<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
GLOBAL DECISIONS GROUP LLC
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 6282 APPLIED FOR
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification Number)
</TABLE>
C/O MCCARTHY, CRISANTI & MAFFEI, INC.
ONE CHASE MANHATTAN PLAZA
NEW YORK, NEW YORK 10005
(212) 509-5800
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
GORDON MCMAHON, VICE PRESIDENT AND SECRETARY
GLOBAL DECISIONS GROUP LLC
C/O MCCARTHY, CRISANTI & MAFFEI, INC.
ONE CHASE MANHATTAN PLAZA
NEW YORK, NEW YORK 10005
(212) 509-5800
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
PAUL P. BROUNTAS, ESQ.
PHILIP P. ROSSETTI, ESQ. STEVEN R. GROSS, ESQ.
HALE AND DORR LLP DEBEVOISE & PLIMPTON
60 STATE STREET 875 THIRD AVENUE
BOSTON, MASSACHUSETTS 02109 NEW YORK, NEW YORK 10022
(617) 526-6000 (212) 909-6000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective and certain
other conditions under the Plan of Merger and Exchange Agreement are met or
waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
===================================================================================================================================
Proposed Maximum
Title of each class of securities Offering Price Per Proposed Maximum Amount of
to be registered Amount to be registered Security Aggregate Offering Price registration fee
- -----------------------------------------------------------------------------------------------------------------------------------
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Units of capital representing
limited liability company interests. 4,731,835 Units (1) (2) $ 28,535,700 (3) $ 8,648.00 (3)
- -----------------------------------------------------------------------------------------------------------------------------------
Rights to receive Units .............. 793,050 rights (4) (2) (5) --
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Units underlying the rights to
receive Units...................... 793,050 Units (6) (2) (5) --
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Contingent options to purchase Units.. 98,744 options (7) (2) (5) --
- -----------------------------------------------------------------------------------------------------------------------------------
Units underlying the contingent
options to purchase Units.......... 98,744 Units (8) $34.53 $ 3,409,630 (9) $ 1,034.00 (9)
- -----------------------------------------------------------------------------------------------------------------------------------
Options to purchase Units ............ 44,576 options (10) (2) (5) --
- -----------------------------------------------------------------------------------------------------------------------------------
Units underlying options to
purchase Units..................... 44,576 Units (11) $23.55 $ 1,049,765 (9) $ 319.00 (9)
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</TABLE>
(1) Represents the number of units of capital representing limited liability
company interests in the Registrant ("Units") issuable in connection with
the merger (the "Merger") of MCM Group, Inc. ("MGI") and GDG Merger
Corporation, and the exchanges (collectively, the "Exchange") between the
Registrant and the stockholders of Cambridge Energy Research Associates,
Inc. ("CERA") and The Goldman Sachs Group, L.P. ("Goldman") described
herein, and assuming that the number of Units to be issued is not adjusted
as described herein.
(2) The securities offered hereby are not being offered on a price per Unit
basis and, therefore, there is no proposed maximum offering price per
share.
(3) Calculated pursuant to Rule 457(f)(2) under the Securities Act of 1933
based on the aggregate book value, as of June 30, 1997, the most recent
practicable date, of the shares of MGI and CERA to be exchanged or
cancelled in the Merger and the Exchange.
(4) Represents the right to receive additional Units to be issued to Goldman
and the stockholders of CERA in connection with the Exchange described
herein, upon the attainment of certain revenue growth rates by CERA,
and assuming that the number of such rights to be issued is not
adjusted as described herein.
(5) No separate consideration is to be received by the Registrant for such
rights, Units and options, as the case may be.
(6) Represents the maximum number of Units issuable to Goldman and the
stockholders of CERA, pursuant to the rights described above, upon the
attainment of certain revenue growth rates by CERA, and assuming that the
number of Units is not adjusted as described herein.
(7) Represents the contingent options to purchase additional Units to be issued
to Goldman and the stockholders of CERA in connection with the Exchange
described herein, upon the attainment of certain revenue growth rates by
CERA, and assuming that the number of such contingent options to be issued
is not adjusted as described herein.
(8) Represents the number of Units issuable to Goldman and the stockholders of
CERA upon the exercise of the contingent options described above, and
assuming that the number of Units is not adjusted as described herein.
(9) Calculated pursuant to Rule 457(f)(3) under the Securities Act of 1933
based on the cash to be received by the Registrant upon the exercise of
such options.
(10) Represents the options to purchase Units to be issued to Brera Capital
Partners, LLC or its designees, and Edward G. Jordan, in connection with
the Merger and the Exchange described herein, and assuming that the number
of such options to be issued is not adjusted as described herein.
(11) Represents the number of Units issuable to Brera Capital Partners, LLC or
its designees, and Edward G. Jordan upon the exercise of the options
described above, and assuming that the number of Units is not adjusted as
described herein.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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MCM Group, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
____________, 1997
Dear Stockholder:
As you have previously been notified, MCM Group, Inc. ("MGI") has
entered into an agreement that would result in MGI becoming wholly owned by
Global Decisions Group LLC (the "Parent") through the merger of a subsidiary of
the Parent into MGI. As part of the same agreement, the stockholders of
Cambridge Energy Research Associates, Inc. ("CERA") have agreed to exchange
their shares of CERA stock for units of capital of the Parent ("Units")
representing limited liability company interests in the Parent. As a result,
CERA would also become wholly owned by the Parent. In addition, The Goldman
Sachs Group, L.P. has agreed to exchange its partnership interest in Cambridge
Energy Research Associates Limited Partnership for Units. The Clayton & Dubilier
Private Equity Fund IV Limited Partnership, which holds over 80% of the
outstanding shares of MGI, has approved the Merger and the Exchange, thereby
providing the requisite stockholder approval therefor. As a result, we are not
soliciting proxies, and you are requested not to send us a proxy. The
accompanying Information Statement/Prospectus describes the merger and the
exchanges and the Units being distributed in connection therewith. The
Information Statement/Prospectus also sets forth information about MGI and CERA,
and their respective subsidiaries, organizations, businesses and properties, and
contains financial statements and other financial information. Due to the
importance of the information contained in this document, you are urged to
retain it for future reference.
In the merger, each share of MGI common stock will be converted into
the right to receive 9.55555 Units (subject to adjustment as described in the
Information Statement/Prospectus). We estimate that the 3,338,710 Units, subject
to adjustment as described in the Information Statement/Prospectus, to be issued
to MGI stockholders in the merger will represent approximately 69% of the
outstanding Units immediately after the merger and exchanges.
For further information regarding the merger and exchanges and the
potential benefits of the transaction, I urge that you read carefully the
accompanying Information Statement/Prospectus and, specifically, the section
"The Merger and the Exchange--Reasons for the Merger and the Exchange." In
addition, a copy of the Plan of Merger and Exchange Agreement and the form of
the Amended and Restated Limited Liability Company Agreement of the Parent is
attached as Annex A and Annex B, respectively, to the Information
Statement/Prospectus.
This Information Statement/Prospectus is also being accompanied by a
notice from MGI concerning the right of each of its stockholders to demand the
appraisal of such stockholder's shares. Each stockholder has the right to
dissent from the merger and demand payment of the fair value of his shares. The
right of any stockholder to receive such payment is contingent upon strict
compliance with the requirements of Section 262 of the Delaware General
Corporation Law. The full text of Section 262 of the Delaware General
Corporation Law is set forth in Annex C to the Information Statement/Prospectus.
For a summary of the requirements of Section 262 of the Delaware General
Corporation Law, see "The Merger and the Exchange--Appraisal Rights" in the
accompanying Information Statement/Prospectus.
WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
Sincerely,
ALBERTO CRIBIORE
Chairman
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PROSPECTUS INFORMATION STATEMENT
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GLOBAL DECISIONS GROUP LLC MCM GROUP, INC.
This Information Statement/Prospectus is being furnished to holders of
Class A Common Stock, par value $.01 per share (the "Class A Common Stock"),
Class B Common Stock, par value $.01 per share (the "Class B Common Stock"), and
Class C Common Stock, par value $.01 per share (the "Class C Common Stock", and
together with the Class A Common Stock and Class B Common Stock, the "MGI Common
Stock"), of MCM Group, Inc., a Delaware corporation ("MGI"), and relates to the
merger (the "Merger") of GDG Merger Corporation, a Delaware corporation ("Sub"),
with and into MGI, pursuant to the Plan of Merger and Exchange Agreement dated
as of August 1, 1997 (the "Merger Agreement") by and among MGI, Global Decisions
Group LLC, a Delaware limited liability company (the "Parent"), Sub, a wholly
owned subsidiary of the Parent, the stockholders (the "CERA Stockholders") of
Cambridge Energy Research Associates, Inc., a Massachusetts corporation
("CERA"), and The Goldman Sachs Group, L.P., a Delaware limited partnership
("Goldman"). The Clayton & Dubilier Fund IV Private Equity Limited Partnership
("C&D Fund IV"), which holds approximately 83% of the outstanding MGI Common
Stock, has approved the Merger, thereby providing the requisite stockholder
approval therefor.
On the day immediately preceding the Closing Date, McCarthy, Crisanti &
Maffei, Inc., a New York corporation and a wholly owned subsidiary of MGI
("MCM"), intends to lend up to $25,000,000 to CERA (the "CERA Distribution
Loan"), and CERA will apply a portion of such funds, together with CERA's
available cash, to the extent necessary, to make a distribution to the CERA
Stockholders in an aggregate amount equal to $21,510,000 and will apply the
remainder of such funds and available cash to purchase a portion of the limited
partnership interest in Cambridge Energy Research Associates Limited Partnership
("CERA LP") held by Goldman for a purchase price of $2,390,000 (collectively,
the "CERA Cash Distribution").
Pursuant to the Merger Agreement, among other things, (a) Sub will be
merged with and into MGI, which will be the surviving corporation, MGI will
become a wholly owned subsidiary of the Parent, and each outstanding share of
MGI Common Stock (excluding treasury shares and shares held by stockholders who
perfect their dissenters' rights) shall be converted into the right to receive
9.55555 units of capital of the Parent ("Units") representing limited liability
company interests in the Parent, (b) the CERA Stockholders will exchange each
outstanding share of Common Stock, par value $.01 per share, and Non-Voting
Common Stock, par value $.01 per share, of CERA (collectively, the "CERA Common
Stock") owned by them for 5.17956 Units, the right to receive from 0.49875 to
2.94851 additional Units upon the attainment of certain revenue growth rates by
CERA and a contingent option to purchase 0.37028 additional Units, at a per Unit
exercise price equal to $34.53, upon the attainment of certain revenue growth
rates by CERA (the "CERA Exchange") and (c) Goldman will exchange the portion of
the limited partnership interest in CERA LP owned by it after the CERA Cash
Distribution for 150,000 Units, the right to receive from 14,444 to 85,389
additional Units upon the attainment of certain revenue growth rates by CERA and
a contingent option to purchase 9,874 additional Units, at a per Unit exercise
price equal to $34.53, upon the attainment of certain revenue growth rates by
CERA (the "Goldman Exchange"). Such numbers of Units are subject to adjustment
as provided in the Merger Agreement and described herein. The CERA Exchange and
the Goldman Exchange are referred to collectively as the "Exchange." See
"Summary," "The Merger and the Exchange," "The Limited Liability Company
Agreement," Annex A and Annex B.
Immediately after the consummation of the Merger and the Exchange, it
is currently anticipated that a total of 4,731,835 Units will be outstanding.
Promptly after the date the Merger and the Exchange are consummated,
the Parent will sell to CERA, for a purchase price per Unit equal to the value
of a Unit on the Closing Date (as defined herein) as determined pursuant to the
Merger Agreement, and CERA will grant to certain employees of or consultants to
CERA (the "CERA Employees"), pursuant to the Cambridge Energy Research
Associates, Inc. LLC Unit Grant Plan (the "CERA Unit Grant Plan"), (i) an
aggregate of 106,875 Units and (ii) a right to receive an aggregate of from
10,291 to 60,840 additional Units (the "CERA Employee Contingent Units"), upon
the attainment of certain revenue growth rates by CERA. After the grant of such
106,875 Units to the CERA Employees, it is currently anticipated that a total of
4,838,710 Units will be outstanding.
<PAGE> 4
After consummation of the Merger and the Exchange and the issuance of
Units to the CERA Employees, and assuming the exercise of all Contingent Options
and the grant of all contingent Units to the CERA Stockholders, all contingent
Units to Goldman and all CERA Employee Contingent Units, it is currently
anticipated that a total of 5,791,344 Units would be outstanding.
Promptly after the date the Merger and the Exchange are consummated,
CERA will also grant options to purchase an aggregate of 231,500 Units, at an
exercise price of $18.31 per Unit, to certain employees of and consultants to
CERA pursuant to the Cambridge Energy Research Associates, Inc. LLC Unit Option
Plan (the "CERA Option Plan"). In addition, each outstanding option to purchase
MGI Common Stock granted under the MCM Group, Inc. Special Stock Option Plan
(collectively, the "MGI Special Options") and each outstanding option to
purchase MGI Common Stock granted under the MCM Group, Inc. Stock Option Plan
(collectively, the "MGI Employee Options" and together with the MGI Special
Options, the "Existing MGI Options") shall automatically be converted into an
equivalent option to purchase 9.55555 Units from MGI at an exercise price of
either $10.47 per Unit or $15.03 per Unit. As a result, Existing MGI Options to
purchase an aggregate of 867,912 Units will be outstanding after such
conversion.
In addition, on the date the Merger and the Exchange are consummated,
MGI will grant options (the "Brera Options") to purchase an aggregate of 33,444
Units to Brera Capital Partners, LLC or its designees ("Brera"), at an exercise
price of $23.55 per Unit, and CERA will grant options (the "Jordan Options") to
purchase an aggregate of 11,132 Units to Mr. Edward G. Jordan ("Jordan"), at an
exercise price of $23.55 per Unit.
The number of Units to be issued in connection with the Merger and the
Exchange and the other transactions contemplated by the Merger Agreement may be
adjusted so that the per Unit value as of the date the Merger and the Exchange
are consummated will be equal to ten dollars.
This Information Statement/Prospectus also constitutes a Prospectus of
the Parent relating to (i) the issuance of 3,338,710 Units to MGI stockholders
in the Merger, (ii) the issuance of 1,243,125 Units, rights to receive up to
707,661 additional Units, and contingent options to purchase 88,870 Units, to
the CERA Stockholders in the CERA Exchange, (iii) the issuance of 150,000 Units,
a right to receive up to 85,389 additional Units and a contingent option to
purchase 9,874 Units, to Goldman in the Goldman Exchange, (iv) the issuance of
up to 707,661 additional Units to the CERA Stockholders upon the attainment of
certain revenue growth rates by CERA, (v) the issuance of up to 85,389
additional Units to Goldman upon the attainment of certain revenue growth rates
by CERA, (vi) the issuance of 88,870 Units to the CERA Stockholders upon the
exercise of contingent options, (vii) the issuance of 9,874 Units to Goldman
upon the exercise of a contingent option, (viii) the issuance of options to
purchase 33,444 Units to Brera, (ix) the issuance of 33,444 Units upon the
exercise of the Brera Options, (x) the issuance of options to purchase 11,132
Units to Jordan and (xi) the issuance of 11,132 Units upon the exercise of the
Jordan Options.
The Units offered hereby involve a high degree of risk. See "Risk Factors."
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS INFORMATION
STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------------
The date of this Information Statement/Prospectus is , 1997, and
it is being mailed or otherwise delivered to MGI stockholders, the CERA
Stockholders, Goldman, Brera and Jordan on or about such date.
2
<PAGE> 5
AVAILABLE INFORMATION
This Information Statement/Prospectus does not contain all of the
information set forth in the Registration Statement on Form S-4, of which this
Information Statement/Prospectus is a part, and the exhibits thereto (together
with any amendments thereto, the "Registration Statement"), which has been filed
with the Securities and Exchange Commission (the "Commission"), certain portions
of which have been omitted pursuant to the rules and regulations of the
Commission and to which portions reference is hereby made for further
information. Statements contained in this Information Statement/Prospectus
concerning the provisions of certain documents filed as exhibits to the
Registration Statement are necessarily brief descriptions thereof, and are not
necessarily complete and each such statement is qualified in its entirety by
reference to the full text of such document. Copies of the Registration
Statement and the exhibits thereto may be inspected, without charge, at the
principal office of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and should be available at the
Commission's Regional Offices at Seven World Trade Center, 13th Floor, New York,
New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material may also be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, the Parent is required
to file electronic versions of these documents with the Commission through the
Commission's Electronic Data Gathering, Analysis and Retrieval (EDGAR) system.
The Commission maintains a World Wide Web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
The Parent is not currently subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS INFORMATION
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE PARENT, MGI, CERA OR
ANY OTHER PERSON. THIS INFORMATION STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES, OR THE
SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS
NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS INFORMATION STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE PARENT, MGI
OR CERA SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
TRADEMARKS
This Information Statement/Prospectus contains trademarks of CERA and
MGI and may contain trademarks of others.
FORWARD-LOOKING STATEMENTS
This Information Statement/Prospectus contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Exchange Act. Any
statements contained herein (including without limitation statements to the
effect that the Parent, CERA, MGI or their respective managements "believes,"
"expects," "anticipates," "plans" and similar expressions) that are not
statements of historical fact should be considered forward-looking statements.
Actual results could differ materially from those projected in the
forward-looking statements as a result of certain factors, including those set
forth in the "Risk Factors" section below. Reference is also made to the
respective discussions set forth under "CERA Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "MGI Management's
Discussion and Analysis of Financial Condition and Results of Operations."
3
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TABLE OF CONTENTS
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AVAILABLE INFORMATION............................................................... 3
TRADEMARKS.......................................................................... 3
FORWARD-LOOKING STATEMENTS.......................................................... 3
SUMMARY ........................................................................... 7
The Companies................................................................... 7
Recommendation of the MGI Board of Directors.................................... 8
The Merger and the Exchange..................................................... 8
Absence of Public Market for Units; Restrictions on Transfer.................... 13
Number of Stockholders and Holders of Interests of CERA LP...................... 13
Distributions and Dividends..................................................... 14
RISK FACTORS........................................................................ 15
Risks Relating to the Merger and the Exchange................................... 15
Risks Relating to MGI........................................................... 17
Risks Relating to CERA.......................................................... 20
THE MERGER AND THE EXCHANGE......................................................... 23
General ....................................................................... 23
Background of the Merger and the Exchange....................................... 24
Reasons for the Merger and the Exchange......................................... 24
Structure and Terms of the Merger and the Exchange.............................. 25
Effective Time.................................................................. 27
Procedure for Exchange of Certificates.......................................... 27
Certain Federal Income Tax Consequences......................................... 28
Management and Operations After the Merger and the Exchange..................... 30
Interests of Certain Persons in the Merger and the Exchange..................... 31
Conditions to Obligations of the Parties........................................ 31
Amendment, Waiver and Termination............................................... 34
Covenants Pending the Merger and the Exchange................................... 35
Additional Agreements........................................................... 38
Expenses and Fees............................................................... 40
Appraisal Rights................................................................ 41
Regulatory Matters.............................................................. 42
THE LIMITED LIABILITY COMPANY AGREEMENT............................................. 43
Organization and Duration....................................................... 43
Purpose ....................................................................... 43
Management...................................................................... 43
The Units....................................................................... 44
Resales of Units................................................................ 46
Issuance of Additional Securities............................................... 49
Limited Liability............................................................... 49
Capital Contributions........................................................... 49
Amendment of LLC Agreement...................................................... 49
Fiduciary and Other Duties...................................................... 50
Indemnification................................................................. 50
Right to Information............................................................ 50
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4
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Termination and Dissolution..................................................... 51
Liquidation and Distribution of Proceeds........................................ 51
SELECTED HISTORICAL FINANCIAL DATA.................................................. 52
PRO FORMA CONDENSED COMBINED FINANCIAL DATA......................................... 54
MGI MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................ 60
General ....................................................................... 60
Results of Operations........................................................... 61
Liquidity and Capital Resources................................................. 63
Income Taxes ................................................................... 63
CERA MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................ 64
General ....................................................................... 64
Results of Operations........................................................... 65
Liquidity and Capital Resources................................................. 67
DESCRIPTION OF THE PARENT........................................................... 69
BUSINESS OF THE PARENT.............................................................. 70
BUSINESS OF MGI..................................................................... 70
Overview ....................................................................... 70
Services ....................................................................... 72
Distribution of Services........................................................ 73
Subscription Agreements......................................................... 74
Marketing....................................................................... 74
Customers....................................................................... 74
Employees....................................................................... 74
Competition..................................................................... 74
Facilities...................................................................... 75
Intellectual Property........................................................... 75
Transitional Administrative Services and Other Arrangements..................... 75
MCM Indemnification Agreement................................................... 76
The Tax Sharing Agreement....................................................... 76
Legal and Related Matters ...................................................... 76
BUSINESS OF CERA.................................................................... 77
Overview ....................................................................... 77
Industry Background............................................................. 77
CERA Solution................................................................... 78
CERA Strategy................................................................... 78
Products and Services........................................................... 79
Research and Analysis........................................................... 81
Sales and Marketing............................................................. 81
Customers....................................................................... 81
Competition..................................................................... 82
Employees....................................................................... 82
Facilities...................................................................... 82
</TABLE>
5
<PAGE> 8
<TABLE>
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Intellectual Property............................................................ 82
Legal and Related Matters ....................................................... 82
MANAGEMENT........................................................................... 83
Executive Officers and Directors................................................. 83
Board Compensation............................................................... 86
Compensation Committee Interlocks and Insider Participation...................... 87
Executive Compensation........................................................... 87
Employment Agreements............................................................ 90
Certain Relationships and Related Transactions................................... 91
OWNERSHIP OF SECURITIES.............................................................. 93
COMPARISON OF STOCKHOLDER, LIMITED PARTNERSHIP
INTEREST HOLDER AND UNIT HOLDER RIGHTS........................................... 95
MGI Common Stock................................................................. 95
MGI Class A and Class B Common Stock............................................. 95
MGI Class C Common Stock......................................................... 97
CERA Common Stock................................................................ 99
CERA LP Limited Partnership Interests............................................ 99
Units ........................................................................ 99
EXPERTS ............................................................................ 100
LEGAL MATTERS........................................................................ 100
INDEX TO FINANCIAL STATEMENTS........................................................ F-1
</TABLE>
ANNEXES:
Annex A - Plan of Merger and Exchange Agreement
Annex B - Amended and Restated Limited Liability Company Agreement
Annex C - Section 262 of the Delaware General Corporation Law
6
<PAGE> 9
SUMMARY
The following is a summary of certain information contained elsewhere
in this Information Statement/Prospectus. Reference is made to, and this summary
is qualified in its entirety by, the more detailed information, including
financial information, contained in this Information Statement/Prospectus and
the Annexes hereto. Unless otherwise defined herein, capitalized terms used in
this summary have the respective meanings ascribed to them elsewhere in this
Information Statement/Prospectus. The holders of MGI Common Stock, the CERA
Stockholders, Goldman, Brera and Jordan are urged to read this Information
Statement/Prospectus and the Annexes hereto in their entirety.
Certain of the information contained in this Information
Statement/Prospectus may constitute forward-looking statements, including
statements as to the benefits expected to be realized as a result of the Merger
and the Exchange and as to future financial performance. See "The Merger and the
Exchange--Reasons for the Merger and the Exchange." There are a number of
important factors that could cause actual results to differ materially from
those indicated by such forward-looking statements. Such factors include those
set forth in this Information Statement/Prospectus under the heading "Risk
Factors."
THE COMPANIES
Global Decisions Group LLC. The Parent is a newly formed Delaware
limited liability company and currently is owned by MGI and MCM, a wholly owned
subsidiary of MGI. The Parent is currently engaged in no business activities
other than in connection with the Merger and the Exchange described herein. If
the Merger and the Exchange are consummated, the Parent will become the sole
stockholder of MGI and CERA.
The principal executive offices of the Parent are located at c/o
McCarthy, Crisanti & Maffei, Inc., One Chase Manhattan Plaza, New York, New York
10005, and its telephone number is (212) 509-5800. Following consummation of the
Merger and the Exchange, the principal executive offices of the Parent will be
located at c/o Cambridge Energy Research Associates, Inc., 20 University Road,
Cambridge, Massachusetts 02138, and its telephone shall be (617) 497-6446.
MCM Group, Inc. MGI provides up-to-the-minute information and analysis
relating to developments in the U.S. and international corporate securities,
fixed income and currency markets to over 2,400 institutional clients in over 57
countries. MGI was incorporated under the laws of the State of Delaware in 1996.
References in this Information Statement/Prospectus to "MGI" shall mean MGI and
its subsidiaries, unless the context otherwise requires.
The principal executive offices of MGI are located at c/o McCarthy,
Crisanti & Maffei, Inc., One Chase Manhattan Plaza, New York, New York 10005,
and its telephone number is (212) 509-5800.
Cambridge Energy Research Associates, Inc. CERA is a leading
international advisory firm providing analysis on the energy industries,
including markets, geopolitics, structure and strategy. CERA was incorporated
under the laws of the Commonwealth of Massachusetts in 1983. CERA is the general
partner of CERA LP. References in this Information Statement/Prospectus to
"CERA" shall mean CERA and CERA LP, unless the context otherwise requires.
The principal executive offices of CERA are located at 20 University
Road, Cambridge, Massachusetts 02138, and its telephone number is (617)
497-6446.
GDG Merger Corporation. Sub is a newly formed Delaware corporation and
a wholly owned subsidiary of the Parent. Sub was formed specifically for the
purpose of effecting the Merger. Sub is currently engaged in no business
activities other than in connection with the proposed Merger described
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<PAGE> 10
herein. Upon the consummation of the Merger, Sub will merged with and into MGI
and Sub will cease to exist, and MGI will be the surviving corporation.
The principal executive offices of Sub are located at c/o McCarthy,
Crisanti & Maffei, Inc., One Chase Manhattan Plaza, New York, New York 10005,
and its telephone number is (212) 509-5800.
RECOMMENDATION OF THE MGI BOARD OF DIRECTORS
The Board of Directors and the majority stockholder of MGI have
approved the Merger Agreement, and the Board of Directors believes the Merger
and the Exchange and the consummation of the other transactions contemplated by
the Merger Agreement are in the best interest of MGI and its stockholders. C&D
Fund IV, which holds 287,038 shares of MGI Common Stock as of the date hereof,
or approximately 83% of the outstanding MGI Common Stock, has voted all of such
shares in favor of the Merger, thereby providing the requisite approval
therefor.
THE MERGER AND THE EXCHANGE
General. The Merger Agreement provides that Sub, a wholly owned
subsidiary of the Parent, shall merge with and into MGI. MGI shall be the
surviving corporation of the Merger and as a result shall become a wholly owned
subsidiary of the Parent. Following the Merger, MGI shall continue to be
governed by the laws of the State of Delaware. On the day immediately preceding
the closing of the Merger and the Exchange (the "Closing Date"), MCM intends to
make the CERA Distribution Loan to CERA, and CERA will apply a portion of the
proceeds from such loan, together with CERA's available cash, to the extent
necessary, to make the CERA Cash Distribution, which will consist of a
distribution to the CERA Stockholders in an aggregate amount equal to
$21,510,000 and the purchase of a portion of the limited partnership interest of
CERA LP held by Goldman for a purchase price of $2,390,000. At the time the
Merger becomes effective, each share of MGI Common Stock (excluding treasury
shares and shares held by stockholders who perfect their dissenters' rights)
shall cease to be outstanding and shall be converted into the right to receive
Units, as provided in the Merger Agreement. If all required consents and
approvals are obtained, and all other conditions to the obligations of the
parties to consummate the Merger and the Exchange are either satisfied or waived
(as permitted), the Merger will be consummated. See "The Merger and the
Exchange--Conditions to Obligations of the Parties."
The Merger Agreement also provides that the CERA Stockholders will
exchange the shares of CERA Common Stock owned by them for Units, the right to
receive the CERA Contingent Units (as defined herein) and Contingent Options to
purchase Units, and that Goldman will exchange the portion of the limited
partnership interest in CERA LP owned by it after the CERA Cash Distribution for
Units, the right to receive the Goldman Contingent Units (as defined herein) and
Contingent Options to purchase Units. As a result, CERA will become a wholly
owned subsidiary of the Parent. Following the Exchange, CERA shall continue to
be governed by the laws of the Commonwealth of Massachusetts. Immediately upon
completion of the Goldman Exchange, the Parent will transfer or cause to be
transferred to CERA the limited partnership interest in CERA LP acquired from
Goldman in the Goldman Exchange. Upon such transfer, CERA will become the sole
partner of CERA LP and CERA LP will be dissolved by operation of law (the "CERA
Roll-up").
The Merger Agreement also provides that promptly after the Closing
Date, the Parent will sell to CERA, and CERA will grant to the CERA Employees,
pursuant to the CERA Unit Grant Plan, Units and rights to receive CERA Employee
Contingent Units. CERA will also grant options to purchase an aggregate of
231,500 Units to certain employees of and consultants to CERA, pursuant to the
CERA Option Plan. In addition, each Existing MGI Option shall automatically be
converted into an equivalent option to purchase Units. MGI will also grant the
Brera Options to Brera, and CERA will grant the Jordan
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<PAGE> 11
Options to Jordan. A copy of the Merger Agreement is set forth as Annex A of
this Information Statement/Prospectus.
Conversion of MGI Common Stock; CERA Exchange; Goldman Exchange. The
Merger Agreement provides that, (a) at the effective time of the Merger, each
outstanding share of MGI Common Stock (excluding treasury shares and shares held
by stockholders who perfect their dissenters' rights) shall be converted into
the right to receive 9.55555 Units, and (b) at the closing of the Exchange, (i)
the CERA Stockholders shall exchange each outstanding share of CERA Common Stock
for (x) 5.17956 Units, (y) a right to receive, in the event that CERA attains a
sixteen percent or higher compound annual revenue growth rate over a three-year
period ending June 30, 2000 (subject to acceleration upon the occurrence of
certain events), from 0.49875 to 2.94851 additional Units (the "CERA Contingent
Units"), and (z) an option, contingent upon the attainment of at least a twenty
percent compound annual revenue growth rate over a three-year period ending June
30, 2000 (subject to termination prior to the end of such three-year period upon
the occurrence of certain events) (a "Contingent Option"), to purchase 0.37028
Units at a per Unit exercise price equal to $34.53 (collectively, the "CERA
Consideration"), and (ii) Goldman shall exchange the portion of the limited
partnership interest in CERA LP owned by it following the CERA Cash Distribution
for (x) 150,000 Units, (y) a right to receive, in the event that CERA attains a
sixteen percent or higher compound annual revenue growth rate over a three-year
period (subject to acceleration upon the occurrence of certain events), from
14,444 to 85,389 additional Units (the "Goldman Contingent Units"), and (z) a
Contingent Option to purchase 9,874 Units (collectively, the "Goldman
Consideration"). Immediately after the consummation of the Merger and the
Exchange, it is currently anticipated that a total of 4,731,835 Units will be
outstanding. The number of Units to be issued in connection with the Merger and
the Exchange and the other transactions contemplated by the Merger Agreement
will be subject to adjustment such that the per Unit value as of the Closing
Date will be equal to ten dollars. See "The Merger and the Exchange--Structure
and Terms of the Merger and the Exchange."
Issuance of Units and Contingent Units to CERA Employees. Promptly
after the Closing Date, the Parent will sell to CERA, and CERA will grant to the
CERA Employees, pursuant to the CERA Unit Grant Plan, (i) an aggregate of
106,875 Units and (ii) the right to receive an aggregate of from 10,291 to
60,840 CERA Employee Contingent Units.
After consummation of the Merger and the Exchange and the issuance of
Units to the CERA Employees, it is currently anticipated that 4,838,710 Units
will be outstanding (or 5,791,344 Units assuming the exercise of all Contingent
Options and the receipt of all CERA Contingent Units, all Goldman Contingent
Units and all CERA Employee Contingent Units). See "The Merger and the
Exchange--Structure and Terms of the Merger and the Exchange."
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<PAGE> 12
Ownership of Units. The following table sets forth the expected
ownership of the Units upon consummation of the Merger and the Exchange both on
a primary and fully-diluted basis, including the grant of Units to the CERA
Employees and assuming the exercise of all Contingent Options and options to
purchase Units granted to employees of or consultants to CERA and MGI or to
Brera or Jordan (whether vested or unvested), and the receipt of all CERA
Contingent Units, all Goldman Contingent Units and all CERA Employee Contingent
Units:
<TABLE>
<CAPTION>
Number of Number of Number of
Units Units Units Percentage
Number Percentage Number of Subject to Subject to on a Fully- of Units-
of of Units Contingent Contingent Other Diluted Fully-
Units Outstanding Units(2) Options Options Basis(1) Diluted(1)
----- ----------- -------- ------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
C&D Fund IV 2,742,806 56.7% -- -- -- 2,742,806 39.5%
Holders of MGI
Common Stock (other
than C&D Fund IV) 595,904 12.3% -- -- -- 595,904 8.6%
Holders of Existing
MGI Options -- -- -- -- 867,912 867,912 12.5%
CERA Stockholders 1,243,125 25.7% 707,661 88,870 -- 2,039,656 29.4%
Goldman 150,000 3.1% 85,389 9,874 -- 245,263 3.5%
CERA Employees 106,875 2.2% 60,840 -- 184,150 351,865 5.1%
Employees of CERA
(other than the CERA
Employees) -- -- -- -- 47,350 47,350 0.7%
Brera -- -- -- -- 33,444 33,444 0.5%
Jordan -- -- -- -- 11,132 11,132 0.2%
----------- ----------- ----------- --------- ---------- ---------- ---------
Total 4,838,710 100.0% 853,890 98,744 1,143,988 6,935,332 100%
</TABLE>
(1) This information is provided solely for illustrative purposes and is not
necessarily indicative of the future number or percentage of Units that
will actually be outstanding.
(2) Amounts shown include the CERA Contingent Units, the Goldman Contingent
Units and the CERA Employee Contingent Units.
Effective Time. If all required consents and approvals are obtained,
and the other conditions to the obligations of the parties to consummate the
Merger and the Exchange are either satisfied or waived (as permitted), the
Merger will be consummated and will become effective on the date and at the time
that a Certificate of Merger, reflecting the Merger, is filed with the Secretary
of State of the State of Delaware (the "Effective Time"), and the Exchange will
be consummated and will become effective on the date and at the time that the
CERA Stockholders exchange their shares of CERA Common Stock for Units, the CERA
Contingent Units and Contingent Options, and Goldman exchanges the portion of
the limited partnership interest in CERA LP owned by it following the CERA Cash
Distribution for Units, the Goldman Contingent Units and a Contingent Option.
See "The Merger and the Exchange--Effective Time."
Comparative Rights of Stockholders of MGI, Stockholders of CERA,
Holders of Partnership Interests in CERA LP and holders of Units. The rights of
the holders of MGI Common Stock are currently governed by the Delaware General
Corporation Law ("DGCL") and by the MGI Certificate of Incorporation and
By-Laws. The rights of holders of MGI Class C Common Stock are also governed in
part by the management stock subscription agreements that each such holder has
entered into with MGI. The rights of the holders
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<PAGE> 13
of CERA Common Stock are currently governed by Chapter 156B of the Massachusetts
General Laws and by the CERA Articles of Organization and By-Laws. The rights of
the holders of partnership interests of CERA LP are currently governed by the
Delaware Revised Uniform Limited Partnership Act and by the CERA LP Amended and
Restated Certificate of Limited Partnership and Amended and Restated Limited
Partnership Agreement. As a result of the Merger, the CERA Exchange and the
Goldman Exchange, the holders of MGI Common Stock (other than stockholders
exercising dissenters' rights), CERA Common Stock and limited partnership
interests in CERA LP will become holders of Units and as such their rights will
be governed by the Delaware Limited Liability Company Act (the "Delaware Act")
and by the Parent's Certificate of Formation and the Amended and Restated
Limited Liability Company Agreement of the Parent (the "LLC Agreement"), the
form of which is attached as Annex B to this Information Statement/Prospectus.
Certain material differences arise from these changes in governing law as well
as from distinctions between the governing documents of these entities. See
"Comparison of Stockholder, Limited Partnership Interest Holder and Unit Holder
Rights."
Reasons for the Merger and the Exchange. The Board of Directors of MGI
believes the Merger and the Exchange, and the other transactions contemplated by
the Merger Agreement, will position MGI to capitalize on the latest technology
distribution and delivery channels, serve new markets and develop new products.
Management of CERA believes the Merger and the Exchange, and the transactions
contemplated by the Merger Agreement, will enable CERA to meet the expanding
needs of energy companies by bringing together CERA's capability in the energy
business with MCM's knowledge of the economic and financial markets. The Board
of Directors of MGI and the management of CERA also believe that the Merger and
the Exchange will better position the combined company to be competitive with
larger information providers in the marketplace served by the companies, by
creating an organization with the critical mass necessary to compete with such
providers.
Management and Operation After the Merger and the Exchange. After the
Merger and the Exchange, MGI and CERA will each be wholly owned subsidiaries of
the Parent and will continue to be operated on a stand-alone basis. MGI shall
continue to be governed by the laws of the State of Delaware, and CERA shall
continue to be governed by the laws of the Commonwealth of Massachusetts.
Alberto Cribiore, Gordon McMahon, Donald Gogel, David Nixon, Daniel Yergin,
Joseph Stanislaw and up to seven additional directors will be named to the Board
of Directors of the Parent at the time of or shortly after the consummation of
the Merger and the Exchange. In addition, Messrs. Cribiore and Yergin will be
appointed Chairman and Vice-Chairman of the Parent, respectively. The LLC
Agreement provides for an executive committee of the Board of Directors of the
Parent which, during the intervals between meetings of the Board, generally will
have the powers and authority of the Board in the management of the Parent. Upon
consummation of the Merger and the Exchange, such executive committee shall be
composed of Messrs. Cribiore, Yergin, Nixon and such other directors as may be
designated by the Board. The persons named as directors of the Parent will also
be required to be named as the directors of CERA and MGI.
Interests of Certain Persons in the Merger and the Exchange. Certain
directors of MGI or CERA have interests in the Merger and the Exchange that
present them with potential conflicts of interest. In connection with the Merger
and the Exchange, Messrs. Cribiore, McMahon, Gogel, Nixon, Yergin and Stanislaw
will be named as directors of the Parent. In addition, Mr. Nixon will continue
to be the President and Chief Executive Officer of MGI. Additionally, Brera, of
which Mr. Cribiore is Managing Principal and Mr. McMahon is a principal, will
receive the Brera Options. Pursuant to a Services Agreement, dated as of March
31, 1997 (the "Cribiore Services Agreement"), between Clayton, Dubilier & Rice,
Inc. ("CD&R") and Brera, Brera has agreed to provide the services of Mr.
Cribiore to assist CD&R in providing managerial and financial advisory services
pursuant to the Consulting Agreement, dated as of August 31, 1996 (the
"Consulting Agreement"), among MGI, MCM and CD&R. Brera may make other Brera
employees, including Mr. McMahon, available to assist Mr. Cribiore in providing
such services. Messrs. Yergin, Rosenfield and Stanislaw (and affiliated trusts)
will each receive Units, a right to receive CERA Contingent Units, Contingent
Options, and a pro rata portion of the CERA Cash Distribution, and
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<PAGE> 14
will enter into new employment agreements with CERA. In addition, Jordan, a
director of CERA until June 1997, will receive the Jordan Options. Goldman Sachs
& Co. ("Goldman Sachs"), an affiliate of Goldman, will receive approximately
$ from MGI for services rendered in respect of the transactions
contemplated by the Merger Agreement. Finally, CERA and Goldman are parties to
an agreement, currently due to expire in October 1997, pursuant to which CERA
provides advisory services to Goldman. See "The Merger and the
Exchange--Interests of Certain Persons in the Merger and the Exchange" and
"Management--Certain Relationships and Related Transactions."
Conditions to Consummation. Consummation of the Merger and the Exchange
is subject to various conditions, including among other matters: (i) receipt of
all consents and approvals from governmental authorities necessary to permit
consummation of the Merger and the Exchange and (ii) satisfaction of certain
other conditions. See "The Merger and the Exchange--Conditions to Obligations of
the Parties" and "--Amendment, Waiver and Termination."
Amendment, Waiver and Termination. The Merger Agreement may be
terminated at any time prior to the Closing Date by the written agreement of
Messrs. Yergin, Rosenfield and Stanislaw (collectively, the "Founding
Stockholders") and MGI. In addition, the Merger Agreement may be terminated at
any time prior to the Closing Date by MGI, on the one hand, or the Founding
Stockholders, on the other hand, by written notice to the other after 5:00 p.m.,
New York City time, on November 30, 1997 if the Closing Date shall not have
occurred by such date (unless the failure of the Closing Date to occur shall be
due to, in the case of any termination by MGI, any material breach of the Merger
Agreement by MGI, the Parent or Sub or, in the case of any termination by the
Founding Stockholders, any material breach of the Merger Agreement by the CERA
Stockholders or Goldman), unless such date is extended by the mutual written
consent of MGI and the Founding Stockholders. The Merger Agreement may also be
terminated at any time prior to the Closing Date for certain other reasons. See
"The Merger and the Exchange--Amendment, Waiver and Termination."
Certain Federal Income Tax Consequences. Each of (i) the exchange of
MGI Common Stock for Units in the Merger, (ii) the exchange of CERA Common Stock
for Units, the CERA Contingent Units and Contingent Options in the CERA Exchange
and (iii) the exchange of interests in CERA LP for Units, the Goldman Contingent
Units and Contingent Options in the Goldman Exchange is expected to be a tax
free exchange for federal income tax purposes. See "The Merger and the
Exchange--Certain Federal Income Tax Consequences."
Procedure for Exchange of Certificates. The Merger Agreement provides
that, after the Effective Time, each holder of a certificate or certificates
that, immediately prior to the Merger, represented shares of MGI Common Stock
("MGI Stock Certificates") who surrenders such certificate or certificates,
together with a completed and signed MGI Holder Information Form (a copy of
which has been enclosed with this Information Statement/Prospectus), to the
person or entity appointed by the Parent (the "Exchange Agent") will be entitled
to receive a certificate or certificates ("Unit Certificates") representing the
Units into which such shares of MGI Common Stock shall have been converted in
the Merger. The Parent currently intends to appoint MGI as the Exchange Agent.
Substantially all of the MGI Stock Certificates currently are held by MCM, as
bailee (the "MGI Bailee") pursuant to a Master Bailment Agreement, dated as of
August 31, 1996 (the "MGI Bailment Agreement"), among certain holders of MGI
Common Stock and the MGI Bailee. Each holder of shares of MGI Common Stock who
wants the MGI Bailee to surrender such holder's MGI Stock Certificates to the
Exchange Agent on such holder's behalf must complete, execute and deliver to the
MGI Bailee a Holder Information Form and a Letter of Instruction (a copy of
which has been enclosed with this Information Statement/Prospectus), which will
authorize the MGI Bailee to so surrender the applicable MGI Stock Certificates.
Promptly after the receipt of such documents, the MGI Bailee will deliver the
applicable MGI Stock Certificates and Holder Information Forms to the Exchange
Agent.
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<PAGE> 15
Pursuant to the LLC Agreement, all of the Unit Certificates will be
required to be held by the Parent, as bailee (the "Unit Bailee") under a Master
Bailment Agreement, to be dated the Closing Date (the "Unit Bailment
Agreement"), among certain holders of Units and the Unit Bailee. Accordingly,
the Unit Certificates to be issued in the name of those former holders of MGI
Common Stock whose MGI Stock Certificates, together with completed and signed
Holder Information Forms, shall have been surrendered to the Exchange Agent,
shall be delivered to the Unit Bailee in accordance with the Unit Bailment
Agreement. The Unit Bailee will hold such Unit Certificates for safekeeping in a
safe deposit box at a financial institution chosen by the Unit Bailee, and each
such former holder of MGI Common Stock will receive a receipt from the Unit
Bailee for the applicable Unit Certificate and a photocopy of such Certificate.
See "The Limited Liability Company Agreement--The Units--Bailment Agreement."
Rights of Dissenting Shareholders. Holders of MGI Common Stock are
entitled to assert dissenters' rights under Section 262 of the DGCL with respect
to the proposed Merger and, subject to the consummation of the Merger, to
receive the "fair value" of their shares by complying with the procedures set
forth in Section 262 of the DGCL. See "The Merger and the Exchange--Appraisal
Rights" and the text of Section 262 of the DGCL, a copy of which is attached as
Annex C hereto.
Regulatory Matters. Under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and the rules promulgated thereunder,
the Merger and the Exchange may not be consummated until certain information is
provided to the Federal Trade Commission ("FTC") and to the Antitrust Division
of the United States Department of Justice ("DOJ"), and a thirty-day waiting
period is observed. The thirty-day waiting period may be extended by a request
for additional information by the DOJ or FTC, or may be terminated early when
both agencies approve the Merger and the Exchange. See "The Merger and the
Exchange--Regulatory Matters."
ABSENCE OF PUBLIC MARKET FOR UNITS; RESTRICTIONS ON TRANSFER
The Units issued in the Merger and the Exchange will be freely
transferable under the Securities Act, except for Units issued to a holder of
MGI Common Stock, CERA Common Stock or partnership interests in CERA LP who, for
purposes of Rule 145 under the Securities Act, may be deemed to be an affiliate
of MGI as of August 1, 1997 or of CERA as of the Closing Date, and Units held by
an affiliate of the Parent for purposes of Rule 144 under the Securities Act.
However, there has been no public trading market for Units prior to the Merger
and the Exchange, and it is not expected that there will be a public market for
the Units in the foreseeable future. In addition, transfers of the Units will be
substantially restricted (i) under the LLC Agreement, (ii) pursuant to grant,
subscription and/or option agreements to be executed in connection with the
acquisition of Units or options to acquire Units by certain employees of CERA
and MGI and (iii) pursuant to existing subscription and/or option agreements
executed by certain employees of and consultants to MGI.
Under Rule 145 under the Securities Act, affiliates of MGI or CERA may
not sell Units issued to them in the Merger and the Exchange except pursuant to
an effective registration statement under the Securities Act or other applicable
exemption from the registration requirements of the Securities Act, including
(in the case of such affiliates who are not affiliates of the Parent) pursuant
to Rule 145 under the Securities Act. The provisions of Rule 145 require that,
among other things, the Units be sold in "brokers' transactions" or in
transactions directly with a "market maker." It is unlikely that an affiliate
would be able to comply with the provisions of Rule 145 to effect a resale of
Units.
NUMBER OF STOCKHOLDERS AND HOLDERS OF INTERESTS OF CERA LP
As of August 1, 1997, there were 206 stockholders of record who held
shares of MGI Common Stock, as shown on the records of MGI for such shares. As
of August 1, 1997, there were nine stockholders of record who held shares of
CERA Common Stock, as shown on the records of CERA for such shares.
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<PAGE> 16
As of August 1, 1997, there were two holders of record who held partnership
interests in CERA LP, as shown on the records of CERA LP for such partnership
interests.
DISTRIBUTIONS AND DIVIDENDS
Parent. It is the policy of the Parent's Board of Directors to retain
earnings to support operations and to finance continued growth of the Parent's
and its subsidiaries' businesses rather than to make distributions, provided,
however, that the Parent will make distributions, to the extent of available
cash, necessary for holders of Units to pay tax liabilities. The Parent has
never made any distributions on its limited liability company interests. The
amount of any future distributions will be determined by the Board of Directors
of the Parent in light of circumstances then existing, including the Parent's
growth, profitability, financial condition, results of operations, and such
other factors as the Board deems relevant. The Parent does not expect to make
any distributions in the foreseeable future, other than distributions to holders
of Units to pay their taxes, as required by the LLC Agreement. See "The Merger
and the Exchange--Certain Federal Income Tax Consequences" and "The Limited
Liability Company Agreement--The Units--Rights to Distributions and
Allocations." There can be no assurance that the Parent will have sufficient
available cash to make such distributions. The Parent is and, following the
Merger and the Exchange, will continue to be a holding company with no
substantial business operations, and, accordingly, the Parent's ability to make
any distributions will be limited by the ability of the Parent's subsidiaries to
transfer funds to the Parent in the form of cash, loans or advances. See "MGI
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "CERA Management's Discussion and Analysis of Financial
Condition and Results of Operations."
MGI. It is the policy of MGI's Board of Directors to retain earnings to
support operations and to finance continued growth of MGI's business rather than
to pay dividends. MGI has never declared or paid any cash dividends or
distributions on its capital stock. MGI may transfer funds to the Parent to
enable the Parent to pay its expenses and to enable the Parent to make
distributions to holders of Units, as required by the LLC Agreement. MGI's
ability to declare and pay dividends and to transfer funds to the Parent in the
form of cash, loans or advances is expected to be limited by certain covenants
to be contained in its loan agreements with financial institutions. See "MGI
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
CERA. It has been the policy of CERA's Board of Directors to distribute
substantially all of its earnings in the form of bonuses. Since June 30, 1995,
CERA has not declared or paid any cash dividends or distributions on its capital
stock, other than the CERA Cash Distribution. CERA may transfer funds to the
Parent to enable the Parent to pay its expenses and to enable the Parent to make
distributions to holders of Units, as required by the LLC Agreement. CERA's
ability to declare and pay dividends and to transfer funds to the Parent in the
form of cash, loans or advances is expected to be limited by certain covenants
to be contained in its loan agreements with MCM or with financial institutions.
See "CERA Management's Discussion and Analysis of Financial Condition and
Results of Operations."
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<PAGE> 17
RISK FACTORS
An investment in the Units offered hereby involves a high degree of
risk. The following factors, in addition to the other information contained in
this Information Statement/Prospectus should be carefully considered by holders
of MGI Common Stock, the CERA Stockholders, Goldman, Brera and Jordan. Certain
of the following risk factors apply to MGI and its business and operations and
certain others apply to CERA and its business and operations. If the Merger and
the Exchange is consummated, these risk factors will apply equally to the
Parent, in that following the Merger and the Exchange the Parent's primary
assets will be the equity of MGI and CERA.
RISKS RELATING TO THE MERGER AND THE EXCHANGE
The Merger. Consummation of the Merger and the Exchange is subject to
various conditions, including, without limitation, the receipt of all consents
and approvals necessary to permit consummation of the Merger and the Exchange,
and there can be no assurance that the Merger and the Exchange will ever be
consummated. See "The Merger and the Exchange--Conditions to Obligations of the
Parties." The success of the Merger and the Exchange will be determined by
various factors, including the financial performance of the companies'
operations after the Merger and the Exchange. There can be no assurance that the
Merger and the Exchange will not adversely affect the future operating results
of CERA, MGI and the Parent.
Ownership of Limited Assets. Upon consummation of the Merger and the
Exchange, the Parent will own two principal assets, its interest in CERA and its
interest in MGI. Accordingly, the Parent's results of operations will be
completely dependent on the successful and continued operation of CERA and MGI.
In particular, if either CERA or MGI experiences decreased demand for its
services or increased competition, the Parent's results of operations may be
materially adversely affected.
Concentration of Control. Upon completion of the transactions
contemplated by the Merger Agreement, C&D Fund IV will beneficially own
approximately 57% of the then outstanding Units (approximately 40% on a fully
diluted basis assuming the grant of the CERA Contingent Units, the Goldman
Contingent Units and the CERA Employee Contingent Units, and the exercise of all
outstanding options (whether vested or unvested and including all Contingent
Options)). In addition, the present executive officers and directors of CERA and
of MGI (including those directors and executive officers of CERA (and affiliated
trusts) and of MGI who are identified herein as persons who will become
directors of the Parent) will own or control approximately 29% of the
outstanding Units (approximately 36% on a fully diluted basis assuming the grant
of the CERA Contingent Units, the Goldman Contingent Units and the CERA Employee
Contingent Units, and the exercise of all outstanding options (whether vested or
unvested and including all Contingent Options)). Such concentration of ownership
could limit the price that certain investors might be willing to pay in the
future for Units, and could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Parent.
Certain Limited Liability Company Agreement Provisions. The LLC
Agreement will contain certain provisions, including without limitation rights
of first offer and participation rights, that could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, control of the Parent. Such provisions could limit
the price that certain investors might be willing to pay in the future for Units
and impose certain procedural and other requirements which could make it more
difficult for holders of Units to effect certain company actions.
No Public Market for Units; Restrictions on Transfer. Although Units
issued in connection with the Merger and the Exchange (other than Units issued
to "affiliates" of MGI, CERA or CERA LP and Units held by "affiliates" of the
Parent) will be freely transferable under the Securities Act, there is no public
market for the Units and it is not expected that there will be a public market
for the Units in the foreseeable future. In addition, transfer of Units to be
issued in connection with the Merger and the
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Exchange and the other transactions contemplated by the Merger Agreement,
including the CERA Contingent Units, the Goldman Contingent Units, the Units
issuable upon exercise of Contingent Options, the Brera Options and the Jordan
Options, is restricted under the LLC Agreement and other agreements pursuant to
which Units will be or may be issued to certain employees or consultants to CERA
or MGI and other persons (other than the CERA Stockholders and Goldman). The
Units are also subject to a holdback provision, a right of first offer in favor
of the holders as of the Closing Date of five percent or more of the Units, and
certain "take-along" rights and participation rights set forth in the LLC
Agreement. Additionally, certain restrictions on transfer and related
restrictions are contained in (i) grant, subscription and/or option agreements
to be executed in connection with the acquisition of Units or options to acquire
Units by certain employees of CERA and MGI and (ii) existing subscription and/or
option agreements executed by certain employees of MGI. The restrictions on
transfer could limit the price that certain investors might be willing to pay in
the future for Units, and could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Parent.
Dilution. The Units will be subject to dilution upon future issuances
of Units, including any issuance of Units upon the exercise of options under the
CERA Option Plan and the MCM Group, Inc. LLC Unit Option Plan (the "MGI Option
Plan"), any issuance of CERA Contingent Units, any issuance of Goldman
Contingent Units, any issuance of CERA Employee Contingent Units and any
issuance of Units upon the exercise of Contingent Options, Existing MGI Options,
the Brera Options or the Jordan Options. On or prior to the Closing Date, CERA
will adopt the CERA Option Plan and MGI will adopt the MGI Option Plan, pursuant
to which options to purchase an aggregate of up to 462,699 Units may be granted.
In connection with the Merger and the Exchange, Existing MGI Options will
automatically be converted into options to purchase an aggregate of 867,912
Units. Shortly following the Merger and the Exchange, options to purchase an
aggregate of 231,500 Units will be granted by CERA under the CERA Option Plan to
certain employees of or consultants to CERA. In connection with the Merger and
the Exchange, CERA will grant to the CERA Stockholders and to Goldman,
Contingent Options to purchase an aggregate of 98,744 Units, based on the
attainment by CERA of certain revenue growth rates. The Merger Agreement also
provides that if CERA achieves certain revenue growth rates, the CERA
Stockholders will receive an aggregate of from 119,704 additional Units to
707,661 additional Units, Goldman will receive from 14,444 additional Units to
85,389 additional Units and the CERA Employees will receive an aggregate from
10,291 additional Units to 60,840 additional Units. Additionally, in connection
with the Merger and the Exchange, Brera will receive options to purchase an
aggregate of 33,444 Units and Jordan will receive options to purchase 11,132
Units. See "The Merger and the Exchange--Structure and Terms of the Merger and
the Exchange."
Dividend Policy. The Parent does not expect to declare or pay any
dividends or distributions in the foreseeable future, other than distributions
to holders of Units to pay their taxes, as required by the LLC Agreement. The
Parent's ability to declare and pay dividends or distributions is limited by the
ability of the Parent's subsidiaries to transfer funds to the Parent in the form
of cash, loans or advances. It is expected that MGI's and CERA's ability to
transfer funds to the Parent will be limited by certain covenants to be
contained in their respective loan agreements. The inability of MGI and CERA to
transfer funds to the Parent in the form of cash, loans or advances may prevent
the Parent from making the distributions required by the LLC Agreement.
Certain Federal Income Tax Risks. The Parent is expected to be treated
as a partnership for federal income tax purposes. As such, the Parent will not
be required to pay federal income taxes as an entity. Instead, each holder of
Units will be required to include its allocable share of the Parent's income or
loss (and certain items thereof) in the computation of the Unit holder's taxable
income (or loss) for federal income tax purposes. Accordingly, a Unit holder may
be required to pay tax on its allocable share of the Parent's taxable income for
a year without regard to whether or not such income was distributed to the Unit
holder. The LLC Agreement requires that the Parent make distributions, to the
extent of available
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cash, to Unit holders in order to pay their taxes. However, there can be no
assurance that the Parent will have sufficient available cash to make
distributions in the full amount of the Unit holders' tax liabilities. A Unit
holder's tax liability may exceed the cash distributed to it from the Parent in
a particular period, and a Unit holder may be required to satisfy such tax
liability from other sources. See "The Merger and the Exchange--Certain Federal
Income Tax Consequences."
RISKS RELATING TO MGI
Industry and Competitive Factors. MGI competes in the high-value-added
segment of the financial information services industry against both
well-established and smaller companies, some of which may have substantially
greater resources than MGI and offer a broader array of services. Currently,
MGI's primary competitors are MMS International, owned by McGraw-Hill, and
Technical Data Corporation, owned by Thomson Corporation and a strategic partner
of Dow Jones Markets, Inc. (formerly known as Dow Jones Telerate, Inc., "DJM").
MGI distributes almost all of its services through screens provided by DJM,
Bloomberg L.P. ("Bloomberg"), Bridge Information Systems, Inc. (formerly known
as Knight-Ridder Financial, Inc., "Bridge"), Reuters Limited ("Reuters"), ADP
Financial Information Services, Inc. ("ADP") and Kabushiki Kaisha Quick
("Quick") (collectively, the "Vendor Distribution Firms"). Ongoing access by MGI
to the Vendor Distribution Firms is critical to future performance.
Competition is based on various factors, including the breadth of
coverage, availability of both fundamental and technical analyses, the frequency
and number of intra-day updates, the range, quality, timeliness and accuracy of
information, the ability to filter, retrieve, manipulate and store information,
the level of fees charged, customer service, the success of marketing and sales
efforts and the subscribers' preference among the Vendor Distribution Firms.
Currently, there are relatively few barriers to entry by new on-line service
providers, although the lack of name recognition and access to the distribution
network provided by the Vendor Distribution Firms may make entering the business
more difficult for potential competitors. The Vendor Distribution Firms also
distribute numerous competing services, including their own or their affiliates'
proprietary services and the services offered by MGI's primary competitors.
Competition is expected to increase as technological advancements
improve the speed and reliability of delivery and retrieval of information
supplied over the Internet, which could emerge as an inexpensive distribution
alternative to the high-cost, proprietary networks offered by the Vendor
Distribution Firms. At present, the relatively slow rate of transmission of data
over the Internet, questions about the reliability of Internet service
providers' systems and concerns over the security and integrity of data
delivered over the Internet serve as technological impediments to the
effectiveness of the Internet as a distribution channel for services such as
those provided by MGI. If technological advancements enabling faster, more
reliable and secure delivery of digital data occur, the Internet could emerge as
a significant distribution channel for financial information, including
high-value-added services such as those provided by MGI. Because access to the
Internet is inexpensive and requires relatively inexpensive equipment and
software, such technological advancements could allow the Internet to emerge as
an alternative to the Vendor Distribution Firms and therefore reduce one of the
most significant entry barriers to start-up--i.e., access to the Vendor
Distribution Firms. While MGI is taking steps to respond to developments in
Internet- related technologies and industries, there can be no assurance that
increased competition resulting from the emergence of the Internet as an
effective, low-cost distribution channel would not have a material adverse
effect on MGI. See "Business of MGI--Competition."
Changes in Economic or Market Conditions. Changes in economic and
market conditions may adversely affect the demand for MGI's services and,
therefore, revenue and profitability. Virtually all of MGI's revenue is derived
from subscriptions, and the subscribers of MGI's services are primarily the
trading and sales desks of institutional participants in the global financial
markets. Consequently, a significant decrease in the volume of activity in the
global financial markets resulting from general
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economic factors or a decrease in the number of trading and sales desks in such
institutional participants could affect materially the level of demand for MGI's
services, which in turn could lead to termination of subscriptions representing
a material portion of MGI's revenues.
Termination Provisions of Subscription Agreements. Virtually all of
MGI's revenues are derived from subscription agreements with its customers.
Subscription agreements with U.S.-based customers are generally made directly
between those customers and MGI and may be either oral or written agreements.
Oral agreements with U.S.-based clients are generally terminable upon ninety
(90) days' notice without penalty. Written agreements, which represented
approximately 18.7% of MGI's U.S. revenues in 1996, typically have a one-year
term but are not subject to early termination.
Non-U.S.-based clients subscribe by means of service agreements entered
into with the Vendor Distribution Firms, pursuant to which a subscriber can
elect to subscribe for various optional services, including MGI's services. With
certain exceptions, such agreements are written and typically have one- or
two-year terms that renew automatically unless the subscriber provides 90 days'
prior notice of non-renewal.
Dependence on DJM. Historically, MGI provided its services, with
limited exceptions, exclusively through screens provided by DJM. In late 1993
MGI exercised its option under its contract with DJM to deliver its services on
a non-exclusive basis through other Vendor Distribution Firms. Following MGI's
exercise of its option under the DJM contract to distribute its services on a
non-exclusive basis, the royalty fee payable to DJM thereunder increased
substantially, which has required MGI to generate substantial incremental volume
in order to offset that increase. See "MGI Management's Discussion and Analysis
of Financial Condition and Results of Operation." MGI believes that its decision
to distribute MGI's services an a non-exclusive basis will continue to enable
MGI to generate such incremental volume, but there can be no assurance in this
regard.
The agreement with DJM also provides that in the event of a "change of
control" of either party, the other party has the right to terminate the
agreement upon at least 20 days' prior notice. A "change of control" is defined
in the agreement as a change in the possession of the ultimate power to,
directly or indirectly, direct or cause the direction of the management or the
policies of such party, whether through the ownership of voting securities, by
contract or otherwise. MGI does not believe that the Merger will constitute a
change of control of MGI. Termination of MGI's agreement with DJM would have a
material adverse impact on MGI's results of operations and financial condition.
Dependence on Technology. MGI depends on computer equipment and
software technology to provide its services to its customers. MGI must continue
to maintain and upgrade its equipment and software to remain competitive, adapt
to technological developments in the distribution and presentation of electronic
financial information and ensure the quality, delivery, timeliness and accuracy
of its services. Generally, MGI's economists and analysts in its various offices
prepare and transmit information and analyses over MGI's wide area network to
MGI's central computer processing and data storage center in New York (the "Data
Center"), which packages that information in specific presentation formats and
sends the final products to the Vendor Distribution Firms virtually
instantaneously, which is a critical factor in providing real-time financial
information. There can be no assurance that physical damage or other disruption
to the Data Center through fire, flood or other event outside the control of MGI
would not have a material adverse effect on MGI.
The Data Center runs on an operating system that uses, among other
software, certain source codes and proprietary software applications (the
"Licensed Software") originally developed by Key Information Systems, Inc.
("KIS") and licensed exclusively to MGI. MGI and KIS have entered into
agreements covering the provision of services relating to the Data Center and
the Licensed Software and certain option rights of MGI with respect to the
Licensed Software. The services agreement between MGI
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and KIS will expire on December 31, 1997, and, after such date, such agreement
may be terminated by either party upon 90 days' prior notice. MGI may replace
the operating system for its Data Center and develop or procure new software
applications to run on the new system. If MGI does not replace its existing
operating system and the service agreement between KIS and MGI were to be
terminated by KIS or KIS were not otherwise available to perform its duties
under the service agreement, MGI would be required to secure a replacement
vendor to perform such duties or acquire some other means of maintaining MGI's
Data Center. There can be no assurance that an adequate replacement vendor could
be timely located by MGI or that the termination of such service agreement would
not have a material adverse effect on MGI's business.
Retention of Key Personnel. MGI's ability to conduct and expand its
business is related to its ability to hire and retain the highly qualified
personnel needed to maintain and enhance the presentation, quality and breadth
of coverage of MGI's research services. MGI's key assets are the economists,
market analysts and technical analysts who are responsible for the compilation,
analysis and dissemination of MGI's financial information services on a daily,
real-time basis. A loss of key personnel, particularly the senior analysts and
managers responsible for MGI's major product lines, could have a material
adverse effect on MGI. See "Management--Employment Agreements."
Significant International Operations. MGI provides services to
institutional clients in 57 countries and derived a substantial portion of its
revenue in 1996 from the sale of its services in countries outside the United
States. International operations generally are subject to various risks that are
not present in domestic operations. Various foreign jurisdictions have laws and
regulations that regulate MGI's business, which are in addition to U.S. federal
and state regulation. Also, various foreign jurisdictions have laws limiting the
right and ability of foreign subsidiaries to pay dividends and remit earnings to
affiliated companies unless specified conditions are met. Further, sales in
foreign jurisdictions typically are made in local currencies, and transactions
with foreign affiliates customarily are accounted for in foreign currencies. To
the extent MGI does not take steps to mitigate the effect of changes in the
relative value of the U.S. dollar and these foreign currencies, MGI's results of
operations and financial condition (which are reported in U.S. dollars) could be
affected adversely by negative changes in these relative values. MGI does not
presently intend to take any steps to mitigate such effects of possible changes
in the relative value of the U.S. dollar and these foreign currencies.
Regulation. MGI's business is subject to regulation under various
federal and state laws and regulations, as well as the laws and regulations of
certain foreign jurisdictions where MGI or its subsidiaries have offices and/or
where its services are sold. MCM and its subsidiary, McCarthy, Crisanti &
Maffei, S.A. ("MCM S.A."), are both registered commodity trading advisers with
the Commodities Futures Trading Commission. In addition, MCM Asia Pacific Co.,
Ltd. ("MCM Asia Pacific") has recently been advised by the Monetary Authority of
Singapore that it will be required to register as a futures trading adviser and
investment adviser in Singapore. These laws and regulations are primarily
intended to benefit or protect MGI's clients and generally grant supervisory
agencies and bodies broad administrative powers, including the power to limit or
restrict MGI's ability to carry on its business if it fails to comply with such
laws and regulations. In such event, the possible sanctions that may be imposed
include suspension of individual employees, limitations on engaging in certain
types of business for specified periods of time, revocation of MCM's and MCM
S.A.'s commodity trading adviser and other registrations, censures and fines,
any of which could have a material adverse effect on MGI's business. MGI
believes that it is currently in substantial compliance with all applicable laws
and regulations, other than the requirement to register in Singapore (which MGI
is in the process of satisfying).
Risks Associated With New Product Development. MGI's future success
will depend in part on its ability to develop or acquire new products and
services that address specific industry and business organization sectors,
changes in client requirements and technological changes in the financial
markets. The process of internally researching, developing, launching and
gaining client acceptance of a new
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product or service, or assimilating and marketing an acquired product or
service, is inherently risky and costly. There can be no assurance that its
efforts to introduce new, or assimilate acquired, products or services, will be
successful.
RISKS RELATING TO CERA
Dependence on Renewals of Retainer-Based Research Services. CERA's
success depends in part upon renewals of subscriptions for its research
products. Approximately 50% and 53% of CERA's revenues for the years ended June
30, 1996 and 1997, respectively, were derived from CERA's subscription-based
research products. CERA has historically experienced high subscription renewal
rates for these products. However, there can be no assurance that CERA will be
able to sustain such high renewal rates. A significant portion of the growth of
CERA's consulting and advisory services in any given year has historically been
generated in the last quarter of the fiscal year. Accordingly, any deterioration
in CERA's ability to generate revenue growth might not be apparent until late in
CERA's fiscal year. A decline in renewal rates for CERA's research products or a
decline in demand for consulting and advisory services could have a material
adverse effect on CERA's business, financial condition, and results of
operations.
Dependence on Limited Number of Customers. CERA's revenues are
partially dependent on three customers who, in the aggregate, accounted for 28%
and 20% of its total revenues for the years ended June 30, 1996 and 1997,
respectively. An advisory agreement to provide services to one of such
customers, Goldman, is currently due to expire in October 1997. The loss of any
one or more of these customers, or the inability to replace these customers,
would materially and adversely affect the financial performance of CERA.
Potential Fluctuations in Operating Results. CERA's operating results
have fluctuated in the past and may fluctuate significantly in the future due to
various factors, including the level and timing of renewals of subscriptions to
CERA's services, the timing and amount of new business generated by CERA, the
timing of revenue-generating events sponsored by CERA, the mix of domestic
versus international business, the development, introduction and marketing of
new products and services, the hiring and training of research analysts and
sales personnel, the utilization of its advisory services, changes in the
spending patterns of CERA's target clients, CERA's accounts receivable
collection experience, changes in market demand for energy research and analysis
and competitive conditions in the energy industry. Due to these factors, CERA
believes period-to-period comparisons of results of operations are not
necessarily meaningful and should not be relied upon as an indication of future
results of operations.
Dependence on Key Personnel. CERA's ability to conduct and expand its
business is related to its ability to hire and retain the highly qualified
personnel needed to maintain and enhance the presentation, quality and breadth
of coverage of CERA's research and applications. CERA's key assets are the
product line research directors and research analysts who are responsible for
the compilation, analysis and dissemination of CERA's research and application
services. A loss of key personnel, particularly Daniel Yergin, CERA's founder
and President, James Rosenfield, a Managing Director and Head of Business
Development, Joseph Stanislaw, a Managing Director and Head of Global Research,
Philippe A. Michelon, Managing Director, Operations, and the research directors
for major product lines, could have a material adverse effect on CERA. In
connection with the Merger and the Exchange, Messrs. Yergin, Rosenfield and
Stanislaw will enter into new employment agreements with CERA. See
"Management--Employment Agreements."
Need to Attract and Retain Professional Staff. CERA's future success
will depend in large measure upon the continued contributions of its senior
management team, research analysts, and experienced sales and marketing
personnel. Accordingly, future operating results will be largely dependent upon
CERA's ability to retain the services of these individuals and to attract
additional qualified personnel from a limited pool of qualified candidates. CERA
experiences intense competition in hiring and retaining
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professional personnel from, among others, other research firms, management
consulting firms, and financial services companies. Many of these firms have
substantially greater financial resources than CERA to attract and compensate
qualified personnel. The loss of the services of key management and professional
personnel or the inability to attract such personnel could have a material
adverse effect on the CERA's business, financial condition, and results of
operations.
International Operations. Revenues attributable to customers outside
the United States represented approximately 30% and 33% of CERA's total revenues
for the years ended June 30, 1996 and 1997, respectively. CERA expects that
international revenues will continue to account for a substantial portion of
total revenues and intends to continue to expand its international operations.
Expansion into new geographic territories requires considerable management and
financial resources and may negatively impact CERA's near-term results of
operations. In addition, CERA's operating results are subject to the risks
inherent in international sales, including political and economic conditions in
various jurisdictions, tariffs and other barriers, longer accounts receivable
collection cycles, difficulties in protecting intellectual property rights in
international jurisdictions, changes in market demand as a result of exchange
rate fluctuations, difficulties in staffing and managing foreign sales
operations, and higher levels of taxation on foreign income than domestic
income. There can be no assurance that such factors will not have a material
adverse effect on CERA's business, financial condition, and results of
operations.
Cyclical Industry Customer Base. CERA's research products and services
target customers in the global energy market. CERA's ability to attract and
retain customers in this market is dependent on risks inherent in the global
energy market. A decline in energy price volatility could result in reduced
demand for CERA's products and services. Many of the end users of CERA's
products typically experience cyclical fluctuations in revenues and earnings.
Accordingly, there can be no assurance that CERA will not experience declining
revenues in the future.
Competition. CERA competes in the market for research products and
services with other independent providers of similar services. Some of CERA's
competitors have substantially greater financial, information-gathering, and
marketing resources than CERA. In addition, CERA's indirect competitors include
other information providers such as electronic and print publishing companies,
survey-based general market research firms, brokerage firms and general business
consulting firms. CERA's indirect competitors may choose to compete directly
against CERA in the future. In addition, there are relatively few barriers to
entry into CERA's market and new competitors could readily seek to compete
against CERA in one or more market segments addressed by CERA's products and
services. Increased competition could adversely affect CERA's operating results
through pricing pressure and loss of market share. There can be no assurance
that CERA will be able to continue to compete successfully against existing or
new competitors.
Management of Growth. Since inception, CERA has experienced substantial
changes in its operations as a result of the expansion and growth of CERA's
business, which have placed significant demands on CERA's management,
administrative, operational and financial resources. CERA's ability to manage
growth, should it continue to occur, will require CERA to continue to implement
and improve its operational, financial and management information systems and to
motivate and effectively manage an evolving workforce. If CERA's management is
unable to effectively manage a changing and growing business, the quality of
CERA's products, its ability to retain key personnel and its results of
operations could be materially adversely affected.
Management of Planned Expansion. Any significant expansion by CERA is
expected to place a strain on CERA's financial, operational and managerial
resources. To manage its expansion, CERA must continue to implement and improve
its operations and financial systems and to increase, train and manage its
personnel. There can be no assurance that CERA's systems, procedures or controls
currently in place will
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be adequate to support CERA's operations or that CERA will be able to implement
additional systems successfully and in a timely manner if required. If CERA
continues to grow, it will be required to expand its research staff, expand its
sales and marketing force, recruit additional key management personnel, improve
its operational and financial systems and train, motivate and manage additional
employees. There can be no assurance that CERA will be able to manage these
changes successfully. Any inability of CERA to manage its growth successfully
could have a material adverse effect on CERA's business, financial condition and
results of operations.
Risks Associated With New Product Development. CERA's future success
will depend in part on its ability to develop or acquire new products and
services that address specific industry and business organization sectors,
changes in client requirements and technological changes in the energy industry.
The process of internally researching, developing, launching and gaining client
acceptance of a new product or service, or assimilating and marketing an
acquired product or service, is inherently risky and costly. There can be no
assurance that its efforts to introduce new, or assimilate acquired, products or
services, will be successful.
Risk of Product Pricing Limiting Potential Market. CERA's pricing
strategy may limit the potential market for CERA's subscription-based services
to substantial commercial and governmental users of its research products. As a
result, CERA may be required to reduce prices for its subscription-based
services or to introduce new products with lower prices in order to expand its
market share. These actions could have a material adverse effect on CERA's
business and results of operations.
Uncertainties Relating to Proprietary Rights. CERA's success and
ability to compete is dependent in part upon its proprietary information and
technology. CERA relies on a combination of copyright, trademark and trade
secret laws, employee and third-party nondisclosure agreements and contractual
provisions and other methods to protect its proprietary information and
technology. There can be no assurance that the measures taken by CERA to protect
its proprietary information and technology will be adequate to prevent
misappropriation or that others will not develop independently similar
proprietary information or technology. Furthermore, there can be no assurance
that competitors will not develop similar or superior proprietary information or
technologies.
CERA licenses certain content from third parties. There can be no
assurance CERA will not be involved in expensive and time consuming litigation
with respect to claims based on the third-party content that it distributes. Any
such litigation, whether or not resulting in a ruling requiring the payment of
damages, could have a material adverse effect on CERA's business, financial
condition and results of operations.
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THE MERGER AND THE EXCHANGE
The following description summarizes certain information pertaining to
the Merger and the Exchange. This description does not purport to be complete
and is qualified in its entirety by reference to the Merger Agreement, a copy of
which is set forth as Annex A to this Information Statement/Prospectus and is
incorporated herein by reference. All holders of MGI Common Stock, the CERA
Stockholders, Goldman, Brera and Jordan are urged to read Annex A in its
entirety.
GENERAL
This Information Statement/Prospectus serves as a Prospectus of the
Parent with respect to the Units to be issued pursuant to the proposed Merger
and the Exchange and the other transactions contemplated by the Merger
Agreement, including the Units to be issued to the holders of MGI Common Stock
in the Merger, the Units to be issued to the CERA Stockholders in the CERA
Exchange, the Units to be issued to Goldman in the Goldman Exchange, the
issuance of CERA Contingent Units, the issuance of Goldman Contingent Units, and
the Units to be issued upon exercise of Contingent Options, the Brera Options
and the Jordan Options, which Prospectus is part of a Registration Statement on
Form S-4 filed by the Parent with the Commission under the Securities Act.
The Merger Agreement provides that Sub, a wholly owned subsidiary of
the Parent, shall merge with and into MGI. MGI shall be the surviving
corporation of the Merger and as a result shall become a wholly owned subsidiary
of the Parent. Following the Merger, MGI shall continue to be governed by the
laws of the State of Delaware. At the time the Merger becomes effective, each
share of MGI Common Stock (excluding treasury shares and shares held by
stockholders who perfect their dissenters' rights) shall cease to be outstanding
and shall be converted into the right to receive Units, as provided in the
Merger Agreement.
On the day immediately preceding the Closing Date, MCM intends to make
the CERA Distribution Loan to CERA, and CERA will apply a portion of the
proceeds from such loan, together with CERA's available cash, to the extent
necessary, to make the CERA Cash Distribution, which will consist of, a
distribution to the CERA Stockholders in an aggregate amount equal to
$21,510,000 and the purchase of a portion of the limited partnership interest of
CERA LP held by Goldman for a purchase price of $2,390,000.
The Merger Agreement also provides that the CERA Stockholders will
exchange the shares of CERA Common Stock owned by them for Units, the right to
receive the CERA Contingent Units and Contingent Options to purchase Units, and
that Goldman will exchange the remaining limited partnership interest in CERA LP
owned by it after the CERA Cash Distribution for Units, the right to receive the
Goldman Contingent Units and a Contingent Option to purchase Units. As a result,
CERA will become a wholly owned subsidiary of the Parent. Following the
Exchange, CERA shall continue to be governed by the laws of the Commonwealth of
Massachusetts. Immediately upon completion of the Goldman Exchange, the Parent
will transfer or cause to be transferred to CERA the limited partnership
interest in CERA LP acquired from Goldman in the Goldman Exchange. Upon such
transfer, CERA will become the sole partner of CERA LP and CERA LP will be
dissolved by operation of law.
The Merger Agreement also provides that promptly after the Closing
Date, the Parent will sell to CERA, and CERA will grant to the CERA Employees,
pursuant to the CERA Unit Grant Plan, Units and rights to receive the CERA
Employee Contingent Units. CERA will also grant options to purchase an aggregate
of 231,500 Units to certain employees of and consultants to CERA, pursuant to
the CERA Option Plan. In addition, each Existing MGI Option shall automatically
be converted into an equivalent option to purchase Units. MGI will also grant
the Brera Options to Brera, and CERA will grant the Jordan Options to Jordan.
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If all conditions to the obligations of the parties to consummate the
Merger and the Exchange are either satisfied or waived (as permitted), the
Merger will be consummated. A copy of the Merger Agreement is set forth as Annex
A of this Information Statement/Prospectus.
BACKGROUND OF THE MERGER AND THE EXCHANGE
Discussions between CERA and MGI were initiated by their respective
financial advisors during November 1996. Several discussions and meetings
occurred thereafter, which led to a meeting between the management of MGI and
CERA. In February 1997, CERA's management, including Daniel Yergin, and
representatives of CERA's financial advisor, Wm. Sword & Co. ("Sword"), met with
MGI's management and advisors, including Alberto Cribiore, in Cambridge,
Massachusetts and in New York, New York, to discuss business philosophies and
strategies and the companies' respective business plans.
Thereafter, several meetings took place between various representatives
of both companies, Goldman Sachs and Sword in New York City, Boston and
Cambridge. In early March, while meeting in New York with representatives of
Goldman Sachs and Sword, the parties agreed upon a combination of the companies.
Other key terms of the transaction were agreed upon at subsequent meetings and
discussions. At a meeting of the Board of Directors of CERA held on April 8,
1997, Sword reviewed the status of negotiations with MGI.
Following preliminary meetings with certain Board members of MGI, a
definitive plan of merger and exchange agreement was prepared and negotiated
beginning in May 1997. The Board of Directors of MGI and CERA each met on July
30, 1997 to approve the transaction and the plan of merger and exchange
agreement. The definitive Merger Agreement, dated as of August 1, 1997, was
signed by the parties shortly thereafter.
REASONS FOR THE MERGER AND THE EXCHANGE
The MGI Board of Directors, after consideration of relevant business,
financial, legal and market factors, including the compatibility of the
operations and management of MGI and CERA, and the financial condition, results
of operations and future prospects of MGI and CERA, has concluded that the
Merger and the Exchange is in the best interests of MGI and its stockholders.
The MGI Board believes the Merger and the Exchange will position MGI to
capitalize on the latest technology distribution and delivery channels, serve
new markets and develop new products.
CERA and MGI are each providers of specialized information. Management
of CERA believes that the Merger and the Exchange will benefit CERA in several
respects. First, each company has been successful in delivering critical
information to the industries and markets which it primarily serves. Many of the
markets and industries in which MGI has focused are different than the markets
and industries served by CERA, while other markets complement the markets served
by CERA and will provide CERA with a greater market presence. Second, management
of CERA believes that the combined management of the two companies will be
stronger and better able to manage the combined company in the changing
marketplaces served by the companies. In addition, CERA management believes that
the Merger and the Exchange will enable CERA to meet the expanding needs of its
existing clients by bringing together CERA's expertise in the energy business
with MGI's knowledge of the economic and financial markets. Also, CERA
management believes that the combined company will be financially stronger than
either of the two separate companies and better able to raise additional capital
as needed to expand their businesses and pursue development of new products and
services.
The MGI Board of Directors and the management of CERA believe that an
important trend in response to the changing marketplace served by the companies
is consolidation among various groups
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to create a critical mass necessary to compete with larger information
providers. The MGI Board of Directors and CERA management believe that the
Merger and the Exchange, and the other transactions contemplated by the Merger
Agreement, will better position the combined company to be competitive in such
an environment.
The Board of Directors and the majority stockholder of MGI have
approved the Merger Agreement, and the Board of Directors believes the Merger
and the Exchange and the consummation of the other transactions contemplated by
the Merger Agreement are in the best interest of MGI and its stockholders. C&D
Fund IV, which holds 287,038 shares of MGI Common Stock, or approximately 82% of
the outstanding shares of MGI, has voted all of such shares in favor of the
Merger, thereby providing the requisite approval therefor.
STRUCTURE AND TERMS OF THE MERGER AND THE EXCHANGE
Pursuant to the Merger Agreement, among other things, (a) Sub will be
merged with and into MGI, which will be the surviving corporation, and MGI will
become a wholly owned subsidiary of the Parent, (b) the CERA Stockholders will
exchange all of their shares of CERA Common Stock for Units, the right to
receive additional Units upon the attainment of certain revenue growth rates by
CERA and Contingent Options to purchase additional Units upon the attainment of
certain revenue growth rates by CERA, and (c) Goldman will exchange the portion
of the limited partnership interest in CERA LP owned by it after the CERA Cash
Distribution for Units, the right to receive additional Units upon the
attainment of certain revenue growth rates by CERA and a Contingent Option to
purchase additional Units upon the attainment of certain revenue growth rates by
CERA. See Annex A, "The Limited Liability Company Agreement" and Annex B.
Upon consummation of the Merger, the CERA Exchange and the Goldman
Exchange,
(a) each outstanding share of MGI Common Stock (excluding
treasury shares and shares held by stockholders who perfect their
dissenters' rights) shall cease to be outstanding and shall be
converted into and exchanged for the right to receive 9.55555 Units,
(b) the CERA Stockholders shall exchange each outstanding
share of CERA Common Stock owned by them for (i) 5.17956 Units, (ii) a
right to receive from 0.49875 up to 2.94851 CERA Contingent Units,
(iii) a Contingent Option to purchase 0.37028 Units at a per Unit
exercise price equal to $34.53, and
(c) Goldman shall exchange its limited partnership interest in
CERA LP after the CERA Cash Distribution for (i) 150,000 Units, (ii) a
right to receive from 14,444 to 85,389 Goldman Contingent Units, and
(iii) a Contingent Option to purchase 9,874 Units at a per Unit
exercise price equal to $34.53.
Immediately after the consummation of the Merger, the CERA Exchange and the
Goldman Exchange, a total of 4,731,835 Units will be outstanding.
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<PAGE> 28
The Contingent Units shall be issued if, and only if, CERA achieves a
compound annual growth rate of revenue (excluding certain types of revenue) from
its current businesses (the "CERA CAGR") of at least 16% during the three-year
period ending June 30, 2000 or, if (A) an acquisition of 50% or more of the
voting power of the Parent's or CERA's outstanding voting equity interests, a
merger, consolidation or similar combination in which 50% or more of the
Parent's or CERA's outstanding voting equity interests are acquired, or a sale
of all or substantially all of the assets of the Parent or CERA, in each case
other than by or to persons or entities who were owners of the Parent's or
CERA's equity interests, or affiliates of such owners, prior to such transaction
(each, a "Sale of the Parent or CERA"), (B) a distribution to holders of Units
of all of the capital stock of CERA, or (C) an underwritten public offering of
equity securities of the Parent or CERA (each, a "Termination Event") shall have
occurred prior to June 30, 2000, during the period from June 30, 1997 to shortly
before the closing of such Termination Event. In the event that the CERA CAGR
for the applicable period shall be
(A) less than 16%, then the right to receive Contingent Units shall
terminate and no Contingent Units shall be issued,
(B) at least 16%, then the holders of rights to receive the CERA
Contingent Units, Goldman and the holders of rights to receive the CERA Employee
Contingent Units shall receive an aggregate of 119,204 Units, 14,444 Units and
10,291 Units, respectively,
(C) at least 20%, then the holders of rights to receive the CERA
Contingent Units, Goldman and the holders of rights to receive the CERA Employee
Contingent Units shall receive an aggregate of 707,661 Units, 85,389 Units and
60,840 Units, respectively, or
(D) between 16% and 20%, then the holders of rights to receive CERA
Contingent Units, Goldman and the holders of rights to receive the CERA Employee
Contingent Units shall receive a pro rata portion of the number of Units such
holders would have received had the CERA CAGR been 20%;
provided, that if a Termination Event occurs prior to June 30, 2000 that is (x)
a Sale of the Parent or CERA, in which the aggregate value of the consideration
paid for the equity interests in the Parent or CERA, as the case may be, is at
least $225,000,000 in the case of the Parent, or at least $90,000,000 in the
case of CERA, (y) a distribution to holders of Units of all of the capital stock
of CERA, in which the aggregate value of the capital stock of CERA at the time
of such distribution is at least $90,000,000 (an event described in clause (x)
above or this clause (y), a "Qualifying Sale"), or (z) an underwritten public
offering of equity securities of the Parent or CERA, then the CERA CAGR shall be
deemed to be 20%.
The CERA CAGR will be based on revenues from the businesses engaged in
by CERA on the date of the Merger Agreement (but excluding all revenues from the
advisory agreement with Goldman or any other agreement which (i) imposes an
exclusivity obligation on CERA or (ii) provides for compensation of CERA in the
form of contingent transaction fees), determined in accordance with generally
accepted accounting principles. See Annex A.
If a CERA Employee's employment with CERA is terminated, such CERA
Employee's right to receive CERA Employee Contingent Units shall also terminate
and, under certain circumstances, such CERA Employee may be entitled to receive
a cash payment in lieu of receiving such Units.
Contingent Options shall become exercisable if, and only if, (i) CERA
achieves a CERA CAGR of at least 20% during the three-year period ending June
30, 2000, and (ii) no Termination Event shall have occurred prior to June 30,
2000. Contingent Options shall remain exercisable for five years after the date
such options became exercisable. If a Termination Event occurs prior to June 30,
2000, Contingent Options shall not be exercisable for any Units and all
Contingent Options shall terminate as of the date of the closing of such
Termination Event.
The rights to receive Contingent Units and the Contingent Options to be
issued to the CERA Stockholders and the CERA Employees shall be transferable
only (i) by will or the laws of descent or distribution upon the death of a CERA
Stockholder or CERA Employee who is a natural person, (ii) in the case of a CERA
Employee of a CERA Stockholder who is a natural person, to a trust the only
actual beneficiaries under which are such CERA Employee or CERA Stockholder
and/or one or more of such CERA Employee's or CERA Stockholder's brothers and
sisters (whether by whole or half blood), spouse, ancestors and lineal
descendants and (iii) in the case of a CERA Stockholder that is a trust, to the
beneficiaries of such trust). The right to receive Contingent Units and the
Contingent Option to be issued to Goldman shall not be transferable.
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Promptly after the Closing Date, the Parent will sell to CERA, for a
purchase price per Unit equal to the value of a Unit on the Closing Date (as
defined herein) as determined pursuant to the Merger Agreement, and CERA will
grant to the CERA Employees, pursuant to the CERA Unit Grant Plan, (i) an
aggregate of 106,875 Units and (ii) rights to receive an aggregate of from
10,291 to 60,840 CERA Employee Contingent Units. After the grant of such 106,875
Units to the CERA Employees, it is currently anticipated that a total of
4,838,710 Units will be outstanding.
After consummation of the Merger and the Exchange and the issuance of
Units to the CERA Employees, and assuming the exercise of all Contingent Options
and the receipt of all CERA Contingent Units, all Goldman Contingent Units and
all CERA Employee Contingent Units, it is currently anticipated that a total of
5,791,344 Units will be outstanding.
Promptly after the Closing Date, CERA will also grant options to
purchase an aggregate of 231,500 Units, at an exercise price of $18.31 per Unit,
to certain employees of and consultants to CERA pursuant to the CERA Option
Plan. In addition, each outstanding Existing MGI Option shall automatically be
converted into an equivalent option to purchase 9.55555 Units from MGI at an
exercise price of either $10.47 per Unit or $15.03 per Unit. As a result,
Existing MGI Options to purchase an aggregate of 867,912 Units will be
outstanding after such conversion.
The number of Units to be issued in connection with the Merger and the
Exchange and the other transactions contemplated by the Merger Agreement may be
adjusted so that the per Unit value as of the Closing Date will be equal to ten
dollars.
CERA will also pay to the CERA Employees, within thirty days after the
due date for filing the U.S. federal income tax return of CERA for each taxable
year ending after the Closing Date during which any deduction with respect to
the distribution of Units to such employees pursuant to the CERA Unit Grant Plan
is actually utilized by CERA for U.S. federal income tax purposes, an aggregate
amount equal to the amount of any such deduction so utilized by CERA during such
taxable year multiplied by the highest corporate tax rate applicable for federal
income tax purposes for such taxable year.
EFFECTIVE TIME
If all required consents and approvals are obtained, and the other
conditions to the obligations of the parties to consummate the Merger and the
Exchange are either satisfied or waived (as permitted), the Merger will be
consummated and will become effective on the date and at the time that a
Certificate of Merger, reflecting the Merger, is filed with the Secretary of
State of the State of Delaware, the CERA Exchange will be consummated and will
become effective on the date and at the time that the CERA Stockholders exchange
their shares of CERA Common Stock and the Goldman Exchange will be consummated
and will become effective on the date and at the time that Goldman exchanges its
limited partnership interest in CERA LP. See "The Merger and the
Exchange--Conditions to Obligations of the Parties."
PROCEDURE FOR EXCHANGE OF CERTIFICATES
The Merger Agreement provides that, after the Effective Time, each
holder of an MGI Stock Certificate or MGI Stock Certificates who surrenders such
certificate or certificates, together with a completed and signed MGI Holder
Information Form (a copy of which has been enclosed with this Information
Statement/Prospectus), to the Exchange Agent will be entitled to receive a Unit
Certificate or Unit Certificates represented the Units into which such holder's
shares of MGI Common Stock shall have been converted in the Merger. The Parent
currently intends to appoint MGI as the Exchange Agent. Substantially all of the
MGI Stock Certificates currently are held by the MGI Bailee pursuant to the MGI
Bailment Agreement. Each holder of share of MGI Common Stock who wants to MGI
Bailee to surrender
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such holder's MGI Stock Certificates to the Exchange Agent on such holder's
behalf must complete, execute and deliver to the MGI Bailee a Holder Information
Form and a Letter of Instruction (a copy of which has been enclosed with this
Information Statement/Prospectus), which will authorize the MGI Bailee to so
surrender the applicable MGI Stock Certificates. Promptly after the receipt of
such documents, the MGI Bailee will deliver the applicable MGI Stock
Certificates and Holder Information Forms to the Exchange Agent.
If any issuance of Units in exchange for shares of MGI Common Stock is
to be made to a person or entity other than the MGI stockholder in whose name
such shares of MGI Common Stock are registered at the Effective Time, it will be
a condition to such exchange that the applicable MGI Stock Certificate
surrendered to the Exchange Agent be properly endorsed or accompanied by an
appropriate instrument of transfer and that the MGI stockholder requesting such
issuance either pay any transfer or other tax required or establish to the
satisfaction of the Parent that such tax has been paid or is not payable.
Pursuant to the LLC Agreement, all of the Unit Certificates will be
required to be held by the Unit Bailee under the Unit Bailment Agreement.
Accordingly, the Unit Certificates to be issued in the name of those former
holders of MGI Common Stock whose MGI Stock Certificates, together with
completed and signed Holder Information Forms, shall have been surrendered to
the Exchange Agent shall be delivered to the Unit Bailee in accordance with the
Unit Bailment Agreement. The Unit Bailee will hold such Unit Certificates for
safekeeping in a safe deposit box at a financial institution chosen by the Unit
Bailee, and each such former holder of MGI Common Stock will receive a receipt
from the Unit Bailee for the applicable Unit Certificate and a photocopy of such
Certificate. See "The Limited Liability Company Agreement--The Units--Bailment
Agreement."
After the Effective Time, there will be no further transfers of MGI
Common Stock on the stock transfer books of MGI. If an MGI Stock Certificate is
presented for transfer, it will be cancelled and, subject to the receipt of a
completed and signed MGI Holder Information Form and any other required
documentation, a Unit Certificate representing the appropriate number of Units
will be issued in exchange therefor. After the Effective Time and until
surrendered to the Exchange Agent, MGI Stock Certificates will be deemed for all
purposes, other than the payment of distributions, to evidence ownership of the
number of full Units into which the shares of the MGI Common Stock formerly
represented thereby were converted at the Effective Time. No distributions, if
any, payable to holders of Units will be paid to the holders of MGI Stock
Certificates until such certificates are surrendered. Upon surrender of each
such MGI Stock Certificate, all distributions that, after the Effective Time,
shall have become payable with respect to the applicable Units will be paid to
the holder of the Units issued in exchange for such MGI Stock Certificate,
without interest.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain federal income tax
consequences of the Merger and the Exchange. This discussion is based on the
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the
Treasury Regulations thereunder and rulings and court decisions as of the date
hereof, all of which are subject to change, possibly retroactively. MGI, CERA
and the Parent have not requested a ruling from the Internal Revenue Service
("IRS") or a tax opinion from legal counsel in connection with the proposed
transactions.
No attempt has been made in the following discussion to address all
federal income tax matters that may affect the receipt or retention of Units,
nor does the discussion address the effect of any applicable state, local, or
foreign tax laws. Accordingly, each prospective Unit holder should consult with,
and should rely upon, the Unit holder's own tax advisor in analyzing the
federal, state, local and foreign tax consequences of the receipt, ownership and
disposition of Units.
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Tax Consequences of the Merger and the Exchange. Each of (i) the
exchange of MGI Common Stock for Units in the Merger, (ii) the exchange of CERA
Common Stock for Units in the Exchange and (iii) the exchange of interests in
CERA LP for Units in the Goldman Exchange will be treated for federal income tax
purposes as a contribution of the surrendered security to a partnership in
exchange for an interest in the partnership. As such, no gain or loss will
recognized by the exchanging party. The exchanging party will have a basis in
its Units equal to the basis such party had in the surrendered security and will
have a holding period for the Units equal to the holding period that it had for
the surrendered security provided that the surrendered security was held as a
capital asset prior to the Merger or the Exchange, as applicable.
Classification of the Parent. The Parent intends to be treated as a
partnership rather than as a corporation for federal income tax purposes. As
such, the Parent will not be a taxable entity and will incur no federal income
tax liability. Instead, each Unit holder will be required to take into account
such holder's allocable share of the Parent's items of income, gain, loss,
deduction and credit in computing the Unit holder's federal income tax
liability, regardless of the amount of cash distributions received by the Unit
holder from the Parent.
If the Parent were determined at any time to be a "publicly traded
partnership" within the meaning of Section 7704 of the Code, the Parent would be
taxable as a corporation. As a result, the income, gain, loss, deductions and
credits of the Parent would be reflected only on its tax return and would not be
passed through to the Unit holders. If the Parent had positive taxable income
for any period, it would be required to pay tax on such income at applicable
corporate rates. The imposition of such tax would reduce the amount of
distributions that would ultimately be made to the Unit holders. In addition,
the amount of any distributions to the Unit holders would be taxable to them as
ordinary dividend income to the extent of the Parent's current or accumulated
earnings and profits, regardless of the source from which they were generated.
Distributions in excess of the Parent's current or accumulated earnings and
profits would be treated as a nontaxable return of capital to the extent of the
Unit holder's basis in its Units and thereafter as gain from the sale of such
Unit holder's Units. The LLC Agreement contains limitations on transfer and
other matters with respect to the Units that are intended to prevent the
treatment of the Parent as a "publicly traded partnership." Although it is not
expected that the Parent will be considered to be a "publicly traded
partnership," because determination of such status will depend in large part
upon facts existing in the future, there can be no assurances that such
characterization will not occur.
Income from Holding of Units. Because the Parent will treated as a
partnership for federal income tax purposes, the character of the income of the
Parent allocable to the Unit holders (e.g., ordinary income, capital gains,
dividends, etc.) will be determined as if such income were realized directly by
the Unit holders. Since the activities of the Parent are expected to be limited
to the holding of shares of CERA and MGI, the only type of income that the
Parent may realize other than with respect to the sale or other disposition of
shares of CERA and/or MGI will be dividend income from actual or constructive
dividend distributions from CERA and/or MGI. It is not currently contemplated
that significant amounts of any such distributions will be made by either
corporation. Income or gain recognized by the Parent upon the sale or other
disposition of shares of CERA or MGI is expected to be capital gain.
Generally, cash distributions from a partnership are not taxable to the
recipient partner except to the extent that they exceed the partner's tax basis
in his interest in the partnership. See "--Disposition of Units" below, for a
discussion of the a Unit holder's tax basis in Units. Cash distributions in
excess of a partner's tax basis in its partnership interest are treated as gain
realized from the sale or other taxable disposition of the partnership interest.
See "--Disposition of Units," below. Distributions of assets in kind to a
partner from a partnership generally are not taxable to either the partnership
or the recipient partner. Nevertheless, under applicable sections of the Code,
if a partner contributes appreciated property to a partnership and, within 7
years of the date of the contribution, the partnership either (i) distributes
the
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contributed property to one or more other partners or (ii) distributes other
property to the contributing partner, all or a portion of any appreciation in
the contributed property determined as of the time of its contribution may be
required to be recognized as taxable gain to the contributing partner at the
time of the distribution. Such Code sections could be applicable to in-kind
distributions by the Parent as a result of the contribution of the CERA Common
Stock, the MGI Common Stock or Goldman's interest in CERA LP.
Disposition of Units. Gain or loss will be recognized by a Unit holder
upon the sale or other taxable disposition of a Unit equal to the difference
between the amount realized and the Unit holder's tax basis in the Unit. Such
gain or loss will generally be capital gain or loss except to the extent
attributable to the Unit holder's allocable share of any "unrealized
receivables" or "inventory" held by the Parent at the time of the disposition.
The Parent does not expect that it will hold any "unrealized receivables" or
"inventory." Capital gain or loss recognized by a Unit holder upon the sale or
other disposition of its Units will be long-term gain or loss if the Unit was
held for more than 18 months and will be subject to a maximum tax rate of 28% if
the Unit was held for more than one year. A reduced maximum tax rate on capital
gain will apply to an individual Unit holder if such holder's holding period for
the Units is more than eighteen months at the time of disposition.
A Unit holder's basis in its Units will generally be equal to the tax
basis the Unit holder had in the securities that were exchanged for Units
pursuant to the Merger or the Exchange increased by the amount of any
contributions made by the Unit holder to the Parent and by the Unit holder's
allocable share of any income of the Parent and decreased by the amount of any
distributions received by the Unit holder from the Parent and by the Unit
holder's allocable share of any losses of the Parent. A Unit holder's tax basis
may also be affected by the amount of any liabilities of the Parent. However,
since it is not expected that the Parent will incur any substantial amount of
liabilities, no adjustments to the bases of the Unit holders in their Units
attributable to liabilities is expected.
MANAGEMENT AND OPERATIONS AFTER THE MERGER AND THE EXCHANGE
After the Merger and the Exchange, MGI and CERA will each be wholly
owned subsidiaries of the Parent and will continue to be operated on a
stand-alone basis. MGI shall continue to be governed by the laws of the State of
Delaware. As part of the Merger, MGI's existing Certificate of Incorporation
will be amended in its entirety to read as set forth in Exhibit G to the Merger
Agreement. Following the Merger, MGI shall operate in accordance with the
By-laws of Sub as in effect immediately prior to the Effective Time, except that
certain amendments thereto will be effected in connection with the Merger and
the Exchange. CERA shall continue to be governed by the laws of the Commonwealth
of Massachusetts and shall operate in accordance with its Articles of
Organization and By-laws as in effect on the date of the Merger Agreement until
otherwise amended or repealed after the Effective Time, except that certain
amendments thereto will be effected in connection with the Merger and the
Exchange.
In connection with the Merger and the Exchange, Messrs. Cribiore,
McMahon, Gogel, Nixon, Yergin and Stanislaw and up to seven additional directors
will be named to the Board of Directors of the Parent at the time of or shortly
after the consummation of the Merger and the Exchange. In addition, Messrs.
Cribiore and Yergin will be appointed Chairman and Vice-Chairman, respectively,
of the Board of Directors of the Parent. The LLC Agreement provides for an
executive committee of the Board of Directors of the Parent which, during the
intervals between meetings of the Board, generally will have the powers and
authority of the Board in the management of the Parent. Upon consummation of the
Merger and the Exchange, such executive committee shall be composed of Messrs.
Cribiore, Yergin, Nixon and such other directors as may be designated by the
Board. The persons named as directors of the Parent will also be required to be
named as the directors of CERA and MGI. See "Management."
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INTERESTS OF CERTAIN PERSONS IN THE MERGER AND THE EXCHANGE
Certain directors of MGI or CERA have interests in the Merger and the
Exchange that present them with potential conflicts of interest. In connection
with the Merger and the Exchange, Messrs. Cribiore, McMahon, Gogel, Nixon,
Yergin, and Stanislaw will be named as directors of the Parent. In addition, Mr.
Nixon will continue to be the President and Chief Executive Officer of MGI.
Additionally, Brera, of which Mr. Cribiore is Managing Principal and Mr. McMahon
is a principal, will receive the Brera Options. Pursuant to the Cribiore
Services Agreement, Brera has agreed to provide the services of Mr. Cribiore to
assist CD&R in providing managerial and financial consulting services under the
Consulting Agreement. Brera may make other Brera employees, including Mr.
McMahon, available to assist Mr. Cribiore in providing such services. Messrs.
Yergin, Rosenfield and Stanislaw (and affiliated trusts) will each receive
Units, a right to receive CERA Contingent Units, Contingent Options, and a pro
rata portion of the CERA Cash Distribution, and will enter into new employment
agreements with CERA. In addition, Jordan, a former director of CERA, will
receive the Jordan Options. Goldman Sachs, an affiliate of Goldman, will receive
approximately $ from MGI for services rendered in respect of the
transactions contemplated by the Merger Agreement. See "Management--Certain
Relationships and Related Transactions."
As of the date of the Merger Agreement, MGI's directors, executive
officers, certain entities affiliated with MGI's directors and executive
officers and C&D Fund IV in the aggregate held, directly or indirectly, 306,438
shares of MGI Common Stock or approximately 88% of the shares of MGI Common
Stock outstanding as of such date, and CERA's directors, executive officers,
certain entities affiliated with CERA's directors and executive officers in the
aggregate held, directly or indirectly, 235,850 shares of CERA Common Stock or
approximately 98% of the shares of CERA Common Stock outstanding as of such
date.
CONDITIONS TO OBLIGATIONS OF THE PARTIES
Conditions to the Obligations of MGI, the CERA Stockholders, Goldman,
the Parent and Sub. The respective obligations of MGI, the CERA Stockholders,
Goldman, the Parent and Sub to consummate the Merger and the Exchange is subject
to the satisfaction or waiver of the following conditions at or prior to the
Closing Date: (i) the waiting period applicable to the consummation of the
Merger and the Exchange under the HSR Act has expired or been terminated, (ii)
all consents, approvals, authorizations, waivers, permits, licenses, grants,
exemptions or orders of, or registrations, declarations or filings with, any
nation or government, any state or other political subdivision thereof (a
"Consent"), including, without limitation, any governmental agency, department,
commission or instrumentality of the United States, any state of the United
States or any political subdivision thereof, or any stock exchange or
self-regulatory agency or authority (a "Governmental Authority"), required to be
made or obtained by any party to the Merger Agreement or any of their respective
Affiliates (as defined in the Merger Agreement) in connection with the execution
and delivery of the Merger Agreement or the consummation of the transactions
contemplated by the Merger Agreement have been made or obtained, other than, in
the case of any such consent solely in connection with the CERA Roll-up, where
the failure to make or obtain any such consent would not have and would not
reasonably be expected to have a materially adverse effect on the business,
financial condition, results of operations or properties of CERA and CERA LP,
taken as a whole (a "CERA Material Adverse Effect"), (iii) consummation of the
transactions contemplated by the Merger Agreement has not been restrained,
enjoined or otherwise prohibited by all applicable provisions of (x) any
statute, law, rule, administrative code, regulation or ordinance of any
Governmental Authority, (y) any Consent of, with or to any Governmental
Authority and (z) any outstanding order, judgment, injunction, award, decree or
writ (each, an "Order") of any Governmental Authority (collectively, "Applicable
Law") (except, in the case of any such prohibition solely because of the CERA
Roll-up, for any such prohibition that would not, and would not reasonably be
expected to, have a CERA Material Adverse Effect), no action, proceeding brought
by any Governmental Authority is pending on the Closing Date before any court or
other Governmental Authority to restrain, enjoin or otherwise prevent the
consummation of the transactions contemplated by the Merger Agreement, no court
or
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other Governmental Authority has determined any Applicable Law making illegal
the consummation of the transactions contemplated by the Merger Agreement to be
applicable to the Merger Agreement and no proceeding brought by any Governmental
Authority with respect to the application of any such Applicable Law is pending,
(iv) the Registration Statement, of which this Information Statement/Prospectus
is a part, has been declared effective, no stop order suspending the
effectiveness of such Registration Statement has been entered and no proceedings
for that purpose will have been initiated by the Commission, (v) the CERA
Distribution Loan and the CERA Cash Distribution has been made, and (vi) the LLC
Agreement, substantially in the form of Exhibit I to the Merger Agreement, has
been executed and delivered.
Additional Conditions to the Obligations of MGI and the Parent. In
addition, the obligations of MGI, the Parent and Sub to consummate the Merger
and the Exchange are also subject to the satisfaction or waiver of the following
conditions at or prior to the Closing Date: (i) the representations and
warranties set forth in Sections 2.1, 2.2 and 2.3 of the Merger Agreement (A)
are true and correct at and as of the date of the Merger Agreement, provided
that if any such representation or warranty shall not have been true and correct
at and as of the date of the Merger Agreement, the CERA Stockholders and
Goldman, upon written notice to MGI delivered not later than three business days
prior to the scheduled Closing Date, shall have until thirty days after the date
on which the closing of the transactions contemplated by the Merger Agreement
would otherwise have been required to have occur pursuant to Section 1.1.2 of
the Merger Agreement to cure such breach in all respects in the case of any
representation and warranty qualified by material adverse effect, and in any
other case, to cure such breach in all material respects, or otherwise in a
manner reasonably satisfactory to MGI, (B) in the case of Section 2.1 of the
Merger Agreement, are true and correct at and as of the Closing Date as though
made at and as of the Closing Date, except where the aggregate effect of the
failure of such representations and warranties to be true and correct has not
had and would not reasonably be expected to have a CERA Material Adverse Effect,
and (C) in the case of Sections 2.2 and 2.3 of the Merger Agreement, are true
and correct in all material respects at and as of the Closing Date as though
made at and as of the Closing Date, provided in each case that the accuracy of
any specific representation or warranty that by its terms speaks only as of the
date of the Merger Agreement or another date prior to the Closing Date shall be
determined solely as of the date of the Merger Agreement or such other date, as
the case may be, (ii) the CERA Stockholders and Goldman have duly performed and
complied in all material respects with all agreements and conditions required by
the Merger Agreement to be performed or complied with by them prior to or on the
Closing Date, (iii) the CERA Stockholders and Goldman have delivered to MGI, the
Parent and Sub a certificate or certificates, dated the Closing Date and signed
by each of them, with respect to the conditions set forth in Section 4.2.1(a)
and 4.2.2 of the Merger Agreement, (iv) no event, occurrence, fact, condition,
change, development or effect has occurred or come to exist since the date of
the Merger Agreement that, individually or in the aggregate, has had or resulted
in, or would be reasonably likely to have or result in, a CERA Material Adverse
Effect, (v) each of the Founding Stockholders has executed and delivered an
employment agreement, substantially in the form of Exhibit J to the Merger
Agreement, (vi) CERA has become a party to the Consulting Agreement, and that
certain Indemnification Agreement, dated as of August 31, 1996, among MGI, MCM,
CD&R and C&D Fund IV, pursuant to an agreement or agreements in form and
substance reasonably satisfactory to MGI, (vii) MGI, the Parent and Sub have
received favorable opinions, addressed to each of them and dated the Closing
Date and in form and substance reasonably satisfactory to MGI and its counsel,
from Hale and Dorr LLP, special counsel to the CERA Stockholders, and from
counsel to Goldman, (viii) MGI shall have received from each CERA Stockholder
and Goldman an affidavit pursuant to Section 3.1.6 and Section 3.3.2 of the
Merger Agreement, (ix) the CERA Stockholders and Goldman have received certain
third party consents and approvals to or of the execution, delivery and
performance of the Merger Agreement or the transactions contemplated thereby,
except for certain consents or approvals the failure of which to be made or
obtained, individually and in the aggregate, would not have a CERA Material
Adverse Effect and would not adversely affect the ability of any of the CERA
Stockholders to perform their obligations under the Merger Agreement, (x) MGI
has
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caused MCM to obtain funds at least in the amount contemplated in the Merger
Agreement to finance the CERA Distribution Loan, on such terms as are
satisfactory to MGI in its reasonable judgment, (xi) such directors of CERA have
resigned, and such other persons have been appointed as directors of CERA, such
that, effective simultaneously with the closing of the transactions contemplated
by the Merger Agreement, the board of directors of CERA is the same as the board
of directors of the Parent, (xii) each of the CERA Stockholders and Goldman
shall have executed and delivered an information form in accordance with Section
1.1.2(a) and (b) of the Merger Agreement, (xiii) the Founding Stockholders and
CERA shall have executed and delivered an agreement, satisfactory to MGI,
pursuant to which CERA shall agree to assign to the applicable Founding
Stockholder all copyrights to any book authored by such Founding Stockholder in
the course of his employment with CERA and each of the Founding Stockholders
shall agree that CERA shall receive all of the economic benefits of all such
books, (xiv) the articles of organization and the by-laws of CERA shall have
been amended as necessary to contain the same provisions as contained in the LLC
Agreement in respect of supermajority board voting provisions and board
composition, (xv) at or prior to the Closing Date, the CERA Stockholders shall
cause the $1,750,000 line of credit to CERA LP from Cambridge Trust Company, as
in effect on the date of the Merger Agreement, and any related agreements,
documents, financing statements, instruments or arrangements, to be terminated
and all amounts due and payable thereunder to be paid in full, and (xvi) all
proceedings of the CERA Stockholders, CERA and Goldman that are required in
connection with the transactions contemplated by the Merger Agreement, and all
documents and instruments incident thereto, shall be reasonably satisfactory to
MGI and its counsel, and MGI and such counsel shall have received all such
documents and instruments, or copies thereof, certified if requested, as may be
reasonably requested.
Additional Conditions to the Obligations of the CERA Stockholders and
Goldman. In addition, the obligations of the CERA Stockholders and Goldman to
consummate the Merger and the Exchange are also subject to the satisfaction or
waiver of the following conditions at or prior to the Closing Date: (i) the
representations and warranties set forth in Sections 2.4 and 2.5 of the Merger
Agreement (A) are true and correct at and as of the date of the Merger
Agreement, provided that if any such representation or warranty shall not have
been true and correct at and as of the date of the Merger Agreement, MGI, upon
written notice to the Founding Stockholders delivered not later than three
business days prior to the scheduled Closing Date, shall have until thirty days
after the date on which the closing of the transactions contemplated by the
Merger Agreement would otherwise have been required to have occur pursuant to
Section 1.1.2 of the Merger Agreement to cure such breach in all respects in the
case of any representation and warranty qualified by material adverse effect,
and in any other case, to cure such breach in all material respects, or
otherwise in a manner reasonably satisfactory to the Founding Stockholders, (B)
in the case of Section 2.4 of the Merger Agreement, are true and correct at and
as of the Closing Date as though made at and as of the Closing Date, except
where the aggregate effect of the failure of such representations and warranties
to be true and correct has not had and would not reasonably be expected to have
a materially adverse effect on the business, financial condition, results of
operations or properties of MGI, taken as a whole (an "MGI Material Adverse
Effect"), and (C) in the case of Section 2.5 of the Merger Agreement, are true
and correct in all material respects at and as of the Closing Date as though
made at and as of the Closing Date, provided in each case that the accuracy of
any specific representation or warranty that by its terms speaks only as of the
date of the Merger Agreement or another date prior to the Closing Date shall be
determined solely as of the date of the Merger Agreement or such other date, as
the case may be, (ii) MGI, the Parent and Sub have duly performed and complied
in all material respects with all agreements and conditions required by the
Merger Agreement to be performed or complied with by them prior to or on the
Closing Date, (iii) the Parent, MGI and Sub have delivered to the CERA
Stockholders and Goldman a certificate or certificates, dated the
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Closing Date and signed by each of them, with respect to the conditions set
forth in Section 4.3.1(a) and 4.3.2 of the Merger Agreement, (iv) no event,
occurrence, fact, condition, change, development or effect has occurred or come
to exist since the date of the Merger Agreement that, individually or in the
aggregate, has had or resulted in, or would be reasonably likely to have or
result in, an MGI Material Adverse Effect, (v) the CERA Stockholders and Goldman
have received favorable opinions, addressed to each of them and dated the
Closing Date and in form and substance reasonably satisfactory to the Founding
Stockholders and their counsel, from General Counsel of MGI, Debevoise &
Plimpton, special counsel to MGI, and Richards, Layton & Finger, special
Delaware counsel to the Parent, (vi) MGI has received certain third party
consents and approvals to of or the execution, delivery and performance of the
Merger Agreement or the transactions contemplated thereby, except for certain
consents or approvals the failure of which to be made or obtained, individually
and in the aggregate, would not have an MGI Material Adverse Effect and would
not adversely affect the ability of MGI to perform its obligations under the
Merger Agreement, (vii) such directors of MGI and MCM have resigned, and such
other persons have been appointed as directors of MGI and CERA, such that,
effective simultaneously with the closing of the transactions contemplated by
the Merger Agreement, the board of directors of MGI and MCM are the same as the
board of directors of the Parent, (viii) the certificates of incorporation and
the by-laws of MGI and MCM shall have been amended as necessary to contain the
same provisions as contained in the LLC Agreement in respect of supermajority
board voting provisions and board composition, and (ix) all proceedings of MGI,
the Parent and Sub that are required in connection with the transactions
contemplated by the Merger Agreement, and all documents and instruments incident
thereto, shall be reasonably satisfactory to the Founding Stockholders and their
counsel, and the Founding Stockholders and such counsel have received all such
documents and instruments, or copies thereof, certified if requested, as may be
reasonably requested.
No assurances can be provided as to when or if all of the conditions
precedent to the Merger and the Exchange can or will be satisfied or waived by
the appropriate parties. As of the date of this Information
Statement/Prospectus, the parties know of no reason to believe that any of the
conditions set forth above will not be satisfied.
The conditions to consummation of the Merger and the Exchange may be
waived, in whole or in part, to the extent permissible under applicable law, by
the party for whose benefit the condition has been imposed, without the approval
of the stockholders of MGI.
AMENDMENT, WAIVER AND TERMINATION
The Merger Agreement may be terminated at any time prior to the Closing
Date: (a) by the written agreement of the Founding Stockholders and MGI; (b) by
MGI, on the one hand, or the Founding Stockholders, on the other hand, by
written notice to the other after 5:00 p.m., New York City time, on November 30,
1997 if the Closing Date shall not have occurred by such date (unless the
failure of the Closing Date to occur shall be due to, in the case of any
termination by MGI, any material breach of the Merger Agreement by MGI, the
Parent or Sub or, in the case of any termination by the Founding Stockholders,
any material breach of the Merger Agreement by the CERA Stockholders or
Goldman), unless such date is extended by the mutual written consent of MGI and
the Founding Stockholders; (c) by MGI if there has been a breach on the part of
the CERA Stockholders or Goldman of any of their covenants set forth in the
Merger Agreement, or any failure on the part of the CERA Stockholders or Goldman
to perform their obligations under the Merger Agreement (provided that MGI, the
Parent and Sub shall have performed and complied with, in all material respects,
all agreements and covenants required by the Merger Agreement to have been
performed or complied with by them) prior to such time, such that, in any such
case, any of the conditions to the effectiveness of the Merger and the Exchange
set forth in Section 4.1 or 4.2 of the Merger Agreement could not (including
without limitation through the use of diligent efforts to cure such breaches or
failure) be satisfied on or prior to November 30, 1997; or (d) by any of the
Founding Stockholders, if there has been a breach on the part of MGI, the Parent
or Sub of any of their covenants set forth in the Merger Agreement, or any
failure on the part of MGI, the Parent or Sub to perform their obligations under
the Merger Agreement (provided that the CERA Stockholders and Goldman shall have
performed and complied with, in all material respects, all agreements and
covenants required by the Merger Agreement to have been performed or complied
with by them) prior to such time, such that, in any such case, any of the
conditions to the effectiveness of the Merger and the Exchange set
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forth in Sections 4.1 or 4.3 of the Merger Agreement could not (including
without limitation through the use of diligent efforts to cure such breaches or
failure) be satisfied on or prior to November 30, 1997.
In the event of the termination of the Merger Agreement as described
above, the Merger Agreement shall become void and have no effect, without any
liability to any person in respect of the Merger Agreement or of the
transactions contemplated by the Merger Agreement on the part of any party to
the Merger Agreement, or any of its directors, officers, employees, agents,
consultants, representatives, advisers, stockholders, partners or affiliates,
except for any liability resulting from any party's breach of the Merger
Agreement. See "The Merger and the Exchange--Expenses and Fees."
COVENANTS PENDING THE MERGER AND THE EXCHANGE
Operation of CERA's Business. From the date of the Merger Agreement to
the Closing Date, except as expressly contemplated by the Merger Agreement or
the transactions contemplated thereby, or as consented to by MGI, the CERA
Stockholders and Goldman will cause CERA and CERA LP to: (a) carry on their
respective businesses in the ordinary course consistent with past practices, and
use all commercially reasonable efforts to preserve intact their respective
present business organizations, keep available the services of their officers
and key employees and preserve their relationships with clients and others
having material business dealings with either of them, except to the extent that
the failure to do so would not, and would not reasonably be expected to, result
in a material change, after the date of the Merger Agreement, in the business,
financial condition, results of operations or properties of CERA and CERA LP,
taken as a whole (a "CERA Material Change"); (b) in the case of CERA, not amend
its articles of incorporation, by-laws or other organizational documents, and,
in the case of CERA LP, not amend its certificate of limited partnership,
limited partnership agreement or other organizational documents; (c) (x) not
declare, set aside or pay any dividends on, or make any other distributions in
respect of, any shares of its capital stock in the case of CERA and any of its
partnership interests in the case of CERA LP, or otherwise make any payments to
the CERA Stockholders, Goldman or the employees of CERA or CERA LP, other than
(i) as expressly provided in the Merger Agreement, (ii) pursuant to the CERA
Cash Distribution, (iii) the payment to employees of CERA or CERA LP, in their
capacities as such, of their respective base salaries and other benefits and
expense reimbursements (but expressly excluding bonuses and other incentive
compensation), in each such case, in the ordinary course of business consistent
with past practices, provided that CERA and CERA LP shall be entitled to
increase such base salaries or base compensation and/or other benefits and
expense reimbursements, in an amount not to exceed $20,000 in the case of any
individual or $750,000 in the aggregate, (iv) (A) cash bonuses to employees of
CERA or CERA LP in an aggregate amount not to exceed $3.9 million or (B) signing
bonuses in an amount in the case of any individual not to exceed $50,000, (v)
dividends and other distributions, in an aggregate amount not to exceed $50,000,
by CERA LP to CERA to enable CERA, to pay its liabilities and (vi) dividends and
other distributions in an aggregate amount not to exceed the sum of $195,800 and
44% of the amount of CERA LP's taxable income for the period July 1, 1997
through the Closing Date to allow the partners of CERA LP to pay their tax
liabilities with respect to the taxable income of CERA LP or (y) not, other than
pursuant to the CERA Cash Distribution, purchase, redeem or otherwise acquire
any shares of capital stock of CERA or partnership interests in CERA LP or any
other securities thereof or any rights, warrants or options to acquire any such
shares, partnership interests or other securities; (d) not issue, deliver, sell,
pledge, dispose of or otherwise encumber any shares of the capital stock of
CERA, partnership interests in CERA LP or other securities (including, without
limitation, any rights, warrants or options to acquire any securities); (e)
other than the CERA Distribution Loan and borrowings in the ordinary course
under the $1,750,000 line of credit extended to CERA LP by Cambridge Trust
Company (as in effect on the date of the Merger Agreement), not incur any
indebtedness for borrowed money or guarantee any such indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others, or make loans, advances or capital
contributions to, or investments in, any other person or entity; (f) not acquire
or agree to acquire, by merging or consolidating with, by purchasing a
substantial portion of the assets of or equity in, or by any other manner, any
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business or any corporation, partnership, company, association or other business
organization or division thereof; (g) not make or incur any capital expenditure
or expenditures which, individually, is in excess of $100,000 or, in the
aggregate, are in excess of $300,000; (h) (i) not enter into or amend any
employment or consulting agreement or arrangement providing for cash
compensation in excess of $125,000 per year or any retention, severance, change
in control or similar agreement or arrangement with, (ii) not establish or amend
any employee or consultant compensation or benefit plan or practice that is
material to CERA and CERA LP, taken as a whole, and maintained for the benefit
of, and (iii) other than as permitted by the Merger Agreement, not pay or accrue
any bonus or deferred compensation for or in respect of, any current or former
director, officer or employee of CERA or CERA LP, in each case in any material
respect, and in the case of clauses (i) and (ii), other than in the ordinary
course of business consistent with past practices, and other than any such
amendment to a CERA benefit plan that is made to maintain the qualified status
of such CERA benefit plan or its continued compliance with applicable law; (i)
not make any change in accounting practices or policies applied in the
preparation of their respective financial statements except as required by
generally accepted accounting principles; (j) other than, in respect of certain
employment-related or similar agreements, as permitted by the Merger Agreement,
(x) not modify in any material respect certain agreements, contracts or
commitments or (y) not enter into certain types of agreements, contracts or
commitments that would have been required to be listed in connection with
Section 2.1.8 of the Merger Agreement (or any other agreement, contract or
commitment with a client) if in existence on the date of the Merger Agreement,
other than in the ordinary course of business consistent with past practices,
provided that CERA and CERA LP shall be entitled to enter into, outside of the
ordinary course of business, such agreements, contracts and commitments of the
type described in this clause (y), after consultation with the Chairman of MGI,
if entering into such agreements, contracts and commitments, individually and in
the aggregate, would not, and would not reasonably be expected to, result in a
CERA Material Change; and (k) not agree or commit to do any of the foregoing
referred to in clauses (a) - (j) above.
Operations of MGI's Business. From the date of the Merger Agreement to
the Closing Date, except as expressly contemplated by the Merger Agreement or
the transactions contemplated thereby, or as consented to by the Founding
Stockholders, MGI will, and will cause each of its subsidiaries to: (a) carry on
their respective businesses in the ordinary course consistent with past
practices, and use all commercially reasonable efforts to preserve intact their
respective present business organizations, keep available the services of their
officers and key employees and preserve their relationships with clients and
others having material business dealings with them, except to the extent that
failure to do so would not, and would not reasonably be expected to, result in a
material change, after the date of the Merger Agreement, in the business,
financial condition, results of operations or properties of MGI, taken as a
whole (an "MGI Material Change"); (b) in the case of MGI, not amend its
certificate of incorporation, by-laws or other organizational documents; (c)
with respect to MGI only, (x) not declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its capital stock, or (y)
other than pursuant to any MGI Management Stock Subscription Agreement or any
agreement governing any Existing MGI Option, not purchase, redeem or otherwise
acquire any shares of capital stock of MGI or any other securities thereof or
any rights, warrants or options to acquire any such shares or other securities;
(d) other than pursuant to any Existing MGI Option, not issue, deliver, sell,
pledge, dispose of or otherwise encumber any shares of the capital stock of MGI
or other securities (including, without limitation, any rights, warrants or
options to acquire any securities) of MGI; (e) other than amounts to be borrowed
by MCM in connection with the CERA Distribution Loan and the other transactions
contemplated by the Merger Agreement and other than indebtedness to MGI or any
of its subsidiaries, not incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or guarantee any debt
securities of others; (f) not acquire or agree to acquire, by merging or
consolidating with, by purchasing a substantial portion of the assets of or
equity in, or by any other manner, any business or any corporation, partnership,
company, association or other business organization or division thereof; (g) not
make or incur any capital expenditure or expenditures which, individually, is in
excess of $100,000 or, in the aggregate, are in excess of $300,000; (h) not make
any change in accounting practices
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or policies applied in the preparation of their respective financial statements
except as required by generally accepted accounting principles; (i) (x) not
modify in any material respect certain agreements, contracts or commitments, and
(y) not enter into any agreement, contract or commitment of the type that would
have been required to be listed in connection with Section 2.4.11 of the Merger
Agreement (other than any agreement, contract or commitment with a customer) if
in existence on the date of the Merger Agreement, other than in the ordinary
course of business consistent with past practices, provided that MGI shall be
entitled to enter into, outside of the ordinary course of business, agreements,
contracts and commitments of the type described in clause (y), after
consultation with Mr. Yergin, if entering into such agreements, contracts and
commitments, individually and in the aggregate, would not, and would not
reasonably be expected to, result in an MGI Material Change; and (j) not agree
to commit to do any of the foregoing referred to in clauses (a) - (i) above.
CERA Cash Distribution. MGI agreed to cause MCM to make the CERA
Distribution Loan to CERA, subject to MCM being able to obtain the necessary
financing to fund such loan, on the day immediately preceding the Closing Date,
pursuant to a loan agreement substantially in the form and substance reasonably
satisfactory to MGI and CERA, which shall provide that CERA will be required to
make cash payments in respect of principal or interest thereunder prior to June
30, 2000 only to the extent such payments are required to be made by the board
of directors of the Parent. Each of the CERA Stockholders agreed to cause CERA
to apply the proceeds from the CERA Distribution Loan, immediately upon the
receipt thereof, to pay the CERA Cash Distribution. Each of the CERA
Stockholders released CERA and its directors and officers from all actions and
liabilities arising out of the CERA Cash Distribution.
Access and Information. From the date of the Merger Agreement to the
Closing Date, the Stockholders will, and will cause CERA and CERA LP to, give to
MGI, the Parent and Sub and MGI's, the Parent's and Sub's accountants, counsel
and other representatives reasonable access during normal business hours to such
of CERA and CERA LP's offices, properties, books, contracts, commitments,
reports and records relating to CERA or CERA LP, and to furnish them or provide
them with access to all such documents, financial data, records and information
with respect to the properties and businesses of CERA or CERA LP, as MGI or the
Parent shall from time to time reasonably request. In addition, from the date of
the Merger Agreement to the Closing Date, the Stockholders will, and will cause
CERA and CERA LP to, permit MGI, the Parent or Sub and MGI's, the Parent's or
Sub's accountants, counsel and other representatives reasonable access to such
personnel of CERA and CERA LP during normal business hours as may be reasonably
requested by MGI, the Parent or Sub in its review of the properties of CERA and
CERA LP, the business affairs of CERA and CERA LP and the above-mentioned
documents and records. MGI has similarly agreed to permit CERA, CERA's
accountants, counsel and other representatives access to MGI's offices and to
such personnel of MGI, and to furnish them or provide them with access to
information with respect to the business of MGI, as may be reasonably requested.
Financial Information. From the date of the Merger Agreement to the
Closing Date, the CERA Stockholders will cause CERA LP to make available to MGI,
the Parent and Sub, promptly after the same become available, copies of such
monthly management reports, if any, for CERA LP as may be furnished to senior
management of CERA LP, together with such monthly financial statements as may be
furnished to such management, and MGI will make available to the Founding
Stockholders, promptly after the same become available, copies of such monthly
reports, if any, for MGI as may be furnished to senior management of MGI,
together with such monthly financial statements as may be furnished to such
management.
No Solicitation. From the date of the Merger Agreement to the earlier
of the closing of the transactions contemplated by the Merger Agreement and the
termination of the Merger Agreement, none of the CERA Stockholders or Goldman,
any of their affiliates or any person acting on their behalf shall (i) solicit,
initiate or encourage any inquiries or proposals for, or enter into any
discussions with respect to, the sale of CERA, CERA LP, the assets of CERA
and/or CERA LP, any equity interest in CERA or any
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partnership interest in CERA LP (any such inquiry or proposal, a "CERA
Acquisition Transaction") or (ii) furnish or cause to be furnished any
non-public information concerning CERA or CERA LP to any person (other than MGI,
the Parent, Goldman and their respective representatives, and the professional
advisors to CERA LP, CERA, the CERA Stockholders and Goldman) in connection with
any such inquiries or proposals. The CERA Stockholders shall promptly notify MGI
of any inquiry or proposal received by the CERA Stockholders or any of their
affiliates with respect to any such CERA Acquisition Transaction and will keep
MGI fully informed of the nature, details and status of any such inquiry or
proposal. Similarly, from the date of the Merger Agreement to the earlier of the
Closing and the termination of the Merger Agreement, neither MGI nor any of its
affiliates or any person acting on its behalf shall (i) solicit, initiate or
encourage any inquiries or proposals for, or enter into any discussions with
respect to, the sale of MGI, MCM, the assets of MGI and/or MCM or, other than
pursuant to the existing MGI stock options, any equity interest in MGI or MCM
(any such inquiry or proposal, an "MGI Acquisition Transaction") or (ii) furnish
or cause to be furnished any non-public information concerning MGI or its
subsidiaries to any person (other than CERA, CERA LP, the CERA Stockholders,
Goldman and their respective representatives, and the professional advisors to
MGI, the Parent and Sub) in connection with any such inquiries or proposals. MGI
shall promptly notify the Founding Stockholders of any inquiry or proposal
received by MGI or any of its affiliates with respect to any such MGI
Acquisition Transaction and will keep the Founding Stockholders fully informed
of the nature, details and status of any such inquiry or proposal.
ADDITIONAL AGREEMENTS
Pursuant to the Merger Agreement, MGI, the CERA Stockholders, the
Parent and Sub have covenanted and agreed, among other things, to the following:
Noncompetition. Each of the Founding Stockholders agreed that during
the period commencing on the Closing Date and ending on the fourth anniversary
of the Closing Date, he would not, directly or indirectly, (A) as an individual
proprietor, partner, member, principal, officer, employee, agent, consultant or
stockholder, develop, produce, market, sell or render (or assist any other
person in developing, producing, marketing, selling or rendering) products or
services competitive anywhere in the United States or elsewhere in the world
with, or (B) engage in business with, serve as an agent or consultant to, or
become an individual proprietor, partner, member, principal or stockholder
(other than a holder of less than 1% of the outstanding voting shares of any
publicly held company) of or become employed in an executive capacity by, any
person, firm or other entity ("Competitor") a substantial portion of whose
business competes anywhere in the United States or elsewhere in the world with,
a substantial portion of the business of the Parent, CERA, MGI or any of their
respective subsidiaries (collectively, the "MGI/CERA Group") that relates to the
financial information, financial analysis, energy information and analysis or
any other business then engaged in by any member of the MGI/CERA Group;
provided, however, that this agreement not to compete will not be deemed to
prohibit any of the Founding Stockholders from teaching courses at educational
institutions or writing books or articles for public sale or making appearances
on television or preparing or otherwise participating in television programs;
and provided, further, that if the employment of a Founding Stockholder with
CERA is terminated after the Closing Date without cause or for good reason (as
defined in the applicable employment agreement between CERA and such Founding
Stockholder), the noncompetition period shall terminate with respect to such
Founding Stockholder on the earlier of (x) the fourth anniversary of the Closing
Date and (y) the first anniversary of the date of termination of such Founding
Stockholder's employment. For the preceding sentence, a "substantial portion"
(x) in the case of the business of Competitor shall mean a line or lines of
business that account for more than 50% of the consolidated revenues of
Competitor and (y) in the case of the MGI/CERA Group shall mean a line or lines
of business that account for more than 25% of the consolidated revenues of the
MGI/CERA Group, in each case for the fiscal year ended immediately prior to the
date on which the Founding Stockholder first proposes to engage in any of the
activities described in clause (B) of the immediately preceding sentence,
provided, however, that in the case of a Competitor that has had less than three
full years of operations, "substantial portion" shall mean a line or lines of
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business accounting for more than 50% of the projected consolidated revenues of
such Competitor for the two fiscal years next succeeding the date on which the
Founding Stockholder first proposes to engage in any of the activities described
in clause (B) of the immediately preceding sentence.
Confidentiality. Except as otherwise provided in the Merger Agreement,
(x) the CERA Stockholders, Goldman, CERA and CERA LP, agreed to, and agreed to
cause their representatives to, keep confidential all information which, prior
to the date of the Merger Agreement, was or, from and after the date of the
Merger Agreement, is furnished to any of them by MGI or any of its
representatives, or to which the CERA Stockholders, Goldman, CERA or CERA LP,
prior to the date of the Merger Agreement, were or, from and after the date of
the Merger Agreement, are given access, that in any way relates to the business
of MGI and (y) MGI agreed to, and agreed to cause its representatives to, keep
confidential all information which, prior to the date of the Merger Agreement,
was or, from and after the date of the Merger Agreement, is furnished to MGI, or
to which MGI, prior to the date of the Merger Agreement, was or, from and after
the date of the Merger Agreement, is given access, that in any way relates to
the business of CERA or CERA LP. The parties agreed that the restrictions
described in the preceding sentence do not apply to the disclosure of any
information, documents or materials (i) which are or become generally available
to the public other than as a result of a disclosure by the receiving party or
any affiliate or representative of the receiving party in violation of the
restriction, (ii) received from a third party on a non-confidential basis from a
source other than the providing party or its representatives, which source, to
the knowledge of the receiving party after due inquiry, is not prohibited from
disclosing such information to the receiving party by a legal, contractual or
fiduciary obligation to the providing party, (iii) required by applicable law to
be disclosed by such party, or (iv) necessary to establish such party's rights
under the Merger Agreement or any related agreement, provided that, in the case
of clauses (iii) and (iv), the person intending to make disclosure of
confidential information will promptly notify in writing the party to whom it is
obliged to keep such information confidential and, to the extent practicable,
provide such party a reasonable opportunity to prevent public disclosure of such
information or, if appropriate, waive compliance with the restriction. The
parties agreed that these agreements and undertakings shall (x) continue until
the earliest of (i) five (5) years from the date of the Merger Agreement or (ii)
the closing of the transactions contemplated by the Merger Agreement and (y)
survive the termination of the Merger Agreement.
Registration Statement. Each of the parties agreed, and agreed to cause
their respective subsidiaries, controlled affiliates, directors, officers,
employees and representatives to, assist the Parent in the preparation and
filing of this Registration Statement and to furnish the Parent with all
information in their possession concerning CERA, CERA LP, the CERA Stockholders,
Goldman and MGI required for use in this Registration Statement, including,
without limitation, such financial statements as may be required to be included
in this Registration Statement or that are necessary to prepare pro forma
financial statements and other information to be included in this Registration
Statement. If, at any time on or prior to the Closing Date, any event with
respect to the CERA Stockholders, Goldman, CERA, CERA LP, MGI or any of their
respective affiliates should occur which is required to be described in an
amendment of or supplement to this Registration Statement, the party or parties
to the Merger Agreement that are familiar with such event agreed to provide the
Parent with a description of such event that will be sufficient to enable the
Parent or its representatives to prepare such amendment or supplement and to
otherwise assist the Parent in the preparation and filing of such amendment or
supplement. The parties agreed that the Parent would prepare this Registration
Statement (or cause it to be prepared), file it with the Commission promptly
after the date of the Merger Agreement, use its commercially reasonable efforts
to cause it to be declared effective and to remain effective through the Closing
Date and, if at any time on or prior to the Closing Date, any event with respect
to the CERA Stockholders, Goldman, CERA, CERA LP, MGI or any of their respective
affiliates shall occur which is required to be described in an amendment of or
supplement to this Registration Statement, prepare such amendment or supplement
(or cause it to be prepared) and promptly file it with the Commission.
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Public Announcements. From the date of the Merger Agreement to the
Closing Date, except as required by applicable law, each of the parties agreed
not to, and not to permit any of their affiliates or representatives to, make
any public announcement in respect of the Merger Agreement or the transactions
contemplated thereby without the prior consent of MGI and the Founding
Stockholders.
Further Actions. Each of the parties agreed to use its, his or her
commercially reasonable best efforts to take all actions to make effective the
transactions contemplated by the Merger Agreement and has also agreed to file
all notifications and obtain all consents that may be required in connection
with the Merger Agreement, and the consummation of the transactions contemplated
thereby.
Notice of Certain Events. From the date of the Merger Agreement to the
Closing Date, each of the CERA Stockholders and Goldman, on the one hand, agreed
to promptly notify MGI, and MGI, the Parent and Sub, on the other, agreed to
promptly notify the Founding Stockholders, of: (i) any fact, condition, event or
occurrence known to any of them that will or reasonably may be expected to
result in the failure of any of the conditions contained in Article IV of the
Merger Agreement to be satisfied; and (ii) any actions, suits, claims,
investigations or proceedings commenced or, to the knowledge of the CERA
Stockholders, CERA, CERA LP or Goldman, on the one hand, or MGI, any of its
subsidiaries, the Parent or Sub, on the other, threatened against, relating to
or involving or otherwise affecting CERA or CERA LP, on the one hand, or MGI and
its subsidiaries, on the other, or any of their respective affiliates which, if
pending on the date of the Merger Agreement, would have been required to have
been disclosed pursuant to Section 2.1.11 or Section 2.4.14 of the Merger
Agreement, as applicable, or that relate to the consummation of the transactions
contemplated by the Merger Agreement.
Tax Affairs. Through the Closing Date, MGI and its subsidiaries, on the
one hand, and the CERA Stockholders, on the other, agreed, and in the case of
the CERA Stockholders, agreed to cause each of CERA LP and CERA to, conduct all
tax affairs relating to MGI and its subsidiaries or CERA LP and CERA, as the
case may be, only in the ordinary course, in substantially the same manner as
previously conducted and in good faith in substantially the same manner as such
affairs would have been conducted if the Merger Agreement had not been entered
into.
EXPENSES AND FEES
The Merger Agreement provides that each party shall be responsible for
its own costs and expenses incurred in connection with the negotiation and
consummation of the transactions contemplated by the Merger Agreement; provided,
however, that in the event the closing of the transactions contemplated by the
Merger Agreement shall occur, on the Closing Date, MGI shall pay (i) the fees
and expenses of Goldman Sachs in respect of the transactions contemplated by the
Merger Agreement, (ii) the fees and expenses of Sword in respect of the
transactions contemplated by the Merger Agreement, in an aggregate amount not to
exceed $1,335,811, and provided that any additional amount shall be payable by
the CERA Stockholders and/or Goldman and (iii) any transfer taxes that may be
payable and due in respect of the Merger; and all of the other fees, costs and
expenses (including, without limitation, attorneys' and accountants' fees and
expenses) incurred in connection with the Merger Agreement and the transactions
contemplated thereby, to the extent not previously paid, shall be paid by MGI
and CERA.
CERA engaged Sword to provide financial advice and assistance in
connection with a sale or merger of CERA and agreed to pay Sword a fee in
respect of the transactions contemplated by the Merger Agreement and reimburse
Sword for its reasonable out-of-pocket expenses. CERA also agreed to pay Jordan,
a former director of CERA, a fee in respect of the transactions contemplated by
the Merger Agreement. On the Closing Date, Jordan will receive the Jordan
Options in full payment of the fee due to him in respect of the transactions
contemplated by the Merger Agreement.
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MGI engaged Goldman Sachs, an affiliate of Goldman, to provide
financial advice and assistance in connection with the transactions contemplated
by the Merger Agreement and agreed to pay Goldman Sachs a fee for providing
such advice and assistance and to reimburse Goldman Sachs for its reasonable
out-of-pocket expenses incurred in connection therewith. Additionally, on the
Closing Date, Brera, of which Mr. Cribiore is Managing Principal and Mr.
McMahon is a principal, will receive the Brera Options in respect of the
services provided to MGI in connection with the transactions contemplated by
the Merger Agreement.
APPRAISAL RIGHTS
Holders of Units are not entitled to dissenters' appraisal rights under
the Delaware Act in connection with the Merger because the Parent is not a
constituent corporation in the Merger. Neither holders of CERA Common Stock nor
limited partnership interests in CERA LP are entitled to dissenters' appraisal
rights under the DGCL in connection with the Merger because neither CERA nor
CERA LP is a constituent corporation in the Merger.
MGI stockholders are entitled to rights of appraisal under Section 262
of the DGCL, a copy of which is attached hereto as Annex C, in connection with
the Merger. If the Merger is consummated, each stockholder who has not voted in
favor of the Merger or consented thereto in writing and who otherwise complies
with such Section 262 will be entitled to such rights. The following discussion
is not a complete statement of laws relating to appraisal rights and is
qualified in its entirety by reference to Section 262 of the DGCL. This
discussion and Annex C should be reviewed carefully by any holder of shares of
MGI Common Stock who wishes to exercise statutory appraisal rights or who wishes
to preserve the right to do so, as failure to timely and properly comply with
the procedures set forth therein will result in the loss of appraisal rights.
Moreover, because of the complexity of the procedures for exercising appraisal
rights, MGI believes that holders who consider exercising such rights should
seek the advice of counsel. All references in Section 262 and in this discussion
to "holder" or "stockholder" are to the record holder of the shares of MGI
Common Stock as to which appraisal rights are asserted.
Under the DGCL, in order to exercise their appraisal rights, MGI
stockholders must satisfy all of the following conditions. A written demand for
appraisal of the applicable holder's shares of MGI Common Stock must be
delivered to MGI on or before the twentieth day after the mailing to the MGI
stockholders of an appraisal right notice. (An appraisal right notice is being
sent to each stockholder with this Information Statement/Prospectus.)
Stockholders electing to exercise their appraisal rights under the DGCL
must not vote for approval of the Merger or consent thereto in writing pursuant
to Section 228 of the DGCL.
A stockholder who elects to exercise appraisal rights should deliver
the written demand to MGI. The written demand for appraisal must specify the
stockholder's name and that the stockholder is thereby demanding appraisal of
his shares, and should specify the stockholder's mailing address and the number
of shares of MGI Common Stock owned.
Only the stockholder of record may make a demand for appraisal. If
stock is owned of record in a fiduciary capacity, such as by a trustee,
guardian, or custodian, such demand must be executed by the fiduciary. If MGI
Common Stock is owned of record by more than one person, as in a joint tenancy
or tenancy in common, such demand must be executed by all joint owners. An
authorized agent, including an agent for two or more joint owners, may execute
the demand for appraisal for a stockholder of record; however, the agent must
identify the record owner and expressly disclose the fact that, in exercising
the demand, such person is acting as agent for the record owner.
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Delaware law is unclear as to whether a record holder who also is the
beneficial owner of the shares held (or a record holder acting on behalf of a
beneficial owner) may exercise appraisal rights with respect to less than all of
the shares beneficially owned by such beneficial owner. It is MGI's position
that if a record holder who also is the beneficial owner of the shares held (or
a record holder acting on behalf of a beneficial owner) exercises appraisal
rights, the exercise must be with respect to all of the shares beneficially
owned by such beneficial owner. Where the number of shares is not expressly
stated, the demand will be presumed to cover all shares of MGI Common Stock
outstanding in the name of such record owner. Beneficial owners who are not
record owners and who intend to exercise appraisal rights should instruct the
record owner to comply strictly with the statutory requirements with respect to
the exercise of appraisal rights before the expiration of the applicable
twenty-day period.
Within 10 days after the Effective Time, MGI must provide notice of the
Effective Time to holders of MGI Common Stock, except that if such notice is
sent more than twenty days following the date the initial appraisal rights
notice was sent, such second notice need only be sent to each stockholder who
provided on a timely basis the written demand required under the DGCL and did
not vote for approval of the Merger or consent thereto in writing. Within 120
days after the Effective Time, either MGI or any stockholder who has provided on
a timely basis the written demand required under the DGCL may file a petition in
the Delaware Court of Chancery demanding a determination of the fair value of
the shares of all dissenting stockholders. In connection therewith, such Court
may require that a stockholder who has demanded an appraisal for such
stockholder's shares submit the certificates representing such shares for
notation thereon, and failure by such stockholder to do so may result in
dismissal of the proceedings. Notwithstanding the foregoing, at any time within
60 days after the Effective Time, any such stockholder will have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the Merger. Within 120 days after the Effective Time, any stockholder who
has complied with the requirements of Section 262 of the DGCL, upon written
request, will be entitled to receive from MGI a statement setting forth the
aggregate number of shares not voted in favor of the Merger and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Court of Chancery will determine which stockholders are
entitled to appraisal rights and will appraise the "fair value" of the shares
owned by such stockholders, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
Any such judicial determination of the fair value of such shares could be based
upon considerations other than or in addition to the consideration received in
the Merger, including asset values and the investment value of the MGI Common
Stock. The per share value so determined could be more than, the same as, or
less than the consideration received per share in the Merger. If a petition is
not filed within 120 days after the Effective Time, the appraisal rights of
dissenting stockholders will terminate.
Failure to strictly follow the steps required by Section 262 of the
DGCL for perfecting appraisal rights may result in the loss of such rights, in
which event an MGI stockholder will be entitled to receive the consideration to
be provided to MGI stockholders pursuant to the Merger for each share of MGI
Common Stock held by such stockholder.
REGULATORY MATTERS
Under the HSR Act, and the rules promulgated thereunder, the Merger and
the Exchange may not be consummated until certain information is provided to the
FTC and to the DOJ, and a thirty-day waiting period is observed. The thirty-day
waiting period may be extended by a request for additional information by the
DOJ or FTC, or may be terminated early when both agencies approve the Merger and
the Exchange. At any time before or after the consummation of the Merger and the
Exchange either agency, as well as the individual states' attorneys general and
private parties, could take action to enjoin the consummation of the Merger and
the Exchange, seeking divestiture of substantial assets of MGI or CERA, or other
substantive relief.
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THE LIMITED LIABILITY COMPANY AGREEMENT
The following description summarizes certain information pertaining to
the LLC Agreement of the Parent. This description does not purport to be
complete and is qualified in its entirety by reference to the LLC Agreement, a
copy of which is set forth as Annex B to this Information Statement/Prospectus
and is incorporated herein by reference. All holders of MGI Common Stock, the
CERA Stockholders, Goldman, Brera and Jordan are urged to read Annex B in its
entirety.
ORGANIZATION AND DURATION
The Parent was recently organized as a limited liability company under
the Delaware Act. Pursuant to the LLC Agreement, which will become effective as
of the Closing Date, limited liability company interests in the Parent will be
represented by Units. The Parent will have perpetual existence unless sooner
dissolved pursuant to the terms of the LLC Agreement. See "Termination and
Dissolution," below.
PURPOSE
The purposes of the Parent are, and the Parent shall have the power and
authority, to acquire, hold, vote, sell or otherwise dispose of, to receive,
allocate and distribute distributions on and other proceeds of, and to manage,
investments in accordance with the terms of the LLC Agreement, to engage in all
acts or activities as the Parent deems necessary, advisable, convenient or
incidental to the furtherance and accomplishment of the foregoing, and to engage
in any other lawful act or activity for which limited liability companies may be
formed under the Delaware Act. Immediately after the Closing Date, the Parent's
activities will consist solely of ownership of all of the outstanding capital
stock of CERA and MGI and the exercise of rights and performance of obligations
in connection therewith.
MANAGEMENT
Board of Directors. Generally, the business of the Parent will be
managed by or under the direction of a committee of the Parent (the "Board" or
the "Board of Directors"), each member of which (a "Director") will serve until
a successor is elected as provided in the LLC Agreement or until his earlier
death, resignation or removal. The LLC Agreement provides that the Board will
consist of at least three persons, and further requires all members ("Members")
of the Parent, at all times after the Closing Date and until the settlement date
of the first underwritten public offering of equity securities of the Parent or
a successor entity (the "IPO Date"), to vote their respective Units in such
manner as may be necessary to ensure that (A) the Board at all times consists of
(i) two of the Founding Stockholders nominated by the Founding Stockholders,
(ii) the chief executive officer of MCM ("MCM Nominee"), (iii) the chief
executive officer (if any) of the Parent ("CEO Nominee"), (iv) three nominees of
C&D Fund IV who are employees of CD&R, Brera or other affiliates of C&D Fund IV
(the "C&D Fund IV Nominees"), and (v) up to six additional persons not
affiliated with CD&R, C&D Fund IV, Brera or any of the Founding Stockholders,
who are nominated by C&D Fund IV with the consent of Mr. Yergin, or in the event
of Mr. Yergin's death, legal incapacity or termination of employment for cause
or disability, Mr. Rosenfield or Mr. Stanislaw (the "Consenting CERA
Principal"), which consent will not be unreasonably withheld, and (B) all such
persons are elected to serve as Directors. Until the IPO Date, Directors may not
be removed without cause without the consent of the Member or Members that
nominated such Director, and the Member or Members who nominated or appointed
any Director whose position has become vacant due to such Director's
resignation, removal or inability to serve for any reason will be entitled to
appoint a replacement Director to fill such vacancy. A majority of the Members
(by number of Units held) or of the Directors may remove a Director for cause.
For the identity of the initial directors, see "Management," below.
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An election of Directors will be held, and new Directors will be
elected (or existing Directors will be reelected), at each annual meeting of
Members, which will be held on the third Tuesday of October of each year
(starting in 1998) or at such other time as the Board of Directors shall
determine. At each election of Directors, each Member will be entitled to one
vote per Unit held of record (other than non-voting Units), and the presence, in
person or by proxy, of the holders of a majority of the Units entitled to vote
will constitute a quorum. Since, as described above, the LLC Agreement requires
all Members to vote their respective Units, at all times prior to the IPO Date,
for the election to the Board of Directors of persons nominated as described in
the preceding paragraph, election of such nominees at all times prior to the IPO
Date is assured absent amendment of the LLC Agreement.
Until the earlier of (a) the IPO Date and (b) the issuance of the CERA
Contingent Units, the Goldman Contingent Units and the CERA Employee Contingent
Units (collectively, the "Contingent Units"), any (i) acquisition or disposition
of a business or assets having a value in excess of $15,000,000, (ii) a capital
expenditure involving more than $15,000,000, (iii) issuance of Units (or
securities convertible into or exchangeable for Units, or options, warrants or
other rights to acquire Units or such securities) for aggregate consideration in
excess of $15,000,000, other than the Contingent Units, the Contingent Options,
Existing MGI Options, the options granted under the CERA Option Plan or the MGI
Option Plan, and the Units issuable upon exercise thereof, (iv) entry into new
lines of business, (v) dissolution, (vi) public offering of equity securities of
the Parent or a successor entity, and (vi) with certain exceptions, incurrence
of indebtedness or guarantees in respect thereof in excess of $15,000,000, will
require approval of at least 75% of the Directors then in office. In addition,
until the earlier of (a) the IPO Date and (b) the issuance of the Contingent
Units, the sale of 50% or more of CERA or the spin-off to Members of all of
CERA's capital stock will require the approval of the Consenting CERA Principal.
The LLC Agreement requires that until the IPO Date, the Board of
Directors of CERA and of MGI shall be composed of the same individuals as the
Board of Directors of the Parent.
Executive Committee. The LLC Agreement provides for the establishment
of a committee of the Board of Directors to be designated as the Executive
Committee and to be composed of the Chairman, the Consenting CERA Principal, the
CEO Nominee (if any), the MCM Nominee and such other Directors as may be
designated by the Board. During the intervals between meetings of the Board, the
Executive Committee will have all the powers and authority of the Board in the
management of the Parent, except that the Executive Committee will not have the
authority to take any action requiring (i) a vote greater than a majority of
Directors present as described above or (ii) the consent or approval of the
Consenting CERA Principal or any one or more of the C&D Fund IV Nominees, or
authorizing any distribution by the Parent to the Members.
Officers. The Board of Directors may select certain individuals to be
designated as officers ("Officers") of the Parent, with such titles as the Board
may determine. The Board may appoint a Chief Executive Officer, a President, a
Chief Financial Officer, a Secretary and a Treasurer, and one or more Vice
Presidents, Assistant Secretaries and Assistant Treasurers, provided that until
the IPO Date, the Chief Executive Officer will be appointed by the C&D Fund IV
Nominees with the consent of the Consenting CERA Principal, whose consent will
not be unreasonably withheld. Each Officer will have certain authority by virtue
of being appointed an Officer and may be further authorized from time to time by
the Board of Directors to take any action that the Board of Directors delegates
to such Officer.
THE UNITS
Rights to Distributions and Allocations. The LLC Agreement authorizes
the issuance of Units for such consideration and on such terms and conditions as
shall be established by the Board of Directors in its sole discretion without
approval of the Members. Members (i) will be entitled to receive, to the extent
of available cash and cash equivalent assets of the Parent, cash distributions
in amounts intended to enable
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Members and certain other persons or entities to discharge their United States
federal, state and local income tax liabilities arising from certain allocations
made with respect to the Units as described below, (ii) other than with respect
to certain distributions relating to specified disposition transactions, will be
entitled on a pro rata basis to such distributions, if any, prior to the
dissolution and liquidation of the Parent as may be determined by the Board of
Directors of the Parent in its sole discretion, and (iii) will be entitled on a
pro rata basis, upon dissolution and liquidation of the Parent, to all remaining
assets after satisfaction of the Parent's liabilities to creditors.
With respect to distributions to Members (i) of any capital stock of
MGI or less than all of the capital stock of CERA prior to the earlier of the
issuance of the Contingent Units and June 30, 2000, or (ii) of the net proceeds
of any sale or other disposition (other than in a distribution to Members of
capital stock of MGI or CERA), prior to the earlier of the issuance of the
Contingent Units and June 30, 2000, of capital stock of MGI, more than 50% of
the assets of MGI, or capital stock or assets or CERA in a transaction that does
not constitute a Termination Event, Members will be entitled to receive each
such distribution on a pro rata basis, except that each Member who, at the time
of determination, has a right to receive Contingent Units will be treated,
solely for the purposes of such distribution, as if such Member owned the number
of Contingent Units that would have been issuable to such Member if the closing
of a Termination Event (other than an underwritten public offering) that did not
constitute a Qualifying Sale had occurred at such time of determination.
Except with respect to non-voting Units (the "Non-Voting Units"), which
will be issuable by the Parent only in limited circumstances and only to those
holders of Units subject to certain legal or regulatory constraints on their
ability to possess voting power with respect to any single entity in excess of
certain thresholds, and except with respect to certain rights and obligations
applicable, pursuant to the LLC Agreement, to certain holders of Units with
respect to (i) nomination, election and/or appointment of members of the Board
of Directors, (ii) rights and obligations relating to transferability of Units
and rights to request registration of Units under the applicable securities
laws, (iii) Contingent Units, and (iv) certain other matters, each Unit will be
identical in all respects to each other Unit. Units other than Non-Voting Units
("Voting Units") will be the only class of equity interests in the Parent
outstanding immediately following the closing of the Merger and the Exchange.
Voting and Related Rights. Holders of record of Voting Units will be
entitled to notice of, and to vote at, meetings of the Members and to act with
respect to matters as to which approval of the Members may be solicited. There
will be an annual meeting of the Members starting in 1998, and special meetings
of the Members may be called by the Board, the Chairman or the Vice Chairman of
the Board, the Parent's chief executive officer, or upon written request of
Members holding not less than 20% of the outstanding Units. Holders of Voting
Units will be entitled to one vote per Voting Unit on matters submitted to a
vote or consent of holders of Units. The LLC Agreement provides that the vote of
a majority of Voting Units represented at a meeting of Members at which a quorum
is present will be sufficient for the transaction of business at such meeting,
except that, upon the recommendation of the Board of Directors that the Members
give such approval, the approval of at least two-thirds of the Members (by
number of Units) then entitled to vote at a meeting of Members will be required
for (i) with certain limited exceptions, any merger, consolidation, conversion
or reorganization of the Parent, (ii) dissolution of the Parent and (iii) the
sale or other disposition of all or substantially all of the assets of the
Parent or the sale or other disposition of all of the capital stock of MGI or
CERA owned by the Parent, other than in a spin-off of all of the capital stock
of MGI or CERA. Pursuant to the LLC Agreement, as described above, prior to the
IPO Date, the Members will be required to vote all of their respective Units for
the election as directors of the nominees described under "The Limited Liability
Company Agreement--Management--Board of Directors" above.
Appraisal Rights. Pursuant to the terms of the LLC Agreement, holders
of Units will not be entitled to any appraisal or dissenters' rights.
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Bailment Agreement. Pursuant to the LLC Agreement, all of the Unit
Certificates will be held by the Parent, as the Unit Bailee under the Unit
Bailment Agreement. The Unit Bailee will hold the Unit Certificates for
safekeeping in a safe deposit box at a financial institution chosen by the Unit
Bailee, and each Member will receive a receipt from the Unit Bailee for the
applicable Unit Certificate and a photocopy of such Certificate. During the time
the Unit Bailee has possession of the Unit Certificates of each Member, each
such Member will retain all rights of ownership of the Units represented by such
Unit Certificates, including but not limited to the right to receive and retain
distributions, to vote such Units, to transfer title to such Units (subject to
the terms of the LLC Agreement and any other applicable agreements) and to
execute consents, waivers or releases and otherwise to act in respect of such
Units in all matters acted upon by the Members. Pursuant to the Unit Bailment
Agreement, the Unit Bailee will have no security or ownership interest in the
Unit Certificates and each Member will be entitled to regain possession of such
Member's Unit Certificates at any time upon five days' prior notice and upon
compliance with certain other requirements.
RESALES OF UNITS
Restrictions on Transfer. The LLC Agreement will provide that, during
the period ending on the earlier of three years after the Closing Date and one
year after the IPO Date, each Member who, together with certain related trusts,
if any, owned, as of the Closing Date, 5% or more of the then outstanding Units
(each such Member, a "Restricted Holder"), each such trust and each of such
Restricted Holder's and such trust's Permitted Transferees (as defined below)
may transfer Units only (i) to an unaffiliated third party (A) in a sale of all
of the Units pursuant to an exercise of the take-along rights described in
"--Take-Along Rights" below or (B) pursuant to a merger, conversion,
consolidation or reorganization of the Parent, other than in a transaction
described in the following clause (ii), (ii) pursuant to certain transactions
where the organizational form of the Parent is changed (for example, from a
limited liability company to a corporation) but the owners and proportional
ownership of voting securities or other equity interests before and after such
change generally are unchanged, (iii) in a public offering of Units pursuant to
an effective registration statement under the Securities Act, (iv) to a
Permitted Transferee or (v) to the Parent or any subsidiary of the Parent.
In addition, prior to the IPO Date, each Member other than a Member
subject to the transfer restrictions described in the immediately preceding
paragraph, and, after the expiration of the period described in the immediately
preceding paragraph, each Member, may transfer such Member's Units only (i) in
any of the transactions described in clause (i) through (v) of the immediately
preceding paragraph, (ii) to a Member who was a Member as of the Closing Date or
(iii) subject to compliance with the qualifying sale rights, rights of first
offer and take-along rights described in "--Qualifying Sales," "--Rights of
First Offer" and "--Take-Along Rights" below, to Restricted Holders or third
parties who are "accredited investors," for cash in transactions that are exempt
from the registration requirements of the Securities Act. After the IPO Date, in
addition to transfers in any of the transactions described in the immediately
preceding sentence, each such Member will also be entitled to transfer such
Member's Units to any third party, subject to compliance with such qualifying
sale rights and with Rule 144 or Rule 145 under the Securities Act, if
applicable.
A "Permitted Transferee" will be defined in the LLC Agreement to mean
(i) any transferee by bequest or the laws of descent or distribution, (ii) any
trust for employees of the Parent and/or any of the Parent's subsidiaries
established under a qualified employee benefit plan, (iii) in the case of any
Member that is a trust, the trust beneficiaries of such trust, (iv) as to any
Member that is a corporation, company, partnership or other entity, certain
affiliates of such Member and (v) in the case of any Member that is an
individual, any trust the only actual beneficiaries under which are such
individual and/or one or more of his brothers and sisters (whether by whole or
half blood), spouse, ancestors and lineal descendants, provided, in each case,
that the Permitted Transferee agrees in writing to be bound by the terms of the
LLC Agreement and complies with certain requirements.
46
<PAGE> 49
Further, (i) any transferee of Units will, unless such requirements are
waived by the Board of Directors of the Parent, be admitted as a substitute
Member only upon (a) execution by the transferee and the transferor of such
instruments as the Board of Directors or any officer of the Parent deems
reasonably necessary or desirable to effect the substitution, (b) the agreement
in writing by the transferee to be bound by the LLC Agreement, and (c) the
agreement in writing by the transferee to provide the Parent with such
information (including the transferee's employer identification number or social
security number, as applicable, and the amount paid for the Units) as the Parent
may request from time to time, (ii) it is a condition to any transfer of Units
that (x) the Board of Directors of the Parent determine that the proposed
transfer will not cause the Parent to violate applicable law or the terms of any
then outstanding indebtedness of the Parent, guarantees of indebtedness or
related documents, result in the Parent becoming subject to certain legal
requirements, or otherwise constitute a Prohibited Transaction (as defined in
the LLC Agreement), and (y) in the case of a transfer to a Permitted Transferee
(or in a transaction described in clause (iii) of the first sentence of the
second preceding paragraph), the transferor deliver to the Parent (A) an opinion
of counsel reasonably satisfactory to the Parent relating to certain matters
specified in the LLC Agreement, and (B) a certificate concerning compliance with
the restrictions on transfer set forth in the LLC Agreement and certain related
matters, and certain other documentation, (iii) each person or entity obtaining
Units, other than the persons and entities admitted as Members pursuant to the
Merger, the Exchange or the transfer of Units and Contingent Units pursuant to
the CERA Unit Grant Plan or exercising options to purchase Units (provided that
each such person or entity who exercised such options executes a subscription
agreement and tenders full payment of the exercise price of such options), will
be admitted as an additional Member at the time such person or entity (A)
executes a counterpart of the LLC Agreement, (B) complies with the applicable
resolution, if any, of the Board of Directors of the Parent with respect to such
admission, and (C) is named as a Member in the Parent's membership register, and
(iv) transfers of Units prior to the IPO Date are subject to certain further
restrictions designed to ensure that the Parent is not treated as a publicly
traded partnership for tax purposes. See "The Merger and the Exchange--Certain
Federal Income Tax Consequences" above, for a discussion of the tax consequences
of the Parent being treated as a "publicly traded partnership."
Securities Laws. The issuance of the Units pursuant to the Merger and
the Exchange, the Contingent Units and the Units issuable upon exercise of the
Contingent Options, the Brera Options and the Jordan Options will be registered
under the Securities Act and such Units (other than Units issued to "affiliates"
of MGI, CERA or the Parent) will be freely transferable under the Securities
Act. However, there is no public trading market for Units, and it is not
expected that there will be a public trading market for the Units in the
foreseeable future. Units issued to affiliates of MGI as of August 1, 1997 or
CERA as of the Closing Date may not be sold except pursuant to an effective
registration statement under the Securities Act or other applicable exemption
from the registration requirements of the Securities Act, including (in the case
of such affiliates who are not also affiliates of the Parent) Rule 145 under the
Securities Act.
Holdback Agreement. Under the LLC Agreement, the Units will be subject
to a holdback provision under which such Units may not be transferred in any
public sale or distribution, including sales pursuant to Rule 144 or Rule 144A
under the Securities Act, during the 20-day period prior to and the one-year
period after the effective date of any registration statement for a public
offering filed in respect of any equity securities of the Parent (other than as
part of such public offering).
Qualifying Sales. Each Member will be entitled, prior to such time as
30% of the then outstanding Units have been sold to the public pursuant to an
effective registration statement under the Securities Act or pursuant to Rule
144 under the Securities Act (the "Establishment of a Public Market"), to
participate proportionately in certain "qualifying sales" of Units by a
Restricted Holder, certain related trusts, if any, and/or any of their Permitted
Transferees. Subject to certain qualifications, "qualifying sales" generally
will be any sales by a Restricted Holder, such trusts and/or such Permitted
Transferees to a third party in a
47
<PAGE> 50
private transaction after such Restricted Holder, trusts and/or Permitted
Transferees have sold an aggregate of 5% of the Units held by such Restricted
Holder, trusts and/or Permitted Transferees.
Rights of First Offer. Under the LLC Agreement, prior to the IPO Date,
the Units will be subject to certain rights of first offer in favor of the
Parent (whose right may be assigned to MGI or CERA) and each Restricted Holder.
If a holder of Units desires, prior to the IPO Date, to offer or to sell Units
owned by such holder in a transaction described in clause (iii) of the first
sentence of the second paragraph of "--Restrictions on Transfer" above, such
holder must first make an offer to sell such Units to the Parent and, if the
Parent does not accept such offer within a twenty-day period, to each Restricted
Holder at a price and on the other terms specified by such holder of Units in a
notice to the Parent. Each Restricted Holder shall have the right during the two
successive twenty-day periods following the expiration of the first twenty-day
period to purchase such Restricted Holder's pro rata portion of the number of
such Units that the Parent shall not have elected to purchase. If the Parent and
the Restricted Holders do not elect to exercise such rights with respect to all
the Units so being offered, the holder may sell such Units to a third party at
no less than 90% of the price and on the other terms initially offered to the
Parent and the Restricted Holders.
Take-Along Rights. Under the LLC Agreement, the Units will be subject
to certain "take-along" rights of the holders of more than 50% of the
outstanding Units (the "Majority Holders"). In the event that the Majority
Holders elect to sell all of their Units to a third party, each other holder of
Units will have an obligation to sell such holder's Units to such third party on
the same terms and at the same price as the Majority Holders.
Registration Rights. Under the LLC Agreement and subject to the
limitations described therein, the Parent will agree to grant to (i) the holder
or holders (other than the Founding Stockholders and certain related trusts) of
30% of the Registrable Securities (as such term is defined in the LLC Agreement
and which will generally include all of the Units to be issued in connection
with the transactions contemplated by the Merger Agreement) with respect to the
initial request and 10% of the Registrable Securities with respect to any
subsequent requests, and (ii) with respect to two requests only after the third
anniversary of the Closing Date, the Founding Stockholders holding a specified
percentage of Units, the right to require the Parent to register for resale
(subject to certain minimum registration requirements), under the Securities Act
and applicable state securities laws, Units that such holders or certain of
their affiliates propose to sell. Since the requests for registration under
clause (i) of the immediately preceding sentence exclude the Founding
Stockholders and the initial request thereunder must be made by the holders of
at least 30% of the Registrable Securities, C&D Fund IV will effectively control
the initial registration of the Units if such registration occurs prior to the
third anniversary of the Closing Date. The Parent will be obligated to pay all
expenses incidental to the first two registrations requested pursuant to clause
(i) of the first sentence of this paragraph and each of the two registrations
requested pursuant to clause (ii) of such first sentence, in each case,
excluding underwriting discounts and commissions. Subject to certain limitations
set forth in the LLC Agreement, all holders of Units as of the Closing Date will
be entitled to participate in any such registration for resale, or in any
registration of equity securities of the Parent otherwise undertaken by the
Parent.
Registration Statement on Form S-8. The Parent intends to file a
registration statement on Form S-8 under the Securities Act to register all
Units issuable under the CERA Unit Grant Plan, the CERA Option Plan and the MGI
Option Plan or upon exercise of the Existing MGI Options. This registration
statement is expected to be filed promptly following the effective date of the
Registration Statement of which this Information Statement/Prospectus is a part
and will be effective upon filing. The resale of such Units generally will be
subject to the restrictions applicable to Units described above and to certain
additional restrictions contained in or to be contained in the option, grant and
subscription agreements entered into or to be entered into pursuant to such
plans or in connection with such options.
48
<PAGE> 51
Certificate Legend. Each certificate representing Units will bear a
legend indicating that such Units are subject to the restrictions on transfer
contained in the LLC Agreement and any other applicable agreement. Each holder
of Units should read carefully the provisions regarding restrictions on transfer
applicable to the Units as set forth in the LLC Agreement, a copy of which is
attached as Annex B to this Information Statement/Prospectus.
ISSUANCE OF ADDITIONAL SECURITIES
The LLC Agreement, subject to the requirements of the Delaware Act and
other applicable law, and subject to certain limitations set forth in the LLC
Agreement, grants the Board of Directors the authority to issue and sell
additional Units and other securities of the Parent, at any time and on such
terms and conditions as the Board may determine, and without the approval of the
holders of Units.
If the Parent proposes to issue or sell, prior to the Establishment of
a Public Market, any additional Units to a Restricted Holder or any affiliate
thereof (subject to certain exceptions), the Parent will be required to offer to
each holder of Registrable Securities who is an "accredited investor," on the
same terms and conditions as will be applicable to the sale to such Restricted
Holder or such affiliate, the right to purchase the number of additional Units
such that such holder of Registrable Securities would have the opportunity to
hold the same percentage of Units, after giving effect to the sale to such
Restricted Holder or such affiliate, as such holder of Registrable Securities
held immediately prior to such sale.
LIMITED LIABILITY
Generally, the liability of an owner of an equity interest in a
Delaware limited liability company is limited, under the Delaware Act, to the
amount of capital such owner contributes to the company in respect of such
owner's interest in the company plus such owner's share of any undistributed
profits and assets of the company.
CAPITAL CONTRIBUTIONS
The securities and assets exchanged for Units pursuant to the Merger,
the CERA Exchange and the Goldman Exchange will constitute capital contributions
to the Parent by the persons or entities receiving such Units in connection
therewith. No holder of Units will be required to make subsequent capital
contributions to the Parent.
AMENDMENT OF LLC AGREEMENT
The LLC Agreement may not be amended except by a written agreement
signed by the Parent and a majority of the Members (by number of Voting Units),
except that (i) any amendment of any provision of the LLC Agreement requiring
the affirmative vote of more than a majority of the Directors then in office, or
the consent or approval of the Consenting CERA Principal or one or more of the
C&D Fund IV Nominees, will also require the corresponding vote of such
percentage of the Directors or the consent or approval of such other person or
entity, as the case may be, (ii) any amendment of any provision of the LLC
Agreement requiring the affirmative vote of a specified percentage or proportion
of the Members or holders of Units will require the affirmative vote of such
percentage or proportion of such Members or holders, (iii) any amendment or
modification of any provision of the LLC Agreement providing for, or resulting
in, the direct reduction or elimination of any right, preference or benefit
granted to any particular person or entity or group of persons or entities will
require the consent of such person or entity or group of persons or entities,
and (iv) any amendment of any other provision of the LLC Agreement (A) to
satisfy any requirements, conditions, guidelines or opinions contained in any
opinion, directive, order, ruling or regulation of the Commission, the IRS or
any other United States federal or state agency, or in any United States federal
or state statute, compliance with which the Board
49
<PAGE> 52
deems in good faith to be in the best interests of the Parent and (B) to cure
any ambiguity or mistake or correct or supplement any provision of the LLC
Agreement that may be incomplete or inconsistent with any other provision
contained therein, may be signed by the Parent only, without any approval of the
Members being required, if such modification or amendment is authorized by the
Board.
FIDUCIARY AND OTHER DUTIES
The fiduciary obligations of officers, directors, members and
affiliates of limited liability companies is a developing area of the law. In an
effort to create more certainty regarding the duties of the officers and
directors of the Parent to the Parent and the Members, the LLC Agreement
specifies certain standards of behavior required of such persons, sets forth
procedures that may be used for resolution of conflicts of interest and
describes certain activities that will not be deemed to violate fiduciary or
other duties.
The LLC Agreement provides that, except as otherwise specifically
provided therein, the duties and obligations of Officers, Directors and Members
to the Parent will be the same as the duties owed by officers, directors and
stockholders, respectively, of a corporation organized under the DGCL to such
corporation. The Parent believes that there is more certainty under the DGCL
regarding duties owed by such persons than under the Delaware Act, primarily
because there are many judicial decisions under the DGCL and comparable
corporate statutes. Other provisions of the LLC Agreement contain language that
limits the liability of Officers, Directors, Members, their respective
affiliates and certain other persons (collectively, "Covered Persons") to the
Parent or the holders of Units. Such provisions are intended to permit Covered
Persons to act in good faith reliance on the provisions of the LLC Agreement;
with certain limitations, to allow certain Covered Persons to engage in outside
businesses and activities (including those competitive with the business of the
Parent) and to take for their respective own accounts investment opportunities
without first presenting such investment opportunities to the Parent; and to
permit the Officers and Directors to perform their duties to the Parent, without
undue uncertainty regarding the standards by which they will be judged or undue
risk of liability. The Parent believes that such provisions are necessary to
provide certainty and fairness with respect to the relationships between Covered
Persons and the Parent, some of which may potentially involve conflicts of
interest. See "The Merger and the Exchange--Interest of Certain Persons in the
Merger and the Exchange." The LLC Agreement provides, among other things, that a
Covered Person will not be liable for any act or omission if such person acted
in the good faith belief that such action was in, or was not opposed to, the
best interests of the Parent and in a manner believed to be within the scope of
authority conferred on such Covered Person by or pursuant to the LLC Agreement.
INDEMNIFICATION
The LLC Agreement provides that the Parent will indemnify any person
who is or was or has agreed to become a Director, Officer, employee or agent of
the Parent, or is or was serving or has agreed to serve at the request of the
Parent as a director, officer, employee or agent of another entity or other
enterprise, against liabilities arising in the course of such person's service,
provided that the indemnitee acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the Parent, provided
that with respect to any criminal proceeding, the indemnitee had no reasonable
cause to believe his conduct was unlawful. Such liabilities include all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement.
The Members will not be personally liable for such indemnification.
RIGHT TO INFORMATION
In addition to other rights specifically listed in the LLC Agreement,
and subject to such reasonable standards as may be established by the Parent,
each Member is entitled to all information to which a
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<PAGE> 53
member of a Delaware limited liability company is entitled to have access
pursuant to Section 18-305 of the Delaware Act under the circumstances and
subject to the conditions therein stated.
TERMINATION AND DISSOLUTION
The Parent will have perpetual existence, unless sooner terminated
pursuant to the Agreement. The LLC Agreement provides that the Parent will be
dissolved upon (i) the consent of the Board of Directors and two-thirds of the
Members (by number of Units), or (ii) any event which, under the Delaware Act or
other applicable law, would cause the dissolution of the Parent, provided that,
unless required by law, the Parent will not be wound up as a result of any such
event and the business of the Parent will be continued. Notwithstanding the
foregoing, the death, retirement, resignation, bankruptcy or dissolution of any
Member or the occurrence of any other event that terminates the continued
membership of any Member in the Parent under the Delaware Act will not, in and
of itself, cause the dissolution of the Parent.
LIQUIDATION AND DISTRIBUTION OF PROCEEDS
Upon dissolution of the Parent, the Board of Directors will direct the
liquidation of the Parent's assets and apply the proceeds of liquidation in the
order of priority set forth in the LLC Agreement. Generally, after discharging
the debts and liabilities of the Parent, any remaining proceeds will be
distributed to the Members in accordance with the respective Units owned by
them.
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<PAGE> 54
SELECTED HISTORICAL FINANCIAL DATA
The following tables set forth selected historical financial data of
MGI for the four years ended December 31, 1996 and for the six month period
ended June 30, 1997 and of CERA for the five fiscal years ended June 30, 1997.
The selected historical financial data of MGI for the four years ended December
31, 1996 and of CERA for the four fiscal years ended June 30, 1996 were derived
from the audited Consolidated Financial Statements of MGI and CERA,
respectively. The selected historical financial data of MGI for the six month
period ended June 30, 1997 and of CERA for the fiscal year ended June 30, 1997
were derived from the unaudited Consolidated Financial Statements of MGI and
CERA, respectively, and include, in the opinion of the respective managements,
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the data for such periods. The unaudited results of MGI for the
six month period ended June 30, 1997 are not necessarily indicative of the
results of MGI to be expected for the full year ended December 31, 1997, or for
any future periods. The following tables should also be read in conjunction with
"MGI Management's Discussion and Analysis of Financial Condition and Results of
Operations," "CERA Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements of MGI and
of CERA and accompanying notes thereto included elsewhere in this Information
Statement/Prospectus.
MCM GROUP, INC.
<TABLE>
<CAPTION>
Six months ended
Years ended December 31, June 30,
---------------------------------------------------------------- ----------------
1993 1994 1995 1996 1996 1997
------------------------------ ---- ---- ---- ---- ----
January 1 to February 17
February 16 to
(Predecessor) December 31
------------- -----------
(a) (a)
Dollars in Thousands
(except per share data)
OPERATING DATA:
------------- ----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues $2,555 | $18,488 $26,596 $31,625 $36,119 $17,718 $20,155
|
Income before |
income tax provision 554 | 2,734 1,420 2,536 5,738 2,770 4,113
|
Income tax provision 195 | 1,354 692 977 2,776 1,330 1,972
|
Net income $ 359 | $ 1,380 $ 728 $ 1,559 $ 2,962 $ 1,440 $ 2,141
|
Income from |
continuing operations |
per common share | 4.19 2.21 4.72 8.82 4.12 6.49
|
BALANCE SHEET DATA: |
|
Total assets | $25,038 $26,558 $28,432 $34,151 $30,855 $37,326
|
Total liabilities | _ _ 4,773 6,555 5,755 7,589
|
Redeemable |
common stock (b) | _ _ _ 800 _ 800
|
Common |
stockholders' equity | 22,007 22,100 23,659 26,796 25,100 28,937
</TABLE>
52
<PAGE> 55
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
<TABLE>
<CAPTION>
Years ended June 30,
---------------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenues $ 11,026 $ 14,157 $ 20,074 $ 25,413 $ 30,020
Income before income tax provision 121 82 231 96 110
Income tax provision (c) 47 71 197 89 107
Net income $ 74 $ 11 $ 34 $ 7 $ 3
Income from continuing
operations per common share 0.31 0.05 0.14 0.03 0.01
BALANCE SHEET DATA:
Total assets $ 5,826 $ 6,802 $ 9,057 $ 12,108 $ 16,320
Total long term debt 113 41 -- -- --
Common stockholders' deficit (278) (264) (384) (375) (401)
</TABLE>
NOTES TO SELECTED HISTORICAL FINANCIAL DATA
(a) Two periods have been presented for 1993 to reflect the acquisition of
MGI's former parent, The Van Kampen Merritt Companies, Inc. ("the VKM
Acquisition") on February 17, 1993. As a result of the VKM Acquisition,
the consolidated financial data for the period after the VKM
Acquisition is presented on a different cost basis than that for the
period prior to the VKM Acquisition and therefore is not comparable.
(b) MGI has agreed to redeem certain common stock at fair market value
under certain defined conditions.
(c) During these periods, CERA elected S Corporation status under the
Internal Revenue Code whereby it did not incur any federal and most
state taxes at the corporate level, as they were borne by CERA's
stockholders.
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<PAGE> 56
PRO FORMA CONDENSED COMBINED FINANCIAL DATA
(UNAUDITED)
The following unaudited Pro Forma Condensed Combined Financial Data are
based on the Consolidated Financial Statements of MGI and CERA included
elsewhere in this Information Statement/Prospectus, as adjusted to give effect
to the Merger and the Exchange and related transactions.
The unaudited Pro Forma Condensed Combined Statements of Operations of
the Parent are derived from the Consolidated Statements of Income of CERA for
the fiscal year ended June 30, 1996 and the fiscal year ended June 30, 1997,
included elsewhere in this Information Statement/Prospectus, and the
Consolidated Statement of Income of MGI for the year ended December 31, 1996 and
the six months ended June 30, 1997, included elsewhere in this Information
Statement/Prospectus, and assumes that the Merger and the Exchange were
consummated as of January 1, 1996. The unaudited Pro Forma Condensed Combined
Balance Sheet of the Parent is derived from the Consolidated Balance Sheets of
CERA and of MGI as of June 30, 1997, included elsewhere in this Information
Statement/Prospectus, and the Balance Sheet of the Parent, included elsewhere in
this Information Statement/Prospectus. The unaudited Pro Forma Condensed
Combined Financial Data should be read in conjunction with the Consolidated
Financial Statements of the Parent, of MGI and of CERA, included elsewhere in
this Information Statement/Prospectus.
The unaudited Pro Forma Condensed Combined Financial Data of the Parent
do not purport to be indicative of the results that would actually have been
obtained if the Merger and the Exchange had occurred on the dates indicated or
of the results that may be obtained in the future. The unaudited Pro Forma
Condensed Combined Financial Data are presented for comparative purposes only.
The pro forma adjustments, as described in the accompanying data and notes, are
based on available information and certain assumptions that management believes
are reasonable.
The unaudited pro forma information is based on the historical
Consolidated Financial Statements of the Parent, of MGI and of CERA. The Merger
has been accounted for at historical cost. The Exchange has been accounted for
under the purchase method of accounting. The purchase price, including related
fees and expenses, has been allocated to the tangible and identifiable
intangible assets and liabilities of CERA based upon management's preliminary
estimates of their fair value, with the remainder allocated to goodwill. The
allocation of the purchase price is subject to revision when additional
information concerning asset and liability valuation becomes available. The pro
forma adjustments include adjustments to reflect the CERA Distribution Loan and
the CERA Cash Distribution, changes in amortization of intangible assets
relating to the allocation of the purchase price, the elimination of
non-recurring charges for various fees and costs associated with the Exchange,
the change in CERA's tax status, and the related tax effects of the various pro
forma adjustments.
54
<PAGE> 57
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
June 13, to
June 30, 1997 Six Months ended June 30, 1997
------------- --------------------------------------------------
Parent
------ Pro Forma
(a) MGI CERA Adjustments Pro Forma
--- --- ---- ----------- ---------
<S> <C> <C> <C> <C> <C>
Dollars in Thousands
Research services revenues -- $ 19,834 $ 16,904 -- $ 36,738
Other revenues -- 321 -- -- 321
----------- -------- -------- ----------- ---------
Total revenues -- 20,155 16,904 -- 37,059
Total expenses -- 16,042 16,120 1,018 (d) 33,180
----------- -------- -------- ----------- ---------
Operating Income -- 4,113 784 (1,018) 3,879
Interest income (expenses), net -- -- 29 (1,016) (c) (987)
Other income (expenses), net -- -- (756) 496 (f) (260)
----------- -------- -------- ----------- ---------
Income before income tax
provision -- 4,113 57 (1,538) 2,632
Income tax provision -- 1,972 54 (921) (e) 1,105
----------- -------- -------- ----------- ---------
Net income -- $ 2,141 $ 3 $ (617) $ 1,527
=========== ======== ======== =========== =========
</TABLE>
See Notes to Pro Forma Condensed Combined Statement of Operations
55
<PAGE> 58
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Year ended December 31, 1996
-----------------------------------------------------------------------------------
MGI CERA
------------- ------------------------------
Six months
Year ended Six months ended
December 31, ended December 31, Pro Forma
1996 June 30, 1996 1996 Adjustments Pro Forma
------------- ------------- ------------- ------------- -------------
(b) (b)
<S> <C> <C> <C> <C> <C>
DOLLARS IN THOUSANDS
Research services revenues $ 35,794 $ 14,624 $ 13,116 -- $ 63,534
Other revenues 325 -- -- -- 325
------------- ------------- ------------- ------------- -------------
Total revenues 36,119 14,624 13,116 -- 63,859
Total expenses 30,381 14,402 12,866 2,035 (d) 59,684
------------- ------------- ------------- ------------- -------------
Operating Income 5,738 222 250 (2,035) 4,175
Interest income (expense), net -- 47 11 (2,032) (c) (1,974)
Other income (expense), net -- (216) (209) -- (425)
------------- ------------- ------------- ------------- -------------
Income before income 5,738 53 52 (4,067) 1,776
tax provision
Income tax provision 2,776 52 52 (2,134) (e) 746
------------- ------------- ------------- ------------- -------------
Net income $ 2,962 $ 1 -- $ (1,933) $ 1,030
============= ============= ============= ============= =============
</TABLE>
See Notes to Pro Forma Condensed Combined Statement of Operations
56
<PAGE> 59
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(Dollars In Thousands)
The Pro Forma Condensed Combined Statements of Operations (unaudited)
for the year ended December 31, 1996 and the six months ended June 30, 1997
assume that the Merger and the Exchange and related transactions occurred on
January 1, 1996.
(a) The Parent was formed on June 13, 1997.
(b) The Condensed Combined Statement of Operations, for the year ended
December 31, 1996 of CERA was derived from combining the results of
operations for the six months ended June 30, 1996 as derived from the
Consolidated Statement of Income of CERA for the year ended June 30,
1996, included elsewhere in this Information Statement/Prospectus, with
the six months ended December 31, 1996, as derived from the
Consolidated Statement of Income of CERA for the year ended June 30,
1997, included elsewhere in this Information Statement/Prospectus.
(c) The adjustment reflects an increase in interest expense resulting from
the CERA Distribution Loan in an assumed aggregate principal amount of
$23,900, assuming an interest rate of 8.5%.
(d) The adjustment reflects an increase in amortization expense resulting
from the increase in CERA's intangible assets, including capitalized
transaction costs, amortized over their useful lives ranging from 5 to
25 years.
(e) The adjustment reflects an increase in income tax expense resulting
from the assumed change in tax status of CERA as a result of the CERA
Exchange and a net decrease in the provision for income taxes as a
result of the pro forma adjustments, all assuming an effective tax rate
of 42%.
(f) The adjustment reflects the elimination of professional fees of $496
incurred by CERA during the six months ended June 30, 1997 that were
associated with the Exchange.
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<PAGE> 60
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, 1997
---------------------------------------------------------------
Parent
------- Pro Forma
(a) MGI CERA Adjustments Pro Forma
--------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents -- $ 12,794 $ 4,942 23,900 (d) $ 17,736
(23,900) (d)
Receivables, net -- 4,963 9,466 -- 14,429
Prepaids and other current assets -- 834 296 -- 1,130
------- --------- -------- ----------- -----------
Total current assets -- 18,591 14,704 -- 33,295
Furniture, equipment, and leasehold -- 2,228 1,503 -- 3,731
improvements, net
Excess cost over fair value of net assets -- 16,077 -- 28,397 (b) 44,474
acquired, net
Other intangible assets -- -- -- 14,450 (b) 14,450
Other assets -- 430 113 324 (e) 867
------- --------- -------- ----------- -----------
Total assets -- 37,326 16,320 43,171 96,817
======= ========= ======== =========== ===========
LIABILITIES and STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable and accrued expenses -- 959 1,939 2,165 (c) 5,063
Accrued compensation and benefits -- 1,141 4,909 -- 6,050
Accrued vendor commissions -- 1,793 -- -- 1,793
Deferred revenues -- -- 9,902 -- 9,902
Income taxes payable -- 1,042 -- -- 1,042
Short term bank loan -- 703 -- -- 703
------- --------- -------- ----------- -----------
Total current liabilities -- 5,638 16,750 2,165 24,553
Loan payable -- -- -- 23,900 (d) 23,900
Deferred income taxes payable -- 933 -- -- 933
Other noncurrent liabilities -- 1,018 -- -- 1,018
------- --------- -------- ----------- -----------
Total liabilities -- 7,589 16,750 26,065 50,404
Minority interest -- -- (29) 29 (f) --
Redeemable common stock -- 800 -- (800) (f) --
Company equity/(deficit) -- 28,937 (401) 46,089 (d) 46,413
(28,536) (f) --
324 (e)
------- --------- -------- ----------- -----------
Total stockholders' equity -- 28,937 (401) 17,877 46,413
------- --------- -------- ----------- -----------
Total liabilities and stockholders' equity -- $ 37,326 $ 16,320 $ 43,171 $ 96,817
======= ========= ======== =========== ===========
</TABLE>
See Notes to Pro Forma Condensed Combined Balance Sheet
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<PAGE> 61
NOTES TO PRO FORMA CONDENSED COMBINED BALANCE SHEET
(Dollars In Thousands)
The Pro Forma Condensed Combined Balance Sheet (unaudited) assumes that
the Merger and the Exchange and related transactions occurred on June 30, 1997.
(a) The Parent was formed on June 13, 1997 with subscribed capital of one
hundred dollars.
(b) The acquisition of CERA by the Parent will be accounted for as a
purchase in accordance with Accounting Principles Board Opinion No. 16,
"Business Combinations." The purchase price is being allocated first to
the tangible and identifiable intangible assets and liabilities of CERA
based upon preliminary estimates of their fair market values, with the
remainder allocated to goodwill. The total purchase price is as
follows:
<TABLE>
<S> <C>
Purchase Price paid to CERA Stockholders, including
equity in Parent $ 40,000
Transaction expenses 2,417
--------
Total Purchase Price 42,417
Book value of net assets acquired (430)
--------
Increase in basis $ 42,847
========
Allocation of increase in basis:
Identifiable intangible assets including
customer list and key contract proprietary software $ 14,450
Goodwill 28,397
--------
$ 42,847
========
</TABLE>
(c) This adjustment reflects unpaid transaction expenses as of June 30,
1997 of $2,165.
(d) The $40,000 cost to acquire 100% of the outstanding CERA Common Stock
includes cash of $23,900 (the CERA Distribution Loan) and an exchange
of CERA stock for Units. The CERA Distribution Loan was obtained by
MCM, a wholly owned subsidiary of MGI. The loan proceeds were in turn
loaned by MCM to CERA which used such funds to acquire a portion of the
limited partnership interest in CERA LP, held by Goldman, for $2,390,
and to make a distribution of $21,510 to the CERA Stockholders. All of
the outstanding CERA Common Stock (and Goldman's remaining interest in
CERA LP), was then exchanged for Units.
(e) The adjustment reflects the deferred tax asset arising from the change
in CERA's tax status, resulting from the Exchange.
(f) Eliminates historical equity.
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<PAGE> 62
MGI MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following is a discussion and analysis of the historical results of
operations and financial condition of MGI and factors affecting MGI's financial
resources. This discussion should be read in conjunction with MGI's Consolidated
Financial Statements, including the notes thereto, appearing elsewhere in this
Information Statement/Prospectus. As used in this MGI Management's Discussion
and Analysis of Financial Condition and Results of Operations, "MGI" refers to
(i) MGI and its subsidiaries for periods from and after the August 1996 spin-off
of MGI by VK/AC Holding, Inc. ("VK/AC") to the holders of its common stock (the
"Spin-Off"), (ii) MCM and its subsidiaries for periods prior to the Spin-Off or
(iii) if the context requires, MCM.
MCM and its subsidiaries, MCM S.A., MCM Asia Pacific and McCarthy,
Crisanti & Maffei (Europe) Limited ("MCM Europe"), provide specialized on-line
financial information and analysis relating to developments in the U.S. and
international corporate securities, fixed income and currency markets. MGI
distributes its services primarily through on-line telecommunications
information networks to subscribers in 57 countries. Subscribers to MGI's
electronic information services consist almost exclusively of institutional
clients (e.g., major banks, brokers, dealers, government bond and financial
futures trading operations, foreign exchange trading operations, and treasury
departments of major corporations). In addition to MGI's headquarters in New
York, MGI maintains offices in Boston, London, Paris, Tokyo, Hong Kong and
Singapore.
For the year ended December 31, 1996, nearly half of MGI's total
revenues were attributable to customers located in the United States.
European-based customers accounted for approximately one third of total revenue
and customers based in Asia accounted for the balance. The CorporateWatch(R)
service is responsible for a substantial portion of MGI's revenue earned in the
United States, while the CurrencyWatch(R) service is responsible for a
substantial portion of the revenue earned in the European and Asian markets.
Revenue from MGI's services has grown substantially since 1992,
principally as a result of investments made by MGI to expand its distribution
and marketing capabilities and enhance its service offerings throughout the
global financial markets. See "Business of MGI--Overview" below. The substantial
increases in revenues have been offset to some extent by (i) increases in vendor
royalties resulting from MGI's decision in late 1993 to distribute its services
on a non-exclusive basis over various Vendor Distribution Firms and (ii)
increases in compensation and benefits resulting from MGI's hiring of personnel
to expand the services offered by its product lines.
Vendor royalties currently represent MGI's largest item of expense.
Vendor royalties are commissions paid to Vendor Distribution Firms, mainly DJM.
Historically, MGI provided its services, with limited exceptions, exclusively
through screens provided by DJM. In late 1993 MGI exercised its option under its
contract with DJM to deliver its services on a non-exclusive basis through other
Vendor Distribution Firms. As a result of the discontinuation of the exclusive
distribution agreement with DJM, DJM's royalty increased to a level
substantially greater than that in effect while distribution of MGI's services
was made exclusively through DJM. MGI renegotiated the agreement with DJM and
reached agreement in November 1996 with DJM on a reduction in the royalty fee in
respect of subscription revenues above a specified base amount. Since moving to
a multi-vendor distribution system, MGI has increased its sales volume and
believes that this strategy will continue to increase revenues to more than
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<PAGE> 63
offset the additional vendor royalty costs. However, there can be no assurance
that MGI's strategy will continue to be successful.
Compensation and benefits costs also have increased as MGI has invested
in additional professional staff to enhance certain product lines, particularly
CurrencyWatch(R) and YieldWatch(R), MGI's two fastest growing services in terms
of revenues. While revenues for these two services have grown substantially, the
additional investment in personnel has kept profit margins on these services
relatively low. MGI believes that as CurrencyWatch(R) and YieldWatch(R) revenues
continue to grow, profit margins will significantly improve, although there can
be no assurance in this regard.
Historically, MGI has not had any material interest expense. MGI
expects to incur significant interest expense following the Merger and the
Exchange in connection with the financing of the CERA Distribution Loan.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1997 versus 1996
Revenues
Revenue from research services grew from $17.7 million during the first
six months of 1996 to $19.8 million during the same period of 1997, an increase
of 13.1%. Revenues for all of MGI's major product lines continue to grow, due
primarily to the expansion of MGI's international customer base and the delivery
of research services through multiple Vendor Distribution Firms to MGI's
customers.
Expenses
Total expenses in the first six months of 1997 were $16.0 million, or
$1.1 million more than the same period in 1996, an increase of 6.6%. Sales,
distribution and administrative expense for the first six months of 1997 was
$15.6 million, an increase of 7.6% over the same period in 1996. This increase
resulted from substantially higher compensation and benefits costs, reflecting
the hiring of additional analysts and research assistants to enhance MGI's
product lines, as well as from increases in occupancy expense and in expenses
associated with the hiring of additional personnel and investments in computer
system enhancements.
These increased costs were partially offset by overall lower vendor
royalties, reflecting the continuing success of MGI in increasing revenues
through multiple Vendor Distribution Firms.
Net Income
Net income for the six months ended June 30, 1997 was $2.1 million, an
increase of $1.3 million or 40.6% over the same period in 1996. Net income grew
as a result of increased revenue realized on all of MGI's major product lines
and lower expenses for vendor royalties.
Recent Accounting Pronouncements
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" ("SFAS 130"). SFAS 130 establishes standards for reporting and display
of comprehensive income and its components in a full set of general-purpose
financial statements. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997. Reclassification of financial statements for earlier periods
provided for comparative purposes is required. The adoption of SFAS No. 130 will
have no impact on MGI's consolidated results of operations, financial position
or cash flows.
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In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information" ("SFAS 131"). SFAS No. 131 establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas, and major
customers. SFAS No. 131 is effective for financial statements for fiscal years
beginning after December 15, 1997. The adoption of SFAS No. 131 will have no
impact on MGI's consolidated results of operations, financial position or cash
flows.
Year Ended December 31, 1996 versus 1995
Revenues
Revenue from research services grew from $31.1 million in 1995 to $35.8
million in 1996, an increase of 15.1%. Revenues for all of MGI's major product
lines continued to grow, due primarily to the expansion of MGI's international
customer base and the delivery of research services through multiple Vendor
Distribution Firms to MGI's customers.
Expenses
Total expenses in 1996 were $30.4 million, or $1.3 million more than in
1995, an increase of 4.5%. Sales, distribution and administrative expenses
totaled $29.6 million, an increase of 4.6% over 1995. This increase resulted
from substantially higher compensation and benefits costs, reflecting the hiring
of additional analysts and research assistants to enhance MGI's product lines,
as well as from increases in occupancy expense and in expenses associated with
the hiring of additional personnel and investments in computer system
enhancements.
These increased costs were partially offset by lower vendor royalties,
reflecting the continuing success of MGI in increasing revenues through multiple
Vendor Distribution Firms.
Net Income
Net income for 1996 was $3.0 million, an increase of $1.4 or 87.5% over
1995. Net income grew as a result of increased revenue realized on all of MGI's
major product lines and lower expenses for vendor royalties.
Year Ended December 31, 1995 versus 1994
Revenues
Research services revenue grew from $26.0 million in 1994 to $31.1
million in 1995, an increase of 19.6%, which was attributable to growth in all
of MGI's major product lines.
Expenses
Total expenses in 1995 were $29.1 million, or $3.9 million more than in
1994, an increase of 15.5%. Sales, distribution and administrative expense
totaled $28.3 million, an increase of 16.0% over 1994 due to an increase in
compensation and benefits, which in turn reflected additions in personnel as
part of MGI's investment in the CurrencyWatch(R) and YieldWatch(R) product
lines, an increase in occupancy expense associated with MGI's relocation to a
new headquarters in 1994 and an increase in professional fees incurred resulting
from higher outside consulting and computer programming costs in 1995 associated
with MGI's expansion of its computer technology capabilities.
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<PAGE> 65
In addition, vendor royalties increased slightly in 1995 over 1994, but
declined as a percentage of total sales, reflecting MGI's ongoing efforts to
distribute its services through multiple Vendor Distribution Firms.
Net Income
Net income for 1995 was $1.6 million, an increase of $0.9 million or
128.6% over 1994. Net income growth was primarily due to higher revenues for
each of MCM's major services and decreased distribution costs as a percentage of
revenue.
LIQUIDITY AND CAPITAL RESOURCES
MGI generated cash from operations in the amounts of $3.2 million, $8.4
million and $0.7 million for the six months ended June 30, 1997 and the years
ended December 31, 1996 and 1995, respectively. Prior to the Spin-Off, Van
Kampen American Capital, Inc., a former affiliate of MGI ("VKAC, Inc."),
provided treasury functions for MGI. All cash was transferred to VK/AC and
applied to pay MGI's costs of operations. MGI did not have any material,
independent sources of credit and did not receive interest credit in respect of
excess cash balances nor was it charged interest for negative cash balances. MGI
continues to receive treasury services (including cash management) from VK/AC
and its affiliates under a services agreement but MGI maintains its own bank
accounts. MGI's principal operating expense is for compensation and benefits,
which it funds with cash from operations. MGI may make significant technology
related capital expenditures in the near future, but MGI believes that its cash
from operations will be sufficient to meet its operating costs and, following
the Merger and the Exchange, any increased debt service costs.
INCOME TAXES
MCM was a member of the VK/AC group for purposes of filing federal and
certain state and local consolidated, combined or unitary income tax returns
before the Spin-Off. MGI was included in the VK/AC group's 1996 federal and
certain state and local consolidated, combined or unitary income tax returns for
the period beginning August 22, 1996 and ending on the date of the Spin-Off. As
a result of the Spin-Off, MGI and MCM can no longer be included as members of
the VK/AC group for purposes of filing federal, state or local consolidated,
combined or unitary income tax returns. Instead, MCM will be included in federal
and certain state and local consolidated, combined or unitary income tax returns
to be filed by MGI for the period beginning after the Spin-Off. For taxes other
than consolidated, combined or unitary taxes, MCM has historically filed returns
with respect to such taxes on a stand-alone basis and has continued to file such
returns on a stand-alone basis after the Spin-Off.
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CERA MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The explanations and comments on the following pages relate to CERA's
financial performance in different fiscal periods. They should be read in
conjunction with CERA's Consolidated Financial Statements, and the notes
thereto, included elsewhere in this Information Statement/Prospectus.
CERA's core business is research, analysis and strategic information on
energy industry developments and trends, which is sold, primarily, on a
continuous, renewable retainer basis. CERA offers a number of different retainer
advisory services (see "Business of CERA," below) which are sold, principally,
as annual, renewable contracts. These contracts can vary in price depending on
the level of service and/or the number of advisory services purchased. The
majority of CERA's retainer clients purchase more than one service. The contract
price is billed at the inception of the contract and revenue is recognized
ratably over the contract term. Upon expiration of the contract, revenue does
not continue to be recognized unless and until the contract has been renewed and
billed. In the fiscal years ended June 30, 1997, 1996 and 1995, revenue from
retainer advisory services has increased over the prior fiscal year by 26%, 25%
and 32%, respectively. Revenue from retainer advisory services represented 53%,
of total revenue in the fiscal year ended June 30, 1997, up from 50% of total
revenue in each of the prior two fiscal years.
The balance of CERA's revenue is derived from custom projects, and
several different activities collectively called "retainer related."
Custom projects (also described as retainer applications and
consulting) are, generally, client-specific applications of research, data and
knowledge derived from the retainer advisory business. Most projects are priced
on a fixed-fee basis, plus expenses, with a limited number of projects priced on
a per-diem rate basis. The majority of project clients are also (or become)
retainer advisory clients. The revenue is less predictable than retainer
advisory revenue. It also can be more affected, year-to-year, by singular,
non-recurring large projects. The revenue is recognized, on a
percentage-of-completion basis, over the course of the project. In the fiscal
year ended June 30, 1997 ("Fiscal 1997") revenue from applications and
consulting projects decreased 7%, compared to increases of 10% and 66%,
respectively, in the prior two fiscal years. Project revenue was 27%, 34% and
39% of total revenue in the fiscal years ended June 30, 1997, 1996 and 1995,
respectively.
Retainer-related revenue encompasses several activities, including
separately-charged presentations and consulting days, individual sales of
research reports, fees for attending CERA events, and major, multi-client
sponsored research studies. Revenue from these activities, which are all,
generally, connected to the retainer advisory business (with respect to content,
staffing and clients) increased 48%, 93% and 23% in the fiscal years ended June
30, 1997, 1996 and 1995, respectively. This revenue, which has increased
principally as a result of higher sales of multi-client research and scenarios
reports, represented 20%, 16% and 11% of total revenue in the fiscal years ended
June 30, 1997, 1996 and 1995, respectively.
CERA has, historically, distributed all of its earnings in the form of
bonuses to its directors, employees and consultants. CERA has had S-corporation
status under the Code whereby CERA's earnings, if any, are passed through to
CERA's stockholders and taxed on an individual, rather than corporate, basis. It
is a fairly common practice for service companies (which, generally, may not
require large amounts of working capital) that are S-corporations to operate in
this manner (i.e., to have minimal amounts of reported net earnings).
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Staff compensation and benefits, including employee and consultant
bonuses (but excluding the bonuses distributed to CERA's stockholders) have
represented approximately two-thirds of operating expenses in each of the last
three fiscal years ended June 30, 1997, 1996, and 1995. These staff-related
expenses have increased at annual rates of 21%, 30% and 39% in each of the
fiscal years ended June 30, 1997, 1996 and 1995, respectively. The higher
expense has been largely the result of staff expansion over the past three
years, during which period the number of employees increased from 72 at the
beginning of the fiscal year ended June 30, 1995 ("Fiscal 1995") to 158 at the
end of fiscal 1997. The rate of staff expansion is expected to moderate in the
next fiscal year. The other one-third of operating expenses consists mainly of
travel costs, rent and other occupancy expenses, printing and communications.
These expenses have increased at annual rates similar to the staff expenses.
RESULTS OF OPERATIONS
Fiscal Year Ended June 30, 1997 versus 1996
Revenues
Total revenue increased 18%, from $25.4 million in the fiscal year
ended June 30, 1996 ("Fiscal 1996") to $30.0 million in Fiscal 1997. Retainer
services revenue increased 26%, due, in part, to new advisory services covering
Asia Pacific Energy, Global Electric Power, and Oil and Gas Information
Technology Strategy. Revenue from applications and custom consulting projects
decreased 7%, primarily because Fiscal 1996 included revenue from a large,
multi-year applications project in Europe which was completed in Fiscal 1996.
This decrease was offset by increased sales of special reports (up 42%), and
increased revenue from the CERA Executive Conference and other client-service
events (up 115%).
Expenses
As in prior periods, CERA distributed substantially all of its earnings
to its directors and employees in the form of bonuses. For Fiscal 1997, bonuses
were $3.7 million compared to $4.7 million in Fiscal 1996. Included in the $3.7
million in Fiscal 1997 is $1.9 million in bonuses related to the Merger and the
Exchange. Total expenses, excluding bonuses, increased 27% in Fiscal 1997
compared to Fiscal 1996. The increase in expenses was largely due to personnel
costs, up 27%, because of staff additions and increased use of Senior Associates
(contract research and consulting professionals) to generate and support
increased revenues. Expenses also increased because of a significant increase in
non-operating, merger-related expenses. Operating expenses, excluding bonuses,
for Fiscal 1997 are up 25%. Expenses also rose as a result of increased
international travel, particularly to Asia (CERA introduced a new Asia service
during this period), higher telecommunications expense, and increased rent due
to office expansion.
Other expenses (non-operating) of $1.0 million were incurred by CERA in
Fiscal 1997 in connection, primarily, with the Merger and Exchange. In Fiscal
1996, $0.4 million was incurred in connection with CERA's review of potential
strategic merger partners.
Net Income
Net income for Fiscal 1997 and Fiscal 1996, $2,744 and $7,523,
respectively, is nominal and has no particular significance because CERA has
distributed substantially all of its earnings in the form of bonuses. Income
before bonuses was $3.7 million in Fiscal 1997 compared to $4.7 million in
Fiscal 1996; the decrease due, primarily, to the merger-related expenses noted
above and increased staff expenses.
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Fiscal Year Ended June 30, 1996 versus 1995
Revenues
Total revenue increased 27%, from $20.1 million in Fiscal 1995 to $25.4
million in Fiscal 1996. Revenue increased in all of CERA's product lines with
particularly high growth in the World Oil, and Latin America (which was
introduced in Fiscal 1995) services. Retainer services revenue increased 25%.
Revenue from applications and custom consulting projects increased 10%. Report
sales (scenarios, multi-client studies) increased significantly, from $0.7
million in Fiscal 1995 to $2.3 million in Fiscal 1996. A large applications
project in Europe, which began in 1994, continued through Fiscal 1996, and a
new, major (multi-year) applications project was begun in Fiscal 1996.
Expenses
CERA has historically distributed substantially all of its net earnings
each year to its directors, employees and consultants in the form of bonuses. In
Fiscal 1996, these bonuses, which are included in operating expenses (in cost of
revenues, and selling, general and administrative expenses) were $4.7 million,
compared to $4.0 million in Fiscal 1995. Operating expenses, excluding bonuses,
increased 31% in Fiscal 1996 over Fiscal 1995, to $20.3 million from $15.5
million in Fiscal 1995. The increase in operating expenses was due, primarily,
to a 29% increase in personnel expenses (compensation and benefits), which,
generally, comprise approximately 60% of CERA's operating expenses (excluding
bonuses). The increased personnel expenses were due to a significant staff
expansion in Fiscal 1996 (to 143 employees, up from 98 at the end of Fiscal
1995). The staff additions were primarily in research, consulting and marketing,
and were needed to support CERA's continued revenue growth and in anticipation
of several new services planned for introduction in Fiscal 1997. Other operating
expense (non-personnel) increased 35%, primarily due to higher travel and
communications (network) expenses, and a major expansion of CERA's annual
Executive Conference and client Roundtables.
Other expenses (non-operating) of $0.4 million were incurred for CERA's
ongoing review of potential strategic merger partners.
Net Income
Net income decreased to $7,523 in Fiscal 1996 from $34,104 in Fiscal
1995. This decrease is not significant in that CERA had distributed
substantially all of its earnings in the form of bonuses. Net income before
bonuses increased to $4.7 million in Fiscal 1996 from $4.0 million in Fiscal
1995 due, primarily, to increased revenues in Fiscal 1996.
Fiscal Year Ended June 30, 1995 versus 1994
Revenues
Total revenue increased 42% from $14.2 million in the fiscal year ended
June 30, 1994 ("Fiscal 1994") to $20.1 million in Fiscal 1995. The revenue
growth was across all of CERA's product lines, particularly the North American
Electric Power and Refined Products services. Retainer services revenue
increased 32%. Revenue from applications and custom consulting projects
increased 66%. Revenue also increased due to a new advisory service for a
financial services industry client and continuation of a significant
applications project in Europe.
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Expenses
As indicated, CERA has distributed substantially all of its earnings
each year to its directors, employees and consultants in the form of bonuses. In
Fiscal 1995, these bonuses, which are included in operating expenses (in cost of
revenues, and selling, general and administrative expenses) were $4.0 million,
compared to $2.0 million in Fiscal 1994. Operating expenses, excluding bonuses,
increased 31% in Fiscal 1995 over Fiscal 1994, to $15.5 million from $11.8
million in Fiscal 1994. The increase in operating expenses was due, primarily,
to a 30% increase in personnel expenses (compensation and benefits). The
increased personnel expenses were due to additional research and consulting
staff hired to generate and support the increased revenues in Fiscal 1995, and,
to a lesser degree, staff additions in sales and marketing to support future
revenue growth.
Other expenses (non-operating) of $0.5 million were incurred in
connection with a transaction in Fiscal 1995 in which Goldman acquired a ten
percent ownership interest in CERA LP, as well as expenses related to CERA's
ongoing review of potential strategic merger partners.
Net Income
Net income increased from $10,884 in Fiscal 1994 to $34,104 in Fiscal
1995. This increase is not significant in that CERA had distributed
substantially all of its earnings in the form of bonuses. Net income before
bonuses increased to $4.0 million in Fiscal 1995 from $2.0 million in Fiscal
1994 due to increased revenues in Fiscal 1995 and a decrease in expenses as a
percentage of revenues.
LIQUIDITY AND CAPITAL RESOURCES
In Fiscal 1996 and Fiscal 1995, CERA's cash flows from operations were
$0.4 million, and ($0.5) million, respectively. As indicated above, CERA has,
essentially, distributed all of its income in the form of bonuses to its
directors, employees and consultants. Operating cash flows, without bonuses
(which are all discretionary) in Fiscal 1996 and Fiscal 1995 were $4.5 million
and $3.2 million, respectively.
In Fiscal 1997 and Fiscal 1996, CERA's cash flows from operations were
$5.4 million and $0.4 million, respectively. Operating cash flows, without
bonuses, in Fiscal 1997 and Fiscal 1996 were $7.5 million and $4.5 million,
respectively.
In Fiscal 1995, CERA paid a special dividend of $0.2 million to
stockholders, to reimburse them for income taxes they had incurred on behalf of
CERA (because of CERA's S-corporation status under the Code). Also, in Fiscal
1995, CERA received $2.8 million in connection with a transaction in which
Goldman acquired a ten percent ownership interest in CERA LP. The $2.8 million
was distributed, as a special dividend, to CERA's stockholders.
Capital expenditures were $1.1 million, $0.5 million and $0.4 million
in Fiscal 1997, Fiscal 1996 and Fiscal 1995, respectively. CERA's capital
spending is, primarily, for computer equipment, systems and software.
Expenditures increased in Fiscal 1997 because of purchase and development costs
of new research and marketing database systems which totaled $0.5 million.
Capital expenditures have been funded from operations.
CERA has a $1.75 million, secured line of credit with a commercial
bank. In Fiscal 1997, Fiscal 1996 and Fiscal 1995, there were no borrowings
under this line of credit (or from any other sources). CERA's operating costs,
primarily staff compensation and benefits, are funded from operating cash flow.
CERA believes that it will continue to be able to fund its operating costs and
capital expenditures adequately from cash generated by operations.
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CERA has not had significant foreign exchange exposure. It invoices
substantially all of its clients in U.S. dollars, and incurs the majority of its
expenses in U.S. dollars. CERA does not have significant assets or liabilities
denominated in foreign currencies.
All of CERA's cash, and cash equivalent, balances are maintained in
accounts with commercial banks or in a money market account at a large financial
institution.
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DESCRIPTION OF THE PARENT
The Parent is a newly formed Delaware limited liability company and is
currently owned by MGI and MCM and thus is controlled by MGI. The Units are not
currently, and have never previously been, traded in any public market. The
Parent is currently engaged in no business activities other than in connection
with the Merger and the Exchange described herein. Upon consummation of the
Merger and the Exchange, the Parent will be the sole stockholder of MGI and
CERA. The following shows the anticipated ownership structure of the Parent and
its subsidiaries immediately following the completion of the Merger and the
Exchange.
<TABLE>
<S> <C> <C>
------------------------------------
| PARENT |
|(Delaware limited liability company)|
------------------------------------
|
------------------------------------------
100% Common Stock | | 100% Common Stock
--------------------------- ----------------------
| CERA | | MGI |
|(Massachusetts corporation) | |(Delaware corporation)|
--------------------------- ----------------------
|
|
| 100% Common Stock
----------------------
| MCM |
|(New York corporation)|
----------------------
|
---------------------------------------------------|
| | |
| 85% | 99.73% | 100%
| Common Stock | Common Stock | Common Stock
------------------ ---------------- ------------------------
| MCM Asia Pacific | | MCM S.A. | | MCM Europe |
|(Japanese company)| |(French company)| |(United Kingdom company)|
------------------ ---------------- ------------------------
</TABLE>
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<PAGE> 72
BUSINESS OF THE PARENT
Upon consummation of the Merger and the Exchange, the Parent's primary
assets will be the equity of MGI and CERA. As a result, the business of the
Parent will consist of the business of MGI and the business of CERA.
BUSINESS OF MGI
OVERVIEW
The Company
MGI provides up-to-the-minute information and analysis relating to
developments in the U.S. and international corporate securities, fixed income
and currency markets to over 2,400 institutional clients in over 57 countries.
MGI's primary services include CorporateWatch(R), which is a leading provider of
up-to-the-minute information regarding the new issue corporate securities
market; MoneyWatch(R), which provides on-going analysis of developments in the
U.S. Treasury, agency and money markets; CurrencyWatch(R), which provides
analysis of intraday developments in the foreign exchange markets; and
YieldWatch(R), which analyzes intraday developments in the European and Asia
Pacific government bond and money markets. MGI recently introduced three other
services: FX OptionWatch(TM), which provides fundamental and technical analysis
of global currency option markets; TradeWatch(R), which provides longer term
trading recommendations for government securities, currencies, equities,
commodities and other financial instruments; and KinriWatch(TM), a Japanese
language service that provides fundamental and technical analysis of the
Japanese government bond and money markets.
MCM was established in New York in 1975 and acquired in 1985 by VK/AC's
predecessor. In 1980, MCM entered into an agreement with DJM to distribute
MoneyWatch(R) on-line, a decision that reflected the market demand for quicker
updates on, and analysis of, Federal Reserve Board policy bearing on U.S.
Treasury, agency and money markets. In 1982, MCM launched its second
screen-based service, CorporateWatch(R), which covered new issues of corporate
debt and equity in the United States.
MCM established an office in London in 1986 as the first step in a
strategy to expand its coverage of the integrating global financial markets.
Also in 1986, MCM launched its third screen-based service, YieldWatch(R), which
provides technical analysis and trading recommendations on some of the major
non-U.S. fixed-income markets. In 1987, MCM launched CurrencyWatch(R), which
proved very popular in large dealing rooms in London and continental Europe. In
1988, MCM and Fuji Xerox Co., Limited, established MCM Asia Pacific, 85% of
which is owned by MCM, to cover the principal financial markets in East Asia. In
1991, MCM sold its credit analysis and ratings division to Duff & Phelps
Investment Research Co. to concentrate on its electronic research services
business, and in 1992 MCM purchased Fintrend, S.A. (whose name has been changed
to McCarthy, Crisanti and Maffei, S.A.), further expanding its coverage of the
currency markets in Europe. Finally, in recognition of the increasing importance
of its London office, MCM established MCM Europe in early 1996, where
CurrencyWatch(R), YieldWatch(R) and FX OptionWatch(TM) are managed.
Having offices staffed with analysts in the major financial centers
around the world has been an essential part of MGI's strategy for the last
decade. Currently, MCM and its subsidiaries produce and distribute electronic
information services worldwide, with offices in New York, Boston, London, Paris,
Tokyo, Hong Kong and Singapore.
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MGI believes there are attractive growth opportunities in the financial
information services sector of the foreign exchange and global fixed income
markets and that it is well positioned to take advantage of these opportunities.
The Electronic Financial Information Services Industry
The electronic financial information services industry encompasses
providers of a range of real-time financial information delivered through
digital feeds to computer workstation screens of financial market participants
that subscribe for those services. This financial information includes basic
data such as market quotes, financial news and historical information, as well
as high-value-added information such as market and technical analyses, research,
commentary and forecasts. Providers of such high-value-added financial
information first emerged in the late 1970s and early 1980s, primarily in
response to the strong demand for analysis and interpretation of the monetary
policy of the Federal Reserve Board. Because of their independence from
underwriters and brokerage firms and the quality of their services, a small
number of these providers established credibility with the markets in the
volatile interest rate environment of the early 1980s. Their services became,
for many clients, the functional equivalent of a high-quality, inexpensive,
in-house research department. The customers for these higher-value-added
services were primarily the trading and sales desks of institutional
participants in the U.S. fixed-income markets.
Until the mid-1980s, the financial markets were focused primarily on
the U.S. fixed-income markets and Federal Reserve Board policy. Following the
peak in the relative value of the U.S. Dollar in 1985, however, the financial
markets became increasingly interested in non-U.S.-Dollar-denominated assets, a
trend which has increased with time. Providers of high-value-added services
responded by offering services to meet this demand. The customer base for these
services are now primarily the trading and sales desks of institutional
participants in the global markets.
Business Strategy
Subscription revenues for MGI's services have grown at a compound
annual rate of 20.5% from December 31, 1993 to December 31, 1996, which MGI
attributes to the quality of its research services, the expansion of its
coverage of global fixed income and foreign exchange markets, a shift to a
multi-vendor distribution system and a general increase in demand for financial
information services resulting from increased activity in the global financial
markets.
MGI intends to maintain its strong growth in subscription revenues by
strengthening relationships with its Vendor Distribution Firms, increasing
market share for its existing services, identifying new services to market on
the strength of its brand recognition and reputation and preparing for
distribution through the Internet.
- - Strengthen Relationships with Vendor Distribution Firms. Historically,
MGI distributed its research services almost exclusively through DJM.
Beginning in late 1993, MGI has pursued a non- exclusive distribution
strategy with DJM and the other Vendor Distribution Firms, including
Reuters, Bloomberg, Bridge, ADP and Quick. MGI believes that
maintaining its historical relationship with DJM and strengthening its
relationship with the other Vendor Distribution Firms is a key
component in expanding revenues and market share. See "MGI Management's
Discussion and Analysis of Financial Condition and Results of
Operations" above and "--Distribution of Services" below. However,
there can be no assurance that MGI's strategy will continue to be
successful.
- - Increase Market Share of Existing Services. In conjunction with its
strategy of increasing market penetration by strengthening its
relationships with Vendor Distribution Firms, MGI will continue to
pursue an aggressive global marketing strategy that includes using
analysts in marketing efforts
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and sharpening the design and content of its services. However, there
can be no assurance that MGI's efforts to increase the market share of
its primary existing services will be successful.
- - Identify Market Opportunities and Launch New Services. To capitalize on
MGI's global distribution system and coverage, MGI has actively
explored, and intends to continue to identify and develop, new market
opportunities in the continuously evolving global financial markets and
the design and launch of services that build on MGI's success and
reputation in the marketplace. The proposed combination with CERA is
one of the results of this strategy. MGI may consider further strategic
acquisitions or further hiring of key personnel as it continues to
pursue opportunities to expand its business.
- - Prepare to Expand through the Internet. In preparation for developments
in Internet-related technologies, MGI is evaluating the distribution of
MGI's existing services over the Internet and the development of new
services specifically designed for distribution over the Internet.
However, any such delivery of services over the Internet will depend on
technological developments in the speed, reliability and security of
data transmission and the emergence of demand for such services.
SERVICES
MGI's primary services are as follows:
- - CorporateWatch(R)is the leading provider of up-to-the-minute
information relating to new issues in the corporate securities market.
It is marketed to corporate sales departments, trading personnel and
portfolio managers of financial institutions, primarily in the United
States. CorporateWatch(R) covers the U.S. fixed income markets (fixed
income filings, high-yield markets, preferred stock issuances, U.S.
agencies, fixed-income deals, private placements, Yankee bonds),
structured finance markets (asset-backed, whole loan issues,
collateralized mortgage obligations and commercial mortgages) and
international new issues, and provides commentary and analysis on a
number of segments of these various markets.
- - CurrencyWatch(R)is a research service that provides fundamental and
technical analysis of intraday developments in the global foreign
exchange markets and is marketed to foreign exchange dealing operations
worldwide. CurrencyWatch(R)covers the market 24 hours a day, providing
foreign exchange dealers with trading recommendations for the U.S.
Dollar versus eight other currencies and nine key cross-rates, which
are placed in context by a series of technical indicators and
explanatory text. In addition, CurrencyWatch(R)covers the European
Monetary System with commentary and data (including each EMS currency's
cross rate against the Deutsche Mark, the cross-rate band limits for
each currency and percentage movement of allowable divergence against
the ECU), provides regional market briefings and recaps and other
services.
- - YieldWatch(R) is a research service that analyzes intraday developments
in the global government securities markets and is marketed primarily
to dealers in non-U.S. government bonds, primarily in Europe.
YieldWatch(R) provides live commentary and technical analysis of short-
and long-term yield curve spreads in the major fixed-income markets
around the world.
- - MoneyWatch(R) is a research service that provides ongoing fundamental
and technical analysis of developments in the U.S. Treasury, agency and
money markets, including analysis of economic data and Federal Reserve
Board policies bearing on these markets. MoneyWatch(R) is marketed to
traders, portfolio managers and certain credit analysts and foreign
exchange traders in the United States and abroad.
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Recently MGI launched three new services that target participants in
identifiable market niches. FX OptionWatch(TM), which provides fundamental and
technical analysis of global foreign exchange option markets, was launched in
the first quarter of 1996. FX OptionWatch(TM) targets participants in the
options segment of the foreign exchange markets and was designed to complement
CurrencyWatch(R). FX OptionWatch(TM) provides trading recommendations,
strategies, moving averages and technical chartpoints that identify the key
issues bearing on volatility in different currencies. KinriWatch(TM), a Japanese
language service that provides fundamental and technical analysis of Japanese
government bond and money markets, was launched in the first quarter of 1996 and
was designed to be responsive to the preferences of the Japanese markets.
Originally available only through Quick, MGI expanded the distribution of
KinriWatch(TM) recently through Reuters and intends to expand the distribution
of KinriWatch(TM) in the near term through other Vendor Distribution Firms,
including Bloomberg and DJM. TradeWatch(R), which provides longer term trading
recommendations for government securities, foreign exchange, equities,
commodities and other financial instruments, was launched in the fourth quarter
of 1995 and was designed to take advantage of one of MGI's greatest
strengths--the quality and reputation of MGI's economists and analysts. MGI has
targeted portfolio managers in the existing base of institutional clients for
this service, who generally have not subscribed for real-time research services
such as those provided by MGI because of their longer term, investment-oriented
objectives. New service launches are inherently uncertain of success, and there
can be no assurance that MGI's strategy to identify new market segments and
design and launch new services will be successful. MGI does not expect to expend
material resources in promoting the launch of these services.
DISTRIBUTION OF SERVICES
The traditional distribution channels for financial information are the
Vendor Distribution Firms, which charge a basic site fee and additional fees
based on the services subscribed for and delivered to each computer screen in a
financial institutional client. For many years most financial information
relating to U.S. dollar-denominated assets was distributed over DJM, which was
the first Vendor Distribution Firm to carry services provided by MGI and its
major competitors, MMS International and Technical Data Corporation. In late
1993, MGI made the strategic decision to develop non-exclusive distribution
relationships with every major Vendor Distribution Firm. The following chart
demonstrates the number of screens available to it through the Vendor
Distribution Firms.
<TABLE>
<CAPTION>
% OF SCREENS BY GEOGRAPHIC SEGMENT
----------------------------------------------
TOTAL
USER SCREENS AMERICAS ASIA PACIFIC EUROPE
---------------- ------------ ---------------- ----------
<S> <C> <C> <C> <C>
REUTERS 300,000 20% 20% 60%
DJM 90,000 40% 30% 30%
BLOOMBERG 60,000 75% 10% 15%
BRIDGE 30,000 70% 10% 20%
QUICK 30,000 5% 90% 5%
ADP 90,000 80% 5% 15%
</TABLE>
- ----------
Source: MGI estimates based on publicly available information and discussions
with Vendor Distribution Firms.
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MGI is also monitoring developments in the Internet-related industries,
a potentially significant distribution channel in the future that could allow
dial-up retrieval of MGI's services. See "--Overview--Business Strategy" above.
SUBSCRIPTION AGREEMENTS
Virtually all of MGI's revenues are derived from subscription
agreements with its customers. Subscription agreements with U.S.-based customers
are generally made directly between those customers and MGI and may be either
oral or written agreements. Oral agreements with U.S.-based clients are
generally terminable upon 90 days' notice without penalty. Written agreements,
which represented approximately 18.7% of MGI's U.S. revenues in 1996, typically
have a one-year term but are not subject to early termination.
Non-U.S.-based clients subscribe by means of service agreements entered
into with the Vendor Distribution Firms, pursuant to which a subscriber can
elect to subscribe for various optional services, including MGI's services. With
certain exceptions, such agreements are written and typically have one- or
two-year terms that renew automatically unless the subscriber provides 90 days'
prior notice of non-renewal.
MARKETING
MGI has an experienced team of marketing, sales and client support
personnel. The staff of 33 professionals in the United States, Europe and Asia
Pacific is responsible for securing, expanding and maintaining client
relationships, pricing, promotions and identifying new product opportunities.
CUSTOMERS
No subscriber accounts for more than 2% of MGI's revenues. Subscribers
to MCM's electronic information services consist almost exclusively of
institutional clientele (e.g., major banks, brokers, dealers, government bond
and financial futures trading operations, foreign exchange trading operations,
and treasury departments of major corporations).
EMPLOYEES
At June 30, 1997, MGI had 105 full-time employees (including both
professional and support staff). None of these employees is a member of a union.
COMPETITION
MGI competes in the high-value-added segment of the financial
information services industry against both well-established and smaller
companies, some of which may have substantially greater resources than MGI and
offer a broader array of services. The Vendor Distribution Firms distribute
numerous competing services, including their own or their affiliates'
proprietary services and the services offered by MGI's primary competitors.
Currently, MGI's primary competitors are MMS International, owned by
McGraw-Hill, and Technical Data Corporation, owned by Thomson Corporation.
Competition is based on various factors, including the breadth of
coverage, availability of both fundamental and technical analyses, the frequency
and number of intra-day updates, the range, quality, timeliness and accuracy of
information, the ability to filter, retrieve, manipulate and store information,
the level of fees charged, customer service, the success of marketing and sales
efforts and the subscribers' preference among the Vendor Distribution Firms.
Currently, there are relatively few barriers to entry by
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new on-line service providers, although the lack of name recognition and access
to a Vendor Distribution Firm may make entering the business more difficult for
potential competitors.
Competition is expected to increase as technological advancements
improve the speed and reliability of delivery and retrieval of information
supplied over the Internet, which could emerge as an inexpensive distribution
alternative to the high-cost, proprietary networks offered by the Vendor
Distribution Firms. At present, the relatively slow rate of transmission of data
over the Internet, questions about the reliability of Internet service
providers' systems and concerns over the security and integrity of data
delivered over the Internet serve as technological impediments to the
effectiveness of the Internet as a distribution channel for services such as
those provided by MGI. If technological advancements enabling faster, more
reliable and secure delivery of digital data occur, the Internet could emerge as
a significant distribution channel for financial information, including the
high-value-added services such as those provided by MGI. Because access to the
Internet is inexpensive and requires relatively inexpensive equipment and
software, such technological advancements could allow the Internet to emerge as
an alternative to the Vendor Distribution Firms and therefore reduce one of the
most significant entry barriers to start-up--i.e., access to the Vendor
Distribution Firms. While MGI is taking preliminary steps to respond to
developments in Internet-related technologies and industries, there can be no
assurance that increased competition resulting from the emergence of the
Internet as an effective, low-cost distribution channel would not have a
material adverse effect on MGI.
FACILITIES
MGI, which is headquartered in New York, New York, conducts its
business through leased office space there and in Boston, London, Paris, Tokyo,
Hong Kong and Singapore. MCM's lease for approximately 29,000 square feet in its
New York (the "New York Office Lease") headquarters expires in year 2009. MGI
also leases over 14,000 square feet for additional office space for its
operations. MGI also intends to enter into a lease for an additional 3,000
square feet of office space in London. MGI believes that these facilities are
adequate to serve its currently anticipated business needs.
Van Kampen American Capital Distributors, Inc., a wholly owned
subsidiary of VKAC, Inc. ("Distributors, Inc."), subleases from MCM
approximately 6,400 square feet of space in MCM's New York office. MCM and
Distributors, Inc. have entered into a sublease agreement, dated as of January
3, 1995, under which the sublessor is obligated to pay a proportionate share of
rent and expenses payable by MCM under the New York Office Lease, and which may
be terminated by either party upon 90 days' written notice.
INTELLECTUAL PROPERTY
MGI owns a number of trademarks and service marks associated with its
research services, including the "--Watch" marks, and has procedures in place to
monitor and oppose any infringements on these marks. MGI licenses key software
applications from a third party pursuant to an agreement that will expire on
December 31, 1997 and is terminable by either party upon 90 days' prior notice.
See "Risk Factors--Dependence on Technology."
TRANSITIONAL ADMINISTRATIVE SERVICES AND OTHER ARRANGEMENTS
In connection with Spin-Off, VK/AC and its principal operating
subsidiary, VKAC, Inc., entered into an Interim Services Agreement, dated as of
August 31, 1996 (the "Services Agreement"), with MGI and MCM, pursuant to which
VK/AC and VKAC, Inc. provide certain transitional administrative services to MGI
for fixed monthly fees that have been determined on a cost-plus basis. These
services include (i) accounting services, including accounts payable, assistance
in budget preparation, financial statement preparation, management reporting,
regulatory reporting and tax filings, and treasury and cash
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management functions; and (ii) payroll processing services. MGI has the right to
terminate any of these services on 30 days' prior written notice to VK/AC. VK/AC
has the right to terminate the Services Agreement upon delivery of one year's
prior written notice to MGI.
Distributors, Inc. is also a party to a sublease agreement, dated
January 3, 1995, with MCM pursuant to which Distributors, Inc. subleases from
MCM a portion of the New York office space of MCM. The sublease may be
terminated by either party upon 90 days' written notice. See "-- Facilities"
above.
MCM INDEMNIFICATION AGREEMENT
In connection with the Spin-Off, MCM entered into an indemnification
agreement, dated as of August 31, 1996 (the "MCM Indemnification Agreement")
with VK/AC and Morgan Stanley Group, Inc. ("Morgan Stanley"), pursuant to which
MCM agreed to indemnify VK/AC and Morgan Stanley and their respective officers,
directors, employees and affiliates from and against all liabilities, costs,
expenses and losses arising from the operations of MCM and the ownership of the
common stock of MGI or MCM.
THE TAX SHARING AGREEMENT
In connection with the Spin-Off, MGI, MCM and VK/AC entered into a Tax
Sharing Agreement, dated as of August 31, 1996 (the "Tax Sharing Agreement"),
which allocates certain tax liabilities and benefits between MGI, MCM and its
subsidiaries, on the one side, and VK/AC and its subsidiaries, on the other
side, relating to periods ending on or before the Spin-Off. The Tax Sharing
Agreement provides for the continuation of payments, after the Spin-Off, of tax
liabilities and benefits attributable to income taxes for which MGI, MCM or any
of its subsidiaries files combined, consolidated or unitary tax returns with
VK/AC or any of its subsidiaries (other than MGI, MCM and its subsidiaries). The
amount of tax liabilities or benefits attributable to MGI, MCM or any of its
subsidiaries is to be determined as if MGI, MCM and its subsidiaries had filed
their income tax returns on a stand-alone basis. The Tax Sharing Agreement will
not have any effect on the payment of taxes with respect to which MGI, MCM and
its subsidiaries have historically filed returns on a stand-alone basis.
LEGAL AND RELATED MATTERS
MGI is not involved in any material proceeding, other than routine
litigation incidental to its business.
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BUSINESS OF CERA
OVERVIEW
CERA is a leading international advisory and consulting firm that
focuses on the energy industries, including markets, geopolitics, structure and
strategy. CERA's independent expertise and perspective assist its clients in
making informed strategic, investment and market decisions in the energy
industry. CERA's expertise covers major global and regional energy sectors--oil,
refined products, natural gas and electricity. CERA delivers services through
retainer advisory services, a series of subscription-based continuous retainer
advisory services, consulting, applications, and related services that draw upon
its unique industry expertise.
CERA's family of retainer advisory services provide a continuous
analysis of energy markets, industry trends and strategies. Each retainer
advisory service focuses on a key energy segment or region, including World Oil,
Refined Products, North American Natural Gas, North American Electric Power,
European Natural Gas, European Electric Power, Former Soviet Union Energy, Latin
American Energy, California Energy and Asia Pacific Energy. CERA also offers
membership services aimed at specific professional communities. These include
the Global Power Forum and the Oil and Gas Information Technology Strategy
Forum, which provide clients with dialog, interaction and collaboration in
matters affecting the power and oil and gas industries, respectively.
CERA applies its strategic knowledge and in-depth analysis expertise in
the energy industry to provide consulting and advisory services, including
strategic and scenario planning, organizational and market studies, and other
focused consulting activities. In addition, CERA multiclient studies provide
assessments of major energy developments and specific markets.
INDUSTRY BACKGROUND
The energy industry is one of the world's largest industries and is
essentially a global industry. CERA believes that the global energy industry is
of important strategic significance to the international economy and is subject
to significant change and influence relating to, among other things, political
forces, globalization, privatization, environmentalism and competitive
pressures. The industry, including its oil, gas and electric power segments, is
subject to considerable volatility. In addition, CERA expects vast amounts of
capital to be expended in the energy industry, including, for example,
expenditures related to the rehabilitation of the Russian oil industry, ensuring
sufficient energy supplies and infrastructure in Asia to support economic
growth, restructuring the electric power business in the U.S. and overseas, new
technologies and compliance by oil refiners with existing and new environmental
regulations.
The pace of change around the world in both developed and developing
countries and economies makes strategic information of significant value to
decision makers. The increasingly global nature of these trends requires
extensive capabilities and expertise to obtain, assimilate and analyze critical
information and data and to develop insights into the industry's future. In
addition, CERA believes that the ability to integrate economic and political
analyses with global energy expertise is particularly useful.
CERA also believes that there is a need for the efficient development
of energy resources in an environmentally-sensitive manner to support economic
growth, which has been highlighted by the transition of the world's energy
industry from the public to the private sector in formerly state-run economies.
The emerging global private power business is an example, as is the transition
in the former Soviet Union. The trend toward privatization began in Europe in
the 1980's with the deregulation of energy markets and privatization of formerly
state- controlled enterprises. Privatization has also commenced in Latin America
as a source for financial resources and as the need for operating efficiencies
has become apparent. This is creating new companies requiring objective
information and analysis on energy. It is also creating a need among existing
industry
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participants for enhanced strategic knowledge and information on global and
regional energy markets. CERA believes that the growth of economic activity in
developing countries can only be sustained with access to additional energy
sources.
CERA believes that these circumstances create a market for strategic
information that will allow businesses to make short- and long-term decisions
relating to the energy industry.
CERA SOLUTION
CERA's products and services provide a continuous analysis of energy
markets, industry trends and strategies. This analysis creates a framework that
allows clients to identify key forces, uncertainties and price movements that
may affect certain fundamentals in key energy sectors and markets around the
world. CERA provides an assessment of the economic and geopolitical factors, as
well as key governmental policies and changes in political attitudes, affecting
supply and demand, prices and investment opportunities in the energy industry.
CERA's retainer advisory membership services provide clients with
continuous analysis of energy markets, industry trends and strategies, covering
the key energy segments and regions around the world. In addition, CERA's
applications and consulting services provide solutions to client specific needs
by utilizing strategic knowledge and in-depth analysis of the energy industry
and the factors affecting such industry. Through its membership forums, CERA
promotes dialogue, interaction and collaboration concerning developments in the
energy industry. CERA's multiclient studies provide assessments of major energy
developments and specific markets. Scenarios developed by CERA's research
retainer service provide clients with an overall framework for anticipating and
understanding change in global and regional business environments.
CERA STRATEGY
CERA's strategy is to become a leading provider of insights and
strategic knowledge on the global energy market. CERA seeks to do the following:
- Maintain Research and Analysis Excellence. The quality of its
research organization is critical to CERA's ability to provide
value to its customers. CERA seeks to attract, develop and
retain outstanding research professionals with expertise in a
broad range of energy industry disciplines. In order to
capture a worldwide energy industry perspective, CERA has
developed a global network of research analysts.
- Expand Client Base and Maintain High Retention Rates. CERA
seeks to increase the number of retainer advisory memberships.
CERA believes that its current offerings of products and
services, and anticipated new products and services, can
continue to be successfully marketed and sold to new clients,
as well as new constituencies within existing client
companies. CERA also seeks to maintain or improve its 90%
client retention rate through continued implementation of
additional retainer advisory services and broad research
coverage. In addition, CERA's research is available via the
World Wide Web. CERA believes that improvements in
distribution technology will enable it to expand
constituencies within existing client organizations as well as
to expand its client base. However, there can be no assurance
that CERA will be able to sustain such a high client retention
rate or that CERA's strategy will continue to be successful.
- Identify and Define New Products. CERA seeks to position
itself ahead of other research and advisory firms by
delivering strategic research and analysis on new and emerging
trends in the global energy industry, including in-depth
analysis of key fuels and all
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geographical markets for energy. CERA believes that its
methodology and culture allow it to focus on the key fuels and
developments in the energy markets and enable it to expand its
product and service offerings to address these new
developments. However, there can be no assurance that CERA's
strategy will be successful.
- Leverage Core Research and Applications. CERA seeks to employ
expertise gained from the research that supports retainer
services to assist clients in specific applications. In
addition, CERA intends to continue to introduce new retainer
advisory membership services that build upon its expertise and
an understanding of needs of the industry. However, there can
be no assurance that CERA's strategy will be successful.
PRODUCTS AND SERVICES
CERA's products and services are as follows:
- retainer advisory membership services
- applications and consulting services
- membership forums
- multiclient studies (including scenario studies)
Each of these products and services is described below.
RETAINER ADVISORY MEMBERSHIP SERVICES. CERA's family of retainer
advisory services provides clients with a continuous analysis of energy markets,
industry trends and strategies. Each retainer advisory service focuses on a key
energy segment or region, including the following: World Oil, Global Refined
Products, North American Natural Gas, North America Electrical Power, European
Natural Gas, European Electric Power, Former Soviet Union Energy, Latin America
Energy, California Energy and Asia Pacific Energy. Members may enroll in one or
more retainer advisory services on an annual or multi-annual basis.
CERA retainer clients benefit from written and electronic research,
access to and interaction with CERA experts and peer-level gatherings of
industry leaders. The following retainer membership components are provided:
- CERA Watches--quarterly or semiannual analyses and forecasts
of near- and medium-term markets, strategies, and critical
issues and trends.
- Private Reports--in-depth, original thinking on key industry
developments and their implications for investment decision
making.
- Decision Briefs--reports on current developments and their
implications for decision making.
- Fax or E-mail Alerts--electronically distributed assessments
of short-term developments and their implications.
- Telephone and Electronic Access--access to and contact with
CERA experts.
- Client Conference Calls--convened periodically, as events
warrant, to provide clients with timely multiclient briefings.
- CERA Roundtables--executive workshop sessions with CERA
experts and industry decision makers.
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- On-Site Presentations and Workshops--one-on-one interactive
sessions to present CERA analysis and discuss the implications
for the client company.
Retainer advisory service members also receive CERA's global overview
research, which is intended to provide a broad, integrative framework concerning
economic and geopolitical trends affecting the energy industries. This global
research includes Global Energy Watch, a semiannual assessment of key strategic
energy trends and interfuel interactions, and reports on the changing dynamic of
the energy business. CERA members may also attend the CERA Executive
Conference--The Global Energy Forum, which is an annual gathering of senior
energy decision makers.
MEMBERSHIP FORUMS. CERA has established two forums designed to promote
dialogue, interaction and collaboration based on a research agenda, which
includes specific research papers, that is managed and implemented by CERA.
These two forums are as follows:
The Global Power Forum. This forum brings senior decision
makers and ministers from business, government and financial communities
together for regular conferences. These conferences are designed to promote
dialogue and the exchange of views and help participants to understand
developments in the international power industry as well as regional
opportunities and related strategic implications.
The Oil and Gas Information Technology Strategy Forum. This
forum provides a strategic framework for assessing and benchmarking challenges
and opportunities created by information technology. Sessions also address the
potential impact of information technology on the structure of oil and gas
companies as well as competitive implications.
APPLICATIONS AND CONSULTING SERVICES. CERA provides strategic and
scenario planning services, organizational and market studies, and other focused
consulting activities. Through specific client projects, referred to as
applications, CERA applies its strategic knowledge and in-depth analysis in the
energy industry to assist individual clients with particular needs. Assignments
typically focus on the following areas: scenario planning process and
facilitation; strategy development and implementation; corporate and business
segment strategy options; future skills and competencies; market analysis
(regional or industry); organizational analysis; restructuring and deregulation;
asset valuation; value chain analysis; strategic alliance/partnership
development; company profiling; post-merger strategic alignment and integration;
privatization; country assessment; business environment and scenario
development; implications for the client; expert witness; due diligence and
critical review of strategy and plans; and executive presentations and corporate
facilitation.
MULTICLIENT STUDIES. Multiclient studies provide assessment of major
energy developments and specific markets. Clients are provided with a
cost-effective, high-value, decision-oriented analysis and a framework for
assessing critical issues. CERA offers these studies as written in-depth
reports, participant workshops and one-on-one company sessions. Examples of
multiclient studies include the following: The Race to Capture Value: The Future
of US Northeast Gas Markets; Transportation Dynamics: Understanding the Future
of Oil Flows in the Former Soviet Union; Natural Gas in Southeast Asia:
Scenarios for the Future of Gas Investment, Infrastructure Development, and the
Competitive Dynamics of the Energy Marketplace; The Future of Central European
Energy; and The New Energy Frontier: The Future of the Western Gas & Power
Markets.
Most of CERA's retainer services develop multi-client scenario studies
to provide a long-term framework for anticipating and understanding change in
its focus area. Scenarios assist clients in anticipating and responding to
uncertainties and change in the global and regional business environment. CERA
believes that this approach allows decision makers to explore trends and forces
that will affect their business and to incorporate new ideas and information
into their thinking and strategic processes. Current CERA multiclient scenario
studies include the following: The Future of World Oil Markets: Scenarios to
2010;
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Restructuring Refining: Scenarios for Industry Structure and Markets to 2010;
North American Natural Gas Markets: Scenarios to 2010; Reshaping the North
American Electric Power Industry: Scenarios to 2010; European Natural Gas:
Scenarios to 2010; and Latin America Energy: Scenarios to 2010.
RESEARCH AND ANALYSIS
CERA's research and analysis group consists of approximately 68
full-time employees who provide ongoing research and analysis on the
developments, information and activities in the energy industry. Each of the
energy products and geographical regions covered by CERA is staffed by a team of
research analysts and associates with substantial experience and/or expertise in
the industry area covered by such products or regions.
CERA employs a consistent, disciplined research and analysis
methodology across CERA's full product line, and issues printed or
electronically distributes material using a consistent presentation format. Each
energy product and geographical region has a product line research director who
is responsible for implementing CERA's research and analysis methodology in that
product area or geographical region. The development methodology consists of an
iterative process of research, analysis, hypothesis and testing. Analysts
conduct extensive primary research, working with CERA's client base and
contacting other sources. These activities are supplemented with searches of
numerous trade, financial and other third party source materials. From this
research, analysts identify significant patterns and trends, develop
assumptions, test hypotheses and arrive at concrete recommendations and
conclusions to provide to clients. CERA conducts its research and analysis on an
ongoing basis, continually retests its underlying assumptions and projected
scenarios as developments occur and highlights to clients material changes to
the assumptions, projections, recommendations and conclusions.
The knowledge and experience of CERA's analysts is critical to the
quality of CERA's products and services. To ensure consistency of positions and
analysis across service and research disciplines, all CERA's distributed
research is reviewed by CERA's Head of Global Research. While varying opinions,
debate and philosophical contention among services and research disciplines are
encouraged, final positions and conclusions are consistent. This practice
ensures that the analytical structure and recommendations presented in CERA's
products are not inconsistent and better enables the various elements of client
organizations to formulate integrated strategies based on coherent information
and analysis.
SALES AND MARKETING
As of June 30, 1997, CERA had 41 full-time employees in sales and
marketing in various locations worldwide. CERA's strategy is to optimize and
grow resources and coordinate sales and marketing across product lines and
geographical regions. Responsibilities among CERA's sales and marketing staff
are allocated as follows: sales staff have account-driven responsibility for
renewals, new retainer and application consulting sales within designated
industry segments and regions; marketing and product management staff have
accountability for product planning, development, pricing, promotion, quality
control, commercial database management, sales staff support and other
initiatives such as electronic distribution; and administrative and client
services staff handle processing of new clients, assistance with incoming
information requests, distribution of reports and other literature, written
research to clients and the delivery of corporate marketing materials. Three of
CERA's customers accounted, in the aggregate, for 28% and 20% of its total
revenues for the fiscal years ended June 30, 1996 and 1997, respectively.
CUSTOMERS
As of June 30, 1997, CERA had a total retainer base of approximately
440 retainer client organizations. Among the client organizations that CERA
serves are the following: integrated oil
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companies and national oil companies; independent producers and refiners;
pipelines, tanker and transportation companies; electric and gas utilities and
independent power generators; banks, pension funds, institutional investors and
other financial institutions; manufacturing firms and large energy end-users;
government and regulatory agencies; trading, marketing and distribution firms;
oil services and supply companies; engineering and construction companies; and
legal and accounting firms servicing the energy industry. Three of CERA's
customers accounted, in the aggregate, for 28% and 20% of its total revenues for
the years ended June 30, 1996 and 1997, respectively.
COMPETITION
CERA believes that the principal competitive factors in its industry
include independence and quality of research, breadth of product offering, depth
of expertise, relevance and timeliness of information and its efficient
delivery, attention to customer service, effectiveness of sales and marketing,
credibility and reputation, global perspective and orientation, and adaptability
to the evolving information needs of clients. CERA believes that it competes
favorably with respect to each of these factors.
CERA competes in the market for research and information on the global
energy industry. The Parent believes that the principal competitors for CERA's
business are the energy practices of the major management consulting firms,
independent energy consulting firms and information providers (such as brokerage
firms, consulting firms, publishing firms and smaller boutique firms
specializing in a particular energy industry sector or region). There can be no
assurance that CERA will be able to continue to compete successfully against
existing or new competitors.
EMPLOYEES
As of August 11, 1997, CERA had 158 full-time employees (including both
professional and support staff). None of these employees is a member of a union.
FACILITIES
CERA, which is headquartered in Cambridge, Massachusetts, conducts its
business through leased office space there and in Paris, France, Oakland,
California, Moscow, Russia, and Washington, D.C. CERA's lease for approximately
22,600 square feet in its Cambridge headquarters expires on June 3, 2000. CERA
also leases over 10,000 square feet for additional office space for its
operations. CERA has entered into a non-binding letter agreement with the
landlord of its Cambridge headquarters with respect to the leasing of additional
space by CERA for a period of five years beginning on January 1, 1998.
INTELLECTUAL PROPERTY
CERA owns a number of trademarks and service marks associated with its
products and services, including the "CERA" mark.
LEGAL AND RELATED MATTERS
CERA is not involved in any material proceeding, other than routine
litigation incidental to its business.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth the names, ages as of June 30, 1997 and
positions of the current executive officers and members of the Board of
Directors of the Parent, MGI and CERA.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Daniel H. Yergin.................... 50 President and Director, CERA
Philippe A. Michelon................ 59 Managing Director, Operations, CERA
James P. Rosenfield................. 40 Managing Director, Head of Business Development and
Director, CERA
Joseph A. Stanislaw................. 47 Managing Director, Head of Global Research and Director,
CERA
Daniel H. Lucking, Jr............... 50 Senior Director and Chief Financial Officer, CERA
Alberto Cribiore.................... 51 President and Director, Parent; Chairman and Director, MGI
Gordon McMahon...................... 44 Vice President, Secretary and Director, Parent; Director, MGI
David D. Nixon...................... 50 Vice President, Parent; President, Chief Executive Officer,
Treasurer, Assistant Secretary and Director, MGI
Richard J. Schnall.................. 28 Treasurer, Parent
Malcolm A. Cook..................... 49 Senior Vice President, MGI
Lauretta F. Gell.................... 34 Senior Vice President, MGI
Bruce M. Kamish..................... 45 Senior Vice President, MGI
Chauncey G. Morgan.................. 33 Senior Vice President and Chief Financial Officer, MGI
Anthony Napolitano.................. 42 Senior Vice President, MGI
Carl J. Palash...................... 47 Senior Vice President and Chief Economist, MGI
Donald J. Gogel..................... 48 Vice President and Director, Parent; Director, MGI
Max C. Chapman...................... 54 Director, MGI
Wallace Mathai-Davis................ 53 Director, MGI
Dennis J. McDonnell................. 55 Director, MGI
Martin D. Payson.................... 61 Director, MGI
</TABLE>
Effective upon consummation of the Merger and the Exchange, Messrs.
Cribiore, McMahon, Nixon, Gogel and Schnall will resign from their positions as
officers of the Parent, and Messrs. Nixon, Yergin and Stanislaw will become
additional directors of the Parent. It is expected that up to six additional
independent directors, who have not yet been identified, will be named to the
Board of Directors of the
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Parent at the time of or shortly after the consummation of the Merger and the
Exchange. Messrs. Cribiore and Yergin will also become the Chairman and Vice
Chairman, respectively, of the Parent.
The business experience of each of the current executive officers and
the members of the Board of Directors of the Parent, MGI and CERA is set forth
below. Effective upon consummation of the Merger and the Exchange, each of the
directors of the Parent will also become a director of MGI and CERA.
ALBERTO CRIBIORE, PRESIDENT AND DIRECTOR OF THE PARENT, CHAIRMAN AND
DIRECTOR OF MGI -- Mr. Cribiore has been President and a director of the Parent
since its inception in June 1997. Mr. Cribiore has been Chairman of the Boards
of Directors of MGI and MCM since August 1996. Mr. Cribiore is also currently
the Managing Principal of Brera. Mr. Cribiore was a principal of CD&R from 1985
to March 1997 and was President of CD&R from 1995 to March 1997. Mr. Cribiore
was also a general partner of Clayton & Dubilier Associates IV Limited
Partnership, a Connecticut limited partnership and the general partner of C&D
Fund IV ("Associates IV"), the majority stockholder of MGI, until March 31,
1997, and retains an equity interest in Associates IV. In December 1995 and
October 1995, respectively, Mr. Cribiore became a director of Riverwood Holding,
Inc. and RIC Holding, Inc., and in March 1996 he became a director of Riverwood
International Corporation. Mr. Cribiore also serves as a director of WESCO
Distribution, Inc. and its parent CDW Holding Corporation, each of which is a
corporation in which C&D Fund IV has invested.
DANIEL H. YERGIN, PRESIDENT AND DIRECTOR OF CERA -- Dr. Yergin, a
co-founder of CERA, has been President and a director of CERA since 1983. Dr.
Yergin received the 1992 Pulitzer Prize for General Nonfiction for his work The
Prize: The Epic Quest for Oil, Money & Power. He was formerly a professor at the
Harvard Business School and the Kennedy School of Government at Harvard
University. Dr. Yergin is a graduate of Yale University and received his Ph.D.
in international relations from The University of Cambridge in England. Dr.
Yergin was a Marshall scholar. He is the co-author, with Thane Gustafson, of
Russia 2010 and, with Dr. Stanislaw, of the forthcoming The Commanding Heights:
The Battle Between Government and Markets that is Remaking the Modern World.
JOSEPH A. STANISLAW, MANAGING DIRECTOR, HEAD OF GLOBAL RESEARCH AND
DIRECTOR OF CERA -- Dr. Stanislaw, a co-founder of CERA, has been a Managing
Director and a director of CERA since 1983. Dr. Stanislaw was formerly Senior
Oil Economist at the International Energy Agency. He was also a professor at
Cambridge University. Dr. Stanislaw is a graduate of Harvard College and
received a Ph.D. in economics from Edinburgh University. He is the co-author,
with Dr. Yergin, of the forthcoming The Commanding Heights: The Battle Between
Government and Markets that is Remaking the Modern World.
DAVID D. NIXON, VICE PRESIDENT OF THE PARENT, PRESIDENT, CHIEF
EXECUTIVE OFFICER, TREASURER, ASSISTANT SECRETARY AND DIRECTOR OF MGI -- Mr.
Nixon has been Vice President of the Parent since its inception in June 1997.
Mr. Nixon started at MCM in September 1985 as Senior Vice President and became
President in 1991. In 1991 he left this position to serve as Executive Vice
President at Fitch Investor Services. He returned to MCM in May 1995 to be the
President, Chief Operating Officer and Director, and was appointed President and
Chief Executive Officer, Treasurer and Assistant Secretary of MGI and MCM in
August 1996.
GORDON MCMAHON, VICE PRESIDENT, SECRETARY AND DIRECTOR OF THE PARENT,
DIRECTOR OF MGI -- Mr. McMahon has been Vice President, Secretary and a director
of the Parent since its inception in June 1997. Mr. McMahon has been a director
of MGI and MCM since April 1997. Mr. McMahon is a principal of Brera. Mr.
McMahon was a professional employee of CD&R from May 1996 to March 1997. Prior
to joining CD&R, Mr. McMahon was a limited partner of Goldman Sachs from 1993 to
1996 and a general partner of Goldman Sachs from 1984 to 1993. Mr. McMahon is
also a director of Automation, Inc. and a member of the Advisory Board of
Affordable Residential Communities, L.P.
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DONALD J. GOGEL, VICE PRESIDENT AND DIRECTOR OF THE PARENT, DIRECTOR OF
MGI -- Mr. Gogel has been Vice President and a director of the Parent since its
inception in June 1997. Mr. Gogel has been a director of MGI and MCM since
August 1996. Mr. Gogel is currently President of CD&R and has been a principal
of CD&R since he joined the firm in 1989. He is a general partner of Associates
IV. Mr. Gogel is also a director of A.P.S., Inc. and its parent APS Holding,
Inc., Lexmark International, Inc. and its parent Lexmark International Group,
Inc., and Alliant Foodservice, Inc. and its parent CDRF Holding, Inc., each of
which is a corporation in which C&D Fund IV has invested. Mr. Gogel also serves
as a director of TurboChef, Inc.
JAMES P. ROSENFIELD, MANAGING DIRECTOR, HEAD OF BUSINESS DEVELOPMENT
AND DIRECTOR OF CERA -- Mr. Rosenfield, a co-founder of CERA, has been a
Managing Director and a director of CERA since 1983. Mr. Rosenfield is
responsible for CERA's worldwide business development, new products and services
and commercial operations. Mr. Rosenfield attended Harvard College and holds an
M.B.A. from Boston University.
PHILIPPE A. MICHELON, MANAGING DIRECTOR, OPERATIONS OF CERA -- Mr.
Michelon has been a Managing Director of CERA since 1993. Mr. Michelon was
formerly Corporate Vice President of SRI International (previously Stanford
Research Institute) and Executive Director of its Process Industries Division.
Mr. Michelon received a B.S., summa cum laude, in chemical engineering from
INSA, Lyons, holds an M.S. in chemical engineering from ENSPM, Paris, and holds
an M.B.A. from the University of Pittsburgh.
DANIEL H. LUCKING, JR., SENIOR DIRECTOR AND CHIEF FINANCIAL OFFICER OF
CERA -- Mr. Lucking has been Senior Director and Chief Financial Officer of CERA
since 1992. He previously was Vice President, Corporate Controller of the Forum
Corporation and prior to that, a Manager with Arthur Andersen & Co.
Mr. Lucking is a graduate of the College of the Holy Cross.
MALCOLM A. COOK, SENIOR VICE PRESIDENT OF MGI -- Mr. Cook started with
MCM in February 1986 as Vice President and was elected Senior Vice President of
MGI in August 1996. Mr. Cook is also the Managing Director of MCM Europe and
President, Director General of MCM S.A., with overall responsibility for
European operations.
LAURETTA F. GELL, SENIOR VICE PRESIDENT OF MGI -- Ms. Gell joined MCM
in 1987 and was elected Senior Vice President of MGI in August 1996. Ms. Gell
has primary responsibility for CurrencyWatch,(R) YieldWatch(R) and
OptionWatch(R).
BRUCE M. KAMICH, SENIOR VICE PRESIDENT OF MGI -- Mr. Kamich joined MCM
as a technical analyst in 1985. He was elected Senior Vice President of MGI in
August 1996. Mr. Kamich oversees TradeWatch(R) and co-manages MoneyWatch(R).
CHAUNCEY G. MORGAN, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
OF MGI -- Mr. Morgan joined MCM in 1997 as a Senior Vice President to MCM and
MGI. Mr. Morgan has worldwide responsibility for MCM's finance, accounting,
budgeting, tax and treasury functions. He previously served as a Director of
Business Development and Assistant Treasurer in the Finance Department of News
Corporation.
ANTHONY NAPOLITANO, SENIOR VICE PRESIDENT OF MGI -- Mr. Napolitano
joined MCM as a market analyst in 1985 and was elected Senior Vice President of
MGI in August 1996. Mr. Napolitano has primary responsibility for
CorporateWatch(R).
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CARL J. PALASH, SENIOR VICE PRESIDENT OF MGI -- Mr. Palash joined MCM
as Senior Economist in 1986 and was elected Senior Vice President of MGI in
August 1996. Mr. Palash is co-manager of MoneyWatch(R).
RICHARD J. SCHNALL, TREASURER OF THE PARENT -- Mr. Schnall has served
as Treasurer of the Parent since its inception in June 1997. Since June 1996,
Mr. Schnall has been a principal of CD&R. He was formerly with Smith Barney,
Donaldson, Lufkin & Jenrette and McKinsey & Co. Mr. Schnall is a graduate of the
University of Pennsylvania and the Harvard Business School.
MAX C. CHAPMAN, DIRECTOR OF MGI AND MCM -- Mr. Chapman has been a
director of MGI since August 1996. He has been Co-Chairman of Nomura Securities
International, Inc. and Nomura Holding America Inc. since 1989, Chief Executive
Officer since 1992, and director of The Nomura Securities Co., Ltd. since 1990.
Mr. Chapman is also a member of the Board of Directors of the American Stock
Exchange; a Trustee of the Endowment Fund and Investment Fund of the University
of North Carolina at Chapel Hill; a member of the Bond Club; a Director of the
Futures Industry Association; and in May 1989, was elected to the Board of
Directors of O'Sullivan Corporation, an American Stock Exchange Company, and has
served as a director of the Chicago Mercantile Exchange. Mr. Chapman received
his B.A. from the University of North Carolina and an M.B.A. from Columbia
University.
WALLACE MATHAI-DAVIS, DIRECTOR OF MGI -- Mr. Mathai-Davis has been a
director of MGI since December 1996. Mr. Mathai-Davis is the Corporate Secretary
and Chief Financial Officer, a Managing Director, shareholder and a member of
the Management Committee of OFFITBANK. He joined OFFITBANK in 1986. Mr.
Mathai-Davis graduated with a B.A. maxima cum laude from the University of Notre
Dame in 1966. He holds both an M.A. (1972) and a Ph.D. (1974) from Princeton
University. He is a member of the New York Academy of Sciences. Currently he is
the Treasurer of the Board of Trustees of The Cathedral of St. John the Divine
and a Director of the Public Education Association.
DENNIS J. MCDONNELL, DIRECTOR OF MGI AND MCM -- Mr. McDonnell has been
a director of MGI since August 1996. Mr. McDonnell has been a director of VK/AC
and VKAC, Inc. since February 1993 and has been an Executive Vice President of
VK/AC and VKAC, Inc. since December 1993. Mr. McDonnell has been with VK/AC
since 1983 and, from the acquisition of MCM in 1985 until August 1996, served as
Chairman of the Board of MCM. Mr. McDonnell received his M.A. degree in Economic
Theory for UCLA and his B.S. degree in Economics from Loyola University of
Chicago. Mr. McDonnell serves on the Investment Advisers Committee of the
Investment Company Institute.
MARTIN D. PAYSON, DIRECTOR OF MGI AND MCM -- Mr. Payson has had a
distinguished business career, most recently serving as Vice President of Time
Warner Inc. He serves on the board of directors of several corporations and
non-profit organizations and brings significant expertise to MGI. Mr. Payson
received his AB degree from Cornell and his LL.B. degree Cum Laude from New York
University School of Law.
Each officer of the Parent, MGI and CERA serves at the discretion of
the Board of Directors of the Parent, MGI and CERA, respectively. There are no
family relationships among any of the directors and executive officers of the
Parent, MGI or CERA.
BOARD COMPENSATION
The current directors of the Parent do not receive any direct
compensation from the Parent. Following the consummation of the Merger and the
Exchange, MGI and CERA will pay or cause to be paid to their non-employee
directors who are not C&D Fund IV Nominees $15,000 per annum and $1,000 per
meeting of the Board attended and will reimburse such directors (or cause them
to be reimbursed) for their out-of-pocket expenses incurred in attending
meetings. In addition, following completion of the Merger and the Exchange, the
non-employee directors may participate in either the CERA Option Plan
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or the MGI Option Plan. Directors of the Parent will not receive any additional
compensation in respect of their membership on the Boards of Directors of the
Parent, MGI and CERA.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of the Parent does not have, and it is not
currently expected that it will have, a compensation committee. Shortly after
the consummation of the Merger and the Exchange, the Board of Directors of each
of MGI and CERA will have a Compensation Committee, which will make
recommendations concerning salaries and incentive compensation for employees of
and consultants to MGI and CERA, respectively, and will administer and grant
Units, options for Units and awards pursuant to MGI's and CERA's, respectively,
equity incentive plans.
EXECUTIVE COMPENSATION
The following table sets forth the compensation for the fiscal year
ended December 31, 1996 of MGI's Chief Executive Officer and MGI's four other
most highly compensated executive officers whose annual cash compensation for
such fiscal year exceeded $100,000 (collectively, the "MGI Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
All Other
Name and Principal Position Year Salary(1) Bonus Compensation(2)
- --------------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
David D. Nixon .............. 1996 $235,000 $315,000 $ 28,433
President and CEO, MCM
Carl J. Palash(4) ........... 1996 $148,140 $ 43,500 $ 18,958
Senior Vice President, MCM
Malcolm A. Cook ............. 1996 $145,500(3) $236,000 $ 34,425(3)
Senior Vice President, MCM
Anthony Napolitano .......... 1996 $123,000 $165,000 $ 22,862
Senior Vice President, MCM
Lauretta F. Gell ............ 1996 $164,440(3) $110,000 $ 23,628(3)
Senior Vice President, MCM
</TABLE>
(1) Amounts include salary deferral contributions by the MGI Named
Executives to MGI's qualified and nonqualified profit sharing plans for
1996.
(2) Amounts shown are for profit sharing contributions and, in the case of
Messrs. Palash and Napolitano, book entry credits to MGI's nonqualified
profit sharing plans for 1996.
(3) Amounts shown have been converted from British pounds into U.S. dollars
based on an exchange ratio of 1.70 U.S. dollars to British pounds.
(4) Mr. Palash has submitted his resignation effective September 1997.
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The following table sets forth the compensation for the fiscal year
ended June 30, 1997 of CERA's Chief Executive Officer and CERA's four other most
highly compensated executive officers whose annual cash compensation for such
fiscal year exceeded $100,000 (collectively, the "CERA Named Executives" and
together with the MGI Named Executives, the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
Fiscal All Other
Name and Principal Position Year Salary Bonus Compensation(2)
- --------------------------- ------ ------ ----- ------------
<S> <C> <C> <C> <C>
Daniel H. Yergin 1997 $380,000 (1) $42,279
President, CERA....................................
Philippe A. Michelon 1997 $300,000 $70,000 $223,672
Managing Director, Operations, CERA................
Joseph A. Stanislaw 1997 $360,000 (1) $123,988
Managing Director, CERA............................
James P. Rosenfield 1997 $360,000 (1) $37,090
Managing Director, CERA............................
Daniel H. Lucking, Jr. 1997 $147,325 $90,000 $128,496
Senior Director and Chief Financial Officer, CERA..
</TABLE>
(1) Messrs. Yergin, Rosenfield and Rosenfield did not receive a bonus or
contribution from the CERA Profit Sharing Plan for the fiscal year
ended June 30, 1997. In previous years, Messrs. Yergin, Rosenfield
and Stanislaw have received substantial cash bonuses.
(2) Other compensation includes the dollar value of insurance premiums
paid by CERA with respect to term life insurance for the benefit of
the CERA Named Executive, in the case of Mr. Stanislaw, a cost of
living adjustment of approximately $60,000 due to his overseas
assignment and a reimbursement of moving expenses, and in the case of
Messrs. Michelon and Lucking, a one-time payment in connection with
the transactions contemplated by the Merger Agreement of $200,000 and
$100,000, respectively, and profit sharing plan and 401(k) plan
contributions.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding option
grants by MGI to each of the MGI Named Executives during the fiscal year ended
December 31, 1996:
<TABLE>
<CAPTION>
Potential realizable value
at assumed annual rates of
Individual Grants stock price appreciation
-------------------------------------------------------------- --------------------------
Number of Percent of
securities total options
underlying granted to Exercise or
options employees base price Expiration 5% ($) 10% ($)
Name granted (1)(2) in fiscal year ($) date (3) (3)
- ---- -------------- -------------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
3,630 100 600,148 2,079,083
David D. Nixon 19 10/7/06
3,630 143.60 441,880 1,920,815
1,210 100 200,049 693,028
Carl J. Palash 6 10/7/06
1,210 143.60 147,293 640,272
2,118 100 350,169 1,213,085
Malcolm A. Cook(4) 11 10/7/06
2,118 143.60 257,824 1,120,740
105(4) 100
2,118 100 350,169 1,213,085
Anthony Napolitano 11 10/7/06
2,118 143.60 257,824 1,120,740
2,118 100 350,169 1,213,085
Lauretta F. Gell 11 10/7/06
2,118 143.60 257,824 1,120,740
</TABLE>
(1) Options with two different exercise prices were granted to the
executives. The Options granted at an exercise price of $100 are
referred to as Initial Value Options. The Options granted at an
exercise price of $143.60 are referred to as Premium Options.
(2) Subject to the continuous employment of the executive with MGI,
one-half of the Initial Value Options and one-half of the Premium
Options granted to an executive will become exercisable in five equal
installments, on each of the first five anniversaries of the date of
the grant. Subject to the continuous employment of the executive with
MGI, the remaining one-half of the Initial Value Options and the
remaining one-half of the Premium Options granted to an executive will
become exercisable on the earlier of (x) the third anniversary of the
date of the grant, provided that MGI shall have achieved certain
cumulative EBITDA performance objectives and (y) the ninth anniversary
of the date of the grant.
(3) Amounts for the executives shown in these columns have been derived by
(x) multiplying the exercise price by the annual appreciation rate
shown (compounded for the term of the options), (y) multiplying the
result obtained under clause (x) by the number of shares of Common
Stock underlying the options, and (2) subtracting from the product
derived under clause (y) the aggregate exercise price for such Common
Stock. The dollar amounts set forth under this heading are the result
of calculations at the 5% and 10% rates set by the Commission and are
not intended to forecast possible future appreciation, if any, of the
stock price of the MGI Common Stock.
(4) These options were granted in connection with options, Malcolm Cook
primarily held, to purchase Common Stock of VK/AC to reflect the
Spin-Off pursuant to an Option program applicable to all employee
holders of VK/AC Shares.
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<PAGE> 92
AGGREGATED FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning stock
options held as of December 31, 1996 by each of the MGI Named Executives:
<TABLE>
<CAPTION>
Number of MGI
Shares Underlying
Un-exercised Value of Unexercised
Options at Fiscal in-the-Money Options
MGI Shares Year-End (#) at Fiscal Year-End ($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise(#)(1) Realized($) Unexercisable Unexercisable(2)
- ---- ----------------- ----------- ------------- ----------------
<S> <C> <C> <C> <C>
David D. Nixon - - 0 / 7,260 -
Carl J. Palash - - 0 / 2,420 -
Malcolm A. Cook - - 0 / 4,341 -
Anthony Napolitano - - 0 / 4,236 -
Lauretta F. Gell - - 0 / 4,236 -
</TABLE>
(1) No options were exercised during the 1996 fiscal year.
(2) Based upon a price of $100 per share, which was the value per share
assigned to the MGI Class C Common Stock as of December 31, 1996 by
MGI's Board of Directors.
EMPLOYMENT AGREEMENTS
In connection with the Spin-Off, MGI entered into employment agreements
with Mr. Nixon, Mr. Cook, Mr. Napolitano and Ms. Gell. The employment agreements
generally provide for a three-year term, and for compensation and benefit
arrangements that are consistent with the current compensation and benefit
arrangements of MGI. The employment agreements also provide that, in the event
of a termination of any such key employee's employment during the term of the
agreement by MGI other than for "Cause" (as defined in the employment
agreements) or by such key employee for "Good Reason" (as so defined), the key
employee will be entitled to special termination benefits consisting of (i)
continued salary generally for a period equal to the greater of (x) one year and
(y) the remaining term under the employment agreement, (ii) a pro rata incentive
bonus for the year of termination and (iii) continued welfare benefits,
generally for six months. The agreements also contain customary indemnification,
confidentiality, noncompetition and nonsolicitation provisions.
CERA will enter into employment agreements with Daniel H. Yergin, James
P. Rosenfield and Joseph A. Stanislaw, which will replace the existing
employment agreements between CERA and such individuals. The employment
agreements will generally provide for a three-year term, ending on the third
anniversary of the Closing Date, for base compensation of $265,000, $255,000,
and $255,000 to Mr. Yergin, Rosenfield and Stanislaw, respectively, and for a
bonus based on the performance of CERA and MGI and the achievement of individual
goals. The employment agreements also provide that in the event of a termination
of the applicable employee's employment during the term of the agreement by CERA
"Without Cause" (as defined in the employment agreements) or by such employee
for "Good Reason" (as so defined), the employee will be entitled to special
termination benefits consisting of (i) continued salary for the remaining term
under the employment agreement, (ii) a pro rata incentive bonus for the year of
termination and (iii) continued welfare benefits for the remaining term under
the employment agreement.
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<PAGE> 93
The agreements also contain customary indemnification, confidentiality,
noncompetition and nonsolicitation provisions.
Mr. Michelon serves as Managing Director, Operations of CERA pursuant
to the terms of a letter agreement regarding his employment with CERA dated July
2, 1993, as amended by a letter agreement dated February 24, 1995. The agreement
provides for a term of employment through September 1, 1998, provided that, such
term will be extended for additional two-year terms, unless either Mr. Michelon
or CERA provides twelve months' notice prior to the expiration of the current
term. If a controlling portion of CERA is merged or sold and Mr. Michelon's
employment is terminated by CERA without cause, the agreement provides for a
severance payment to Mr. Michelon in an amount equal to two times his then
current annual salary.
CERA has entered into an agreement with Mr. Lucking which provides that
if, on or prior to December 31, 1998, his employment with CERA is terminated in
connection with the merger or sale of all or a controlling portion of CERA or
without cause subsequent to the merger or sale of all or a controlling portion
of CERA, he will receive a severance payment in an amount equal to his then
current annual base salary.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
C&D Fund IV, which is MGI's largest stockholder and, following the
consummation of the Merger and the Exchange will be the Parent's largest Member,
is a private investment fund managed by CD&R. Amounts contributed to C&D Fund IV
by its limited partners are invested at the discretion of Associates IV, in
equity or equity-related securities of entities formed to effect leveraged
buy-out transactions and in the equity of corporations and other entities where
the infusion of capital coupled with the provision of managerial assistance by
CD&R can be expected to generate returns on the investments comparable to
returns historically achieved in leveraged buy-out transactions. Associates IV
is the general partner of C&D Fund IV. Donald J. Gogel, President and a
shareholder of CD&R and a general partner of Associates IV, serves as a director
of MGI, MCM and the Parent.
Pursuant to the Consulting Agreement, MGI pays CD&R an annual fee of
$150,000 for management and financial consulting services provided to MGI,
together with reimbursement of out-of-pocket expenses. Such services include
helping MGI to establish effective banking, legal and other business
relationships, and assisting management in developing and implementing
strategies for improving the operational, marketing and financial performance of
MGI. Such consulting fees will be reviewed on an annual basis and will be
calculated with reference to the size and complexity of MGI's business, the type
and magnitude of the advisory and management consulting services being provided,
the fees being paid to CD&R by other companies for which it provides such
services and the fees charged by other managers with comparable organizations
for similar services provided to companies in which investment funds managed by
such managers have been invested. In connection with the consummation of the
Merger and the Exchange, CERA will become a party to the Consulting Agreement
and CERA and MGI will share the obligation to pay the fees and other amounts
payable thereunder.
Pursuant to the Cribiore Services Agreement, Brera has agreed to
provide the services of Mr. Cribiore to assist CD&R in providing managerial and
financial consulting services under the Consulting Agreement. Brera may make
other Brera employees, including Mr. McMahon, available to assist Mr. Cribiore
in providing such services. CD&R has agreed to pay Brera a fee equal to the sum
of any management fee paid to CD&R under the Consulting Agreement and certain
directors' fees.
CD&R, C&D Fund IV and MGI are parties to an indemnification agreement,
pursuant to which MGI has agreed to indemnify CD&R, C&D Fund IV, Associates IV
and their respective directors, officers, partners, employees, agents and
controlling persons against certain liabilities arising under the federal
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<PAGE> 94
securities laws, other laws regulating the business of MGI and certain other
claims and liabilities. In connection with the Merger and the Exchange, CERA
will become a party to such indemnification agreement and will agree to
indemnify such persons and entities to the same extent as they are indemnified
by MGI.
Messrs. Yergin, Rosenfield, Stanislaw and I. C. Bupp and Mr. Raymond
Vernon, a director of CERA until June 1997, entered into an indemnification
agreement, pursuant to which Messrs. Yergin, Rosenfield, Stanislaw and Bupp
agreed to indemnify Mr. Vernon against all expenses, judgments, fines and
penalties incurred by Mr. Vernon in the event that he was or is a party, or is
threatened to be made a party, to certain actions by reason of the fact that he
is or was a director or officer of CERA or any its affiliates. The agreement
also contains certain provisions which set forth the procedures for obtaining
indemnification. The term of the agreement shall terminate no earlier than three
years after the date on which Mr. Vernon ceased to be a director or officer of
CERA and any of its affiliates.
Messrs. Yergin, Rosenfield, Stanislaw and Bupp and Mr. Edward G.
Jordan, a director of CERA until June 1997, entered into an indemnification
agreement, pursuant to which Messrs. Yergin, Rosenfield, Stanislaw and Bupp
agreed to indemnify Mr. Jordan against all expenses, judgments, fines and
penalties incurred by Mr. Jordan in the event that he was or is a party, or is
threatened to be made a party, to certain actions by reason of the fact that he
is or was a director or officer of CERA or any its affiliates. The agreement
also contains certain provisions which set forth the procedures for obtaining
indemnification. The term of the agreement shall terminate no earlier than three
years after the date on which Mr. Jordan ceased to be a director or officer of
CERA and any of its affiliates.
In January 1995, CERA entered into a consulting arrangement with Mr.
Jordan, a director of CERA until June 1997. The arrangement provided for payment
to Mr. Jordan of $17,500, $35,000 and $35,000 in the fiscal years ended June 30,
1995, 1996 and 1997, respectively. In addition, CERA agreed to pay Mr. Jordan a
fee in respect of the transactions contemplated by the Merger Agreement. Mr.
Jordan has agreed to accept the Jordan Options in full payment of such fee.
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<PAGE> 95
OWNERSHIP OF SECURITIES
The following table sets forth information, as of August 1, 1997,
regarding the ownership of MGI Common Stock and CERA Common Stock by (i) the
only persons known by MGI or CERA to own more than five percent of the
outstanding shares of MGI or CERA, as applicable, (ii) Goldman, (iii) each of
the directors of MGI and CERA, (iv) each of the Named Executives, and (v) all of
the directors and executive officers as a group, of MGI and CERA, respectively,
and the ownership of Units by each such person immediately after consummation of
the Merger and the Exchange and the grant of Units to the CERA Employees.
<TABLE>
<CAPTION>
Number of Number of Number of
Shares of Shares of Units After Ownership
MGI Ownership CERA Ownership the Merger of the
Common of MGI Common of CERA and the Parent
Name Stock (%) Stock (%) Exchange (%)
- ---- --------- --------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Daniel H. Yergin ....... -- -- 96,000 40.0% 497,238 10.28%
Joseph A. Stanislaw .... -- -- 69,925(1) 29.1% 362,181 7.49%
James P. Rosenfield .... -- -- 69,925(2) 29.1% 362,181 7.49%
Philippe A. Michelon ... -- -- -- -- 11,250 *
Daniel H. Lucking, Jr .. -- -- -- -- 5,625 *
The Goldman Sachs
Group, L.P.(3) ......... -- -- -- -- 150,000 3.10%
The Clayton and Dubilier
Private Equity Fund IV
Limited Partnership (4) 287,038 82.15% -- -- 2,742,806 56.69%
David D. Nixon ......... 3,000 * -- -- 28,667 *
Dennis J. McDonnell .... 2,065 * -- -- 19,732 *
Malcolm A. Cook ........ 1,750 * -- -- 16,722 *
Lauretta F. Gell ....... 1,750 * -- -- 16,722 *
Anthony Napolitano ..... 1,750 * -- -- 16,722 *
Chauncey G. Morgan ..... 1,000 * -- -- 9,556 *
Bruce M. Kamich ........ 1,000 * -- -- 9,556 *
Carl J. Palash ......... 1,000 * -- -- 9,556 *
Martin D. Payson ....... 1,000 * -- -- 9,556 *
Wallace Mathai-Davis ... 750 * -- -- 7,167 *
Max C. Chapman ......... 136 * -- -- 1,300 *
Gordon McMahon ......... 136 * -- -- 1,300 *
Alberto Cribiore (5) ... -- -- -- -- 33,444 *
Donald J. Gogel (4) .... 287,038 82.15% -- -- 2,742,806 56.69%
Richard J. Schnall ..... -- -- -- -- -- --
</TABLE>
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<PAGE> 96
<TABLE>
<CAPTION>
Number of Number of Number of
Shares of Shares of Units After Ownership
MGI Ownership CERA Ownership the Merger of the
Common of MGI Common of CERA and the Parent
Name Stock (%) Stock (%) Exchange (%)
- ---- --------- --------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Directors and Executive
Officers of MGI,
as a group (14 persons) (6)(7)... 15,337 4.39% -- -- 146,556 3.03%
Directors and Executive
Officers of CERA,
as a group (5 persons)........... -- -- 235,850 98.3% 1,238,475 25.61%
Directors and Executive
Officers of the Parent,
as a group (4 persons) (6)(7).... 136 * -- -- 1,300 *
</TABLE>
* Indicates less than 1%.
(1) Includes 15,000 shares held by Mr. Stanislaw's wife, Augusta McC. P.
Stanislaw, as trustee of three trusts (5,000 shares each), the
beneficial owners of which are the Stanislaws' children. Mr. and Mrs.
Stanislaw each disclaim beneficial ownership of such shares.
(2) Includes 12,000 shares held by Jamie W. Katz, trustee for the James P.
Rosenfield 1994 Irrevocable Gift Trust, for the benefit of Mr.
Rosenfield's children. Mr. Rosenfield disclaims beneficial ownership of
such shares.
(3) As of August 1, 1997, Goldman owned interests representing ten percent
of the outstanding partnership interests of CERA LP.
(4) B. Charles Ames, William A. Barbe, Donald J. Gogel, Leon J. Hendrix,
Jr., Hubbard C. Howe, Andrall E. Pearson and Joseph L. Rice, III may be
deemed to share beneficial ownership of the shares owned of record by
C&D Fund IV by virtue of their status as general partners of Associates
IV, but each expressly disclaims such beneficial ownership of the
shares owned by C&D Fund IV. Messrs. Ames, Barbe, Gogel, Hendrix, Howe,
Pearson and Rice share investment and voting power with respect to
securities owned by C&D Fund IV. Mr. Cribiore has withdrawn as a
general partner of Associates IV, effective as of March 31, 1997, but
retains his economic interest in Associates IV with respect to
investments by C&D Fund IV while Mr. Cribiore was a partner of
Associates IV, including his indirect interest in the shares of MGI
Common Stock owned of record by C&D Fund IV.
(5) Mr. Cribiore may be deemed to share beneficial ownership of the Units
which Brera will have the right to acquire upon exercise of the Brera
Options by virtue of his status as a principal of Brera, but he
expressly disclaims such beneficial ownership of the securities owned
by Brera. For purposes of this table, the Units have been allocated to
Mr. Cribiore. Mr. Cribiore has investment and voting power with respect
to securities owned by Brera.
(6) Does not include the Units which Brera will have the right to acquire
upon exercise of the Brera Options.
(7) Does not include shares owned of record by C&D Fund IV, of which Mr.
Gogel may be deemed to share beneficial ownership. See note (4) above.
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<PAGE> 97
COMPARISON OF STOCKHOLDER, LIMITED PARTNERSHIP
INTEREST HOLDER AND UNIT HOLDER RIGHTS
The rights of the holders of MGI Common Stock are currently governed by
the DGCL and by the MGI Certificate of Incorporation and By-Laws. The rights of
holders of MGI Class C Common Stock are also governed in part by the management
stock subscription agreements that each such holder has entered into with MGI.
As a result of the Merger, stockholders of MGI not exercising dissenters' rights
will become holders of units of capital representing limited liability interests
in the Parent, a Delaware limited liability company, and as such their rights
will be governed by the Delaware Act and by the Parent's Certificate of
Formation and the LLC Agreement. Certain differences arise from this change in
governing law as well as from distinctions between MGI's Certificate of
Incorporation and By-Laws and the Parent's Certificate of Formation and LLC
Agreement.
The rights of the holders of CERA Common Stock are currently governed
by Chapter 156B of the Massachusetts General Laws and by CERA's Articles of
Organization and By-Laws. As a result of the CERA Exchange, shareholders of CERA
will become holders of units of capital representing limited liability company
interests in the Parent, a Delaware limited liability company, and as such their
rights will be governed by the Delaware Act and by the Parent's Certificate of
Formation and the LLC Agreement. Certain differences arise from this change in
governing law as well as from distinctions between CERA's Articles of
Organization and By-Laws and the Parent's Certificate of Formation and the LLC
Agreement.
The rights of the holders of limited partnership interests of CERA LP
are currently governed by the Delaware Revised Uniform Limited Partnership Act
and by CERA LP's Certificate of Limited Partnership and Limited Partnership
Agreement. As a result of the Goldman Exchange, Goldman will become a holder of
units of capital representing limited liability company interests in the Parent,
a Delaware limited liability company, and as such its rights will be governed by
the Delaware Act and by the Parent's Certificate of Formation and the LLC
Agreement. Certain differences arise from this change in governing law as well
as from distinctions between CERA LP's Certificate of Limited Partnership and
Limited Partnership Agreement and the Parent's Certificate of Formation and the
LLC Agreement.
The following summary does not purport to be a complete description of
the rights of holders of Units, the rights of holders of MGI Common Stock, the
rights of the CERA Stockholders or the rights of holders of limited partnership
interests of CERA LP, or a comprehensive comparison of such rights, and is
qualified in its entirety by reference to the DGCL, Chapter 156B of the
Massachusetts General Laws, the Delaware Revised Uniform Limited Partnership Act
and the Delaware Act, and MGI's Certificate of Incorporation and By-Laws, CERA's
Articles of Organization and By-Laws, CERA LP's Certificate of Limited
Partnership and Limited Partnership Agreement and the Parent's Certificate of
Formation and the LLC Agreement.
MGI COMMON STOCK
Voting Rights. Each holder of shares of Class A Common Stock and Class
C Common Stock is entitled to one vote per share on all matters to be voted on
by stockholders. Holders of Class A Common Stock and Class C Common Stock are
not entitled to cumulative votes in the election of directors. Any director may
be removed at any time, either for or without cause, upon the affirmative vote
of the holders of a majority of the outstanding shares of MGI's capital stock
entitled to vote for the election of such director, cast at a special meeting of
stockholders called for that purpose. C&D Fund IV, therefore, is able to effect
the removal of any director so long as C&D Fund IV holds a majority of the
outstanding shares of MGI's capital stock entitled to vote.
Dividend Rights. The holders of Class A Common Stock and Class B
Common Stock are entitled to dividends and other distributions if, as and when
declared by the MGI Board of Directors out of assets legally available therefor.
The holders of Class A Common Stock, Class B Common Stock and Class C Common
Stock are entitled to equivalent per share dividends and distributions.
MGI CLASS A AND CLASS B COMMON STOCK
Certificate of Incorporation. The Certificate of Incorporation of MGI
provides that the shares of the Class A Common Stock and Class B Common Stock
may not be transferred until such time as MGI has registered the Class A Common
Stock and Class B Common Stock under Section 12 of the Exchange Act, except in
the case of "permitted transfers". The term "permitted transfers" is defined as
transfers or assignments: (i) by VK/AC to its common stockholders in the
Spin-Off; (ii) to MGI or its affiliates; (iii) to existing stockholders of MGI
who were stockholders of VK/AC and received Class A Common Stock and Class B
Common Stock in the Spin-Off; (iv) by bequest or the laws of descent or
distribution; (v) in connection with a transfer to an unaffiliated third party
pursuant to a merger, consolidation, stock for stock exchange, tender offer or
similar transaction involving MGI; (vi) to a trust for employees of MGI and its
subsidiaries established under a qualified employee benefit plan; (vii) by a
trust to the trust's beneficiaries; (viii) for cash only in transactions which
would be exempt from the
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<PAGE> 98
registration requirements of Section 5 of the Securities Act, by virtue of the
exemption provided by Section 4(2) of the Securities Act if the transferor were
the issuer of the shares, provided that the transferee is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act and
subject, in certain cases, to compliance with a right of first offer in favor of
MGI and C&D Fund IV, and to certain "take-along" rights of C&D Fund IV; or (ix)
pursuant to an effective registration statement under the Securities Act
simultaneously with a registration of the Class A Common Stock and Class B
Common Stock under Section 12 of the Exchange Act. Transfers under clauses (ii)
(other than to MGI), (iii), (iv), (v), (vi), (vii) and (viii) are subject to the
transferee agreeing to be bound by the same restrictions on transfer, provided
that transferees under clause (v) shall not be required to agree that in order
for any subsequent transfer by them to qualify as a "permitted transfer" of the
type contemplated by clause (viii) such transfer must be for cash or to agree
that such transfers would be subject to compliance with the rights of first
offer and "take along" rights referred to in clause (viii).
Rights of First Offer. Under the MGI Certificate of Incorporation, the
Class A Common Stock and Class B Common Stock are subject to certain rights of
first offer in favor of MGI and C&D Fund IV. If a holder of Class A Common
Stock or Class B Common Stock desires to offer or to sell shares of Class A
Common Stock or Class B Common Stock owned by such holder in a transaction
permitted under clause (viii) of the definition of "permitted transfers", such
holder must first make an offer to sell such shares to MGI and C&D Fund IV at a
price specified by such holder in a notice to MGI and C&D Fund IV. MGI and C&D
Fund IV, respectively, have the right during successive 30-day periods
following receipt of such notice to purchase all (but not less than all) of
such shares at the price and on the terms offered. If MGI and C&D Fund IV elect
not to exercise such rights, the holder may sell shares to a third party at no
less than 90% of the price and on the terms initially offered to MGI and C&D
Fund IV. The rights of first offer in favor of MGI and C&D Fund IV terminate
upon the registration of the Class A Common Stock and Class B Common Stock
under Section 12 of the Exchange Act.
Take-Along Rights. Under the MGI Certificate of Incorporation, the
Class A Common Stock and Class B Common Stock is subject to certain
"take-along" rights of C&D Fund IV. In the event that C&D Fund IV elects to
sell all of its shares of Class A Common Stock and Class B Common Stock to a
third party, each holder of Class A Common Stock and Class B Common Stock has
an obligation to sell its shares to such third party on the same terms and at
the same price as C&D Fund IV. The "take-along" rights of C&D Fund IV terminate
upon the registration of the Class A Common Stock and Class B Common Stock
under Section 12 of the Exchange Act.
Registration and Participation Rights. All holders of outstanding
shares of MGI Common Stock are entitled to the benefits of and bound by the
obligations set forth in the Registration and Participation Agreement dated as
of August 31, 1996 among MGI and each of the holders of MGI Common Stock (the
"Existing Registration and Participation Agreement"). Pursuant to the Existing
Registration and Participation Agreement, the holder or holders of certain
percentages of the MGI Common Stock at the time outstanding, that is registrable
thereunder, have the right to initiate one or more of all or part of such
holder's or holders' registrable MGI Common Stock. Since the initial request
must be made by the holder or holders of 50% of the outstanding shares, C&D Fund
IV effectively control the initial registration of the MGI Common Stock.
Subsequent requests may be made by the holders of 10% of the outstanding shares,
provided that the holders of at least 20% of the outstanding shares participate
in the registration. The Existing Registration and Participation Agreement
requires MGI to pay the expenses of three such registrations. In addition,
holders of MGI Common Stock have rights to
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<PAGE> 99
participate in certain registered public offerings initiated by MGI, for which
the registration expenses will also be borne by MGI.
Under the Existing Registration and Participation Agreement any such
stockholders who are "accredited investors," as such term is defined in Rule 501
of Regulation D under the Securities Act, also have the right to purchase
proportionately additional shares of capital stock proposed to be issued by MGI
to C&D Fund IV or its affiliates.
Additionally, under the Existing Registration and Participation
Agreement (and under the MGI Certificate of Incorporation), the Class A Common
Stock and Class B Common Stock will be subject to a holdback provision under
which such shares may not be transferred in any public sale or distribution,
including sales pursuant to Rule 144 and Rule 144A under the Securities Act,
during the 20-day period prior to and the 180-day period after the effective
date of any registration statement for a public offering filed in respect of
MGI's equity securities (other than as part of such public offering).
MGI CLASS C COMMON STOCK
Pursuant to the terms of the existing management stock subscription
greements between MGI and each of the holders of the outstanding shares of
Class C Common Stock, such holder's right to sell or otherwise transfer or
pledge the outstanding shares of Class C Common Stock is limited as described
below and, generally, such outstanding shares of Class C Common Stock may be
transferred only to the estate of such holder or his or her beneficiary under
the holder's will upon the death of the holder. Upon issuance of shares of
Class C Common Stock to the holders of the MGI Employee Options upon their
exercise (the "Exercise Shares") such Exercise Shares will be subject to
substantially the same contractual restrictions on transferability as the
outstanding shares of Class C Common Stock. These contractual transfer
restrictions terminate automatically upon the occurrence of an initial public
offering of the Class A Common Stock and/or Class B Common Stock led by one or
more underwriters, at least one of which is of nationally recognized standing
(a "Public Offering"). In addition, pursuant to the management stock option
agreements, holders of the MGI Employee Options are not be permitted to sell or
otherwise transfer the Employee Options at any time, other than pursuant to the
laws of descent and distribution upon the death of the holder. The restrictions
on transferability applicable to the Exercise Shares under the MGI management
stock subscription agreements, discussed above, will continue to apply to the
Units exchanged for the Class C Common Stock and to the Units that will be
issuable upon the exercise of the MGI Employee Options.
Right of First Refusal. The outstanding shares of Class C Common
Stock and the Exercise Shares are subject to substantial restrictions on
transferability, including a right of first refusal of MGI and C&D Fund IV,
which make it virtually impossible for such outstanding shares of Class C
Common Stock or Exercise Shares to be transferred without the consent of MGI
and C&D Fund IV. Each certificate representing outstanding shares of Class C
Common Stock or Exercise Shares bears a legend indicating that the
transferability of such outstanding shares of Class C Common Stock and Exercise
Shares is restricted by the applicable management stock subscription
agreement.
Repurchase Rights. In the event that the employment of the holder of
outstanding shares of Class C Common Stock or of MGI Employee Options with
MGI terminates for any reason whatsoever, MGI and C&D Fund IV have successive
rights (but not the obligation) to repurchase all or a portion of the
outstanding shares of Class C Common Stock, exercisable MGI Employee Options
and Exercise Shares then held by the holder. In addition, such holder has the
right to require MGI to repurchase such holder's outstanding shares of Class
C Common Stock and Exercise Shares (but not MGI Employee Options) if such
holder's employment (x) is terminated by MGI other than for "Cause" (as defined
in the applicable management stock subscription agreements) or, in the case of
a holder who, as of the effective date of such termination, is a party to an
effective employment agreement with MGI, for "good reason" (as defined in such
employment agreement) or (y) terminates by reason of his death, permanent
disability (as defined in the applicable management stock subscription
agreements) or retirement at or after age 60 (any such termination described
under clause (x) or (y), a "Special Termination").
The repurchase price will, in general, be equal to the fair market
value of the outstanding shares of Class C Common Stock or Exercise Shares, as
determined by the Board of Directors of MGI (the "Board") in accordance with
the terms of the applicable management stock subscription agreements as of the
date (the "Determination Date") of the holder's termination of employment,
reduced int he case of the MGI Employee Options by the option exercise price,
and could be higher or lower than the cost of such outstanding shares of Class
C Common Stock or Exercise Shares to the holder. Payment of the repurchase
price for the outstanding shares of Class C Common Stock, Exercise Shares and
exercisable MGI Employee
97
<PAGE> 100
Options will generally be made at the closing of such repurchase shortly
following receipt by the holder of the notice of election to repurchase from
MGI and/or C&D Fund IV, as the case may be, or, solely in the case of a
repurchase of outstanding shares of Class C Common Stock and/or Exercise Shares
following a Special Termination, receipt by MGI of the holder's notice
requiring MGI to repurchase such outstanding shares of Class C Common Stock
and/or Exercise Shares. However, if the Determination Date occurs during the
first or fourth fiscal quarter of any fiscal year of MGI, payment of a portion
of the repurchase price may be deferred until receipt by MGI of an annual
valuation of the outstanding shares of Class C Common Stock as of the last day
of the fiscal year of MGI ending immediately prior to such first fiscal quarter
or coincident with the end of such fourth fiscal quarter. Notwithstanding the
foregoing, if the holder's employment is terminated for Cause, all MGI Employee
Options will be forfeited and the purchase price for the outstanding shares of
Class C Common Stock and Exercise Shares will be the lesser of the initial
purchase price for such outstanding shares of Class C Common Stock or Exercise
Shares, as applicable, and the fair market value of such outstanding shares of
Class C Common Stock or Exercise Shares as of the date of termination.
The closing of any such repurchase by MGI from a holder of such
outstanding shares of Class C Common Stock, exercisable MGI Employee Options or
Exercise Shares will be deferred, if such repurchase would result in a
violation of, or default under, any of MGI's financing agreements, would
violate the MGI Certificate of Incorporation or would be prohibited by
applicable law. In the event such a deferral is required, the repurchase price
for the outstanding shares of Class C Common Stock, exercisable MGI Employee
Options or Exercise Shares, as applicable, is generally determined as of the
Determination Date for such repurchase and, except as described below, will
include interest for the period from such Determination Date until the deferred
closing of such repurchase. Solely in the case of a deferred repurchase of
outstanding shares of Class C Common Stock or Exercise Shares pursuant to a
holder's election to require MGI to repurchase such outstanding shares of Class
C Common Stock or Exercise Shares following a Special Termination, the
repurchase price for the outstanding shares of Class C Common Stock or Exercise
Shares is determined as of the deferred closing date that such repurchase
actually takes place and will not include interest.
Upon the termination of a holder of such outstanding shares of
Class C Common Stock's employment for any reason and the expiration of the
period during which MGI and C&D Fund IV may elect to repurchase such holder's
outstanding shares of Class C Common Stock and, in the case of a Special
Termination, the period during which such holder may require MGI to repurchase
such outstanding shares of Class C Common Stock, the outstanding principal and
interest balance on any loan provided to such holder by MGI to finance the
purchase of the outstanding shares of Class C Common Stock will become due in
full. Pursuant to the applicable management stock subscription agreement and
the promissory note evidencing such loan, each holder is required to apply the
repurchase price, if any, received from MGI and/or C&D Fund IV to the
prepayment of such outstanding principal and interest balance. Such mandatory
prepayment is for an amount equal to the entire principal balance and accrued
interest then outstanding under such loan. Except in the case of a Special
Termination as described above, such holder does not have the right to require
MGI or C&D Fund IV to repurchase any outstanding shares of Class C Common
Stock, MGI Employee Options or Exercise Shares in the event MGI and C&D Fund IV
do not exercise their respective repurchase rights. As a result, if MGI and C&D
Fund IV do not exercise their repurchase rights, a holder who has chosen to
finance the purchase of the outstanding shares of Class C Common Stock in part
under the loan program may be required to obtain funds from an alternative
source to prepay such loan in the event of his termination of employment.
Registration and Participation Rights. All holders of outstanding
shares of Class C Common Stock are entitled to the benefits of and bound by
the obligations set forth in the Existing Registration and Participation
Agreement. See "--MGI Class A and Class B Common Stock--Registration and
Participation Rights" above.
Pursuant to the applicable management stock subscription agreements,
each holder of such outstanding shares of Class C Common Stock has agreed that
if MGI files a registration statement under the Securities Act with respect to
an underwritten public offering of any shares of its capital stock, the holder
will not effect any public resale or distribution of any shares of MGI Common
Stock (other than as part of such underwritten public offering), including, but
not limited to, pursuant to
98
<PAGE> 101
Rule 144 or Rule 144A under the Securities Act, during the 20 days prior to and
180 days after the effective date of such registration statement. This holdback
restriction impairs such holder's ability to sell his outstanding shares of
Class C Common Stock and Exercise Shares in the public market if MGI becomes a
public company.
CERA COMMON STOCK
Rights to Dividends and Other Distributions. The holders of shares of
CERA Common Stock are entitled to receive dividends, when and if declared by the
board of directors of CERA, out of the assets of CERA lawfully available
therefor. In the event of the dissolution of CERA, holders of CERA Common Stock
are entitled to receive, unless otherwise provided by law or CERA's Articles of
Organization, all of the remaining assets of CERA ratably in proportion to the
number of shares of CERA Common Stock held by them, respectively.
Voting Rights. Except as otherwise provided by law or CERA's Articles
of Organization, (i) each holder of Common Stock of CERA (other than Non-Voting
Common Stock) has one vote in respect of each share of Common Stock (other than
Non-Voting Common Stock) held by him of record on the books of CERA for the
election of directors and on all matters submitted to a vote of shareholders of
CERA, and (ii) shares of Non-Voting Common Stock of CERA do not entitle holders
thereof to any voting rights.
CERA LP LIMITED PARTNERSHIP INTERESTS
Rights to Dividends and Other Distributions. Except as otherwise
required by law or set forth in CERA LP's Amended and Restated Limited
Partnership Agreement, holders of limited partnership interests of CERA LP are
entitled to receive (i) at such times and in such amounts as the general partner
of CERA LP may determine, distributions of Distributable Cash (as defined in
CERA LP's Amended and Restated Limited Partnership Agreement) and (ii)
distributions of net proceeds upon liquidation of CERA LP, in proportion to
their respective percentage interests in CERA LP.
Management and Voting Rights. Except as otherwise required by law or
set forth in CERA LP's Amended and Restated Limited Partnership Agreement, the
overall management and control of the business and affairs of CERA LP is vested
solely in the general partner of CERA LP, and holders of limited partnership
interests of CERA LP are not permitted to take part in the control of the
business or affairs of CERA LP or to have any voice in the management or
operation of CERA LP's business or property.
UNITS
Rights to Dividends and Other Distributions. Holders of Units of the
Parent (i) will be entitled to receive, to the extent of available cash and cash
equivalent assets of the Parent, cash distributions in amounts intended to
enable holders and certain other persons or entities to discharge their United
States federal, state and local income tax liabilities arising from certain
allocations made with respect to the Units as described above, (ii) other than
with respect to certain distributions relating to specified disposition
transactions, will be entitled on a pro rata basis to such distributions, if
any, prior to the dissolution and liquidation of the Parent as may be determined
by the Board of Directors of the Parent in its sole discretion, and (iii) will
be entitled on a pro rata basis, upon dissolution and liquidation of the Parent,
to all remaining assets after satisfaction of the Parent's liabilities to
creditors. See "The Limited Liability Company Agreement--The Units."
Voting Rights. Holders of record of Voting Units will be entitled to
notice of, and to vote at, meetings of the Members and to act with respect to
matters as to which approval of the Members may be solicited. Non-Voting Units,
which will be issuable by the Parent only in limited circumstances and
99
<PAGE> 102
only to those holders of Units subject to certain legal or regulatory
constraints on their ability to possess voting power with respect to any single
entity in excess of certain thresholds, and except with respect to certain
rights and obligations applicable, pursuant to the LLC Agreement, to certain
holders of Units with respect to (i) nomination, election and/or appointment of
members of the Board of Directors, (ii) rights and obligations relating to
transferability of Units and rights to request registration of Units under the
applicable securities laws, (iii) Contingent Units, and (iv) certain other
matters, each Unit will be identical in all respects to each other Unit. See
"The Limited Liability Company Agreement--The Units."
EXPERTS
The audited balance sheet of the Parent at June 30, 1997 appearing in
this Information Statement/Prospectus and Registration Statement has been
audited by Coopers & Lybrand L.L.P., independent accountants, as set forth in
their report thereon included herein. Such balance sheet is included herein in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated balance sheet of MGI at December 31, 1996 and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the year ended December 31, 1996 appearing in this Information
Statement/Prospectus and Registration Statement have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their report thereon
included herein. Such consolidated financial statements are included herein in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated balance sheet of MGI at December 31, 1995 and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the years ended December 31, 1995 and 1994 appearing in this
Information Statement/Prospectus and Registration Statement have been audited by
KPMG Peat Marwick LLP, independent auditors, as set forth in their report
thereon included herein. Such consolidated financial statements are included
herein in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The consolidated balance sheets of CERA at June 30, 1996 and 1995, and
the related consolidated statements of income, stockholders' deficit and cash
flows for each of the years in the three-year period ended June 30, 1996
appearing in this Information Statement/Prospectus and Registration Statement
have been audited by KPMG Peat Marwick LLP, independent auditors, as set forth
in their report thereon included herein. Such consolidated financial statements
are included herein in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the securities of the Parent to be issued in connection
with the Merger and the Exchange, and the other transactions contemplated by the
Merger Agreement, will be passed upon for the Parent by Richards, Layton &
Finger, P.A.
100
<PAGE> 103
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GLOBAL DECISIONS GROUP LLC
Report of Independent Accountants..................................................................... F-2
Balance Sheet as of June 30, 1997..................................................................... F-3
Notes to Financial Statement - As of June 30, 1997.................................................... F-4
MCM GROUP, INC. AND SUBSIDIARIES
Report of Independent Accountants..................................................................... F-5
Independent Auditors' Report.......................................................................... F-6
Consolidated Balance Sheets as of December 31, 1996 and 1995.......................................... F-7
Consolidated Statements of Income - Years Ended
December 31, 1996, 1995 and 1994............................................................... F-8
Consolidated Statements of Changes in Stockholders' Equity - Years Ended
December 31, 1996, 1995 and 1994............................................................... F-9
Consolidated Statements of Cash Flows - Years Ended
December 31, 1996, 1995 and 1994............................................................... F-10
Notes to Consolidated Financial Statements - Years Ended
December 31, 1996, 1995 and 1994............................................................... F-11
Consolidated Balance Sheets as of June 30, 1997 and 1996 (Unaudited).................................. F-17
Consolidated Statements of Income - Six Month Periods
Ended June 30, 1997 and 1996 (Unaudited)....................................................... F-18
Consolidated Statements of Cash Flows - Six Month Periods
Ended June 30, 1997 and 1996 (Unaudited)....................................................... F-19
Notes to Consolidated Financial Statements............................................................ F-20
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Independent Auditors' Report.......................................................................... F-21
Consolidated Balance Sheets as of June 30, 1995 and 1996.............................................. F-22
Consolidated Statements of Income - Years Ended
June 30, 1994, 1995 and 1996................................................................... F-23
Statements of Cash Flows - Years Ended
June 30, 1994, 1995 and 1996................................................................... F-24
Consolidated Statements of Stockholders' Deficit -
Years Ended June 30, 1994, 1995 and 1996....................................................... F-25
Notes to Consolidated Financial Statements -
June 30, 1994, 1995 and 1996................................................................... F-26
Consolidated Balance Sheet as of June 30, 1997 (Unaudited)............................................ F-30
Consolidated Statement of Income - Year Ended June 30, 1997 (Unaudited)............................... F-31
Statement of Cash Flows - Year Ended June 30, 1997 (Unaudited)........................................ F-32
Consolidated Statement of Stockholders' Deficit -
Year Ended June 30, 1997 (Unaudited)........................................................... F-33
Notes to Consolidated Financial Statements............................................................ F-34
</TABLE>
F-1
<PAGE> 104
REPORT OF INDEPENDENT ACCOUNTANTS
To the Members of
Global Decisions Group LLC:
We have audited the accompanying balance sheet of Global Decisions Group LLC as
of June 30, 1997 (date of inception). This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Global Decisions Group LLC as of
June 30, 1997, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
August 14, 1997
F-2
<PAGE> 105
GLOBAL DECISIONS GROUP LLC
BALANCE SHEET
As of June 30, 1997
<TABLE>
<S> <C>
Total Assets $ 0
Liabilities and Members' Equity
Members' Equity
LLC Units $ 100
Less: Subscription receivable 100
-------
Total Members' Equity $ 0
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F-3
<PAGE> 106
GLOBAL DECISIONS GROUP LLC
NOTES TO FINANCIAL STATEMENT
AS OF JUNE 30, 1997
1. Formation of Global Decisions Group LLC:
On June 13, 1997, Global Decisions Group LLC (the "Company"), was
formed as a Delaware Limited Liability Company for the purpose of effectuating
the transaction described below.
The members of the Company are MCM Group, Inc. ("MGI") and McCarthy
Crisanti & Maffei, Inc., ("MCM").
2. Merger:
On July 2, 1997, GDG Merger Corporation ("Merger Corp."), a Delaware
corporation, was incorporated as a wholly owned subsidiary of the Company.
On August 1, 1997, the Company entered into an agreement and, as a
result, Merger Corp. will merge with MGI. The outstanding common stock of MGI
will be converted into units of the Company. As part of the agreement, the
stockholders of Cambridge Energy Research Associates, Inc. ("CERA") and the
limited partners of Cambridge Energy Research Associates Limited Partnership
("CERA LP") also agreed to exchange their outstanding stock of CERA and its
limited partnership interest in CERA LP, respectively, for units of capital of
the Company. MGI and CERA will be wholly owned subsidiaries of the Company
following the merger and exchanges.
Closing of the transaction is anticipated by the end of September,
1997.
F-4
<PAGE> 107
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MCM Group, Inc.:
We have audited the accompanying consolidated balance sheet of MCM GROUP, INC.
and SUBSIDIARIES (see Note 1 to the consolidated financial statements) as of
December 31, 1996, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of MCM
Group, Inc. and Subsidiaries as of December 31, 1996, and the consolidated
results of their operations and their cash flows for the year then ended, in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
February 7, 1997
F-5
<PAGE> 108
INDEPENDENT AUDITORS' REPORT
The Board of Directors
MCM Group, Inc.
We have audited the accompanying consolidated balance sheet of MCM Group, Inc.
and subsidiaries, formerly McCarthy, Crisanti & Maffei, Inc. and subsidiaries,
as of December 31, 1995, and the related consolidated statements of income,
changes in stockholder's equity and cash flows for the years ended December 31,
1995 and 1994. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles use and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of MCM Group, Inc. and
subsidiaries, formerly McCarthy, Crisanti & Maffei, Inc. and subsidiaries, as of
December 31, 1995 and the results of their operations and their cash flows for
the years ended December 31, 1995 and 1994 in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
January 26, 1996
F-6
<PAGE> 109
MCM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 1996 and 1995
(in 000's except for par value and shares)
<TABLE>
<CAPTION>
ASSETS 1996 1995
------- -------
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 1) $ 9,877 $ 623
Accounts receivable, net of allowance for doubtful accounts of $200 in
1996 and $159 in 1995 4,651 2,797
Receivable from affiliates, net (Note 1) -- 4,411
Prepaid expenses and other assets 680 627
------- -------
Total current assets 15,208 8,458
Furniture, equipment and leasehold improvements, net (Note 1) 2,046 2,351
Excess of cost over fair value of net assets acquired, net (Note 1) 16,467 17,246
Other assets 430 377
------- -------
Total assets $34,151 $28,432
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 698 $ 605
Accrued vendor commissions (Note 1) 1,517 1,666
Income taxes payable 314 --
Bank loans payable (Note 10) 657 729
Payroll and benefit-related liabilities 1,578 465
------- -------
Total current liabilities 4,764 3,465
Deferred income taxes payable (Note 2) 841 477
Other liabilities, including minority interest (Note 5) 950 831
------- -------
Total liabilities 6,555 4,773
Commitments and contingencies (Note 5)
Redeemable Common Stock:
Class C common stock $.01 par value, 80,000 shares authorized, 17,400
shares outstanding, 15,650 shares at redemption value of $100 per
share, less notes receivable from stockholders of $765, and 1,750
"non redeemable" shares (see below) (Note 8) 800 --
Stockholders' equity:
Class A common stock, $.01 par value, 500,000 shares authorized, and
330,000 shares issued and outstanding 3 --
Class B common stock $.01 par value 60,000 shares authorized, none
issued and outstanding -- --
Class C common shares, 1,750 "non redeemable" shares outstanding (see
above)(Note 8) 175 --
Additional paid-in capital 22,004 22,007
Retained earnings 4,614 1,652
------- -------
Total stockholders' equity 26,796 23,659
------- -------
Total liabilities and stockholders' equity $34,151 $28,432
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
<PAGE> 110
MCM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 1996, 1995 and 1994
(In 000's)
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Research Services Revenue (Note 1) $35,794 $31,110 $26,037
Other revenue 325 515 559
------- ------- -------
Total revenues 36,119 31,625 26,596
------- ------- -------
Expenses:
Vendor commissions (Note 1) 11,433 12,643 11,862
Compensation and benefits 10,340 8,641 6,815
Sales, distribution and administrative 7,829 7,028 5,733
Amortization of excess of cost over fair value
of net assets acquired (Note 1) 779 777 766
------- ------- -------
Total expenses 30,381 29,089 25,176
------- ------- -------
Income before income tax provision 5,738 2,536 1,420
Income tax provision (Note 2) 2,776 977 692
------- ------- -------
Net income $ 2,962 $ 1,559 $ 728
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-8
<PAGE> 111
MCM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31, 1996, 1995 and 1994
(In 000's)
<TABLE>
<CAPTION>
CLASS A CLASS C ADDITIONAL
COMMON COMMON PAID-IN RETAINED
STOCK STOCK CAPITAL EARNINGS TOTAL
-------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $ -- $ -- $ 22,007 $ -- $ 22,007
Net income -- -- -- 728 728
Dividends (Note 9) -- -- -- (635) (635)
-------- -------- ---------- -------- --------
Balance at December 31, 1994 -- -- 22,007 93 22,100
Net income -- -- -- 1,559 1,559
-------- -------- ---------- -------- --------
Balance at December 31, 1995 -- -- 22,007 1,652 23,659
Issuance of common stock for
stock of MCM Inc. and
Subsidiaries (Note 1) 3 -- (3) -- --
Issuance of common stock
(Note 7) -- 175 -- -- 175
Net income -- -- -- 2,962 2,962
-------- -------- ---------- -------- --------
Balance at December 31, 1996 $ 3 $ 175 $ 22,004 $ 4,614 $ 26,796
======== ======== ========== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-9
<PAGE> 112
MCM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996, 1995 and 1994
(in 000's)
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,962 $ 1,559 $ 728
------- ------- -------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 323 301 228
Amortization 779 777 766
Changes in assets and liabilities:
Increase in receivables (1,854) (254) (1,350)
Decrease (increase) in receivables from affiliates,
net 4,411 (1,857) 845
Increase (decrease) in accounts payable and
accrued expenses 93 (26) 151
(Decrease) increase in accrued vendor
commissions (149) (153) 308
Increase in income taxes payable 314
Increase (decrease) in payroll and benefit related
liabilities 1,113 66 (56)
Increase in deferred income taxes 364 93 237
Decrease in other, net 14 172 312
------- ------- -------
Net cash provided by operating activities 8,370 678 2,169
------- ------- -------
Cash flows from investing activities:
Capital expenditures (19) (337) (1,992)
------- ------- -------
Cash flows from financing activities:
Net bank loan (repayments) borrowings (72) 86 315
Issuance of Class C common stock, less notes
receivable 975
Payments of dividends (635)
------- ------- -------
Net cash provided (used) by financing
activities 903 86 (320)
Net increase (decrease) in cash 9,254 427 (143)
Cash and cash equivalents at beginning of year 623 196 339
------- ------- -------
Cash and cash equivalents at end of year $ 9,877 $ 623 $ 196
======= ======= =======
Supplementary disclosure of cash flow information:
Cash paid for:
Income taxes $ 1,977 $ 528 $ 807
Interest 13 22 17
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-10
<PAGE> 113
MCM GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1996, 1995 and 1994
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
MCM Group, Inc. ("MGI"), a Delaware corporation, was incorporated on
August 21, 1996 as a wholly owned subsidiary of VK/AC Holding, Inc.
("Holding"). On that date, Holding was a majority owned subsidiary of
The Clayton & Dubilier Private Equity Fund IV Limited Partnership ("C&D
Fund IV"), which is managed by Clayton Dubilier & Rice, Inc. Prior to
August 31, 1996, McCarthy, Crisanti & Maffei, Inc. ("MCM") was a wholly
owned subsidiary of Holding. On August 31, 1996, Holding's ownership
interest in MCM was transferred to MGI. On August 31, 1996, 100% of the
outstanding Class A Common Stock of MGI was distributed to the
stockholders of record of Holding as a dividend on their shares of
Holding's common stock. Upon the distribution, MGI became a majority
owned subsidiary of C&D Fund IV. The transfer of 100% of the MCM Common
Stock to MGI has been accounted for in a manner similar to the
pooling-of-interests method due to the common ownership of MGI and
Holding by C&D Fund IV following the distribution. On October 31, 1996,
C&D Fund IV sold its ownership interest in Holding, which then ceased
to be an affiliate of MGI.
These financial statements have been prepared in accordance with
generally accepted accounting principles. The statements include the
accounts of MGI and MCM and its subsidiaries McCarthy, Crisanti &
Maffei, S.A. a 99.73% owned French subsidiary, and MCM Asia Pacific
Company Limited an 85% owned subsidiary (collectively, "the Company").
The 1995 financial statements and related amounts presented in the
report represent those of MCM. All material intercompany accounts and
transactions have been eliminated in consolidation. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
MCM and its subsidiaries are providers of specialized on-line financial
information and analysis relating to domestic and international debt
and currency markets. MCM distributes its products primarily through
on-line telecommunications information networks to institutional
clients in 57 countries. In addition to its headquarters in New York,
MCM has offices in Boston, London, Paris, Tokyo, Hong Kong and
Singapore.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
RESEARCH SERVICES
Revenue from Research Services results from the Company producing and
distributing electronic information services worldwide and is
recognized when the services are provided. The life of the customers'
contract period is generally one year. Amounts billed or collected
relating to future periods are classified as unearned revenue and
recognized as the services are provided.
VENDOR COMMISSIONS
Vendor commissions are royalties paid to distributors of the Company's
on-line services.
F-11
<PAGE> 114
RECEIVABLE FROM AFFILIATES
Receivable from Affiliates represents amounts due from Holding's
affiliates which arose from daily operations.
DEPRECIATION
The Company provides for depreciation of equipment using the straight
line method over three years. Leasehold improvements and furniture are
amortized over the lesser of the remaining lives of the leases or their
estimated useful lives using the straight-line method. All fixed assets
are stated at cost and related repair and maintenance charges are
expensed as incurred. When assets are sold, retired or otherwise
disposed of, the applicable costs and accumulated depreciation are
removed from the accounts and the resulting gain or loss is included in
the consolidated statement of income. Accumulated depreciation at
December 31, 1996 and 1995 was approximately $1,027,000 and $745,000,
respectively.
AMORTIZATION
The estimated life of Excess of Cost Over Fair Value of Net Assets
Acquired was determined by an independent study. The Company assesses
impairment of this asset based on several factors, including probable
fair market value, cash flows, and the aggregate value of the business
as a whole. Excess of Cost Over Fair Value of Net Assets Acquired is
being amortized over twenty-five years on a straight line basis.
Accumulated amortization of Excess of Cost Over Fair Value of Net
Assets Acquired at December 31, 1996 and 1995 was approximately
$3,015,000 and $2,235,000, respectively.
TRANSLATION OF FOREIGN CURRENCIES
The monetary assets and liabilities of foreign operations that are
denominated in foreign currencies are translated into U.S. dollars at
year end or historical exchange rates. Income and expense items are
converted into U.S. dollars at average rates of exchange prevailing
during the year. Foreign exchange gains and losses are not material to
the consolidated financial statements.
RECLASSIFICATIONS
Certain 1995 and 1994 amounts have been reclassified to conform to the
1996 presentation.
2. INCOME TAXES:
For periods prior to August 31, 1996, MCM joined with Holding in the
filing of consolidated federal tax returns but filed separate local and
state income and franchise tax returns. Pursuant to a tax sharing
agreement, MCM paid federal income taxes to Holding as if MCM filed
separate federal tax returns. For periods subsequent to August 31,
1996, the Company will file its own consolidated federal and other tax
returns.
The Company accounts for income taxes in accordance with the provisions
of Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes". Under this standard, deferred tax assets
and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled.
F-12
<PAGE> 115
Income tax expense consists of (in 000's):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Current:
U.S. Federal $1,521 $ 634 $ 264
State, local, and foreign 699 250 191
------ ------ ------
2,220 884 455
------ ------ ------
Deferred:
U.S. Federal 389 78 196
State and local 167 15 41
------ ------ ------
556 93 237
------ ------ ------
Total $2,776 $ 977 $ 692
====== ====== ======
</TABLE>
The deferred income tax liability shown on the consolidated balance
sheets at December 31, 1996 and 1995 is due primarily to temporary
differences between tax and book amortization of excess of cost over
fair value of net assets acquired.
The provision for income taxes is different from that which would be
computed by applying the statutory federal income tax rate to income
before taxes. The principal reasons for the differences are set forth
in the table below.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 35.0%
State taxes, net of federal income tax benefit 9.3 7.4 8.5
Foreign and other, net 4.1 (3.9) 5.2
------ ------ ------
Effective rate 48.4% 38.5% 48.7%
====== ====== ======
</TABLE>
3. PROFIT SHARING:
Prior to November 1, 1996, VKAC, an affiliated corporation of Holding,
provided a defined contribution profit sharing plan (the "Plan")
covering all eligible employees of MCM and was reimbursed by MCM for
expenses under the Plan. VKAC contributed to a trust, that was
qualified under the Internal Revenue Code, an amount which did not
exceed the amount allowable as a deduction for federal income tax
purposes. On November 1, 1996, MCM implemented its own defined
contribution profit sharing plan as a continuation of and successor to
the Plan. MCM's allocated portion of the contribution to the plans was
approximately $273,000, $196,000 and $162,000, for the years ended
December 31, 1996, 1995 and 1994, respectively.
4. POSTRETIREMENT BENEFITS:
Prior to August 31, 1996, Holding provided a postretirement health care
plan for all eligible retired employees of MCM. The Company no longer
provides such a plan for its employees.
F-13
<PAGE> 116
5. COMMITMENTS AND CONTINGENCIES:
Rent expense for office space was approximately $1,387,000, $1,290,000
and $1,122,000, net of sublease income of approximately $216,000,
$227,000 and $133,000 from an affiliate of Holding, for the years ended
December 31, 1996, 1995 and 1994, respectively. Future minimum lease
commitments under non- cancelable long-term leases are as follows:
<TABLE>
<CAPTION>
YEAR (000'S)
---- -------
<S> <C>
1997 995
1998 1,004
1999 1,014
2000 1,129
2001 1,129
2002 through 2018 10,441
-------
$15,712
=======
</TABLE>
In the ordinary course of business, certain claims arise against the
Company. Management believes such claims are without merit and will
vigorously defend its position. In the opinion of management, based on
the information currently available, the ultimate resolution of these
claims will not have a material adverse affect on the Company's
financial position or the results of its operations.
6. FOREIGN OPERATIONS:
The Company provides research services to various customers in foreign
countries. For the years ended December 31, 1996, 1995 and 1994, such
revenues amounted to approximately $17,388,000, $15,612,000 and
$11,982,000, respectively.
7. REDEEMABLE COMMON STOCK:
The Company has sold 17,400 shares of its Class C Common Stock, par
value $.01 per share, to members of management, other key employees and
directors of the Company ("Management Investors"). The Company has
agreed to repurchase 15,650 of these shares at fair market value under
certain defined conditions, such as death, disability, retirement at
normal retirement age, or termination of employment without cause. Fair
market value will be periodically estimated by the Company's board of
directors considering, among other factors, the value as determined by
an independent appraisal. The shares of redeemable Class C Common Stock
held by Management Investors have been presented as redeemable common
stock and excluded from stockholders' equity.
The shares of redeemable common stock are reported on the balance sheet
at redemption value at issuance, which exceeds the estimated fair
market value of the stock at December 31, 1996, less notes receivable
of $765,000 from Class C stockholders. The remaining 1,750 shares ("non
redeemable shares") are not required to be repurchased by the Company
as described previously.
F-14
<PAGE> 117
8. STOCK OPTION PLANS:
OPTIONS ISSUED UNDER THE STOCK OPTION PLAN
Options to purchase 37,878 shares of Class C Common Stock were granted
to the Management Investors pursuant to the MCM Group, Inc. Stock
Option Plan (the "Stock Option Plan"). One half of the options issued
under the Stock Option Plan were Service Options which will vest over a
period of time up to five years, 20% on each anniversary of the option
grant date subject to continued employment with the Company or a
subsidiary and accelerated vesting in the event of death or a change in
control of the Company. The Service Options expire on the tenth
anniversary of the grant date. The other options issued under the Stock
Option Plan were Performance Options which will vest three years from
the date of grant subject to continued employment with the Company and
the achievement of certain financial performance objectives by the
Company and vesting in the event of death or change in control of the
Company. All of the Performance Options become exercisable nine years
from the grant date regardless of the achievement of the financial
performance objectives.
The following summarizes activity in the Stock Option Plan for the
period ended December 31, 1996:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE AVERAGE
SHARES PRICE LIFE (a)
--------- -------- -------
<S> <C> <C> <C>
Balance, January 1, 1996 -- -- --
Service Options Granted 18,939 $ 100.00 2.67
Performance Options Granted 18,939 143.60 3.00
--------- -------- -------
Balance, December 31, 1996 37,878 $ 121.80 2.84
========= ======== =======
</TABLE>
(a) Average contractual life remaining in years.
At December 31, 1996, no options were exercisable and 11,122 shares
were available for future grants.
OPTIONS ISSUED UNDER THE SPECIAL STOCK OPTION PLAN:
The Company's Special Stock Option Plan (the "Plan") provided for the
grant of stock options on August 31, 1996 to certain current and former
employees of Holding. The options were awarded in connection with the
transfer of the ownership of MCM from Holding to the Company. As of
December 31, 1996, options to purchase an aggregate of 48,110 shares of
Class A Common Stock were outstanding under the Plan. The options are
fully vested and are exercisable subsequent to the registration of the
related Class A Common Stock.
F-15
<PAGE> 118
The following summarizes activity in the Plan for the year ended
December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
----------------------------------
WEIGHTED
AVERAGE
NUMBER OF EXERCISE AVERAGE
SHARES PRICE LIFE (a)
--------- -------- --------
<S> <C> <C> <C>
Balance, January 1, 1996 -- -- --
Granted 48,110 $100 4.67
------ ---- ----
Balance, December 31, 1996 48,110 $100 4.67
====== ==== ====
</TABLE>
(a) Average contractual life remaining in years.
At December 31, 1996, no shares were available for future grants.
With respect to both plans, the fair market value of the stock at the
dates of grant of the stock options and at December 31, 1996, was less
than the exercise price of the options, and, accordingly, there was no
related compensation expense for the year ended December 31, 1996. In
addition, there would not have been any compensation expense in
accordance with SFAS No.
123.
9. DIVIDEND REQUIREMENT:
Pursuant to a stock purchase agreement dated October 13, 1992, Van
Kampen American Capital, Inc. ("VKAC"), a wholly owned subsidiary of
Holding, purchased from Xerox Financial Services, Inc. all of the
outstanding capital stock of The Van Kampen Merritt Companies, Inc. and
its subsidiaries, including the Company. In connection with the
acquisition, VKAC incurred substantial debt. Debt covenants required
that the subsidiaries of VKAC pay dividends to VKAC equal to the
subsidiaries' net income as long as the dividend did not put the
subsidiary in noncompliance with any regulatory requirements. MCM paid
such dividends to VKAC until December 20, 1994, at which time it was
acquired by Holding and was no longer a subsidiary of VKAC.
10. BANK LOANS
A subsidiary maintains credit facilities in Japanese Yen which provide
financing availability approximating $700,000, of which $657,000 was
utilized as of December 31, 1996, with variable interest rates. The
average interest rate during the year ended December 31, 1996 was
1.875%. The Company is not required to pay any commitment fees.
F-16
<PAGE> 119
MCM GROUP, INC. and SUBSIDIARIES
Consolidated Condensed Balance Sheets
As of June 30, 1997 and 1996
(Unaudited)
(in 000's)
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $12,794 $ 869
Accounts receivable, net of allowance for doubtful accounts
of $201 in 1997 and $127 in 1996 4,963 4,294
Receivable from affiliates, net -- 4,879
Prepaid expenses and other assets 834 1,028
------- -------
Total current assets 18,591 11,070
Furniture, equipment and leasehold improvements, net 2,228 2,506
Excess of cost over fair value of net assets acquired, net 16,077 16,856
Other assets 430 423
------- -------
Total assets $37,326 $30,855
======= =======
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 959 $ 715
Payroll and benefit-related liabilities 1,141 822
Accrued vendor commissions 1,793 1,705
Income taxes payable 1,042 374
Bank loans payable 703 672
------- -------
Total current liabilities 5,638 4,288
Deferred income taxes payable 933 568
Other liabilities, including minority interest 1,018 899
------- -------
Total liabilities 7,589 5,755
------- -------
Redeemable Common Stock 800 --
Stockholders' equity:
Common stock 178 --
Additional paid-in capital 22,004 22,007
Retained earnings 6,755 3,093
------- -------
Total stockholders' equity 28,937 25,100
------- -------
Total liabilities and stockholders' equity $37,326 $30,855
======= =======
</TABLE>
See accompanying notes to consolidated condensed financial statements
(unaudited).
F-17
<PAGE> 120
MCM GROUP, INC. and SUBSIDIARIES
Consolidated Condensed Statements of Income
Six month periods ended June 30, 1997 and 1996
(Unaudited)
(In 000's)
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Research Services Revenue $19,834 $17,508
Other revenue 321 210
------- -------
Total revenues 20,155 17,718
------- -------
Expenses:
Vendor commissions 5,948 5,877
Compensation and benefits 5,791 5,019
Sales, distribution and administrative 3,913 3,662
Amortization of excess of cost over fair
value of net assets acquired 390 390
------- -------
Total expenses 16,042 14,948
------- -------
Income before income tax provision 4,113 2,770
Income tax provision 1,972 1,330
------- -------
Net income $ 2,141 $ 1,440
======= =======
</TABLE>
See accompanying notes to consolidated condensed financial statements
(unaudited).
F-18
<PAGE> 121
MCM GROUP, INC. and SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
Six month periods ended June 30, 1997 and 1996
(Unaudited)
(in 000's)
<TABLE>
<CAPTION>
1997 1996
------- ------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,141 $1,440
------- ------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 185 153
Amortization 390 390
Changes in assets and liabilities:
Increase in receivables (312) (1,497)
Increase in receivable from affiliates, net (468)
Increase in accounts payable and accrued expenses 261 110
Increase in accrued vendor commissions 276 39
(Decrease)/Increase in payroll and benefit related liabilities (437) 357
Increase in income taxes payable 728 374
Increase in deferred income taxes 92 91
Increase in other, net (86) (378)
------- ------
Net cash provided by operating activities 3,238 511
Cash flows from investing activities:
Capital expenditures (367) (308)
Cash flows from financing activities:
Net bank loan borrowings (repayments) 46 (57)
------- ------
Net increase in cash 2,917 246
Cash and cash equivalents at beginning of period 9,877 623
------- ------
Cash and cash equivalents at end of period $12,794 $ 869
======= ======
Supplementary disclosure of cash flow information:
Cash paid for:
Income taxes $ 1,152 $ 864
Interest $ 4 $ 7
</TABLE>
See accompanying notes to consolidated condensed financial statements
(unaudited).
F-19
<PAGE> 122
MCM GROUP, INC., AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1. Organization and Basis of Presentation:
MCM Group, Inc. ("MGI" or the "Company"), a Delaware corporation, was
incorporated on August 21, 1996 as a wholly owned subsidiary of VK/AC
Holding, Inc. ("Holding"). On that date, Holding was a majority owned
subsidiary of The Clayton & Dubilier Private Equity Fund IV Limited
Partnership ("C&D Fund IV"), which is managed by Clayton Dubilier & Rice,
Inc. Prior to August 31, 1996, McCarthy, Crisanti & Maffei, Inc. ("MCM")
was a wholly owned subsidiary of Holding. On August 31, 1996, 100% of the
outstanding Class A Common Stock of MGI was distributed to the stockholders
of record of Holding as a dividend on their shares of Holding's common
stock. Upon the distribution, MGI became a majority owned subsidiary of C&D
Fund IV. The transfer of 100% of the MCM Common Stock to MGI has been
accounted for in a manner similar to the pooling-of-interests method due to
the common ownership of MGI and Holding by C&D Fund IV following the
distribution. On October 31, 1996, C&D Fund IV sold its ownership interest
in Holding, which then ceased to be an affiliate of MGI.
The Company believes that the accompanying consolidated condensed financial
statements contain all adjustments (consisting of normal recurring
accruals) necessary to present fairly the Company's consolidated financial
position as of June 30, 1997 and 1996, its consolidated results of
operations for the six months ended June 30, 1997 and 1996, and its
consolidated cash flows for the six months ended June 30, 1997 and 1996.
The statements include the accounts of MGI and MCM and its subsidiaries
McCarthy, Crisanti & Maffei, S.A., a 99.73% owned French subsidiary, and
MCM Asia Pacific Company Limited, an 85% owned subsidiary. The 1996
financial statements and related amounts presented in the report represent
those of MCM. All material intercompany accounts and transactions have been
eliminated in consolidation. Certain information and note disclosure
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted.
However, the Company's consolidated condensed financial statements for the
year ended December 31, 1996 include the information and note disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles and should be referred to for
further information.
2. Subsequent Events
On August 1, 1997, MGI entered into an agreement to merge with a wholly
owned subsidiary of Global Decisions Group LLC (the "Parent"). The
outstanding common stock of MGI will be converted into units of capital of
the Parent in the merger. As part of the agreements the stockholders of
Cambridge Energy Research Associates, Inc. ("CERA") and the limited
partners of Cambridge Energy Research Associates Limited Partnership ("CERA
LP") have also agreed to exchange their outstanding stock of CERA and its
limited partnership interest in CERA LP, respectively, for units of capital
of the Parent. MGI and CERA will be wholly owned subsidiaries of the Parent
following the merger and exchanges. Under the terms of the agreement, MCM
will lend CERA up to $25,000,000, and CERA will use such funds and its
available cash to make a distribution to CERA stockholders and to purchase
a portion of the limited partnership interests in CERA LP. MCM anticipates
generating the funds to be loaned to CERA from long-term third party
borrowings and from MCM's available cash.
F-20
<PAGE> 123
Independent Auditors' Report
The Board of Directors
Cambridge Energy Research Associates, Inc.:
We have audited the accompanying consolidated balance sheets of Cambridge Energy
Research Associates, Inc. and subsidiary as of June 30, 1996 and 1995, and the
related consolidated statements of income, stockholders' deficit, and cash flows
for each of the years in the three-year period ended June 30, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Cambridge Energy
Research Associates, Inc. and subsidiary as of June 30, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
three-year period ended June 30, 1996 in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
August 9, 1996
F-21
<PAGE> 124
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
June 30, 1995 and 1996
<TABLE>
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 845,890 $ 656,061
Accounts receivable, trade, less allowance for doubtful accounts of
$175,000 and $225,000 in 1995 and 1996, respectively (notes 2 and 7) 7,149,272 10,050,267
Prepaid expenses and other current assets 158,466 438,340
---------- -----------
Total current assets 8,153,628 11,144,668
---------- -----------
Property and equipment, at cost (note 3) 1,440,155 1,983,120
Accumulated depreciation and amortization 889,096 1,205,299
Net property and equipment 551,059 777,821
---------- -----------
Other assets 352,838 185,474
---------- -----------
$9,057,525 $12,107,963
========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Note payable (note 6) $ 41,000 $ --
Accounts payable 700,237 1,166,075
Accrued liabilities:
Accrued compensation 2,393,926 3,309,621
Accrued other 791,659 520,639
Deferred revenues 5,544,978 7,516,349
---------- -----------
Total current liabilities 9,471,800 12,512,684
---------- -----------
Commitments and contingencies (notes 5, 8 and 9)
Minority interest (30,577) (29,430)
Stockholders' deficit:
Voting common stock, $.01 par value. Authorized and
issued 200,000 shares 2,000 2,000
Nonvoting common stock, $.01 par value. Authorized
200,000 shares; issued 62,887 shares; 628 628
Additional paid-in capital 56,407 61,998
Accumulated deficit (140,288) (132,765)
Treasury stock, at cost, 12,000 voting common shares and
10,881 nonvoting common shares (328,000) (328,000)
Cumulative translation adjustment 25,555 20,848
---------- -----------
Total stockholders' deficit (383,698) (375,291)
---------- -----------
$9,057,525 $12,107,963
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-22
<PAGE> 125
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Years ended June 30, 1994, 1995 and 1996
<TABLE>
<CAPTION>
1994 1995 1996
----------- ---------- ----------
<S> <C> <C> <C>
Revenues $14,157,414 20,073,631 25,412,602
Cost of revenues 7,096,493 9,845,455 13,147,155
----------- ---------- ----------
Gross profit 7,060,921 10,228,176 12,265,447
Selling, general and administrative expenses 6,686,129 9,523,047 11,820,689
----------- ---------- ----------
Income from operations 374,792 705,129 444,758
Other income (expense):
Interest income, net 152 53,039 73,674
Other, net (292,682) (524,407) (420,270)
----------- ---------- ----------
Income before minority interest and
income taxes 82,262 233,761 98,162
Minority interest -- (2,523) (1,670)
Income before income taxes 82,262 231,238 96,492
Provision for foreign income taxes (note 2) 45,318 74,000 79,521
Provision for state income taxes (note 2) 26,060 123,134 9,448
----------- ---------- ----------
Net income $ 10,884 34,104 7,523
=========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-23
<PAGE> 126
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Statements of Cash Flows
Years ended June 30, 1994, 1995 and 1996
<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 10,884 34,104 7,523
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 159,843 229,857 328,389
Changes in assets and liabilities:
Accounts receivable, trade 341,544 (3,084,129) (2,900,995)
Prepaid expenses and other current assets 147,797 (19,115) (279,874)
Other assets 120,870 (94,903) 167,364
Accounts payable and accrued expenses 617,337 1,349,135 1,110,513
Deferred revenues 416,516 1,128,455 1,971,371
Other, net -- (10,093) (9,516)
---------- ---------- ---------
Net cash provided (used by operating
activities) 1,814,791 (466,689) 394,775
---------- ---------- ---------
Cash flows used by investing activities:
Purchase of property and equipment (234,507) (429,858) (549,195)
---------- ---------- ---------
Net cash used by investing activities (234,507) (429,858) (549,195)
---------- ---------- ---------
Cash flows from financing activities:
Dividends -- (2,999,699) --
Capital contributions 3,106 2,806,492 5,591
Repayments of notes payable (71,750) (71,750) (41,000)
---------- ---------- ---------
Net cash used by financing activities (68,644) (264,957) (35,409)
---------- ---------- ---------
Net increase (decrease) in cash and cash equivalents 1,511,640 (1,161,504) (189,829)
Cash and cash equivalents at beginning of year 495,754 2,007,394 845,890
---------- ---------- ---------
Cash and cash equivalents at end of year $2,007,394 845,890 656,061
========== ========== =========
Supplemental disclosures:
Interest paid $ 14,621 9,319 3,405
========== ========== =========
Income taxes paid $ 72,298 75,030 251,393
========== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-24
<PAGE> 127
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Deficit
Years ended June 30, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Voting Nonvoting
Common Stock Common Stock Treasury Stock Additional Retained
---------------- --------------- ----------------- Paid-in Earnings
Shares Amount Shares Amount Shares Amount Capital (Deficit)
------ ------ ------ ------ ------ ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1993 200,000 $2,000 62,887 $628 22,881 $(328,000) $ 46,809 $ 921
Net income -- -- -- -- -- -- -- 10,884
Capital contributions -- -- -- -- -- -- 3,106 --
------- ------ ------ ---- ------ --------- ---------- ---------
Balance June 30, 1994 200,000 2,000 62,887 628 22,881 (328,000) 49,915 11,805
Assumption of net
liabilities by Investor -- -- -- -- -- -- -- 13,502
Net income -- -- -- -- -- -- -- 34,104
Capital contributions -- -- -- -- -- -- 2,806,492 --
Dividend -- -- -- -- -- -- (2,800,000) (199,699)
Cumulative translation
adjustment -- -- -- -- -- -- -- --
------- ------ ------ ---- ------ --------- ---------- ---------
Balance, June 30, 1995 200,000 2,000 62,887 628 22,881 (328,000) 56,407 (140,288)
Net income -- -- -- -- -- -- -- 7,523
Capital contributions -- -- -- -- -- -- 5,591 --
Cumulative translation
adjustment -- -- -- -- -- -- -- --
------- ------ ------ ---- ------ --------- ---------- ---------
Balance, June 30, 1996 200,000 $2,000 62,887 $628 22,881 $(328,000) $ 61,998 $(132,765)
======= ====== ====== ==== ====== ========= ========== =========
</TABLE>
<TABLE>
<CAPTION>
Foreign Total
Currency Stockholders'
Translation Deficit
----------- -------
<S> <C> <C>
Balance, June 30, 1993 $ -- $ (277,642)
Net income -- 10,884
Capital contributions -- 3,106
------- ----------
Balance June 30, 1994 -- (263,652)
Assumption of net
liabilities by Investor -- 13,502
Net income -- 34,104
Capital contributions -- 2,806,492
Dividend -- (2,999,699)
Cumulative translation
adjustment 25,555 25,555
------- ----------
Balance, June 30, 1995 25,555 (383,698)
Net income -- 7,523
Capital contributions -- 5,591
Cumulative translation
adjustment (4,707) (4,707)
------- ----------
Balance, June 30, 1996 $20,848 $ (375,291)
======= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-25
<PAGE> 128
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 1996, 1995 and 1994
(1) Nature of Business
The Company is a holding company which owns 90% of an international energy
research and consulting firm. The Company's primary business is a
retainer service, which provides ongoing analysis and advice on energy
markets and strategies.
(2) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and its subsidiary, Cambridge Energy Research
Associates, L.P., which is 90 percent owned by the Company.
All significant intercompany accounts are eliminated upon
consolidation.
(b) Use of Estimates
The preparation of consolidated financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses. Actual results could differ from
those estimates.
(c) Fair Value of Financial Instruments
Financial instruments of the Company consist of cash, accounts
receivable, accounts payable and accrued liabilities. The
carrying value of these financial instruments approximates
their fair value because of the short maturity of these
instruments.
(d) Property and Equipment
Property and equipment are stated at cost and depreciated using
the straight-line method over periods ranging from two to
five years. Leasehold improvements are amortized over the
remaining lease term using the straight-line method.
(e) Revenue Recognition
Retainer-service fees are billed at the inception of the contract
and revenue is recognized ratably over the contract term.
Revenues from consulting services are recognized on the
percentage-of-completion method. Losses are recognized when
they are known.
(f) Income Taxes
The Company has elected S corporation status under the Internal
Revenue Code whereby it does not incur federal or most state
income taxes at the corporate level, as they are borne by
the Company's stockholders. The
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<PAGE> 129
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Company does provide for French taxes on the income of its
Paris branch office.
The Company uses the asset and liability method of accounting
for income taxes. Under the asset and liability method,
deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the
period that includes the enactment date.
(g) Foreign Currency Translation
Assets and liabilities of the foreign branch are translated at
the exchange rate as of the balance sheet date. For revenues
and expenses, the weighted average exchange rate for the
period has been used. Translation adjustments that result
from the translation of the foreign branch are reported as a
component of stockholders' deficit.
(h) Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments (purchased with
an original maturity of three months or less) to be cash
equivalents.
(i) Major Customers
The Company's three largest customers accounted for
approximately 27%, 23% and 13% of total revenues for the
years ended June 30, 1996, 1995 and 1994, respectively.
Accounts receivable from these three customers represented
approximately 21% and 20% of the total accounts receivable
balance at June 30, 1996 and 1995, respectively. The Company
estimates an allowance for doubtful accounts based on the
creditworthiness of its customers, as well as general
economic conditions. Consequently, an adverse change in
those factors could affect the Company's estimate of its
allowance.
(j) Foreign Sales
Foreign sales represented approximately 30%, 40% and 41% of
revenue for the years ended June 30, 1996, 1995 and 1994,
respectively.
(k) Company Bonuses
For the years ended June 30, 1996, 1995 and 1994, the Company
distributed substantially all of its net earnings to
directors and employees of the Company in the form of a
bonus. This expense has been allocated between cost of
revenues and selling, general and administrative expenses.
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<PAGE> 130
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(3) PROPERTY AND EQUIPMENT
Property and equipment, at cost, consist of the following at June 30:
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Furniture and fixtures $ 150,272 245,616
Equipment 1,061,731 1,488,466
Leasehold improvements 228,152 249,038
---------- ----------
$1,440,155 $1,983,120
========== ==========
</TABLE>
(4) PROFIT SHARING AND 401(K) PLANS
The Company has a profit-sharing and a 401(k) plan. Profit-sharing plan
contributions, determined annually at the discretion of the board of
directors, were $400,000, $330,000 and $200,000 in 1996, 1995 and
1994, respectively. In the 401(k) plan the Company matches 50% of
employee contributions up to 6% of each employee's income. The Company
contributed $116,560, $80,993 and $63,376, in 1996, 1995 and 1994,
respectively.
(5) LEASES
Operating lease commitments consist of facilities and equipment rentals. As
of June 30, 1996, future minimum lease payments under all operating
leases are as follows:
Year ending June 30:
1997 $ 929,318
1998 922,816
1999 809,589
2000 699,486
2001 9,648
Thereafter 10,452
----------
$3,381,309
==========
Rent expense was $914,078 in 1996, $678,076 in 1995 and $691,000 in 1994.
(6) Note Payable
The note payable at June 30, 1995, consisted of the remaining balance of
an unsecured promissory note with interest at the prime rate, which
was 9% at June 30, 1995. The final principal payment was paid in
fiscal year 1996.
F-28
<PAGE> 131
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(7) Line of Credit
The Company has a $1,000,000 line of credit agreement with a bank, with
interest at prime plus 2%. The line of credit is secured by the
Company's accounts receivable and is guaranteed by the principal
stockholders of the Company.
As of June 30, 1996 and 1995, there were no amounts outstanding under
the agreement.
(8) Agreement with Investor
In 1994, the Company entered into an agreement (the "Agreement") with
another company (the "Investor") whereby the Investor acquired a 10
percent ownership interest in newly formed Cambridge Energy Research
Associates Limited Partnership ("CERA, L.P.") (a Delaware limited
partnership) and the Company acquired a 90 percent ownership interest.
The Company is the sole general partner of CERA, L.P. The Investor is
the only limited partner. CERA, L.P. became the operating entity. At
June 30, 1996 and 1995, the Company's only significant asset is its 90
percent ownership interest in CERA, L.P.
The Company contributed all of its assets to, and all of its liabilities
were assumed by, CERA, L.P. in exchange for its 90 percent ownership
interest. The Investor purchased its 10 percent interest from CERA,
L.P. for $2,800,000 which was distributed by CERA, L.P. to the Company
and then paid to the Company's stockholders as a special dividend.
In conjunction with the Agreement, CERA, L.P. entered into an advisory
agreement with the Investor under which CERA, L.P. is to provide
professional services to the Investor over an initial three-year term
(subject to early- termination rights of both parties).
Until October 31, 1998, under certain provisions of the Agreement, CERA,
L.P. could be obligated to repurchase, at fair market value, the
Investor's ten percent interest.
(9) Commitment
Common Stock Redemption
The Company is obligated to purchase terminated employees' shares of
common stock of the Company, generally at appraised fair market value.
In the event of a stockholder's death, the redemption price is funded
in part by company-owned life insurance policies on the lives of
certain stockholders.
F-29
<PAGE> 132
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Consolidated Balance Sheet
June 30, 1997
(unaudited)
<TABLE>
<S> <C>
Assets
------
Current assets:
Cash and cash equivalents $ 4,942,334
Accounts receivable, trade, less allowance for doubtful accounts of $200,000 9,465,888
Prepaid expenses and other current assets 296,401
-----------
Total current assets 14,704,623
-----------
Property and equipment, at cost 3,072,865
Accumulated depreciation and amortization 1,570,033
-----------
Net property and equipment 1,502,832
-----------
Other assets 112,345
-----------
$16,319,800
===========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 883,676
Accrued liabilities:
Accrued compensation 4,908,785
Accrued other 1,055,036
Deferred revenues 9,902,776
-----------
Total current liabilities 16,750,273
-----------
Commitments and contingencies
Minority interest (29,125)
Stockholders' deficit:
Voting common stock, $.01 par value. Authorized and issued 200,000 shares 2,000
Nonvoting common stock, $.01 par value. Authorized 200,000 shares; issued
62,887 shares 628
Additional paid-in capital 67,589
Accumulated deficit (130,021)
Treasury stock, at cost, 12,000 voting common shares and 10,881 nonvoting
common shares (328,000)
Foreign currency translation (13,544)
-----------
Total stockholders' deficit (401,348)
-----------
$16,319,800
===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-30
<PAGE> 133
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Consolidated Statement of Income
Year ended June 30, 1997
(unaudited)
<TABLE>
<S> <C>
Revenues $30,019,625
Cost of revenues 17,729,619
-----------
Gross profit 12,290,006
Selling, general and administrative expenses 11,255,405
-----------
Income from operations 1,034,601
Other income (expense):
Interest income, net 40,206
Other, net (964,935)
-----------
Income before minority interest and
income taxes 109,872
Minority interest (305)
-----------
Income before income taxes 109,567
Provision for state income taxes 800
Provision for foreign income taxes 106,023
-----------
Net income $ 2,744
===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-31
<PAGE> 134
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Statement of Cash Flows
Year ended June 30, 1997
(unaudited)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 2,744
Adjustments to reconcile net income to net cash
provided by operating activities: 5,383,982
-----------
Net cash provided by operating activities 5,386,726
-----------
Cash flows used by investing activities:
Purchase of property and equipment (1,106,044)
-----------
Net cash used by investing activities (1,106,044)
-----------
Cash flows from financing activities:
Capital contributions 5,591
-----------
Net cash provided by financing activities 5,591
-----------
Net increase in cash and cash equivalents 4,286,273
Cash and cash equivalents at beginning of period 656,061
-----------
Cash and cash equivalents at end of period $ 4,942,334
===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-32
<PAGE> 135
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Consolidated Statement of Stockholders' Deficit
Year ended June 30, 1997
(unaudited)
<TABLE>
<CAPTION>
Voting Nonvoting
Common Stock Common Stock Treasury Stock Additional
----------------- ---------------- ------------------ Paid-in
Shares Amount Shares Amount Shares Amount Capital
------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
June 30, 1996 200,000 $2,000 62,887 $628 22,881 $(328,000) $61,998
Net income - - - - - - -
Capital contributions - - - - - - 5,591
Foreign currency
translation - - - - - - -
------- ------ ------ ---- ------ --------- -------
Balance,
June 30, 1997 200,000 $2,000 62,887 $628 22,881 $(328,000) $67,589
======= ====== ====== ==== ====== ========= =======
</TABLE>
<TABLE>
<CAPTION>
Retained Foreign Total
Earnings Currency Stockholders'
(Deficit) Translation Deficit
--------- ----------- -------
<S> <C> <C> <C>
Balance,
June 30, 1996 $(132,765) $ 20,848 $(375,291)
Net income 2,744 - 2,744
Capital contributions - - 5,591
Foreign currency
translation - (34,392) (34,392)
--------- -------- ---------
Balance,
June 30, 1997 $(130,021) $(13,544) $(401,348)
========= ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-33
<PAGE> 136
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) STATEMENT OF FAIR PRESENTATION
The financial information included herein is unaudited. In addition, the
financial information does not include all disclosures as required
under generally accepted accounting principles because certain note
information included in the Company's audited consolidated financial
statements has been omitted and such information should be read in
conjunction with those consolidated financial statements. However, the
financial information reflects all adjustments (consisting solely of
normal recurring adjustments) which are, in the opinion of management,
necessary to a fair statement of the results of the unaudited periods.
The Company considers the disclosures adequate to make the information
presented not misleading.
(2) COMPANY BONUSES
The Company historically distributes substantially all of its net earnings
to directors and employees of the Company in the form of a bonus. The
amount is calculated at the end of the Company's fiscal year and is
allocated between cost of revenues and selling, general and
administrative expenses. In addition, for the year ended June 30,
1997, the Company has recorded an additional bonus in connection with
the merger agreement.
F-34
<PAGE> 137
Annex A
-------
================================================================================
PLAN OF MERGER AND
EXCHANGE AGREEMENT
by and among
MCM GROUP, INC.,
GLOBAL DECISIONS GROUP LLC,
GDG MERGER CORPORATION,
CERTAIN STOCKHOLDERS NAMED HEREIN
and
THE GOLDMAN SACHS GROUP, L.P.
------------------------------------
Dated as of August 1, 1997
------------------------------------
================================================================================
<PAGE> 138
TABLE OF CONTENTS
Page
ARTICLE I
THE TRANSACTIONS
1.1 Merger and Exchanges....................................................4
1.1.1. Consummation of the Transactions.............................4
1.1.2. Closing......................................................5
1.2 The Merger..............................................................7
1.2.1. Effect of the Merger.........................................7
1.2.2. Organizational Documents, Directors and
Officers of the Surviving Corporation..............................7
1.2.3. Further Assurances...........................................8
1.2.4. Conversion of Common Stock and Options.......................8
1.2.5. Dissenting Shares...........................................10
1.2.6. MGI Certificates............................................10
1.3 Exchange of CERA Common Stock..........................................12
1.4 Exchange of GS LP Interest.............................................13
1.5 Grant of LLC Units and Contingent LLC Units to CERA
Management Members..................................................14
1.6 Calculation of CERA CAGR...............................................16
1.7 No Fractional LLC Units................................................18
1.8 Adjustments to Per Share MGI Allocated LLC Units,
etc.................................................................18
1.9 Treatment of the Transactions for Income Tax
Purposes............................................................19
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Stockholders
and GS LP...........................................................20
2.1.1. Existence and Good Standing; No Violations;
Consents and Approvals............................................21
2.1.2. Capitalization; Ownership...................................22
2.1.3. Financial Statements........................................24
2.1.4. Absence of Undisclosed Liabilities..........................24
2.1.5. Absence of Changes..........................................25
2.1.6. Taxes.......................................................26
2.1.7. Properties and Assets.......................................29
2.1.8. Contracts...................................................31
2.1.9. Intellectual Property.......................................32
2.1.10. Insurance..................................................34
i
<PAGE> 139
2.1.11. Litigation.................................................35
2.1.12. Compliance with Laws and Other Instruments.................36
2.1.13. Affiliate Relationships....................................36
2.1.14. Information in Registration Statement and
Offer Documents...................................................36
2.1.15. Employees, Labor Matters, etc..............................37
2.1.16. ERISA......................................................37
2.1.17. Brokers....................................................40
2.1.18. Clients....................................................40
2.2 Representations and Warranties of the Stockholders.....................40
2.2.1. Authorization...............................................40
2.2.2. No Violations; Consents and Approvals.......................41
2.2.3. Ownership...................................................41
2.3 Additional Representations and Warranties of GS LP.....................42
2.3.1. Existence and Good Standing; Power and
Authority.........................................................42
2.3.2. No Violations; Consents and Approvals.......................43
2.3.3. Ownership...................................................43
2.4 Representations and Warranties of MGI..................................44
2.4.1. Authorization...............................................44
2.4.2. No Violations; Consents and Approvals.......................45
2.4.3. Ownership...................................................45
2.4.4. Existence and Good Standing.................................46
2.4.5. Capitalization; Ownership...................................47
2.4.6. Financial Statements........................................48
2.4.7. Absence of Undisclosed Liabilities..........................49
2.4.8. Absence of Changes..........................................49
2.4.9. Taxes.......................................................51
2.4.10. Properties and Assets......................................53
2.4.11. Contracts..................................................55
2.4.12. Intellectual Property......................................56
2.4.13. Insurance..................................................58
2.4.14. Litigation.................................................59
2.4.15. Compliance with Laws and Other Instruments.................59
2.4.16. Affiliate Relationships....................................59
2.4.17. Information in Registration Statement and
Offer Documents...................................................60
2.4.18. Employees, Labor Matters, etc..............................60
2.4.19. ERISA......................................................61
2.4.20. Brokers....................................................63
2.4.21. Vendor Distribution Firms and Customers....................63
2.5 Representations and Warranties of MGI, the Parent and
Merger Sub..........................................................63
2.5.1. Limited Liability Company Status and
Authority of the Parent...........................................64
2.5.2. Ownership and Status of Parent..............................64
2.5.3. Corporate Status, Ownership and Authority of
Merger Sub........................................................65
2.5.4. No Violations; Consents and Approvals.......................66
ii
<PAGE> 140
2.5.5. Information in Registration Statement and
Offer Documents...................................................66
2.5.6. Brokers.....................................................67
ARTICLE III
COVENANTS
3.1 Covenants of the Stockholders..........................................67
3.1.1. Conduct of Business.........................................67
3.1.2. CERA Cash Distribution......................................71
3.1.3. Access and Information......................................72
3.1.4. Financial Information.......................................72
3.1.5. No Solicitation.............................................72
3.1.6. FIRPTA Affidavits...........................................73
3.2 Covenants of MGI.......................................................73
3.2.1. Conduct of Business.........................................73
3.2.2. CERA Distribution Loan......................................76
3.2.3. Financing...................................................76
3.2.4. Access and Information......................................76
3.2.5. Financial Information.......................................77
3.2.6. FIRPTA Certification........................................77
3.2.7. No Solicitation.............................................77
3.3 Covenants of GS LP.....................................................78
3.3.1. No Solicitation.............................................78
3.3.2. FIRPTA Affidavit............................................78
3.3.3. Consent and Waiver..........................................78
3.4 Additional Agreements..................................................79
3.4.1. Confidentiality.............................................79
3.4.2. Registration Statement......................................81
3.4.3. Public Announcements........................................82
3.4.4. Further Actions.............................................83
3.4.5. Tax Affairs.................................................84
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Obligations of Each Party................................85
4.1.1. HSR Act Notification........................................85
4.1.2. Other Governmental Approvals................................85
4.1.3. No Injunction, etc..........................................85
4.1.4. Registration Statement......................................86
4.1.5. Certain Distributions.......................................86
4.1.6. LLC Agreement...............................................86
4.2 Conditions to Obligations of MGI, the Parent and
Merger Sub..........................................................86
4.2.1. Representations, Performance, etc...........................87
4.2.2. Material Adverse Effect.....................................88
iii
<PAGE> 141
4.2.3. Employment Agreements.......................................88
4.2.4. Consulting and Indemnification Agreements...................88
4.2.5. Opinions of Counsel.........................................88
4.2.6. FIRPTA Affidavit............................................88
4.2.7. Consents and Approvals......................................88
4.2.8. Financing...................................................89
4.2.9. CERA Board of Directors.....................................89
4.2.10. CERA and GS LP Holder Information Forms....................89
4.2.11. Copyrights.................................................89
4.2.12. CERA Organizational Documents..............................89
4.2.13. Termination of Line of Credit..............................90
4.2.14. Proceedings................................................90
4.3 Conditions to Obligations of the Stockholders and GS
LP..................................................................90
4.3.1. Representations; Performance................................90
4.3.2. Material Adverse Effect.....................................91
4.3.3. Opinion of Counsel..........................................91
4.3.4. Consents and Approvals......................................92
4.3.5. MGI Board of Directors......................................92
4.3.6. MGI Organizational Documents................................92
4.3.7. Proceedings.................................................92
ARTICLE V
OTHER AGREEMENTS
5.1 Noncompetition.........................................................93
5.2 Enforceability of Covenants............................................94
5.3 Further Actions and Events.............................................95
5.3.1. Termination or Adoption of Certain
Arrangements......................................................95
5.4 Certain Payments to CERA Management Members............................97
5.5 Grants of Options to Purchase LLC Units................................97
ARTICLE VI
TERMINATION
6.1 Termination............................................................98
6.2 Effect of Termination..................................................99
iv
<PAGE> 142
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Stockholders and GS LP.........................100
7.2 Indemnification by MGI................................................101
7.3 Further Indemnification by GS LP......................................102
7.4 Payment Adjustments, etc..............................................102
7.5 Indemnification Procedures; Limitations...............................103
7.6 Survival of Representations and Warranties, etc.......................105
ARTICLE VIII
DEFINITIONS; MISCELLANEOUS
8.1 Definition of Certain Terms...........................................106
8.2 Expenses..............................................................124
8.3 Severability..........................................................124
8.4 Notices...............................................................124
8.5 Miscellaneous.........................................................127
8.5.1. Headings...................................................127
8.5.2. Entire Agreement...........................................127
8.5.3. Counterparts...............................................127
8.5.4. Governing Law..............................................127
8.5.5. Binding Effect.............................................128
8.5.6. Assignment.................................................128
8.5.7. No Third Party Beneficiaries...............................128
8.5.8. Waiver of Jury Trial.......................................128
8.5.9. Amendment; Waivers.........................................129
v
<PAGE> 143
EXHIBITS
Exhibit A -- CERA Management Members
Exhibit B -- Form of Cambridge Energy Research
Associates, Inc. LLC Unit Grant Plan
Exhibit C -- Initial CERA Option Grantees
Exhibit D -- CERA Holder Information Form
Exhibit E -- GS LP Holder Information Form
Exhibit F -- Form of Contingent Option Agreement
Exhibit G -- Form of Amended Certificate of
Incorporation of MGI
Exhibit H -- MGI Holder Information Form
Exhibit I -- Form of Amended and Restated Limited
Liability Company Agreement
Exhibit J -- Form of Employment Agreement
Exhibit K -- Form of MCM Group, Inc. Management LLC
Unit Option Plan
Exhibit L -- Form of Cambridge Energy Research
Associates, Inc. Management LLC Unit
Option Plan
Exhibit M -- CERA CAGR Formula
Exhibit N -- Notice Addresses
vi
<PAGE> 144
PLAN OF MERGER AND EXCHANGE AGREEMENT
PLAN OF MERGER AND EXCHANGE AGREEMENT, dated as of August 1, 1997,
by and among MCM Group, Inc., a Delaware corporation ("MGI"), Global Decisions
Group LLC, a Delaware limited liability company (the "Parent"), GDG Merger
Corporation, a Delaware corporation and a wholly owned subsidiary of the Parent
("Merger Sub"), the individuals and entities listed on the signature pages
hereto under the heading "Stockholders" (the "Stockholders") and The Goldman
Sachs Group, L.P., a Delaware limited partnership ("GS LP").
W I T N E S S E T H:
WHEREAS, the Parent has been formed for the purpose of acquiring (i)
all of the outstanding shares of capital stock of MGI through a merger of Merger
Sub with and into MGI (the "Merger") and (ii) all of the outstanding shares of
capital stock of Cambridge Energy Research Associates, Inc., a Massachusetts
corporation ("CERA Inc."), and certain of the limited partnership interests of
Cambridge Energy Research Associates Limited Partnership, a Delaware limited
partnership ("CERA LP"), the general partner of which is CERA Inc., pursuant to
the terms and conditions set forth in this Agreement (capitalized terms used
herein without definition having the meanings specified therefor in Section
8.1);
WHEREAS, on the date hereof, the Stockholders own, beneficially and
of record, all of the outstanding shares (the "CERA Stockholders Common Stock")
of Common Stock, par value $.01 per share ("CERA Voting Common Stock"), and
NonVoting Common Stock, par value $.01 per share ("CERA NonVoting Common Stock"
and, together with the CERA Voting Common Stock, "CERA Common Stock"), of CERA
Inc., and GS LP owns, beneficially and of record, all of the outstanding limited
partnership interests in CERA LP other than such partnership interests that are
owned by CERA Inc. (the "GS Partnership Interest");
WHEREAS, on the day immediately preceding the Closing Date,
McCarthy, Crisanti & Maffei, Inc., a New York corporation and a wholly owned
subsidiary of MGI ("MCM"), intends to lend up to $25,000,000 to CERA Inc. (the
"CERA Distribution Loan"), and CERA Inc. will apply a portion of such funds,
together with CERA Inc.'s available cash, to the extent necessary, to make a
distribution to the Stockholders
<PAGE> 145
in an aggregate amount equal to $21,510,000 and will apply the remainder of such
funds and available cash to purchase a portion of the GS Partnership Interest
from GS LP for a purchase price of $2,390,000 (such applications of such funds
and available cash, the "CERA Cash Distribution");
WHEREAS, pursuant to the terms and conditions set forth in this
Agreement, each of the Stockholders wishes to contribute to the Parent all of
the shares of CERA Common Stock owned by such Stockholder in exchange (the "CERA
Stock Exchange") for (i) units of capital of the Parent ("LLC Units")
representing limited liability company interests in the Parent, (ii) CERA
Contingent Options and (iii) the right to receive, under certain circumstances,
Contingent LLC Units;
WHEREAS, pursuant to the terms and conditions set forth in this
Agreement, GS LP wishes to contribute to the Parent all of the GS Partnership
Interest owned by it following the CERA Cash Distribution in exchange (the "GS
Partnership Interest Exchange" and, together with the Merger and the CERA Stock
Exchange, the "Transactions") for (i) LLC Units, (ii) GS Contingent Options and
(iii) the right to receive, under certain circumstances, Contingent LLC Units,
whereupon the Parent will immediately transfer or cause to be transferred to
CERA Inc. such GS Partnership Interest;
WHEREAS, upon such transfer to CERA Inc. of such GS Partnership
Interest, CERA Inc. will become the sole partner of CERA LP, and CERA LP will be
dissolved by operation of law (the "CERA Roll-up");
WHEREAS, pursuant to the terms and conditions set forth in this
Agreement, Parent, Merger Sub and MGI wish to cause Merger Sub to be merged with
and into MGI, and to cause the then outstanding shares of MGI Common Stock to be
converted into LLC Units;
WHEREAS, in connection with the Closing, the parties hereto agree to
cause certain agreements and arrangements relating to (i) the ownership and
operations of CERA Inc. and CERA LP and (ii) the relationship among CERA Inc.,
CERA LP and GS LP to be amended, terminated and/or replaced, in each case as
further set forth herein;
WHEREAS, promptly after the Closing Date, (i) the Parent will issue
to CERA Inc., and CERA Inc. will transfer to the management employees of and
consultants to CERA Inc. listed on Exhibit A hereto (the "CERA Management
Members"),
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an aggregate of 106,875 LLC Units, and (ii) the Parent will enter into an
agreement with CERA Inc., granting CERA Inc. the right to purchase, under
certain circumstances, an aggregate of 7.125% of the Contingent LLC Units, and
CERA Inc. will grant to the CERA Management Members a right to receive their
respective pro rata portions of such Contingent LLC Units, in each case pursuant
to the Cambridge Energy Research Associates, Inc. LLC Unit Grant Plan,
substantially in the form of Exhibit B attached hereto, to be adopted by CERA
Inc. simultaneously with the Closing (the "CERA LLC Unit Grant Plan") and CERA
LLC Unit Grant Agreements to be entered into with each CERA Management Member;
WHEREAS, promptly after the Closing Date, CERA Inc. will grant to
the employees of and consultants to CERA Inc. listed on Exhibit C hereto (the
"Initial CERA Option Grantees"), pursuant to the CERA Option Plan, options to
purchase an aggregate of 231,500 LLC Units, at an exercise price of $18.31 per
LLC Unit; and
WHEREAS, MGI, the Parent, Merger Sub, the Stockholders and GS LP
desire to make certain representations, warranties and agreements in connection
with the Transactions and also to prescribe various conditions to the
Transactions;
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made herein and of the mutual benefits to be
derived therefrom, the parties hereto hereby agree as follows:
ARTICLE I
THE TRANSACTIONS
1.1 Merger and Exchanges.
1.1.1. Consummation of the Transactions. Subject to the terms and
conditions of this Agreement, on the Closing Date, (a) the Stockholders shall
contribute to the Parent all of the shares of CERA Common Stock owned by each of
them, and the Parent, in exchange therefor, shall issue to each of them the
respective numbers of CERA Allocated LLC Units, shall grant to each of them the
respective numbers of CERA Contingent Options and shall grant to each of them
the right to receive the respective numbers of Contingent LLC Units, in each
case as determined pursuant to Section 1.3,
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(b) GS LP shall contribute to the Parent all of the GS Partnership Interest
owned by it following the CERA Cash Distribution, and the Parent, in exchange
therefor, shall issue to GS LP the GS Allocated LLC Units, shall grant to GS LP
the GS Contingent Options and shall grant to GS LP the right to receive 10% of
the Contingent LLC Units, and (c) Merger Sub shall be merged with and into MGI,
and the outstanding shares of MGI Common Stock shall be converted into the right
to receive the number of LLC Units determined pursuant to Section 1.2.4(a).
1.1.2. Closing. Subject to the satisfaction or waiver of all of the
conditions to closing contained in Article IV, the closing of the Transactions
(the "Closing") shall take place at the offices of Debevoise & Plimpton, 875
Third Avenue, New York, New York, as soon as the office of the Secretary of
State of the State of Delaware shall be open for the filing of the Certificate
of Merger, on the fifth Business Day after the satisfaction or waiver of the
conditions to Closing contained in Sections 4.1.1, 4.1.2 and 4.1.4, or at such
other time or on such other date as the parties may agree to in writing or to
which the Closing shall be extended as a result of the proviso to Section
4.2.1(a)(i) or the proviso to Section 4.3.1(a)(i) (the date the Closing occurs
is referred to herein as the "Closing Date").
At the Closing:
(a) the Stockholders shall deliver, or cause to be delivered, to the
Parent, free and clear of any Liens, stock certificates representing all
of the then outstanding shares of CERA Common Stock, duly endorsed in
blank or accompanied by stock powers or other instruments of transfer duly
executed in blank, and bearing or accompanied by all requisite stock
transfer stamps, and a completed and duly executed CERA Holder Information
Form for each Stockholder, substantially in the form attached hereto as
Exhibit D;
(b) GS LP shall deliver, or cause to be delivered, to the Parent a
duly executed and acknowledged instrument of assignment and assumption,
assigning to the Parent all of the GS Partnership Interest then owned by
GS LP, together with the certificates or instruments, if any, representing
such GS Partnership Interest, and a completed and duly executed GS LP
Holder Information Form, substantially in the form attached hereto as
Exhibit E, and the Parent shall
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deliver, or cause to be delivered, to CERA Inc. a duly executed and
acknowledged instrument of assignment and assumption, assigning to CERA
Inc. all of such GS Partnership Interest, together with the certificates
or instruments, if any, representing such GS Partnership Interest, it
being agreed that the Parent may direct GS LP to deliver such certificates
or instruments directly to CERA Inc.;
(c) the Parent shall deliver, or cause to be delivered, to each
Stockholder and GS LP certificates representing the respective LLC Units
to be issued to them on the Closing Date in exchange for their shares of
CERA Common Stock or the GS Partnership Interest, as the case may be, and
a Contingent Option Agreement, substantially in the form of Exhibit F
hereto (each, a "Contingent Option Agreement"), evidencing the grant of
Contingent Options to such Stockholder or GS LP, and shall grant to each
of them the right to receive, under the circumstances described in
Sections 1.3 and 1.4, their respective Contingent LLC Units;
(d) MGI shall execute and file a Certificate of Merger (together
with any other documents required by Applicable Law to effectuate the
Merger) with the Secretary of State of the State of Delaware in accordance
with Sections 251 and 103 of the DGCL (the "Certificate of Merger"). The
Merger shall become effective simultaneously with the filing of the
Certificate of Merger. The time when the Merger shall become effective is
referred to in this Agreement as the "Effective Time";
(e) the Parent shall deliver, or cause to be delivered, to the
Exchange Agent certificates representing the respective LLC Units to be
issued to each of the holders of shares of MGI Common Stock in exchange
for such shares pursuant to Section 1.2.6;
(f) each party hereto shall deliver, or cause to be delivered, to
the other parties hereto the certificates and other documents required to
be delivered pursuant to Article IV; and
(g) the parties hereto shall cause the occurrence of the events and
transactions set forth in Section 5.3.1, subject to the terms and
conditions of, and as more fully described in, such Section.
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1.2 The Merger.
1.2.1. Effect of the Merger. In accordance with and subject to the
terms and provisions of this Agreement and the DGCL, at the Effective Time: (i)
the separate existence of Merger Sub shall cease and MGI shall be the surviving
corporation (the "Surviving Corporation") and shall continue its corporate
existence under the laws of the State of Delaware; (ii) all rights, privileges,
immunities, powers, purposes, franchises, properties and assets of MGI and
Merger Sub shall vest in the Surviving Corporation; and (iii) all debts,
liabilities, obligations, restrictions, disabilities and duties of MGI and
Merger Sub shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
1.2.2. Organizational Documents, Directors and Officers of the
Surviving Corporation. (a) Certificate of Incorporation. At the Effective Time,
the Certificate of Incorporation of MGI shall be amended to read in its entirety
as set forth in Exhibit G hereto, and as so amended shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended, altered or
repealed as provided therein or by Applicable Law.
(b) By-Laws. From and after the Effective Time, the by-laws of
Merger Sub in effect immediately prior to the Effective Time shall be the
by-laws of the Surviving Corporation until thereafter amended, altered or
repealed as provided therein.
(c) Directors and Officers. From and after the Effective Time, the
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, and the officers of MGI immediately
prior to the Effective Time shall be the officers of the Surviving Corporation,
each to hold office in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation until his or her successor is elected or
appointed, as the case may be, and qualified or until his or her earlier death,
resignation, disqualification or removal.
1.2.3. Further Assurances. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title
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or interest in, to or under any of the rights, privileges, immunities, powers,
purposes, franchises, properties or assets of MGI or Merger Sub, or (b)
otherwise to carry out the purposes of this Agreement, the Surviving Corporation
and its proper officers and directors or their designees shall be authorized to
solicit in the name of MGI or Merger Sub any third party consents or other
documents required to be delivered by any third party, to execute and deliver,
in the name and on behalf of MGI or Merger Sub, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of MGI or Merger
Sub, all such other acts and things necessary, desirable or proper to vest,
perfect or confirm its right, title or interest in, to or under any of the
rights, privileges, immunities, powers, purposes, franchises, properties or
assets of MGI or Merger Sub and otherwise to carry out the purposes of this
Agreement.
1.2.4. Conversion of Common Stock and Options. (a) Common Stock in
General. Each share of MGI Common Stock outstanding at the Effective Time
(except for (x) any shares of MGI Common Stock then held in the treasury of MGI
and (y) Dissenting Shares) shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to receive
9.55555 LLC Units, as such number may be adjusted pursuant to Section 1.8 (as so
adjusted, the "Per Share MGI Allocated LLC Units").
(b) Shares Held by MGI. Each share of MGI Common Stock that at the
Effective Time is held in the treasury of MGI shall, by virtue of the Merger and
without any action on the part of MGI, be cancelled and retired and cease to
exist, without any conversion thereof.
(c) No Rights as Stockholders. The holders of certificates
representing shares of MGI Common Stock shall as of the Effective Time cease to
have any rights as stockholders of MGI, except such rights, if any, as holders
of Dissenting Shares may have pursuant to the DGCL, and, except as aforesaid,
their sole right shall be the right to receive the number of LLC Units into
which their respective shares of MGI Common Stock shall have been converted, as
determined and issued in the manner set forth in this Agreement.
(d) Employee Options. At the Effective Time, (i) each then
outstanding option to purchase shares of MGI Common Stock (each such option, an
"MGI Special Option") granted under the MCM Group, Inc. Special Stock Option
Plan (such plan, the "MGI Special Options Plan") and (ii) each then outstanding
option to purchase shares of MGI Common
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Stock (each such option, an "MGI Employee Option" and, together with the MGI
Special Options, the "Existing MGI Options") granted under the MCM Group, Inc.
Stock Option Plan (such plan, the "MGI Management Option Plan" and, together
with the MGI Special Options Plan, the "MGI Option Plans"), shall automatically
be converted, without any action on the part of MGI or the holder of such
Existing MGI Option, into an equivalent option to purchase from MGI a number of
LLC Units equal to the product of (x) the Per Share MGI Allocated LLC Units and
(y) the number of shares of MGI Common Stock subject to such Existing MGI Option
immediately prior to the Effective Time, for an exercise price per LLC Unit
equal to the quotient obtained by dividing (i) the exercise price per share of
MGI Common Stock of such Existing MGI Option by (ii) the Per Share MGI Allocated
LLC Units. All other terms and conditions of the Existing MGI Options, including
such terms relating to the vesting, exercisability and termination of such
Existing MGI Options, shall remain in full force and effect following the
Effective Time, as the same may be amended from time to time in accordance with
the management stock option agreement entered into by and between MGI and each
holder of Existing MGI Options.
(e) Common Stock of Merger Sub. At the Effective Time, each share of
common stock of Merger Sub then issued and outstanding shall, by virtue of the
Merger and without any action on the part of Merger Sub, be converted into and
become one fully paid and nonassessable share of common stock, par value $0.01
per share, of the Surviving Corporation.
1.2.5. Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of MGI Common Stock which are held by stockholders who
shall have effectively dissented from the Merger and perfected their appraisal
rights in accordance with the provisions of Section 262 of the DGCL (the
"Dissenting Shares"), shall not be converted into or be exchangeable for the
right to receive LLC Units, but the holders thereof shall be entitled to payment
from the Surviving Corporation of the appraised value of such shares in
accordance with the provisions of Section 262 of the DGCL.
1.2.6. MGI Certificates. (a) Surrender of Certificates, etc. After
the Effective Time, each holder of an outstanding certificate or certificates
which immediately prior thereto represented shares of MGI Common Stock (the "MGI
Certificates") shall, upon surrender to the Exchange
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Agent of such MGI Certificate or Certificates and delivery to the Exchange Agent
of a completed and duly executed MGI Holder Information Form, substantially in
the form attached hereto as Exhibit H, be entitled to receive a certificate or
certificates representing the aggregate number of LLC Units (each, an "LLC
Certificate") into which the aggregate number of shares of MGI Common Stock
previously represented by such MGI Certificate or Certificates surrendered shall
have been converted pursuant to this Agreement. The Exchange Agent shall deliver
all LLC Certificates which each holder of MGI Common Stock is entitled to
receive pursuant to this Section 1.2.6(a) within ten Business Days following
such holder's surrender of such holder's MGI Certificates. With respect to any
MGI Certificate alleged to have been lost, stolen or destroyed, the owner or
owners of such MGI Certificate shall be entitled to receive LLC Certificates in
respect of such MGI Certificate upon delivery to the Exchange Agent of an
affidavit of such owner or owners setting forth such allegation and a bond
sufficient to indemnify the Parent and the Surviving Corporation against any
claim that may be made against either of them on account of the alleged loss,
theft or destruction of any such MGI Certificate or the delivery of such LLC
Certificates.
(b) Endorsement of MGI Certificates; Transfer Taxes. If an LLC
Certificate is to be delivered to a Person other than the Person in whose name
the MGI Certificate surrendered in exchange therefor is registered, it shall be
a condition to delivery of such LLC Certificate that the MGI Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer,
and that the Person requesting such LLC Certificate shall pay any transfer or
other Taxes required by reason of the payment to a Person other than the
registered holder of the MGI Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such Tax has been paid or is not
applicable.
(c) Status of Certificates. Until surrendered in accordance with the
provisions of this Section 1.2.6, from and after the Effective Time, each MGI
Certificate (other than (i) MGI Certificates representing shares of MGI Common
Stock held in the treasury of the Surviving Corporation and (ii) Dissenting
Shares in respect of which appraisal rights are perfected) shall represent for
all purposes only the right to receive such number of LLC Units as determined in
the manner set forth in this Agreement and shall not itself represent an equity
interest in the Parent, which shall be represented only by LLC Units.
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(d) No Further Transfers. After the Effective Time there shall be no
transfers on the stock transfer books of the Surviving Corporation of the shares
of MGI Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, MGI Certificates are presented to the
Surviving Corporation, they shall be surrendered to the Exchange Agent and
cancelled and exchanged for LLC Certificates only as provided in Section
1.2.6(a).
1.3 Exchange of CERA Common Stock. At the Closing, each share of
CERA Common Stock owned by a Stockholder immediately prior to the Closing shall
be exchanged for (a) a number of LLC Units equal to (x) 1,243,125 as such number
may be adjusted pursuant to Section 1.8 (as so adjusted, the "CERA Allocated LLC
Units"), divided by (y) the aggregate number of shares of CERA Common Stock
outstanding immediately prior to the Closing, (b) the grant by the Parent to
each such Stockholder, pursuant to separate Contingent Option Agreements to be
entered into at the Closing by and between the Parent and each such Stockholder,
of an option (each such option, a "CERA Contingent Option") to purchase at a per
LLC Unit price equal to $34.53 in the event that the CERA CAGR shall be equal to
or greater than 20%, a number of LLC Units equal to the product of (x) (A)
88,870, as such number may be adjusted pursuant to Section 1.8 (as so adjusted,
the "CERA Contingent Option LLC Units"), divided by (B) the aggregate number of
shares of CERA Common Stock outstanding immediately prior to the Closing and (y)
the number of shares of CERA Common Stock exchanged by such Stockholder in the
CERA Stock Exchange, and (c) in the event that the CERA CAGR shall be equal to
or greater than 16% (which event the parties hereto hereby agree shall indicate
that the CERA Common Stock had a value as of the Closing Date in excess of the
value initially agreed upon by the parties hereto), a right to receive
additional LLC Units (which right shall be transferable only (1) by will or the
laws of descent or distribution upon the death of a Stockholder who is a natural
person, (2) in the case of a Stockholder who is a natural person, to a trust the
only actual beneficiaries under which are such Stockholder and/or one or more of
such Stockholder's brothers and sisters (whether by whole or half blood),
spouse, ancestors and lineal descendants and (3) in the case of a Stockholder
that is a trust, to the beneficiaries of such trust) as follows: each
Stockholder who participated in the CERA Stock Exchange (or a permitted
transferee of such right) shall be entitled to receive, as of June 30, 2000 or,
in the event of the first to occur,
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prior to June 30, 2000, of a Sale of the Parent or CERA Inc., a Spin-Off of CERA
Inc. or a Public Offering, as of the closing date of such Sale, Spin-Off or
Public Offering, as the case may be, a number of Contingent LLC Units equal to
the product of (x) (A) 82.875% of the Contingent LLC Units divided by (B) the
aggregate number of shares of CERA Common Stock outstanding immediately prior to
the Closing and (y) the number of shares of CERA Common Stock exchanged by such
Stockholder in the CERA Stock Exchange.
1.4 Exchange of GS LP Interest. At the Closing, the portion of the
GS Partnership Interest owned by GS LP immediately prior to the Closing shall be
exchanged for (a) 150,000 LLC Units, as such number may be adjusted pursuant to
Section 1.8 (as so adjusted, the "GS Allocated LLC Units"), (b) the grant by the
Parent to GS LP, pursuant to a Contingent Option Agreement to be entered into at
the Closing by and between the Parent and GS LP, of an option (such option, the
"GS Contingent Option" and, together with the CERA Contingent Options, the
"Contingent Options") to purchase at a per LLC Unit price equal to $34.53 in the
event that the CERA CAGR shall be equal to or greater than 20%, 9,874 LLC Units,
as such number may adjusted pursuant to Section 1.8 (as so adjusted, the "GS
Contingent Option LLC Units"), and (c) in the event that the CERA CAGR shall be
equal to or greater than 16% (which event the parties hereto hereby agree shall
indicate that such portion of the GS Partnership Interest had a value as of the
Closing Date in excess of the value initially agreed upon by the parties
hereto), a right to receive additional LLC Units (which right shall not be
transferable) as follows: GS LP shall be entitled to receive, as of June 30,
2000 or, in the event of the first to occur, prior to June 30, 2000, of a Sale
of the Parent or CERA Inc., a Spin-Off of CERA Inc. or a Public Offering, as of
the closing date of such Sale, Spin-Off or Public Offering, as the case may be,
10% of the Contingent LLC Units.
1.5 Grant of LLC Units and Contingent LLC Units to CERA Management
Members. Promptly after the Closing Date, (i) (A) the Parent shall issue to CERA
Inc., for a purchase price per LLC Unit equal to the value per LLC Unit as of
the Closing Date set forth in (or agreed upon pursuant to the provisions of)
Section 1.8, which purchase price shall be payable in cash or, at CERA Inc.'s
option, by delivery of an interest-bearing promissory note (which interest will
be payable in cash no less frequently than semi-annually) for such amount that
will be payable at any time upon demand by the Parent, and (B) CERA Inc.,
pursuant
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to the CERA LLC Unit Grant Plan, shall grant to each CERA Management
Member who shall have entered into a CERA LLC Unit Grant Agreement with CERA
Inc., such number of LLC Units (not to exceed an aggregate of 106,875 LLC Units)
as is set forth opposite such CERA Management Member's name on Exhibit A hereto,
and (ii) the Parent shall issue to CERA Inc. the right to purchase additional
LLC Units, for a purchase price per LLC Unit equal to its fair market value (as
determined in good faith by the Board of the Parent) at the time such Contingent
LLC Units shall be deemed to have been issued pursuant to Section 1.6(b), and
CERA Inc. shall grant to each such CERA Management Member, pursuant to a CERA
LLC Unit Grant Agreement, a right to receive such additional LLC Units, as
follows: in the event that the CERA CAGR shall be equal to or greater than 16%,
CERA Inc. shall be entitled to purchase up to 7.125% of the Contingent LLC
Units, and each such CERA Management Member shall be entitled to receive, as of
June 30, 2000 or, in the event of the first to occur, prior to June 30, 2000, of
a Sale of the Parent or CERA Inc., a Spin-Off of CERA Inc. or a Public Offering,
as of the closing date of such Sale, Spin-Off or Public Offering, as the case
may be, a number of Contingent LLC Units equal to the product of (x) (A) 7.125%
of the Contingent LLC Units divided by (B) the aggregate number of LLC Units
granted to the CERA Management Members pursuant to clause (i) of this Section
1.5 and (y) the number of LLC Units so granted to such CERA Management Member.
If the employment of such CERA Management Member with (or, if such CERA
Management Member is a consultant to rather than an employee of CERA Inc. or any
of its Subsidiaries, the provision of services by such CERA Management Member
to) CERA Inc. or any of its Subsidiaries is terminated prior to June 30, 2000
or, in the event that, prior to June 30, 2000, a Sale of the Parent or CERA
Inc., a Spin-Off of CERA Inc. or a Public Offering occurs, prior to the closing
date of such Sale, Spin-Off or Public Offering, and (i) such employment or
provision of services was terminated voluntarily by such CERA Management Member
or by CERA Inc. or such Subsidiary for Cause (as defined in the CERA Option
Plan), then, immediately upon such termination of employment or provision of
services, the right of such CERA Management Member to receive Contingent LLC
Units shall terminate, and such CERA Management Member shall not be entitled to
any payment in respect thereof, or (ii) such employment or provision of services
was terminated for any other reason, then the right of such CERA Management
Member to receive Contingent LLC Units shall terminate and, in lieu thereof,
CERA Inc. shall pay to such CERA Management Member (or his or her permitted
transferees as provided below), promptly
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after such termination of employment or provision of services, an amount in cash
equal to the fair market value (as determined in good faith by the Board of the
Parent), as of the date of such termination of employment or provision of
services, of the number, if any, of Contingent LLC Units that would have been
issuable to such CERA Management Member, based on the CERA CAGR as of such date
(as determined in good faith by CERA Inc.), if the closing of a Nonqualifying
Sale had occurred on such date. The right of each CERA Management Member to
receive Contingent LLC Units pursuant to this Section 1.5 shall be transferable
only (1) by will or the laws of descent or distribution upon the death of such
CERA Management Member or (2) to a trust the only actual beneficiaries under
which are such CERA Management Member and/or one or more of such CERA Management
Member's brothers and sisters (whether by whole or half blood), spouse,
ancestors and lineal descendants, provided that the Parent shall only be
required to treat any such transferee as a permitted transferee for purposes of
this Article I if it shall have received notice of such transfer.
1.6 Calculation of CERA CAGR. (a) Not later than (x) 15 days after
the audited financial statements of CERA Inc. for the fiscal year ended June 30,
2000 shall have been completed and delivered to the Parent or (y) if a Sale of
the Parent or CERA Inc., a Spin-Off of CERA Inc. or a Public Offering shall be
contemplated, five days prior to the scheduled closing date of such Sale,
Spin-Off or Public Offering, the Board of the Parent shall determine, reasonably
and in good faith, the CERA CAGR, and the Parent shall send a written notice to
each Stockholder who participated in the CERA Stock Exchange, to GS LP and to
each CERA Management Member who, as of the date of such notice, shall still have
a right to receive Contingent LLC Units pursuant to Section 1.5 (or any
permitted transferees of any of the foregoing), setting forth (i) the revenues
of CERA Inc. for such fiscal year or, in the case of such Sale, Spin-Off or
Public Offering, for the applicable period prior to such scheduled closing date,
in each case as determined for purposes of calculating the CERA CAGR, (ii) the
CERA CAGR and (iii) the number of Contingent LLC Units, if any, which each
Stockholder, GS LP and each such CERA Management Member who shall still have a
right to receive Contingent LLC Units pursuant to Section 1.5 (or any permitted
transferees of any of the foregoing) have become entitled to receive (subject,
in the case of such CERA Management Members, to the payment by CERA Inc. of the
purchase price for the Contingent LLC Units to be issued to such CERA Management
Members) pursuant to Sections 1.3, 1.4 and 1.5.
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The determination by the Parent, as set forth in such notice, of the CERA CAGR
and the number of Contingent LLC Units to be issued shall, in the absence of
fraud, be final, conclusive and binding on the Stockholders, GS LP and the CERA
Management Members.
(b) In the case of clause (x) of Section 1.6(a), effective
immediately upon the transmittal of the notice referred to in Section 1.6(a),
or, in the case of clause (y) of Section 1.6(a), effective immediately prior to
the closing of the Sale, Spin-Off or Public Offering referred to in such Section
1.6(a), each such Stockholder (or any permitted transferees of any of the
foregoing) and GS LP shall be deemed, without any further action on the part of
the Parent or any such Stockholder (or any permitted transferees of any of the
foregoing) or GS LP, to be the owner, as of June 30, 2000 or immediately prior
to the closing of such Sale, Spin-Off or Public Offering, as the case may be, of
the respective number of Contingent LLC Units set forth in such notice. In the
case of clause (x) of Section 1.6(a), effective immediately upon the later of
(i) the transmittal of the notice referred to in Section 1.6(a) and (ii) the
payment by CERA Inc. of the purchase price for the Contingent LLC Units to be
issued to CERA Management Members, or, in the case of clause (y) of Section
1.6(a), effective immediately prior to the closing of the Sale, Spin-off or
Public Offering referred to in such Section 1.6(a) (provided that CERA Inc.
shall have paid the purchase price for such Contingent LLC Units), each CERA
Management Member who shall still have a right to receive Contingent LLC Units
pursuant to Section 1.5 (or each of his or her permitted transferees) shall be
deemed, without any further action on the part of the Parent, CERA Inc. or such
CERA Management Member or permitted transferee, to be the owner, as of June 30,
2000 or immediately prior to the closing of such Sale, Spin-Off or Public
Offering, as the case may be, of the respective number of Contingent LLC Units
set forth in such notice. The Parent shall send to each such Stockholder, GS LP,
each such CERA Management Member and each such permitted transferee a
certificate or certificates representing such Contingent LLC Units promptly
after delivery of the notice referred to in Section 1.6(a).
(c) The Parent recognizes and understands that a significant portion
of the consideration to be received by the Stockholders and GS LP in the CERA
Stock Exchange and the GS Partnership Interest Exchange, respectively, is
contingent and based upon the level of growth in revenues achieved by CERA Inc.
during the three-year period between
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June 30, 1997 and June 30, 2000. Accordingly, the Parent agrees to cooperate
with CERA Inc. in CERA Inc.'s efforts to achieve the requisite level of revenue
growth, principally by providing CERA Inc.'s management with the authority to
manage and operate CERA Inc.'s business, subject to the reasonable oversight of
CERA Inc.'s Board of Directors.
1.7 No Fractional LLC Units. No certificates for fractions of LLC
Units shall be issued pursuant to Section 1.2, 1.3, 1.4, 1.5 or 1.6. If the
conversion of a Person's aggregate holdings of MGI Common Stock, or the
aggregate number of LLC Units issuable to a Person at any time pursuant to the
CERA Stock Exchange, the GS Partnership Interest Exchange or a Contingent Option
or in connection with the Contingent LLC Units, results in a fractional LLC
Unit, the aggregate number of LLC Units that such Person shall be entitled to
receive shall be rounded to the nearest whole LLC Unit and, in the event that
such aggregate number of LLC Units shall be rounded down, such Person shall not
be entitled to any payment in respect of such fractional LLC Unit.
1.8 Adjustments to Per Share MGI Allocated LLC Units, etc. The
number of Per Share MGI Allocated LLC Units, CERA Allocated LLC Units, CERA
Contingent Option LLC Units, Contingent LLC Units, GS Allocated LLC Units and GS
Contingent Option LLC Units set forth in this Agreement represents the
respective numbers of LLC Units initially agreed upon by the parties hereto.
Prior to the Closing, MGI, the Founding Stockholders and GS LP may agree upon
revised numbers of such LLC Units, such that the agreed-upon value per LLC Unit
at the time of the Closing shall be equal to $10.00. In such case, the
respective numbers of Per Share MGI Allocated LLC Units, CERA Allocated LLC
Units, CERA Contingent Option LLC Units, Contingent LLC Units, GS Allocated LLC
Units and GS Contingent Option LLC Units shall be adjusted by multiplying each
such number by the quotient obtained by dividing (i) the value per LLC Unit at
the time of the Closing that would result if the initial numbers of LLC Units
referred to above were not to be so revised by (ii) $10.00. In the event that
the numbers of such LLC Units are not so revised prior to the Closing pursuant
to this Section 1.8, the value per LLC Unit at the time of the Closing shall be
deemed to be equal to (A) the fair market value of the partnership interests in
CERA LP as of the Closing Date (as determined by Houlihan Valuation Associates
in the valuation report with respect to CERA LP to be prepared and delivered by
it at or prior to the Closing)
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minus the amount of the CERA Cash Distribution divided by (B) 1,500,000.
1.9 Treatment of the Transactions for Income Tax Purposes. The
parties hereto agree that:
(a) For Income Tax purposes, the conversion of MGI Common Stock into
LLC Units, and the conversion of common stock of Merger Sub into common
stock of the Surviving Corporation, in each case pursuant to the Merger,
shall be treated as a contribution of such MGI Common Stock to the Parent
in exchange for such LLC Units pursuant to section 721(a) of the Code.
(b) For Income Tax purposes, the exchange of CERA Common Stock for
LLC Units, Contingent LLC Units and CERA Contingent Options pursuant to
the CERA Stock Exchange shall be treated as a contribution of such CERA
Common Stock to the Parent in exchange for such LLC Units, such Contingent
LLC Units and the right to acquire LLC Units upon exercise of the CERA
Contingent Options pursuant to section 721(a) of the Code.
(c) For Income Tax purposes, the exchange of the GS Partnership
Interest owned by GS LP following the CERA Cash Distribution for LLC
Units, Contingent LLC Units and GS Contingent Options pursuant to the GS
Partnership Interest Exchange shall be treated as a contribution of such
GS Partnership Interest to the Parent in exchange for such LLC Units, such
Contingent LLC Units and the right to acquire LLC Units upon exercise of
the GS Contingent Options pursuant to section 721(a) of the Code.
(d) For Income Tax purposes, the fair market value of such MGI
Common Stock, CERA Common Stock and GS Partnership Interest at the time of
the contribution thereof for Income Tax purposes set forth in paragraphs
(a), (b) and (c), respectively, of this Section 1.8 shall be equal to the
values set forth therefor on Schedule B to the Amended and Restated
Limited Liability Company Agreement of the Parent, to be dated as of the
Closing Date (the "LLC Agreement").
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Stockholders and GS LP.
The Stockholders and GS LP hereby jointly represent and warrant to MGI, the
Parent and Merger Sub on the date hereof that the representations and warranties
contained in this Section 2.1 are true and correct as of the date hereof, except
to the extent that any such representation and warranty is expressly stated
herein to be as of a date other than the date hereof, in which case such
representation and warranty is true and correct as of such date, and in each
case except as set forth in the section of the disclosure letter delivered by
the Stockholders and GS LP to MGI on or before the date of this Agreement (the
"CERA Disclosure Letter") that corresponds to the subsection of this Agreement
in respect of which such exception is being made.
2.1.1. Existence and Good Standing; No Violations; Consents and
Approvals. (a) CERA Inc. is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts. CERA LP is
a limited partnership duly formed, validly existing and in good standing under
the laws of the State of Delaware. There is no bankruptcy, reorganization or
similar proceeding pending against CERA Inc., CERA LP or any of the partners of
CERA LP. Each of CERA Inc. and CERA LP has all necessary corporate or
partnership power and authority, as the case may be, to own, lease or license
the property owned or used by it, and to conduct its business as and in the
places where its business is now being conducted. Section 2.1.1(a) of the CERA
Disclosure Letter sets forth a description (including the name of each party
thereto and of each written agreement relating thereto or, if no such written
agreement exists, a description of the material terms thereof) of each joint
venture or partnership (other than CERA LP), or similar agreement or arrangement
involving a sharing of profits or expenses during the 10-month period ended
April 30, 1997 in excess of $10,000 in the case of any such agreement or
arrangement or $25,000 in the aggregate in the case of all such agreements or
arrangements, to which either CERA Inc. or CERA LP is a party or by which either
of them may be bound. Except as set forth in Section 2.1.1(a) of the CERA
Disclosure Letter, each of CERA Inc. and CERA LP is duly qualified or licensed
to do business and is in good standing in each of the jurisdictions in which the
nature of its business or the
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properties owned or leased by it makes such qualification or licensing
necessary, but any failure to so qualify or be licensed in any such jurisdiction
does not have and would not reasonably be expected to have a CERA Material
Adverse Effect.
(b) Except as set forth in Section 2.1.1(b) of the CERA Disclosure
Letter, the execution, delivery and performance by each of the Stockholders and
GS LP of this Agreement and the other agreements and instruments to be entered
into by it in connection herewith, and the consummation of the transactions
contemplated hereby and thereby to be consummated by it, do not and will not,
with or without the giving of notice or the lapse of time or both: (i) violate,
conflict with or result in a breach or default under any provision of the
Organizational Documents of CERA Inc. or CERA LP, including the Existing
Partnership Agreement; (ii) violate any statute, ordinance, rule, regulation or
Order of any court or of any Governmental Authority applicable to CERA Inc. or
CERA LP, or by which any of CERA Inc.'s or CERA LP's respective properties or
assets may be bound; (iii) require CERA Inc. or CERA LP to obtain the Consent of
any Governmental Authority or any other Person, except, in the case of the CERA
Roll-up only, for failures to obtain such Consents that, individually or in the
aggregate, would not reasonably be expected to have a CERA Material Adverse
Effect; or (iv) result in a violation or breach of, conflict with, constitute a
default (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Lien upon any of CERA
Inc.'s or CERA LP's properties or assets under, any of the terms of any note,
agreement, contract, license, lease or other instrument or obligation to which
CERA Inc. or CERA LP is a party or by which CERA Inc., CERA LP or their
respective properties or assets may be bound, except, with respect to clause
(iv) of this Section 2.1.1(b), in the case of the CERA Roll-up only, for
violations, breaches, conflicts, defaults, terminations, cancellations,
payments, accelerations and Liens that, individually or in the aggregate, would
not reasonably be expected to have a CERA Material Adverse Effect.
2.1.2. Capitalization; Ownership. (a) The authorized capital stock
of CERA Inc. consists of 200,000 shares of CERA Voting Common Stock, of which
188,000 shares are issued and outstanding as of the date hereof, and 200,000
shares of CERA Non-Voting Common Stock, of which 52,006 shares are issued and
outstanding as of the date hereof. All of the outstanding shares of CERA Common
Stock
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have been duly authorized and validly issued and are fully paid and
nonassessable.
(b) The general and limited partners of CERA LP are set forth in
Section 2.1.2(b) of the CERA Disclosure Letter and own such number of units
representing partnership interests in CERA LP as are set forth in Section
2.1.2(b) of the CERA Disclosure Letter. CERA LP has no Subsidiaries. Neither
CERA Inc. nor CERA LP holds, beneficially or of record, any capital stock or
other equity interests of any Person other than, in the case of CERA Inc., of
CERA LP, except for publicly traded equity securities not exceeding 10% of the
outstanding equity securities of such Person or in connection with short-term
investments or cash management. The partnership interests in CERA LP that are
owned, beneficially and of record, by CERA Inc. are described in Section
2.1.2(b) of the CERA Disclosure Letter, are owned by CERA Inc. free and clear of
any Liens, and will be so owned as of the Closing Date.
(c) Except as set forth in the CERA Stockholders Agreement, the
Existing Partnership Agreement or the GS Purchase Agreement, there are no
preemptive or similar rights with respect to the CERA Common Stock or
partnership interests in CERA LP. Except for this Agreement, the Existing
Partnership Agreement, the CERA Stockholders Agreement and the GS Purchase
Agreement and as set forth in Section 2.1.2(c)(i) of the CERA Disclosure Letter,
no (i) subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind obligating any
Stockholder, GS LP, CERA Inc. or CERA LP to issue or sell any shares of capital
stock of CERA Inc. or any other equity interests therein, or to issue or
transfer any partnership interests in CERA LP or (ii) securities convertible
into or exchangeable for any such shares or interests are outstanding, and no
authorization therefor has been given. Except as set forth in the GS Purchase
Agreement and the stock restriction agreements and documents listed in Section
2.1.2(c) of the CERA Disclosure Letter, there are no outstanding contractual
obligations of CERA Inc. or CERA LP to repurchase, redeem or otherwise acquire
any CERA Common Stock or any of its partnership interests, respectively.
2.1.3. Financial Statements. (a) CERA Inc. has delivered to MGI and
the Parent complete and correct copies of the audited financial statements of
CERA LP as at and for the fiscal years ended June 30, 1996, 1995 and 1994,
together with the respective opinions thereon of KPMG Peat
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Marwick LLP, the independent public accountants of CERA LP, for each such fiscal
year, and the unaudited financial statements of CERA LP as at and for the
nine-month period ended March 31, 1997, including in each case a balance sheet,
a statement of income, a statement of equity and a statement of cash flows, and,
in the case of such audited financial statements, accompanying notes (the "CERA
Financial Statements").
(b) The CERA Financial Statements present fairly in all material
respects the financial position of CERA LP as at the respective dates or for the
respective periods thereof, and have been prepared in accordance with generally
accepted accounting principles in the United States ("GAAP") applied on a
consistent basis throughout the periods presented in the CERA Financial
Statements subject, in the case of interim unaudited CERA Financial Statements,
only to normal recurring year-end adjustments and the absence of notes. The
books and records of CERA Inc. and CERA LP have been maintained in the ordinary
course of business.
2.1.4. Absence of Undisclosed Liabilities. Neither CERA LP nor CERA
Inc. has any liabilities or obligations of any nature, whether known, unknown,
absolute, accrued, contingent or otherwise and whether due or to become due,
except (a) as set forth in Section 2.1.4 of the CERA Disclosure Letter, (b) as
and to the extent disclosed or reserved against in the unaudited balance sheet
of CERA LP, dated March 31, 1997, that has been delivered to MGI, or
specifically disclosed in the notes thereto, (c) for liabilities and obligations
that are incurred in the ordinary course of business after the date of such
balance sheet, are consistent with past practices and are not prohibited by this
Agreement, (d) for liabilities and obligations that are expressly contemplated
by this Agreement and (e) for liabilities and obligations that, individually or
in the aggregate, are not and would not reasonably be expected to have a CERA
Material Adverse Effect.
2.1.5. Absence of Changes. Since March 31, 1997, except as set forth
in Section 2.1.5 of the CERA Disclosure Letter or except as expressly
contemplated by this Agreement, the business of CERA Inc. and CERA LP has been
conducted in the ordinary course consistent with past practices and neither CERA
Inc. nor CERA LP has: (a) suffered any CERA Material Adverse Effect, (b)
modified or amended any material term of any material agreement, contract or
commitment attached as an Exhibit to this Agreement or listed in Section 2.1.8
of the CERA Disclosure Letter, or (c)
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entered into any material transaction other than in the ordinary course of
business consistent with past practices. Since March 31, 1997, except as set
forth in Section 2.1.5 of the CERA Disclosure Letter, except as expressly
contemplated by this Agreement or, as of the Closing Date with respect to
matters occurring on or after the date hereof, except in compliance with the
provisions of Sections 3.1.1 and 3.1.2, neither CERA LP nor CERA Inc. has (i)
authorized, declared or paid or made any dividend or other distribution in
respect of its capital stock or partnership interests, as the case may be, or
purchased, redeemed, issued or transferred or agreed to purchase, redeem, issue
or transfer, directly or indirectly, any shares of its capital stock or
partnership interests, warrants, options or other rights to acquire any such
shares or partnership interests or securities convertible into or exchangeable
for any such shares or partnership interests, (ii) incurred any indebtedness for
borrowed money, guaranteed any such indebtedness, issued or sold any debt
securities or guaranteed any debt securities of others, (iii) (x) entered into
or amended any employment, retention, severance, change in control or similar
agreement or arrangement of the type described in Section 2.1.8(c) (taking into
account the dollar thresholds set forth in such subsection) with, (y)
established or amended any material employee compensation or benefit plan or
practice maintained for the benefit of, or (z) paid or accrued any bonus or
deferred compensation for or in respect of, any current or former director,
officer, stockholder, partner or employee of CERA Inc. or CERA LP, in the case
of clause (x) or (y), other than in the ordinary course of business consistent
with past practices, (iv) entered into any agreement, contract or commitment
(other than this Agreement) for the sale of CERA Inc., CERA LP, the assets of
CERA Inc. and/or CERA LP or any equity interests in CERA Inc. or partnership
interests in CERA LP, or (v) taken any action or omitted to take any action (or
committed to take any action or omit to take any action) that would result in
the occurrence of any of the foregoing.
2.1.6. Taxes. (a) Filing of Returns and Payment of Taxes. Except as
set forth in Section 2.1.6(a) of the CERA Disclosure Letter, all material
Returns required to be filed by or on behalf of CERA LP or CERA Inc. ("CERA
Returns") on or before the Closing Date have (or by the Closing Date will have)
been duly and timely filed, and neither CERA LP nor CERA Inc. is currently the
beneficiary of any extension of time within which to file any CERA Return.
Except for Taxes set forth in Section 2.1.6(a) of the CERA Disclosure Letter,
which are being contested in
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good faith and by appropriate proceedings or which can be paid without interest
or penalties, the following Taxes (collectively, "CERA Taxes") have (or by the
Closing Date will have) been duly and timely paid: (i) all Taxes shown to be due
on the CERA Returns and (ii) all material Taxes due and payable on or before the
Closing Date that are or may become payable by CERA LP or CERA Inc. or
chargeable as a Lien upon the assets thereof (whether or not shown on any CERA
Return). Except as set forth in Section 2.1.6(a) of the CERA Disclosure Letter,
all material Employment and Withholding Taxes required to be paid or withheld by
or on behalf of CERA LP or CERA Inc. or for which CERA LP or CERA Inc., as the
case may be, is or may become liable ("CERA Employment and Withholding Taxes")
have been either duly and timely paid to the proper Governmental Authority or
properly set aside in accounts for such purpose.
(b) Extensions, etc. Except as set forth in Section 2.1.6(b) of the
CERA Disclosure Letter, no written agreement or other document extending, or
having the effect of extending, the period of assessment or collection of any
CERA Taxes or CERA Employment and Withholding Taxes, and no power of attorney
with respect to any such Taxes, has been executed or filed with the IRS or any
other taxing authority.
(c) Tax Filing Groups; Income Tax Jurisdictions. Neither CERA LP nor
CERA Inc. is or has been a member of any affiliated, consolidated, combined or
unitary group for purposes of filing Returns or paying Taxes. Set forth in
Section 2.1.6(c) of the CERA Disclosure Letter are all countries, states,
provinces, cities or other jurisdictions in which CERA LP or CERA Inc. currently
files or has filed an Income Tax Return within the last three years.
(d) Copies of Returns; Audits, etc. The Founding Stockholders and GS
LP have (or by the Closing Date will have) delivered to MGI and the Parent
complete and accurate copies of all CERA Returns with respect to all periods
beginning on or after July 1, 1993 that have been filed or will be required to
be filed (after giving effect to all valid extensions of time for filing) by
CERA LP or CERA Inc. on or before the Closing Date. Except as set forth in
Section 2.1.6(d) of the CERA Disclosure Letter, (i) no CERA Taxes or CERA
Employment and Withholding Taxes have been asserted by any Governmental
Authority since January 1, 1994 to be due, (ii) no revenue agent's report or
written assessment for Taxes has been issued by any Governmental Authority in
the course of any audit that has been completed since
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July 1, 1993 with respect to CERA Taxes or CERA Employment and Withholding Taxes
and (iii) no issue has been raised by any Governmental Authority in the course
of any audit that has not been completed with respect to CERA Taxes or CERA
Employment and Withholding Taxes, which issue has been raised in a writing that
has been received by any of the Stockholders, GS LP, CERA LP or CERA Inc. Except
as set forth in Section 2.1.6(d) of the CERA Disclosure Letter, no CERA Return
is currently under audit by any other taxing authority, and no CERA Employment
and Withholding Taxes are currently under audit by any taxing authority. Except
as set forth in Section 2.1.6(d) of the CERA Disclosure Letter, neither the IRS
nor any other taxing authority is now asserting in writing against CERA LP or
CERA Inc. any adjustment or any deficiency or claim for additional Taxes or
Employment and Withholding Taxes.
(e) Section 1445(a) of the Code. No amount will be required to be
deducted or withheld pursuant to section 1445(a) of the Code in connection with
the CERA Cash Distribution, the CERA Stock Exchange or the GS Partnership
Interest Exchange.
(f) Tax Sharing Agreements. Neither CERA LP nor CERA Inc. is a party
to or bound by or has any obligation under any Tax sharing agreement or
arrangement.
(g) Tax Status of CERA LP and CERA Inc. CERA LP is not and has never
been at any time treated as an association taxable as a corporation for federal
Income Tax purposes. CERA LP is and has been since its inception treated as a
partnership for federal and all relevant state or local Income Tax purposes.
CERA Inc. is and has been duly qualified as an "S corporation" within the
meaning of section 1361(a) of the Code for federal Income Tax purposes, pursuant
to an election filed by CERA Inc. on December 5, 1986 and effective as of July
1, 1987. Section 2.1.6(g) of the CERA Disclosure Letter sets forth a list of
each Tax jurisdiction in which a valid S corporation election for
CERA Inc. is in effect, or CERA Inc. is otherwise treated as an S corporation
for state or local Income Tax purposes, and the date beginning with which such
election or treatment has been continuously in effect.
(h) Section 754 of the Code. An election under Section 754 of the
Code is not in effect with respect to CERA LP.
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(i) Disclosure. Each subsection of Section 2.1.6 of the CERA
Disclosure Letter sets forth, for each relevant item set forth in such
subsection thereof, the name of the entity, the taxing jurisdiction, the type of
Tax and the taxable period or periods involved.
2.1.7. Properties and Assets. (a) Except insofar as would not have,
or reasonably be expected to have, a CERA Material Adverse Effect, each of CERA
LP and CERA Inc. has good and valid title to, or otherwise has sufficient and
legally enforceable right to use, all of the properties and assets (real,
personal or mixed, tangible or intangible, including Intellectual Property),
used or held for use in connection with, necessary for the conduct of, or
otherwise material to, the businesses conducted by it (the "CERA Assets").
Except as set forth in Section 2.1.7(a) of the CERA Disclosure Letter, the CERA
Assets that are owned by CERA Inc. or CERA LP are owned free and clear of any
Liens other than (i) liens for Taxes not yet due and payable or that are being
contested in good faith and by appropriate proceedings, (ii) statutory liens
incurred in the ordinary course of business that, individually and in the
aggregate, have not had and would not reasonably be expected to have a CERA
Material Adverse Effect, and (iii) encumbrances and easements that do not
materially detract from the value or materially interfere with the use of the
properties affected thereby (the exceptions described in the foregoing clauses
(i), (ii) and (iii) being referred to as "Permitted CERA Liens").
(b) Neither CERA Inc. nor CERA LP owns any real property. Section
2.1.7(b) of the CERA Disclosure Letter contains a complete and correct list of
all real property leases, subleases and occupancy agreements to which either
CERA LP or CERA Inc. is a party (each, a "CERA Lease") setting forth the
address, landlord and tenant for each CERA Lease. CERA Inc. and CERA LP have
delivered to MGI and the Parent correct and complete copies of the CERA Leases.
Except insofar as would not have, or reasonably be expected to have, a CERA
Material Adverse Effect, (i) each CERA Lease, other than the CERA Lease with
respect to CERA LP's principal offices in Cambridge, Massachusetts, is legal,
valid, binding, in full force and effect and enforceable against CERA Inc. or
CERA LP, as the case may be, and, to the knowledge of any Stockholder, GS LP,
CERA Inc. or CERA LP, against the other parties thereto, (ii) neither CERA LP
nor CERA Inc. is in default, violation or breach under any such CERA Lease, and
no event has occurred and is continuing that constitutes or, with notice or the
passage of time or
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both, would constitute a default, violation or breach under any such CERA Lease
and (iii) each such CERA Lease grants the tenant under such CERA Lease the right
to use and occupy the premises and rights demised and intended to be demised
thereunder, which right is sufficient for the purposes for which such premises
and rights are or are contemplated to be used or occupied by such tenant. The
CERA Lease with respect to CERA LP's principal offices in Cambridge,
Massachusetts (the "CERA Headquarters Lease") is legal, valid, binding, in full
force and effect and enforceable against CERA Inc. or CERA LP, as the case may
be, and, to the knowledge of any Stockholder, GS LP, CERA Inc. or CERA LP, the
other parties thereto. Neither CERA LP nor CERA Inc. is in default, violation or
breach in any material respect under the CERA Headquarters Lease, and no event
has occurred and is continuing that constitutes or, with notice or the passage
of time or both, would constitute a default, violation or breach under the CERA
Headquarters Lease that would reasonably be expected to have a CERA Material
Adverse Effect. The CERA Headquarters Lease grants the tenant thereunder the
right to use and occupy the premises and rights demised and intended to be
demised thereunder, which right is sufficient for the purposes for which such
premises and rights are or are contemplated to be used or occupied by such
tenant.
2.1.8. Contracts. Section 2.1.8 of the CERA Disclosure Letter sets
forth a correct and complete list, as of the date hereof, of all agreements,
contracts and commitments (including the names of each party thereto), or, in
the case of clause (a) below, of all clients party to all agreements, contracts
and commitments, of the following types (taking into account any specified
dollar thresholds) to which either CERA LP or CERA Inc. or, if the subject
matter of such agreement, contract or commitment constitutes part of the
business conducted by CERA Inc. or CERA LP, any Founding Stockholder is a party
or by or pursuant to which either CERA LP or CERA Inc. is bound or is receiving
(or will receive) payments or other benefits even if not a party to such
agreement: (a) each client party to any contract or group of contracts,
including any oral arrangements relating thereto or extensions thereof, with
respect to which client CERA LP or CERA Inc. accrued (for financial reporting
purposes), for the 10-month period ended April 30, 1997, revenues in excess of
$200,000 in the aggregate, (b) loan agreements and other agreements relating to
indebtedness for borrowed money, promissory notes, bonds, guaranties, letters of
credit, credit facilities, mortgages, security agreements, pledge agreements,
deferred purchase price agree-
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ments, sale and leaseback agreements or similar agreements, (c) (i) employment,
consulting and agency agreements or arrangements involving, during the 10-month
period ended April 30, 1997, accruals (for financial reporting purposes) by CERA
Inc. or CERA LP in excess of $25,000 with respect to any particular such
agreement or arrangement, other than any employment or consulting agreement or
arrangement involving accruals during such period of less than $90,000 that is
terminable at will or subject to such limitations on termination as may be
imposed by Applicable Law, by the applicable employer or entity being provided
with consulting services, without the payment of any amount in excess of such
amount as may be required by Applicable Law, or (ii) severance, retention,
bonus, change in control and other similar agreements or arrangements involving,
during the 10-month period ended April 30, 1997 (or reasonably expected as of
the date hereof to involve in any fiscal year of CERA Inc. commencing after June
30, 1997), accruals (for financial reporting purposes) by CERA Inc. or CERA LP
in excess of $25,000 with respect to any particular such agreement or
arrangement or in excess of $100,000 with respect to all such agreements and
arrangements in the aggregate, (d) any contracts or other documents that on or
after the Closing Date substantially limit or will limit the freedom of CERA LP
or CERA Inc. to compete in any line of business and (e) any other contract or
commitment that is material to CERA LP, CERA Inc. or their respective businesses
or not made in the ordinary course of business. Neither CERA LP, CERA Inc., any
Stockholder, GS LP nor, to the knowledge of any Stockholder, GS LP, CERA LP or
CERA Inc., any other party, is in breach or default in any material respect
under any of the agreements, contracts or commitments set forth in Section 2.1.8
of the CERA Disclosure Letter and, except as set forth in Section 2.1.8 of the
CERA Disclosure Letter, there exists no event or condition (including the
Transactions) which has resulted or would result in a material breach or default
thereunder upon the giving of notice, the passage of time or both. All the
agreements, contracts and commitments set forth in Section 2.1.8 of the CERA
Disclosure Letter are legal, valid, binding, in full force and effect and
enforceable against CERA LP, CERA Inc. or the applicable Founding Stockholder,
as the case may be, except for such agreements, contracts and commitments as
would not reasonably be expected to result in a CERA Material Adverse Effect.
2.1.9. Intellectual Property. (a) Schedule of Intellectual Property.
Section 2.1.9(a) of the CERA Disclosure Letter sets forth a correct and complete
list of all
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of the material trade or service marks, registered copyrights and
all other material Intellectual Property (other than unregistered copyrights)
used or held for use in connection with, necessary for the conduct of, or
otherwise material to the business and operations of CERA Inc. and CERA LP (the
"CERA Intellectual Property") and sets forth the owner and nature of the
interest of CERA LP or CERA Inc. therein. All of the material copyrights used or
held for use in connection with, necessary for the conduct of, or otherwise
material to the business and operations of CERA Inc. and CERA LP have been duly
registered. Section 2.1.9(a) of the CERA Disclosure Letter sets forth a correct
and complete list of all material licenses, sublicenses or other similar
material agreements (including any amendments thereto) to which CERA Inc. or
CERA LP is a party, by which either of them is bound or under which either of
them receives any benefits, relating to any CERA Intellectual Property (the
"CERA Licenses"). Each CERA License is legal, valid, binding, in full force and
effect and enforceable against CERA LP or CERA Inc., as applicable, and neither
CERA Inc., CERA LP nor, to the knowledge of any Stockholder, GS LP, CERA LP or
CERA Inc., any other party thereto is in breach or default in any material
respect under any CERA License and there exists no event or condition (including
the Transactions) which has resulted or would result in a material breach or
default thereunder upon the giving of notice, the passage of time or both.
Except as set forth in Section 2.1.9(a) of the CERA Disclosure Letter, CERA LP
or CERA Inc. has and immediately after the Closing will have the legal right to
use the CERA Intellectual Property in connection with the business as currently
conducted or contemplated to be conducted by CERA Inc. and CERA LP.
(b) No Infringement, etc. Except as disclosed in Section 2.1.9(b) of
the CERA Disclosure Letter, the business and operations of CERA Inc. and CERA LP
as currently conducted do not infringe or otherwise conflict with any rights of
any Person in respect of any Intellectual Property, and neither CERA Inc., CERA
LP nor any of their Affiliates has received notice or has actual knowledge of
any such infringement or conflict, except such infringements and conflicts as,
individually and in the aggregate, have not had and would not reasonably be
expected to have a CERA Material Adverse Effect. To the knowledge of any of the
Stockholders, GS LP, CERA Inc. or CERA LP, none of the CERA Intellectual
Property owned by CERA Inc. or CERA LP is being materially infringed or, other
than pursuant to license agreements in the ordinary course of business,
otherwise materially used or available for use by any Person other
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than CERA Inc. or CERA LP. No CERA Intellectual Property owned by CERA Inc. or
CERA LP is subject to any outstanding Order or agreement restricting the use
thereof by CERA Inc. or CERA LP with respect to its business or restricting the
licensing thereof by CERA Inc. or CERA LP to any Person. Each trademark, trade
dress or service mark and any registration or application therefor, mask work,
copyright registration or application therefor included in any CERA Intellectual
Property owned by CERA Inc. or CERA LP is in proper form and has been properly
maintained in all material respects and has otherwise been duly registered with,
filed in or issued by, as the case may be, the United States Patent and
Trademark Office, the United States Copyright Office or such other applicable
filing offices, domestic or foreign, and CERA Inc. or CERA LP has taken
reasonable actions to ensure protection under any applicable laws, and such
registrations, filings, issuances and other actions remain in full force and
effect. Except as set forth in Section 2.1.9(b) of the CERA Disclosure Letter,
neither CERA Inc. nor CERA LP has entered into any agreement to indemnify any
other Person against any charge of infringement, dilution or violation of
Intellectual Property rights, other than pursuant to any such agreements entered
into in connection with the use of commercially available information systems
applications or entered into in the ordinary course of business in connection
with the provision to clients of reports by CERA Inc. or CERA LP.
2.1.10. Insurance. Set forth in Section 2.1.10 of the CERA
Disclosure Letter is a complete and correct list of all of the insurance
policies, including, without limitation, key man insurance policies, which are
maintained for the benefit of CERA LP or CERA Inc. or with respect to the
businesses conducted by CERA Inc. or CERA LP, the CERA Assets or both, together
with a description with respect to each policy of the amount and types of
coverage, limits and deductibles, inception and expiration dates and insurance
carrier. CERA Inc. and CERA LP have made available to MGI complete and correct
copies of all such policies together with all riders and amendments thereto.
Such policies are in full force and effect and all premiums due thereon have
been paid. Such policies, with respect to their amounts and types of coverage
and limitations as to deductibles and self-insured retentions, are, to the
knowledge of any of the Stockholders, GS LP, CERA Inc. or CERA LP, adequate and
customary to insure against risks to which CERA Inc., CERA LP or the CERA Assets
are normally exposed in the operation of the businesses conducted by CERA Inc.
and CERA LP.
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2.1.11. Litigation. Except as set forth in Section 2.1.11 of the
CERA Disclosure Letter, there is no claim, action, suit, litigation or
proceeding at law or in equity, or investigation, arbitration, administrative or
other proceeding (each, "Litigation") by or before any governmental or other
instrumentality or agency, pending (in the case of pending investigations only,
to the knowledge of any Stockholder, GS LP, CERA LP or CERA Inc., and in the
case of all other pending Litigation, without regard to knowledge), or, to the
knowledge of any Stockholder, GS LP, CERA LP or CERA Inc., threatened, (i)
against or affecting CERA LP, CERA Inc., the CERA Common Stock, the partnership
interests in CERA LP, the CERA Assets or the businesses conducted by CERA Inc.
and CERA LP, that would reasonably be expected to result in liability on the
part of CERA Inc. or CERA LP in an amount in excess of $100,000 in the aggregate
or (ii) seeking to prevent or challenging the transactions contemplated by this
Agreement. There are no outstanding orders, judgments, injunctions, awards,
decrees or writs (each, an "Order") issued by any federal, state or local
governmental authority, agency, board, commission, judicial, regulatory or
administrative body, to which either CERA LP or CERA Inc. is a party or against
either CERA LP or CERA Inc., or that, to the knowledge of any of the
Stockholders, GS LP, CERA Inc. or CERA LP, have or would reasonably be expected
to have a CERA Material Adverse Effect.
2.1.12. Compliance with Laws and Other Instruments. Each of CERA LP
and CERA Inc. and, to the extent that any action taken is or has been on behalf
of or for the benefit of the businesses conducted by CERA Inc. or CERA LP (and
excluding any actions solely in a Stockholder's personal capacity), each
Stockholder is operating, and has at all times operated such business, in
compliance with all laws, ordinances, rules and regulations (including all
Environmental Laws and the respective Organizational Documents of each of CERA
LP and CERA Inc.) and Orders applicable to CERA LP, CERA Inc., such business,
any of the CERA Assets or the use, ownership and operation thereof, except to
the extent that failures to be in such compliance would not, individually or in
the aggregate, reasonably be expected to result in a CERA Material Adverse
Effect.
2.1.13. Affiliate Relationships. Except as set forth in Section
2.1.13 of the CERA Disclosure Letter and other than (i) agreements listed in
Section 2.1.8(c) of the CERA Disclosure Letter regarding compensation payable to
officers and employees who are also Stockholders and (ii) the GS Advisory
Agreement, neither CERA LP nor CERA
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Inc. has entered into any agreement, arrangement or other commitment or
transaction with any Stockholder, GS LP or any of their Affiliates which
involved, during the ten-month period ended April 30, 1997 (or is reasonably
expected, during CERA Inc.'s fiscal year ending on June 30, 1998, to involve),
payments or receipts in excess of $25,000 in any individual case or, in the
aggregate, $100,000.
2.1.14. Information in Registration Statement and Offer Documents.
None of the information supplied by any of the Stockholders, GS LP, CERA LP or
CERA Inc. regarding any of them for inclusion or incorporation by reference in
the Registration Statement or Offer Documents will, in the case of the
Registration Statement, at the date of the effectiveness of the Registration
Statement, and, in the case of the Offer Documents, at the date such materials
are mailed to the holders of MGI Common Stock, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
2.1.15. Employees, Labor Matters, etc. Neither CERA Inc. nor CERA LP
is a party to or bound by any collective bargaining or other labor agreement,
and there are no labor unions or similar organizations representing, or, to the
knowledge of any of the Stockholders, GS LP, CERA Inc. or CERA LP, purporting to
represent or attempting to represent any employees employed by CERA Inc. or CERA
LP. Since June 30, 1994, there has not occurred or, to the knowledge of any of
the Stockholders, GS LP, CERA LP or CERA Inc., been threatened any slowdown,
work stoppage, concerted refusal to work overtime or other similar labor
activity with respect to any employees of CERA Inc. or CERA LP, in any such
case, that has had or would reasonably be expected to have or result in a CERA
Material Adverse Effect or a material change in CERA Inc. or CERA LP's relations
with employees. There are no material labor disputes currently subject to any
grievance procedure, arbitration or litigation and there is no representation
petition pending or, to the knowledge of any of the Stockholders, GS LP, CERA LP
or CERA Inc., threatened with respect to any employee of CERA Inc. or CERA LP.
Each of CERA Inc. and CERA LP has complied with all applicable laws pertaining
to the employment or termination of employment of their respective employees
except for any failure so to comply that, individually and in the aggregate,
have not had and would not reasonably be expected to have or result in a CERA
Material Adverse Effect.
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2.1.16. ERISA. (a) Section 2.1.16(a) of the CERA Disclosure Letter
sets forth a complete and correct list of each "employee benefit plan," as such
term is defined in section 3(3) of ERISA, and each bonus, incentive or deferred
compensation, severance, termination, retention, change of control,
equity-based, performance or other employee or retiree benefit or compensation
plan, program, arrangement, agreement, policy or understanding, whether written
or unwritten, maintained, sponsored or contributed to by CERA Inc. or with
respect to which CERA Inc. is obligated to contribute or is a party
(collectively, the "CERA Plans"). CERA LP does not maintain, sponsor, contribute
to or have an obligation to contribute to, and is not a party to, any such
employee benefit plan or employee or retiree benefit or compensation plan,
program, arrangement, agreement, policy or understanding. With respect to each
CERA Plan, CERA Inc. or CERA LP have provided MGI complete and correct copies of
(i) such CERA Plan, if written, or a description of such CERA Plan if not
written, and (ii) to the extent applicable to such CERA Plan, all trust
agreements, insurance contracts or other funding agreements or arrangements, the
most recent actuarial and trust report, the most recent Form 5500 required to
have been filed with the IRS and all schedules thereto, the most recent IRS
determination letter, all current summary plan descriptions and any and all
amendments to any such document. No other trade or business, whether or not
incorporated, is currently or, within the preceding six years, has been required
to be treated as a "single employer" together with CERA LP or CERA Inc. pursuant
to clause (b), (c) or (m) of section 414 of the Code.
(b) Each CERA Plan intended to be qualified under section 401(a) of
the Code, and the trust (if any) forming a part thereof, has received a
favorable determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is exempt from taxation under
section 501(a) of the Code, and nothing has occurred since the date of such
determination letter that could reasonably be expected to adversely affect such
qualification or tax-exempt status.
(c) No CERA Plan is (i) subject to section 412 of the Code or
section 302 or Title IV of ERISA, (ii) a "multiemployer plan" within the meaning
of section 4001(a) of ERISA or (iii) a "multiple employer plan" within the
meaning of section 4064 of ERISA.
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(d) Neither CERA Inc. nor CERA LP has incurred (either directly or
indirectly, including as a result of an indemnification obligation) any material
liability under or pursuant to Title I or IV of ERISA or the penalty, excise Tax
or joint and several liability provisions of the Code relating to employee
benefit plans and, to the knowledge of any of the Stockholders, GS LP, CERA Inc.
or CERA LP, no event, transaction or condition has occurred or exists that could
result in any such liability to CERA Inc. or CERA LP or, following the Closing,
the Parent or any of its Affiliates. All contributions and premiums required to
have been paid by CERA Inc. to any CERA Plan under the terms of any such CERA
Plan or its related trust, insurance contract or other funding arrangement, or
pursuant to any applicable law (including ERISA and the Code) or collective
bargaining agreement have been paid when due and, and to the extent not yet due,
have been properly and adequately reflected on the CERA Financial Statements.
(e) Each of the CERA Plans has been operated and administered in all
respects in compliance with its terms and all applicable laws except for any
failure so to comply that, individually and in the aggregate, has not had and
would not reasonably be expected to have or result in a CERA Material Adverse
Effect. There are no material pending or, to the knowledge of any of the
Stockholders, GS LP, CERA LP or CERA Inc., threatened claims by or on behalf of
any of the CERA Plans, by any current or former director, officer or employee of
CERA Inc. or CERA LP or otherwise involving any such CERA Plan or the assets of
any CERA Plan (other than routine claims for benefits, all of which have been
fully reserved for on the CERA Financial Statements).
(f) The consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits or the acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of or accrued on behalf of any
current or former director, officer or employee of CERA Inc. or CERA LP or
entitle any such director, officer or employee to any severance or similar
compensation or benefits.
2.1.17. Brokers. There is no agreement that obligates any party to
pay any broker's or finder's fee or commission or similar compensation to any
Person acting on behalf of the Stockholders, GS LP, CERA Inc. or CERA LP with
respect to any sale of CERA Inc., of CERA LP, the assets of CERA Inc. and/or
CERA LP or any equity interest or part-
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nership interest in either of them, other than to Wm. Sword & Co. and Mr. Edward
Jordan, whose fees shall be paid in accordance with Sections 8.2 and 5.5(i)(b),
respectively.
2.1.18. Clients. Except as set forth in Section 2.1.18 of the CERA
Disclosure Letter, no client of the business conducted by CERA Inc. and CERA LP
and required to be listed in Section 2.1.8(a) of the CERA Disclosure Letter has
given notice to CERA LP, CERA Inc. or any Founding Stockholder to cancel or
otherwise terminate or reduce, or, to the knowledge of any of the Stockholders,
GS LP, CERA LP or CERA Inc., threatened to cancel, terminate or reduce, a
material portion of its agreements or relationships with CERA LP or CERA Inc.,
or, to the extent it relates to such business, any Founding Stockholder, and
none of the Stockholders, GS LP, CERA LP or CERA Inc. has any knowledge of any
intention of any such client to do so.
2.2 Representations and Warranties of the Stockholders. Each of the
Stockholders hereby represents and warrants, severally but not jointly, to MGI,
the Parent and Merger Sub on the date hereof that the representations and
warranties contained in this Section 2.2 are true and correct as of the date
hereof, except as set forth in the section of the CERA Disclosure Letter that
corresponds to the subsection of this Agreement in respect of which such
exception is being made.
2.2.1. Authorization. Such Stockholder has the capacity to execute
and deliver this Agreement and the other agreements and instruments to be
entered into in connection herewith to which such Stockholder is or will be a
party, to perform such Stockholder's obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby to be consummated by
it. This Agreement has been duly executed and delivered by such Stockholder and
this Agreement constitutes and, when executed, such other agreements and
instruments to which such Stockholder is or will be a party will constitute,
valid and binding obligations of such Stockholder, enforceable against such
Stockholder in accordance with their respective terms. All Consents required to
authorize such Stockholder's execution of this Agreement and such other
agreements and instruments have been obtained.
2.2.2. No Violations; Consents and Approvals. Except as set forth in
Section 2.2.2 of the CERA Disclosure Letter, the execution, delivery and
performance by such Stockholder of this Agreement and the other agreements and
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instruments to be entered into by such Stockholder in connection herewith, and
the consummation of the transactions contemplated hereby and thereby to be
consummated by such Stockholder, do not and will not, with or without the giving
of notice or the lapse of time or both: (a) violate any statute, ordinance,
rule, regulation or Order of any court or of any Governmental Authority
applicable to such Stockholder, or by which such Stockholder's properties or
assets may be bound; (b) require such Stockholder to obtain the consent of any
Governmental Authority or any other Person or (c) result in a violation or
breach of, conflict with, or constitute a default (or give rise to any right of
termination, cancellation, payment or acceleration) under, any of the terms of
any note, agreement, contract, license, lease or other instrument or obligation
to which such Stockholder is a party or by which such Stockholder or its
properties or assets may be bound.
2.2.3. Ownership. As of the date hereof, such Stockholder owns,
beneficially and of record, all of the outstanding shares of CERA Common Stock
listed in Section 2.2.3 of the CERA Disclosure Letter as being owned by such
Stockholder (it being understood that, in the case of a Stockholder that is a
trust, such Stockholder shall not be required to list in such Section 2.2.3 the
grantor or the beneficiaries of such trust), free and clear of any Liens, and as
of the Closing Date, all of such shares of CERA Common Stock will be owned,
beneficially and of record, by such Stockholder, free and clear of any Liens.
Upon the CERA Stock Exchange, the Parent will acquire good and valid title to
all of the shares of CERA Common Stock exchanged by such Stockholder, free and
clear of any Liens.
2.3 Additional Representations and Warranties of GS LP. GS LP hereby
represents and warrants to MGI, the Parent and Merger Sub and each of the
Stockholders on the date hereof that the representations and warranties
contained in this Section 2.3 are true and correct as of the date hereof.
2.3.1. Existence and Good Standing; Power and Authority. GS LP is a
limited partnership duly formed, validly existing and in good standing under the
laws of the State of Delaware. There is no bankruptcy, reorganization or similar
proceeding pending against GS LP or any of its partners. GS LP has all necessary
partnership power and authority to execute and deliver this Agreement and the
other agreements and instruments to be entered into in connection herewith to
which GS LP is or will be a party, to
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perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby to be consummated by it. The
execution, delivery and performance by GS LP of this Agreement and the other
agreements and instruments to be entered into in connection herewith to which GS
LP is or will be a party, and the consummation of the transactions contemplated
hereby and thereby to be consummated by it, have been duly authorized and
approved by all necessary partnership action of GS LP. This Agreement has been
duly executed and delivered by GS LP, and this Agreement constitutes and, when
executed, such other agreements and instruments to which GS LP is or will be a
party will constitute, valid and binding obligations of GS LP, enforceable
against it in accordance with their respective terms. All Consents required to
authorize GS LP's execution of this Agreement and such other agreements and
instruments have been obtained.
2.3.2. No Violations; Consents and Approvals. The execution,
delivery and performance by GS LP of this Agreement and the other agreements and
instruments to be entered into in connection herewith to which GS LP is or will
be a party and the consummation of the transactions contemplated hereby and
thereby to be consummated by it do not and will not, with or without the giving
of notice or the lapse of time or both: (a) violate, conflict with, or result in
a breach or default under any provision of the limited partnership agreement or
other Organizational Documents of GS LP; (b) violate any statute, ordinance,
rule, regulation or Order of any court or of any Governmental Authority
applicable to GS LP or by which any of its properties or assets may be bound;
(c) require GS LP to obtain any Governmental Authority or any other Person; or
(d) result in a violation or breach of, conflict with, or constitute a default
(or give rise to any right of termination, cancellation, payment or
acceleration) under, any of the terms of any note, agreement, contract, license,
lease or other instrument or obligation to which GS LP is a party or by which it
or any of its properties or assets may be bound.
2.3.3. Ownership. As of the date hereof, GS LP owns, beneficially
and of record, the GS Partnership Interests, and as of the Closing Date, GS LP
will own, beneficially and of record, the portion of the GS Partnership
Interests not purchased by CERA Inc. as part of the CERA Cash Distribution, in
each case free and clear of any Liens. Upon the CERA Cash Distribution, CERA
Inc. will acquire good and valid title and all right and interest in
and to the
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portion of the GS Partnership Interest to be transferred to CERA Inc.
in the CERA Cash Distribution, free and clear of any Liens, and upon the GS
Partnership Interest Exchange, the Parent will acquire good and valid title and
all right and interest in and to the portion of the GS Partnership Interest
being transferred by GS LP in the GS Partnership Interest Exchange, free and
clear of any Liens.
2.4 Representations and Warranties of MGI. MGI hereby represents and
warrants to the Stockholders and GS LP on the date hereof that the
representations and warranties contained in this Section 2.4 are true and
correct as of the date hereof, except to the extent that any such representation
and warranty is expressly stated herein to be as of a date other than the date
hereof, in which case such representation and warranty is true and correct as of
such date, and in each case except as set forth in the section of the disclosure
letter delivered by MGI to CERA Inc. and GS LP on or before the date of this
Agreement (the "MGI Disclosure Letter") that corresponds to the subsection of
this Agreement in respect of which such exception is being made.
2.4.1. Authorization. MGI and each other MCM Company has all
requisite corporate power and authority to execute and deliver this Agreement
and the other agreements and instruments to be entered into by it in connection
herewith, as applicable, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby to be consummated
by it. The execution, delivery and performance by MGI or any other MCM Company
of this Agreement and the other agreements and instruments to be executed or
delivered by it in connection herewith to which MGI or such other MCM Company is
or will be a party, and the consummation of the transactions contemplated hereby
and thereby to be consummated by MGI or such other MCM Company, other than any
financing that may be necessary or appropriate in connection with such
consummation, have been duly authorized and approved by all necessary corporate
action of MGI or such other MCM Company, as the case may be. This Agreement has
been duly executed and delivered by MGI and this Agreement constitutes and, when
executed, such other agreements and instruments to be executed or delivered by
it or the applicable MCM Company in connection herewith to which MGI or any
other MCM Company is or will be a party will constitute, valid and binding
obligations of MGI or such other MCM Company, as the case may be, enforceable
against MGI and such other MCM Company, as applicable, in accordance with their
respective terms. All Consents required to authorize execution by MGI and each
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such other MCM Company, as applicable, of this Agreement and such other
agreements and instruments to which MGI or any other MCM Company is or will be a
party, as applicable, have been obtained.
2.4.2. No Violations; Consents and Approvals. Except as set forth in
Section 2.4.2 of the MGI Disclosure Letter, the execution, delivery and
performance by MGI of this Agreement and the execution, delivery and performance
by MGI or any other MCM Company, as the case may be, of the other agreements and
instruments to be entered into by MGI or such other MCM Company, as applicable,
in connection herewith, and the consummation of the transactions contemplated
hereby and thereby to be consummated by it, do not and will not, with or without
the giving of notice or the lapse of time or both: (a) violate, conflict with or
result in a breach or default under any provision of the Organizational
Documents of any MCM Company; (b) violate any statute, ordinance, rule,
regulation or Order of any court or of any Governmental Authority applicable to
any MCM Company, or by which any of its properties or assets may be bound; (c)
require any MCM Company to obtain the Consent of any Governmental Authority or
any other Person; or (d) result in a violation or breach of, conflict with,
constitute a default (or give rise to any right of termination, cancellation,
payment or acceleration) under, or result in the creation of any Lien upon any
of the properties or assets of any MCM Company under, any of the terms of any
note, agreement, contract, license, lease or other instrument or obligation to
which any MCM Company is a party, or by which any MCM Company or its properties
or assets may be bound.
2.4.3. Ownership. As of the date hereof, (i) The Clayton & Dubilier
Private Equity Fund IV Limited Partnership, a Connecticut limited partnership
("Fund IV"), owns, beneficially and of record, all of the outstanding shares of
MGI Common Stock listed in Section 2.4.3 of the MGI Disclosure Letter as being
owned by Fund IV, free and clear of any Liens, and as of the Closing Date, all
of such shares of MGI Common Stock will be owned, beneficially and of record, by
Fund IV, free and clear of any Liens, and (ii) each stockholder of MGI owns of
record all of the outstanding shares of MGI Common Stock listed in Section 2.4.3
of the MGI Disclosure Letter as being owned by such MGI stockholder.
2.4.4. Existence and Good Standing. MGI is a corporation duly
organized, validly existing and in good
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standing under the laws of the State of Delaware. There is no bankruptcy,
reorganization or similar proceeding pending against any of the MCM Companies.
MCM is a corporation duly organized, validly existing and in good standing under
the laws of the State of New York. Each of the MCM Companies is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, formation or organization (as the case may be), has all necessary
corporate power and authority to own, lease or license the property owned or
used by it, and to conduct its business as and in the places where its business
is now being conducted. Section 2.4.4(ii) of the MGI Disclosure Letter sets
forth a description (including the name of each party thereto and of each
written agreement relating thereto or, if no such written agreement exists, a
description of the material terms thereof) of each joint venture or partnership,
or similar agreement or arrangement involving a sharing of profits or expenses
during the year ended December 31, 1996 in excess of $10,000 in the case of any
such agreement or arrangement or $25,000 in the aggregate in the case of all
such agreements or arrangements, to which any MCM Company is a party or by which
any of them may be bound. Each MCM Company is duly qualified or licensed to do
business and is in good standing in each of the jurisdictions in which the
nature of its business or the properties owned or leased by it makes such
qualification or licensing necessary, except for such jurisdictions where the
failure to so qualify or be licensed does not have and would not reasonably be
expected to have an MGI Material Adverse Effect.
2.4.5. Capitalization; Ownership. (a) The authorized capital stock
of MGI consists of (i) 500,000 shares of MGI Class A Common Stock, of which
330,000 shares are issued and outstanding as of the date hereof, (ii) 60,000
shares of MGI Class B Common Stock, of which no shares are issued and
outstanding as of the date hereof and (iii) 80,000 shares of MGI Class C Common
Stock, of which 17,400 shares are issued and outstanding as of the date hereof.
All of the outstanding shares of MGI Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
(b) Section 2.4.5(b) of the MGI Disclosure Letter sets forth a
complete and correct (i) list of all members of the MCM Group other than MGI and
(ii) description of the authorized stock or other equity interests of each
member of the MCM Group (other than MGI) and the amount of such stock or other
equity interests that are issued and outstanding as of the date hereof. All of
such outstanding shares of stock
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or other equity interests of each member of the MCM Group (other than MGI) have
been duly authorized and validly issued and are fully paid and nonassessable.
All of such outstanding shares of capital stock or other equity interests of
each member of the MCM Group (other than MGI) are owned, beneficially and of
record, by the Person listed in Section 2.4.5(b) of the MGI Disclosure Letter as
being the owner of such shares or other equity interests. None of the MCM
Companies holds, beneficially or of record, any capital stock or other equity
interests of any Person that is not an MCM Company, except for publicly traded
equity securities not exceeding 10% of the outstanding equity securities of such
Person or in connection with short-term instruments or cash management.
(c) Other than as set forth in the Registration and Participation
Agreement and as set forth in Section 2.4.5(c) of the MGI Disclosure Letter,
there are no preemptive or similar rights with respect to the MGI Common Stock
or any other equity securities of any MCM Company. Except for this Agreement and
the Existing MGI Options, no (i) subscriptions, options, warrants, conversion or
other rights, agreements, commitments, arrangements or understandings of any
kind obligating any MCM Company to issue or sell any shares of capital stock of
any MCM Company or any other equity interests therein or (ii) securities
convertible into or exchangeable for any such shares or interests are
outstanding, and no authorization therefor has been given. Section 2.4.3 of the
MGI Disclosure Letter sets forth, as of the date hereof, a correct and complete
list of all holders of Existing MGI Options, setting forth with respect to each
such holder (x) the number and class of shares of MGI Common Stock subject to
the Existing MGI Options held by such holder and (y) the exercise price of the
Existing MGI Options held by such holder. Except for the MGI Management Stock
Subscription Agreements, there are no outstanding contractual obligations of any
MCM Company to repurchase, redeem or otherwise acquire any MGI Common Stock or
any other equity securities of any MCM Company.
2.4.6. Financial Statements. MGI has delivered to the Founding
Stockholders and GS LP complete and correct copies of the audited consolidated
financial statements of the MCM Group as at and for the fiscal years ended
December 31, 1996, 1995 and 1994, together with the respective opinions thereon
of KPMG Peat Marwick LLP, the independent public accountants of the MCM Group
for 1995 and 1994, respectively, and of Coopers & Lybrand LLP, the independent
public accountants of the MCM Group for 1996, and
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the unaudited consolidated financial statements of the MCM Group as at and for
the three-month period ended March 31, 1997, including in each case a balance
sheet, a statement of income, a statement of stockholders' equity and a
statement of cash flows, and, in the case of such audited consolidated financial
statements, accompanying notes (the "MGI Financial Statements").
The MGI Financial Statements present fairly in all material respects
the financial position of the MCM Group as at the respective dates or for the
respective periods thereof, and have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods presented in the MGI
Financial Statements subject, in the case of interim unaudited MGI Financial
Statements, only to normal recurring year-end adjustments and the absence of
notes. The books and records of the MCM Companies have been maintained in the
ordinary course of business.
2.4.7. Absence of Undisclosed Liabilities. The MCM Companies have no
liabilities or obligations of any nature, whether known, unknown, absolute,
accrued, contingent or otherwise and whether due or to become due, except (a) as
set forth in Section 2.4.7 of the MGI Disclosure Letter, (b) as and to the
extent disclosed or reserved against in the unaudited balance sheet of the MCM
Companies, dated March 31, 1997, that has been delivered to the Parent, the
Founding Stockholders and GS LP, or specifically disclosed in the notes thereto,
(c) for liabilities and obligations that are incurred in the ordinary course of
business after the date of such balance sheet, are consistent with past
practices and are not prohibited by this Agreement, (d) for liabilities and
obligations that are expressly contemplated by this Agreement and (e) for
liabilities and obligations that, individually or in the aggregate, are not and
would not reasonably be expected to have an MGI Material Adverse Effect.
2.4.8. Absence of Changes. Since March 31, 1997, except as set forth
in Section 2.4.8 of the MGI Disclosure Letter or except as expressly
contemplated by this Agreement, the businesses of the MCM Companies have been
conducted in the ordinary course consistent with past practices and the MCM
Companies have not: (a) suffered any MGI Material Adverse Effect, (b) modified
or amended any material term of any material agreement, contract or commitment
attached as an Exhibit to this Agreement or listed in Section 2.4.11 of the MGI
Disclosure Letter or (c) entered into any transaction other than in the ordinary
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course of business consistent with past practices. Since March 31, 1997, except
as set forth in Section 2.4.8 of the MGI Disclosure Letter, except as expressly
contemplated by this Agreement or, as of the Closing Date with respect to
matters occurring on or after the date hereof, except in compliance with the
provisions of Section 3.2.1 or 3.2.2, (i) neither MGI, MCM nor MCM Asia Pacific
Co., Ltd. has authorized, declared or paid or made any dividend or other
distribution in respect of its capital stock or purchased, redeemed, issued or
transferred or agreed to purchase, redeem, issue or transfer, directly or
indirectly, any shares of its capital stock, warrants, options or other rights
to acquire any such shares or securities convertible into or exchangeable for
any such shares, (ii) no MCM Company has (x) incurred any indebtedness for
borrowed money, guaranteed any such indebtedness, issued or sold any debt
securities or guaranteed any debt securities of others or (y) entered into or
amended any employment, retention, severance, change in control or similar
agreement or arrangement of the type described in Section 2.4.11(d) (taking into
account the dollar thresholds set forth in such subsection) with any current or
former director, officer, stockholder or employee of any MCM Company, other that
in the ordinary course of business consistent with past practices, (iii) neither
MGI nor any other MCM Company has (A) established or amended any material
employee compensation or benefit plan or practice maintained for the benefit of,
or (B) paid or accrued any bonus or deferred compensation for or in respect of,
any current or former director, officer, stockholder or employee of MGI or any
other MCM Company, in the case of clause (A), other than in the ordinary course
of business consistent with past practices, (iv) no MCM Company has entered into
any agreement, contract or commitment (other than this Agreement) for the sale
of MGI, MCM, the assets of MGI or MCM or any equity interests in MGI or MCM, or
the sale of any other MCM Company that is material to the MCM Companies taken as
a whole, the assets of any such MCM Company or any equity interests in any such
MCM Company, and (v) none of the applicable MCM Companies has taken any action
or omitted to take any action (or committed to take any action or omit to take
any action) that would result in the occurrence of any of the foregoing.
2.4.9. Taxes. (a) Filing of Returns and Payment of Taxes. Except as
set forth in Section 2.4.9(a) of the MGI Disclosure Letter, all material Returns
required to be filed by or on behalf of any MCM Company ("MCM Returns") on or
before the Closing Date have (or by the Closing Date will have) been duly and
timely filed, and none of the MCM Com-
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panies is currently the beneficiary of any extension of time within which to
file any MCM Return. Except for Taxes set forth in Section 2.4.9(a) of the MGI
Disclosure Letter, which are being contested in good faith and by appropriate
proceedings or which can be paid without interest or penalties, the following
Taxes (collectively, "MCM Taxes") have (or by the Closing Date will have) been
duly and timely paid: (i) all Taxes shown to be due on the MCM Returns and (ii)
all material Taxes due and payable on or before the Closing Date that are or may
become payable by any MCM Company or chargeable as a Lien upon the assets
thereof (whether or not shown on any Return). Except as set forth in Section
2.4.9(a) of the MGI Disclosure Letter, all material Employment and Withholding
Taxes required to be paid or withheld by or on behalf of any MCM Company or for
which any MCM Company is or may become liable ("MCM Employment and Withholding
Taxes") have been either duly and timely paid to the proper Governmental
Authority or properly set aside in accounts for such purpose.
(b) Extensions, etc. Except as set forth in Section 2.4.9(b) of the
MGI Disclosure Letter, no written agreement or other document extending, or
having the effect of extending, the period of assessment or collection of any
MCM Taxes or MCM Employment and Withholding Taxes, and no power of attorney with
respect to any such Taxes, has been executed or filed with the IRS or any other
taxing authority.
(c) Tax Filing Groups; Income Tax Jurisdictions. Except as set forth
in Section 2.4.9(c) of the MGI Disclosure Letter, none of the MCM Companies is
or has been a member of any affiliated, consolidated, combined or unitary group
for purposes of filing Returns or paying Taxes at any time since July 1, 1993.
Set forth in Section 2.4.9(c) of the MGI Disclosure Letter are all countries,
states, provinces, cities or other jurisdictions in which any MCM Company
currently files or has filed an Income Tax Return within the last three years.
(d) Copies of Returns; Audits, etc. MGI has (or by the Closing Date
will have) delivered to the Founding Stockholders and GS LP complete and
accurate copies of all MCM Returns with respect to federal consolidated Income
Taxes and separate state Income Taxes for all periods beginning on or after July
1, 1993 that have been filed or will be required to be filed (after giving
effect to all valid extensions of time for filing) on or before the Closing
Date. Except as set forth in Section 2.4.9(d) of
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the MGI Disclosure Letter, (i) no MCM Taxes or MCM Employment and Withholding
Taxes have been asserted by any Governmental Authority since January 1, 1994 to
be due, (ii) no revenue agent's report or written assessment for Taxes has been
issued by any Governmental Authority in the course of any audit that has been
completed since July 1, 1993 with respect to MCM Taxes or MCM Employment and
Withholding Taxes and (iii) no issue has been raised by any Governmental
Authority in the course of any audit that has not been completed with respect to
MCM Taxes or MCM Employment and Withholding Taxes, which issue has been raised
in a writing that has been received by any of the MCM Companies. Except as set
forth in Section 2.4.9(d) of the MGI Disclosure Letter, no Return is currently
under audit by any other taxing authority, and no Employment and Withholding
Taxes are currently under audit by any taxing authority. Except as set forth in
Section 2.4.9(d) of the MGI Disclosure Letter, neither the IRS nor any other
taxing authority is now asserting in writing against any of the MCM Companies
any deficiency or claim for additional Taxes or Employment and Withholding Taxes
or any adjustment of Taxes or Employment and Withholding Taxes.
(e) Section 1445(a) of the Code. No amount will be required to be
deducted or withheld pursuant to section 1445(a) of the Code in connection with
the Merger.
(f) Tax Sharing Agreements. Except as set forth in Section 2.4.9(f)
of the MGI Disclosure Letter, none of the MCM Companies is a party to or bound
by or has any obligation under any Tax sharing agreement or arrangement.
(g) Disclosure. Each subsection of Section 2.4.9 of the MGI
Disclosure Letter sets forth, for each relevant item set forth in such
subsection thereof, the name of the MCM Company, the taxing jurisdiction, the
type of Tax and the taxable period or periods involved.
2.4.10. Properties and Assets. (a) Except insofar as would not have,
or reasonably be expected to have, an MGI Material Adverse Effect, each MCM
Company has good and valid title to, or otherwise has sufficient and legally
enforceable right to use, all of the properties and assets (real, personal or
mixed, tangible or intangible, including Intellectual Property), used or held
for use in connection with, necessary for the conduct of, or otherwise material
to, the businesses conducted by it (the "MGI Assets"). The MGI Assets that are
owned by any MCM Company are owned free and clear of any Liens other than (i)
liens
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for Taxes not yet due and payable or that are being contested in good faith and
by appropriate proceedings, (ii) statutory liens incurred in the ordinary course
of business that, individually and in the aggregate, have not had and would not
reasonably be expected to have an MGI Material Adverse Effect, and (iii)
encumbrances and easements that do not materially detract from the value or
materially interfere with the use of the properties affected thereby (the
exceptions described in the foregoing clauses (i), (ii) and (iii) being referred
to as "Permitted MCM Liens").
(b) None of the MCM Companies owns any real property. Section
2.4.10(b) of the MGI Disclosure Letter contains a complete and correct list of
all real property leases, subleases and occupancy agreements to which any MCM
Company is a party (each, an "MGI Lease") setting forth the address, landlord
and tenant for each MGI Lease. MGI has delivered to the Founding Stockholders
and GS LP correct and complete copies of the MGI Leases. Except insofar as would
not have, or reasonably be expected to have, an MGI Material Adverse Effect, (i)
each MGI Lease, other than the MGI Lease with respect to MCM's principal offices
in New York, New York, is legal, valid, binding, in full force and effect and
enforceable against the applicable MCM Company and, to the knowledge of MGI,
against the other parties thereto, (ii) the applicable MCM Company is not in
default, violation or breach under any such MGI Lease, and no event has occurred
and is continuing that constitutes or, with notice or the passage of time or
both, would constitute a default, violation or breach under any such MGI Lease,
and (iii) each such MGI Lease grants the tenant under such MGI Lease the right
to use and occupy the premises and rights demised and intended to be demised
thereunder, which right is sufficient for the purposes for which such premises
and rights are or are contemplated to be used or occupied by such tenant. The
MGI Lease with respect to MCM's principal offices in New York, New York (the
"MCM Headquarters Lease") is legal, valid, binding, in full force and effect and
enforceable against MCM and, to the knowledge of MGI, the other parties thereto.
MCM is not in default, violation or breach in any material respect under the MCM
Headquarters Lease, and no event has occurred and is continuing that constitutes
or, with notice or the passage of time or both, would constitute a default,
violation or breach under the MCM Headquarters Lease that would reasonably be
expected to have an MGI Material Adverse Effect. The MCM Headquarters Lease
grants the tenant thereunder the right to use and occupy the premises and rights
demised and intended to be demised thereunder, which right is sufficient for the
purposes for
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which such premises and rights are or are contemplated to be used or occupied by
such tenant.
2.4.11. Contracts. Section 2.4.11 of the MGI Disclosure Letter sets
forth a correct and complete list, as of the date hereof, of all agreements,
contracts and commitments (including the names of each party thereto), or, in
the case of clause (b) below, of all customers party to all agreements,
contracts and commitments, of the following types (taking into account any
specified dollar thresholds) to which any MCM Company is a party or by or
pursuant to which any MCM Company is bound or is receiving (or will receive)
payments or other benefits even if not a party to such agreement: (a) all
contracts with vendor distribution firms, including any oral arrangements
relating thereto or extensions thereof, (b) each customer party to any contract
or group of contracts, including any oral arrangements relating thereto or
extensions thereof, with respect to which customer any MCM Company expects, as
of the date hereof, to receive, during the year ending December 31, 1997,
revenues in excess of $200,000 in the aggregate, (c) loan agreements and other
agreements relating to indebtedness for borrowed money, promissory notes, bonds,
guaranties, letters of credit, credit facilities, mortgages, security
agreements, pledge agreements, deferred purchase price agreements, sale and
leaseback agreements or similar agreements, (d) (i) employment, consulting and
agency agreements or arrangements involving, during the twelve-month period
ended March 31, 1997, accruals (for financial reporting purposes) by any MCM
Company in excess of $25,000 with respect to any particular such agreement or
arrangement, other than any employment or consulting agreement or arrangement
involving accruals during such period of less than $90,000 that is terminable at
will or subject to such limitations on termination as may be imposed by
Applicable Law, by the applicable employer or entity being provided with
consulting services, without the payment of any amount in excess of such amount
as may be required by Applicable Law, or (ii) severance, retention, bonus,
change in control and other similar agreements or arrangements involving, during
the twelve-month period ended March 31, 1997 (or reasonably expected as of the
date hereof to involve in any calendar year commencing on or after January 1,
1997), accruals (for financial reporting purposes) by any MCM Company in excess
of $25,000 with respect to any particular such agreement or arrangement or in
excess of $100,000 with respect to all such agreements and arrangements in the
aggregate, (e) any contracts or other documents that on or after the Closing
Date substantially limit or will limit the
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freedom of any MCM Company to compete in any line of business and (f) any other
contract or commitment that is material to any MCM Company or its business or
not made in the ordinary course of business. Neither the applicable MCM Company
nor, to the knowledge of MGI, any other party, is in breach or default in any
material respect under any of the agreements, contracts or commitments set forth
in Section 2.4.11 of the MGI Disclosure Letter and, except as set forth in
Section 2.4.11 of the MGI Disclosure Letter, there exists no event or condition
(including the Transactions) which has resulted or would result in a material
breach or default thereunder upon the giving of notice, the passage of time or
both. All the agreements, contracts and commitments set forth in Section 2.4.11
of the MGI Disclosure Letter are legal, valid, binding, in full force and effect
and enforceable against the applicable MCM Company, except for such agreements,
contracts and commitments as would not reasonably be expected to result in an
MGI Material Adverse Effect.
2.4.12. Intellectual Property. (a) Schedule of Intellectual
Property. Section 2.4.12(a) of the MGI Disclosure Letter sets forth a correct
and complete list of all of the material trade or service marks, registered
copyrights and all other material Intellectual Property (other than unregistered
copyrights) used or held for use in connection with, necessary for the conduct
of, or otherwise material to the business and operations of the MCM Companies
(the "MGI Intellectual Property") and sets forth the owner and nature of the
interest of the applicable MCM Company therein. All of the material copyrights
used or held for use in connection with, necessary for the conduct of, or
otherwise material to the business and operations of the MCM Companies have been
duly registered. Section 2.4.12(a) of the MGI Disclosure Letter sets forth a
correct and complete list of all material licenses, sublicenses or other similar
material agreements (including any amendments thereto) to which any MCM Company
is a party by which it is bound or under which it receives any benefits,
relating to any MGI Intellectual Property (the "MCM Licenses"). Each MCM License
is legal, valid, binding, in full force and effect and enforceable against the
MCM Company party thereto, and neither such MCM Company nor, to the knowledge of
MGI, any other party thereto is in breach or default in any material respect
under any MCM License and there exists no event or condition (including the
Transactions) which has resulted or would result in a material breach or default
thereunder upon the giving of notice, the passage of time or both. Except as set
forth in Section 2.4.12(a) of the MGI Disclosure
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Letter, the applicable MCM Company has and immediately after the Closing will
have the legal right to use the MGI Intellectual Property in connection with the
business as currently conducted or contemplated to be conducted by the MCM
Companies.
(b) No Infringement, etc. Except as disclosed in Section 2.4.12(b)
of the MGI Disclosure Letter, the business and operations of the MCM Companies
as currently conducted do not infringe or otherwise conflict with any rights of
any Person in respect of any Intellectual Property, and none of the MCM
Companies has received notice or has actual knowledge of any such infringement
or conflict, except such infringements and conflicts as, individually and in the
aggregate, have not had and would not reasonably be expected to have an MGI
Material Adverse Effect. To the knowledge of MGI, none of the MGI Intellectual
Property owned by any MCM Company is being materially infringed or, other than
pursuant to license agreements in the ordinary course of business, otherwise
materially used or available for use by any Person other than the MCM Companies.
No MGI Intellectual Property owned by any MCM Company is subject to any
outstanding Order or agreement restricting the use thereof by any MCM Company
with respect to its business or restricting the licensing thereof by the MCM
Companies to any Person. Each trademark, trade dress or service mark and any
registration or application therefor, mask work, copyright registration or
application therefor included in any MGI Intellectual Property owned by any MCM
Company is in proper form and has been properly maintained in all material
respects and has otherwise been duly registered with, filed in or issued by, as
the case may be, the United States Patent and Trademark Office, the United
States Copyright Office or such other applicable filing offices, domestic or
foreign, and the applicable MCM Company has taken reasonable actions to ensure
protection under any applicable laws, and such registrations, filings, issuances
and other actions remain in full force and effect. Except as set forth in
Section 2.4.12(b) of the MGI Disclosure Letter, none of the MCM Companies has
entered into any agreement to indemnify any other Person against any charge of
infringement, dilution or violation of Intellectual Property rights, other than
pursuant to any such agreements entered into in connection with the use of
commercially available information systems applications.
2.4.13. Insurance. Set forth in Section 2.4.13 of the MGI Disclosure
Letter is a complete and correct list of all of the insurance policies,
including, without limi-
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tation, key man insurance policies, which are maintained for the benefit of any
MCM Company or with respect to the businesses conducted by the MCM Companies,
the MGI Assets or both, together with a description with respect to each policy
of the amount and types of coverage, limits and deductibles, inception and
expiration dates and insurance carrier. MGI has made available to the Founding
Stockholders and GS LP complete and correct copies of all such policies together
with all riders and amendments thereto. Such policies are in full force and
effect and all premiums due thereon have been paid. Such policies, with respect
to their amounts and types of coverage and limitations as to deductibles and
self-insured retentions, are, to the knowledge of MGI, adequate and customary to
insure against risks to which the MCM Companies or the MGI Assets are normally
exposed in the operation of the businesses conducted by the MCM Companies.
2.4.14. Litigation. Except as set forth in Section 2.4.14 of the MGI
Disclosure Letter, there is no Litigation by or before any governmental or other
instrumentality or agency, pending (in the case of pending investigations only,
to the knowledge of MGI, and in the case of all other pending Litigation,
without regard to knowledge), or, to the knowledge of MGI, threatened, (i)
against or affecting the MCM Companies, the MGI Common Stock, the MGI Assets or
the businesses conducted by the MCM Companies, that would reasonably be expected
to result in liability on the part of the MCM Companies in an amount in excess
of $100,000 in the aggregate or (ii) seeking to prevent or challenging the
transactions contemplated by this Agreement. There are no outstanding Orders
issued by any federal, state or local governmental authority, agency, board,
commission, judicial, regulatory or administrative body, to which any MCM
Company is a party or against any MCM Company, or that, to the knowledge of MGI,
have or would reasonably be expected to have an MGI Material Adverse Effect.
2.4.15. Compliance with Laws and Other Instruments. The MCM
Companies have at all times operated their respective businesses in compliance
with all laws, ordinances, rules and regulations (including all Environmental
Laws and the respective Organizational Documents of each of the MCM Companies)
and Orders applicable to any MCM Company, such business, any of the MGI Assets
or the use, ownership and operation thereof, except to the extent that failures
to be in such compliance would not, individually or in the aggregate, reasonably
be expected to
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result in an MGI Material Adverse Effect.
2.4.16. Affiliate Relationships. Except as set forth in Section
2.4.16 of the MGI Disclosure Letter and other than the Fund IV Indemnification
Agreement, the CD&R Consulting Agreement and agreements listed in Section
2.4.11(d) of the MGI Disclosure Letter, none of the MCM Companies has entered
into any agreement, arrangement or other commitment or transaction with any
Affiliate (other than another MCM Company) which involved, during the
twelve-month period ended March 31, 1997 (or is reasonably expected, during the
calendar year ending December 31, 1998, to involve) payments or receipts in
excess of $25,000 in any individual case or, in the aggregate, $100,000.
2.4.17. Information in Registration Statement and Offer Documents.
None of the information supplied by any MCM Company regarding any MCM Company
for inclusion or incorporation by reference in the Registration Statement or
Offer Documents will, in the case of the Registration Statement, at the date of
the effectiveness of the Registration Statement, and, in the case of the Offer
Documents, at the date such materials are mailed to the holders of MGI Common
Stock, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
2.4.18. Employees, Labor Matters, etc. None of the MCM Companies is
a party to or bound by any collective bargaining or other labor agreement, and
there are no labor unions or similar organizations representing, or, to the
knowledge of MGI, purporting to represent or attempting to represent any
employees employed by any MCM Companies. Since June 30, 1994, there has not
occurred or, to the knowledge of MGI, been threatened any slowdown, work
stoppage, concerted refusal to work overtime or other similar labor activity
with respect to any employees of any MCM Company, in any such case, that has had
or would reasonably be expected to have or result in an MGI Material Adverse
Effect, or a material change in their relations with employees. There are no
material labor disputes currently subject to any grievance procedure,
arbitration or litigation and there is no representation petition pending or, to
the knowledge of MGI, threatened with respect to any employee of any MCM
Company. The MCM Companies have complied with all applicable laws pertaining to
the employment or termination of employment of their respective employees
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except for any failure so to comply that, individually and in the aggregate,
have not had and would not reasonably be expected to have or result in an MGI
Material Adverse Effect.
2.4.19. ERISA. (a) Section 2.4.19(a) of the MGI Disclosure Letter
sets forth a complete and correct list of each "employee benefit plan," as such
term is defined in section 3(3) of ERISA, and each bonus, incentive or deferred
compensation, severance, termination, retention, change of control,
equity-based, performance or other employee or retiree benefit or compensation
plan, program, arrangement, agreement, policy or understanding, whether written
or unwritten, maintained, sponsored or contributed to or established by any MCM
Company or with respect to which any MCM Company is obligated to contribute or
is a party (collectively, the "MGI Plans"). With respect to each MGI Plan, MGI
has provided the Founding Stockholders and GS LP complete and correct copies of
(i) such MGI Plan, if written or a description of such MGI Plan if not written
and (ii) to the extent applicable to such MGI Plan, all trust agreements,
insurance contracts or other funding agreements or arrangements, the most recent
actuarial and trust reports, the most recent Form 5500 required to have been
filed with the IRS and all schedules thereto, the most recent IRS determination
letter, all current summary plan descriptions, and any and all amendments to any
such document.
(b) Except as disclosed in Section 2.4.19(b) of the MGI Disclosure
Letter, each MGI Plan intended to be qualified under section 401(a) of the Code,
and the trust (if any) forming a part thereof, has received a favorable
determination letter from the IRS as to its qualification under the Code and to
the effect that each such trust is exempt from taxation under section 501(a) of
the Code, and nothing has occurred since the date of such determination letter
that could reasonably be expected to adversely affect such qualification or
tax-exempt status.
(c) No MGI Plan is (i) subject to section 412 of the Code or section
302 or Title IV of ERISA, (ii) a "multiemployer plan" within the meaning of
section 4001(a) of ERISA or (iii) a "multiple employer plan" within the meaning
of section 4064 of ERISA.
(d) None of the MCM Companies has incurred (either directly or
indirectly, including as a result of an indemnification obligation) any material
liability under or pursuant to Title I or IV of ERISA or the penalty, excise
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Tax or joint and several liability provisions of the Code relating to employee
benefit plans and, to the knowledge of MGI, no event, transaction or condition
has occurred or exists that could result in any such liability to any of the MCM
Companies or, following the Closing, the Parent or any of its Affiliates. All
contributions and premiums required to have been paid by any MCM Company to any
MGI Plan under the terms of any such MGI Plan or its related trust, insurance
contract or other funding arrangement, or pursuant to any applicable law
(including ERISA and the Code) or collective bargaining agreement have been paid
when due, and to the extent not yet due, have been properly and adequately
reflected on the MGI Financial Statements.
(e) Each of the MGI Plans has been operated and administered in all
respects in compliance with its terms and all applicable laws except for any
failure so to comply that, individually and in the aggregate, has not had and
would not reasonably be expected to have or result in an MGI Material Adverse
Effect. There are no material pending or, to the knowledge of MGI, threatened
claims by or on behalf of any of the MGI Plans, by any current or former
director, officer or employee of any MCM Company or otherwise involving any such
MGI Plan or the assets of any MGI Plan (other than routine claims for benefits,
all of which have been fully reserved for on the MGI Financial Statements).
(f) The consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits or the acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of or accrued on behalf of any
current or former director, officer or employee of MGI or entitle any such
director, officer or employee to any severance or similar compensation or
benefits.
2.4.20. Brokers. There is no agreement that obligates any party to
pay any broker's or finder's fee or commission or similar compensation to any
Person acting on behalf of MGI or MCM with respect to any sale of CERA Inc.,
CERA LP, the assets of CERA Inc. and/or CERA LP or any equity interest or
partnership interest in either of them, other than to Goldman, Sachs & Co. and
Brera Capital Partners, LLC, whose fees shall be paid in accordance with
Sections 8.2 and 5.5(i)(a), respectively.
2.4.21. Vendor Distribution Firms and Customers. Except as set forth
in Section 2.4.21 of the MGI Disclosure
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Letter, no vendor distribution firm that electronically distributes any of the
financial information provided by any MCM Company, and no customer of any MCM
Company required to be listed in Section 2.4.11(b) of the MGI Disclosure Letter,
has given notice to such MCM Company to cancel or otherwise terminate or reduce,
or, to the knowledge of any MCM Company, threatened to cancel, terminate or
reduce, a material portion of its agreements or relationships with such MCM
Company, and no MCM Company has any knowledge of the intention of any such
vendor distribution firm or such customer to do so.
2.5 Representations and Warranties of MGI, the Parent and Merger
Sub. MGI, the Parent and Merger Sub, jointly and severally, represent and
warrant to the Founding Stockholders and GS LP on the date hereof that the
representations and warranties contained in this Section 2.5 are true and
correct as of the date hereof, except as set forth in the section of the MGI
Disclosure Letter that corresponds to the subsection of this Agreement in
respect of which such exception is being made.
2.5.1. Limited Liability Company Status and Authority of the Parent.
The Parent is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware. The Parent has the
limited liability company power and authority to execute and deliver this
Agreement and the other agreements and instruments to be entered into by it in
connection herewith, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby to be consummated by
it. The execution, delivery and performance of this Agreement and such other
agreements and instruments have been duly authorized by all necessary limited
liability company action on the part of the Parent other than in respect of the
issuance of LLC Units, any financing that may be necessary or appropriate in
connection with the Transactions, and in respect of the authorization of the
filing of the Registration Statement. This Agreement has been duly executed and
delivered by the Parent and this Agreement constitutes and, when executed, such
other agreements and instruments to which the Parent is or will be a party will
constitute valid and binding obligations of the Parent, enforceable against the
Parent in accordance with their respective terms.
2.5.2. Ownership and Status of Parent. As of the date hereof, all of
the limited liability company interests in the Parent are owned and held,
beneficially and of
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record, and prior to the Closing will be owned and held, beneficially and of
record, by MGI and MCM. As of the date hereof, there are no preemptive or
similar rights, and prior to the Closing there will be no such rights, with
respect to the limited liability company interests in the Parent or the LLC
Units representing such interests. Except for this Agreement, as of the date
hereof, there are not, and prior to the Closing there will not be, any (i)
subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind obligating the Parent to
issue or sell any LLC Units or any other equity interests therein or (ii)
outstanding securities convertible into or exchangeable for any LLC Units or
such equity interests. Since the date of its formation, the Parent has not (i)
acquired any assets, (ii) undertaken any liabilities or obligations, (iii)
engaged in any activities or (iv) become a party to any agreement, commitment,
arrangement or understanding with any Person, in each case except for this
Agreement and the documents and instruments executed and delivered, or to be
executed and delivered, by the Parent in connection herewith or the transactions
contemplated hereby and thereby.
2.5.3. Corporate Status, Ownership and Authority of Merger Sub.
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. All of the outstanding shares
of capital stock of Merger Sub have been duly authorized and validly issued and
are fully paid and non-assessable. Merger Sub has the corporate power and
authority to execute and deliver this Agreement and the other agreements and
instruments to be entered into by it in connection herewith to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby to be consummated by it. The execution, delivery
and performance of this Agreement and such other agreements and instruments have
been duly authorized by all necessary corporate action on the part of Merger
Sub. This Agreement has been duly executed and delivered by Merger Sub and this
Agreement constitutes and, when executed, such other agreements and
instruments to which Merger Sub is or will be a party will constitute, valid and
binding obligations of Merger Sub, enforceable against Merger Sub in accordance
with their respective terms. Since the date of its incorporation, the Merger Sub
has not (i) acquired any assets, (ii) undertaken any liabilities or obligations,
(iii) engaged in any activities or (iv) become a party to any agreement,
commitment, arrangement or understanding with any Person, in each case except
for this Agreement and the documents and
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instruments executed and delivered, or to be executed and delivered, by the
Merger Sub in connection herewith or the transactions contemplated hereby and
thereby.
2.5.4. No Violations; Consents and Approvals. The execution,
delivery and performance by the Parent and Merger Sub of this Agreement and the
other agreements and instruments to be entered into by them in connection
herewith and the consummation of the transactions contemplated hereby and
thereby to be consummated by them do not and will not result in (i) any
violation of the Organizational Documents of the Parent or Merger Sub, (ii) any
breach or violation of Applicable Law applicable to the Parent or Merger Sub or
(iii) any breach or violation of or default under any agreement or other
instrument to which the Parent or Merger Sub is a party or by which the Parent,
Merger Sub or any of their respect the properties or assets is bound, except, in
the case of clauses (ii) and (iii), for such breaches, violations or defaults
that would not reasonably be expected to have a material adverse effect on the
ability of the Parent or Merger Sub to consummate the Merger and the other
transactions contemplated hereby. Except as set forth in Section 2.5.4 of the
MGI Disclosure Letter, no Governmental Approval or other Consent is required to
be obtained or made by the Parent or Merger Sub in connection with the execution
and delivery of this Agreement and the other agreements and instruments to be
entered into by either of them in connection herewith or the consummation by the
Parent and Merger Sub of the transactions contemplated hereby or thereby.
2.5.5. Information in Registration Statement and Offer Documents.
The Registration Statement (or any amendment thereof), at the date of its
effectiveness, and the Offer Documents (and any amendment or supplement thereto)
at the date that they are mailed to the holders of MGI Common Stock, the holders
of CERA Common Stock and the holders of partnership interests in CERA LP, will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made with respect to statements
made therein based on information supplied by or on behalf of MGI, the
Stockholders, GS LP, CERA LP or CERA Inc. for inclusion or incorporation by
reference in the Registration Statement or the Offer Documents. The Registration
Statement will comply as to form in all material respects with
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the provisions of the Securities Act and the rules and regulations thereunder.
2.5.6. Brokers. There is no agreement that obligates any party to
pay any broker's or finder's fee or commission or similar compensation to any
Person acting on behalf of the Parent or Merger Sub with respect to any sale of
CERA Inc., CERA LP, the assets of CERA Inc. and/or CERA LP or any equity
interest or partnership interest in either of them.
ARTICLE III
COVENANTS
3.1 Covenants of the Stockholders.
3.1.1. Conduct of Business. From the date hereof to the Closing
Date, except as expressly contemplated by this Agreement or the transactions
contemplated hereby, as described in Section 3.1.1 of the CERA Disclosure Letter
or as consented to by MGI, the Stockholders and GS LP will cause CERA Inc. and
CERA LP to:
(a) carry on their respective businesses in the ordinary course
consistent with past practices, and use all commercially reasonable
efforts to preserve intact their respective present business
organizations, keep available the services of their officers and key
employees and preserve their relationships with clients and others having
material business dealings with either of them, except to the extent that
the failure to do so would not, and would not reasonably be expected to,
result in a CERA Material Change;
(b) in the case of CERA Inc., not amend its articles of
incorporation, by-laws or other Organizational Documents, and, in the case
of CERA LP, not amend its certificate of limited partnership, limited
partnership agreement or other Organizational Documents;
(c) (x) not declare, set aside or pay any dividends on, or make any
other distributions in respect of, any shares of its capital stock in the
case of CERA Inc. and any of its partnership interests in the case of CERA
LP, or otherwise make any payments to the Stockholders, GS LP or the
present or future employees
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of (including individuals who are parties to consulting agreements or
arrangements with) CERA Inc. or CERA LP, other than (i) as expressly
provided in this Agreement, (ii) pursuant to the CERA Cash Distribution,
(iii) the payment to such employees of CERA Inc. or CERA LP, in their
capacities as such, of their respective base salaries (or, with respect to
consultants, base compensation) and other benefits and expense
reimbursements (but expressly excluding bonuses and other incentive
compensation), in each such case, in the ordinary course of business
consistent with past practices, provided that CERA Inc. and CERA LP shall
be entitled to increase such base salaries or base compensation and/or
other benefits and expense reimbursements, in an amount not to exceed
$20,000 in the case of any individual or $750,000 in the aggregate, (iv)
(A) cash bonuses to such employees of CERA Inc. or CERA LP in an aggregate
amount not to exceed $3.9 million or (B) signing bonuses in an amount in
the case of any individual not to exceed $50,000 and (v) dividends and
other distributions, in an aggregate amount not to exceed $50,000, by CERA
LP to CERA Inc. to enable CERA Inc. to pay its liabilities and (vi)
dividends and other distributions in an aggregate amount not to exceed the
sum of $195,800 and 44% of the amount of CERA LP's taxable income for the
period July 1, 1997 through the Closing Date to allow the partners of CERA
LP (or, in the case of CERA Inc., the shareholders of CERA Inc.) to pay
their tax liabilities with respect to the taxable income of CERA LP or (y)
not, other than pursuant to the CERA Cash Distribution, purchase, redeem
or otherwise acquire any shares of capital stock of CERA Inc. or
partnership interests in CERA LP or any other securities thereof or any
rights, warrants or options to acquire any such shares, partnership
interests or other securities;
(d) not issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of the capital stock of CERA Inc., partnership
interests in CERA LP or other securities (including, without limitation,
any rights, warrants or options to acquire any securities);
(e) other than the CERA Distribution Loan and borrowings in the
ordinary course of business under the $1,750,000 line of credit extended
to CERA LP by Cambridge Trust Company (as in effect on the date hereof),
not incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any
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debt securities or guarantee any debt securities of others, or make any
loans, advances or capital contributions to, or investments in, any other
Person;
(f) not acquire or agree to acquire, by merging or consolidating
with, by purchasing a substantial portion of the assets of or equity in,
or by any other manner, any business or any corporation, partnership,
company, association or other business organization or division thereof;
(g) not make or incur any capital expenditure or expenditures which,
individually, is in excess of $100,000 or, in the aggregate, are in excess
of $300,000;
(h) (i) not enter into or amend any employment or consulting
agreement or arrangement providing for cash compensation in excess of
$125,000 per year or any retention, severance, change in control or
similar agreement or arrangement with, (ii) not establish or amend any
employee or consultant compensation or benefit plan or practice that is
material to CERA Inc. and CERA LP, taken as a whole, and maintained for
the benefit of, and (iii) other than as permitted under clause (x) of
paragraph (c) of this Section 3.1.1, not pay or accrue any bonus or
deferred compensation for or in respect of, any current, former or future
director, officer or employee of or, in the case of an individual,
consultant to CERA Inc. or CERA LP, in each case in any material respect,
and in the case of clauses (i) and (ii), other than in the ordinary course
of business consistent with past practices, and other than any such
amendment to a CERA Plan that is made to maintain the qualified status of
such CERA Plan or its continued compliance with Applicable Law;
(i) not make any change in accounting practices or policies applied
in the preparation of their respective financial statements except as
required by GAAP;
(j) other than as may be permitted pursuant to Section 3.1.1(h)(i)
in respect of the employment or, in the case of any consulting agreement
or arrangement to which an individual is a party, consulting agreements or
arrangements of the type described in Section 2.1.8(c)(i), (x) not modify
in any material respect any of the agreements, contracts or commitments
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set forth in Section 2.1.8 of the CERA Disclosure Letter (other than
agreements, contracts and commitments with the clients listed in Section
2.1.8(a) of the CERA Disclosure Letter) or (y) not enter into any
agreement, contract or commitment of the type (taking into account any
dollar threshold set forth in Section 2.1.8) that would have been required
to be listed in Section 2.1.8 of the CERA Disclosure Letter (other than
any nonexclusive agreement, contract or commitment with a client that does
not provide for contingent transaction fees) if in existence on the date
hereof, in each case other than in the ordinary course of business
consistent with past practices, provided, that CERA Inc. and CERA LP shall
be entitled to enter into, outside of the ordinary course of business,
agreements, contracts and commitments of the type described in this clause
(y), after consultation with the Chairman of MGI, if entering into such
agreements, contracts and commitments, individually and in the aggregate,
would not, and would not reasonably be expected to, result in a CERA
Material Change; and
(k) not agree or commit to do any of the foregoing referred to in
clauses (a) through (j) of this Section 3.1.1.
3.1.2. CERA Cash Distribution. (a) Each of the Stockholders hereby
agrees to cause CERA Inc. to apply the proceeds from the CERA Distribution Loan,
immediately upon the receipt thereof, to pay the CERA Cash Distribution.
(b) Each of the Stockholders, on behalf of themselves and each of
their affiliates, agents, legal representatives, attorneys, trustees,
predecessors and assigns, hereby (i) releases and forever discharges CERA Inc.
and its subsidiaries, parent entities, affiliates, officers, directors,
employees, stockholders, agents, attorneys, trustees and assigns, from any and
all actions, causes of action, suits, covenants, contracts, agreements, damages,
claims, liabilities and demands of any nature whatsoever, including without
limitation any action pursuant to Section 45 or
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Section 61 of Chapter 156B of the Massachusetts General Laws, arising out of or
related to the CERA Cash Distribution or the CERA Distribution Loan, and (ii)
agrees that they will not commence or prosecute any action or proceeding against
CERA Inc. and its subsidiaries, parent entities, affiliates, officers,
directors, employees, stockholders, agents, attorneys, trustees and assigns,
including without limitation any action pursuant to Section 45 or Section 61 of
Chapter 156B of the Massachusetts General Laws, that concerns the CERA Cash
Distribution or the CERA Distribution Loan.
3.1.3. Access and Information. From the date hereof to the Closing
Date, the Stockholders will, and will cause CERA Inc. and CERA LP to, give to
MGI, the Parent and Merger Sub and MGI's, the Parent's and Merger Sub's
accountants, counsel and other representatives reasonable access during normal
business hours to such of CERA Inc.'s and CERA LP's offices, properties, books,
contracts, commitments, reports and records relating to CERA Inc. or CERA LP,
and to furnish them or provide them with access to all such documents, financial
data, records and information with respect to the properties and businesses of
CERA Inc. or CERA LP, as MGI or the Parent shall from time to time reasonably
request. In addition, from the date hereof to the Closing Date, the Stockholders
will, and will cause CERA Inc. and CERA LP to, permit MGI, the Parent or Merger
Sub and MGI's, the Parent's or Merger Sub's accountants, counsel and other
representatives reasonable access to such personnel of CERA Inc. and CERA LP
during normal business hours as may be reasonably requested by MGI, the Parent
or Merger Sub in its review of the properties of CERA Inc. and CERA LP, the
business affairs of CERA Inc. and CERA LP and the above-mentioned documents and
records.
3.1.4. Financial Information. From the date hereof to the Closing
Date, the Stockholders will cause CERA LP to make available to MGI, the Parent
and Merger Sub, promptly after the same become available, copies of such monthly
management reports, if any, for CERA LP as may be furnished to senior management
of CERA LP, together with such monthly financial statements as may be furnished
to such management.
3.1.5. No Solicitation. From the date hereof to the earlier of the
Closing and the termination of this Agreement, none of the Stockholders, any of
their Affiliates or any Person acting on their behalf shall (i) solicit,
initiate or encourage any inquiries or proposals for, or enter into any
discussions with respect to, the sale of CERA Inc., CERA LP, the assets of CERA
Inc. and/or CERA LP, any equity interest in CERA Inc. or any partnership
interest in CERA LP (any such inquiry or proposal, a "CERA Acquisition
Transaction") or (ii) furnish or cause to be furnished any non-public
information concerning CERA Inc. or CERA LP to any Person (other than MGI, the
Parent, GS LP and their respective representatives, and the professional
advisors to
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CERA LP, CERA Inc., the Stockholders and GS LP) in connection with any such
inquiries or proposals. The Stockholders shall promptly notify MGI of any
inquiry or proposal received by the Stockholders or any of their Affiliates with
respect to any such CERA Acquisition Transaction and will keep MGI fully
informed of the nature, details and status of any such inquiry or proposal.
3.1.6. FIRPTA Affidavits. Each Stockholder shall deliver to MGI and
CERA Inc. an affidavit, as contemplated under and meeting the requirements of
section 1.1445-2(b)(2)(i) of the Treasury Regulations, to the effect that such
Stockholder is not a "foreign person" within the meaning of the Code and
applicable Treasury Regulations.
3.2 Covenants of MGI.
3.2.1. Conduct of Business. From the date hereof to the Closing
Date, except as expressly contemplated by this Agreement or the transactions
contemplated hereby, as described in Section 3.2.1 of the MGI Disclosure Letter
or as consented to by the Founding Stockholders, MGI will, and will cause each
of the MCM Companies to:
(a) carry on their respective businesses in the ordinary course
consistent with past practices, and use all commercially reasonable
efforts to preserve intact their respective present business
organizations, keep available the services of their officers and key
employees and preserve their relationships with clients and others having
material business dealings with them, except to the extent that failure to
do so would not, and would not reasonably be expected to, result in an MGI
Material Change;
(b) in the case of MGI, not amend its certificate of incorporation,
by-laws or other Organizational Documents;
(c) with respect to MGI only, (x) not declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of its
capital stock, or (y) other than pursuant to any MGI Management Stock
Subscription Agreement or any agreement governing any Existing MGI Option,
not purchase, redeem or otherwise acquire any shares of capital stock of
MGI or any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
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(d) other than pursuant to any agreement governing any Existing MGI
Option, not issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of the capital stock of MGI or other securities (including,
without limitation, any rights, warrants or options to acquire any
securities) of MGI;
(e) other than amounts to be borrowed by MCM in connection with the
CERA Distribution Loan and the other transactions contemplated hereby and
other than indebtedness to any other MCM Company, not incur any
indebtedness for borrowed money or guarantee any such indebtedness or
issue or sell any debt securities or guarantee any debt securities of
others;
(f) not acquire or agree to acquire, by merging or consolidating
with, by purchasing a substantial portion of the assets of or equity in or
by any other manner, any business or any corporation, partnership,
company, association or other business organization or division thereof;
(g) not make or incur any capital expenditure or expenditures which,
individually, is in excess of $100,000 or, in the aggregate, are in excess
of $300,000;
(h) not make any change in accounting practices or policies applied
in the preparation of their respective financial statements except as
required by GAAP;
(i) (x) not modify in any material respect any of the agreements,
contracts or commitments set forth in Section 2.4.11 of the MGI Disclosure
Letter (other than the agreements, contracts or commitments with customers
listed in Section 2.4.11(b) of the MGI Disclosure Letter), and (y) not
enter into any agreement, contract or commitment of the type (taking into
account any dollar threshold set forth in Section 2.4.11) that
would have been required to be listed on Section 2.4.11 of the MGI
Disclosure Letter (other than any agreement, contract or commitment with a
customer) if in existence on the date hereof, in each case other than in
the ordinary course of business consistent with past practices, provided,
that an MCM Company shall be entitled to enter into, outside of the
ordinary course of business, agreements, contracts and commitments of the
type described in this clause (y), after consultation
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with Mr. Yergin, if entering into such agreements, contracts and
commitments, individually and in the aggregate, would not, and would not
reasonably be expected to, result in an MGI Material Change; and
(j) not agree or commit to do any of the foregoing referred to in
clauses (a) through (i) of this Section 3.2.1.
3.2.2. CERA Distribution Loan. Subject to obtaining the financing
set forth in Section 3.2.3, MGI hereby agrees to cause MCM to make the CERA
Distribution Loan to CERA Inc., on the day immediately preceding the Closing
Date, pursuant to a loan agreement in form and substance reasonably satisfactory
to MGI and CERA Inc., which shall provide that CERA Inc. will be required to
make cash payments in respect of principal or interest thereunder prior to June
30, 2000 only to the extent such payments are required to be made by the Board
of the Parent.
3.2.3. Financing. MGI shall cause MCM to use its reasonable best
efforts to enter into definitive financing agreements and to do all such acts
and things reasonably necessary to consummate the financing transactions
required to enable MCM to make the CERA Distribution Loan. MGI shall keep the
Founding Stockholders or their representatives fully informed in all material
respects concerning the general status and the terms and conditions of the
financing.
3.2.4. Access and Information. From the date hereof to the Closing
Date, the MCM Companies will give to the Founding Stockholders, GS LP, CERA Inc.
and CERA LP and the Stockholders', GS LP's, CERA Inc.'s and CERA LP's
accountants, counsel and other representatives reasonable access during normal
business hours to such of the MCM Companies' offices, properties, books,
contracts, commitments, reports and records relating to the MCM Companies, and
to furnish them or provide them with access to all such documents, financial
data, records and information with respect to the properties and businesses of
the MCM Companies, as the Founding Stockholders or GS LP shall from time to time
reasonably request. In addition, from the date hereof to the Closing Date, the
MCM Companies will permit the Stockholders, GS LP, CERA Inc. or CERA LP and the
Stockholders', GS LP's, CERA Inc.'s or CERA LP's accountants, counsel and other
representatives reasonable access to such personnel of the MCM Companies during
normal business hours as may be reasonably requested by the Stockholders or GS
LP
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in their review of the properties of the MCM Companies, the business affairs
of the MCM Companies and the above-mentioned documents and records.
3.2.5. Financial Information. From the date hereof to the Closing
Date, MGI will make available to the Founding Stockholders, promptly after the
same become available, copies of such monthly reports, if any, for MGI as may be
furnished to senior management of MGI, together with such monthly financial
statements as may be furnished to such management.
3.2.6. FIRPTA Certification. MGI shall deliver a certificate to the
Parent, dated no more than 30 days prior to the Closing Date and signed by a
responsible officer of MGI, that MGI is not, and has not been at any time since
its incorporation, a United States real property holding company, as defined in
section 897(c)(2) of the Code.
3.2.7. No Solicitation. From the date hereof to the earlier of the
Closing and the termination of this Agreement, neither MGI nor any of its
Affiliates or any Person acting on its behalf shall (i) solicit, initiate or
encourage any inquiries or proposals for, or enter into any discussions with
respect to, the sale of MGI, MCM or any other MCM Company material to the MCM
Companies, taken as a whole, the assets of MGI, MCM and/or any MCM Company or,
other than pursuant to the Existing MGI Options, any equity interest in MGI, MCM
or any such other MCM Company (any such inquiry or proposal, an "MGI Acquisition
Transaction") or (ii) furnish or cause to be furnished any non-public
information concerning the MCM Companies to any Person (other than CERA Inc.,
CERA LP, the Stockholders, GS LP and their respective representatives, and the
professional advisors to MGI, the Parent and the Merger Sub) in connection with
any such inquiries or proposals. MGI shall promptly notify the Founding
Stockholders of any inquiry or proposal received by MGI or any of its Affiliates
with respect to any such MGI Acquisition Transaction and will keep the Founding
Stockholders fully informed of the nature, details and status of any such
inquiry or proposal.
3.3 Covenants of GS LP.
3.3.1. No Solicitation. From the date hereof to the earlier of the
Closing and the termination of this Agreement, none of GS LP, any of its
Affiliates or any Person acting on their behalf shall (i) solicit, initiate or
encourage any inquiries or proposals for, or enter into any
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discussions with respect to, any CERA Acquisition Transaction or (ii) furnish or
cause to be furnished any non-public information concerning CERA Inc. or CERA LP
to any Person (other than MGI, the Parent and their respective representatives)
in connection with any such inquiries or proposals. GS LP shall promptly notify
MGI of any inquiry or proposal received by it or any of its Affiliates with
respect to any such CERA Acquisition Transaction and will keep MGI fully
informed of the nature, details and status of any such inquiry or proposal.
3.3.2. FIRPTA Affidavit. GS LP shall deliver to MGI and CERA Inc. an
affidavit, as contemplated under and meeting the requirements of section
1.1445-2(b)(2)(i) of the Treasury Regulations, to the effect that it is not a
"foreign person" within the meaning of the Code and applicable Treasury
Regulations.
3.3.3. Consent and Waiver. By its execution hereof, GS LP
unconditionally and irrevocably (i) consents to the execution and delivery by
each of the Stockholders of this Agreement and each document and instrument
(each, an "Ancillary Document") to be executed or delivered by such Stockholder
in connection herewith, the performance by each of the Stockholders of their
obligations hereunder and thereunder, and the consummation by all parties
hereto, CERA Inc. and CERA LP of the transactions contemplated hereby and
thereby, and (ii) waives, and agrees not to exercise, any and all rights it has,
had or may have, pursuant to or under, or by reason of or in connection with,
(A) the GS Purchase Agreement, (B) the Existing Partnership Agreement, (C) the
CERA Stockholders Agreement or (D) any other document or instrument, other than
the GS Advisory Agreement, executed or delivered in connection with the
acquisition by GS LP of the GS Partnership Interest, in each case including,
without limitation, any and all rights thereunder to consent or object to,
exercise pre-emptive, first refusal, repurchase or any other similar rights with
respect to or receive notices or notifications in respect of, (x) the
performance by the Stockholders of their obligations hereunder or under any
Ancillary Document, (y) the Closing or (z) the consummation of any of the
transactions contemplated hereby or by any Ancillary Document; provided that the
provisions of this Section 3.3.3 shall become null and void, and shall have no
further force or effect, upon (and in the event of) termination of this
Agreement prior to the Closing.
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3.4 Additional Agreements.
3.4.1. Confidentiality. (a) Termination of Existing Confidentiality
Agreements. (i) All parties hereto hereby agree that the letter agreement, dated
December 6, 1996, entered into with Wm. Sword & Co. Incorporated ("Sword"), in
Sword's capacity as financial advisor to CERA Inc., by Clayton, Dubilier & Rice,
Inc. ("CD&R"), on behalf of the MCM Companies, is hereby terminated effective as
of the date hereof.
(ii) All parties hereto hereby agree that (x) the letter agreement,
dated April 2, 1997, entered into with MCM by Sword, on behalf of CERA Inc., and
(y) the letter agreement, dated as of November 6, 1996, entered into with CD&R
by Sword, in Sword's capacity as financial advisor to CERA Inc., on behalf of
CERA Inc., are hereby terminated effective as of the date hereof.
(iii) None of the parties hereto or their Affiliates shall have any
further rights, obligations or liabilities thereunder or under any other
agreement entered into with Sword prior to the date hereof other than the
engagement letters between CERA and Sword, dated as of July 1, 1993, September
13, 1993 and January 25, 1995 (as such letters may be amended, modified,
supplemented or waived).
(iv) All parties hereto agree to use commercially reasonable efforts
to cause CERA Inc., MCM, CD&R and Sword to acknowledge and agree to the
termination of the agreements described in this Section 3.4.1 as being
terminated effective as of the date hereof.
(b) Confidentiality. Except as otherwise provided in this Agreement,
(x) the Stockholders, GS LP, CERA Inc. and CERA LP, will, and will cause their
Representatives to, keep confidential, and not use except in connection with
this Agreement and the transactions contemplated hereby, all information which,
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prior to the date hereof, has been or, from and after the date hereof, is
furnished to any of them by the MCM Companies or any of their Representatives,
or to which the Stockholders, GS LP, CERA Inc. or CERA LP, prior to the date
hereof, have been or, from and after the date hereof, are given access, that in
any way relates to the business of any of the MCM Companies and (y) MGI will,
and will cause its Representatives to, keep confidential, and not use except in
connection with this Agreement and the transactions contemplated hereby, all
information which, prior to the date hereof, has been or, from and after the
date hereof, is furnished to MGI or its Representatives, or to which MGI or its
Representatives, prior to the date hereof, have been or, from and after the date
hereof, are given access, that in any way relates to the business of CERA Inc.
or CERA LP. The provisions of this Section 3.4.1(b) shall not apply to the
disclosure or use by the Stockholders, GS LP, CERA Inc., CERA LP or their
respective Representatives, on the one hand, and MGI or its Representatives, on
the other hand, of any information, documents or materials (i) which are or
become generally available to the public other than as a result of a disclosure
by the receiving party or any Affiliate or Representative of the receiving party
in violation of this Section 3.4.1, (ii) received from a third party on a
non-confidential basis from a source other than the providing party or its
Representatives, which source, to the knowledge of the receiving party after due
inquiry, is not prohibited from disclosing such information to the receiving
party by a legal, contractual or fiduciary obligation to the providing party,
(iii) required by Applicable Law to be disclosed by such party, or (iv)
necessary to establish such party's rights under this Agreement or any related
agreement, provided that, in the case of clauses (iii) and (iv), the Person
intending to make disclosure of confidential information will promptly notify in
writing the party to whom it is obliged to keep such information confidential
and, to the extent practicable, provide such party a reasonable opportunity to
prevent public disclosure of such information or, if appropriate, waive
compliance with the terms of this Section 3.4.1.
(c) The agreements and undertakings of the Stockholders, GS LP, CERA
Inc. and CERA LP, on the one hand, and MGI, on the other hand, set forth in
Section 3.4.1(b) shall (x) continue until the earlier of (i) five years from the
date hereof or (ii) the Closing and (y) survive the termination of this
Agreement.
3.4.2. Registration Statement. (a) Each of the parties hereto shall,
and shall cause their respective Subsidiaries, controlled Affiliates, directors,
officers, employees and representatives to, assist the Parent in the preparation
and filing of the Registration Statement and furnish the Parent with all
information in their possession concerning CERA Inc., CERA LP, the Stockholders,
GS LP and the MCM Companies required for use in the Registration Statement,
including, without limitation, such financial statements as may be required to
be included in the Regis-
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tration Statement or that are necessary to prepare pro forma financial
statements and other information to be included in the Registration Statement.
If, at any time on or prior to the Closing Date, any event with respect to the
Stockholders, GS LP, CERA Inc., CERA LP, the MCM Companies or any of their
respective Affiliates should occur which is required to be described in an
amendment of or supplement to the Registration Statement, the party or parties
hereto that are familiar with such event shall provide the Parent with a
description of such event that is sufficient to enable the Parent or its
representatives to prepare such amendment or supplement and shall otherwise
assist the Parent in the preparation and filing of such amendment or supplement.
(b) Subject to the performance of the covenants set forth in Section
3.4.2(a), the Parent shall prepare the Registration Statement (or cause it to be
prepared), shall file it with the SEC promptly after the date hereof, shall use
its commercially reasonable efforts to cause it to be declared effective and to
remain effective through the Closing Date and, if at any time on or prior to the
Closing Date, any event with respect to the Stockholders, GS LP, CERA Inc., CERA
LP, the MCM Companies or any of their respective Affiliates shall occur which is
required to be described in an amendment of or supplement to the Registration
Statement, shall prepare such amendment or supplement (or cause it to be
prepared) and promptly file it with the SEC.
3.4.3. Public Announcements. From the date hereof to the Closing
Date, except as required by Applicable Law, each of the parties hereto shall
not, and shall not permit any of their Affiliates or representatives to, make
any public announcement in respect of this Agreement or the transactions
contemplated hereby without the prior consent of MGI and the Founding
Stockholders; provided that this Section 3.4.3 shall not apply to any oral
disclosures to be made to, or discussions to be held with, officers and
employees of CERA LP or CERA Inc., on the one hand, or of any member of the MCM
Group, on the other hand, by Representatives of CERA LP, CERA Inc. or any of the
Stockholders, or by Representatives of any member of the MCM Group, as the case
may be, and that CERA LP, CERA Inc. or any of the Stockholders, on the one hand,
and any member of the MCM Group, on the other hand, shall obtain the prior
consent of MGI or the Founding Stockholders, as applicable, for the use of any
written communications that are to be presented or distributed to such officers
and employees.
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3.4.4. Further Actions. (a) Generally. Each of the parties hereto
agrees to use its, his or her commercially reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated hereby.
(b) Filings; Consents. Each of the parties hereto shall, as promptly
as practicable, (i) file or supply, or cause to be filed or supplied, all
applications, notifications and information, including but not limited to
filings pursuant to the HSR Act, required to be filed or supplied by or on
behalf of it, him or her or any of its, his or her Affiliates pursuant to
Applicable Law and (ii) use its, his or her commercially reasonable efforts to
obtain, or cause to be obtained, all other Consents that may be required to be
obtained or made by it, in each case in connection with this Agreement, the
Transactions, the Registration Statement or the consummation of the other
transactions contemplated hereby.
(c) Other Actions. Each of the parties hereto shall use its, his or
her commercially reasonable efforts to take, or cause to be taken, all other
actions necessary, proper or advisable in order to fulfill its, his or her
obligations in respect of this Agreement and the transactions contemplated
hereby. Each of the parties hereto will coordinate and cooperate with the other
parties hereto in providing such information and supplying such reasonable
assistance as may be reasonably requested by any of them in connection with the
consummation of the transactions contemplated hereby.
(d) Notice of Certain Events. From the date hereof to the Closing
Date, each of the Stockholders and GS LP, on the one hand, shall promptly notify
MGI, and MGI, the Parent and Merger Sub, on the other, shall promptly notify the
Founding Stockholders, of:
(i) any fact, condition, event or occurrence known to any of them
that will or reasonably may be expected to result in the failure of any of
the conditions contained in Article IV to be satisfied; and
(ii) any actions, suits, claims, investigations or proceedings
commenced or, to the knowledge of the Stockholders, CERA Inc., CERA LP or
GS LP, on the one hand, or MGI, any other MCM Company, the Parent or
Merger Sub, on the other, threatened against, relating
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to or involving or otherwise affecting CERA Inc. or CERA LP, on the one
hand, or the MCM Companies, on the other, or any of their respective
Affiliates which, if pending on the date of this Agreement, would have
been required to have been disclosed pursuant to Section 2.1.11 or Section
2.4.14, as applicable, or that relate to the consummation of the
transactions contemplated by this Agreement.
3.4.5. Tax Affairs. Through the Closing Date, the MCM Companies, on
the one hand, and the Stockholders, on the other, shall, and in the case of the
Stockholders, shall cause each of CERA LP and CERA Inc. to, conduct all Tax
affairs relating to the MCM Companies or CERA LP and CERA Inc., as the case may
be, only in the ordinary course, in substantially the same manner as heretofore
conducted and in good faith in substantially the same manner as such affairs
would have been conducted if this Agreement had not been entered into.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Obligations of Each Party. The obligations of MGI,
the Parent and Merger Sub to effect the Merger and to consummate the other
transactions contemplated hereby, the obligations of the Stockholders and the
Parent to engage in the CERA Stock Exchange and to consummate the other
transactions contemplated hereby and the obligations of GS LP and the Parent to
engage in the GS Partnership Interest Exchange and to consummate the other
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions:
4.1.1. HSR Act Notification. In respect of the notifications of MGI,
on the one hand, and CERA Inc., on the other hand, pursuant to the HSR Act, the
applicable waiting period and any extensions thereof shall have expired or been
terminated.
4.1.2. Other Governmental Approvals. All other Governmental
Approvals required to be made or obtained by any party hereto or any of their
respective Affiliates in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby shall have
been made or obtained, other than, in the case of any Governmental Approval
solely in connection with the CERA
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Roll-up, where the failure to make or obtain any such Governmental Approval
would not have and would not reasonably be expected to have a CERA Material
Adverse Effect.
4.1.3. No Injunction, etc. Consummation of the transactions
contemplated hereby shall not have been restrained, enjoined or otherwise
prohibited by any Applicable Law, including any Order of any court or other
Governmental Authority (except, in the case of any such prohibition solely
because of the CERA Roll-up, for any such prohibition that would not, and would
not reasonably be expected to, have a CERA Material Adverse Effect), no action
or proceeding brought by any Governmental Authority shall be pending on the
Closing Date before any court or other Governmental Authority to restrain,
enjoin or otherwise prevent the consummation of the transactions contemplated
hereby, no court or other Governmental Authority shall have determined any
Applicable Law making illegal the consummation of the transactions contemplated
hereby to be applicable to this Agreement and no proceeding brought by any
Governmental Authority with respect to the application of any such Applicable
Law shall be pending.
4.1.4. Registration Statement. The Registration Statement shall have
been declared effective, no stop order suspending the effectiveness of the
Registration Statement shall have been entered and no proceedings for that
purpose shall have been initiated by the SEC.
4.1.5. Certain Distributions. The CERA Distribution Loan and the
CERA Cash Distribution shall have been made.
4.1.6. LLC Agreement. The LLC Agreement, substantially in the form
of Exhibit I hereto, shall have been executed and delivered by all parties
hereto other than the Parent or Merger Sub.
4.2 Conditions to Obligations of MGI, the Parent and Merger Sub. The
obligations of MGI, the Parent and Merger Sub to effect the Merger and to
consummate the other transactions contemplated hereby and the obligations of the
Parent to engage in the CERA Stock Exchange and the GS Partnership Interest
Exchange shall be subject to the fulfillment (or waiver by MGI), at or prior to
the Closing Date, of the following additional conditions:
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4.2.1. Representations, Performance, etc. (a) The representations
and warranties set forth in Sections 2.1, 2.2 and 2.3 (i) shall have been true
and correct at and as of the date hereof, provided that if any such
representation and warranty shall not have been true and correct at and as of
the date hereof, the Stockholders and GS LP, upon written notice (which shall
identify such representation and warranty and describe the respect in which it
shall not have been so true and correct) to MGI delivered not later than three
Business Days prior to the scheduled Closing Date, shall have until 30 days
after the date on which the Closing would otherwise have been required to occur
pursuant to Section 1.1.2 (without taking into account this proviso) to cure
such breach in all respects in the case of any representation and warranty
qualified by material adverse effect, and in any other case, to cure such breach
in all material respects, or otherwise in a manner reasonably satisfactory to
MGI; (ii) in the case of Section 2.1, shall be true and correct at and as of the
Closing Date as though made at and as of the Closing Date, except where the
aggregate effect of the failure of such representations and warranties to be
true and correct has not had and would not reasonably be expected to have a CERA
Material Adverse Effect; and (iii) in the case of Sections 2.2 and 2.3, shall be
true and correct in all material respects at and as of the Closing Date as
though made at and as of the Closing Date; provided in each case that the
accuracy of any specific representation or warranty that by its terms speaks
only as of the date hereof or another date prior to the Closing Date shall be
determined solely as of the date hereof or such other date, as the case may be.
The Stockholders and GS LP shall have duly performed and complied in all
material respects with all agreements and conditions required by this Agreement
to be performed or complied with by them prior to or on the Closing Date.
(b) The Stockholders and GS LP shall have delivered to MGI, the
Parent and Merger Sub a certificate or certificates, dated the Closing Date and
signed by each of them, with respect to the conditions set forth in Section
4.2.1(a) and 4.2.2.
4.2.2. Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall have occurred or come to exist
since the date hereof that, individually or in the aggregate, has had or
resulted in, or would be reasonably likely to have or result in, a CERA Material
Adverse Effect.
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4.2.3. Employment Agreements. Each of the Founding Stockholders
shall have executed and delivered an employment agreement (each, an "Employment
Agreement"), substantially in the form of Exhibit J hereto.
4.2.4. Consulting and Indemnification Agreements. CERA Inc. shall
have become a party to the CD&R Consulting Agreement and the Fund IV
Indemnification Agreement pursuant to an agreement or agreements in form and
substance reasonably satisfactory to MGI.
4.2.5. Opinions of Counsel. MGI, the Parent and Merger Sub shall
have received favorable opinions, addressed to each of them and dated the
Closing Date and in form and substance reasonably satisfactory to MGI and its
counsel, from (i) Hale and Dorr LLP, special counsel to the Stockholders,
including with respect to certain federal and Massachusetts Tax matters, and
(ii) counsel to GS LP.
4.2.6. FIRPTA Affidavit. MGI shall have received from each
Stockholder and GS LP an affidavit pursuant to Section 3.1.6 and Section 3.3.2.
4.2.7. Consents and Approvals. The Stockholders and GS LP shall have
received all requisite third party consents and approvals to or of the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby listed in Sections 2.1.1(b) or 2.2.2 of the
CERA Disclosure Letter, except, in the case of Section 2.1.1(b), for any
consents or approvals the failure of which to be made or obtained, individually
and in the aggregate, would not have a CERA Material Adverse Effect and would
not adversely affect the ability of any of the Stockholders to perform their
obligations hereunder.
4.2.8. Financing. MGI shall have caused MCM to obtain funds at least
in the amount contemplated in this Agreement to finance the CERA Distribution
Loan, on such terms as are satisfactory to MGI in its reasonable judgment.
4.2.9. CERA Board of Directors. Such directors of CERA Inc. shall
have resigned, and such other persons shall have been appointed as directors of
CERA Inc., such that, effective simultaneously with the Closing, the board of
directors of CERA Inc. shall be the same as the Board of the Parent.
4.2.10. CERA and GS LP Holder Information Forms. Each of the
Stockholders and GS LP shall have executed and
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delivered a CERA Holder Information Form or GS LP Holder Information Form, as
applicable, in accordance with Section 1.1.2(a) and (b).
4.2.11. Copyrights. The Founding Stockholders and CERA Inc. shall
have executed and delivered an agreement, in form and substance satisfactory to
MGI, pursuant to which CERA Inc. shall agree to assign to the applicable
Founding Stockholder(s) the copyrights in any book authored by such Founding
Stockholder(s) in the course of his employment with CERA Inc., and each of the
Founding Stockholders shall agree that CERA Inc. shall receive all of the
economic benefits of all such books.
4.2.12. CERA Organizational Documents. The articles of organization
and the by-laws of CERA Inc. shall be amended, effective immediately upon the
Closing, as necessary to contain the same provisions as contained in the LLC
Agreement in respect of supermajority board voting provisions and board
composition.
4.2.13. Termination of Line of Credit. At or prior to the Closing,
the Stockholders shall cause the $1,750,000 line of credit to CERA LP from
Cambridge Trust Company, as in effect on the date hereof, and any related
agreements, documents, financing statements, instruments or arrangements, to be
terminated and all amounts due and payable thereunder to be paid in full.
4.2.14. Proceedings. All proceedings of the Stockholders, CERA Inc.,
CERA LP and GS LP that are required in connection with the transactions
contemplated by this Agreement, and all documents and instruments incident
thereto, shall be reasonably satisfactory to MGI and its counsel, and MGI and
such counsel shall have received all such documents and instruments, or copies
thereof, certified if requested, as may be reasonably requested.
4.3 Conditions to Obligations of the Stockholders and GS LP. The
obligations of the Stockholders to engage in the CERA Stock Exchange and to
consummate the other transactions contemplated hereby and the obligations of GS
LP to engage in the GS Partnership Interest Exchange and to consummate the other
transactions contemplated hereby shall be subject to the fulfillment (or waiver
by each of the Founding Stockholders), at or prior to the Closing, of the
following additional conditions:
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4.3.1. Representations; Performance. (a) The representations and
warranties set forth in Sections 2.4 and 2.5 (i) shall have been true and
correct at and as of the date hereof, provided that if any such representation
and warranty shall not have been true and correct at and as of the date hereof,
MGI, upon written notice (which shall identify such representation and warranty
and describe the respect in which it shall not have been so true and correct) to
the Founding Stockholders delivered not later than three Business Days prior to
the scheduled Closing Date, shall have until 30 days after the date on which the
Closing would otherwise have been required to occur pursuant to Section 1.1.2
(without taking into account this proviso) to cure such breach in all respects
in the case of any representation and warranty qualified by material adverse
effect, and in any other case, to cure such breach in all material respects, or
otherwise in a manner reasonably satisfactory to the Founding Stockholders; (ii)
in the case of Section 2.4, shall be true and correct at and as of the Closing
Date as though made at and as of the Closing Date, except where the aggregate
effect of the failure of such representations and warranties to be true and
correct has not had and would not reasonably be expected to have an MGI Material
Adverse Effect; and (iii) in the case of Section 2.5, shall be true and correct
in all material respects at and as of the Closing Date as though made at and as
of the Closing Date; provided in each case that the accuracy of any specific
representation or warranty that by its terms speaks only as of the date hereof
or another date prior to the Closing Date shall be determined solely as of the
date hereof or such other date, as the case may be. MGI, the Parent and Merger
Sub shall have duly performed and complied in all material respects with all
agreements and conditions required by this Agreement to be performed or complied
with by them prior to or on the Closing Date.
(b) MGI, the Parent and Merger Sub shall have delivered to the
Stockholders and GS LP a certificate, dated the Closing Date and signed by an
authorized officer of each of MGI, the Parent and Merger Sub, with respect to
the conditions set forth in Section 4.3.1(a) and 4.3.2.
4.3.2. Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall have occurred or come to exist
since the date hereof that, individually or in the aggregate, has had or
resulted in, or would be reasonably likely to have or result in, an MGI Material
Adverse Effect.
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4.3.3. Opinion of Counsel. The Stockholders and GS LP shall have
received favorable opinions, addressed to each of them and dated the Closing
Date and in form and substance reasonably satisfactory to the Founding
Stockholders and their counsel, from (i) the General Counsel of MGI, (ii) from
Debevoise & Plimpton, special counsel to MGI and (iii) from Richards, Layton &
Finger, special Delaware counsel to the Parent.
4.3.4. Consents and Approvals. (a) MGI shall have received all
requisite third party consents and approvals to or of the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby listed in Section 2.4.2 of the MGI Disclosure Letter, except
for any consents or approvals the failure of which to be made or obtained,
individually and in the aggregate, would not have an MGI Material Adverse Effect
and would not adversely affect the ability of MGI to perform its obligations
hereunder.
4.3.5. MGI Board of Directors. Such directors of MGI and MCM shall
have resigned, and such other persons shall have been appointed as directors of
MGI and MCM, such that, effective simultaneously with the Closing, the boards of
directors of MGI and MCM shall be the same as the Board of the Parent.
4.3.6. MGI Organizational Documents. The certificates of
Incorporation and the by-laws of MGI and MCM shall be amended, effective
immediately upon the Closing, as necessary to contain the same provisions as
contained in the LLC Agreement in respect of supermajority board voting
provisions and board composition.
4.3.7. Proceedings. All proceedings of MGI, the Parent and Merger
Sub that are required in connection with the transactions contemplated by this
Agreement, and all documents and instruments incident thereto, shall be
reasonably satisfactory to the Founding Stockholders and their counsel, and the
Founding Stockholders and their counsel shall have received all such documents
and instruments, or copies thereof, certified if requested, as may be reasonably
requested.
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ARTICLE V
OTHER AGREEMENTS
5.1 Noncompetition. Each of Daniel H. Yergin, James P. Rosenfield
and Joseph A. Stanislaw (collectively, the "Founding Stockholders") hereby
agrees that during the period commencing on the Closing Date and ending on the
fourth anniversary of the Closing Date, he shall not, directly or indirectly,
(A) as an individual proprietor, partner, member, principal, officer, employee,
agent, consultant or stockholder, develop, produce, market, sell or render (or
assist any other person in developing, producing, marketing, selling or
rendering) products or services competitive anywhere in the United States or
elsewhere in the world with, or (B) engage in business with, serve as an agent
or consultant to, or become an individual proprietor, partner, member, principal
or stockholder (other than a holder of less than 1% of the outstanding voting
shares of any publicly held company) of or become employed in an executive
capacity by, any person, firm or other entity ("Competitor") a substantial
portion of whose business competes anywhere in the United States or elsewhere in
the world with a substantial portion of the business of the Parent, CERA Inc.,
MGI or any of their respective Subsidiaries (collectively, the "MGI/CERA Group")
that relates to the financial information, financial analysis, energy
information and analysis or any other business then engaged in by any member of
the MGI/CERA Group; provided that this Section 5.1 shall not be deemed to
prohibit any of the Founding Stockholders from teaching courses at educational
institutions or writing books or articles for public sale or making appearances
on television or preparing or otherwise participating in television programs;
and provided, further, that if the employment of a Founding Stockholder with
CERA Inc. shall be terminated after the Closing Without Cause (as such term
shall be defined in the applicable Employment Agreement between CERA Inc. and
such Founding Stockholder) or for Good Reason (also as shall be defined in such
Employment Agreement), the noncompetition period set forth in this Section 5.1
shall terminate with respect to such Founding Stockholder on the earlier of (x)
the fourth anniversary of the Closing Date and (y) the first anniversary of the
date of termination of such Founding Stockholder's employment. For the purposes
of this Section 5.1, a "substantial portion" (x) in the case of the business of
Competitor shall mean a line or lines of business that account for more than 50%
of the consolidated revenue of Competitor
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and (y) in the case of the MGI/CERA Group shall mean a line or lines of business
that account for more than 25% of the consolidated revenues of the MGI/CERA
Group, in each case for the fiscal year ended immediately prior to the date on
which the Founding Stockholder first proposes to engage in any of the activities
described in clause (B) of the immediately preceding sentence, provided,
however, that in the case of a Competitor that has had less than three full
years of operations, "substantial portion" shall mean a line or lines of
business accounting for more than 50% of the projected consolidated revenues of
such Competitor for the two fiscal years next succeeding the date on which
Founding Stockholder first proposes to engage in any of the activities described
in clause (B) of the immediately preceding sentence. Whether any such person,
firm or entity so competes shall be determined in good faith by Employer's Board
(as such term is defined in the applicable Employment Agreement). For purposes
of this Section 5.1, the phrase employment "in an executive capacity" shall mean
employment in any position in connection with which the applicable Founding
Stockholder has or reasonably would be viewed as having powers and authorities
with respect to any other person, firm or other entity or any part of the
business thereof that are substantially similar, with respect thereto, to the
powers and authorities assigned to any executive officer of CERA Inc. as
described in the By-Laws of CERA Inc. as in effect on the date hereof.
5.2 Enforceability of Covenants. The provisions of Sections 3.4.1
and 5.1 were negotiated in good faith by the parties hereto, and the parties
hereto agree that such provisions are reasonable and are not more restrictive
than necessary to protect the legitimate interests of the parties hereto. If any
provision contained in Section 3.4.1 or Section 5.1 shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of Section 3.4.1 or
Section 5.1. It is the intention of the parties hereto that if any of the
restrictions or covenants contained herein is held to cover a geographic area or
to be for a length of time that is not permitted by applicable law, or is any
way construed to be too broad or to any extent invalid, such provision shall not
be construed to be null, void and of no effect, but to the extent such provision
would be valid or enforceable under applicable law, a court of competent
jurisdiction shall construe and interpret or reform such provision to provide
for a restriction or covenant having the maximum enforceable geographic area,
time period and other provisions (not greater than those
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contained herein) as shall be valid and enforceable under applicable law.
5.3 Further Actions and Events. In connection with the Closing:
5.3.1. Termination or Adoption of Certain Arrangements. At the
Closing:
(a) CERA Stock Restriction Agreements. Each of the Stockholders
hereby agrees that, effective simultaneously with the Closing, each of the stock
restriction agreements and documents listed in Section 2.1.2(c) of the CERA
Disclosure Letter, including, without limitation, the Cambridge Energy Research
Associates, Inc. 1985 Restricted Stock Plan, as amended, shall terminate and
have no further force or effect (except to the extent that any provision thereof
shall expressly provide that such provision shall survive the termination of
such agreement or document), and that from and after the Closing, all of the
parties thereto shall be released from all of their liabilities and obligations
thereunder (other than any such liabilities or obligations that arose prior to
the Closing).
(b) Existing Arrangements with GS LP. Each of the Stockholders and
GS LP hereby agrees that, effective simultaneously with the Closing, each of the
GS Purchase Agreement, the CERA Stockholders Agreement and all other documents
and instruments executed or delivered in connection with the acquisition by GS
LP of the GS Partnership Interest (other than the Existing Partnership
Agreement, which shall be terminated by operation of law, and the GS Advisory
Agreement) shall terminate and have no further force or effect (except to the
extent that any provision thereof shall expressly provide that such provision
shall survive the termination of such agreement or document), and that from and
after the Closing, all of the parties thereto shall be released from all of
their liabilities and obligations thereunder (other than any such liabilities or
obligations that arose prior to the Closing).
(c) MGI and CERA LLC Unit Option Plans. MGI shall, and each of the
Stockholders shall cause CERA Inc. to, adopt the MCM Group, Inc. Management LLC
Unit Option Plan and the Cambridge Energy Research Associates, Inc. Management
LLC Unit Option Plan (the "CERA Option Plan"), respectively, substantially in
the respective forms of Exhibits K and L hereto, together with the respective
forms of management LLC Unit option agreements and management LLC Unit
subscription agreements attached as Exhibits A and B thereto.
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(d) CERA Inc. Bonus Plan. Each of the Stockholders shall cause CERA
Inc. to adopt a performance bonus program (the "CERA Bonus Plan"), in form and
substance mutually satisfactory to MGI and the Founding Stockholders, pursuant
to which the participants in the CERA Bonus Plan shall be entitled to receive
annual incentive awards based upon the annual operating targets and other
performance goals established, pursuant to the CERA Bonus Plan, by CERA Inc.'s
board of directors from time to time.
5.4 Certain Payments to CERA Management Members. The Parent hereby
agrees to cause CERA Inc. to pay to each CERA Management Member who shall have
received LLC Units pursuant to the distribution to CERA Management Members
promptly after the Closing Date as provided for in Section 1.5, within 30 days
after the due date (after taking into account any applicable extension) for
filing the U.S. federal Income Tax Return of CERA Inc. for each taxable year
ending after the Closing Date during which any deduction with respect to such
distribution is actually utilized by CERA Inc. for U.S. federal Income Tax
purposes (whether as a current deduction or as a deduction for a net operating
loss carryover resulting from any such deduction), cash (subject to applicable
withholding) in an amount equal to the product of (i) the quotient of (x) the
number of LLC Units received by such CERA Management Member pursuant to such
distribution divided by (y) the total number of LLC Units distributed by CERA
Inc. pursuant to such distribution and (ii) an amount equal to (x) the amount of
any such deduction so utilized by CERA Inc. during such taxable year (in the
case of any such loss carryover, net of any related gain included in the gross
income of CERA Inc. as a result of any examination of any U.S. federal Income
Tax Return of CERA Inc. for any such taxable year prior to such taxable year)
multiplied by (y) the highest corporate tax rate applicable for U.S. federal
Income Tax purposes for such taxable year, provided that the amount set forth in
subclause (ii)(x) shall not exceed CERA Inc.'s taxable income for such taxable
year after taking into account all available deductions, losses and net
operating loss carryovers but before taking into account the deduction described
in subclause (ii)(x).
5.5 Grants of Options to Purchase LLC Units. (i) On the Closing
Date, (a) MGI shall grant options to purchase an aggregate of 33,444 LLC Units
to Brera Capital
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Partners, LLC or its designees, at an exercise price of $23.55 per LLC Unit, and
(b) CERA Inc. shall grant options to purchase an aggregate of 11,132 LLC Units
to Mr. Edward Jordan, at an exercise price of $23.55 per LLC Unit, in full
payment of the fee due to him in respect of the Transactions and the other
transactions contemplated hereby and (ii) promptly after the Closing Date, CERA
Inc. will grant to each Initial CERA Option Grantee, pursuant to the CERA Option
Plan, options to purchase such number of LLC Units as is set forth opposite such
Initial CERA Option Grantee's name on Exhibit C hereto, at an exercise price of
$18.31 per LLC Unit.
ARTICLE VI
TERMINATION
6.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by the written agreement of the Founding Stockholders and MGI;
(b) by MGI, on the one hand, or the Founding Stockholders, on the
other hand, by written notice to the other after 5:00 p.m., New York City
time, on November 30, 1997 if the Closing Date shall not have occurred by
such date (unless the failure of the Closing Date to occur shall be due
to, in the case of any termination by MGI, any material breach of this
Agreement by MGI, the Parent or Merger Sub or, in the case of any
termination by the Founding Stockholders, any material breach of this
Agreement by the Stockholders or GS LP), unless such date is extended by
the mutual written consent of MGI and the Founding Stockholders;
(c) by MGI if there has been a breach on the part of the
Stockholders or GS LP of any of their covenants set forth herein, or any
failure on the part of the Stockholders or GS LP to perform their
obligations hereunder (provided that MGI, the Parent and Merger Sub shall
have performed and complied with, in all material respects, all agreements
and covenants required by this Agreement to have been performed or
complied with by them) prior to such time, such that, in any such case,
any of the conditions to the effectiveness of the Transactions set forth
in Section 4.1 or 4.2 could not
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(including without limitation through the use of diligent efforts to cure
such breach or failure) be satisfied on or prior to the termination date
contemplated by Section 6.1(b); or
(d) by any of the Founding Stockholders, if there has been a breach
on the part of MGI, the Parent or Merger Sub of any of their covenants set
forth herein, or any failure on the part of MGI, the Parent or Merger Sub
to perform their obligations hereunder (provided that the Stockholders and
GS LP shall have performed and complied with, in all material respects,
all agreements and covenants required by this Agreement to have been
performed or complied with by them) prior to such time, such that, in any
such case, any of the conditions to the effectiveness of the Transactions
set forth in Section 4.1 or 4.3 could not (including without limitation
through the use of diligent efforts to cure such breach or failure) be
satisfied on or prior to the termination date contemplated by Section
6.1(b).
6.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 6.1, this Agreement shall become void and have no
effect, without any liability to any Person in respect hereof or of the
transactions contemplated hereby on the part of any party hereto, or any of its
directors, officers, employees, agents, consultants, representatives, advisers,
stockholders, partners or Affiliates, except for any liability resulting from
any party's breach of this Agreement and except that the provisions of Sections
3.4.1(b) and (c), 8.2, 8.5.4, 8.5.7 and 8.5.8 shall survive any such
termination.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Stockholders and GS LP. To the fullest
extent permitted by applicable law, each of the Stockholders, severally and not
jointly, and GS LP covenants and agrees to defend, indemnify and hold harmless
each of the Parent, the Surviving Corporation, such of the other members of the
MCM Group (without duplication) as are, directly or indirectly, wholly owned by
the Parent and the respective officers, directors and employees of the Parent,
the Surviving Corporation and any such other member of the
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MCM Group (collectively, the "MGI Indemnitees") from and against, and pay or
reimburse the MGI Indemnitees for, any and all claims, demands, liabilities,
obligations, losses, fines, costs, expenses, Litigation, deficiencies or damages
(whether absolute, accrued, conditional or otherwise and whether or not
resulting from third party claims), including interest and penalties with
respect thereto and out-of-pocket expenses and reasonable attorneys' and
accountants' fees and expenses incurred in the investigation or defense of any
of the same or in asserting, preserving or enforcing any of their respective
rights hereunder (collectively, "Losses"), incurred or suffered by any MGI
Indemnitee (provided that any Loss incurred or suffered by any member of the MCM
Group that is not, directly or indirectly, wholly owned by the Parent shall be
deemed to be a Loss incurred or suffered by the Parent in an amount equal to the
amount of such Loss incurred or suffered by such member of the MCM Group
multiplied by a fraction, the numerator of which shall be the portion of the
outstanding common equity interests of such member of the MCM Group that,
directly or indirectly, is held by any wholly owned member of the MCM Group and
the denominator of which shall be all of the outstanding common equity interests
of such non-wholly owned member of the MCM Group) with respect to, resulting
from or arising out of:
(a) any inaccuracy of any representation or warranty by the
Stockholders or GS LP made in or pursuant to this Agreement or in any
certificate delivered by any Stockholder or GS LP in connection with the
Closing; or
(b) any failure by any of the Stockholders or GS LP to perform any
of their covenants or agreements hereunder or fulfill any other of their
obligations in respect hereof;
provided, that (i) in the case of any representation and warranty set forth in
Section 2.1, GS LP shall indemnify and hold harmless under this Section 7.1 for
only 10%, and each of the Stockholders shall indemnify and hold harmless under
this Section 7.1 for their respective percentages (as calculated pursuant to
Section 7.4(b)) of 90%, of each Loss incurred or suffered with respect to,
resulting from or arising out of such representation and warranty; (ii) GS LP
shall not indemnify and hold harmless under this Section 7.1 for Losses incurred
or suffered with respect to, resulting from or arising out of any representation
and warranty set forth in Section 2.2 or any breach or nonfulfillment by the
Stockholders of any covenant, agreement or obligation
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described in Section 7.1(b); and (iii) the Stockholders shall not indemnify and
hold harmless under this Section 7.1 for Losses incurred or suffered with
respect to, resulting from or arising out of any representation and warranty set
forth in Section 2.3 or any breach or nonfulfillment by GS LP of any covenant,
agreement or obligation described in Section 7.1(b).
7.2 Indemnification by MGI. To the fullest extent permitted by
applicable law, MGI covenants and agrees to defend, indemnify and hold harmless
each of the Stockholders and GS LP from and against, and pay or reimburse them
for, any and all Losses incurred or suffered by any of them with respect to,
resulting from or arising out of:
(a) any inaccuracy of any representation or warranty by MGI, the
Parent or Merger Sub made in or pursuant to this Agreement or in any
certificate delivered by MGI, the Parent or Merger Sub in connection with
the Closing; or
(b) any failure by MGI, the Parent or Merger Sub to perform any of
their covenants or agreements hereunder or fulfill any other of their
obligations in respect hereof.
7.3 Further Indemnification by GS LP. GS LP covenants and agrees to
defend, indemnify and hold harmless each of the Stockholders from and against,
and pay or reimburse them for, any and all Losses incurred or suffered by any of
them with respect to, resulting from or arising out of:
(a) any inaccuracy of any representation or warranty by GS LP made
in or pursuant to Section 2.3 of this Agreement or in any certificate
delivered by GS LP in connection with the Closing relating to any such
representation or warranty; or
(b) any failure by GS LP to perform any of its covenants or
agreements hereunder or fulfill any of its obligations in respect hereof.
7.4 Payment Adjustments, etc. Any indemnity payment made by any
Stockholder or GS LP to the MGI Indemnitees, on the one hand, or by MGI to the
Stockholders or GS LP, on the other hand, pursuant to this Article VII in
respect of any claim (i) shall be net of an amount equal to
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(x) any insurance proceeds realized by and paid to the Indemnified Party minus
(y) any related costs and expenses, including the aggregate cost of pursuing any
related insurance claims plus any correspondent increases in insurance premiums
or other chargebacks and (ii) shall be (a) reduced by an amount equal to the
Income Tax benefits, if any, attributable to such claim and (b) increased by an
amount equal to the Income Taxes, if any, attributable to the receipt of such
indemnity payment, but only to the extent that such Tax benefits are actually
realized, or such Income Taxes are actually paid, as the case may be, by the
Indemnified Party or any consolidated, combined or unitary group of which any
Indemnified Party is a member.
7.5 Indemnification Procedures; Limitations. (a) In the case of any
claim asserted by a third party against a party entitled to indemnification
under this Article VII (the "Indemnified Party"), notice shall be given by the
Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and the Indemnified Party
shall permit the Indemnifying Party (at the expense of such Indemnifying Party)
to assume the defense of any claim or any litigation resulting therefrom,
provided, that (i) counsel for the Indemnifying Party who shall conduct the
defense of such claim or litigation shall be reasonably satisfactory to the
Indemnified Party, and the Indemnified Party may participate in such defense at
such Indemnified Party's expense and (ii) the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its indemnification obligation under this Agreement except to the extent that
such failure results in a lack of actual notice to the Indemnifying Party and
such Indemnifying Party is materially prejudiced as a result of such failure to
give notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that provides for
injunctive or other non-monetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified
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Party's Tax liability or (in the case of an Indemnified Party that is an MGI
Indemnitee) the ability of any member of the MCM Group to conduct, in any
material respect, its business, or that the Indemnified Party may have available
to it one or more defenses or counterclaims that are inconsistent with one or
more of those that may be available to the Indemnifying Party in respect of such
claim or any litigation relating thereto, the Indemnified Party shall have the
right at all times to participate in the defense, settlement, negotiations or
litigation relating to any such claim with counsel of its own choosing, with all
of the fees and expenses of one (but not more than one) such counsel payable by
the Indemnifying Party, provided that if the Indemnified Party does so exercise
its right to participate, the Indemnified Party shall not settle such claim or
litigation without the written consent of the Indemnifying Party, such consent
not to be unreasonably withheld. In the event that the Indemnifying Party does
not accept the defense of any matter as above provided, the Indemnified Party
shall have the full right to defend against any such claim or demand, and shall
be entitled to settle or agree to pay in full such claim or demand.
(b) Notwithstanding anything to the contrary in the foregoing, (i)
the aggregate indemnification obligations hereunder of the Stockholders and GS
LP for Losses with respect to, resulting from or arising out of Section 7.1(a)
and (b) shall not exceed $5,000,000 and (ii) each of the Stockholders and GS LP
shall be required to indemnify and hold harmless under Section 7.1(a) and (b)
(x) only for each claim in respect of which the aggregate Losses exceed $50,000
and (y) only to the extent that the aggregate amount (without duplication and
without regard to the indemnification threshold set forth in clause (x) above)
of Losses incurred or suffered with respect to or in connection with the matters
described in such Sections exceeds $250,000. For purposes of calculating the
percentage of any Losses that any Stockholder shall be responsible for, the
percentage shall be based on the ratio on the date hereof of (i) the number of
shares of CERA Common Stock owned by such Stockholder to (ii) the aggregate
number of shares of CERA Common Stock owned by all the Stockholders; provided
that in the event that any Stockholder that is a trust for the benefit of any
other Stockholder and/or the family members of or other persons affiliated with
such other Stockholder shall fail to pay any or all of its pro rata portion of
any Losses of an Indemnified Party subject to indemnification under Section 7.1
promptly after a request therefor is made, such Indemnified Party shall be
entitled to recover, without
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duplication, the amount of such unpaid Losses in accordance with the provisions
hereof directly from such other Stockholder (in addition to any other payment in
respect of such Losses that may be due hereunder from such other Stockholder).
7.6 Survival of Representations and Warranties, etc. All claims for
indemnification under clause (a) or (b) of Section 7.1, clause (a) or (b) of
Section 7.2 or clause (a) or (b) of Section 7.3 must be asserted on or prior to
the date that is 30 days after the termination of the respective survival
periods set forth in this Section 7.6. The representations, warranties,
covenants and agreements made in or pursuant to this Agreement or in any
certificate delivered in connection with the Closing shall survive the execution
and delivery of this Agreement, any examination by or on behalf of the parties
hereto and the completion of the transactions contemplated herein, but only to
the extent specified below:
(a) except as set forth below, the representations, warranties,
covenants and agreements made in or pursuant to this Agreement or in any
certificate delivered in connection with the Closing shall survive until
the first anniversary of the Closing Date;
(b) the representations and warranties contained in Sections 2.1.6
and 2.4.9 shall survive until the expiration of any statutes of
limitations applicable to the particular Tax at issue, and the
representations and warranties contained in Sections 2.1.16 and 2.4.19
shall survive until the expiration of any statutes of limitations
applicable to the particular provision of ERISA at issue;
(c) the covenants and agreements set forth herein which, by their
terms, are to be performed subsequent to the Closing shall survive until
the expiration of any applicable statutes of limitation; and
(d) a representation and warranty, and a covenant and agreement,
shall survive after the applicable time period set forth in subparagraph
(a), (b) or (c) above only with respect to any claim that has been
asserted within the time period set forth in the first sentence of this
Section 7.6.
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ARTICLE VIII
DEFINITIONS; MISCELLANEOUS
8.1 Definition of Certain Terms. The terms defined in this Section
8.1, whenever used in this Agreement shall have the respective meanings
indicated below for all purposes of this Agreement. All references herein to a
Section, Article or Schedule are to a Section, Article or Schedule of or to this
Agreement, unless otherwise indicated.
Affiliate: of a Person means a Person that directly, or indirectly
through one or more intermediaries, Controls, is Controlled by, or is
under common Control with, the first Person, including but not limited to
a Subsidiary of the first Person, a Person of which the first Person is a
Subsidiary, or another Subsidiary of a Person of which the first Person is
also a Subsidiary. "Control" (including the terms "Controlled by" and
"under common Control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management policies
of a Person, whether through the ownership of voting securities, by
contract, as trustee or executor, or otherwise.
Agreement: this Plan of Merger and Exchange Agreement, including the
Exhibits hereto.
Ancillary Document: as defined in Section 3.3.3.
Applicable Law: all applicable provisions of all (i) statutes, laws,
rules, administrative codes, regulations or ordinances of any Governmental
Authority, (ii) Governmental Approvals and (iii) Orders of any
Governmental Authority.
Business Day: a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York or Cambridge, Massachusetts
are authorized or required by law to close.
CD&R: as defined in Section 3.4.1(a).
CD&R Consulting Agreement: the Consulting Agreement, dated as of
August 31, 1996, among MGI, MCM and CD&R, as amended, supplemented, waived
or otherwise modified from time to time.
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CERA Acquisition Transaction: as defined in Section 3.1.5.
CERA Allocated LLC Units: as defined in Section 1.3.
CERA Assets: as defined in Section 2.1.7(a).
CERA Bonus Plan: as defined in Section 5.3.1(d).
CERA CAGR: the compound annual growth rate, calculated as provided
in Exhibit M hereto, of the revenues of CERA Inc. from the businesses
engaged in by CERA Inc. or CERA LP on the date hereof (including the
revenues from such businesses or transactions that the Board of the Parent
may determine, at or prior to the time such businesses or transactions are
first engaged in or entered into, shall be part of the businesses engaged
in by CERA Inc. or CERA LP on the date hereof, but excluding all revenues
from the GS Advisory Agreement or any other agreement which (i) imposes an
exclusivity obligation on CERA Inc. or (ii) provides for compensation of
CERA Inc. in the form of contingent transaction fees) (the "Qualifying
Revenues"), determined in accordance with GAAP, from the fiscal year ended
June 30, 1997 to the fiscal year ending June 30, 2000; provided that upon
the first to occur, prior to June 30, 2000, of (x) a Public Offering or a
Qualifying Sale, the CERA CAGR shall be deemed to be 20%, or (y) a
Nonqualifying Sale, the CERA CAGR shall be deemed to be the compound
annual growth rate, calculated as provided in Exhibit M, of the Qualifying
Revenues from the fiscal year ended June 30, 1997 to the last day of the
calendar month immediately preceding the closing date of such
Nonqualifying Sale if such closing shall occur on or after the tenth day
of the following month, and otherwise to the last day of the second
calendar month immediately preceding such closing date.
CERA Cash Distribution: as defined in the third recital to this
Agreement.
CERA Common Stock: as defined in the second recital to this
Agreement.
CERA Contingent Option: as defined in Section 1.3.
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CERA Contingent Option LLC Units: as defined in Section 1.3.
CERA Disclosure Letter: as defined in Section 2.1.
CERA Distribution Loan: as defined in the third recital to this
Agreement.
CERA Employment and Withholding Taxes: as defined in Section
2.1.6(a).
CERA Financial Statements: as defined in Section 2.1.3(a).
CERA Headquarters Lease: as defined in Section 2.1.7(b).
CERA Holder Information Form: the CERA Holder Information Form
attached hereto as Exhibit D.
CERA Inc.: as defined in the first recital to this Agreement.
CERA Intellectual Property: as defined in Section 2.1.9(a).
CERA Lease: as defined in Section 2.1.7(b).
CERA Licenses: as defined in Section 2.1.9(a).
CERA LLC Unit Grant Agreement: a Management LLC Unit Grant Agreement
between CERA Inc. and a CERA Management Member, having terms that are
substantially the same (except with respect to purchase price and except
as specified in Section 1.5) as the corresponding terms of the form of
management LLC Unit subscription agreement attached as Exhibit B to the
CERA Option Plan, and pursuant to which CERA Inc. shall have granted to
such CERA Management Member LLC Units and a right to receive Contingent
LLC Units in accordance with Section 1.5.
CERA LLC Unit Grant Plan: as defined in the ninth recital to this
Agreement.
CERA LP: as defined in the first recital to this Agreement.
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CERA Management Members: as defined in the ninth recital to this
Agreement.
CERA Material Adverse Effect: a materially adverse effect on the
business, financial condition, results of operations or properties of CERA
Inc. and CERA LP, taken as a whole.
CERA Material Change: a material change, after the date hereof, in
the business, financial condition, results of operations or properties of
CERA Inc. and CERA LP, taken as a whole.
CERA Non-Voting Common Stock: as defined in the second recital to
this Agreement.
CERA Option Plan: as defined in Section 5.3.1(c).
CERA Plans: as defined in Section 2.1.16(a).
CERA Returns: as defined in Section 2.1.6(a).
CERA Roll-up: as defined in the sixth recital to this Agreement.
CERA Stock Exchange: as defined in the fourth recital to this
Agreement.
CERA Stockholders Agreement: the Agreement with Stockholders, dated
as of November 30, 1994, by and among CERA Inc., GS LP and certain
stockholders of CERA Inc. named therein.
CERA Stockholders Common Stock: as defined in the second recital to
this Agreement.
CERA Taxes: as defined in Section 2.1.6(a).
CERA Voting Common Stock: as defined in the second recital to this
Agreement.
CERA/GS Contingent Percentage: the percentage (rounded to the
nearest hundredth of a percentage point) equal to the sum of (i) 33% plus
(ii) the product of (x) 8.35% multiplied by (y) a fraction, the numerator
of which is the CERA CAGR minus 16% and the denominator of which is 4%.
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Certificate of Merger: as defined in Section 1.1.2(d).
Closing: as defined in Section 1.1.2.
Closing Date: as defined in Section 1.1.2.
Code: the Internal Revenue Code of 1986, as amended.
Competitor: as defined in Section 5.1.
Consent: any consent, approval, authorization, waiver, permit,
license, grant, exemption or order of, or registration, declaration or
filing with, any Person, including but not limited to any Governmental
Authority.
Contingent LLC Units: the additional LLC Units that the
Stockholders, GS LP and the CERA Management Members shall be entitled to
receive pursuant to Sections 1.3(c), 1.4(c) and 1.5 and the management LLC
Unit grant agreements to be entered into with each of the CERA Management
Members, respectively, in an aggregate amount determined as follows: (i)
if the CERA CAGR is less than 16%, the Contingent LLC Units shall be equal
to 0; (ii) if the CERA CAGR is equal to 16%, the Contingent LLC Units
shall be equal to 144,439; (iii) if the CERA CAGR is greater than 16% but
less than 20%, the Contingent LLC Units shall be equal to an aggregate
number of additional LLC Units such that the result obtained by dividing
(x) the sum of 1,500,000 plus the Contingent LLC Units by (y) the sum of
4,838,710 plus the Contingent LLC Units shall be equal to the CERA/GS
Contingent Percentage; and (iv) if the CERA CAGR is equal to or greater
than 20%, the Contingent LLC Units shall be equal to 853,890; provided
that the Contingent LLC Units may be adjusted pursuant to Section 1.8.
Contingent Option Agreement: as defined in Section 1.1.2(c).
Contingent Options: as defined in Section 1.4.
DGCL: the General Corporation Law of the State of Delaware, as in
effect from time to time.
Dissenting Shares: as defined in Section 1.2.5.
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Effective Time: as defined in Section 1.1.2(d).
Employment Agreement: as defined in Section 4.2.3.
Employment and Withholding Taxes: any federal, state, local, foreign
or other employment, unemployment, social security, disability, workers'
compensation, payroll, health care or other similar tax, duty or other
governmental charge or assessment or deficiencies thereof and all Taxes
required to be paid or withheld by or on behalf of each of the MCM
Companies, CERA LP or CERA Inc., as applicable, in connection with amounts
paid or owing to any employee, independent contractor, creditor or other
party (including, but not limited to all interest and penalties thereon
and additions thereto whether disputed or not).
Environmental Activity: any storage, holding, release, emission,
discharge, generation, disposal, handling or transportation of any
Hazardous Materials.
Environmental Laws: all Applicable Laws relating to the protection
of the environment, to human health and safety, or to any Environmental
Activity, including, without limitation, (i) the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act, and the Occupational Safety and Health Act,
and (ii) all other requirements pertaining to reporting, licensing,
permitting, investigation or remediation of emissions, discharges or
releases of Hazardous Materials into the air, surface water, groundwater
or land, or relating to the manufacture, processing, distribution, use,
sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Materials.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Exchange Act: the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Exchange Agent: the Person appointed by the Parent to administer the
exchange of MGI Certificates for LLC Certificates pursuant to Section
1.2.6.
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Existing MGI Options: as defined in Section 1.2.4(d).
Existing Partnership Agreement: the Amended and Restated Agreement
of Limited Partnership of CERA LP, dated as of November 30, 1994.
Founding Stockholders: as defined in Section 5.1.
Fund IV: as defined in Section 2.4.3.
Fund IV Indemnification Agreement: the Indemnification Agreement,
dated as of August 31, 1996, among MGI, MCM, CD&R and Fund IV, as amended,
supplemented, waived or otherwise modified from time to time.
GAAP: as defined in Section 2.1.3(b).
Governmental Approval: any Consent of, with or to any Governmental
Authority.
Governmental Authority: any nation or government, any state or other
political subdivision thereof, including, without limitation, any
governmental agency, department, commission or instrumentality of the
United States, any State of the United States or any political subdivision
thereof, or any stock exchange or self-regulatory agency or authority.
GS Advisory Agreement: the Advisory Agreement, dated as of November
30, 1994, between GS LP and CERA LP.
GS Allocated LLC Units: as defined in Section 1.4.
GS Contingent Option: as defined in Section 1.4.
GS Contingent Option LLC Units: as defined in Section 1.4.
GS LP: as defined in the introductory paragraph of this Agreement.
GS LP Holder Information Form: the GS LP Holder Information Form
attached hereto as Exhibit E.
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GS Partnership Interest: as defined in the second recital to this
Agreement.
GS Partnership Interest Exchange: as defined in the fifth recital to
this Agreement.
GS Purchase Agreement: the Purchase Agreement, dated as of November
30, 1994, by and among CERA LP, CERA Inc. and GS LP.
Hazardous Materials: any substance that: (i) is or contains
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum-derived substances or wastes, (ii) requires
investigation, removal or remediation under any Environmental Law, or is
defined as a "hazardous waste" or "hazardous substance" thereunder, or
(iii) is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is regulated by any
Governmental Authority or Environmental Law.
HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
Income Tax: any federal, state, local or foreign income,
alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits or windfall profits
tax or other similar tax, estimated tax, duty or other governmental charge
or assessment or deficiencies thereof (including, but not limited to, all
interest and penalties thereon and additions thereto whether disputed or
not).
Indemnified Party: as defined in Section 7.5.
Indemnifying Party: as defined in Section 7.5.
Initial CERA Option Grantees: as defined in the tenth recital to
this Agreement.
Intellectual Property: United States and foreign trademarks, service
marks, trade names, trade dress, copyrights, and similar rights, including
registrations and applications to register or renew the registration of
any of the foregoing; United States and foreign letters patent and patent
applications; and inventions,
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processes, designs, formulae, trade secrets, know-how and all similar
intellectual property rights.
IRS: the Internal Revenue Service.
Lien: any mortgage, pledge, hypothecation, security interest,
encumbrance, title retention agreement, lien, charge or other similar
restriction.
Litigation: as defined in Section 2.1.11.
LLC Agreement: as defined in Section 1.9(d).
LLC Certificate: as defined in Section 1.2.6(a).
LLC Units: as defined in the fourth recital to this Agreement.
Losses: as defined in Section 7.1.
MCM: as defined in the third recital to this Agreement.
MCM Employment and Withholding Taxes: as defined in Section
2.4.9(a).
MCM Group or MCM Company: collectively, MGI, MCM and each of its
Subsidiaries.
MCM Headquarters Lease: as defined in Section 2.4.10(b).
MCM Licenses: as defined in Section 2.4.12(a).
MCM Returns: as defined in Section 2.4.9(a).
MCM Taxes: as defined in Section 2.4.9(a).
Merger: as defined in the first recital to this Agreement.
Merger Sub: as defined in the introductory paragraph of this
Agreement.
MGI: as defined in the introductory paragraph of this Agreement.
MGI Acquisition Transaction: as defined in Section 3.2.7.
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<PAGE> 239
MGI Assets: as defined in Section 2.4.10(a).
MGI/CERA Group: as defined in Section 5.1.
MGI Certificates: as defined in Section 1.2.6(a).
MGI Class A Common Stock: the Class A Common Stock, par value $.01
per share, of MGI.
MGI Class B Common Stock: the Class B Common Stock, par value $.01
per share, of MGI.
MGI Class C Common Stock: the Class C Common Stock, par value $.01
per share, of MGI.
MGI Common Stock: the MGI Class A Common Stock, the MGI Class B
Common Stock and the MGI Class C Common Stock.
MGI Disclosure Letter: as defined in Section 2.4.
MGI Employee Option: as defined in Section 1.2.4(d).
MGI Financial Statements: as defined in Section 2.4.6.
MGI Holder Information Form: the MGI Holder Information Form
attached hereto as Exhibit H.
MGI Indemnitees: as defined in Section 7.1.
MGI Intellectual Property: as defined in Section 2.4.12(a).
MGI Lease: as defined in Section 2.4.10(b).
MGI Management Option Plan: as defined in Section 1.2.4(d).
MGI Management Stock Subscription Agreements: the Management Stock
Subscription Agreements by and between MGI and each purchaser party
thereto, as amended, supplemented, waived or otherwise modified from time
to time, relating to the purchase of MGI Common Stock by such purchaser.
MGI Material Adverse Effect: a materially adverse effect on the
business, financial condition, results of
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operations or properties of the MCM Companies, taken as a whole.
MGI Material Change: a material change, after the date hereof, in
the business, financial condition, results of operations or properties of
the MCM Group, taken as a whole.
MGI Option Plans: as defined in Section 1.2.4(d).
MGI Plans: as defined in Section 2.4.19.
MGI Special Option: as defined in Section 1.2.4(d).
MGI Special Options Plan: as defined in Section 1.2.4(d).
Nonqualifying Sale: a Sale of the Parent or CERA Inc. or a Spin-Off
of CERA Inc. that does not constitute a Qualifying Sale.
Offer Documents: the prospectus, information statement or other
similar document or documents to be sent to the holders of MGI Common
Stock in connection with and prior to the Merger.
Order: as defined in Section 2.1.11.
Organizational Documents: as to any Person, if a corporation, its
articles or certificate of incorporation and by-laws; if a partnership,
its certificate of partnership and partnership agreement; and if some
other entity, its constituent documents.
Parent: as defined in the introductory paragraph of this Agreement.
Per Share MGI Allocated LLC Units: as defined in Section 1.2.4(a).
Permitted CERA Liens: as defined in Section 2.1.7(a).
Permitted MCM Liens: as defined in Section 2.4.10(a).
Person: any natural person or any firm, partnership, limited
liability partnership,
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association, corporation, limited liability company, trust, business
trust, Governmental Authority or other entity.
Public Offering: a sale to the public in the United States of LLC
Units or other equity interests in the Parent or its successor, or in CERA
Inc., pursuant to an underwritten public offering of such LLC Units or
other equity interests led by one or more underwriters, at least one of
which is of nationally recognized standing.
Qualifying Sale: (i) a Sale of the Parent or of CERA Inc. in which
the aggregate value (in the case of any contingent or non-cash
consideration, as determined in good faith by the board of directors or
managers of the Parent or its successor) of the consideration paid for the
equity interests in the Parent or its successor or in CERA Inc., as the
case may be, is equal to or greater than $225,000,000 in the case of the
Parent or such successor, or equal to or greater than $90,000,000 in the
case of CERA Inc., or (ii) a Spin-Off of CERA Inc. in which the aggregate
value (as determined in good faith by the board of directors or managers
of the Parent or its successors after consideration of such factors,
including a valuation of the capital stock of CERA Inc. by an independent
valuation firm, as such board of directors or managers shall deem to be
relevant) of the capital stock of CERA Inc. at the time of such Spin-Off
shall be equal to or greater than $90,000,000.
Registration and Participation Agreement: the Registration and
Participation Agreement, dated as of August 31, 1996, among MGI and the
stockholders of MGI that are parties thereto, as amended, supplemented,
waived or otherwise modified from time to time.
Registration Statement: the registration statement on Form S-4 to be
filed by the Parent with the SEC with respect to the LLC Units (including
the Contingent LLC Units and any LLC Units issuable upon exercise of the
Contingent Options) to be issued in connection with the Merger, the CERA
Stock Exchange and the GS Partnership Interest Exchange.
Representatives: as to any Person, its accountants, counsel,
consultants (including actuarial, insurance and industry consultants),
employees, agents
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and other representatives and advisors.
Return: any return, report, declaration, form, claim for refund or
information statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof, required to be
filed by or on behalf of any MCM Company, CERA LP or CERA Inc., as
applicable.
Sale: As applied to any entity, and whether accomplished through a
single transaction or a series of related transactions:
(i) the acquisition by any Person or "group" (as defined in Section
13(d) of the Exchange Act), other than any owner of equity interests in
such entity as of the Closing Date or any Affiliate of such owner, of 50%
or more of the combined voting power of such entity's or its successor's
then outstanding voting securities or other voting equity interests;
(ii) the merger or consolidation of such entity or its successor, as
a result of which Persons who were owners of equity interests in such
entity immediately prior to such merger or consolidation, do not,
immediately thereafter, own, directly or indirectly, securities or other
equity interests representing more than 50% of the combined voting power
entitled to vote generally in the election of directors or managers, as
the case may be, of the survivor of such merger or consolidation; or
(iii) the sale (directly or indirectly, whether through one or more
transfers of securities of one or more entities or otherwise) of all or
substantially all of the assets of such entity or its successor to one or
more Persons that are not, immediately prior to such sale, Affiliates of
such entity, such successor or owners of equity interests in such entity
or such successor.
SEC: the Securities and Exchange Commission.
Securities Act: the Securities Act of 1933, as amended.
Spin-Off of CERA Inc.: a distribution of all of the capital stock of
CERA Inc. to holders of equity interests in the Parent or its successor,
where no
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consideration is required to be paid for the capital stock so being
distributed.
Stockholders: as defined in the introductory paragraph of this
Agreement.
Sword: as defined in Section 3.4.1(a)(ii).
Subsidiary: each corporation or other Person in which a Person owns
or controls, directly or indirectly, capital stock or other equity
interests representing more than 50% of the outstanding voting stock or
other equity interests.
Surviving Corporation: as defined in Section 1.2.1.
Tax: (i) any federal, state, local, foreign or other income,
alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits,
gross receipts, value added, sales, use, excise, custom duties, transfer,
documentary, registration, stamp, premium, real property, ad valorem,
intangibles, rent, occupancy, license, occupational, employment,
unemployment, social security, disability, workers' compensation, payroll,
health care, withholding, estimated or other similar tax, duty or other
governmental charge or assessment or deficiency thereof of any kind
whatsoever (including, but not limited to, all interest and penalties
thereon and additions thereto whether disputed or not), (ii) any liability
of any MCM Company, CERA LP or CERA Inc., as applicable, for the payment
of any amounts of the type described in clause (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group, or of
being a party to any agreement or arrangement whereby liability of any MCM
Company, CERA LP or CERA Inc., as applicable, for payments of such amounts
was determined or taken into account with reference to the liability of
any other Person, and (iii) any liability of any MCM Company, CERA LP or
CERA Inc., as applicable, for the payment of any amounts as a result of
being party to any tax sharing or tax indemnity agreement or arrangement
with respect to the payment of any amounts of the type described in clause
(i) or (ii).
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Transactions: as defined in the fifth recital to this Agreement.
Transfer Taxes: all transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including but not limited to
any real property transfer Tax, whether based on value, proceeds or gain
and whether direct or indirect, and any similar Tax).
Treasury Regulations: the regulations prescribed under the Code.
8.2 Expenses. Each party hereto shall be responsible for its own
fees, costs and expenses (including attorneys' fees and expenses) in connection
with this Agreement and the transactions contemplated hereby; provided, that in
the event that the Closing shall occur, on the Closing Date MGI shall pay (i)
the fees and expenses of Goldman Sachs & Co. in respect of the Transactions,
(ii) the fees and expenses of Wm. Sword & Co. in respect of the Transactions, in
an aggregate amount not to exceed $1,355,811, and provided that any additional
amount shall be payable by the Stockholders and/or GS LP and (iii) any Transfer
Taxes that may be payable and due in respect of the Merger; and all of the other
fees, costs and expenses (including, without limitation, attorneys' and
accountants' fees and expenses) incurred in connection with this Agreement and
the transactions contemplated hereby, to the extent not previously paid, shall
be paid by MGI and CERA Inc.
8.3 Severability. If any provision of this Agreement is inoperative
or unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever. The
invalidity of any one or more phrases, sentences, clauses, Sections or
subsections of this Agreement shall not affect the remaining portions of this
Agreement.
8.4 Notices. All notices, requests, demands and other communications
made in connection with this Agreement shall be in writing and shall be (a)
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or (b) transmitted by hand delivery or reputable overnight
delivery service, addressed as follows:
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(i) if to MGI, to:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, Fl. 37
New York, New York 10005
Telecopy: (212) 908-4345
Telephone: (212) 509-5800
Attention: Mr. David D. Nixon
With copies to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Telecopy: (212) 407-5252
Telephone: (212) 407-5200
Attention: Mr. Donald J. Gogel
Brera Capital Partners, LLC
590 Madison Avenue, 18th Floor
New York, New York 10022
Telecopy: (212) 835-1399
Telephone: (212) 835-1350
Attention: Mr. Alberto Cribiore
and to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Steven R. Gross, Esq.
(ii) if to the Parent or Merger Sub to:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, F1.37
New York, New York 10005
Attention: Mr. David D. Nixon
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<PAGE> 246
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Steven R. Gross, Esq.
(iii) if to a Stockholder, to such Stockholder at
the address set forth on Exhibit N hereto:
with copies to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telecopy: (617) 526-5000
Telephone: (617) 526-6000
Attention: Paul P. Brountas, Esq.
(iv) if to GS LP, to:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Telecopy: (212) 902-3000
Telephone: (212) 902-1000
Attention: Pierre F. Lapeyre
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
8.5 Miscellaneous.
8.5.1. Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
8.5.2. Entire Agreement. This Agreement, including the Exhibits,
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
8.5.3. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be
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deemed an original and all of which shall together constitute one and the same
instrument.
8.5.4. Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF
THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARENT, MERGER SUB, THE
STOCKHOLDERS, GS LP AND MGI HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE
COURTS OF THE STATES OF NEW YORK AND DELAWARE, AND THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA LOCATED IN THE STATE, CITY AND COUNTY OF NEW YORK OR IN
THE DISTRICT OF DELAWARE, AS APPLICABLE, SOLELY IN RESPECT OF THE INTERPRETATION
AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND OF THE DOCUMENTS
REFERRED TO IN THIS AGREEMENT, AND HEREBY AND THEREBY WAIVE, AND AGREE NOT TO
ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR
ENFORCEMENT HEREOF OR OF ANY SUCH DOCUMENT, THAT IT OR THEY ARE NOT SUBJECT
THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT
MAINTAINABLE IN SAID COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE OR
THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES
HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION OR
PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH NEW YORK STATE, DELAWARE STATE
OR FEDERAL COURT. THE PARENT, MERGER SUB, THE STOCKHOLDERS, GS LP AND MGI HEREBY
CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES
AND OVER THE SUBJECT MATTER OF ANY SUCH DISPUTE AND AGREE THAT, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, MAILING OF PROCESS OR OTHER PAPERS IN
CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION
8.4, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND
SUFFICIENT SERVICE THEREOF. EACH OF THE PARTIES HERETO AGREES THAT THIS
AGREEMENT INVOLVES AT LEAST $100,000.00 AND THAT THIS AGREEMENT HAS BEEN ENTERED
INTO IN EXPRESS RELIANCE UPON 6 Del. C. ss. 2708. EACH OF THE PARTIES HERETO
IRREVOCABLY AGREES, TO THE EXTENT SUCH PARTY IS NOT OTHERWISE SUBJECT TO SERVICE
OF PROCESS IN THE STATE OF DELAWARE, TO APPOINT AND MAINTAIN AN AGENT IN THE
STATE OF DELAWARE AS SUCH PARTY'S AGENT FOR ACCEPTANCE OF LEGAL PROCESS.
8.5.5. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
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8.5.6. Assignment. This Agreement shall not be assignable by any
party hereto without the prior written consent of the other parties hereto.
8.5.7. No Third Party Beneficiaries. Except for Article VII, nothing
in this Agreement shall confer any rights upon any person or entity other than
the parties hereto and their respective heirs, successors and permitted assigns.
8.5.8. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) IT MAKES THIS WAIVER
VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.5.8.
8.5.9. Amendment; Waivers. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
MCM GROUP, INC.
By: /s/ David D. Nixon
------------------------
Name: David D. Nixon
Title: President and Chief
Executive Officer
GLOBAL DECISIONS GROUP LLC
By: /s/ Gordon McMahon
------------------------
Name: Gordon McMahon
Title: Vice President and
Secretary
GDG MERGER CORPORATION
By: /s/ Gordon McMahon
------------------------
Name: Gordon McMahon
Title: Vice President and
Secretary
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STOCKHOLDERS:
/s/ Daniel H. Yergin
--------------------------------
Daniel H. Yergin
/s/ Joseph A. Stanislaw
--------------------------------
Joseph A. Stanislaw
/s/ James P. Rosenfield
--------------------------------
James P. Rosenfield
/s/ Jamie W. Katz
--------------------------------
Jamie W. Katz, as Trustee for the
James P. Rosenfield Irrevocable Gift
Trust
/s/ Augusta McC. P. Stanislaw
--------------------------------
Augusta McC. P. Stanislaw, as Trustee
for the Joseph A. Stanislaw 1994 Trust
for Louis Joseph Perkins Stanislaw
/s/ Augusta McC. P. Stanislaw
--------------------------------
Augusta McC. P. Stanislaw, as Trustee
for the Joseph A. Stanislaw 1994 Trust
for Katrina Augusta Perkins Stanislaw
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/s/ Augusta McC. P. Stanislaw
--------------------------------
Augusta McC. P. Stanislaw, as Trustee
for the Joseph A. Stanislaw 1994 Trust
for Henry Winslow Perkins Stanislaw
/s/ I.C. Bupp
--------------------------------
I.C. Bupp
/s/ Stephen C. Aldrich
--------------------------------
Stephen C. Aldrich
THE GOLDMAN SACHS GROUP, L.P.
By: The Goldman Sachs Corporation, as
general partner of The Goldman
Sachs Group, L.P.
By: /s/ David Leuschen
--------------------------------
Name: David Leuschen
Title: Executive Vice President
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Exhibits to the Merger Agreement are filed separately as
Exhibit 2.1 to the Registration Statement
<PAGE> 253
Annex B
-------
================================================================================
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GLOBAL DECISIONS GROUP LLC
Dated as of , 1997
================================================================================
<PAGE> 254
TABLE OF CONTENTS Page
ARTICLE I
DEFINED TERMS......................................................4
1.1. Definitions..................................................4
ARTICLE II
CONTINUATION AND TERM.............................................21
2.1. Continuation................................................21
2.2. Name........................................................22
2.3. Term of Company.............................................22
2.4. Registered Agent and Office.................................22
2.5. Principal Place of Business.................................23
2.6. Qualification in Other Jurisdictions........................23
2.7. Fiscal Year; Taxable Year...................................23
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY.................................23
3.1. Purposes....................................................23
3.2. Powers of the Company.......................................24
ARTICLE IV
MEMBERS...........................................................27
4.1. Powers of Members...........................................27
4.2. Partition...................................................27
4.3. Resignation.................................................27
4.4. Meetings of Members.........................................28
4.5. Business Transactions of a Member with the Company..........30
4.6. No Cessation of Membership upon Bankruptcy..................30
ARTICLE V
MANAGEMENT........................................................31
<PAGE> 255
5.1. Board.......................................................31
5.2. Annual and Regular Meetings.................................35
5.3. Special Meetings; Notice....................................35
5.4. Quorum and Acts of the Board................................35
5.5. Rules and Regulations; Manner of Acting.....................36
5.6. Electronic Communications...................................36
5.7. Committees of Directors.....................................36
5.8. Compensation of Directors...................................37
5.9. Reliance on Accounts and Reports, etc.......................37
5.10. Resignation................................................37
5.11. Directors as Agents........................................37
ARTICLE VI
OFFICERS..........................................................38
6.1. Officers....................................................38
6.2. Chief Executive Officer.....................................38
6.3. The Chief Financial Officer.................................39
6.4. President...................................................39
6.5. Vice Presidents.............................................40
6.6. The Secretary and Assistant Secretary.......................40
6.7. The Treasurer and Assistant Treasurer.......................40
6.8. Execution of Contracts......................................41
6.9. Officers as Agents..........................................41
6.10. Reliance by Third Parties..................................41
ARTICLE VII
AMENDMENTS........................................................42
7.1. Amendments..................................................42
ARTICLE VIII
CAPITAL CONTRIBUTIONS AND INTERESTS...............................43
8.1. Capital Units...............................................43
8.2. Capital Contributions of Property...........................43
8.3. Additional Capital Contributions............................43
<PAGE> 256
8.4. Member's Interest...........................................44
8.5. Certificates of LLC Units...................................44
8.6. Issuance of Non-Voting LLC Units............................44
8.7. Conversion and Exchange.....................................44
8.8. Certain Conversion and Exchange Procedures..................45
8.9. Signatures; Facsimile.......................................47
8.10. Lost, Stolen or Destroyed Certificates.....................47
8.11. Registration and Transfer of LLC Units.....................47
8.12. Transfer Agent, Exchange Agent and Registrar...............47
ARTICLE IX
ALLOCATIONS; DISTRIBUTIONS........................................48
9.1. Allocations.................................................48
9.2. Distributions...............................................48
9.3. Withholding.................................................50
9.4. Restricted Distributions....................................50
ARTICLE X
BOOKS AND RECORDS; TAX MATTERS....................................50
10.1. Books, Records and Financial Statements....................50
10.2. Filings of Returns and Other Writings; Tax Matters Partner.51
10.3. Accounting Method..........................................52
10.4. Audits.....................................................52
10.5. Other Tax Matters..........................................53
10.6. Section 754 Election.......................................53
ARTICLE XI
LIABILITY, EXCULPATION AND INDEMNIFICATION........................53
11.1. Liability..................................................53
11.2. Exculpation................................................53
11.3. Fiduciary Duty.............................................54
11.4. Indemnification............................................54
11.5. Severability...............................................57
11.6. Outside Businesses.........................................58
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ARTICLE XII
ADDITIONAL MEMBERS................................................58
12.1. Admission..................................................58
ARTICLE XIII
TRANSFER OF INTERESTS; SUBSTITUTE MEMBERS.........................59
13.1. Restrictions on LLC Unit Transfers.........................59
13.2. Participation Rights.......................................62
13.3. First Offer Rights.........................................65
13.4. Take-Along Rights..........................................67
13.5. Members' Rights to Purchase Additional LLC Units...........70
13.6. Registration Rights........................................71
13.7. Substitute Members.........................................72
13.8. Release of Liability.......................................72
ARTICLE XIV
DISSOLUTION, LIQUIDATION AND TERMINATION..........................73
14.1. Dissolving Events..........................................73
14.2. Dissolution and Winding-Up.................................73
14.3. Termination................................................74
14.4. Claims of the Members......................................74
ARTICLE XV
MISCELLANEOUS.....................................................74
15.1. Notices....................................................74
15.2. Legend on LLC Unit Certificates............................76
15.3. Headings...................................................78
15.4. Entire Agreement...........................................78
15.5. Counterparts...............................................78
15.6. Governing Law..............................................79
15.7. Term of Certain Provisions.................................79
15.8. Binding Effect.............................................79
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15.9. No Third-Party Beneficiaries...............................79
15.10. Consent to Jurisdiction...................................79
15.11. Waiver of Jury Trial......................................80
15.12. Severability..............................................81
SCHEDULE A
SCHEDULE B
SCHEDULE C
EXHIBIT A FORM OF LLC UNIT GRANT AGREEMENT
EXHIBIT B FORM OF BAILMENT AGREEMENT
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
GLOBAL DECISIONS GROUP LLC
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of
GLOBAL DECISIONS GROUP LLC, a Delaware limited liability company (the
"Company"), is entered into as of ___________, 1997, by and among THE CLAYTON &
DUBILIER PRIVATE EQUITY FUND IV LIMITED PARTNERSHIP, a Connecticut limited
partnership, DANIEL H. YERGIN, JOSEPH A. STANISLAW, JAMES P. ROSENFIELD (Messrs.
Yergin, Stanislaw and Rosenfield, collectively, the "CERA Principals"), certain
other individuals and trusts listed on the signature pages hereto (together with
the CERA Principals, the "CERA Stockholders") and THE GOLDMAN SACHS GROUP, L.P.
("GS LP"), as members of the Company, and any other Persons who may be or become
members of the Company in accordance with the provisions hereof, and MCM GROUP,
INC., a Delaware corporation ("MGI"), and MCCARTHY, CRISANTI & MAFFEI, INC., a
New York corporation and a wholly owned subsidiary of MGI ("MCM"), as
withdrawing members,
RECITALS:
WHEREAS, MGI and MCM formed the Company as a limited liability
company pursuant to the Delaware Limited Liability Company Act (6 Del. C.
ss.18-101, et seq., as amended from time to time and including any successor
statute of similar import, the "Delaware Act"), to be treated as a partnership
for federal income tax purposes, by filing the Certificate with the office of
the Secretary of State of the State of Delaware on June 30, 1997, and entering
into a Limited Liability Company Agreement of the Company, dated as of June 30,
1997 (the "Original Agreement") (capitalized terms used in this Agreement
without definition have the respective meanings specified in Section 1.1.);
WHEREAS, MGI, the Company, GDG Merger Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company ("Merger Sub"), the
CERA Stockholders and GS LP are party to the Merger and Exchange Agreement;
WHEREAS, the Company was formed for the purpose of acquiring (i) all
of the outstanding shares of capital stock of MGI, through a merger of Merger
Sub with and into MGI (the "Merger") and (ii) acquiring all of the outstanding
shares of
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capital stock of Cambridge Energy Research Associates, Inc., a Massachusetts
corporation ("CERA Inc." or "CERA"), and certain of the limited partnership
interests of Cambridge Energy Research Associates Limited Partnership, a
Delaware limited partnership ("CERA LP"), the general partner of which is CERA
Inc., pursuant to the terms and conditions set forth in the Merger and Exchange
Agreement;
WHEREAS, prior to the Transactions, the CERA Stockholders owned in
the aggregate, beneficially and of record, all of the outstanding shares of
voting common stock, par value $.01 per share ("CERA Voting Common Stock"), and
non-voting common stock, par value $.01 per share ("CERA Non-Voting Common
Stock" and, together with the CERA Voting Common Stock, "CERA Common Stock"), of
CERA Inc., and GS LP owned, beneficially and of record, all of the outstanding
limited partnership interests in CERA LP other than such partnership interests
that were owned by CERA Inc. (the "GS Partnership Interest");
WHEREAS, on the day immediately preceding the date hereof, MCM lent
up to $25,000,000 to CERA Inc. (the "CERA Distribution Loan") , and CERA Inc.
applied a portion of such funds, together with CERA Inc.'s available cash, to
the extent necessary, to make a distribution to the Stockholders in an aggregate
amount equal to $21,510,000 and applied the remainder of such funds and
available cash to purchase a portion of the GS Partnership Interest from GS LP
for a purchase price of $2,390,000 (such applications of such funds and
available cash, the "CERA Cash Distribution");
WHEREAS, pursuant to the terms and conditions set forth in the
Merger and Exchange Agreement, on the date hereof each of the CERA Stockholders
shall contribute to the Company all of the shares of CERA Common Stock owned by
such CERA Stockholder, in exchange (the "CERA Stock Exchange") for (i) LLC
Units, (ii) CERA Contingent Options (as such term is defined in the Merger and
Exchange Agreement) and (iii) the right to receive, under certain circumstances,
Contingent LLC Units (as such term is defined in the Merger and Exchange
Agreement);
WHEREAS, pursuant to the terms and conditions set forth in the
Merger and Exchange Agreement, on the date hereof GS LP shall contribute to the
Company all of the GS Partnership Interest owned by it following the CERA Cash
Distribution in exchange (the "GS Partnership Interest Exchange" and, together
with the Merger and the CERA Stock Exchange, the "Transactions") for (i) LLC
Units, (ii) GS Contingent Options (as defined in the Merger and Exchange
Agreement, and, together with the CERA Contingent Options, the "Contingent
Options") and (iii) the right to receive, under certain circumstances,
Contingent LLC Units, whereupon the
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Company shall immediately transfer or cause to be transferred to CERA Inc. such
GS Partnership Interest;
WHEREAS, on the date hereof, upon such transfer to CERA Inc. of such
GS Partnership Interest, CERA Inc. shall become the sole partner of CERA LP and
CERA LP shall be dissolved by operation of law;
WHEREAS, pursuant to the terms and conditions set forth in the
Merger and Exchange Agreement, on the date hereof the Company, Merger Sub and
MGI shall have caused Merger Sub to be merged with and into MGI, and have caused
the then outstanding shares of MGI Common Stock (as defined in the Merger and
Exchange Agreement) to be converted into LLC Units;
WHEREAS, promptly following the date hereof, (i) the Company shall
issue to CERA Inc., and CERA Inc. shall transfer to certain management employees
of CERA Inc. listed on Schedule A hereto (the "CERA Management Members"), an
aggregate of 106,875 LLC Units and (ii) the Company shall enter into an
agreement with CERA Inc., granting CERA Inc. the right to purchase, under
certain circumstances, an aggregate of 7.125% of the Contingent LLC Units, and
CERA Inc. shall grant to the CERA Management Members a right to receive their
respective pro rata portions of such Contingent LLC Units, in each case pursuant
to the Cambridge Energy Research Associates, Inc. LLC Unit Grant Plan (the "CERA
LLC Unit Grant Plan") and LLC Unit Grant Agreements to be entered into with each
CERA Management Member;
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement to reflect, among other things, (i) the issuance of LLC Units to and
the admission of Fund IV, the CERA Stockholders, GS LP and the other Persons
listed on Schedule A hereto (other than the CERA Management Members) as members
of the Company, subject to Section 2.1(b) hereof, (ii) the transfer of LLC Units
to and the admission of the CERA Management Members as members of the Company
and (iii) the withdrawal of MGI and MCM from the Company as members of the
Company; and
WHEREAS, the Members desire to continue the Company as a limited
liability company under the Delaware Act without dissolution;
NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
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ARTICLE I
DEFINED TERMS
Section 1.1. Definitions. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified. All references herein to a Section, Article or
Schedule are to a Section, Article or Schedule of or to this Agreement, unless
otherwise indicated.
"Additional Member" shall have the meaning set forth in Section 12.1
hereof.
"Adjustment Date" shall mean (i) the last day of each Taxable Year,
(ii) the day before the date of admission of any substituted or additional
Member, (iii) the day before the date a Member ceases to be a member of the
Company or (iv) any other date determined by the Board as appropriate for a
closing of the Company's books.
"Affiliate" shall mean, with respect to a specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the specified
Person, including but not limited to a Subsidiary of the specified Person, a
Person of which the specified Person is a Subsidiary or another Subsidiary of a
Person of which the specified Person is also a Subsidiary. As used in this
definition, the term "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract, as trustee, as
executor or otherwise.
"Agreement" shall mean this Amended and Restated Limited Liability
Company Agreement of the Company, including the Schedules hereto, as such
Agreement and Schedules may be amended, modified, supplemented or restated from
time to time.
"Allocation Period" shall mean the period beginning on the day
following any Adjustment Date (or, in the case of the first Allocation Period,
beginning on the date of formation of the Company) and ending on the next
succeeding Adjustment Date.
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"Applicable Federal Rate" shall mean the Federal short-term rate
publicly announced from time to time by the U.S. Internal Revenue Service
pursuant to section 1274 of the Code.
"Applicable Laws" shall mean all applicable provisions of
(i) constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any governmental entity, (ii) any
consents or approvals of any governmental entity and (iii) any orders,
decisions, injunctions, judgments, awards, decrees of or agreements with any
governmental entity.
"Automatic Conversion" shall have the meaning provided in Section
8.7(b).
"Available Assets" shall mean, as of any date, the excess of the
cash and cash equivalent items held by the Company over the sum of the amount of
such items determined by the Board to be reasonably necessary for the payment of
the Company's expenses, liabilities and other obligations (whether fixed or
contingent), and for the establishment of appropriate reserves for such
expenses, liabilities and obligations as may arise, including the maintenance of
adequate working capital for the continued conduct of the Company's business.
"Board" shall have the meaning provided in Section 5.1(a).
"Book Value," as of any date, shall mean the value at which the
asset is reflected on the books and records of the Company as of such date, the
initial Book Value of each asset being its original cost to the Company for
federal income tax purposes, unless such asset is contributed to the Company by
a Member in which case the initial Book Value shall be the value of such asset
determined by the Board. The initial Book Values of the CERA Common Stock, the
portion of the GS Partnership Interest contributed to the Company (the Book
Value of which shall be added to the Book Value of the CERA Common Stock as a
result of the transfer of such portion to CERA Inc.) and the MGI Common Stock
shall be the respective values set forth on Schedule B hereto, provided that the
initial Book Values of the CERA Common Stock and of the portion of the GS
Partnership Interest contributed to the Company shall be redetermined in the
event that the CERA CAGR (as such term is defined in the Merger and Exchange
Agreement) shall be equal to or greater than 16%, in accordance with the formula
set forth on Schedule B. After the Merger, upon the occurrence of (a) a
contribution of money or other property to the Company by a new or existing
Member as consideration
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for LLC Units or (b) a distribution of money or other property by the Company to
a retiring or continuing Member as consideration for LLC Units (including but
not limited to a distribution upon the liquidation of the Company), the Book
Values of the assets of the Company shall be adjusted to reflect a revaluation
thereof, based on the fair market values of such assets as of the date of such
contribution, liquidation or distribution, to the extent deemed appropriate in
the sole discretion of the Executive Committee.
"Brera" shall mean Brera Capital Partners, LLC, a Delaware limited
liability company.
"Business Day" shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in New York or Massachusetts are authorized
or required under Applicable Law to close.
"CD&R" shall mean Clayton, Dubilier & Rice, Inc., a Delaware
corporation.
"CEO Nominee" shall have the meaning provided in Section 5.1(b).
"CERA Cash Distribution" shall have the meaning provided in the
fifth recital to this Agreement.
"CERA Common Stock" shall have the meaning provided in the fourth
recital to this Agreement.
"CERA Distribution Loan" shall have the meaning provided in the
fifth recital to this Agreement.
"CERA Inc." or "CERA" shall have the meaning provided in the third
recital to this Agreement.
"CERA LLC Unit Grant Plan" shall have the meaning set forth in the
tenth recital to this Agreement.
"CERA LP" shall have the meaning provided in the third recital to
this Agreement.
"CERA Management Members" shall have the meaning provided in the
tenth recital to this Agreement.
"CERA Nominees" shall have the meaning provided in Section 5.1(b).
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"CERA Non-Voting Common Stock" shall have the meaning provided in
the fourth recital to this Agreement.
"CERA Principals" shall have the meaning provided in the
introductory paragraph to this Agreement.
"CERA Stock Exchange" shall have the meaning provided in the sixth
recital to this Agreement.
"CERA Stockholders" shall have the meaning provided in the
introductory paragraph to this Agreement.
"CERA Trust" shall mean, with respect to any CERA Principal, a trust
the only actual beneficiaries under which are such CERA Principal and/or his
brothers and sisters (whether by whole or half blood), spouse, ancestors and
lineal descendants.
"CERA Voting Common Stock" shall have the meaning provided in the
fourth recital to this Agreement.
"Certificate" shall mean the Certificate of Formation of the Company
and any and all amendments thereto and restatements thereof filed on behalf of
the Company with the office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act.
"Closing" shall mean the consummation of the transactions
contemplated by the Merger and Exchange Agreement.
"Closing Date" shall have the meaning set forth in the Merger and
Exchange Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Company" shall have the meaning provided in the introductory
paragraph of this Agreement.
"Consenting CERA Principal" shall mean (a) Daniel H. Yergin or (b)
in the event of his death or legal incapacity or the termination of his
employment with CERA Inc. for Cause or as a result of any Disability (as each
such term is defined in
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the employment agreement, dated as of the date hereof, to which he is a party),
either (i) one of the two other CERA Principals who is designated in writing by
both such CERA Principals (provided that if such CERA Principals do not make
such designation within 30 days after such death, incapacity or termination,
then the consent of a Consenting CERA Principal shall not be required
notwithstanding any such consent requirement contained in this Agreement until
such time as the Company shall have received written notice from such CERA
Principals of such designation) or (ii) in the event that one of such two other
CERA Principals shall have died or become legally incapable or his employment
with CERA Inc. shall have been terminated for Cause or as a result of any
Disability (as each such term is defined in the employment agreement, dated as
of the date hereof, to which such CERA Principal is a party), the remaining CERA
Principal (provided that if both of such two other CERA Principals shall have
died or become legally incapable or the employment thereof with CERA Inc. shall
have been so terminated, then the consent of a Consenting CERA Principal shall
not be required under this Agreement).
"Contingent Options" shall have the meaning provided in the seventh
recital to this Agreement.
"Controlling Group" shall have the meaning provided in Section
13.4(a).
"Conversion Transaction" shall mean any merger, consolidation,
conversion, reorganization, exchange of securities or liquidation of the Company
as a result of which the Persons who were Members immediately prior to such
transaction (other than such Persons who received cash payments in such
transaction in lieu of fractional interests) will, immediately thereafter, still
own (in the same proportion), directly or indirectly, all of the securities or
other equity interests representing the combined voting power of each successor
entity's then outstanding voting securities or other equity interests.
"Covered Person" shall mean a Member, a Director, any Affiliate of a
Member or a Director, any officers, directors, stockholders, partners, members,
employees, representatives or agents of a Member, a Director, the Company or
their respective Affiliates, or any Person who was, at the time of the act or
omission in question, such a Person.
"Credit Agreement" shall mean the Credit Agreement, dated as of
________, 1997, among MGI and [the lenders named therein], as amended,
supplemented, waived or otherwise modified from time to time.
"Custodian" shall have the meaning provided in Section 13.4(b).
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"Delaware Act" shall have the meaning provided in the first recital
to this Agreement.
"Directors" shall have the meaning provided in Section 5.1(a).
"Draft Sale Agreement" shall have the meaning provided in Section
13.4(a).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Established Securities Market" shall mean (i) a national securities
exchange, (ii) a foreign securities exchange (including but not limited to the
London International Financial Futures Exchange, the Marche a Terme
International de France, the International Stock Exchange of the United Kingdom
and the Republic of Ireland, the Frankfurt Stock Exchange and the Tokyo Stock
Exchange), (iii) a regional or local exchange or (iv) an interdealer quotation
system that regularly disseminates firm buy or sell quotations by identified
brokers or dealers by electronic means or otherwise (including but not limited
to NASDAQ).
"Excess Number" shall have the meaning provided in Section 13.2(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder. Any
reference to a particular section thereof shall include a reference to the
corresponding section, if any, of any such successor Federal statute, and the
rules and regulations thereunder.
"Existing CERA Trusts" shall mean each CERA Trust existing on the
date hereof.
"Existing MGI Options" shall mean all options to purchase MGI Common
Stock (which options have been converted into options to purchase LLC Units as a
result of the consummation of the Transactions) granted by MGI and outstanding
on the date hereof.
"First Offer LLC Units" shall have the meaning provided in Section
13.3.
"Fiscal Year" shall have the meaning provided in Section 2.7.
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"Fundamental Transaction" shall have the meaning provided in Section
13.1(a).
"Fund IV" shall mean The Clayton & Dubilier Private Equity Fund IV
Limited Partnership, a Connecticut limited partnership, and any successor
investment vehicle managed by CD&R.
"Fund IV Nominees" shall have the meaning provided in Section
5.1(b).
"GS LP" shall have the meaning provided in the introductory
paragraph of this Agreement.
"GS Partnership Interest" shall have the meaning provided in the
fourth recital to this Agreement.
"GS Partnership Interest Exchange" shall have the meaning provided
in the seventh recital to this Agreement.
"Independent Nominees" shall have the meaning provided in Section
5.1(b).
"Indirect LLC Interest" shall mean a financial instrument or
contract the value of which is determined in whole or in part by reference to
the Company (including the amount of distributions from the Company, the value
of the Company's assets, or the results of the Company's operations), other than
(i) an LLC Unit, (ii) an option to acquire an LLC Unit from the Company or any
of its Subsidiaries and (iii) a financial instrument or contract that (A) is
treated as debt for federal income tax purposes and (B) is not convertible into
or exchangeable for an interest in the capital or profits of the Company and
does not provide for a payment of equivalent value.
"Initial Holding Period" shall have the meaning provided in Section
13.1(a).
"LLC Interest" shall mean any Indirect LLC Interest and any interest
in the capital or profits of the Company (including the right to receive
distributions from the Company), including but not limited to an LLC Unit and an
option to acquire an LLC Unit from the Company or any of its Subsidiaries.
"LLC Unitholder" shall have the meaning provided in the introductory
paragraph to Schedule C hereto.
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"LLC Units" shall have the meaning provided in Section 8.1.
"LLC Unit Subscription Agreements" shall mean LLC Unit subscription
agreements, LLC Unit option agreements (other than the Contingent Option
Agreements (as defined in the Merger and Exchange Agreement)), LLC Unit Grant
Agreements and any other agreements, plans or arrangements pursuant to which LLC
Units or options, warrants or other rights in respect of LLC Units are granted,
issued or sold by the Company or any of its Subsidiaries to any party.
"Loan Documents" shall have the meaning provided in Section 3.2.
"Management LLC Unitholder" shall mean an LLC Unitholder who is also
an employee of the Company or any of its Subsidiaries or who has an arrangement
to provide services to the Company or any of its Subsidiaries.
"Manager" shall mean each Director and Officer and any other Person
designated by the Members or the Board as a manager of the Company within the
meaning of the Delaware Act.
"MCM" shall have the meaning provided in the introductory paragraph
of this Agreement.
"Member" means any Person listed as a member of the Company on the
Membership Register and includes any Person admitted as an Additional Member or
a Substitute Member pursuant to the provisions of this Agreement in such
Person's capacity as a member of the Company, within the meaning of the Delaware
Act. For purposes of the Delaware Act, the Members holding Voting LLC Units
shall constitute one class or group of Members, and the Members holding
Non-Voting LLC Units shall constitute a separate class or group of Members.
"Member Offer" shall have the meaning provided in Section 13.3(a).
"Member Offering Notice" shall have the meaning provided in Section
13.3(b).
"Membership Register" shall mean the register of the Company
containing the names and addresses of the Members and the other information
described in Section 2.1(c).
"Merger" shall have the meaning provided in the third recital to
this Agreement.
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"Merger and Exchange Agreement" shall mean the Plan of Merger and
Exchange Agreement, dated as of August 1, 1997, by and among MGI, the Company,
Merger Sub, the CERA Stockholders and GS LP.
"Merger Sub" shall have the meaning provided in the second recital
to this Agreement.
"MGI" shall have the meaning provided in the introductory paragraph
of this Agreement.
"MGI/CERA Additional Options" shall mean options to be granted by
MGI or CERA, as the case may be, pursuant to the MCM Group, Inc. LLC Unit Option
Plan and the Cambridge Energy Research Associates, Inc. LLC Unit Option Plan,
respectively, in respect of a total of up to 617,418 LLC Units.
"NASD" shall mean National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the NASD National Market System.
"Newco" shall have the meaning provided in Section 13.6(b).
"Nominees" shall have the meaning provided in Section 5.1(b).
"Non-Voting LLC Units" shall have the meaning provided in Section
8.1.
"Offer" shall have the meaning provided in Section 13.5(a).
"Offered Securities" shall have the meaning provided in Section
13.5(b).
"Offering Member" shall have the meaning provided in Section 13.3.
"Officers" shall have the meaning provided in Section 6.1.
"100% Buyer" shall have the meaning provided in Section 13.4(a).
"Original Agreement" shall have the meaning provided in the first
recital to this Agreement.
"Other LLC Unitholders" shall have the meaning provided in Section
13.4(a).
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"Permitted Transferee" shall mean:
(i) any transferee by bequest or the laws of descent or
distribution;
(ii) any trust for employees of the Company and/or any of the
Company's Subsidiaries established under a qualified employee benefit
plan;
(iii) in the case of any Member that is a trust, the trust
beneficiaries of such trust;
(iv) as to any Member which is a corporation, company, partnership
or other entity, any Specified Affiliate of such Member; and
(v) in the case of any Member that is an individual, any trust the
only actual beneficiaries under which are such individual and/or one or
more of his brothers and sisters (whether by whole or half blood), spouse,
ancestors and lineal descendants,
provided, in each such case, that the Permitted Transferee shall agree in
writing to be bound by the terms of this Agreement in accordance with Section
13.1(c) and shall otherwise acquire the LLC Units proposed to be transferred in
compliance with this Agreement.
"Person" shall mean any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company, or other legal entity or organization.
"Prime Rate" shall mean the rate of interest publicly announced from
time to time by The Chase Manhattan Bank as its prime rate.
"Private Transfer" shall mean:
(i) a Transfer in which the basis, for federal income tax purposes,
of the LLC Interest that is the subject of the Transfer in the hands of
the transferee is determined, in whole or in part, by reference to its
basis in the hands of the transferor or is determined under section 732 of
the Code;
(ii) a Transfer at death, including a Transfer from an estate or
testamentary trust;
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(iii) a Transfer between members of a family (as defined in section
267(c)(4) of the Code);
(iv) a Transfer involving the issuance of LLC Interests by (or on
behalf of) the Company in exchange for cash, property or services;
(v) a Transfer involving distributions from a retirement plan
qualified under section 401(a) of the Code or an individual retirement
account;
(vi) a block transfer (as defined in section 1.7704-1(e)(2) of the
Treasury Regulations);
(vii) a Transfer pursuant to a right under a redemption or
repurchase agreement (as defined in section 1.7704-1(e)(3) of the Treasury
Regulations) that is exercisable only upon (A) the death, disability or
mental incompetence of the Member whose LLC Interest is the subject of the
Transfer or (B) the retirement or termination of the performance of
services of an individual who actively participated in the management of,
or performed services on a full-time basis for, the Company;
(viii) a Transfer pursuant to a closed end redemption plan (as
defined in section 1.7704-1(e)(4) of the Treasury Regulations); and
(ix) a Transfer or Transfers by one or more Members of LLC Interests
representing in the aggregate 50 percent or more of the total interests in
the capital and profits of the Company in one transaction or a series of
related transactions.
"Prohibited Transaction" shall mean any Transfer of LLC Units which
would (i) cause the Company to be in violation of any Applicable Laws, (ii)
result in the assets of the Company constituting assets of one or more employee
benefit plans subject to ERISA, or constitute a prohibited transaction within
the meaning of section 406 of ERISA or section 4975 of the Code, (iii) cause the
Company to be controlled by or under common control with an "investment company"
for purposes of the Investment Company Act of 1940, as amended, (iv) cause the
Company to violate, breach or default under any then outstanding indebtedness of
the Company or any guarantee by the Company of indebtedness of any Subsidiary of
the Company, including MGI or CERA Inc., or any financing or security document
relating thereto, or require the payment of any such indebtedness prior to its
scheduled maturity or (v) require the Company to register any of its securities
pursuant to the Securities Act or
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Exchange Act, except in connection with a Public Offering approved by the Board
or pursuant to Schedule C hereto.
"Proportionate Share" shall have the meaning provided in Section
13.5(b).
"Public Market" shall mean such time as 30% of the then outstanding
LLC Units have been sold to the public pursuant to an effective registration
statement under the Securities Act or pursuant to Rule 144.
"Public Offering" shall mean a public offering of LLC Units pursuant
to an effective registration statement under the Securities Act.
"Qualifying Number" shall have the meaning provided in Section
13.2(b).
"Qualifying Sale" shall have the meaning provided in Section
13.2(b).
"Registrable Securities" shall mean (a) any LLC Units issued by the
Company pursuant to the Transactions, (b) any LLC Units transferred to CERA
Management Members promptly after the date hereof as described in the tenth
recital to this Agreement, (c) any Contingent LLC Units, (d) any LLC Units
issued upon exercise of any CERA Contingent Option or GS Contingent Option, (e)
LLC Units transferred to any Person upon exercise of any Existing MGI Option,
(f) any LLC Units transferred to any Person upon exercise of any MGI/CERA
Additional Options pursuant to the applicable LLC Unit Subscription Agreement
that provides that such LLC Units shall be Registrable Securities, (g) any
additional LLC Units granted, issued or sold pursuant to any LLC Unit
Subscription Agreement that provides that such LLC Units shall be Registrable
Securities, except for any such LLC Units issued pursuant to an effective
registration statement under the Securities Act on Form S-8, Form S-4, Form S-1
or any successor form to any thereof (unless such LLC Units are held by a
Management LLC Unitholder who is an Affiliate of the Company), (h) any LLC Units
issued pursuant to the terms of, and under the circumstances set forth in,
Section 13.5, and (i) any securities issued or issuable with respect to any LLC
Units referred to in the foregoing clauses (1) upon any conversion or exchange
thereof, (2) by way of a distribution of LLC Units or a split of the LLC Units,
(3) in connection with a combination of LLC Units or a recapitalization, merger,
consolidation or other reorganization of the Company or (4) otherwise, in all
cases subject to the penultimate paragraph of Section 1.3 of Schedule C hereto.
As to any particular Registrable Securities, once issued, such securities shall
cease to be Registrable Securities when (A) a registration statement (other than
a Special Registration pursuant
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to which such securities were transferred to a Management LLC Unitholder who is
an Affiliate of the Company) with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement, (B) such
securities shall have been distributed to the public in reliance upon Rule 144,
(C) subject to the relevant provisions of this Agreement and the LLC Unit
Subscription Agreement pursuant to which such securities shall have been
granted, issued or sold (if any), such securities shall have been otherwise
transferred, new certificates for such securities not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any similar state
law then in force, (D) except for purposes of Sections 13.2 and 13.5, such
securities have been held, or deemed, by virtue of tacking holding periods as
contemplated by Rule 144, to be held for a period of two years by a Person who
is not an Affiliate of the Company, (E) such securities shall have ceased to be
outstanding, (F) except for purposes of Sections 13.2 and 13.5, with respect to
any such securities acquired by a Management LLC Unitholder pursuant to the
exemption from the registration requirements of the Securities Act contained in
Rule 701 (or any successor provision) thereunder, at any time following the date
the Company registers a class of equity securities under section 12 of the
Exchange Act or (G) the Company shall have registered LLC Units under section 12
of the Exchange Act and such securities are held by a Person who is not an
Affiliate of the Company; provided that (x) for purposes of clauses (A) and (G)
above, (1) securities held by a Person who was not an Affiliate of the Company
at the time of the event specified in such clauses but who thereafter becomes an
Affiliate of the Company shall be and remain Registrable Securities for so long
as such Person is an Affiliate of the Company and (2) securities held by a
Person who was an Affiliate of the Company at the time of the event specified in
such clauses shall remain Registrable Securities for only so long as such Person
remains an Affiliate of the Company and (y) with respect to any securities that
were formerly Registrable Securities the Board may, under such circumstances as
it deems appropriate, designate such securities as Registrable Securities for
purposes of this Agreement.
"Registration Expenses" shall mean all expenses incident to the
Company's performance of its obligations under or compliance with Section 1 of
Schedule C hereto, including, but not limited to, all registration and filing
fees, all fees and expenses of complying with securities or blue sky laws, all
fees and expenses associated with listing securities on exchanges or NASDAQ,
all fees and other expenses associated with filings with the NASD (including, if
required, the fees and expenses of any "qualified independent underwriter" and
its counsel), all printing expenses, the fees and disbursements of counsel for
the Company and of its independent public accountants, and the expenses of any
special audits made by such
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accountants required by or incidental to such performance and compliance and the
fees and disbursements of one law firm (but not more than one) retained by the
holders holding a majority (by number of LLC Units) of the Registrable
Securities.
"Regulated Holder" shall mean any limited partner of Fund IV which
is not permitted, under any applicable law, regulation, order, rule or other
requirement of any governmental authority, to own, control or have the power to
vote more than a specified quantity of securities of any kind issued by the
Company.
"Regulated Securities" shall mean, with respect to any Regulated
Holder, the number of Voting LLC Units in excess of the amount such Regulated
Holder is permitted, under any applicable law, regulation, order, rule or other
requirement of any governmental authority to own, control or have the power to
vote.
"Remaining LLC Units" shall have the meaning provided in Section
13.3(b).
"Requisite Percentage of CERA Principals" shall mean, after the
Initial Holding Period, as to two requests under Section 1.1 of Schedule C, the
CERA Principals who, as of the Closing Date, held not less than 66-2/3% of the
LLC Units that all of the CERA Principals who, at the time of determination,
hold LLC Units, held on the Closing Date (including, for the purposes of
calculating the number of LLC Units held by a CERA Principal, any LLC Units held
by such CERA Principal's CERA Trusts).
"Requisite Percentage of LLC Unitholders" shall mean the holder or
holders (other than the CERA Principals and the CERA Principals' CERA Trusts) of
at least (a) as to the initial request under Section 1.1(a)(i) of Schedule C
hereto, 30% (by number of LLC Units of the Registrable Securities held at the
time outstanding or (b) as to any other request, 10% (by number of LLC Units) of
the Registrable Securities at the time outstanding.
"Restricted Holder" shall have the meaning provided in Section
13.1(a).
"Restricted Holder Sale" shall have the meaning provided in Section
13.5(a).
"Rule 144" shall mean Rule 144 (or any successor provision) under
the Securities Act.
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"Rule 144A" shall mean Rule 144A (or any successor provision) under
the Securities Act.
"Sale Notice" shall have the meaning provided in Section 13.2(a).
"Secondary Market" shall mean a market for LLC Interests (whether
maintained by the Company or any other Person) in which (i) LLC Interests are
regularly quoted by any Person, such as a broker or dealer, making a market in
the interests, (ii) any Person regularly makes available to the public
(including customers or subscribers) bid or offer quotes with respect to LLC
Interests and stands ready to effect buy or sell transactions at the quoted
prices for itself or on behalf of others, (iii) the holder of an LLC Interest
has a readily available, regular, and ongoing opportunity to sell or exchange
the interest through a public means of obtaining or providing information of
offers to buy, sell, or exchange LLC Interests or (iv) prospective buyers and
sellers otherwise have the opportunity to buy, sell, or exchange LLC Interests
in a time frame and with the regularity and continuity that is comparable to
that described in any of the preceding clauses (i), (ii) and (iii).
"Section 13.4 Closing" shall have the meaning provided in Section
13.4(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder. Any reference to a
particular section thereof shall include a reference to the corresponding
section, if any, of any such successor Federal statute, and the rules and
regulations thereunder.
"Special Distribution" shall mean a distribution to Members of (i)
the net proceeds of any sale or other disposition (other than in a Spin-Off),
prior to the earlier of the issuance of the Contingent LLC Units and June 30,
2000, of (A) all or any portion of the capital stock of MGI held by the Company
(whether by the sale of such stock, merger or otherwise), or more than 50% of
the assets (measured by their fair market value as determined by the Board in
good faith) of MGI if the proceeds thereof are distributed to the Company, or
(B) capital stock of CERA Inc. held by the Company, or more than 50% of the
assets (measured by their fair market value as determined by the Board in good
faith) of CERA Inc. if the proceeds thereof are distributed to the Company, and
sold or otherwise disposed of in any transaction or series of related
transactions not constituting a Sale (as such term is defined in the Merger and
Exchange Agreement) of CERA Inc. or (ii) prior to the earlier of the issuance of
the Contingent LLC Units and June 30, 2000, all or any portion of the capital
stock of MGI held by the Company or less than all of the capital stock of CERA
Inc. held by the Company.
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"Special Registration" shall mean (a) the registration of equity
securities and/or options or other rights in respect thereof to be offered to
directors, members of management, employees, consultants or sales agents,
distributors or similar representatives of the Company or its direct or indirect
Subsidiaries or senior executives of Persons controlled by an Affiliate of the
Company or (b) the registration of equity securities and/or options or other
rights in respect thereof solely on Form S-4 or S-8 or any successor form.
"Specified Affiliate" shall mean with respect to any Person, any
other Person controlling, controlled by or under common control with such first
Person solely by virtue of having the power to direct the affairs of the Person
by reason of ownership, directly or indirectly, of at least 75% of the
outstanding voting securities or other equity interests of such Person, other
than any such Person (other than a wholly owned Subsidiary of such first Person)
that was created or used solely for the purpose of holding LLC Units.
"Specified Laws" shall mean the Securities Act, the Exchange Act,
any applicable foreign securities laws, any state securities or "blue sky laws,"
the merger control laws of any foreign jurisdiction in which the Company is then
doing business, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and ERISA.
"Spin-Off" shall mean, with respect to MGI, CERA Inc. or any other
Subsidiary of the Company, as applicable, the distribution by the Company to
Members of all of the capital stock of MGI or CERA Inc., or all of the capital
stock or other voting securities or other equity interests of such Subsidiary,
as the case may be, owned by the Company.
"Subsidiary" shall mean with respect to any Person, any corporation
or other Person, a majority of the outstanding voting stock or other equity
interests of which is owned, directly or indirectly, by that Person.
"Substitute Director" shall have the meaning provided in Section
5.1(b).
"Substitute Member" shall mean a Person who is admitted to the
Company as a Member pursuant to Section 13.7 hereof and who is named as a Member
in the Membership Register.
"Take-Along Notice" shall have the meaning provided in Section
13.4(a).
"Take-Along Offer" shall have the meaning provided in Section
13.4(a).
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"Tax Liability Distribution" shall have the meaning provided in
Section 9.2.
"Tax Matters Partner" shall have the meaning provided in Section
10.2(c).
"Taxable Year" shall have the meaning provided in Section 2.7.
"Third Round" shall have the meaning provided in Section 13.3(b).
"Transactions" shall have the meaning provided in the seventh
recital to this Agreement.
"Transfer" (or any variation thereof used herein) shall mean any
direct or indirect sale, assignment, mortgage, transfer, pledge, hypothecation
or other disposition.
"Treasury Regulations" shall mean the Federal income tax
regulations, including any temporary or proposed regulations, promulgated under
the Code, as such Treasury Regulations may be amended from time to time (it
being understood that all references herein to specific sections of the Treasury
Regulations shall be deemed also to refer to any corresponding provisions of
succeeding Treasury Regulations).
"Underwritten Public Offering" shall mean an underwritten Public
Offering (whether by the Company, one or more Members or any combination
thereof), conducted in accordance with the provisions of this Agreement and led
by at least one underwriter of nationally recognized standing.
"Voting LLC Units" shall have the meaning provided in Section 8.1.
"Withdrawing Director" shall have the meaning provided in Section
5.1(b).
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ARTICLE II
CONTINUATION AND TERM
Section 2.1. Continuation. (a) The Members hereby agree to continue
the Company as a limited liability company under and pursuant to the provisions
of the Delaware Act and agree that the rights, duties and liabilities of the
Members shall be as provided in the Delaware Act, except as otherwise provided
herein.
(b) (i) upon the consummation of the GS Partnership Interest
Exchange and the CERA Stock Exchange, each of GS LP and each of the CERA
Stockholders listed on Schedule A hereto shall be admitted as members of the
Company, and the Company shall promptly issue to each such Person the number of
LLC Units set forth opposite such Person's name on Schedule A hereto, (ii) at
the Effective Time (as defined in the Merger and Exchange Agreement), Fund IV
and the other former stockholders of MGI listed on Schedule A hereto shall be
admitted as members of the Company, and the Company shall promptly issue to each
such Person the number of LLC Units set forth opposite such Person's name on
Schedule A hereto; provided that any such Person who holds Dissenting Shares (as
defined in the Merger and Exchange Agreement) shall not be admitted as a member
of the Company and shall not be issued LLC Units, except that if such Person
withdraws its demand for an appraisal of shares of MGI stock or otherwise loses
its right of appraisal of shares of MGI stock, in any case pursuant to the
General Corporation Law of the State of Delaware, such Person shall be deemed to
have been admitted as a member of the Company as of the date hereof and the
Company shall promptly issue to such Person the number of LLC Units set forth
opposite such Person's name on Schedule A hereto, (iii) upon the admission of
the Persons described in the foregoing clauses (i) and (ii), MGI and MCM shall
withdraw as members of the Company, and the remaining Members shall continue the
business of the Company without dissolution, and (iv) the day after the
consummation of the Transactions, each CERA Management Member listed on Schedule
A hereto who shall have executed and delivered an LLC Unit Grant Agreement,
substantially in the form attached hereto as Exhibit A, shall be admitted as a
member of the Company, and the Company shall promptly issue to CERA Inc., and
CERA Inc. shall promptly transfer to each such Person, the number of LLC Units
specified in the applicable LLC Unit Grant Agreement.
(c) The name, mailing address, employer identification number or
social security number and the number of LLC Units owned by each Member shall be
listed on the Membership Register of the Company kept at the Company's principal
office. The Chief Executive Officer, the President or the Secretary shall be
required to update the Membership Register from time to time as necessary to
accurately reflect
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the information required to be set forth therein, including with respect to the
resignation of any Member or the admission of any Additional Member or
Substitute Member. Any update or other revision to the Membership Register made
in accordance with this Agreement shall not be deemed an amendment to this
Agreement. Any reference in this Agreement to the Membership Register shall be
deemed to be a reference to the Membership Register as revised and in effect
from time to time.
(d) The Chairman, the Vice Chairman, the Chief Executive Officer,
the President or any other Officer authorized by the Board as an authorized
person within the meaning of the Delaware Act may execute, deliver and file
documents required by the Delaware Act to be filed with the Secretary of State
of the State of Delaware.
Section 2.2. Name. The name of the Company heretofore formed and
continued hereby is Global Decisions Group LLC. The business of the Company
shall be conducted under such name or such other names as the Board may from
time to time designate in accordance with the Delaware Act.
Section 2.3. Term of Company. The term of the Company shall be
deemed to have commenced on the date of the initial filing of the Certificate
with the Secretary of State of the State of Delaware. The Company shall continue
perpetually unless and until dissolved as provided in Article XIV.
Section 2.4. Registered Agent and Office. The Company's registered
agent and office in the State of Delaware shall be The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801. The Chairman, the Vice Chairman, the Chief Executive
Officer, the President or any other Officer authorized by the Board may
designate another registered agent and/or registered office from time to time in
accordance with the then applicable provisions of the Delaware Act and any other
applicable laws.
Section 2.5. Principal Place of Business. The principal place of
business of the Company shall be located at 20 University Road, Cambridge,
Massachusetts 02138. The location of the Company's principal place of business
may be changed by the Board from time to time in accordance with the then
applicable provisions of the Delaware Act and any other applicable laws.
Section 2.6. Qualification in Other Jurisdictions. The Chairman, the
Chief Executive Officer, the President or any other Officer shall cause the
Company to be qualified, formed or registered under assumed or fictitious name
statutes or similar
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laws in any jurisdiction in which the Company transacts business and where such
qualification, formation or registration shall be necessary or desirable. The
Chief Executive Officer, the President or any other Officer, as an authorized
person within the meaning of the Delaware Act, shall execute, deliver and file
any certificates (and any amendments and/or restatements thereof) necessary for
the Company to qualify to do business in a jurisdiction in which the Company may
wish to conduct business.
Section 2.7. Fiscal Year; Taxable Year. The fiscal year of the
Company for financial accounting purposes (the "Fiscal Year") shall end on June
30. The taxable year of the Company for federal, state and local income tax
purposes (the "Taxable Year") shall end on December 31.
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY
Section 3.1. Purposes. The purposes of the Company are, and the
Company shall have the power and authority, to acquire, hold, vote, sell or
otherwise dispose of, to receive, allocate and distribute distributions on and
other proceeds of, and to manage, investments in accordance with the terms of
this Agreement, to engage in all acts or activities as the Company deems
necessary, advisable, convenient or incidental to the furtherance and
accomplishment of the foregoing, including without limitation the acts described
in Section 3.2, and to engage in any other lawful act or activity for which
limited liability companies may be formed under the Delaware Act.
Section 3.2. Powers of the Company. The Company shall have the power
and authority to take any and all actions necessary, appropriate, proper,
advisable, incidental or convenient to or for the furtherance of the purpose set
forth in Section 3.1, including, but not limited to, the power and authority:
(i) to have and exercise the powers granted to a limited liability
company by the Delaware Act in any state, territory, district or
possession of the United States, or in any foreign country, that may be
necessary, advisable, convenient or incidental to the accomplishment of
the purposes of the Company;
(ii) to purchase, take, receive, subscribe for or otherwise acquire,
own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise
dispose of, and otherwise use and deal in and with, shares or other
interests in or obligations of domestic or foreign corporations,
associations, general or limited
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partnerships (including, without limitation, the power to be admitted as a
partner thereof and to exercise the rights and perform the duties created
thereby), trusts, limited liability companies (including, without
limitation, the power to be admitted as a member or appointed as a manager
thereof and to exercise the rights and perform the duties created
thereof), or individuals or direct or indirect obligations of the United
States or of any government, state, territory, governmental district or
municipality or of any instrumentality of any of them;
(iii) to enter into transactions contemplated by any financing
agreement and related documents entered into in connection with the
Transactions or otherwise, as any such agreement and related documents may
be amended, supplemented, waived or otherwise modified from time to time
("Loan Documents");
(iv) to own the capital stock of Merger Sub, MGI and CERA Inc., and
exercise rights and perform obligations in connection therewith;
(v) to enter into, and exercise rights and perform obligations in
respect of, or to take or omit to take such other action in connection
with, agreements of any kind, including without limitation, (A) Loan
Documents and any guarantee, surety or endorsement related to Loan
Documents to which the Company may be a party, and any other agreement to
which it is a party on the date hereof, in each case as amended,
supplemented, waived or otherwise modified from time to time, and any
refinancings, refundings, renewals or extensions thereof, (B) contracts
and agreements with officers, directors and employees of the Company or
any Subsidiary of the Company relating to their employment or
directorships, (C) insurance policies and related contracts and
agreements, and (D) equity subscription agreements, equity option
agreements, registration rights agreements, voting and other equityholder
agreements, engagement letters, underwriting agreements and other
agreements in respect of its equity securities or any offering, issuance
or sale thereof, including but not limited to in respect of the LLC Unit
Subscription Agreements, as may be necessary or desirable to further the
purposes of the Company;
(vi) to offer, issue and sell LLC Units;
(vii) to file registration statements, and comply with applicable
reporting and other obligations, under federal, state or other securities
laws;
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(viii) to list the Company's equity securities and comply with
applicable reporting and other obligations in connection therewith;
(ix) to retain transfer agents, private placement agents,
underwriters, counsel, accountants and other advisors and consultants;
(x) to perform obligations under and comply with the Company's
Certificate and this Agreement, or any applicable law, ordinance,
regulation, rule, order, judgment, decree or permit, including, without
limitation, as a result of or in connection with the activities of MGI or
CERA Inc. and their respective Subsidiaries;
(xi) to incur and pay its operating and business expenses and any
taxes for which it may be liable;
(xii) to lend money to, borrow money from (other than to finance any
acquisition of property), act as surety, guarantor or endorser for,
provide collateral for, and transact other business with third parties
including Members and Affiliates of the Company and to invest and reinvest
its funds, to take and hold real and personal property for the payment of
funds so loaned or invested;
(xiii) to establish, have, maintain or close one or more offices
within or without the State of Delaware and in connection therewith to
rent or acquire office space and to engage personnel;
(xiv) to open, maintain and close bank and brokerage accounts,
including the power to draw checks or other orders for the payment of
moneys, and to invest such funds as are temporarily not otherwise required
for Company purposes;
(xv) to bring and defend actions and proceedings at law or in equity
or before any governmental, administrative or other regulatory agency,
body or commission, and to pay, collect, compromise, or otherwise adjust
or settle any and all other claims or demands of or against the Company or
to hold such proceeds against the payment of contingent liabilities;
(xvi) to hire consultants, custodians, attorneys, accountants and
such other agents and employees of the Company as it may deem necessary or
advisable, to authorize each such agent and employee to act for and on
behalf of the Company and to fix the compensation of each such agent and
employee;
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(xvii) to make all elections, investigations, evaluations and
decisions, binding the Company thereby, that may, in the sole judgment of
the Directors or the Officers, be necessary or appropriate for the
acquisition, holding or disposition of securities for the Company;
(xviii) to enter into, perform and carry out contracts of any kind,
including, without limitation, contracts with the Directors, the Officers,
any Manager, any Member, any Affiliate thereof, or any agent or Affiliate
of the Company necessary to, in connection with, convenient to, or
incidental to the accomplishment of the purposes of the Company;
(xvix) to indemnify any Person in accordance with the Delaware Act
and to obtain any and all types of insurance;
(xx) to merge with, or consolidate into, another Delaware limited
liability company or other business entity (as defined in section
18-209(a) of the Delaware Act), including a corporation (pursuant to
section 264 of the Delaware General Corporation Law) in accordance with
Section 4.4(f) hereof;
(xxi) to cease its activities and cancel its Certificate;
(xxii) to enter into and perform its obligations under the Merger
and Exchange Agreement without any further act, vote or approval of any
Person, and all actions heretofore taken by the Company in connection with
the Merger and Exchange Agreement are hereby ratified (including the
execution and delivery of the Merger and Exchange Agreement on behalf of
the Company);
(xxiii) to make, execute, acknowledge and file any and all documents
or instruments, and to carry on any other activities in connection with
the foregoing, as may be necessary, convenient or incidental to the
accomplishment of the purpose of the Company; and
(xxiv) other activities incidental or related to the foregoing.
ARTICLE IV
MEMBERS
Section 4.1. Powers of Members. The Members shall have the power to
exercise any and all rights or powers granted to the Members pursuant to the
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express terms of this Agreement. Except as otherwise required by law, on all
matters submitted to the Members for a vote, the holders of Non-Voting LLC Units
shall have no right to vote with respect to such LLC Units. The approval or
consent of the Members shall not be required in order to authorize the taking of
any action by the Company unless and only to the extent that (i) this Agreement
shall expressly provide therefor, (ii) such approval or consent shall be
required by non-waivable provisions of the Delaware Act or (iii) the Board shall
determine that obtaining such approval or consent would be appropriate or
desirable. The Members shall have no power to bind the Company.
Section 4.2. Partition. Each Member waives, until termination of the
Company, any and all rights that such Member may have to maintain an action for
partition of the Company's property.
Section 4.3. Resignation. A Member may not resign from the Company
prior to the dissolution and winding up of the Company pursuant to Article XIV,
provided that a Member who Transfers 100% of the LLC Units which such Member
owns to a Transferee in accordance with Section 13.1 shall automatically cease
to be a Member, and provided, further, that such Member shall not be entitled to
receive any distributions from the Company upon or after a sale, assignment,
transfer or other disposition of 100% of the LLC Units that such Member owns.
Section 4.4. Meetings of Members. (a) Annual Meetings. The annual
meeting of the Members of the Company for the election of Directors and for the
transaction of such other business as properly may come before such meeting
shall be held at such place, either within or without the State of Delaware, and
at 10:00 a.m. local time on the third Tuesday in October beginning in October
1998 (or, if such day is not a Business Day, then on the next succeeding
Business Day), or at such other date and hour, as may be fixed from time to time
by resolution of the Board and set forth in the notice or waiver of notice of
the meeting.
(b) Special Meetings of the Members; Action by the Members. Meetings
of the Members (i) may be called by the Chairman, Vice Chairman or Chief
Executive Officer, or by the Board and (ii) shall be called by the Chairman or
the Secretary for any purpose or purposes upon the written request of a Member
or Members representing not less than 20% of the outstanding LLC Units as
described in Section 4.4(e).
(c) Notice of Meetings; Waiver of Notice. No notice of any meeting
of Members need be given to any Member who submits a signed waiver of notice,
whether before or after the meeting. Neither the business to be transacted at,
nor the
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purpose of, any regular or special meeting of the Members need be specified in a
written waiver of notice. The attendance of any Member at a meeting of Members
shall constitute a waiver of notice of such meeting, except when the Member
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting is
not lawfully called or convened. Notice of any such meeting shall be given to
all Members not less than five (5) Business Days nor more than thirty (30) days
prior to the date of such meeting, and shall state the location and time of the
meeting and the nature of the business of be transacted.
(d) Quorum. Except as otherwise required by law or by the
Certificate, the presence in person or by proxy of the holders of record of a
majority of the LLC Units entitled to vote at a meeting of Members shall
constitute a quorum for the transaction of business at such meeting.
(e) Voting. If the Board has fixed a record date, every holder of
record of Voting LLC Units entitled to vote at a meeting of Members or to
consent in writing in lieu of a meeting of Members shall be entitled to one vote
for each Voting LLC Unit outstanding in his name on the books of the Company at
the close of business on such record date. If no record date has been so fixed,
then every holder of record of Voting LLC Units entitled to vote at a meeting of
Members or to consent in writing in lieu of a meeting of Members shall be
entitled to one vote for each Voting LLC Unit outstanding in his name on the
books of the Company at the close of business on the day next preceding the day
on which notice of the meeting is given or the first such consent in respect of
the applicable action is executed and delivered to the Company, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. In the event that the action to be considered by the Members
shall have been determined by the Board to constitute a Sale (as defined in the
Merger and Exchange Agreement) of the Company, MGI or CERA Inc., solely for the
purposes of determining the number of votes to which each holder of record of
Voting LLC Units shall be entitled in respect of any action to be taken by the
Members to approve such a Sale, such number of Contingent LLC Units shall be
deemed to be outstanding on the applicable record date or day next preceding the
day on which such notice is given or the first such consent is so executed and
delivered, as the case may be, and in such names, as the Board shall determine
would be issuable pursuant to Sections 1.3, 1.4, 1.5 and 1.6 of the Merger and
Exchange Agreement based upon the CERA CAGR (as defined in the Merger and
Exchange Agreement) as of the most recent available date prior to such
determination. Except as otherwise required by Applicable Law, the Certificate,
Section 4.4(f) or Section 7.1, the vote of a majority of the Voting LLC Units
represented in person or by proxy at
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any meeting at which a quorum is present shall be sufficient for the
transaction of any business at such meeting.
(f) Super-Majority Voting Requirements. Each of the following events
shall require the approval of at least two-thirds of the Members (by number of
LLC Units) then entitled to vote at a meeting of Members, upon the
recommendation of the Board that the Members give such approval:
(i) a merger, consolidation, conversion or reorganization of the
Company, other than a Conversion Transaction;
(ii) the dissolution of the Company pursuant to Section 14.1(a); and
(iii) the sale or other disposition of all or substantially all of
the assets of the Company or the sale or other disposition of all of the
capital stock of MGI or CERA Inc. owned by the Company, other than in a
Spin-Off of MGI or CERA.
Members shall not be entitled to appraisal rights in respect of their LLC Units,
including in connection with actions approved by the Members in accordance with
and pursuant to this Section 4.4(f) or upon a Conversion Transaction.
(g) Proxies. Each Member may authorize any Person to act for such
Member by proxy on all matters in which a Member is entitled to participate,
including waiving notice of any meeting, or voting or participating at a
meeting. Every proxy must be signed by the Member or such Member's
attorney-in-fact. No proxy shall be valid after the expiration of three years
from the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the Member executing it unless otherwise
provided in such proxy, such revocation shall not invalidate or otherwise affect
actions taken under such proxy prior to such revocation.
(h) Organization. Each meeting of Members shall be conducted by the
Chairman or by such other Person as the Board may designate.
(i) Action Without a Meeting. Unless otherwise provided in this
Agreement, any action which may be taken at any meeting of the Members may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by Members having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all Members entitled to vote were
present. Prompt notice
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of the taking of the action without a meeting by less than unanimous written
consent shall be given to those Members who have not consented in writing.
Section 4.5. Business Transactions of a Member with the Company. A
Member may lend money to, borrow money from, act as surety or endorser for,
guaranty or assume one or more specific obligations of, provide collateral for,
or transact any other business with the Company, provided that any such
transaction pursuant to any agreement entered into after the date hereof shall
be either (i) on terms not less favorable to the Company than those obtainable
from third parties or (ii) approved by a majority of Directors not affiliated
with, or related to, the interested Member.
Section 4.6. No Cessation of Membership upon Bankruptcy. A Person
shall not cease to be a Member of the Company upon the happening, with respect
to such Person, of any of the events specified in section 18-304 of the Delaware
Act.
ARTICLE V
MANAGEMENT
Section 5.1. Board. (a) Generally. The business and affairs of the
Company shall be managed by or under the direction of a committee of the Company
(the "Board") consisting of at least three (3) natural persons ("Directors"),
which persons are either named in the first sentence of Section 5.1(b)(i) or
elected as provided in Section 5.1(b). The Board shall have full, exclusive and
complete discretion to manage and control the business and affairs of the
Company, to make all decisions affecting the business and affairs of the Company
and to take all such actions as it deems necessary or appropriate to accomplish
the purposes of the Company as set forth herein, including, without limitation,
to exercise all of the powers of the Company set forth in Section 3.2.
(b) Voting Agreement.
(i) Election and Term of the Company's Board; Number of Directors.
Upon consummation of the Transactions, the Directors will be [list names of
initial Directors], and Mr. Cribiore shall be the Chairman and Mr. Yergin shall
be the Vice Chairman. Except as provided in the preceding sentence, the
Directors shall be elected at each annual meeting of the Members. Each person
named in the first sentence of this Section 5.1(b)(i) or hereafter elected a
Director, by such naming or election, as the case may be, shall be deemed to
have been designated as a Manager
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for purposes of the Delaware Act. Subject to this Section 5.1(b), the number of
Directors may be modified from time to time by resolution of the Board. Each
Director shall hold office until a successor is elected as provided herein or
until such Director's earlier death, resignation or removal. Except as otherwise
provided in this Section 5.1(b), at each meeting of the Members for the election
of Directors, provided a quorum is present, the Directors shall be elected by a
majority of the votes validly cast in such election. If any vacancies shall
occur in the Board, by reason of death, resignation, removal or otherwise, the
Directors then in office shall continue to act, and such vacancies may be filled
by the Members, subject to the provisions of paragraph (b)(ii) of this Section
5.1, or, following the settlement date of the first Underwritten Public Offering
after the date hereof, by a majority vote of the Directors then in office (even
if less than a quorum). If the authorized number of Directors shall be
increased, newly created directorships may be elected at a meeting of the
Members, subject to this Section 5.1(b).
Directors need not be Members. Each of the Members agrees that such
Member will, at all times after the date of this Agreement and until the
settlement date of the first Underwritten Public Offering after the date hereof,
vote all LLC Units now or hereafter owned by such Member at any meeting of
Members and in whatever other manner is necessary to ensure that (x) the Board
will at all times consist of at least (A) two nominees who shall be any two of
the CERA Principals nominated by the CERA Principals (the "CERA Nominees"), (B)
one nominee who shall be the chief executive officer of MCM (the "MCM Nominee"),
(C) one nominee who shall be the Chief Executive Officer, if any, of the Company
(the "CEO Nominee"), (D) three nominees who shall be such employees of CD&R,
Brera or other Affiliates of Fund IV as shall be nominated by Fund IV and such
of its Permitted Transferees who hereafter become owners of LLC Units (the "Fund
IV Nominees") and (E) up to six additional nominees, who shall be persons not
affiliated with CD&R, Fund IV, Brera or any of the CERA Principals, as may be
nominated by Fund IV with the written consent of the Consenting CERA Principal,
whose consent shall not be unreasonably withheld (the "Independent Nominees"
and, together with the CERA Nominees, the MCM Nominee, the CEO Nominee and the
Fund IV Nominees, the "Nominees") and (y) all such Nominees shall be duly
elected. Of the Directors on the date hereof, Messrs. Yergin and _______ shall
be the CERA Nominees, Mr. David D. Nixon shall be the MCM Nominee, Messrs.
Cribiore, Gordon McMahon and _______ shall be the Fund IV Nominees and Messrs.
_______, _______, _______, _______, _______ and _______ shall be the Independent
Nominees. Until the settlement date of the first Underwritten Public Offering
after the date hereof, the Chairman shall always be a Fund IV Nominee and the
Vice Chairman shall always be a CERA Nominee.
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(ii) Replacement Nominees. If, prior to his or her election to the
Board pursuant to Section 5.1(b)(i), any Nominee shall be unable or unwilling to
serve as a Director, the Member or Members who nominated such Nominee in
accordance with Section 5.1(b)(i) or, following the settlement date of the first
Underwritten Public Offering after the date hereof, the Board shall be entitled
to nominate a replacement who shall then be a Nominee for purposes of this
Section 5.1. If, following election to the Board pursuant to Section 5.1(b)(i),
any Nominee shall resign or be removed or be unable to serve for any reason
prior to the expiration of his or her term as a Director (a "Withdrawing
Director"), the Member or Members who nominated such Withdrawing Director shall
appoint a replacement Nominee (a "Substitute Director") to fill the unexpired
term of the Withdrawing Director whom such Substitute Director is replacing,
provided that any Independent Nominee shall be replaced with the written consent
of the Consenting CERA Principal, whose consent shall not be unreasonably
withheld. If a Member or Members shall fail to so appoint a Substitute Director
in the manner provided above, the seat of such Substitute Director shall remain
vacant. Notwithstanding the preceding sentences of this paragraph (ii), if,
following the settlement date of the first Underwritten Public Offering after
the date hereof, any vacancies shall occur in the Board or if the authorized
number of Directors shall be increased, the Directors then in office shall
continue to act, and such vacancies and newly created directorships may be
filled by a majority of the Directors then in office, although less than a
quorum, and any such vacancy or newly created directorship may also be filled at
any time by vote of the Members.
(iii) Removal. Members shall have the right to remove any Director
at any time for cause upon the affirmative vote of the holders of a majority of
outstanding LLC Units entitled to vote for the election of such Director. The
Member or Members that nominate any Director pursuant to Section 5.1(b) or,
following the settlement date of the first Underwritten Public Offering after
the date hereof, the holders of a majority of the outstanding LLC Units entitled
to vote for the election of Directors shall have the right to remove such
Director at any time, with or without cause, by delivery of written notice to
the Board or by action taken at any meeting of Members, and shall, upon any such
removal, appoint a Substitute Director, in accordance with Section 5.1(b)(ii). A
majority of the Directors then in office shall have the right to remove a
Director for cause. Upon taking such action, the Director shall cease to be a
Director. In the event that a Director is removed by the Board for cause, until
the settlement date of the first Underwritten Public Offering after the date
hereof, only the Member or Members who nominated or appointed such removed
Director shall be entitled to appoint his replacement. Until the settlement date
of the first Underwritten Public Offering after the date hereof, no Director
shall be removed without cause without the consent of the Member or Members that
nominated or appointed such Director.
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(iv) Special Voting Provisions. (w) Until the earlier of (a) the
settlement date of the first Underwritten Public Offering after the date hereof
and (b) the issuance of the Contingent LLC Units, action to approve any of the
following events shall require the approval of at least 75% of the Directors
then in office:
(A) An acquisition or disposition by the Company of a business or of
assets having a value in excess of $15,000,000 individually or when
aggregated with all other transactions related to the same specific
business or asset;
(B) A capital expenditure by the Company or contractual commitment
therefor involving more than $15,000,000 individually or when aggregated
with all other transactions related to the same specific asset;
(C) The issuance by the Company in a single transaction or a series
of related transactions of LLC Units, or securities convertible into or
exchangeable for LLC Units or options, warrants or other rights to acquire
LLC Units or such securities, for aggregate consideration in excess of
$15,000,000, other than the Contingent LLC Units, the CERA Contingent
Options, the GS Contingent Options, the Existing MGI Options, the MGI/CERA
Additional Options and the LLC Units issuable upon exercise thereof;
(D) The entry by the Company into new lines of business;
(E) The dissolution of the Company pursuant to Section 14.1(a);
(F) A Public Offering by the Company; or
(G) Incurring any indebtedness for borrowed money, or any guarantee
in respect of the same, in excess of $15,000,000, other than (1) any
guarantee of indebtedness under the Credit Agreement or under any renewal,
extension, refinancing or refunding of any such indebtedness or (2) the
renewal, extension, refinancing or refunding of any other indebtedness, or
any guarantee in respect of the same, that may have previously been
approved by the Board pursuant to this subclause (G);
(x) until the settlement date of the first Underwritten Public Offering after
the date hereof, the appointment or replacement of the Chief Executive Officer
of the Company shall require (i) the approval of the Fund IV Nominees then in
office and (ii) the written consent of the Consenting CERA Principal, whose
consent shall not be unreasonably withheld; (y) until the settlement date of the
first Underwritten Public Offering after the date hereof, the Company shall
cause each of and only the Directors
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then in office to be elected as directors of each of MGI and CERA Inc., and each
Director shall vote in favor of the nomination and election of such Directors as
the directors of MGI and CERA Inc. whenever such matters are considered by the
Board; and (z) until the earlier of (a) the settlement date of the first
Underwritten Public Offering after the date hereof and (b) the issuance of the
Contingent LLC Units, the Sale (as defined in the Merger and Exchange Agreement)
or Spin-Off of CERA Inc. shall require the written approval of the Consenting
CERA Principal.
Section 5.2. Annual and Regular Meetings. The annual meeting of the
Board for the purpose of electing Officers and for the transaction of such other
business as may come before the meeting shall be held as soon as possible
following adjournment of the annual meeting of the Members at the place of such
annual meeting of the Members. Notice of such annual meeting of the Board need
not be given. The Board from time to time may by resolution provide for the
holding of regular meetings and fix the place (which may be within or without
the State of Delaware) and the date and hour of such meetings. Notice of regular
meetings need not be given, provided that if the Board shall fix or change the
time or place of any regular meeting, notice of such action shall be mailed
promptly, or sent by telegram, radio or cable, to each Director who shall not
have been present at the meeting at which such action was taken, addressed to
him at his usual place of business, or shall be delivered to him personally.
Notice of such action need not be given to any Director who attends the first
regular meeting after such action is taken without protesting the lack of notice
to him, prior to or at the commencement of such meeting, or to any Director who
submits a signed waiver of notice, whether before or after such meeting.
Section 5.3. Special Meetings; Notice. Special meetings of the Board
shall be held whenever called by the Chairman, the Vice Chairman or the Chief
Executive Officer, or by the Board, at such place (within or without the State
of Delaware), date and hour as may be specified in the respective notices or
waivers of notice of such meetings. Special meetings of the Board may be called
on 24 hours' notice, if notice is given to each Director personally or by
telephone or telegram, or on at least three days' notice, if notice is mailed to
each Director, addressed to him at his usual place of business. Notice of any
special meeting need not be given to any Director who attends such meeting
without protesting the lack of notice to him, prior to or at the commencement of
such meeting, or to any Director who submits a signed waiver of notice, whether
before or after such meeting, and any business may be transacted thereat.
Section 5.4. Quorum and Acts of the Board. At all meetings of the
Board the presence of a majority of the Directors then in office shall
constitute a quorum for the transaction of business and, except as otherwise
provided in this
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Agreement, the vote of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board. If a quorum shall not be
present at any meeting of the Board, the Directors present thereat may adjourn
the meeting to another time or place, without notice other than announcement at
the meeting, until a quorum shall be present. Any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting, if all of the members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.
Section 5.5. Rules and Regulations; Manner of Acting. To the extent
consistent with applicable law, the Certificate and this Agreement, the Board
may adopt such rules and regulations for the conduct of meetings of the Board
and for the management of the property, affairs and business of the Company as
the Board may deem appropriate.
Section 5.6. Electronic Communications. Members of the Board, or any
committee designated by the Board, may participate in a meeting of the Board, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
Section 5.7. Committees of Directors. (a) The Board may, by
resolution, designate one or more committees of the Board, which resolution
shall specify the duties, members and quorum requirements of such committee,
each such committee to consist of one or more of the Directors, provided that
the Consenting CERA Principal shall be entitled to be a member of any committee
of the Board having substantially the same powers as the Board or the Executive
Committee that has a member who is not an Independent Nominee. The Board may
designate one or more Directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member or alternate member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such members constitute a quorum, may unanimously appoint
another member of the Board to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise all the powers and
authority of the Board in the management of the property, business and affairs
of the Company, but no such committee shall have the power or authority to take
any action hereunder requiring (i) a vote greater than a majority of Directors
present as set forth in Section 5.4 or (ii) the
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consent or approval of the Consenting CERA Principal or any one or more of the
Fund IV Nominees, or authorizing any distribution by the Company to Members.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board. Each committee shall keep
regular minutes of its meetings and report the same to the Board when required.
(b) The Board shall have a committee of the Board designated as the
Executive Committee, which shall consist of the Chairman, the Consenting CERA
Principal, the CEO Nominee (if any), the MCM Nominee (if any) and such other
Directors as may be designated by the Board. During the intervals between
meetings of the Board, the Executive Committee shall have and may exercise all
the powers and authority of the Board in the management of the property,
business and affairs of the Company, except that the Executive Committee shall
not have the power or authority to take any action hereunder requiring (i) a
vote greater than a majority of Directors present as set forth in Section 5.4 or
(ii) the consent or approval of the Consenting CERA Principal or any one or more
of the Fund IV Nominees listed in Section 5.1(b)(iv) or authorizing any
distribution by the Company to Members.
Section 5.8. Compensation of Directors. The Board shall have the
authority to fix the compensation of Directors. The Directors may be paid their
expenses, if any, of attendance at such meeting of the Board and may be paid a
fixed sum for attendance at each meeting of the Board or a stated salary as
Director. No such payment shall preclude any Director from serving the Company
in any other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
Section 5.9. Reliance on Accounts and Reports, etc. A Director, or a
member of any Committee designated by the Board, shall, in the performance of
his duties, be fully protected in relying in good faith upon the records of the
Company and upon information, opinions, reports or statements presented to the
Company by any of the Company's Officers or employees, or Committees designated
by the Board, or by any other person as to the matters the member reasonably
believes are within such other Person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Company.
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Section 5.10. Resignation. Any Director may resign at any time by
delivering a written notice of resignation to the Chief Executive Officer or the
Secretary. The resignation of any Director shall take effect upon receipt of
such notice or at such later time as shall be specified in the notice; and,
unless otherwise specified in the notice, the acceptance of the resignation by
the Company, the Members or the remaining Directors shall not be necessary to
make such resignation effective.
Section 5.11. Directors as Agents. The Directors, to the extent of
their powers set forth in this Agreement, are agents of the Company for the
purpose of the Company's business, and the actions of the Directors taken in
accordance with such powers shall bind the Company. Except as otherwise provided
in this Agreement, no single Director shall have the power to bind the Company,
and the Board shall have the power to act only collectively in the manner
specified herein.
ARTICLE VI
OFFICERS
Section 6.1. Officers. The Board may select natural persons who are
employees of the Company to be designated as officers of the Company
("Officers"), with such titles as the Board shall determine. Any number of
offices may be held by the same person. The Board may appoint a Chief Executive
Officer, a President, a Chief Financial Officer, a Secretary and a Treasurer and
one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers as
the Board may determine, provided that until the settlement date of the first
Underwritten Public Offering after the date hereof, the Fund IV Nominees shall
appoint, with the written consent of the Consenting CERA Principal (whose
consent shall not be unreasonably withheld), the Chief Executive Officer. The
Board may appoint such other Officers as it shall deem necessary or advisable
who shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board. The
salaries (if any) of all Officers shall be fixed by or in the manner prescribed
by the Board. The Officers shall hold office until their successors are chosen
and qualified. Any Officer may resign at any time upon written notice to the
Company. Any Officer may be removed at any time by the affirmative vote of a
majority of the Board. Any vacancy occurring in any office of the Company shall
be filled by the Board. The Officers shall have such powers and duties in the
management of the Company as may be delegated to them in this Agreement or by
the Board, except that in any event each Officer shall exercise such powers and
perform such duties as may be required by law. The Board may require any Officer
or agent
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to give security for the faithful performance of his or her duties. Each person
elected or appointed as an Officer, by such election or appointment, as the case
may be, shall be deemed to have been designated as a Manager for purposes of the
Delaware Act.
Section 6.2. Chief Executive Officer. The Chief Executive Officer of
the Company shall have general charge of the business, affairs and property of
the Company and general supervision over its other Officers and agents. In
general, the Chief Executive Officer shall perform all duties incident to the
office of the chief executive officer of such a company and shall see that all
orders and resolutions of the Board are carried into effect. The Chief Executive
Officer shall have the authority to sign, in the name and on behalf of the
Company, checks, orders, contracts, leases, notes, drafts and other documents
and instruments in connection with the business of the Company, and together
with the Secretary or an Assistant Secretary, conveyances of real estate and
other documents and instruments. The Chief Executive Officer shall have the
authority to cause the employment or appointment of such employees and agents of
the Company as the conduct of the business of the Company may require, to fix
the compensation of such employees and agents and, subject to the direction of,
and subject to general or specific resolutions approved by the Board, of such
Officers as the Board may determine, and to remove or suspend any employee
(other than a CERA Principal) or agent of the Company elected or appointed by
the Chief Executive Officer or the Board. The Chief Executive Officer shall
perform such other duties and have such other powers as the Board may from time
to time prescribe. The Board from time to time may confer like powers upon any
other Person or Persons.
Section 6.3. The Chief Financial Officer. The Chief Financial
Officer shall have charge and supervision over and be responsible for the
moneys, securities, receipts and disbursements of the Company, and shall keep or
cause to be kept full and accurate records of all receipts of the Company. The
Chief Financial Officer shall render to the Board, whenever requested, a
statement of the financial condition of the Company and of all his transactions
as Chief Financial Officer, and render a full financial report at the annual
meeting of the Members, if called upon to do so. The Chief Financial Officer
shall be empowered from time to time to require from all officers or agents of
the Company reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Company. The Chief
Financial Officer shall perform, in general, all duties incident to the office
of chief financial officer of a Delaware corporation and such other duties as
may be specified in this Agreement or as may be assigned to him from time to
time by the Board or the Chairman and the Vice Chairman. The Chief Financial
Officer shall report to the Chairman and the Vice Chairman.
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Section 6.4. President. The President, subject to the authority of
the Chief Executive Officer, shall have primary responsibility for, and
authority with respect to, the management of the day-to-day business and affairs
of the Company. The President shall have the authority to sign, in the name and
on behalf of the Company, checks, orders, contracts, leases, notes, drafts and
other documents and instruments. Except as otherwise performed by the Board or
the Chief Executive Officer, the President shall have the authority to cause the
employment or appointment of such employees and agents of the Company as the
conduct of the business of the Company may require, to fix their compensation,
and to remove or suspend any employee or agent elected or appointed by the
President.
Section 6.5. Vice Presidents. In the absence of the Chief Executive
Officer and the President or in the event of the Chief Executive Officer and the
President's inability to act, the Vice President, if any (or in the event there
be more than one Vice President, the Vice Presidents in the order designated by
the Board, or in the absence of any designation, then in the order of their
election) shall perform the duties of the Chief Executive Officer and the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President. The Vice Presidents, if any, shall
perform such other duties and have such other powers as the Board or the Chief
Executive Officer or President may from time to time prescribe.
Section 6.6. The Secretary and Assistant Secretary. The Secretary
shall attend all meetings of the Board and all meetings of the Members and
record all the proceedings of the meetings of the Members and of the Board in a
book to be kept for that purpose and shall perform like duties for the standing
committees when required. The Secretary shall give, or cause to be given, notice
of all meetings of the Members and special meetings of the Board, and shall
perform such other duties as may be prescribed by the Board or Chief Executive
Officer or President, under whose supervision the Secretary shall be. The
Secretary shall properly maintain and file all books, reports, statements,
certificates and all other documents and records required by law, the
Certificate or by this Agreement. The Assistant Secretary, or if there be more
than one, the Assistant Secretaries in the order determined by the Board (or if
there be no such determination, then in order of their election) shall, in the
absence of the Secretary or in the event of the Secretary's inability to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board, the Chief Executive
Officer or the President may from time to time prescribe.
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Section 6.7. The Treasurer and Assistant Treasurer. The Treasurer
shall cause the moneys and other valuable effects of the Company to be deposited
in the name and to the credit of the Company in such banks or trust companies or
with such bankers or other depositaries of the Company. The Treasurer shall
cause the moneys of the Company to be disbursed by checks or drafts upon the
authorized depositaries of the Company and cause to be taken and preserved
proper vouchers for all moneys disbursed. The Treasurer may sign (unless an
Assistant Treasurer or the Secretary or an Assistant Secretary shall have
signed) certificates representing LLC Units the issuance of which shall have
been authorized by the Board. The Treasurer shall perform, in general, all
duties incident to the office of treasurer of a Delaware corporation and such
other duties as may be specified in this Agreement or as may be assigned to him
from time to time by the Board or the Chief Financial Officer, to whom he shall
report. The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board (or if there be no
such determination, then in the order of their election), shall, in the absence
of the Treasurer or in the event of the Treasurer's inability to act, perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board or the Chief Financial Officer or
the Chairman and the Vice Chairman may from time to time prescribe.
Section 6.8. Execution of Contracts. In addition to the authority
afforded to the Chief Executive Officer and President pursuant to Sections 6.3
and 6.5, respectively, contracts, documents or instruments in writing that
require the signature of the Company and that have been authorized under this
Agreement or by the Board may be signed by any Officer authorized to sign
pursuant to a resolution of the Board. The term "contracts, documents or
instruments in writing" as used in this Agreement shall include deeds, pledges,
mortgages, hypothecations, charges, conveyances, leases, licenses, transfers and
assignments of property, real or personal, immoveable or moveable, agreements,
releases, receipts and discharges for the payment of money or other obligations,
conveyances, transfers and assignments of shares, warrants, bonds, notes,
debentures or other securities and any instrument in writing.
Section 6.9. Officers as Agents. The Officers, to the extent of
their powers set forth in this Agreement or in a resolution of the Board, are
agents of the Company for the purpose of the Company's business, and the actions
of the Officers taken in accordance with such powers shall bind the Company.
Section 6.10. Reliance by Third Parties. Any Person dealing with the
Company or any Officer may rely upon a certificate signed by the Chief Executive
Officer, the President, any Vice President, the Secretary or any Assistant
Secretary as to:
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(a) the identity of the Chief Executive Officer, the President or
any Member or other Officer;
(b) the existence or non-existence of any fact or facts which
constitute a condition precedent to acts by the Chief Executive Officer,
the President or in any other manner germane to the affairs of the
Company;
(c) the Persons who are authorized to execute and deliver any
instrument or document of or on behalf of the Company; or
(d) any act or failure to act by the Company or as to any other
matter whatsoever involving the Company or any Member.
ARTICLE VII
AMENDMENTS
Section 7.1. Amendments. This Agreement may not be modified or
amended except by a written agreement signed by the Company and a majority of
the Members (by number of Voting LLC Units); provided that (i) any amendment or
modification of any provision hereof requiring, or providing for, (x) the
affirmative vote of a greater percentage than a majority of the Directors then
in office, or (y) the consent or approval of the Consenting CERA Principal or
any one or more Fund IV Nominees, shall also require an affirmative vote of such
greater percentage of such Directors or the consent or approval of the
applicable person or persons specified in subclause (y) above, as the case may
be, (ii) any amendment or modification of any provision hereof requiring, or
providing for, the affirmative vote of a specified percentage or proportion of
the Members or holders of LLC Units shall require the affirmative vote of such
percentage or proportion of the Members or such holders, as the case may be,
(iii) any amendment or modification of any provision hereof providing for, or
resulting in, the direct reduction or elimination of any right, preference or
benefit granted hereunder to any particular Person or group of specified Persons
(including, without limitation, any right to nominate or appoint, or consent to
or approve any nomination or appointment of, any Director, to grant or withhold
consent or approval with respect to any matter, to require registration of LLC
Units held by such Person, or to receive distributions of cash or other property
with respect to the LLC Units held by such Person) shall require the consent of
such Person or group of specified Persons, (iv) any amendment or modification of
the definition of Requisite Percentage of LLC Unitholders shall require the
affirmative vote of two-thirds of the Members (by number of Voting LLC Units),
and (v) any modification or
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amendment of any other provision of this Agreement (A) to satisfy any
requirements, conditions, guidelines or opinions contained in any opinion,
directive, order, ruling or regulation of the Commission, the Internal Revenue
Service or any other United States federal or state agency, or in any United
States federal or state statute, compliance with which the Board deems in good
faith to be in the best interests of the Company and (B) to cure any ambiguity
or mistake or correct or supplement any provision of this Agreement that may be
incomplete or inconsistent with any other provision contained herein, may be
signed by the Company only, without any approval of the Members being required,
if such modification or amendment shall have been authorized by the Board.
Anything in this Agreement to the contrary notwithstanding, any modification or
amendment of this Agreement by a written agreement signed by, or binding upon, a
Member shall be valid and binding upon any and all Persons who may, at any time,
have or claim any rights under or pursuant to this Agreement in respect of the
LLC Units originally acquired by such Member.
ARTICLE VIII
CAPITAL CONTRIBUTIONS AND INTERESTS
Section 8.1. Capital Units. The limited liability company interests
of the Company shall be represented by two classes of units of capital of the
Company, which shall consist of voting limited liability company interests
("Voting LLC Units") and non-voting limited liability company interests
("Non-Voting LLC Units" and, together with Voting LLC Units, the "LLC Units").
The Company shall have authority to issue (a) LLC Units to the Members (other
than the CERA Management Members) listed on Schedule A hereto, in the amounts
set forth thereon, and to CERA Inc. for transfer to the CERA Management Members,
in accordance with Section 2.1(b), (b) the Contingent LLC Units, (c) the LLC
Units issuable upon the exercise of CERA Contingent Options and GS Contingent
Options, (d) the LLC Units to be transferred upon the exercise of Existing MGI
Options and MGI/CERA Additional Options and (e) such additional LLC Units as may
be authorized from time to time by the Board.
Section 8.2. Capital Contributions of Property. On the Closing Date,
each Member listed on Schedule A hereto other than the CERA Management Members
shall be deemed to have contributed to the capital of the Company property
having the value set forth opposite such Member's name as such Member's capital
contribution on Schedule A hereto. Any contributions of property after the
Closing Date (including contributions in exchange for the issuance of LLC Units
by the Company) shall have the value determined by the Board.
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Section 8.3. Additional Capital Contributions. No Member shall be
required to make any additional capital contribution to the Company in respect
of the LLC Units then owned by such Member. However, a Member may make such
additional capital contributions to the Company, but only with the written
consent of the Board. The provisions of this Section 8.3 are intended solely to
benefit the Members and, to the fullest extent permitted by applicable law,
shall not be construed as conferring any benefit upon any creditor of the
Company (and no such creditor shall be a third party beneficiary of this
Agreement), and no Member shall have any duty or obligation to any creditor of
the Company to make any additional capital contributions or to cause the Board
to consent to the making of additional capital contributions. Members shall be
deemed to have contributed such additional capital upon issuance of additional
LLC Units equal to the cash purchase price for such LLC Units or, if no cash is
paid or there is non-cash consideration, in the amount of the fair market value
of such non-cash consideration as determined by the Board in good faith at or
prior to issuance of such LLC Units.
Section 8.4. Member's Interest. A Member's LLC Units shall for all
purposes be personal property. A Member has no interest in specific Company
property.
Section 8.5. Certificates of LLC Units. The LLC Units shall be
represented by certificates, provided that the Board may provide by resolution
or resolutions that some or all of any or all classes or groups of the LLC Units
shall be uncertificated LLC Units. Any such resolution shall not apply to LLC
Units represented by a certificate until such certificate is surrendered to the
Company. Notwithstanding the adoption of such a resolution by the Board, upon
request a holder of uncertificated LLC Units shall be entitled to have a
certificate signed by or in the name of the Company, by the Chief Executive
Officer or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, representing the number of LLC Units held
by such holder. Such certificate shall be in such form as the Board may
determine, to the extent consistent with applicable law, the Certificate and
this Agreement.
Section 8.6. Issuance of Non-Voting LLC Units. The Company shall not
issue or sell any Non-Voting LLC Units except in connection with an exchange of
Voting LLC Units as provided in Section 8.7.
Section 8.7. Conversion and Exchange. (a) Special Exchange of Voting
LLC Units for Non-Voting LLC Units. Voting LLC Units held by Fund IV may be
exchanged for the same number of Non-Voting LLC Units for the sole purpose of a
distribution by Fund IV to one or more of its limited partners which is a
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Regulated Holder, provided that the number of Voting LLC Units so exchanged does
not exceed the number of Regulated Securities required for any such Regulated
Holder. The subsequent transfer of any Non-Voting LLC Units by any such
Regulated Holder shall be subject to the provisions of Section 8.7(b)(ii), and
such Regulated Holder shall be permitted to convert Non-Voting LLC Units into
Voting LLC Units to the extent set forth in Section 8.7(b)(i).
(b) Conversion of Non-Voting LLC Units into Voting LLC Units. (i)
Optional Conversion of Non-Voting LLC Units. Each record holder of Non-Voting
LLC Units shall be entitled to convert any or all of such holder's Non-Voting
LLC Units into the same number of Voting LLC Units, provided that no holder of
Non-Voting LLC Units shall be entitled to convert any Non-Voting LLC Units to
the extent that, as a result of such conversion, such holder or the Affiliates
thereof would directly or indirectly own, control or have power to vote a
greater quantity of securities of any kind issued by the Company than such
holder and the Affiliates thereof permitted to own, control or have power to
vote under any law, regulation, order, rule or other requirement of any
governmental authority at any time applicable to such holder and the Affiliates
thereof.
(ii) Automatic Conversion of Non-Voting LLC Units. Upon the sale or
transfer of any Non-Voting LLC Units by the holder thereof to any Person who is
not an Affiliate of such holder (but including, without limitation, any sale or
transfer to an underwriter in connection with a Public Offering of Voting LLC
Units regardless of whether such underwriter is an Affiliate of such holder),
such Non-Voting LLC Units shall automatically be converted without further
action (an "Automatic Conversion") into an equal number of Voting LLC Units,
provided that a distribution of Non-Voting LLC Units by Fund IV to a Regulated
Holder shall not result in an Automatic Conversion.
Section 8.8. Certain Conversion and Exchange Procedures. (a) Each
conversion of Non-Voting LLC Units into Voting LLC Units (other than an
Automatic Conversion contemplated by Section 8.7(b)(ii)) and each exchange of
Voting LLC Units for Non-Voting LLC Units will be effected by the surrender of
the certificate or certificates representing the LLC Units to be converted or
exchanged, as the case may be, at the principal office of the Company or the
transfer agent designated by the Company, if any, at any time during normal
business hours, together with a written notice by the holder of such LLC Units
stating either (i) the number of Non-Voting LLC Units that such holder desires
to convert into Voting LLC Units (and such statement will obligate the Company
to issue such Voting LLC Units), or (ii) the number of Voting LLC Units that
such holder desires to exchange for Non-Voting LLC Units and that such exchange
is required in order for such holder to make a
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distribution of LLC Units to a proposed distributee that is a Regulated Holder
(and such statement will obligate the Company to issue such Non-Voting LLC
Units). Such conversion or exchange will be deemed to have been effected as of
the close of business on the date on which such certificate or certificates have
been surrendered and such notice has been received, and at such time the rights
of any such holder with respect to the converted Non-Voting LLC Units or
exchanged Voting LLC Units, as the case may be, will cease and the person or
persons in whose name or names the certificate or certificates for Voting LLC
Units or Non-Voting LLC Units, as the case may be, are to be issued upon such
conversion or exchange will be deemed to have become the holder or holders of
record of the Voting LLC Units or Non-Voting LLC Units, as the case may be,
represented thereby.
(b) Promptly after such surrender and the receipt of the written
notice referred to in Section 8.8(a), the Company will issue and deliver in
accordance with the surrendering holder's instructions the certificate or
certificates for the Voting LLC Units or Non-Voting LLC Units, as the case may
be, issuable upon such conversion or exchange and a certificate representing any
Voting LLC Units or Non-Voting LLC Units, as the case may be, which was
represented by the certificate or certificates delivered to the Company in
connection with such conversion or exchange but which was not converted or
exchanged. The Company shall be entitled to rely upon any written notice
delivered pursuant to Section 8.8(a) and such notice shall, in the absence of
manifest error, be binding and conclusive upon the Company.
(c) From and after an Automatic Conversion pursuant to Section
8.7(b)(ii), (i) each certificate formerly representing Non-Voting LLC Units
which NonVoting LLC Units were held by the holder thereof or any Affiliate
thereof and which were converted pursuant to such Automatic Conversion shall
thereafter be deemed to represent (A) only the like number of Voting LLC Units
into which such Non-Voting LLC Units have been converted pursuant to such
Automatic Conversion (and no Person shall thereafter have any rights in respect
of such Non-Voting LLC Units), plus (B) if all the Non-Voting LLC Units
represented by such certificate were not converted pursuant to such Automatic
Conversion, such number of Non-Voting LLC Units which were not so converted and
(ii) upon any surrender for transfer of any such certificate accompanied by a
written notice certifying that an Automatic Conversion has occurred and
specifying the number of LLC Units so converted, the Company will issue and
deliver (A) a certificate or certificates representing the Voting LLC Units into
which such Non-Voting LLC Units have been converted pursuant to such Automatic
Conversion and (B) if all the Non-Voting LLC Units represented by such
certificate or certificates were not converted pursuant to such Automatic
Conversion, a certificate or certificates representing such number of Non-Voting
LLC Units which were not so converted. The Company shall be entitled to rely on
any written notice
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delivered to the effect that an Automatic Conversion has occurred and such
notice shall, in the absence of manifest error, be binding and conclusive upon
the Company.
Section 8.9. Signatures; Facsimile. Any or all of such signatures on
the certificate representing LLC Units may be a facsimile, engraved or printed,
to the extent permitted by law. In case any Officer, transfer or exchange agent
or registrar who has signed, or whose facsimile signature has been placed upon,
such a certificate shall have ceased to be such officer, transfer or exchange
agent or registrar before such certificate is issued, it may be issued by the
Company with the same effect as if he were such Officer, transfer agent or
registrar at the date of issue.
Section 8.10. Lost, Stolen or Destroyed Certificates. The Board may
direct that a new certificate representing LLC Units be issued in place of any
certificate theretofore issued by the Company alleged to have been lost, stolen
or destroyed, upon delivery to the Board of an affidavit of the owner or owners
of such certificate, setting forth such allegation. The Board may require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to give the Company a bond sufficient to indemnify it against
any claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of any such new certificate.
Section 8.11. Registration and Transfer of LLC Units. Upon surrender
to the Company or the transfer agent of the Company, if any, of a certificate
for LLC Units, duly endorsed or accompanied by appropriate evidence of
succession, assignment or authority to transfer, in compliance with the
provisions hereof, the Company shall issue a new certificate representing LLC
Units to the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Subject to the provisions of the Certificate and
this Agreement, the Board may prescribe such additional rules and regulations as
it may deem appropriate relating to the issue, transfer and registration of LLC
Units.
Section 8.12. Transfer Agent, Exchange Agent and Registrar. The
Board may appoint one or more transfer agents, one or more exchange agents and
one or more registrars, and may require all certificates representing LLC Units
to bear the signature of any such transfer agents, exchange agents or
registrars.
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ARTICLE IX
ALLOCATIONS; DISTRIBUTIONS
Section 9.1. Allocations. (a) Except as provided in Section 9.1(b),
the income, gains, losses, credits and deductions of the Company for each
Allocation Period shall be determined as of the end of such Allocation Period
and shall be allocated for federal, state and local income tax purposes, to the
extent permitted under the Code and the Treasury Regulations, among the Members
in accordance with the respective LLC Units owned by the Members (as set forth
on the Membership Register) during such Allocation Period, or, in the case of
any such income, gains, losses, credits and deductions arising out of any sale
or other disposition described in clause (i) of the definition of Special
Distribution, in accordance with such LLC Units and the number of Contingent LLC
Units treated as owned by the Members pursuant to the second sentence of Section
9.2. Allocations of income, gains, losses and expenses of the Company for all
other purposes shall be made consistently with the allocations made pursuant to
the immediately preceding sentence.
(b) In accordance with section 704(c) of the Code and the Treasury
Regulations thereunder, any income, gain, loss, credit and deduction with
respect to any asset contributed to the capital of the Company by any Member
shall, solely for income tax purposes, be allocated among the Members so as to
take account of any variation between the adjusted basis of such asset to the
Company for income tax purposes and its initial Book Value (determined in
accordance with the definition of Book Value set forth in Article I). The method
of allocating such income, gain, loss, credit and deduction shall be such method
set forth in section 1.704-3(b) of the Treasury Regulations. In the event the
Book Value of any asset of the Company is subsequently adjusted in accordance
with the last sentence of such definition of Book Value, subsequent allocations
of any income, gain, loss, credit and deduction with respect to such asset shall
be determined using the principles specified in section 1.704-1(b)(2)(iv)(g) of
the Treasury Regulations and shall take account of any variation between the
adjusted basis of the asset to the Company for income tax purposes and its Book
Value (excluding any portion of such variation subject to the first sentence of
this Section 9.1(b)) in the manner required under section 1.704-1(b)(4)(i) of
the Treasury Regulations, using the method set forth in section 1.704-3(b) of
the Treasury Regulations.
Section 9.2. Distributions. Any distribution by the Company, whether
in kind or in cash, other than a Special Distribution, shall be made in
accordance with the respective LLC Units owned by the Members (as set forth on
the Membership Register) at the time of such distribution (except that cash
payments may be made
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upon the occurrence of a Spin-Off in lieu of distributing fractional interests
in the Subsidiary that is the subject of such Spin-Off). Any Special
Distribution by the Company, whether in kind or in cash, shall be made in
accordance with the respective LLC Units owned by the Members (as set forth on
the Membership Register) (i) at the time of the applicable sale or other
disposition in the case of a sale or other disposition described in clause (i)
of the definition of Special Distribution, and (ii) at the time of the
applicable distribution in the case of a distribution described in clause (ii)
of the definition of Special Distribution (the applicable time described in
clause (i) or (ii) above, the "Measurement Time") (except that cash payments may
be made upon the occurrence of a distribution described in clause (ii) of the
definition of Special Distribution in lieu of distributing fractional interests
in MGI or CERA Inc., as applicable); provided that each Member who, at the
Measurement Time, had a right to receive, under certain circumstances,
Contingent LLC Units pursuant to Section 1.3, 1.4 or 1.5 of the Merger and
Exchange Agreement, shall be treated, solely for the purposes of the applicable
Special Distribution, as if such Member owned the number of Contingent LLC Units
that would have been issuable to such Member, based on the CERA CAGR (as such
term is defined in the Merger and Exchange Agreement) as of the Measurement Time
(as determined in good faith by the Board), if the closing of a Non-qualifying
Sale (as defined in the Merger and Exchange Agreement) had occurred at the
Measurement Time. The Board shall determine in good faith whether a distribution
is a Special Distribution. The Board shall, in its sole discretion, determine
the time and the amount of any distribution, provided that, for each Taxable
Year, the Company shall make a cash distribution to the Members to the extent of
Available Assets in amounts intended to enable the Members (or any Person whose
tax liability is determined by reference to the income of a Member) to discharge
their United States federal, state and local income tax liabilities arising from
the allocations made pursuant to Section 9.1 (the "Tax Liability Distribution"),
except for any such allocations arising out of any variation between the
adjusted tax basis of any asset and its Book Value, and except to the extent
that cash distributions shall have theretofore been made during such Taxable
Year. The amount of any such Tax Liability Distribution shall be determined by
the Board in its sole discretion, taking into account (a) the greater of (i) the
maximum combined tax rate for United States federal, New York State and New York
City income tax purposes, (ii) the maximum combined tax rate for United States
federal and Massachusetts income tax purposes and (iii) the maximum combined tax
rate for United States federal income tax purposes and for purposes of any
income tax imposed by the jurisdiction in which the principal office of the
Company is located, in each case applicable to individuals or corporations
(whichever is higher) on ordinary income and net short-term capital gain or on
net long-term capital gain, as applicable, and taking into account the
deductibility of state and local income taxes for United States federal income
tax purposes and the deductibility of local income taxes for state income tax
purposes (and the assumptions
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described in this clause (a) shall be applied equally to each Member regardless
of such Member's place of residence or tax status), and (b) the amounts of
ordinary income, net short-term capital gain and net long-term capital gain so
allocated to the Members, and otherwise based on such reasonable assumptions as
the Board determines in good faith to be appropriate.
Section 9.3. Withholding. The Company shall withhold and pay over,
or otherwise pay, any withholding or other taxes payable by the Company with
respect to such Member or as a result of such Member's participation in the
Company pursuant to any applicable tax law. If and to the extent that the
Company shall be required to with hold or pay any such taxes, such Member shall
be deemed for all purposes of this Agreement to have received a payment from the
Company as of the time such with holding or tax is required to be paid, which
payment shall be deemed to be a distribution to the extent that such Member is
then entitled to receive a distribution and shall reduce the amount of
distributions otherwise to be made to such Member pursuant to Section 9.2. To
the extent that the aggregate of such payments to a Member for any period
exceeds the distributions to which such Member is entitled for such period, the
amount of such excess shall be considered a loan from the Company to such Member
with interest at the Prime Rate (or the Applicable Federal Rate if the Prime
Rate is less than the Applicable Federal Rate) until discharged by such Member
by repayment, which may be made out of distributions to which such Member would
otherwise be subsequently entitled. The withholdings referred to in this Section
9.3 shall be made at the maximum applicable statutory rate under the applicable
tax law unless the Company shall have received an opinion of counsel or other
evidence, satisfactory to the Company, to the effect that a lower rate is
applicable, or that no withholding is applicable.
Section 9.4. Restricted Distributions. Notwithstanding any provision
to the contrary contained in this Agreement, the Company shall not make a
distribution to any Member on account of such Member's interest in the Company
if such distribution would violate section 18-607 of the Delaware Act or other
applicable law.
ARTICLE X
BOOKS AND RECORDS; TAX MATTERS
Section 10.1. Books, Records and Financial Statements. (a) At all
times during the continuance of the Company, the Company shall maintain, at its
principal place of business, separate books of account for the Company that
shall show a true and accurate record of all costs and expenses incurred, all
charges made, all
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credits made and received and all income derived in connection with the
operation of the Company business in accordance with generally accepted
accounting principles consistently applied, and, to the extent inconsistent
therewith, in accordance with this Agreement. Such books of account, together
with an executed copy of this Agreement and of the Certificate, shall at all
times be maintained at the principal place of business of the Company, and such
books of account and such other materials as may be required to be provided to
any Member pursuant to section 18-305(a) of the Delaware Act shall be open to
inspection and examination at reasonable times during business hours by each
Member and the duly authorized representatives thereof upon reasonable written
notice for any purpose reasonably related to such Member's interest in the
Company, provided that the Directors shall have the right to withhold any such
information pursuant to section 18- 305(c) of the Delaware Act and otherwise
establish such lawful conditions for disclosure of information to the Members as
the Board may deem necessary or appropriate.
(b) The Treasurer shall prepare and maintain, or cause to be
prepared and maintained, the books of account of the Company.
(c) The Secretary shall cause to be maintained the Membership
Register.
Section 10.2. Filings of Returns and Other Writings; Tax Matters
Partner. (a) The Treasurer shall cause the preparation and timely filing of all
Company tax returns and shall, on behalf of the Company, timely file all other
writings required by any governmental authority having jurisdiction to require
such filing. The Company shall use its reasonable best efforts to send, no later
than 60 days after the end of each Taxable Year, to each Person that was a
Member at any time during such Taxable Year copies of (i) United States Internal
Revenue Service Form 1065, "U.S. Partnership Return of Income," or any successor
form, required to be filed by the Company, together with all schedules and
exhibits to such return (including Schedule K-1, "Partner's Share of Income,
Credits, Deductions, Etc.," or any successor schedule or form, for such Person),
together with such additional information (including information with respect to
unrelated business taxable income, if any, within the meaning of section 512 of
the Code, of the Company) as may be necessary for such Person (or any other
Person whose tax liability is determined by reference to the income of such
Person that was a Member and who is identified in writing by such Person that
was a Member to the Company) to file such Person's United States federal income
tax returns and (ii) such similar returns as are required to be filed by the
Company for United States state and local income tax purposes.
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(b) Each Member shall provide such information to the Company as may
be reasonably necessary for purposes of the Company's preparing any required tax
return or information return.
(c) The Board shall appoint a Member who is a Manager as the tax
matters partner (the "Tax Matters Partner") for the Company, who shall meet the
requirements set forth in section 301.6231(a)(7)-2 of the Treasury Regulations
and who shall serve as the Tax Matters Partner until such time as such Member
shall notify the Board that he, she or it is resigning as the Tax Matters
Partner or the Board shall appoint another such Member as the Tax Matters
Partner in accordance with this Section 10.2(c). Each Member hereby consents to
such designation and agrees that upon the request of the Tax Matters Partner,
such Member will execute, certify, acknowledge, deliver, swear to, file and
record at the appropriate public offices such documents as may be necessary or
appropriate to evidence such consent.
(d) Promptly following the written request of the Tax Matters
Partner, the Company shall, to the fullest extent permitted by law, reimburse
and indemnify the Tax Matters Partner for all reasonable expenses, including
reasonable legal and accounting fees, claims, liabilities, losses and damages
incurred by the Tax Matters Partner in connection with any administrative or
judicial proceeding with respect to the tax liability of the Company or the
Members, except to the extent arising from the bad faith, gross negligence,
willful violation of law, fraud or breach of this Agreement by such Tax Matters
Partner.
(e) The provisions of this Section 10.2 shall survive the
termination of the Company or the termination of any Member's interest in the
Company and shall remain binding on the Members for as long a period of time as
is necessary to resolve with the Internal Revenue Service any and all matters
regarding the federal income taxation of the Company or the Members.
Section 10.3. Accounting Method. For both financial and tax
reporting purposes, the books and records of the Company shall be kept on the
accrual method of accounting applied in a consistent manner and shall reflect
all Company transactions.
Section 10.4. Audits. At any time at the Board's sole discretion,
but at least annually, the financial statements of the Company may be audited by
the independent certified public accountants, with such audit to be accompanied
by a report of such accountants containing their opinion. The cost of such
audits will be an expense of the Company. A copy of any such audited financial
statements and accountant's report will be made available for inspection by the
Members.
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Section 10.5. Other Tax Matters. (a) The Company shall not elect to
be treated as an association taxable as a corporation for United States federal,
state or local income tax purposes under Treasury Regulations section 301.7701-3
or under any corresponding provision of state or local law.
(b) The Company shall use its best efforts to structure its
investments and activities so as to avoid the incurrence of any income which is
in the hands of any Member (or any other Person whose tax liability is
determined by reference to the income of a Member) "unrelated business taxable
income" (as such term is defined in section 512 of the Code). The Company will
generally not invest in partnership interests in partnerships or in interests in
other entities treated as partnerships for federal income tax purposes if such
investment would cause any non-United States Person that is a Member (or any
other non-United States Person whose U.S. federal income tax liability is
determined by reference to the income of a Member) to be deemed to be engaged in
a trade or business within the United States pursuant to section 875 of the Code
or any Member (or any other Person whose U.S. federal income tax liability is
determined by reference to the income of a Member) to incur unrelated business
taxable income pursuant to section 512(c) of the Code.
Section 10.6. Section 754 Election. The Company shall elect,
pursuant to section 754 of the Code, to adjust the basis of the property of the
Company as permitted and provided in sections 734 and 743 of the Code.
ARTICLE XI
LIABILITY, EXCULPATION AND INDEMNIFICATION
Section 11.1. Liability. Except as otherwise provided by the
Delaware Act, the debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be solely the debts, obligations
and liabilities of the Company, and no Covered Person shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Covered Person.
Section 11.2. Exculpation. (a) No Covered Person shall be liable to
the Company or any other Covered Person for any loss, damage or claim incurred
by reason of any act or omission performed or omitted by such Covered Person in
the good faith belief that such action was in, or was not opposed to, the best
interests of the Company and in a manner believed to be within the scope of
authority conferred on such Covered Person by or pursuant to this Agreement,
except that a Covered
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Person shall be liable for any such loss, damage or claim incurred by reason of
such Covered Person's gross negligence or willful misconduct.
(b) A Covered Person shall be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any Person as to matters the
Covered Person believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Company, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits or losses or any other facts
pertinent to the existence and amount of assets from which distributions to
Members might properly be paid.
Section 11.3. Fiduciary Duty. Subject to the provisions of Section
11.2 and Section 11.6, each Director, Officer and Member of the Company shall be
subject to the fiduciary duties of care and loyalty to the full extent that such
duties would be imposed on, or applicable to, a director, an officer or a
stockholder, respectively, of a corporation organized and existing pursuant to
the General Corporation Law of the State of Delaware (including legislative
history and judicial interpretations and applications thereof); provided that no
Covered Person acting under this Agreement shall be liable to the Company or,
with respect to any matter relating to the Company or its business, to any other
Covered Person for such Person's good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they restrict or
modify the duties and liabilities of a Covered Person otherwise existing at law
or in equity, are agreed by the parties hereto to replace such other duties and
liabilities of such Covered Person.
Section 11.4. Indemnification. (a) Nature of Indemnity. The Company
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was or has agreed to become a Director, Officer, employee or agent
of the Company, or is or was serving or has agreed to serve at the request of
the Company as a director, officer, employee or agent, of another company,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with such
action, suit or proceeding and any appeal therefrom, if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or proceeding
had no reasonable cause to believe his conduct was unlawful; except that in the
case of an action or suit by or in the right of the Company to procure a
judg-
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ment in its favor (1) such indemnification shall be limited to expenses
(including attorneys' fees) actually and reasonably incurred by such person in
the defense or settlement of such action or suit, and (2) no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Company unless and only to the
extent that the Delaware Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Delaware
Court of Chancery or such other court shall deem proper; provided that any
indemnity under this Section 11.4 shall be provided out of and to the extent of
Company assets only, and no Member or Director, Officer, employee or agent of
the Company shall have any personal liabilities with respect to such indemnity.
The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) Successful Defense. To the extent that a Director, Officer,
employee or agent of the Company has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in Section 11.4(a)
hereof or in defense of any claim, issue or matter therein, he shall be
indemnified by the Company against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
(c) Determination That Indemnification Is Proper. Any
indemnification under Section 11.4(a) hereof (unless ordered by a court) shall
be made by the Company unless a determination is made that indemnification of
the director, officer, employee or agent is not proper in the circumstances
because he has not met the applicable standard of conduct set forth in Section
11.4(a) hereof. Any such determination shall be made (1) by a majority vote of
the Directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) if there are no such Directors, or, if such
Directors so direct, by independent legal counsel in a written opinion, or (3)
by Members holding at least 66 2/3% of the LLC Units.
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(d) Advance Payment of Expenses. To the fullest extent permitted by
Applicable Law, expenses (including attorneys' fees) incurred by a Covered
Person in defending any civil, criminal, administrative or investigative claim,
demand, action, suit or proceeding shall, from time to time, be paid by the
Company in advance of the final disposition of such claim, demand, action, suit
or proceeding upon receipt by the Company of an undertaking by or on behalf of
the Covered Person to repay such amount if it shall ultimately be determined
that the Covered Person is not entitled to be indemnified by the Company as
authorized in this Section 11.4. Such expenses (including attorneys' fees)
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board deems appropriate. The Board may authorize the
Company's counsel to represent such director, officer, employee or agent in any
action, suit or proceeding, whether or not the Company is a party to such
action, suit or proceeding.
(e) Procedure for Indemnification of Directors and Officers. Any
indemnification of a person seeking indemnification under Sections 11.4(a) and
11.4(b), or advance of costs, charges and expenses to such person under Section
11.4(d) hereof, shall be made promptly, and in any event within 30 days, upon
the written request of such person. If a determination by the Company that such
person is entitled to indemnification pursuant to this Section 11.4 is required,
and the Company fails to respond within 60 days to a written request for
indemnity, the Company shall be deemed to have approved such request. If the
Company denies a written request for indemnity or advancement of expenses, in
whole or in part, or if payment in full pursuant to such request is not made
within 30 days, the right to indemnification or advances as granted by this
Section 11.4 shall be enforceable by the indemnified person in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Company. It shall be a
defense to any such action (other than an action brought to enforce a claim for
the advance of costs, charges and expenses under Section 11.4(d) where the
required undertaking, if any, has been received by the Company) that the
claimant has not met the standard of conduct set forth in Section 11.4(a) of
this Section 11.4, but the burden of proving such defense shall be on the
Company. Neither the failure of the Company (including its Board and its
independent legal counsel) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Section 11.4(a) hereof, nor the fact that there has been an actual
determination by the Company (including its Board, its independent legal
counsel, or Members holding at least 66 2/3% of the LLC Units) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
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(f) Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the Company
and each director, officer, employee and agent who serves in any such capacity
at any time while these provisions are in effect and any modification thereof
shall not affect any right or obligation then existing with respect to any state
of facts then or previously existing or any action, suit or proceeding
previously or thereafter brought or threatened based in whole or in part upon
any such state of facts. Such a "contract right" may not be modified
retroactively without the consent of such director, officer, employee or agent.
The indemnification and advancement of expenses provided by this
Section 11.4 shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any provision of this Agreement, vote of
disinterested Directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
(g) Insurance. The Company may purchase and maintain insurance, to
the extent and in such amounts as the Board shall, in its sole discretion, deem
reasonable, on behalf of Covered Persons and such other Persons as the Board
shall determine, against any liability that may be asserted against or expenses
that may be incurred by any such Person in connection with the activities of the
Company or such indemnities, regardless of whether the Company would have the
power to indemnify such Person against such liability under the provisions of
this Agreement. The Company may enter into indemnity contracts with Covered
Persons and such other Persons as the Board shall determine and adopt written
procedures pursuant to which arrangements are made for the advancement of
expenses and the funding of obligations under Section 11.4(d) hereof and
containing such other procedures regarding indemnification as are appropriate.
Section 11.5. Severability. To the fullest extent permitted by
applicable law, if any portion of this Article shall be invalidated on any
ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify each person who is or was serving or has agreed to serve
at the request of the Company as a Director, Officer, employee or agent of the
Company, or who is or was serving or has agreed to serve at the request of the
Company as a director, officer, employee or agent of another company,
partnership, joint venture, trust or other enterprise, as to costs, charges and
expenses (including reasonable attorneys' fees), judgments, fines and amounts
paid in settlement with respect to any action, suit or proceeding, whether
civil, criminal, administrative or investigative, including an action by or in
the right of
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the Company, to the fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated.
Section 11.6. Outside Businesses. Any Member or Affiliate thereof
may engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Company, and the Company, the Directors and the Members shall have no
rights by virtue of this Agreement in and to such independent ventures or the
income or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the business of the Company, shall not be deemed wrongful or
improper. No Member, Director or Affiliate thereof shall be obligated to present
any particular investment opportunity to the Company even if such opportunity is
of a character that, if presented to the Company, could be taken by the Company,
and any Member, Director or Affiliate thereof shall have the right to take for
such Person's own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment opportunity, provided that
this Section 11.6 shall not apply to Members who are employees of the Company or
any of its Subsidiaries.
ARTICLE XII
ADDITIONAL MEMBERS
Section 12.1. Admission. By approval of the Board, the Company is
authorized to admit any Person as an additional member of the Company (each, an
"Additional Member" and collectively, the "Additional Members"), subject to
compliance with the provisions of Article XIII of this Agreement. With respect
to the Persons exercising options to purchase LLC Units, each such Person shall
be deemed admitted as a Member upon execution of an LLC Unit Subscription
Agreement and such other documents as may be required pursuant to such LLC Unit
Subscription Agreement and as the Board may reasonably require, and the payment
of the applicable option exercise price, if any. Each Person other than a Person
admitted pursuant to Section 2.1(b) or a Person exercising options to purchase
LLC Units shall be admitted as an Additional Member at the time such Person (i)
executes a counterpart to this Agreement, (ii) complies with the applicable
Board resolution, if any, with respect to such admission and (iii) is named as a
Member in the Membership Register.
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ARTICLE XIII
TRANSFER OF INTERESTS; SUBSTITUTE MEMBERS
Section 13.1. Restrictions on LLC Unit Transfers. (a) Initial
Holding Period for Restricted Holders. No Member who, together with such
Member's Existing CERA Trusts (if any), owns, as of the date hereof, 5% or more
of the then outstanding LLC Units (any such Member, a "Restricted Holder"), no
Existing CERA Trust and none of such Member's or such trust's Permitted
Transferees who shall have become owners of LLC Units after the date hereof
shall, for a period ending on the earlier of three years after the Closing Date
(the "Initial Holding Period") and one year after the first Underwritten Public
Offering after the date hereof, Transfer any LLC Units (including any Transfer
pursuant to Section 13.2) except, subject to Section 13.1(c), (i) to an
unaffiliated third party (x) in a sale of all of the LLC Units pursuant to
Section 13.4, or (y) pursuant to a merger, conversion, consolidation or
reorganization of the Company, other than a Conversion Transaction (any such
sale, merger, conversion, consolidation or reorganization, a "Fundamental
Transaction"), (ii) in any Conversion Transaction, (iii) in a Public Offering,
(iv) Transfers to a Permitted Transferee or (v) Transfers to the Company or any
Subsidiary of the Company. This Section 13.1(a) shall not apply to Transfers by
MGI or CERA Inc. to the extent such Transfers are otherwise covered in Section
13.1(g).
(b) Restrictions on Other Transfers. No Member other than a
Restricted Holder, any Existing CERA Trust and any of such Restricted Holder's
or such trust's Permitted Transferees who shall have become owners of LLC Units
after the date hereof, and, after the earlier of the expiration of the Initial
Holding Period and one year after the first Underwritten Public Offering after
the date hereof, no Member, shall Transfer any LLC Units except, subject to
Section 13.1(c), (i) in a Fundamental Transaction, (ii) in a Conversion
Transaction, (iii) in a Public Offering, (iv) for Transfers to a Permitted
Transferee or to any Member who was a Member as of the Closing Date, (v) for
Transfers to the Company or any Subsidiary of the Company, (vi) subject to
compliance with Sections 13.2, 13.3 and 13.4, as applicable, for Transfers to
Restricted Holders or third parties for cash only in transactions which would be
exempt from the registration requirements of section 5 of the Securities Act by
virtue of the exemption provided by section 4(2) of the Securities Act if the
transferor were the issuer of the LLC Units, provided that, for purposes of this
clause (vi), the transferee is an "accredited investor" within the meaning of
Rule 501(a) under the Securities Act or (vii) following the first Underwritten
Public Offering after the date hereof and subject to compliance with Section
13.2 and Rule 144 or Rule 145 (or any successor provision) under the Securities
Act, if applicable, for any other Transfers to third parties. This Section
13.1(b) shall not apply to Transfers made by
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MGI or CERA Inc. to the extent such Transfers are covered in Section 13.1(g).
(c) Transfer Conditions. No Member shall Transfer any LLC Units if
such Transfer would constitute a Prohibited Transaction. The Board shall
evaluate each Transfer request, and the proposed transferor shall furnish such
information as may be requested by the Board, to determine if such Transfer
would constitute a Prohibited Transaction, which determination shall be
conclusive and binding absent manifest error. The Board shall promptly notify
the proposed transferor of the Board's determination. In addition, it shall be a
further condition of any LLC Unit Transfer pursuant to Section 13.1(a)(iv),
13.1(b)(iv) or 13.1(b)(vi) (other than pursuant to Section 13.4) that (i) the
transferee agrees in writing to be bound by the obligations and restrictions
applicable to Members and/or LLC Units under this Agreement, (ii) the
transferring Member and the transferee shall have complied with all requirements
of any applicable LLC Unit Subscription Agreement, (iii) the proposed transferee
provides to the Company the information required pursuant to Section 13.7(c),
and (iv) such transferring Member delivers to the Company (A) an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to the
Company, to the effect that (1) the Transfer does not violate and will not cause
the Company to be in violation of any Specified Laws, (2) the transferor and the
Specified Affiliate (in the case of a Transfer to a Permitted Transferee
described in clause (iv) of the definition of such term) have made all filings
and obtained all consents of any governmental entity and any other Person
required to be made or obtained by the transferor and the Specified Affiliate,
and have complied with all applicable requirements of Specified Laws in
connection with the Transfer of such LLC Units and (3) the transferring Member
and the transferee have complied with all requirements of this Agreement and any
applicable LLC Unit Subscription Agreement and (B) a certificate setting forth
the basis on which such Transfer is permitted under Section 13.1(a) or 13.1(b),
as the case may be, and, in the case of a Transfer of the type specified in
Section 13.1(b)(vi), describing compliance with Sections 13.2, 13.3 and 13.4, as
applicable.
(d) Restrictions to Avoid Publicly Traded Partnership Status. (i)
Notwithstanding any other provision to the contrary in this Agreement, until the
settlement date of the first Underwritten Public Offering, no Member shall
Transfer any LLC Interest (other than in a Private Transfer) in any form,
including but not limited to by entering into an Indirect LLC Interest, if such
transfer is made on an Established Securities Market or a Secondary Market.
Except for Transfers of LLC Units pursuant to Section 13.1(a)(i), (ii), (iii) or
(v) or Section 13.1(b)(i), (ii), (iii) or (v), the Member proposing to make any
Transfer of an LLC Interest prior to the settlement date of the first
Underwritten Public Offering shall (A) deliver to the Company a certificate
setting forth the basis on which such Member purports that such Transfer is not
prohibited under the immediately preceding sentence and (B) furnish
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such information as may be requested by the Board to determine if such Transfer
would be so prohibited.
(ii) Until the settlement date of the first Underwritten Public
Offering, the Company shall not (A) allow any LLC Interests to be listed or
traded on an Established Securities Market, (B) participate in the inclusion of
any LLC Interests on any Secondary Market or (C) recognize any Transfer of LLC
Interests (other than a Private Transfer) in any form, including but not limited
to the entering into of an Indirect LLC Interest, if such Transfer is made on an
Established Securities Market or a Secondary Market, including but not limited
to (1) by redeeming the transferor Member (in the case of a redemption or
repurchase by the Company) or (2) by admitting the transferee as a Member or
otherwise recognizing any rights of the transferee, including but not limited to
the right to receive distributions from the Company (directly or indirectly) or
to acquire an interest in the capital or profits of the Company.
(e) Custody of the LLC Unit Certificates. Unless otherwise agreed to
in writing by the Company, until the settlement date of the first Underwritten
Public Offering after the date hereof, each Member shall maintain such Member's
LLC Unit certificates in custody, pursuant to the Bailment Agreement, dated as
of the date hereof, between the Company, as bailee thereunder, Fund IV, the CERA
Principals and GS LP, substantially in the form of Exhibit B attached hereto,
the terms of which (including any amendments and supplements to such agreement
adopted in accordance with the terms thereof) are hereby acknowledged and agreed
to by, and shall be binding upon, each Member.
(f) Distributions Following Transfers. The Company shall, from the
effective date of any Transfer permitted under this Section 13.1, thereafter pay
all further distributions on account of the LLC Units (or part thereof) so
transferred to the transferee of such LLC Units (or part thereof). Any Transfer
of LLC Units in violation of this Section 13.1 shall be null and void ab
initio, and the Company shall not register, recognize or give effect to any such
Transfer, nor shall the intended transferee acquire any rights in such LLC Units
for any purposes of this Agreement. All Transfers permitted hereunder are
subject to Section 13.7.
(g) Transfers Involving MGI or CERA. The Transfer restrictions set
forth in Sections 13.1(a) and (b) shall not apply to transfers by MGI or CERA
Inc. to any Person to whom MGI or CERA Inc., as the case may be, may be
obligated to Transfer LLC Units pursuant to any agreement existing on the date
hereof, the Merger and Exchange Agreement (including the exhibits thereto), any
of the agreements entered into in connection with the transactions contemplated
thereby, or as
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contemplated by this Agreement, including (but not limited to) the following
types of Transfers: the grant of LLC Units to the CERA Management Members, the
transfer of the Contingent LLC Units to the CERA Management Members, the
transfer of LLC Units in connection with the exercise of Existing MGI Options,
MGI/CERA Additional Options or any other options granted pursuant to an LLC Unit
Subscription Agreement and transfers to Restricted Holders in connection with
the purchase by MGI or CERA Inc., as the case may be, of LLC Units pursuant to
any LLC Unit Subscription Agreement.
13.2. Participation Rights. So long as any Registrable Securities
remain outstanding and a Public Market has not been established with respect to
the LLC Units, no Restricted Holder, no Existing CERA Trust and no Permitted
Transferee of any Restricted Holder or any such trust shall make any sale or
transfer of LLC Units owned by such Member, trust or Permitted Transferee which
would constitute a Qualifying Sale, except pursuant to Section 13.4 or the
following provisions of this Section 13.2:
(a) Procedures for Qualifying Sales. At least 30 days prior to
making any Qualifying Sale, the applicable Restricted Holder, Existing CERA
Trust and/or such Restricted Holder's or such trust's Permitted Transferee will
send a written notice (the "Sale Notice") to the Company and the other holders
of Registrable Securities. The Sale Notice will disclose the identity of the
prospective transferee and the material terms and conditions of the proposed
Qualifying Sale, including the number of LLC Units that the prospective
transferee is willing to purchase and the intended consummation date of such
Qualifying Sale. The Restricted Holder, each of such Restricted Holder's
Existing CERA Trusts and each of such Restricted Holder's and such trusts'
Permitted Transferees that owns any LLC Units agrees not to consummate any
Qualifying Sale until at least 30 days after the related Sale Notice has been
sent to each holder of Registrable Securities, unless the Restricted Holder,
Existing CERA Trust or such Restricted Holder's and/or such trust's Permitted
Transferee, as the case may be, shall have received a notice from each holder of
Registrable Securities indicating whether or not such holder has elected to
participate in such Qualifying Sale and the number of LLC Units to be sold by
each such holder so electing to participate has been finally determined pursuant
hereto prior to the expiration of such 30-day period. Each holder of Registrable
Securities may elect to participate in the contemplated Qualifying Sale by
giving written notice to the applicable Restricted Holder, Existing CERA Trust
and/or such Restricted Holder's or such trust's Permitted Transferee and the
Company within 30 days after such Restricted Holder, Existing CERA Trust or such
Restricted Holder's and/or such trust's Permitted Transferee, as the case may
be, has sent the related Sale Notice to such holder. If a holder of Registrable
Securities elects to participate, such holder will be entitled to sell in the
contem-
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plated Qualifying Sale, at the same price and on the same terms and conditions
as set forth in the related Sale Notice, an amount of Registrable Securities
equal to the product of (i) the quotient determined by dividing (A) the
percentage of Registrable Securities then held by such holder of Registrable
Securities so electing to participate by (B) the aggregate percentage of
Registrable Securities represented by the Registrable Securities then held by
the selling Restricted Holder, such Restricted Holder's Existing CERA Trusts and
such Restricted Holder's and such trusts' Permitted Transferees and all holders
of Registrable Securities so electing to participate (in each case under this
clause (i) on a partially diluted basis taking into account only such options to
purchase LLC Units as are then exercisable and held by the selling Restricted
Holder, such Existing CERA Trusts, such Permitted Transferees or the holders of
Registrable Securities so electing to participate, as applicable) and (ii) the
number of Registrable Securities such transferee has agreed to purchase in the
contemplated sale (or in the case of a "Qualifying Sale" within the meaning of
clause (ii) of Section 13.2(b), the Excess Number of shares which such
transferee has agreed to purchase). If such right to participate in a Qualifying
Sale shall not have been exercised prior to the expiration of the 30-day period,
then at any time during the 90 days following the expiration of the 30- day
period, subject to extension for not more than an additional 90 days to the
extent reasonably required to comply with Applicable Laws in connection with
such purchase, the Restricted Holder, such Restricted Holder's Existing CERA
Trusts and such Restricted Holder's and such trusts' Permitted Transferees, as
applicable, may sell to the prospective transferee the number of LLC Units and
at the price and on the terms and conditions indicated in the Sale Notice. Upon
request of the Restricted Holder, Existing CERA Trust or such Restricted
Holder's and/or such trust's Permitted Transferee, as the case may be, in
connection with any contemplated Sale Notice, the Company will provide the
Restricted Holder, Existing CERA Trust or such Restricted Holder's and/or such
trust's Permitted Transferee, as the case may be, with a current list of holders
of Registrable Securities and their addresses.
(b) Qualifying Sale Defined. The term "Qualifying Sale" shall mean
(i) any sale or transfer of LLC Units proposed to be made by a Restricted
Holder, or any of such Restricted Holder's Existing CERA Trusts or such
Restricted Holder's or such trust's Permitted Transferees, pursuant to Section
13.1(b)(vi) or 13.1(b)(vii) (other than any sales or transfers to other
Restricted Holders pursuant to Section 13.3 following compliance with the right
of first offer procedures set forth in Section 13.3), at any time after the
Restricted Holder and/or such Restricted Holder's Existing CERA Trusts or such
Restricted Holder's or such trust's Permitted Transferees have sold or
transferred pursuant to Section 13.1(b)(vi) or 13.1(b)(vii) in the aggregate 5%
of the LLC Units owned by such Restricted Holder and such Restricted Holder's
Existing CERA Trusts, if any, at the time of the Closing and any LLC Units
acquired by such
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Restricted Holder, such Existing CERA Trust or any of such Restricted Holder's
or such trust's Permitted Transferees thereafter (the "Qualifying Number") or
(ii) in the event that prior to the sale or transfer by such Restricted Holder,
such Existing CERA Trust and/or such Permitted Transferees of an aggregate of
the Qualifying Number of LLC Units, the Restricted Holder, such Existing CERA
Trust or any of such Restricted Holder's or such trust's Permitted Transferees
proposes to sell or transfer pursuant to Section 13.1(b)(vi) or 13.1(b)(vii) a
number of LLC Units which when combined with any prior such sales or transfers
of LLC Units by such Restricted Holder, such Existing CERA Trust and/or such
Permitted Transferees exceeds the Qualifying Number, the sale or transfer
pursuant to Section 13.1(b)(vi) or 13.1(b)(vii) of a number of LLC Units (the
"Excess Number") equal to the excess of (A) the sum of any LLC Units previously
so sold or transferred by such Restricted Holder, such Existing CERA Trust
and/or such Restricted Holder's or such trust's Permitted Transferees and the
aggregate number of LLC Units proposed to be sold or transferred in such
contemplated sale, over (B) the Qualifying Number of LLC Units. In determining
whether there is a "Qualifying Sale," equitable adjustments shall be made to
reflect any LLC Unit split or combination, distribution of LLC Units,
recapitalization or similar transaction.
(c) Exclusion from Qualifying Sale. The obligations of a Restricted
Holder, an Existing CERA Trust and such Restricted Holder's and such trust's
Permitted Transferees and the rights of the holders of Registrable Securities
pursuant to this Section 13.2 will not apply to any sale or transfer by the
Restricted Holder, an Existing CERA Trust or any such Permitted Transferee
pursuant to a distribution and/or sale to the public (whether pursuant to a
registered Public Offering, Rule 144, broker's transactions or otherwise (but
not pursuant to Rule 144A under the Securities Act or any successor provision)).
Any LLC Units referred to, or covered by any sale or transfer referred to, in
the preceding sentence shall not be included in the computation of "Qualifying
Sale."
Section 13.3. First Offer Rights. In the event that any Member (such
Member, an "Offering Member") shall determine to offer to sell or to sell, prior
to the settlement date of the first Underwritten Public Offering after the date
hereof, for cash pursuant to Section 13.1(b)(vi) LLC Units owned by such
Offering Member (the "First Offer LLC Units"):
(a) Offer Required. The Offering Member shall make an offer (the
"Member Offer") of the First Offer LLC Units, in accordance with this Section
13.3, to the Company (or to MGI or CERA Inc., as applicable, if the Company
shall have assigned its right to accept the applicable Member Offer to MGI or
CERA Inc.) and (if applicable) each Restricted Holder (other than the Offering
Member if the Offering Member is a Restricted Holder).
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(b) First Offer Rights; Procedures. If the Offering Member is
required to make a Member Offer pursuant to this Section 13.3, the Offering
Member shall deliver to the Company a written notice (a "Member Offering
Notice") setting forth the number of LLC Units to be offered or sold, the
proposed date of offer or sale (which shall be not less than 70 days after the
date of delivery of the Member Offering Notice), and the terms and conditions of
the proposed offer or sale. The Member Offering Notice shall include an offer to
sell the First Offer LLC Units at the price and on the terms and conditions as
set forth in the Member Offering Notice, which offer by its terms shall remain
open for a period of 60 days from the date of the Company's receipt of the
Member Offering Notice. The Company may assign to MGI or CERA Inc. its right to
accept any Member Offer by delivery of written notice of such assignment to the
Offering Member and MGI or CERA Inc., as applicable, at any time prior to the
21st day after the delivery of the Member Offering Notice to the Company. In the
event of any such assignment, each reference to the Company in this Section
13.3(b) shall be deemed to refer to MGI or CERA Inc., as the case may be, unless
the context otherwise requires. Prior to the 21st day after the delivery of the
Member Offering Notice to the Company, the Company may accept the offer of First
Offer LLC Units in whole or in part by delivering to the Offering Member a
written notice of acceptance setting forth the number of First Offer LLC Units
which the Company shall elect to purchase. If the Company does not elect to
purchase all of the First Offer LLC Units included in the Member Offer, the
Company shall forward the Member Offering Notice to each Restricted Holder,
together with written notice of the number of First Offer LLC Units the Company
shall have elected not to purchase (the "Remaining LLC Units"). In accordance
with the procedures set forth in this Section 13.3 and for a second successive
period of 20 days, each such Restricted Holder shall have the right to elect to
purchase such Restricted Holder's pro rata portion (determined as of the date of
the Member Offering Notice and on a partially diluted basis taking into account
only such options to purchase LLC Units as are then exercisable and held by the
applicable Restricted Holder, and including any LLC Units held by such
Restricted Holder's CERA Trusts) of the Remaining LLC Units by delivering
written notice to the Company setting forth the number of the Remaining LLC
Units such Restricted Holder has so elected to purchase. If such Restricted
Holders in the aggregate do not elect to purchase all of the Remaining LLC
Units, then the Company shall send a written notice to each Restricted Holder
who had elected to purchase all of such Restricted Holder's pro rata portion of
the Remaining LLC Units during such 20-day period, which notice shall state the
number of Remaining LLC Units as to which elections have not been made, and for
a third successive period of 20 days (the "Third Round"), each such Restricted
Holder shall have the right to purchase additional Remaining LLC Units, in an
amount equal to either (i) the product of (x) the number of such Remaining LLC
Units in respect of
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which offers to purchase had not been accepted in the prior offering period and
(y) a fraction, the numerator of which shall be the number of LLC Units held by
such Restricted Holder (on a partially diluted basis taking into account only
such options to purchase LLC Units as are then exercisable and held by such
Restricted Holder, and including any LLC Units held by such Restricted Holder's
CERA Trusts) as of the date of the Member Offering Notice and the denominator of
which shall be the aggregate number of LLC Units then held by each Restricted
Holder that had subscribed for all of the Remaining LLC Units offered to such
Restricted Holder in the prior offering period (on a partially diluted basis
taking into account only such options to purchase LLC Units as are then
exercisable and held by any such Restricted Holder, and including any LLC Units
held by such Restricted Holder's CERA Trusts) or (ii) such other amount as shall
be agreed upon by all such Restricted Holders. Upon expiration of the Third
Round in accordance with the procedures set forth above, (x) if the Company and
the Restricted Holders in the aggregate have not accepted the Member Offer with
respect to all of the First Offer LLC Units, the Offering Member may proceed
with the proposed offer and sale of, and sell, all of the First Offer LLC Units
(and the Company and the Restricted Holders shall not be entitled to purchase
any of the First Offer LLC Units), at a price equal to no less than 90% of the
price set forth in the Member Offering Notice and on other terms and conditions
substantially the same as those set forth in the Member Offering Notice, at any
time during a period of 30 days after the last day of the Third Round or (y) if
the Company and the Restricted Holders in the aggregate have accepted the Member
Offer with respect to all of the First Offer LLC Units, the Company and (as
applicable) such Restricted Holders shall purchase from the Offering Member, and
the Offering Member shall sell to the Company and (as applicable) such
Restricted Holders, the First Offer LLC Units, on the terms and conditions
specified in the Member Offering Notice; provided that any Restricted Holder may
revoke such Restricted Holder's acceptance of any Member Offering Notice by
written notice to the Company and the Offering Member at any time within 20 days
following delivery of such Restricted Holder's initial acceptance thereof if
such Restricted Holder is unable to secure financing for such purchase in an
amount and on such terms and conditions as are reasonably acceptable to such
Restricted Holder, in which event the LLC Units covered by such revoked
acceptance shall thereupon be deemed Remaining LLC Units and reoffered, for a
period of 14 days, to each other Restricted Holder that elected to purchase all
of the Remaining LLC Units offered to such Restricted Holder in any offering
period, with such reoffering to be conducted as if such LLC Units were Remaining
LLC Units subject to a Third Round offering, as provided above.
Section 13.4. Take-Along Rights. (a) Take-Along Notice. Subject to
the prior application of the provisions of Section 13.3, if the holders of more
than 50% (a "Controlling Group") of the LLC Units (including LLC Units issuable
upon exercise
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of then exercisable options to purchase LLC Units and such number of Contingent
LLC Units as the Board shall determine would be issuable immediately prior to
the Section 13.4 Closing (as defined below) pursuant to Sections 1.3, 1.4, 1.5
and 1.6 of the Merger and Exchange Agreement based upon the CERA CAGR (as such
term is defined in the Merger and Exchange Agreement) as of the most recent
available date prior to such determination), acting jointly, intend to effect a
sale of all of their LLC Units (including such Contingent LLC Units and, if
applicable, their Contingent Options) to an unaffiliated third party (a "100%
Buyer") and elect to exercise their rights under this Section 13.4, such
Controlling Group shall deliver written notice (a "Take-Along Notice") to the
Company and the other Members (collectively, the "Other LLC Unitholders"), which
notice shall (a) state (i) that the Controlling Group wishes to exercise its
rights under this Section 13.4 with respect to such transfer, (ii) the name and
address of the 100% Buyer, (iii) the per LLC Unit amount and form of
consideration the Controlling Group proposes to receive for its LLC Units and
(iv) drafts of purchase and sale documentation setting forth the terms and
conditions of payment of such consideration and all other material terms and
conditions of such transfer (the "Draft Sale Agreement"), (b) contain an offer
(the "Take-Along Offer") by the 100% Buyer to purchase from the Other LLC
Unitholders all of their LLC Units, Contingent LLC Units and, if applicable,
their Contingent Options, on and subject to the same price, terms and conditions
offered to the Controlling Group and (c) state the anticipated time and place of
the closing of such transfer (a "Section 13.4 Closing"), which (subject to such
terms and conditions) shall occur not fewer than five days nor more than 90 days
after the date such Take-Along Notice is delivered, provided that if such
Section 13.4 Closing shall not occur prior to the expiration of such 90-day
period, the Controlling Group shall be entitled to deliver another Take-Along
Notice with respect to such Take-Along Offer. Upon request of a
Controlling Group, the Company shall provide the Controlling Group with a
current list of the names and addresses of the Other LLC Unitholders.
(b) Conditions to Take-Along. Upon delivery of a Take-Along Notice,
each of the Other LLC Unitholders shall have the obligation to transfer all of
such LLC Unitholder's LLC Units and Contingent LLC Units and, if applicable,
such LLC Unitholder's Contingent Options pursuant to the Take-Along Offer, as
such offer may be modified from time to time, provided that the Controlling
Group transfers all of its LLC Units and Contingent LLC Units and, if
applicable, its Contingent Options to the 100% Buyer at the Section 13.4 Closing
and that all LLC Units held by the Controlling Group and the Other LLC
Unitholders are sold to the 100% Buyer at the same price, and on the same terms
and conditions. In the event that any such Other LLC Unitholder shall determine
that the transfer of such LLC Unitholder's LLC Units, Contingent LLC Units or
Contingent Options to the 100% Buyer would constitute a prohibited transaction
under ERISA or the Code, such Other LLC Unitholder shall use
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reasonable best efforts to structure the transfer in a manner that would not
constitute a non-exempt prohibited transaction, including requesting an
individual exemption from the Department of Labor with respect to such transfer
and any other reasonable action. Within 10 days of receipt of the Take-Along
Notice, each of the Other LLC Unitholders shall (i) deliver or cause to be
delivered to the member or an Affiliate of the member of the Controlling Group
designated in the Take-Along Notice (the "Custodian") certificates representing
such Other LLC Unitholder's LLC Units, duly endorsed for transfer or accompanied
by duly executed instruments of transfer, and/or such agreements or other
instruments as shall be requested by the 100% Buyer to effect the transfer of
the Contingent LLC Units, and (ii) execute and deliver to the Custodian a power
of attorney and a letter of transmittal and custody agreement in favor of the
Custodian, and in form and substance reasonably satisfactory to the Controlling
Group, appointing the Custodian as the true and lawful attorney-in-fact and
custodian for such Other LLC Unitholder, with full power of substitution, and
authorizing the Custodian to execute and deliver a purchase and sale agreement
substantially in the form of the Draft Sale Agreement and to take such actions
as the Custodian may deem necessary or appropriate to effect the sale and
transfer of the LLC Units to the 100% Buyer, upon receipt of the purchase price
therefor set forth in the Take-Along Notice at the Section 13.4 Closing, free
and clear of all security interests, liens, claims, encumbrances, charges,
options, restrictions on transfer, proxies and voting and other agreements of
whatever nature, together with all other documents delivered with such Notice
and required to be executed in connection with the sale thereof pursuant to the
Take-Along Offer. The Custodian shall hold such LLC Units and other documents in
trust for such Other LLC Unitholder pending completion or abandonment of such
sale. If, within 90 days after the Controlling Group delivers the Take-Along
Notice, the Controlling Group has not completed the sale of all of the LLC Units
owned by the Controlling Group and the Other LLC Unitholders to the 100% Buyer
and another Take- Along Notice with respect to such Take-Along Offer has not
been sent to the Other LLC Unitholders, the Custodian shall return to each Other
LLC Unitholder all certificates representing the LLC Units and all other
documents that such Other LLC Unitholder delivered in connection with such sale.
The Controlling Group shall be permitted to send only two Take-Along Notices
with respect to any one Take-Along Offer. Promptly after the Section 13.4
Closing, the Custodian shall give notice thereof to the Other LLC Unitholders,
shall remit to each of the Other LLC Unitholders the total consideration for the
LLC Units of such Other LLC Unitholders sold pursuant thereto, and shall furnish
such other evidence of the completion and time of completion of such sale and
the terms thereof as may reasonably be requested by any of the Other LLC
Unitholders.
(c) Remedies. Each of the Other LLC Unitholders acknowledges that
the Controlling Group would be irreparably damaged in the event of a breach or a
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threatened breach by such Other LLC Unitholder of any of such LLC Unitholder's
obligations under this Section 13.4 and each of the Other LLC Unitholders agrees
that, in the event of a breach or a threatened breach by such Other LLC
Unitholder of any such obligation, the Controlling Group shall, in addition to
any other rights and remedies available to it in respect of such breach, be
entitled to an injunction from a court of competent jurisdiction (without any
requirement to post bond) granting it specific performance by such Other LLC
Unitholder of such LLC Unitholder's obligations under this Section 13.4. In the
event that the Controlling Group shall file suit to enforce the covenants
contained in this Section 13.4 (or obtain any other remedy in respect of any
breach thereof), the prevailing party in the suit shall be entitled to recover,
in addition to all other damages to which such party may be entitled, the costs
incurred by such party in conducting the suit, including reasonable attorneys'
fees and expenses. In the event that, following a breach by any Other LLC
Unitholder of the provisions of this Section 13.4, the Controlling Group does
not obtain an injunction granting it specific performance of such LLC
Unitholder's obligations under this Section 13.4 in connection with any proposed
sale prior to the time the Controlling Group completes the sale of its LLC Units
or the Controlling Group, in its sole discretion, abandons such sale, then the
Company shall have the option to purchase the LLC Units from such Other LLC
Unitholder at a purchase price per LLC Unit equal to the price per LLC Unit at
which such LLC Units were originally purchased from the Company or, if such LLC
Units were obtained by such Other LLC Unitholder pursuant to the Transactions,
equal to the amount of such Other LLC Unitholder's deemed capital contribution
per LLC Unit pursuant to Section 8.2.
Section 13.5. Members' Rights to Purchase Additional LLC Units. (a)
Restricted Holder Sale. If at any time after the date of this Agreement and
prior to the establishment of a Public Market with respect to the LLC Units, the
Company shall propose to issue or sell any additional LLC Units to any
Restricted Holder or any Affiliate (other than such officers or employees of or
consultants to the Company or any of its Subsidiaries who are not Restricted
Holders) of any Restricted Holder (a "Restricted Holder Sale"), the Company
shall offer to each holder of Registrable Securities that is an accredited
investor (as such term is defined in Rule 501 of Regulation D under the
Securities Act) the right to purchase that number of additional LLC Units, on
the same terms and conditions as the proposed Restricted Holder Sale, such that
such holder would have the opportunity to hold the same percentage of LLC Units
(on a partially diluted basis taking into account only such options to purchase
LLC Units as are then exercisable) after giving effect to the Restricted Holder
Sale, as such holder held immediately prior thereto (an "Offer").
Notwithstanding the foregoing, none of the following transactions shall
constitute a Restricted Holder Sale: the issuance by the Company of (x) any
Contingent LLC Units or (y) any LLC Units (A) pursuant to the Transactions, (B)
in connection with the transfer to the CERA
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Management Members promptly following the date hereof as described in the tenth
recital hereof, (C) in exchange for Voting LLC Units, (D) upon conversion of
Non-Voting LLC Units pursuant to Section 8.7 hereof, (E) upon or in connection
with exercise of Existing MGI Options or MGI/CERA Additional Options, (F) upon
or in connection with exercise of options granted pursuant to an LLC Unit
Subscription Agreement or (G) upon exercise of the CERA Contingent Options or
the GS Contingent Options.
(b) Offer Procedures. The Company shall make an Offer by delivering
to each holder of Registrable Securities at least 30 Business Days' prior
written notice of the proposed Restricted Holder Sale. Such notice will identify
the class and number of LLC Units (the "Offered Securities"), the proposed date
of issuance and the price and other terms of the issuance. Such notice will also
include an offer to sell to each such holder that number of the Offered
Securities such that such holder would have the opportunity to hold the same
percentage of LLC Units (on a partially diluted basis taking into account only
such options to purchase LLC Units as are then exercisable) after giving effect
to the Restricted Holder Sale, as such holder held immediately prior thereto
(such holder's "Proportionate Share"), at the same price and on the same other
terms as are proposed for such Restricted Holder Sale, which offer by its terms
shall remain open for a period of 15 Business Days from the date of receipt of
such notice, provided that in the event that the Offered Securities are
Non-Voting LLC Units, any holder not required by law to hold non-voting
securities of the Company may purchase such holder's Proportionate Share in
shares of Voting LLC Units. Each such holder shall give notice to the Company of
such holder's intention to accept an Offer prior to the end of the 15-Business
Day period of such Offer, setting forth such portion of the Offered Securities
which such holder elects to purchase. If any holder fails to subscribe in full
for such holder's Proportionate Share of the Offered Securities, the other
subscribing holders shall be entitled to purchase such Offered Securities as are
not subscribed for by such holder in such proportion of the Offered Securities
as they shall have theretofore agreed to purchase until there are no unmet
demands of subscribing holders or all Offered Securities shall have been
subscribed for. The Company shall notify each holder five (5) Business Days
following the expiration of the 15-Business Day period described above of the
amount of Offered Securities which each such holder may purchase pursuant to the
foregoing sentence, and each such holder shall then have 10 Business Days from
the delivery of such notice to indicate such additional amount, if any, that
such holder wishes to purchase. Upon the closing of the Restricted Holder Sale
as to which the Company has given notice, such holder shall purchase from the
Company, and the Company shall sell to such holders, the Offered Securities
subscribed for by such holders on the terms specified in the Offer, which shall
be the same terms at which all other Persons acquire such securities in
connection with such sale or issuance. In the event that
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such holders do not subscribe for all of the Offered Securities, the Company
shall have 30 Business Days from the end of the foregoing 15-Business Day or
30-Business Day period, whichever is applicable, to sell all or any part of such
Offered Securities as to which such holders have not accepted an Offer to any
other Persons, in all material respects on terms and conditions that are no more
favorable to such other Persons or less favorable to the Company than those set
forth in the Offer. Any Offered Securities not purchased by such holders or
other Persons in accordance with this Section 13.5 may not be sold or otherwise
disposed of by the Company until they are again offered to such holders under
the procedures specified in this Section 13.5.
Section 13.6. Registration Rights. (a) The Members shall have the
registration rights set forth in Schedule C hereto.
(b) In the event of a determination by the Company, made in
accordance with the provisions of this Agreement, to cause (i) a Transfer of all
or substantially all of (x) the assets of the Company or (y) the LLC Units to a
newly organized stock corporation or other business entity ("Newco"), (ii) a
merger of the Company into a Newco by merger or consolidation as provided under
section 18-209 of the Delaware Act or otherwise or (iii) any other restructuring
of the LLC Units, in any case in anticipation of a Public Offering, each Member
shall take such steps to effect such Transfer, merger, consolidation or other
restructuring as may be requested by the Company, including, without limitation,
Transferring such Member's LLC Units to Newco in exchange for capital stock of
Newco; provided that no Member shall be required to take any action or omit to
take any action to the extent such action or omission violates Applicable Law.
In addition or alternatively, subject to Section 7.1, the terms and provisions
of this Agreement may be amended at any time by the Company to permit the
Company to register LLC Units under the Securities Act, which amendments may
include, without limitation, any changes in form and structure as may be deemed
by the Company to be necessary, convenient, desirable or incidental to
facilitate the public offering of LLC Units and may cause, among other things,
the Company or its successor to be taxed as a corporation.
Section 13.7. Substitute Members. In the event any Member Transfers
such Member's LLC Units in compliance with the other provisions of this Article
XIII, the transferee thereof shall become a Substitute Member of the Company
only upon satisfaction of the following:
(a) such Member and such transferee shall execute such instruments
as the Board or any Officer deems reasonably necessary or desirable to
effect such substitution;
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(b) the transferee of such Member's LLC Units accepts and agrees in
writing to be bound by all of the terms and provisions of this Agreement;
and
(c) the transferee of such Member's LLC Units accepts and agrees in
writing to provide the Company with such information, including its
employer identification number or social security number, as applicable,
and the amount paid for the LLC Units, as the Company may in its
discretion request from time to time.
The Board in its sole discretion may agree to waive any or all of the conditions
set forth in subparagraphs (a) through (c) of this Section 13.7.
Section 13.8. Release of Liability. In the event any Member shall
sell or otherwise dispose of (other than by a pledge or collateral assignment)
all the LLC Units which such Member owns, in compliance with the provisions of
this Agreement without retaining any interest therein, then the selling Member
shall cease to be a Member, and shall be relieved of any further liability
arising hereunder for events occurring from and after the date of such Transfer.
ARTICLE XIV
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 14.1. Dissolving Events. The Company shall be dissolved in
the manner hereinafter provided upon the happening of any of the following
events:
(a) the Board and the Members shall vote or agree in writing to
dissolve the Company pursuant to Section 5.1(b)(iv) or 4.4(f), as
applicable; or
(b) any event which under Applicable Law would cause the dissolution
of the Company, provided that, unless required by law, the Company shall
not be wound up as a result of any such event and the business of the
Company shall be continued.
Notwithstanding the foregoing, the death, retirement, resignation, expulsion,
bankruptcy or dissolution of any Member or the occurrence of any other event
that terminates the continued membership of any Member in the Company under the
Delaware Act shall not, in and of itself, cause the dissolution of the Company.
In such event, the remaining Member(s) shall continue the business of the
Company without dissolution.
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Section 14.2. Dissolution and Winding-Up. Upon the dissolution of
the Company, the assets of the Company shall be liquidated or distributed under
the direction of and to the extent determined by the Board and the business of
the Company wound up, provided that this Agreement shall remain in full force
and effect, notwithstanding any prior dissolution of the Company, until
termination of the Company in accordance with Section 14.3. Within a reasonable
time after the effective date of dissolution of the Company, the Company's
assets shall be distributed in the following manner and order:
(a) to all creditors of the Company, to the extent otherwise
permitted by law, in satisfaction of liabilities of the Company, including
any amounts the Company may owe under the indemnity provided in Section
11.4 hereof (whether by payment or the making of reasonable provision for
payment thereof); and
(b) with respect to any remaining proceeds, to make distributions to
the Members in accordance with Section 9.2;
provided that no payment or distribution in any of the foregoing categories
shall be made until all obligations in each prior category shall have been
satisfied in full, and provided, further, that if the payments due to be made in
any of the foregoing categories exceed the remaining assets available for such
purpose, such payments shall be made to the Persons within such categories
entitled to receive the same pro rata in accordance with the respective amounts
due to them.
Section 14.3. Termination. The Company shall terminate when the
winding up of the Company's affairs has been completed, all of the assets of the
Company have been distributed and the Certificate has been canceled, all in
accordance with the Delaware Act.
Section 14.4. Claims of the Members. The Members and former Members
shall look solely to the Company's assets for the return of their capital
contributions, and if the assets of the Company remaining after payment of or
due provision for all debts, liabilities and obligations of the Company are
insufficient to return such capital contributions, the Members and former
Members shall not be entitled to have such capital contributions returned to
them and shall have no recourse against the Company or any other Member.
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ARTICLE XV
MISCELLANEOUS
Section 15.1. Notices. All notices, demands and other communications
made in connection with this Agreement shall be in writing. Any notice or other
communication in connection herewith shall be deemed duly given to any party (a)
three Business Days after it is sent by express, registered or certified mail,
return receipt requested, postage prepaid or (b) two Business Days after it is
sent by overnight courier guaranteeing next day delivery, in each case, to the
address of such party set forth in the Membership Register in the case of any
Member or as set forth below in the case of the Company, or to such other
address as such party may have designated to the Company in writing, and:
(a) if given to the Company, at the address set forth below:
Global Decisions Group LLC
20 University Road
Cambridge, Massachusetts 02138
Facsimile:
Telephone:
Attention:
or at such other address or addresses where the Company's principal office
may be located. Copies of any notice or other communication given under
the Agreement shall also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Facsimile: (212) 407-5252
Telephone: (212) 407-5200
Attention: Donald J. Gogel
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Brera Capital Partners, LLC
590 Madison Avenue, 18th Floor
New York, New York 10022
Facsimile: (212) 835-1399
Telephone: (212) 835-1350
Attention: Alberto Cribiore
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Facsimile: (212) 909-6836
Telephone: (212) 909-6000
Attention: Steven R. Gross, Esq.
(b) if given to any CERA Stockholder or CERA Trust, to such Person
at the address set forth in the Membership Register, with copies to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telecopy: (617) 526-5000
Telephone: (617) 526-6000
Attention: Paul P. Brountas, Esq.; and
(c) if given to any other Member, at the address set forth for such
Member in the Membership Register or at such other address as such Member
may hereafter designate by written notice to the Company.
Any party may give any notice or other communication in connection herewith
using any other means (including, but not limited to, personal delivery,
messenger service, facsimile, telex or ordinary mail), but no such notice or
other communication shall be deemed to have been duly given unless and until it
is actually received by the individual for whom it is intended.
Section 15.2. Legend on LLC Unit Certificates. A copy of this
Agreement shall be filed with the Secretary of the Company and kept with the
records of the Company. Each certificate representing LLC Units that are issued
on the date hereof or granted to the CERA Management Members on the day
following the date hereof is subject to this Agreement and shall bear the
following legend:
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"THE LLC UNITS REPRESENTED HEREBY ARE ENTITLED TO THE BENEFITS OF
AND ARE BOUND BY THE OBLIGATIONS, AND ARE SUBJECT TO THE TRANSFER
RESTRICTIONS, HOLDBACK AND OTHER PROVISIONS OF THE AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY, DATED
AS OF ______ __, 1997, AS SUCH AGREEMENT MAY BE AMENDED,
SUPPLEMENTED OR MODIFIED FROM TIME TO TIME (THE "LLC AGREEMENT"),
AND NEITHER THIS CERTIFICATE NOR THE LLC UNITS REPRESENTED BY IT ARE
ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH LLC AGREEMENT, A COPY OF WHICH AGREEMENT IS ON
FILE WITH THE SECRETARY OF THE COMPANY."
Each certificate representing LLC Units that are issued subsequent
to the date hereof (other than the Contingent LLC Units and LLC Units issued
upon exercise of the Contingent Options) shall bear a legend substantially to
the following effect in place of the legend set forth above:
"THE LLC UNITS REPRESENTED HEREBY ARE ENTITLED TO THE BENEFITS OF
AND ARE BOUND BY THE OBLIGATIONS, AND ARE SUBJECT TO THE TRANSFER
RESTRICTIONS, HOLDBACK AND OTHER PROVISIONS OF A [MANAGEMENT] LLC
UNIT [SUBSCRIPTION] [GRANT] AGREEMENT, DATED AS OF ______ __, ___,
AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR MODIFIED FROM TIME TO
TIME (THE "[SUBSCRIPTION] [GRANT] AGREEMENT"), AND THE AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY, DATED
AS OF ______ __, 1997, AS SUCH AGREEMENT MAY BE AMENDED,
SUPPLEMENTED OR MODIFIED FROM TIME TO TIME (THE "LLC AGREEMENT"),
AND NEITHER THIS CERTIFICATE NOR THE LLC UNITS REPRESENTED BY IT ARE
ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH SUBSCRIPTION AGREEMENT AND LLC AGREEMENT, COPIES
OF WHICH AGREEMENTS ARE ON FILE WITH THE SECRETARY OF THE COMPANY."
"THE LLC UNITS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS
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AMENDED, OR UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT
BE TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS (i) (A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
(B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE COMPANY AN OPINION
OF COUNSEL, WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH DISPOSITION IS
EXEMPT FROM THE PROVISIONS OF SECTION 5 OF SUCH ACT, OR (C) A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION,
REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, SHALL HAVE BEEN
OBTAINED WITH RESPECT TO SUCH DISPOSITION AND (ii) SUCH DISPOSITION
IS PURSUANT TO REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION THEREFROM."
Any LLC Unit certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon the
completion of a public distribution of securities of the Company represented
thereby or otherwise if the holder of the LLC Units represented by such
certificate shall have delivered to the Company an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to the Company, that the
Securities Act permits such certificate to be issued without such legend or with
a legend modified as set forth in such opinion) shall also bear such legend. The
provisions of this Agreement shall be binding upon, and shall inure to the
benefit of, the Members and all subsequent holders of LLC Units who acquired the
same directly or indirectly from a Member to the extent set forth herein. The
Company agrees that it will not transfer on its books any certificate
representing LLC Units in violation of the provisions of this Agreement.
In the event of any merger, consolidation, reorganization, exchange
of securities, recapitalization, liquidation or similar transaction where the
LLC Units are converted into or exchanged for other securities, all references
in this Agreement (including the Schedules hereto) to LLC Units shall be deemed
to refer to such securities into which the LLC Units shall have been converted
or for which the LLC Units shall have been exchanged.
Section 15.3. Headings. The headings contained in this Agreement are
for purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
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<PAGE> 335
Section 15.4. Entire Agreement. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
Section 15.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which shall together constitute one and the same instrument.
Section 15.6. Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE INTERNAL
LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICT OF LAWS.
Section 15.7. Term of Certain Provisions. In the event of a
termination of this Agreement pursuant to a Conversion Transaction, the
provisions of Sections 13.1 through 13.6 (including Schedule C hereto), other
than Section 13.1(d), shall continue in full force and effect until the
occurrence of a Fundamental Transaction or until such provisions shall have
terminated or ceased to have any further force or effect in accordance with
their terms, provided that upon the occurrence of the first Underwritten Public
Offering after the date hereof, the provisions of Sections 13.3 and 13.4 shall
terminate but the provisions of Section 13.1, 13.2, 13.5 and 13.6 (including
Schedule C hereto) shall continue in full force and effect until such provisions
shall have terminated or ceased to have any further force or effect in
accordance with their terms.
Section 15.8. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, the other Members and their
respective successors and permitted assigns.
Section 15.9. No Third-Party Beneficiaries. Except as provided in
Section 11.4 with respect to indemnification of directors, officers, employees
or agents, nothing in this Agreement shall confer any rights upon any person or
entity other than the parties hereto and their respective successors and
permitted assigns.
77
<PAGE> 336
Section 15.10. Consent to Jurisdiction. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATES OF NEW YORK AND DELAWARE AND THE
FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE, CITY AND
COUNTY OF NEW YORK OR IN THE DISTRICT OF DELAWARE, AS APPLICABLE, SOLELY IN
RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND OF THE DOCUMENTS REFERRED TO IN THIS AGREEMENT, AND HEREBY AND
THEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR
PROCEEDING FOR THE INTERPRETATION OR ENFORCEMENT HEREOF OR OF ANY SUCH DOCUMENT,
THAT THEY ARE NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY
NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT THE VENUE THEREOF
MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO
SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH NEW YORK STATE,
DELAWARE STATE OR FEDERAL COURT. THE PARTIES HERETO HEREBY CONSENT TO AND GRANT
ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT
MATTER OF ANY SUCH DISPUTE AND AGREE THAT, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH
ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 15.1, OR IN SUCH OTHER
MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE
THEREOF. EACH OF THE PARTIES HERETO AGREES THAT THIS AGREEMENT INVOLVES AT LEAST
$100,000.00 AND THAT THIS AGREEMENT HAS BEEN ENTERED INTO IN EXPRESS RELIANCE
UPON 6 Del. C. ss. 2708. EACH OF THE PARTIES HERETO IRREVOCABLY AGREES, TO THE
EXTENT SUCH PARTY IS NOT OTHERWISE SUBJECT TO SERVICE OF PROCESS IN THE STATE OF
DELAWARE, TO APPOINT AND MAINTAIN AN AGENT IN THE STATE OF DELAWARE AS SUCH
PARTY'S AGENT FOR ACCEPTANCE OF LEGAL PROCESS.
Section 15.11. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
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<PAGE> 337
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH,
TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (B) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.11.
Section 15.12. Severability. If any provision of this Agreement is
in operative or unenforceable for any reason, such circumstances shall not have
the effect of rendering the provision in question inoperative or unenforceable
in any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any extent
whatsoever, so long as this Agreement, taken as a whole, still expresses the
material intent of the parties hereto. The invalidity of any one or more
phrases, sentences, clauses, Sections or subsections of this Agreement shall not
affect the remaining portions of this Agreement.
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<PAGE> 338
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above stated.
MEMBERS:
THE CLAYTON & DUBILIER PRIVATE
EQUITY FUND IV LIMITED PARTNERSHIP
By: Clayton & Dubilier Associates IV
Limited Partnership,
the General Partner
By:
----------------------------
a general partner
-----------------------------
Daniel H. Yergin
-----------------------------
Joseph A. Stanislaw
-----------------------------
James P. Rosenfield
-----------------------------
Jamie W. Katz, as Trustee for the James P.
Rosenfield Irrevocable Gift Trust
-----------------------------
Augusta McC. P. Stanislaw, as Trustee for
the Joseph A. Stanislaw 1994 Trust for
Louis Joseph Perkins Stanislaw
80
<PAGE> 339
-----------------------------
Augusta McC. P. Stanislaw, as Trustee for
the Joseph A. Stanislaw 1994 Trust for
Katrina Augusta Perkins Stanislaw
-----------------------------
Augusta McC. P. Stanislaw, as Trustee for
the Joseph A. Stanislaw 1994 Trust for
Henry Winslow Perkins Stanislaw
-----------------------------
I.C. Bupp
-----------------------------
Stephen C. Aldrich
THE GOLDMAN SACHS GROUP, L.P.
By: The Goldman Sachs Corporation,
as general partner of The Goldman
Sachs Group, L.P.
By:
---------------------------------
Name:
Title:
81
<PAGE> 340
WITHDRAWING MEMBERS:
MCM GROUP, INC.
By:
---------------------------------
Name:
Title:
MCCARTHY, CRISANTI & MAFFEI, INC.
By:
---------------------------------
Name:
Title:
82
<PAGE> 341
Schedule A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
MEMBERS
- -------------------------------------------------------------------------------------------------------------
Name Mailing Address Number of LLC Value of Property Deemed
Units Issued to to Have Been Contributed
Member to Company
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The Clayton & Dubilier Private 270 Greenwich Avenue
Equity Fund IV Limited Greenwich, Connecticut
Partnership 06830
- -------------------------------------------------------------------------------------------------------------
Daniel H. Yergin
- -------------------------------------------------------------------------------------------------------------
Joseph A. Stanislaw
- -------------------------------------------------------------------------------------------------------------
James P. Rosenfield
- -------------------------------------------------------------------------------------------------------------
Jamie W. Katz, as Trustee for the
James P. Rosenfield Irrevocable
Gift Trust
- -------------------------------------------------------------------------------------------------------------
Augusta McC. P. Stanislaw, as
Trustee for the Joseph A. Stanislaw
1994 Trust for Louis Joseph
Perkins Stanislaw
- -------------------------------------------------------------------------------------------------------------
Augusta McC. P. Stanislaw, as
Trustee for the Joseph A. Stanislaw
1994 Trust for Katrina Augusta
Perkins Stanislaw
- -------------------------------------------------------------------------------------------------------------
Augusta McC. P. Stanislaw, as
Trustee for the Joseph A. Stanislaw
1994 Trust for Henry Winslow
Perkins Stanislaw
- -------------------------------------------------------------------------------------------------------------
I.C. Bupp
- -------------------------------------------------------------------------------------------------------------
Stephen C. Aldrich
- -------------------------------------------------------------------------------------------------------------
The Goldman Sachs Group, L.P. c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
- -------------------------------------------------------------------------------------------------------------
[Former stockholders of MGI to be
listed]
- -------------------------------------------------------------------------------------------------------------
CERA Management Members: [To [N/A]
Come]
- -------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 342
SCHEDULE B
The initial Book Values of the CERA Common Stock, the portion of the GS
Partnership Interest contributed to the Company and the MGI Common Stock shall
be equal to the respective number of LLC Units received in exchange therefor
pursuant to the Merger and Exchange Agreement on the Closing Date (not including
any Contingent LLC Units), multiplied by the value per LLC Unit as of the
Closing Date set forth in (or agreed upon pursuant to the provisions of) Section
1.8 of the Merger and Exchange Agreement.
In the event that the CERA CAGR (as such term is defined in the Merger and
Exchange Agreement) shall be equal to or greater than 16%, the initial Book
Values of the CERA Common Stock and of the portion of the GS Partnership
Interest contributed to the Company shall be equal to the respective number of
LLC Units received in exchange therefor pursuant to the Merger and Exchange
Agreement on the Closing Date plus the respective number of LLC Units issued as
additional consideration therefor pursuant to Sections 1.3(c) and 1.4(c) of the
Merger and Exchange Agreement, multiplied by the value per LLC Unit as of the
Closing Date set forth in (or agreed upon pursuant to the provisions of) Section
1.8 of the Merger and Exchange Agreement.
<PAGE> 343
SCHEDULE C
This Schedule C describes certain registration rights of the holders
of Registrable Securities (collectively, the "LLC Unitholders"). Capitalized
terms used herein without definition shall have the meanings set forth in the
Amended and Restated Limited Liability Company Agreement, dated as of
______________, 1997 (the "Agreement"), of Global Decisions Group LLC, a
Delaware limited liability company (the "Company"). In the event that, at the
time any rights under Section 13.6 of the Agreement are exercised, the equity
securities of the Company or its successor are not comprised of limited
liability company interests of a limited liability company, all references
herein to LLC Units shall be deemed to refer to such equity securities and the
other provisions of this Schedule C shall be appropriately applied, with such
adjustment as shall be necessary to give effect to the intent of such
provisions. The words "hereby," "herein," "hereof," "hereunder" and words of
similar import refer to this Schedule C as a whole and not merely to the
specific section, paragraph or clause in which such word appears. All references
herein to Sections shall be deemed references to this Schedule C unless the
context shall otherwise require.
1.1 Registration Upon Request.
(a) Requests. Subject to the provisions of Section 1.6, at any time
or from time to time (i) the Requisite Percentage of LLC Unitholders shall have
the right to make one or more written requests, and (ii) the Requisite
Percentage of CERA Principals shall have the right to make two (2) written
requests, that the Company effect the registration under the Securities Act of
all or part of the Registrable Securities of the holder or holders of such
securities and their trusts making such request, which requests shall specify
the intended method of disposition thereof by such holder or holders of such
securities and their trusts.
(b) Obligation to Effect Registration. Upon receipt by the Company
of any request for registration pursuant to Section 1.1(a), the Company will
promptly give written notice of such requested registration to all holders of
Registrable Securities, and thereupon will use its best efforts to effect the
registration under the Securities Act of
(i) the Registrable Securities which the Company has been so
requested to register pursuant to Section 1.1(a), and
<PAGE> 344
(ii) all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request given to
the Company within 30 days after the Company has given such written notice
(which request shall specify the intended method of disposition of such
Registrable Securities),
all to the extent required to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered. Notwithstanding the preceding sentence:
(x) the Company shall not be required to effect a registration
requested (a) pursuant to Section 1.1(a)(i) if the aggregate number of
Registrable Securities referred to in clauses (i) and (ii) of this Section
1.1(b) included in such registration shall be less than 20% of the
Registrable Securities at the time outstanding and (b) pursuant to Section
1.1(a)(ii) if the aggregate number of Registrable Securities referred to
in clauses (i) and (ii) of this Section 1.1(b) included in such
registration shall be, in the case of the first request, less than 50%,
and in the case of the second request, less than one-third, of the LLC
Units held by the CERA Principals (including LLC Units held by CERA
Trusts) on the Closing Date; and
(y) if the Board determines in its good faith judgment, after
consultation with a firm of nationally recognized underwriters, that there
will be an adverse effect on a then contemplated initial Underwritten
Public Offering of LLC Units, then the Requisite Percentage of LLC
Unitholders or the Requisite Percentage of CERA Principals, as the case
may be, shall be given notice of such fact and shall be deemed to have
withdrawn such request and such registration shall not be deemed to have
been effected or requested pursuant to this Section 1.1.
(c) Registration Statement Form. Each registration requested
pursuant to this Section 1.1 shall be effected by the filing of a registration
statement on Form S-1, Form S-2 or Form S-3 (or any other form which includes
substantially the same information as would be required to be included in a
registration statement on such forms as presently constituted), unless the use
of a different form is (i) required by law or (ii) permitted by law and agreed
to in writing by holders holding at least a majority (by number of LLC Units) of
the Registrable Securities as to which registration has been requested pursuant
to this Section 1.1. At any time after the date hereof that the Company shall
have issued and sold any LLC Units registered under an effective registration
statement under the Securities Act, or after the Company shall have registered
any class of equity securities pursuant to Section 12 of the Exchange
2
<PAGE> 345
Act, it will use its best efforts to qualify for registration on Form S-2 or
Form S-3 (or any other comparable form hereinafter adopted).
(d) Expenses. The Company will pay all Registration Expenses in
connection with the first two registrations which are effected as requested
under Section 1.1(a) (i) and each of the two registrations which are effected as
requested under Section 1.1(a)(ii). The Registration Expenses in connection with
each other registration, if any, requested under this Section 1.1 shall be
apportioned among the holders whose Registrable Securities are then being
registered, on the basis of the respective amounts (by number of LLC Units) of
Registrable Securities then being registered by them or on their behalf.
However, in the case of all registrations requested under Section 1.1(a), the
Company shall pay all amounts in respect of (i) any allocation of salaries of
personnel of the Company and its Subsidiaries or other general overhead expenses
of the Company and its Subsidiaries or other expenses for the preparation of
financial statements or other data normally prepared by the Company and its
Subsidiaries in the ordinary course of its business, (ii) the expenses of any
officers' and directors' liability insurance, (iii) the expenses and fees for
listing the securities to be registered on each exchange on which similar
securities issued by the Company are then listed or, if no such securities are
then listed on an exchange selected by the Company and (iv) all fees associated
with filings required to be made with the NASD (including, if applicable, the
fees and expenses of any "qualified independent underwriter" and its counsel as
may be required by the rules and regulations of the NASD).
(e) Inclusion of Other Securities. The Company shall not register
securities (other than Registrable Securities) for sale for the account of any
Person other than the Company in any registration requested pursuant to Section
1.1(a) unless permitted to do so by the written consent of holders holding at
least a majority (by number of LLC Units) of the Registrable Securities
proposed to be sold in such registration.
(f) Effective Registration Statement. A registration requested
pursuant to Section 1.1(a) will not be deemed to have been effected unless it
has become effective for the period specified in Section 1.3(b). Notwithstanding
the preceding sentence, a registration requested pursuant to Section 1.1(a)
which does not become effective after the Company has filed a registration
statement with respect thereto solely by reason of the refusal to proceed of the
holder or holders of Registrable Securities requesting the registration shall be
deemed to have been effected by the Company at the request of such holder or
holders.
3
<PAGE> 346
(g) Pro Rata Allocation. If the holders of a majority (by number of
LLC Units) of the Registrable Securities for which registration is being
requested pursuant to Section 1.1(a) determine, based on consultation with the
managing underwriters or, in an offering which is not underwritten, with an
investment banker, that the number of securities to be sold in any such
offering should be limited due to market conditions or otherwise, all holders of
Registrable Securities proposing to sell their securities in such registration
shall share pro rata in the number of securities being offered (as determined by
the holders holding a majority (by number of LLC Units) of the Registrable
Securities for which registration is being requested in consultation with the
managing underwriters or investment banker, as the case may be) and registered
for their account, such sharing to be based on the number of Registrable
Securities as to which registration was requested by such holders, and any
securities that the Company shall have proposed to sell for its own account in
such offering shall be included only if all Registrable Securities as to which
registration was requested are included therein.
1.2. Incidental Registration. If the Company at any time proposes to
register any of its equity securities (as defined in the Exchange Act) under the
Securities Act (other than pursuant to Section 1.1 or pursuant to a Special
Registration), whether or not for sale for its own account, and the registration
form to be used may be used for the registration of Registrable Securities, it
will each such time give prompt written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
Section and, upon the written request of any holder of Registrable Securities
given to the Company within 30 days after the Company has given any such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such holder and the intended method of disposition thereof), the Company
will use its best efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to register
by the holders thereof, to the extent required to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, provided that:
(a) if such registration shall be in connection with the
Underwritten Public Offering of the Common Stock, the Company shall not
include any Registrable Securities in such proposed registration if the
Board shall have deter mined, after consultation with the managing
underwriters for such offering, that it is not in the best interests of
the Company to include any Registrable Securities in such registration,
provided that, if the Board makes such a determination, the Company shall
not include in such registration any securities not being sold for the
account of the Company;
4
<PAGE> 347
(b) if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities,
the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities or other securities
that was previously notified of such registration and, thereupon, shall
not register any Registrable Securities in connection with such
registration (but shall nevertheless pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any
holder or holders of Registrable Securities to request that a registration
be effected under Section 1.1;
(c) if the Company shall be advised in writing by the managing
underwriters (or, in connection with an offering which is not
underwritten, by an investment banker) (and the Company shall so advise
each holder of Registrable Securities requesting registration of such
advice) that in their or its opinion the number of securities requested to
be included in such registration (whether by the Company, pursuant to this
Section 1.2 or pursuant to any other rights granted by the Company to a
holder or holders of its securities to request or demand such registration
or inclusion of any such securities in any such registration) exceeds the
number of such securities which can be sold in such offering,
(i) the Company shall include in such registration the number
(if any) of Registrable Securities so requested to be included which
in the opinion of such underwriters or investment banker, as the
case may be, can be sold and shall not include in such registration
any securities (other than securities being sold by the Company,
which shall have priority in being included in such registration) so
requested to be included other than Registrable Securities unless
all Registrable Securities requested to be so included are included
therein, and
(ii) if in the opinion of such underwriters or investment
banker, as the case may be, some but not all of the Registrable
Securities may be so included, all holders of Registrable Securities
requested to be included therein shall share pro rata in the number
of Registrable Securities included in such Underwritten Public
Offering on the basis of the number of Registrable Securities
requested to be included therein by such holders, provided that, in
the case of a registration initially requested or demanded by a
holder or holders of securities other than Registrable Securities,
the holders of the Registrable Securities
5
<PAGE> 348
requested to be included therein and the holders of such other
securities shall share pro rata (based on the number of LLC Units if
the requested or demanded registration is to cover only LLC Units
and, if not, based on the proposed offering price of the total
number of securities included in such Underwritten Public Offering
requested to be included therein),
and the Company shall so provide in any registration agreement hereinafter
entered into with respect to any of its securities; and
(d) if prior to the effective date of the registration statement
filed in connection with such registration, the Company is informed by the
managing underwriter (or, in connection with an offering which is not
underwritten, by an investment banker) that the price at which such
securities are to be sold is a price below that price which the requesting
holders shall have indicated to be acceptable, the Company shall promptly
notify the requesting holders of such fact, and each such requesting
holder shall have the right to withdraw its request to have its
Registrable Securities included in such registration statement.
The Company will pay all Registration Expenses in connection with
each registration of Registrable Securities requested pursuant to this Section
1.2. No registration effected under this Section 1.2 shall relieve the Company
from its obligation to effect registrations upon request under Section 1.1.
1.3. Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 1.1 and 1.2, the
Company will promptly:
(a) subject to clauses (x) and (y) of Section 1.1(b), prepare and
file with the Commission a registration statement with respect to such
securities, make all required filings with the NASD and use best efforts
to cause such registration statement to become effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith and such other documents as may be necessary to keep
such registration statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof set forth in such
registration statement, but in no event
6
<PAGE> 349
for a period of more than six months after such registration statement
becomes effective;
(c) furnish to counsel (if any) selected by the holders of a
majority (by number of LLC Units) of the Registrable Securities covered by
such registration statement copies of all documents proposed to be filed
with the Commission in connection with such registration, which documents
will be subject to the review of such counsel;
(d) furnish to each seller of such securities, without charge, such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case, including all exhibits and
documents filed therewith (other than those filed on a confidential
basis), except that the Company shall not be obligated to furnish any
seller of securities with more than two copies of such exhibits and
documents), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any
summary prospectus) in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably request in
order to facilitate the disposition of the securities owned by such
seller;
(e) use its best efforts (x) to register or qualify the securities
covered by such registration statement under such other securities or blue
sky laws of such jurisdictions as each seller shall request, (y) to keep
such registration or qualification in effect for so long as such
registration statement remains in effect and (z) to do any and all other
acts and things which may be necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the securities
owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, subject
itself to taxation in any jurisdiction wherein it is not so subject, or
take any action which would subject it to general service of process in
any jurisdiction wherein it is not so subject;
(f) in connection with an Underwritten Public Offering only, furnish
to each seller a signed counterpart, addressed to the sellers, of
(i) an opinion of counsel for the Company experienced in
securities law matters, dated the effective date of the registration
statement, and
7
<PAGE> 350
(ii) a "comfort" letter signed by the independent public
accountants who have issued an audit report on the Company's
financial statements included in the registration statement, subject
to such seller having executed and delivered to the independent
public accountants such certificates and documents as such
accountants shall reasonably request and provided that such
accountants shall be permitted by the standards applicable to
certified public accountants to deliver a "comfort" letter to such
seller,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
Underwritten Public Offerings of securities;
(g) (i) notify each holder of Registrable Securities covered by such
registration statement if such registration statement, at the time it or
any amendment thereto became effective, (x) contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading
upon discovery by the Company of such material misstatement or omission or
(y) upon discovery by the Company of the happening of any event as a
result of which the Company believes there would be such a material
misstatement or omission, and, as promptly as practicable, prepare and
file with the Commission a post-effective amendment to such registration
statement and use best efforts to cause such post-effective amendment to
become effective such that such registration statement, as so amended,
shall not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) notify each holder of
Registrable Securities covered by such registration statement, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, if the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading upon discovery by the Company
of such material misstatement or omission or upon discovery by the Company
of the happening of any event as a result of which the Company believes
there would be a material misstatement or omission, and, as promptly as is
practicable, prepare and furnish to such holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as
8
<PAGE> 351
may be necessary so that, as thereafter delivered to the purchasers of
such securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
of the Company complying with the provisions of Section 11(a) of the
Securities Act and Rule 158 under the Securities Act;
(i) notify each seller of any securities covered by such
registration statement (i) when such registration statement, or any
post-effective amendment to such registration statement, shall have become
effective, or any amendment of or supplement to the prospectus used in
connection therewith shall have been filed, (ii) of any request by the
Commission to amend such registration statement or to amend or supplement
such prospectus or for additional information, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of such
registration statement or of any order preventing or suspending the use of
any preliminary prospectus, and (iv) of the suspension of the
qualification of such securities for offering or sale in any jurisdiction,
or of the institution of any proceedings for any of such purposes;
(j) use its best efforts (i) (A) to list such securities on any
securities exchange on which the LLC Units are then listed or, if no LLC
Units are then listed, on an exchange selected by the Company, if such
listing is then permitted under the rules of such exchange or (B) if such
listing is not practicable or the Board determines that quotation as a
NASDAQ security is preferable, to secure designation of such securities as
a NASDAQ "national market system security" within the meaning of Rule
11Aa2-1 under the Exchange Act and (ii) to provide and cause to be
maintained a transfer agent and registrar for such Registrable Securities
not later than the effective date of such registration statement; and
(k) use every reasonable effort to obtain the lifting of any stop
order that might be issued suspending the effectiveness of such
registration statement or of any order preventing or suspending the use of
any preliminary prospectus, provided that if the Company is unable to
obtain the lifting of any such stop order in connection with a
registration pursuant to Section 1.1(a), the request for registration
shall not be deemed exercised for purposes of determining
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whether such registration has been effected for purposes of Section 1.1(a)
or (d).
The Company may require each seller of any securities as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law
in connection therewith. Each such holder agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such holder not materially
misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any securities covered thereby by name, or otherwise
identifies such seller as the holder of any securities of the Company, without
the consent of such seller, such consent not to be unreasonably withheld, except
that no such consent shall be required for any disclosure that is required by
law.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company pursuant to Section 1.3(g), such holder will promptly
discontinue such holder's disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such holder
shall have received, in the case of clause (i) of Section 1.3(g), notice from
the Company that such registration statement has been amended, as contemplated
by Section 1.3(g), and, in the case of clause (ii) of Section 1.3(g), copies of
the supplemented or amended prospectus contemplated by Section 1.3(g). If so
directed by the Company, each holder of Registrable Securities will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, in such holder's possession of the prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event that the Company
shall give any such notice, the period mentioned in Section 1.3(b) shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and including the date when each seller of any
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 1.3(g).
Although Voting LLC Units, Non-Voting LLC Units and LLC Units issued
upon the exercise of options are included in the definition of Registrable
Securities, the Company shall, in respect of any such Registrable Securities
requested to be
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registered pursuant hereto, be required to include in any registration statement
only Voting LLC Units.
1.4. Underwritten Offerings. The provisions of this Section 1.4 do
not establish additional registration rights but instead set forth procedures
applicable, in addition to those set forth in Sections 1.1 through 1.3, to any
registration which is an underwritten offering.
(a) Underwritten Offerings Exclusive. Whenever a registration
requested pursuant to Section 1.1 is for an underwritten offering, only
securities which are to be distributed by the underwriters may be included in
the registration.
(b) Underwriting Agreement. If requested by the underwriters for any
underwritten offering by holders of Registrable Securities pursuant to a
registration requested under Section 1.1(a), the Company shall enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the holders of a majority
(by number of LLC Units) of the Registrable Securities to be covered by such
registration and to the underwriters and to contain such representations and
warranties by the Company and such other terms and provisions as are customarily
contained in agreements of this type, including, but not limited to, indemnities
to the effect and to the extent provided in Section 1.7, provisions for the
delivery of officers' certificates, opinions of counsel and accountants'
"comfort" letters and hold-back arrangements. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of the
representations and warranties by, and the agreements on the part of, the
Company to and for the benefit of such underwriters be made to and for the
benefit of such holders of Registrable Securities and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement shall also be conditions precedent to the obligations of
such holders of Registrable Securities. In the event that any condition to the
obligations under any such underwriting agreement are not met or waived, and
such failure to be met or waived is not attributable to the fault of the selling
LLC Unitholders requesting a demand registration pursuant to Section 1.1(a),
such request for registration shall not be deemed exercised for purposes of
determining whether such registration has been effected for purposes of Section
1.1(a) or (d). No holder of Registrable Securities shall be required by the
Company to make any representations or warranties to, or agreements with, the
Company or the underwriters other than as set forth in Sections 1.4(e) and
1.7(b), representations, warranties or agreements regarding such holder and such
holder's intended method of distribution and any other representations required
by applicable law.
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(c) Selection of Underwriters. Whenever a registration requested
pursuant to Section 1.1(a) is for an underwritten offering, the Company will
have the right to select the managing underwriters to administer the offering
(subject to the consent (not to be unreasonably withheld) of the holders of a
majority of the LLC Units requested to be registered by CERA Principals
(including the CERA Trusts) in the case of a registration requested pursuant to
Section 1.1(a)(ii)), which managing underwriters shall be underwriters of
nationally recognized standing. If the Company at any time pro poses to register
any of its securities under the Securities Act for sale for its own account and
such securities are to be distributed by or through one or more underwriters,
the Company will have the right to select the managing underwriters to
administer the offering at least one of which shall be an underwriter of
nationally recognized standing.
(d) Incidental Underwritten Offerings. Subject to the provisions of
the proviso to the first sentence of Section 1.2, if the Company at any time
proposes to register any of its equity securities under the Securities Act
(other than pursuant to Section 1.1 or pursuant to a Special Registration),
whether or not for its own account, and such securities are to be distributed by
or through one or more underwriters, the Company will give prompt written notice
to all holders of Registrable Securities of its intention to do so and, if
requested by any holder of Registrable Securities, will use its best efforts to
arrange for such underwriters to include the Registrable Securities to be
offered and sold by such holder among those to be distributed by such
underwriters. The holders of Registrable Securities to be distributed by such
underwriters shall be parties to the under writing agreement between the Company
and such underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of the underwriters under such
underwriting agreement shall also be conditions precedent to the obligations of
such holders of Registrable Securities. No such holder of Registrable
Securities shall be required by the Company to make any representations or
warranties to, or agreements with, the Company or the underwriters other than as
set forth in Sections 1.4(e) and 1.7(b), representations, warranties or
agreements regarding such holder and such holder's intended method of
distribution and any other representations required by applicable law.
(e) Hold Back Agreements. If and whenever the Company proposes to
register any of its equity securities under the Securities Act, whether or not
for its own account (other than pursuant to a Special Registration), or is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 1.1 or 1.2, each holder
of Registrable Securities agrees by acquisi-
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<PAGE> 355
tion of such Registrable Securities not to effect (other than pursuant to such
registration) any public sale or distribution, including, but not limited to,
any sale pursuant to Rule 144 or Rule 144A, of any Registrable Securities, any
other equity securities of the Company or any securities convertible into or
exchangeable or exercisable for any equity securities of the Company for one
year after, and during the 20 days prior to, the effective date of such
registration and the Company agrees to cause each holder of any equity security,
or of any security convertible into or exchangeable or exercisable for any
equity security, of the Company purchased from the Company at any time other
than in a Public Offering to enter into a similar agreement with the Company.
The Company further agrees not to effect (other than pursuant to such
registration or pursuant to a Special Registration) any public sale or
distribution, or to file any registration statement (other than such
registration or a Special Registration) covering any, of its equity securities,
or any securities convertible into or exchangeable or exercisable for such
securities, during the 20 days prior to, and for one year after, the effective
date of such registration if required by the managing underwriter.
1.5. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of such
Registrable Securities so to be registered and their underwriters, if any, and
their respective counsel and accountants the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have issued audit reports on its financial
statements as shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
1.6. Other Registrations. If and whenever the Company is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act pursuant to Section 1.1 or 1.2, and if such
registration shall not have been withdrawn or abandoned, the Company shall not
be obligated to and shall not file any registration statement with respect to
any of its securities (including Registrable Securities) under the Securities
Act (other than a Special Registration), whether of its own accord or at the
request or demand of any holder or holders of such securities, until a period of
six months shall have elapsed from the effective date of such previous
registration; and the Company shall so provide in any registration rights
agreement with respect to any of its equity securities.
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1.7. Indemnification.
(a) Indemnification by the Company. In the event of any registration
of any Registrable Securities under the Securities Act pursuant to Section 1.1
or 1.2, the Company will and hereby does indemnify and hold harmless each seller
of such securities, its directors, officers, and employees, each other person
who participates as an underwriter, broker or dealer in the offering or sale of
such securities and each other person, if any, who controls such seller or any
such participating person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all losses,
claims, damages or liabilities, joint or several, to which such seller or any
such director, officer, employee, participating person or controlling person may
become subject under the Securities Act or otherwise (including, without
limitation, the reasonable fees and expenses of legal counsel incurred in
connection with any claim for indemnity hereunder), insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein or related thereto, or
any amend ment or supplement thereto, or (ii) any omission or alleged omission
to state a fact required to be stated in any such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement or necessary to make the statements therein not misleading; and the
Company will reimburse such seller and each such director, officer, employee,
participating person and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding, provided that the Company
shall not be liable in any such case to the extent that any such loss, claim,
dam age, liability or expense arises out of or is based upon an untrue statement
or omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such seller or participating person expressly for use in the
preparation thereof and provided, further, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the prospectus, if such untrue
statement or alleged untrue statement or omission or alleged omission is
completely corrected in an amendment or supplement to the prospectus and the
seller of Registrable Securities thereafter fails to deliver such prospectus as
so amended or supplemented prior to or concurrently with the sale of Registrable
Securities to the person asserting such loss, claim, damage, liability or
expense after the Company had furnished such seller with a sufficient number of
copies of the same or if the seller received notice from the Company
14
<PAGE> 357
of the existence of such untrue statement or alleged untrue statement or
omission or alleged omission and the seller continued to dispose of Registrable
Securities prior to the time of the receipt of either (A) an amended or
supplemented prospectus which completely corrected such untrue statement or
omission or (B) a notice from the Company that the use of the existing
prospectus may be resumed. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
director, officer, employee, participating person or controlling person and
shall survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. In the event of any registration
of any Registrable Securities under the Securities Act pursuant to Section 1.1
or 1.2, each of the prospective sellers of such securities will indemnify and
hold harmless the Company, each director of the Company, each officer of the
Company who shall sign such registration statement, each other person who
participates as an underwriter, broker or dealer in the offering or sale of such
securities and each other person, if any, who controls the Company or any such
participating person within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer, employee, participating person or controlling person may become subject
under the Securities Act or otherwise (including, without limitation, the
reasonable fees and expenses of legal counsel incurred in connection with any
claim for indemnity hereunder), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a fact contained
in, or any omission or alleged omission to state a fact with respect to such
seller required to be stated in, any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein or related thereto, or
any amendment or supplement thereto, if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company by such seller expressly for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement; and the seller will reimburse the Company and each such
director, officer, employee, participating person and controlling person for
any legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding, provided that the liability of each such seller will be in
proportion to and limited to the net amount received by such seller (after
deducting any underwriting discount and expenses) from the sale of Registrable
Securities pursuant to such registration statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
the Company or any such director, officer, participating person or controlling
person and shall survive the transfer of such securities by such seller.
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<PAGE> 358
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 1.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party hereunder, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified party
to give notice as provided therein shall not relieve the indemnifying party of
its obligations under the preceding paragraphs of this Section 1.7. In case any
such action is brought against an indemnified party, the indemnifying party will
be entitled to participate therein and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, provided that if such indemnified
party and the indemnifying party reasonably determine, based upon advice of
their respective independent counsel, that a conflict of interest may exist
between the indemnified party and the indemnifying party with respect to such
action and that it is advisable for such indemnified party to be represented by
separate counsel, such indemnified party may retain other counsel, reasonably
satisfactory to the indemnifying party, to represent such indemnified party, and
the indemnifying party shall pay all reasonable fees and expenses of such
counsel. No indemnifying party, in the defense of any such claim or litigation,
shall, except with the consent of such indemnified party, which consent shall
not be unreasonably withheld, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to that specified
in the preceding paragraphs of this Section 1.7 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of such Registrable
Securities under any Federal or state law or regulation of governmental
authority other than the Securities Act.
(e) Other Remedies. If for any reason the foregoing indemnity under
Section 1.7(a) or (b) is unavailable, or is insufficient to hold harmless an
indemnified party, other than by reason of the exceptions provided therein, then
the indemnifying party and the indemnified party under Section 1.7(a) or (b)
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the
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<PAGE> 359
relative fault of the indemnifying party on the one hand and the indemnified
party on the other or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, in such proportion as is appropriate to
reflect not only the relative fault of the indemnifying party on the one hand
and the indemnified party on the other but also the relative benefits received
by the indemnifying party and the indemnified party from the offering of
Registrable Securities (taking into account the portion of the proceeds of the
offering realized by each such party) as well as any other relevant equitable
considerations. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any party's obligation to contribute pursuant to this Section
1.7(e) is several (in proportion to the relative value of their Registrable
Securities covered by a registration statement) and not joint with the
obligations of any other party. No party shall be liable for contribution under
this Section 1.7(e) except to the extent and under such circumstances as such
party would have been liable to indemnify under this Section 1.7 if such
indemnification were enforceable under applicable law.
(f) Officers and Directors. As used in this Section 1.7, the terms
"officers" and "directors" shall include the partners of the holders of
Registrable Securities which are partnerships and the trustees of CERA trusts.
(g) Indemnification Payments. The indemnification and contribution
required by this Section 1.7 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred; provided that in the
event it is ultimately determined that any amounts so paid were not subject to
indemnification or contribution hereunder, the recipient thereof shall promptly
return such amounts to payor thereof.
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Exhibits to the LLC Agreement are filed separately as
Exhibit 3.3 to the Registration Statement
<PAGE> 361
Annex C
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Section 262. Appraisal rights
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to [sec.] 228
of this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to [sec.] 251 (other than a merger effected pursuant to [sec.]
251(g) of this title), [sec.] 252, [sec.] 254, [sec.] 257, [sec.] 258, [sec.]
263 or [sec.] 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of [sec.] 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to [secs.] 251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts described in
the foregoing subparagraphs a., b. and c. of this paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under [sec.] 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsection (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of his
shares shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of his shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to take such action
must do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation who
has complied with this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to [sec.] 228 or
[sec.] 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within 10
days after such effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required
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to give either notice that such notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more than 10
days prior to the date the notice is given, provided, that if the notice is
given on or after the effective date of the merger or consolidation, the record
date shall be such effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the close of
business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting
3
<PAGE> 364
corporation or by any stockholder entitled to participate in the appraisal
proceeding, the Court may, in its discretion, permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the final
determination of the stockholder entitled to an appraisal. Any stockholder whose
name appears on the list filed by the surviving or resulting corporation
pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
4
<PAGE> 365
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The limited liability company agreement of the Parent provides that the
Parent will indemnify any person who is or was or has agreed to become a
Director, Officer, employee or agent of the Parent, or is or was serving or has
agreed to serve at the request of the Parent as a director, officer, employee or
agent of another entity or other enterprise, against liabilities arising in the
course of such person's service, provided that the indemnitee acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interests of the Parent, provided that with respect to any criminal proceeding,
the indemnitee had no reasonable cause to believe his conduct was unlawful. Such
liabilities include all expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement. The Members will not be personally liable for
such indemnification.
Item 21. Exhibits and Financial Statement Schedules.
(a) EXHIBITS
--------
Exhibit
No. Description
------- -----------
2.1 Plan of Merger and Exchange Agreement dated as of August 1,
1997, among MCM Group, Inc., Global Decisions Group LLC, GDG
Merger Corporation, certain stockholders of Cambridge Energy
Research Associates, Inc., and The Goldman Sachs Group, L.P.
3.1 Certificate of Formation of Global Decisions Group LLC.
3.2 Limited Liability Company Agreement of Global Decisions
Group LLC, dated June 13, 1997.
3.3 Form of Amended and Restated Limited Liability Company
Agreement of Global Decisions Group LLC.
5.1* Opinion of Richards, Layton & Finger, P.A.
10.1 Secured Grid Note between Cambridge Trust Company and
Cambridge Energy Research Associates Limited Partnership,
dated March 25, 1997.
10.2 Inventory and Accounts Receivable Security Agreement between
Cambridge Trust Company and Cambridge Energy Research
Associates Limited Partnership, dated December 11, 1995.
10.3 Lease agreement between the Trustees of KSA Realty Trust and
Cambridge Energy Research Associates Limited Partnership,
dated July 27, 1995 as amended by letter agreement dated
September 26, 1995 and First Amendment to Lease dated
September 26, 1995.
10.4+ Advisory Agreement between Cambridge Energy Research
Associates Limited Partnership and The Goldman Sachs Group,
L.P., dated November 30, 1994.
10.5 Form of Employment Agreement to be entered into between CERA
and each of Daniel H. Yergin, James P. Rosenfield and Joseph
A. Stanislaw.
II-1
<PAGE> 366
Exhibit
No. Description
------- -----------
10.6 Letter Agreement between Philippe A. Michelon and CERA dated
July 2, 1993, as amended by letter agreement dated February
24, 1995.
10.7 Severance agreement between Daniel H. Lucking, Jr. and CERA
dated September 21, 1994, as amended.
10.8 Registration and Participation Agreement, dated as of August
31, 1996, among MGI and each of the MGI stockholders a party
thereto.
10.9 Interim Services Agreement, dated as of August 31, 1996,
among VK/AC Holding, Inc., Van Kampen American Capital,
Inc., MGI and MCM.
10.10 Tax Sharing Agreement, dated as of August 31, 1996, among
VK/AC Holding, Inc., MGI and MCM.
10.11 Indemnification Agreement, dated as of August 31, 1996,
among MGI, MCM, CD&R, and C&D Fund IV.
10.12 Consulting Agreement, dated as of August 31, 1996, among
MGI, MCM and CD&R.
10.13 Indemnification Agreement, dated as of August 31, 1996, made
by MCM in favor of VK/AC and Morgan Stanley Group Inc.
10.14 Employment Agreement, dated as of August 31, 1996, among
MGI, MCM and David D. Nixon.
10.15 Service Agreement between MCM Europe, MGI and Malcolm Alan
Cook.
10.16 Employment Agreement, dated as of August 31, 1996, among
MGI, MCM and Anthony Napolitano.
10.17 Service Agreement between MCM Europe, MGI and Lauretta F.
Gell.
10.18+ Optional Service Delivery Agreement, dated as of January 1,
1992, between MCM and Telerate Systems Incorporated.
10.19+ Letter Agreement, dated November 11, 1996, between Dow Jones
Telerate and MCM.
10.20 Optional Service Delivery Agreement, dated May 1, 1991,
between Telerate Systems Incorporated and Fintrend S.A.
10.21+ Optional Service Delivery Agreement, dated July 1, 1993,
between Reuters Limited and MCM.
10.22 Direct Feed Delivery Agreement, dated July 1, 1993, between
Reuters Limited and MCM.
10.23+ Amendment, dated as of October 31, 1995, between Reuters
Limited and MCM.
II-2
<PAGE> 367
Exhibit
No. Description
------- -----------
10.24+ Optional Service Delivery Agreement, dated July 1, 1993,
between MCM and Knight-Ridder Financial, Inc.
10.25+ Optional Service Delivery Agreement, dated August 18, 1993,
between MCM and Bloomberg L.P.
10.26+ Optional Service Delivery Agreement, dated February 28,
1995, between MCM and MVIS Corporation, d/b/a Market Vision.
10.27+ Optional Service Delivery Agreement, dated April 1, 1996
between ADP Financial Information Services, Inc. ("ADP") and
MCM.
10.28 Letter Agreement, dated April 10, 1997, between ADP and MCM,
amending the Optional Service Delivery Agreement, dated
April 1, 1996, between ADP and MCM.
10.29 Agreement to Supply Information, dated July 1, 1995, between
MCM Asia Pacific and Kabushiki Kaisha Quick.
10.30 Service Agreement, dated as of June 1, 1993, by and between
MCM and KIS.
10.31 Amendment to Services Agreement, dated as of July 1, 1995,
by and between MCM and KIS.
10.32 Amendment to Service Agreement, dated as of August 16, 1996,
by and between MCM and KIS.
10.33 Software License Agreement, dated as of June 1, 1993, by and
between MCM and KIS.
10.34 Option Agreement, dated as of June 1, 1993, by and between
MCM and KIS.
10.35 Lease, dated as of December 7, 1993, between The Chase
Manhattan Bank and MCM.
10.36 Form of CERA LLC Unit Grant Plan to be adopted upon
consummation of the Merger and the Exchange.
10.37 Form of CERA LLC Unit Option Plan to be adopted upon
consummation of the Merger and the Exchange.
10.38 Form of Contingent Option Agreement between Global Decisions
Group LLC and stockholders.
10.39 MGI Special Stock Option Plan.
10.40 MGI Stock Option Plan.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Coopers & Lybrand L.L.P. for Parent.
23.2 Consent of Coopers & Lybrand L.L.P. for MGI.
II-3
<PAGE> 368
Exhibit
No. Description
------- -----------
23.3 Consent of KPMG Peat Marwick LLP for MGI.
23.4 Consent of KPMG Peat Marwick LLP for CERA.
23.5* Consent of Richards, Layton & Finger, P.A (included in
Exhibit 5.1).
24.1 Power of Attorney (included on page II-13).
27 Financial Data Schedule.
-------------------
* To be filed by amendment.
+ Confidential treatment requested as to certain portions,
which portions are omitted and filed separately with the
Commission.
(b) FINANCIAL STATEMENT SCHEDULES
-----------------------------
Schedule II -- Valuation and Qualifying Accounts (MGI)
Schedule II -- Valuation and Qualifying Accounts and Reserves (CERA)
Schedules other than those listed above are omitted because they are not
required or are not applicable, or the required information is shown in the
financial statements or notes thereto.
II-4
<PAGE> 369
INDEPENDENT ACCOUNTANT'S REPORT ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
MCM Group, Inc.:
Our report on the consolidated financial statements of MCM Group, Inc. and
Subsidiaries is included on page F-5 of this registration statement. In
connection with our audit of such financial statements, we have also audited the
related financial statement schedule listed in the index on page II-4 of this
registration statement.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand L.L.P.
New York, New York
February 7, 1997
II-5
<PAGE> 370
Independent Auditors' Report on Supplementary Information
The Board of Directors
MCM Group, Inc.
We have audited and reported separately herein on the consolidated balance sheet
of MCM Group, Inc. and subsidiaries, formerly McCarthy, Crisanti & Maffei, Inc.
and subsidiaries, as of December 31, 1995 and the related consolidated
statements of income, changes in stockholder's equity and cash flows for each of
the years in the two-year period ended December 31, 1995.
Our audits were made for the purpose of forming an opinion on the basic
financial statements of MCM Group, Inc. and subsidiaries taken as a whole. The
supplementary information for the years 1995 and 1994 included in Schedule II is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic consolidated financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic consolidated financial statements taken as a whole.
KPMG Peat Marwick LLP
Chicago, Illinois
January 26, 1996
II-6
<PAGE> 371
MCM GROUP, INC. and SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<TABLE>
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ----------------------------------------------------------------------------------------------------------
Balance at Charged to
Beginning of Costs and Deductions Balance at
Description Period Expenses (Write-Offs) End of Period
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for Uncollectibles
Year 1996.................. $159.1 275.5 $234.5(a) $200.1
Year 1995.................. 70.0 157.0 67.9(a) 159.1
Year 1994.................. 119.6 58.5 108.1(a) 70.0
</TABLE>
(a) Amounts written-off as uncollectible. Amounts previously written-off are
credited directly to this account when recovered.
II-7
<PAGE> 372
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULE
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Cambridge Energy Research Associates, Inc:
The audits referred to in our report dated August 9, 1996, included the related
financial statement schedule as of June 30, 1996, and for each of the years in
the three-year period ended June 30, 1996, including in the Form S-4 of Global
Decisions Group LLC. The financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on the
financial statement schedule based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the Form S-4 of Global Decisions Group LLC.
KPMG Peat Marwick LLP
Boston, Massachusetts
August 27, 1997
II-8
<PAGE> 373
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
Schedule II - Valuation and Qualifying Accounts and Reserves
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Balance at Charge to Balance at
Beginning of Costs and End of
Description Period Expenses Deduction Period
----------- ------ -------- --------- ------
<S> <C> <C> <C>
Year ended June 30, 1996
Allowance for doubtful
accounts receivable $175,000 50,000 - 225,000
Year ended June 30, 1995
Allowance for doubtful
accounts receivable $125,000 50,000 - 175,000
Year ended June 30, 1994
Allowance for doubtful
accounts receivable $148,000 37,269 (60,269) 125,000
</TABLE>
II-9
<PAGE> 374
Item 22. Undertakings.
A. The Undersigned registrant hereby undertakes as follows:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the undersigned registrant undertakes that such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items of
the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Securities Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to this
Registration Statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
B. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
C. The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement though the
date of responding to the request.
D. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
E. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar
II-10
<PAGE> 375
value of securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimate maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) If the registrant is a foreign private issuer, to file a post-
effective amendment to the registration statement to include any financial
statements required by Rule 3-19 of this chapter at the start of any delayed
offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided, that the registrant includes in the prospectus, by means of
a post-effective amendment, financial statements required pursuant to this
paragraph (a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not be
filed to include financial statements and information required by Section
10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements
and information are contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the Form
F-3.
II-11
<PAGE> 376
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York on the 27th day of August, 1997.
GLOBAL DECISIONS GROUP LLC
By: /s/ Alberto Cribiore
--------------------------------
Alberto Cribiore
President
II-12
<PAGE> 377
SIGNATURES AND POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Alberto
Cribiore, Gordon McMahon and Donald J. Gogel, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution in each of them, for him and in his name, place and stead, and in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement on Form S-4 of Global Decisions Group
LLC and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and or the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Alberto Cribiore Director and President (Principal August 27, 1997
- ------------------------- Executive Officer)
ALBERTO CRIBIORE
/s/ Richard J. Schnall Treasurer (Principal Financial and August 27, 1997
- ------------------------- Accounting Officer)
RICHARD J. SCHNALL
/s/ Gordon McMahon Director and Vice President August 27, 1997
- -------------------------
GORDON MCMAHON
/s/ Donald J. Gogel Director and Vice President August 27, 1997
- -------------------------
DONALD J. GOGEL
</TABLE>
II-13
<PAGE> 378
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
2.1 Plan of Merger and Exchange Agreement dated as of August 1, 1997,
among MCM Group, Inc., Global Decisions Group LLC, GDG Merger
Corporation, certain stockholders of Cambridge Energy Research
Associates, Inc., and The Goldman Sachs Group, L.P.
3.1 Certificate of Formation of Global Decisions Group LLC.
3.2 Limited Liability Company Agreement of Global Decisions Group LLC,
dated June 13, 1997.
3.3 Form of Amended and Restated Limited Liability Company Agreement
of Global Decisions Group LLC.
5.1* Opinion of Richards, Layton & Finger, P.A.
10.1 Secured Grid Note between Cambridge Trust Company and Cambridge
Energy Research Associates Limited Partnership, dated March 25,
1997.
10.2 Inventory and Accounts Receivable Security Agreement between
Cambridge Trust Company and Cambridge Energy Research Associates
Limited Partnership, dated December 11, 1995.
10.3 Lease agreement between the Trustees of KSA Realty Trust and
Cambridge Energy Research Associates Limited Partnership, dated
July 27, 1995 as amended by letter agreement dated September 26,
1995 and First Amendment to Lease dated September 26, 1995.
10.4+ Advisory Agreement between Cambridge Energy Research Associates
Limited Partnership and The Goldman Sachs Group, L.P., dated
November 30, 1994.
10.5 Form of Employment Agreement to be entered into between CERA and
each of Daniel H. Yergin, James P. Rosenfield and Joseph A.
Stanislaw.
10.6 Letter Agreement between Philippe A. Michelon and CERA dated July
2, 1993, as amended by letter agreement dated February 24, 1995.
10.7 Severance agreement between Daniel H. Lucking, Jr. and CERA dated
September 21, 1994, as amended.
10.8 Registration and Participation Agreement, dated as of August 31,
1996, among MGI and each of the MGI stockholders a party thereto.
10.9 Interim Services Agreement, dated as of August 31, 1996, among
VK/AC Holding, Inc., Van Kampen American Capital, Inc., MGI and
MCM.
10.10 Tax Sharing Agreement, dated as of August 31, 1996, among VK/AC
Holding, Inc., MGI and MCM.
10.11 Indemnification Agreement, dated as of August 31, 1996, among MGI,
MCM, CD&R, and C&D Fund IV.
10.12 Consulting Agreement, dated as of August 31, 1996, among MGI, MCM
and CD&R.
<PAGE> 379
Exhibit
No. Description
------- -----------
10.13 Indemnification Agreement, dated as of August 31, 1996, made by
MCM in favor of VK/AC and Morgan Stanley Group Inc.
10.14 Employment Agreement, dated as of August 31, 1996, among MGI, MCM
and David D. Nixon.
10.15 Service Agreement between MCM Europe, MGI and Malcolm Alan Cook.
10.16 Employment Agreement, dated as of August 31, 1996, among MGI, MCM
and Anthony Napolitano.
10.17 Service Agreement between MCM Europe, MGI and Lauretta F. Gell.
10.18+ Optional Service Delivery Agreement, dated as of January 1, 1992,
between MCM and Telerate Systems Incorporated.
10.19+ Letter Agreement, dated November 11, 1996, between Dow Jones
Telerate and MCM.
10.20 Optional Service Delivery Agreement, dated May 1, 1991, between
Telerate Systems Incorporated and Fintrend S.A.
10.21+ Optional Service Delivery Agreement, dated July 1, 1993, between
Reuters Limited and MCM.
10.22 Direct Feed Delivery Agreement, dated July 1, 1993, between
Reuters Limited and MCM.
10.23+ Amendment, dated as of October 31, 1995, between Reuters Limited
and MCM.
10.24+ Optional Service Delivery Agreement, dated July 1, 1993, between
MCM and Knight-Ridder Financial, Inc.
10.25+ Optional Service Delivery Agreement, dated August 18, 1993,
between MCM and Bloomberg L.P.
10.26+ Optional Service Delivery Agreement, dated February 28, 1995,
between MCM and MVIS Corporation, d/b/a Market Vision.
10.27+ Optional Service Delivery Agreement, dated April 1, 1996 between
ADP Financial Information Services, Inc. ("ADP") and MCM.
10.28 Letter Agreement, dated April 10, 1997, between ADP and MCM,
amending the Optional Service Delivery Agreement, dated April 1,
1996, between ADP and MCM.
10.29 Agreement to Supply Information, dated July 1, 1995, between MCM
Asia Pacific and Kabushiki Kaisha Quick.
10.30 Service Agreement, dated as of June 1, 1993, by and between MCM
and KIS.
10.31 Amendment to Services Agreement, dated as of July 1, 1995, by and
between MCM and KIS.
<PAGE> 380
Exhibit
No. Description
------- -----------
10.32 Amendment to Service Agreement, dated as of August 16, 1996, by
and between MCM and KIS.
10.33 Software License Agreement, dated as of June 1, 1993, by and
between MCM and KIS.
10.34 Option Agreement, dated as of June 1, 1993, by and between MCM and
KIS.
10.35 Lease, dated as of December 7, 1993, between The Chase Manhattan
Bank and MCM.
10.36 Form of CERA LLC Unit Grant Plan to be adopted upon consummation
of the Merger and the Exchange.
10.37 Form of CERA LLC Unit Option Plan to be adopted upon consummation
of the Merger and the Exchange.
10.38 Form of Contingent Option Agreement between Global Decisions Group
LLC and stockholders.
10.39 MGI Special Stock Option Plan.
10.40 MGI Stock Option Plan.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Coopers & Lybrand L.L.P. for Parent.
23.2 Consent of Coopers & Lybrand L.L.P. for MGI.
23.3 Consent of KPMG Peat Marwick LLP for MGI.
23.4 Consent of KPMG Peat Marwick LLP for CERA.
23.5* Consent of Richards, Layton & Finger, P.A (included in Exhibit
5.1).
24.1 Power of Attorney (included on page II-7).
27 Financial Data Schedule.
-----------------------
* To be filed by amendment.
+ Confidential treatment requested as to certain portions, which
portions are omitted and filed separately with the Commission.
<PAGE> 1
CONFORMED COPY
================================================================================
PLAN OF MERGER AND
EXCHANGE AGREEMENT
by and among
MCM GROUP, INC.,
GLOBAL DECISIONS GROUP LLC,
GDG MERGER CORPORATION,
CERTAIN STOCKHOLDERS NAMED HEREIN
and
THE GOLDMAN SACHS GROUP, L.P.
------------------------------------
Dated as of August 1, 1997
------------------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
THE TRANSACTIONS
1.1 Merger and Exchanges....................................................4
1.1.1. Consummation of the Transactions.............................4
1.1.2. Closing......................................................5
1.2 The Merger..............................................................7
1.2.1. Effect of the Merger.........................................7
1.2.2. Organizational Documents, Directors and
Officers of the Surviving Corporation..............................7
1.2.3. Further Assurances...........................................8
1.2.4. Conversion of Common Stock and Options.......................8
1.2.5. Dissenting Shares...........................................10
1.2.6. MGI Certificates............................................10
1.3 Exchange of CERA Common Stock..........................................12
1.4 Exchange of GS LP Interest.............................................13
1.5 Grant of LLC Units and Contingent LLC Units to CERA
Management Members..................................................14
1.6 Calculation of CERA CAGR...............................................16
1.7 No Fractional LLC Units................................................18
1.8 Adjustments to Per Share MGI Allocated LLC Units,
etc.................................................................18
1.9 Treatment of the Transactions for Income Tax
Purposes............................................................19
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Stockholders
and GS LP...........................................................20
2.1.1. Existence and Good Standing; No Violations;
Consents and Approvals............................................21
2.1.2. Capitalization; Ownership...................................22
2.1.3. Financial Statements........................................24
2.1.4. Absence of Undisclosed Liabilities..........................24
2.1.5. Absence of Changes..........................................25
2.1.6. Taxes.......................................................26
2.1.7. Properties and Assets.......................................29
2.1.8. Contracts...................................................31
2.1.9. Intellectual Property.......................................32
2.1.10. Insurance..................................................34
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<PAGE> 3
2.1.11. Litigation.................................................35
2.1.12. Compliance with Laws and Other Instruments.................36
2.1.13. Affiliate Relationships....................................36
2.1.14. Information in Registration Statement and
Offer Documents...................................................36
2.1.15. Employees, Labor Matters, etc..............................37
2.1.16. ERISA......................................................37
2.1.17. Brokers....................................................40
2.1.18. Clients....................................................40
2.2 Representations and Warranties of the Stockholders.....................40
2.2.1. Authorization...............................................40
2.2.2. No Violations; Consents and Approvals.......................41
2.2.3. Ownership...................................................41
2.3 Additional Representations and Warranties of GS LP.....................42
2.3.1. Existence and Good Standing; Power and
Authority.........................................................42
2.3.2. No Violations; Consents and Approvals.......................43
2.3.3. Ownership...................................................43
2.4 Representations and Warranties of MGI..................................44
2.4.1. Authorization...............................................44
2.4.2. No Violations; Consents and Approvals.......................45
2.4.3. Ownership...................................................45
2.4.4. Existence and Good Standing.................................46
2.4.5. Capitalization; Ownership...................................47
2.4.6. Financial Statements........................................48
2.4.7. Absence of Undisclosed Liabilities..........................49
2.4.8. Absence of Changes..........................................49
2.4.9. Taxes.......................................................51
2.4.10. Properties and Assets......................................53
2.4.11. Contracts..................................................55
2.4.12. Intellectual Property......................................56
2.4.13. Insurance..................................................58
2.4.14. Litigation.................................................59
2.4.15. Compliance with Laws and Other Instruments.................59
2.4.16. Affiliate Relationships....................................59
2.4.17. Information in Registration Statement and
Offer Documents...................................................60
2.4.18. Employees, Labor Matters, etc..............................60
2.4.19. ERISA......................................................61
2.4.20. Brokers....................................................63
2.4.21. Vendor Distribution Firms and Customers....................63
2.5 Representations and Warranties of MGI, the Parent and
Merger Sub..........................................................63
2.5.1. Limited Liability Company Status and
Authority of the Parent...........................................64
2.5.2. Ownership and Status of Parent..............................64
2.5.3. Corporate Status, Ownership and Authority of
Merger Sub........................................................65
2.5.4. No Violations; Consents and Approvals.......................66
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<PAGE> 4
2.5.5. Information in Registration Statement and
Offer Documents...................................................66
2.5.6. Brokers.....................................................67
ARTICLE III
COVENANTS
3.1 Covenants of the Stockholders..........................................67
3.1.1. Conduct of Business.........................................67
3.1.2. CERA Cash Distribution......................................71
3.1.3. Access and Information......................................72
3.1.4. Financial Information.......................................72
3.1.5. No Solicitation.............................................72
3.1.6. FIRPTA Affidavits...........................................73
3.2 Covenants of MGI.......................................................73
3.2.1. Conduct of Business.........................................73
3.2.2. CERA Distribution Loan......................................76
3.2.3. Financing...................................................76
3.2.4. Access and Information......................................76
3.2.5. Financial Information.......................................77
3.2.6. FIRPTA Certification........................................77
3.2.7. No Solicitation.............................................77
3.3 Covenants of GS LP.....................................................78
3.3.1. No Solicitation.............................................78
3.3.2. FIRPTA Affidavit............................................78
3.3.3. Consent and Waiver..........................................78
3.4 Additional Agreements..................................................79
3.4.1. Confidentiality.............................................79
3.4.2. Registration Statement......................................81
3.4.3. Public Announcements........................................82
3.4.4. Further Actions.............................................83
3.4.5. Tax Affairs.................................................84
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Obligations of Each Party................................85
4.1.1. HSR Act Notification........................................85
4.1.2. Other Governmental Approvals................................85
4.1.3. No Injunction, etc..........................................85
4.1.4. Registration Statement......................................86
4.1.5. Certain Distributions.......................................86
4.1.6. LLC Agreement...............................................86
4.2 Conditions to Obligations of MGI, the Parent and
Merger Sub..........................................................86
4.2.1. Representations, Performance, etc...........................87
4.2.2. Material Adverse Effect.....................................88
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<PAGE> 5
4.2.3. Employment Agreements.......................................88
4.2.4. Consulting and Indemnification Agreements...................88
4.2.5. Opinions of Counsel.........................................88
4.2.6. FIRPTA Affidavit............................................88
4.2.7. Consents and Approvals......................................88
4.2.8. Financing...................................................89
4.2.9. CERA Board of Directors.....................................89
4.2.10. CERA and GS LP Holder Information Forms....................89
4.2.11. Copyrights.................................................89
4.2.12. CERA Organizational Documents..............................89
4.2.13. Termination of Line of Credit..............................90
4.2.14. Proceedings................................................90
4.3 Conditions to Obligations of the Stockholders and GS
LP..................................................................90
4.3.1. Representations; Performance................................90
4.3.2. Material Adverse Effect.....................................91
4.3.3. Opinion of Counsel..........................................91
4.3.4. Consents and Approvals......................................92
4.3.5. MGI Board of Directors......................................92
4.3.6. MGI Organizational Documents................................92
4.3.7. Proceedings.................................................92
ARTICLE V
OTHER AGREEMENTS
5.1 Noncompetition.........................................................93
5.2 Enforceability of Covenants............................................94
5.3 Further Actions and Events.............................................95
5.3.1. Termination or Adoption of Certain
Arrangements......................................................95
5.4 Certain Payments to CERA Management Members............................97
5.5 Grants of Options to Purchase LLC Units................................97
ARTICLE VI
TERMINATION
6.1 Termination............................................................98
6.2 Effect of Termination..................................................99
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<PAGE> 6
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Stockholders and GS LP.........................100
7.2 Indemnification by MGI................................................101
7.3 Further Indemnification by GS LP......................................102
7.4 Payment Adjustments, etc..............................................102
7.5 Indemnification Procedures; Limitations...............................103
7.6 Survival of Representations and Warranties, etc.......................105
ARTICLE VIII
DEFINITIONS; MISCELLANEOUS
8.1 Definition of Certain Terms...........................................106
8.2 Expenses..............................................................124
8.3 Severability..........................................................124
8.4 Notices...............................................................124
8.5 Miscellaneous.........................................................127
8.5.1. Headings...................................................127
8.5.2. Entire Agreement...........................................127
8.5.3. Counterparts...............................................127
8.5.4. Governing Law..............................................127
8.5.5. Binding Effect.............................................128
8.5.6. Assignment.................................................128
8.5.7. No Third Party Beneficiaries...............................128
8.5.8. Waiver of Jury Trial.......................................128
8.5.9. Amendment; Waivers.........................................129
v
<PAGE> 7
EXHIBITS
Exhibit A -- CERA Management Members
Exhibit B -- Form of Cambridge Energy Research
Associates, Inc. LLC Unit Grant Plan
Exhibit C -- Initial CERA Option Grantees
Exhibit D -- CERA Holder Information Form
Exhibit E -- GS LP Holder Information Form
Exhibit F -- Form of Contingent Option Agreement
Exhibit G -- Form of Amended Certificate of
Incorporation of MGI
Exhibit H -- MGI Holder Information Form
Exhibit I -- Form of Amended and Restated Limited
Liability Company Agreement
Exhibit J -- Form of Employment Agreement
Exhibit K -- Form of MCM Group, Inc. Management LLC
Unit Option Plan
Exhibit L -- Form of Cambridge Energy Research
Associates, Inc. Management LLC Unit
Option Plan
Exhibit M -- CERA CAGR Formula
Exhibit N -- Notice Addresses
vi
<PAGE> 8
PLAN OF MERGER AND EXCHANGE AGREEMENT
PLAN OF MERGER AND EXCHANGE AGREEMENT, dated as of August 1, 1997,
by and among MCM Group, Inc., a Delaware corporation ("MGI"), Global Decisions
Group LLC, a Delaware limited liability company (the "Parent"), GDG Merger
Corporation, a Delaware corporation and a wholly owned subsidiary of the Parent
("Merger Sub"), the individuals and entities listed on the signature pages
hereto under the heading "Stockholders" (the "Stockholders") and The Goldman
Sachs Group, L.P., a Delaware limited partnership ("GS LP").
W I T N E S S E T H:
WHEREAS, the Parent has been formed for the purpose of acquiring (i)
all of the outstanding shares of capital stock of MGI through a merger of Merger
Sub with and into MGI (the "Merger") and (ii) all of the outstanding shares of
capital stock of Cambridge Energy Research Associates, Inc., a Massachusetts
corporation ("CERA Inc."), and certain of the limited partnership interests of
Cambridge Energy Research Associates Limited Partnership, a Delaware limited
partnership ("CERA LP"), the general partner of which is CERA Inc., pursuant to
the terms and conditions set forth in this Agreement (capitalized terms used
herein without definition having the meanings specified therefor in Section
8.1);
WHEREAS, on the date hereof, the Stockholders own, beneficially and
of record, all of the outstanding shares (the "CERA Stockholders Common Stock")
of Common Stock, par value $.01 per share ("CERA Voting Common Stock"), and
NonVoting Common Stock, par value $.01 per share ("CERA NonVoting Common Stock"
and, together with the CERA Voting Common Stock, "CERA Common Stock"), of CERA
Inc., and GS LP owns, beneficially and of record, all of the outstanding limited
partnership interests in CERA LP other than such partnership interests that are
owned by CERA Inc. (the "GS Partnership Interest");
WHEREAS, on the day immediately preceding the Closing Date,
McCarthy, Crisanti & Maffei, Inc., a New York corporation and a wholly owned
subsidiary of MGI ("MCM"), intends to lend up to $25,000,000 to CERA Inc. (the
"CERA Distribution Loan"), and CERA Inc. will apply a portion of such funds,
together with CERA Inc.'s available cash, to the extent necessary, to make a
distribution to the Stockholders
<PAGE> 9
in an aggregate amount equal to $21,510,000 and will apply the remainder of such
funds and available cash to purchase a portion of the GS Partnership Interest
from GS LP for a purchase price of $2,390,000 (such applications of such funds
and available cash, the "CERA Cash Distribution");
WHEREAS, pursuant to the terms and conditions set forth in this
Agreement, each of the Stockholders wishes to contribute to the Parent all of
the shares of CERA Common Stock owned by such Stockholder in exchange (the "CERA
Stock Exchange") for (i) units of capital of the Parent ("LLC Units")
representing limited liability company interests in the Parent, (ii) CERA
Contingent Options and (iii) the right to receive, under certain circumstances,
Contingent LLC Units;
WHEREAS, pursuant to the terms and conditions set forth in this
Agreement, GS LP wishes to contribute to the Parent all of the GS Partnership
Interest owned by it following the CERA Cash Distribution in exchange (the "GS
Partnership Interest Exchange" and, together with the Merger and the CERA Stock
Exchange, the "Transactions") for (i) LLC Units, (ii) GS Contingent Options and
(iii) the right to receive, under certain circumstances, Contingent LLC Units,
whereupon the Parent will immediately transfer or cause to be transferred to
CERA Inc. such GS Partnership Interest;
WHEREAS, upon such transfer to CERA Inc. of such GS Partnership
Interest, CERA Inc. will become the sole partner of CERA LP, and CERA LP will be
dissolved by operation of law (the "CERA Roll-up");
WHEREAS, pursuant to the terms and conditions set forth in this
Agreement, Parent, Merger Sub and MGI wish to cause Merger Sub to be merged with
and into MGI, and to cause the then outstanding shares of MGI Common Stock to be
converted into LLC Units;
WHEREAS, in connection with the Closing, the parties hereto agree to
cause certain agreements and arrangements relating to (i) the ownership and
operations of CERA Inc. and CERA LP and (ii) the relationship among CERA Inc.,
CERA LP and GS LP to be amended, terminated and/or replaced, in each case as
further set forth herein;
WHEREAS, promptly after the Closing Date, (i) the Parent will issue
to CERA Inc., and CERA Inc. will transfer to the management employees of and
consultants to CERA Inc. listed on Exhibit A hereto (the "CERA Management
Members"),
2
<PAGE> 10
an aggregate of 106,875 LLC Units, and (ii) the Parent will enter into an
agreement with CERA Inc., granting CERA Inc. the right to purchase, under
certain circumstances, an aggregate of 7.125% of the Contingent LLC Units, and
CERA Inc. will grant to the CERA Management Members a right to receive their
respective pro rata portions of such Contingent LLC Units, in each case pursuant
to the Cambridge Energy Research Associates, Inc. LLC Unit Grant Plan,
substantially in the form of Exhibit B attached hereto, to be adopted by CERA
Inc. simultaneously with the Closing (the "CERA LLC Unit Grant Plan") and CERA
LLC Unit Grant Agreements to be entered into with each CERA Management Member;
WHEREAS, promptly after the Closing Date, CERA Inc. will grant to
the employees of and consultants to CERA Inc. listed on Exhibit C hereto (the
"Initial CERA Option Grantees"), pursuant to the CERA Option Plan, options to
purchase an aggregate of 231,500 LLC Units, at an exercise price of $18.31 per
LLC Unit; and
WHEREAS, MGI, the Parent, Merger Sub, the Stockholders and GS LP
desire to make certain representations, warranties and agreements in connection
with the Transactions and also to prescribe various conditions to the
Transactions;
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made herein and of the mutual benefits to be
derived therefrom, the parties hereto hereby agree as follows:
ARTICLE I
THE TRANSACTIONS
1.1 Merger and Exchanges.
1.1.1. Consummation of the Transactions. Subject to the terms and
conditions of this Agreement, on the Closing Date, (a) the Stockholders shall
contribute to the Parent all of the shares of CERA Common Stock owned by each of
them, and the Parent, in exchange therefor, shall issue to each of them the
respective numbers of CERA Allocated LLC Units, shall grant to each of them the
respective numbers of CERA Contingent Options and shall grant to each of them
the right to receive the respective numbers of Contingent LLC Units, in each
case as determined pursuant to Section 1.3,
3
<PAGE> 11
(b) GS LP shall contribute to the Parent all of the GS Partnership Interest
owned by it following the CERA Cash Distribution, and the Parent, in exchange
therefor, shall issue to GS LP the GS Allocated LLC Units, shall grant to GS LP
the GS Contingent Options and shall grant to GS LP the right to receive 10% of
the Contingent LLC Units, and (c) Merger Sub shall be merged with and into MGI,
and the outstanding shares of MGI Common Stock shall be converted into the right
to receive the number of LLC Units determined pursuant to Section 1.2.4(a).
1.1.2. Closing. Subject to the satisfaction or waiver of all of the
conditions to closing contained in Article IV, the closing of the Transactions
(the "Closing") shall take place at the offices of Debevoise & Plimpton, 875
Third Avenue, New York, New York, as soon as the office of the Secretary of
State of the State of Delaware shall be open for the filing of the Certificate
of Merger, on the fifth Business Day after the satisfaction or waiver of the
conditions to Closing contained in Sections 4.1.1, 4.1.2 and 4.1.4, or at such
other time or on such other date as the parties may agree to in writing or to
which the Closing shall be extended as a result of the proviso to Section
4.2.1(a)(i) or the proviso to Section 4.3.1(a)(i) (the date the Closing occurs
is referred to herein as the "Closing Date").
At the Closing:
(a) the Stockholders shall deliver, or cause to be delivered, to the
Parent, free and clear of any Liens, stock certificates representing all
of the then outstanding shares of CERA Common Stock, duly endorsed in
blank or accompanied by stock powers or other instruments of transfer duly
executed in blank, and bearing or accompanied by all requisite stock
transfer stamps, and a completed and duly executed CERA Holder Information
Form for each Stockholder, substantially in the form attached hereto as
Exhibit D;
(b) GS LP shall deliver, or cause to be delivered, to the Parent a
duly executed and acknowledged instrument of assignment and assumption,
assigning to the Parent all of the GS Partnership Interest then owned by
GS LP, together with the certificates or instruments, if any, representing
such GS Partnership Interest, and a completed and duly executed GS LP
Holder Information Form, substantially in the form attached hereto as
Exhibit E, and the Parent shall
4
<PAGE> 12
deliver, or cause to be delivered, to CERA Inc. a duly executed and
acknowledged instrument of assignment and assumption, assigning to CERA
Inc. all of such GS Partnership Interest, together with the certificates
or instruments, if any, representing such GS Partnership Interest, it
being agreed that the Parent may direct GS LP to deliver such certificates
or instruments directly to CERA Inc.;
(c) the Parent shall deliver, or cause to be delivered, to each
Stockholder and GS LP certificates representing the respective LLC Units
to be issued to them on the Closing Date in exchange for their shares of
CERA Common Stock or the GS Partnership Interest, as the case may be, and
a Contingent Option Agreement, substantially in the form of Exhibit F
hereto (each, a "Contingent Option Agreement"), evidencing the grant of
Contingent Options to such Stockholder or GS LP, and shall grant to each
of them the right to receive, under the circumstances described in
Sections 1.3 and 1.4, their respective Contingent LLC Units;
(d) MGI shall execute and file a Certificate of Merger (together
with any other documents required by Applicable Law to effectuate the
Merger) with the Secretary of State of the State of Delaware in accordance
with Sections 251 and 103 of the DGCL (the "Certificate of Merger"). The
Merger shall become effective simultaneously with the filing of the
Certificate of Merger. The time when the Merger shall become effective is
referred to in this Agreement as the "Effective Time";
(e) the Parent shall deliver, or cause to be delivered, to the
Exchange Agent certificates representing the respective LLC Units to be
issued to each of the holders of shares of MGI Common Stock in exchange
for such shares pursuant to Section 1.2.6;
(f) each party hereto shall deliver, or cause to be delivered, to
the other parties hereto the certificates and other documents required to
be delivered pursuant to Article IV; and
(g) the parties hereto shall cause the occurrence of the events and
transactions set forth in Section 5.3.1, subject to the terms and
conditions of, and as more fully described in, such Section.
5
<PAGE> 13
1.2 The Merger.
1.2.1. Effect of the Merger. In accordance with and subject to the
terms and provisions of this Agreement and the DGCL, at the Effective Time: (i)
the separate existence of Merger Sub shall cease and MGI shall be the surviving
corporation (the "Surviving Corporation") and shall continue its corporate
existence under the laws of the State of Delaware; (ii) all rights, privileges,
immunities, powers, purposes, franchises, properties and assets of MGI and
Merger Sub shall vest in the Surviving Corporation; and (iii) all debts,
liabilities, obligations, restrictions, disabilities and duties of MGI and
Merger Sub shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
1.2.2. Organizational Documents, Directors and Officers of the
Surviving Corporation. (a) Certificate of Incorporation. At the Effective Time,
the Certificate of Incorporation of MGI shall be amended to read in its entirety
as set forth in Exhibit G hereto, and as so amended shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended, altered or
repealed as provided therein or by Applicable Law.
(b) By-Laws. From and after the Effective Time, the by-laws of
Merger Sub in effect immediately prior to the Effective Time shall be the
by-laws of the Surviving Corporation until thereafter amended, altered or
repealed as provided therein.
(c) Directors and Officers. From and after the Effective Time, the
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, and the officers of MGI immediately
prior to the Effective Time shall be the officers of the Surviving Corporation,
each to hold office in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation until his or her successor is elected or
appointed, as the case may be, and qualified or until his or her earlier death,
resignation, disqualification or removal.
1.2.3. Further Assurances. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title
6
<PAGE> 14
or interest in, to or under any of the rights, privileges, immunities, powers,
purposes, franchises, properties or assets of MGI or Merger Sub, or (b)
otherwise to carry out the purposes of this Agreement, the Surviving Corporation
and its proper officers and directors or their designees shall be authorized to
solicit in the name of MGI or Merger Sub any third party consents or other
documents required to be delivered by any third party, to execute and deliver,
in the name and on behalf of MGI or Merger Sub, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of MGI or Merger
Sub, all such other acts and things necessary, desirable or proper to vest,
perfect or confirm its right, title or interest in, to or under any of the
rights, privileges, immunities, powers, purposes, franchises, properties or
assets of MGI or Merger Sub and otherwise to carry out the purposes of this
Agreement.
1.2.4. Conversion of Common Stock and Options. (a) Common Stock in
General. Each share of MGI Common Stock outstanding at the Effective Time
(except for (x) any shares of MGI Common Stock then held in the treasury of MGI
and (y) Dissenting Shares) shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to receive
9.55555 LLC Units, as such number may be adjusted pursuant to Section 1.8 (as so
adjusted, the "Per Share MGI Allocated LLC Units").
(b) Shares Held by MGI. Each share of MGI Common Stock that at the
Effective Time is held in the treasury of MGI shall, by virtue of the Merger and
without any action on the part of MGI, be cancelled and retired and cease to
exist, without any conversion thereof.
(c) No Rights as Stockholders. The holders of certificates
representing shares of MGI Common Stock shall as of the Effective Time cease to
have any rights as stockholders of MGI, except such rights, if any, as holders
of Dissenting Shares may have pursuant to the DGCL, and, except as aforesaid,
their sole right shall be the right to receive the number of LLC Units into
which their respective shares of MGI Common Stock shall have been converted, as
determined and issued in the manner set forth in this Agreement.
(d) Employee Options. At the Effective Time, (i) each then
outstanding option to purchase shares of MGI Common Stock (each such option, an
"MGI Special Option") granted under the MCM Group, Inc. Special Stock Option
Plan (such plan, the "MGI Special Options Plan") and (ii) each then outstanding
option to purchase shares of MGI Common
7
<PAGE> 15
Stock (each such option, an "MGI Employee Option" and, together with the MGI
Special Options, the "Existing MGI Options") granted under the MCM Group, Inc.
Stock Option Plan (such plan, the "MGI Management Option Plan" and, together
with the MGI Special Options Plan, the "MGI Option Plans"), shall automatically
be converted, without any action on the part of MGI or the holder of such
Existing MGI Option, into an equivalent option to purchase from MGI a number of
LLC Units equal to the product of (x) the Per Share MGI Allocated LLC Units and
(y) the number of shares of MGI Common Stock subject to such Existing MGI Option
immediately prior to the Effective Time, for an exercise price per LLC Unit
equal to the quotient obtained by dividing (i) the exercise price per share of
MGI Common Stock of such Existing MGI Option by (ii) the Per Share MGI Allocated
LLC Units. All other terms and conditions of the Existing MGI Options, including
such terms relating to the vesting, exercisability and termination of such
Existing MGI Options, shall remain in full force and effect following the
Effective Time, as the same may be amended from time to time in accordance with
the management stock option agreement entered into by and between MGI and each
holder of Existing MGI Options.
(e) Common Stock of Merger Sub. At the Effective Time, each share of
common stock of Merger Sub then issued and outstanding shall, by virtue of the
Merger and without any action on the part of Merger Sub, be converted into and
become one fully paid and nonassessable share of common stock, par value $0.01
per share, of the Surviving Corporation.
1.2.5. Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of MGI Common Stock which are held by stockholders who
shall have effectively dissented from the Merger and perfected their appraisal
rights in accordance with the provisions of Section 262 of the DGCL (the
"Dissenting Shares"), shall not be converted into or be exchangeable for the
right to receive LLC Units, but the holders thereof shall be entitled to payment
from the Surviving Corporation of the appraised value of such shares in
accordance with the provisions of Section 262 of the DGCL.
1.2.6. MGI Certificates. (a) Surrender of Certificates, etc. After
the Effective Time, each holder of an outstanding certificate or certificates
which immediately prior thereto represented shares of MGI Common Stock (the "MGI
Certificates") shall, upon surrender to the Exchange
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Agent of such MGI Certificate or Certificates and delivery to the Exchange Agent
of a completed and duly executed MGI Holder Information Form, substantially in
the form attached hereto as Exhibit H, be entitled to receive a certificate or
certificates representing the aggregate number of LLC Units (each, an "LLC
Certificate") into which the aggregate number of shares of MGI Common Stock
previously represented by such MGI Certificate or Certificates surrendered shall
have been converted pursuant to this Agreement. The Exchange Agent shall deliver
all LLC Certificates which each holder of MGI Common Stock is entitled to
receive pursuant to this Section 1.2.6(a) within ten Business Days following
such holder's surrender of such holder's MGI Certificates. With respect to any
MGI Certificate alleged to have been lost, stolen or destroyed, the owner or
owners of such MGI Certificate shall be entitled to receive LLC Certificates in
respect of such MGI Certificate upon delivery to the Exchange Agent of an
affidavit of such owner or owners setting forth such allegation and a bond
sufficient to indemnify the Parent and the Surviving Corporation against any
claim that may be made against either of them on account of the alleged loss,
theft or destruction of any such MGI Certificate or the delivery of such LLC
Certificates.
(b) Endorsement of MGI Certificates; Transfer Taxes. If an LLC
Certificate is to be delivered to a Person other than the Person in whose name
the MGI Certificate surrendered in exchange therefor is registered, it shall be
a condition to delivery of such LLC Certificate that the MGI Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer,
and that the Person requesting such LLC Certificate shall pay any transfer or
other Taxes required by reason of the payment to a Person other than the
registered holder of the MGI Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such Tax has been paid or is not
applicable.
(c) Status of Certificates. Until surrendered in accordance with the
provisions of this Section 1.2.6, from and after the Effective Time, each MGI
Certificate (other than (i) MGI Certificates representing shares of MGI Common
Stock held in the treasury of the Surviving Corporation and (ii) Dissenting
Shares in respect of which appraisal rights are perfected) shall represent for
all purposes only the right to receive such number of LLC Units as determined in
the manner set forth in this Agreement and shall not itself represent an equity
interest in the Parent, which shall be represented only by LLC Units.
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(d) No Further Transfers. After the Effective Time there shall be no
transfers on the stock transfer books of the Surviving Corporation of the shares
of MGI Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, MGI Certificates are presented to the
Surviving Corporation, they shall be surrendered to the Exchange Agent and
cancelled and exchanged for LLC Certificates only as provided in Section
1.2.6(a).
1.3 Exchange of CERA Common Stock. At the Closing, each share of
CERA Common Stock owned by a Stockholder immediately prior to the Closing shall
be exchanged for (a) a number of LLC Units equal to (x) 1,243,125 as such number
may be adjusted pursuant to Section 1.8 (as so adjusted, the "CERA Allocated LLC
Units"), divided by (y) the aggregate number of shares of CERA Common Stock
outstanding immediately prior to the Closing, (b) the grant by the Parent to
each such Stockholder, pursuant to separate Contingent Option Agreements to be
entered into at the Closing by and between the Parent and each such Stockholder,
of an option (each such option, a "CERA Contingent Option") to purchase at a per
LLC Unit price equal to $34.53 in the event that the CERA CAGR shall be equal to
or greater than 20%, a number of LLC Units equal to the product of (x) (A)
88,870, as such number may be adjusted pursuant to Section 1.8 (as so adjusted,
the "CERA Contingent Option LLC Units"), divided by (B) the aggregate number of
shares of CERA Common Stock outstanding immediately prior to the Closing and (y)
the number of shares of CERA Common Stock exchanged by such Stockholder in the
CERA Stock Exchange, and (c) in the event that the CERA CAGR shall be equal to
or greater than 16% (which event the parties hereto hereby agree shall indicate
that the CERA Common Stock had a value as of the Closing Date in excess of the
value initially agreed upon by the parties hereto), a right to receive
additional LLC Units (which right shall be transferable only (1) by will or the
laws of descent or distribution upon the death of a Stockholder who is a natural
person, (2) in the case of a Stockholder who is a natural person, to a trust the
only actual beneficiaries under which are such Stockholder and/or one or more of
such Stockholder's brothers and sisters (whether by whole or half blood),
spouse, ancestors and lineal descendants and (3) in the case of a Stockholder
that is a trust, to the beneficiaries of such trust) as follows: each
Stockholder who participated in the CERA Stock Exchange (or a permitted
transferee of such right) shall be entitled to receive, as of June 30, 2000 or,
in the event of the first to occur,
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prior to June 30, 2000, of a Sale of the Parent or CERA Inc., a Spin-Off of CERA
Inc. or a Public Offering, as of the closing date of such Sale, Spin-Off or
Public Offering, as the case may be, a number of Contingent LLC Units equal to
the product of (x) (A) 82.875% of the Contingent LLC Units divided by (B) the
aggregate number of shares of CERA Common Stock outstanding immediately prior to
the Closing and (y) the number of shares of CERA Common Stock exchanged by such
Stockholder in the CERA Stock Exchange.
1.4 Exchange of GS LP Interest. At the Closing, the portion of the
GS Partnership Interest owned by GS LP immediately prior to the Closing shall be
exchanged for (a) 150,000 LLC Units, as such number may be adjusted pursuant to
Section 1.8 (as so adjusted, the "GS Allocated LLC Units"), (b) the grant by the
Parent to GS LP, pursuant to a Contingent Option Agreement to be entered into at
the Closing by and between the Parent and GS LP, of an option (such option, the
"GS Contingent Option" and, together with the CERA Contingent Options, the
"Contingent Options") to purchase at a per LLC Unit price equal to $34.53 in the
event that the CERA CAGR shall be equal to or greater than 20%, 9,874 LLC Units,
as such number may adjusted pursuant to Section 1.8 (as so adjusted, the "GS
Contingent Option LLC Units"), and (c) in the event that the CERA CAGR shall be
equal to or greater than 16% (which event the parties hereto hereby agree shall
indicate that such portion of the GS Partnership Interest had a value as of the
Closing Date in excess of the value initially agreed upon by the parties
hereto), a right to receive additional LLC Units (which right shall not be
transferable) as follows: GS LP shall be entitled to receive, as of June 30,
2000 or, in the event of the first to occur, prior to June 30, 2000, of a Sale
of the Parent or CERA Inc., a Spin-Off of CERA Inc. or a Public Offering, as of
the closing date of such Sale, Spin-Off or Public Offering, as the case may be,
10% of the Contingent LLC Units.
1.5 Grant of LLC Units and Contingent LLC Units to CERA Management
Members. Promptly after the Closing Date, (i) (A) the Parent shall issue to CERA
Inc., for a purchase price per LLC Unit equal to the value per LLC Unit as of
the Closing Date set forth in (or agreed upon pursuant to the provisions of)
Section 1.8, which purchase price shall be payable in cash or, at CERA Inc.'s
option, by delivery of an interest-bearing promissory note (which interest will
be payable in cash no less frequently than semi-annually) for such amount that
will be payable at any time upon demand by the Parent, and (B) CERA Inc.,
pursuant
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to the CERA LLC Unit Grant Plan, shall grant to each CERA Management
Member who shall have entered into a CERA LLC Unit Grant Agreement with CERA
Inc., such number of LLC Units (not to exceed an aggregate of 106,875 LLC Units)
as is set forth opposite such CERA Management Member's name on Exhibit A hereto,
and (ii) the Parent shall issue to CERA Inc. the right to purchase additional
LLC Units, for a purchase price per LLC Unit equal to its fair market value (as
determined in good faith by the Board of the Parent) at the time such Contingent
LLC Units shall be deemed to have been issued pursuant to Section 1.6(b), and
CERA Inc. shall grant to each such CERA Management Member, pursuant to a CERA
LLC Unit Grant Agreement, a right to receive such additional LLC Units, as
follows: in the event that the CERA CAGR shall be equal to or greater than 16%,
CERA Inc. shall be entitled to purchase up to 7.125% of the Contingent LLC
Units, and each such CERA Management Member shall be entitled to receive, as of
June 30, 2000 or, in the event of the first to occur, prior to June 30, 2000, of
a Sale of the Parent or CERA Inc., a Spin-Off of CERA Inc. or a Public Offering,
as of the closing date of such Sale, Spin-Off or Public Offering, as the case
may be, a number of Contingent LLC Units equal to the product of (x) (A) 7.125%
of the Contingent LLC Units divided by (B) the aggregate number of LLC Units
granted to the CERA Management Members pursuant to clause (i) of this Section
1.5 and (y) the number of LLC Units so granted to such CERA Management Member.
If the employment of such CERA Management Member with (or, if such CERA
Management Member is a consultant to rather than an employee of CERA Inc. or any
of its Subsidiaries, the provision of services by such CERA Management Member
to) CERA Inc. or any of its Subsidiaries is terminated prior to June 30, 2000
or, in the event that, prior to June 30, 2000, a Sale of the Parent or CERA
Inc., a Spin-Off of CERA Inc. or a Public Offering occurs, prior to the closing
date of such Sale, Spin-Off or Public Offering, and (i) such employment or
provision of services was terminated voluntarily by such CERA Management Member
or by CERA Inc. or such Subsidiary for Cause (as defined in the CERA Option
Plan), then, immediately upon such termination of employment or provision of
services, the right of such CERA Management Member to receive Contingent LLC
Units shall terminate, and such CERA Management Member shall not be entitled to
any payment in respect thereof, or (ii) such employment or provision of services
was terminated for any other reason, then the right of such CERA Management
Member to receive Contingent LLC Units shall terminate and, in lieu thereof,
CERA Inc. shall pay to such CERA Management Member (or his or her permitted
transferees as provided below), promptly
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after such termination of employment or provision of services, an amount in cash
equal to the fair market value (as determined in good faith by the Board of the
Parent), as of the date of such termination of employment or provision of
services, of the number, if any, of Contingent LLC Units that would have been
issuable to such CERA Management Member, based on the CERA CAGR as of such date
(as determined in good faith by CERA Inc.), if the closing of a Nonqualifying
Sale had occurred on such date. The right of each CERA Management Member to
receive Contingent LLC Units pursuant to this Section 1.5 shall be transferable
only (1) by will or the laws of descent or distribution upon the death of such
CERA Management Member or (2) to a trust the only actual beneficiaries under
which are such CERA Management Member and/or one or more of such CERA Management
Member's brothers and sisters (whether by whole or half blood), spouse,
ancestors and lineal descendants, provided that the Parent shall only be
required to treat any such transferee as a permitted transferee for purposes of
this Article I if it shall have received notice of such transfer.
1.6 Calculation of CERA CAGR. (a) Not later than (x) 15 days after
the audited financial statements of CERA Inc. for the fiscal year ended June 30,
2000 shall have been completed and delivered to the Parent or (y) if a Sale of
the Parent or CERA Inc., a Spin-Off of CERA Inc. or a Public Offering shall be
contemplated, five days prior to the scheduled closing date of such Sale,
Spin-Off or Public Offering, the Board of the Parent shall determine, reasonably
and in good faith, the CERA CAGR, and the Parent shall send a written notice to
each Stockholder who participated in the CERA Stock Exchange, to GS LP and to
each CERA Management Member who, as of the date of such notice, shall still have
a right to receive Contingent LLC Units pursuant to Section 1.5 (or any
permitted transferees of any of the foregoing), setting forth (i) the revenues
of CERA Inc. for such fiscal year or, in the case of such Sale, Spin-Off or
Public Offering, for the applicable period prior to such scheduled closing date,
in each case as determined for purposes of calculating the CERA CAGR, (ii) the
CERA CAGR and (iii) the number of Contingent LLC Units, if any, which each
Stockholder, GS LP and each such CERA Management Member who shall still have a
right to receive Contingent LLC Units pursuant to Section 1.5 (or any permitted
transferees of any of the foregoing) have become entitled to receive (subject,
in the case of such CERA Management Members, to the payment by CERA Inc. of the
purchase price for the Contingent LLC Units to be issued to such CERA Management
Members) pursuant to Sections 1.3, 1.4 and 1.5.
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The determination by the Parent, as set forth in such notice, of the CERA CAGR
and the number of Contingent LLC Units to be issued shall, in the absence of
fraud, be final, conclusive and binding on the Stockholders, GS LP and the CERA
Management Members.
(b) In the case of clause (x) of Section 1.6(a), effective
immediately upon the transmittal of the notice referred to in Section 1.6(a),
or, in the case of clause (y) of Section 1.6(a), effective immediately prior to
the closing of the Sale, Spin-Off or Public Offering referred to in such Section
1.6(a), each such Stockholder (or any permitted transferees of any of the
foregoing) and GS LP shall be deemed, without any further action on the part of
the Parent or any such Stockholder (or any permitted transferees of any of the
foregoing) or GS LP, to be the owner, as of June 30, 2000 or immediately prior
to the closing of such Sale, Spin-Off or Public Offering, as the case may be, of
the respective number of Contingent LLC Units set forth in such notice. In the
case of clause (x) of Section 1.6(a), effective immediately upon the later of
(i) the transmittal of the notice referred to in Section 1.6(a) and (ii) the
payment by CERA Inc. of the purchase price for the Contingent LLC Units to be
issued to CERA Management Members, or, in the case of clause (y) of Section
1.6(a), effective immediately prior to the closing of the Sale, Spin-off or
Public Offering referred to in such Section 1.6(a) (provided that CERA Inc.
shall have paid the purchase price for such Contingent LLC Units), each CERA
Management Member who shall still have a right to receive Contingent LLC Units
pursuant to Section 1.5 (or each of his or her permitted transferees) shall be
deemed, without any further action on the part of the Parent, CERA Inc. or such
CERA Management Member or permitted transferee, to be the owner, as of June 30,
2000 or immediately prior to the closing of such Sale, Spin-Off or Public
Offering, as the case may be, of the respective number of Contingent LLC Units
set forth in such notice. The Parent shall send to each such Stockholder, GS LP,
each such CERA Management Member and each such permitted transferee a
certificate or certificates representing such Contingent LLC Units promptly
after delivery of the notice referred to in Section 1.6(a).
(c) The Parent recognizes and understands that a significant portion
of the consideration to be received by the Stockholders and GS LP in the CERA
Stock Exchange and the GS Partnership Interest Exchange, respectively, is
contingent and based upon the level of growth in revenues achieved by CERA Inc.
during the three-year period between
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June 30, 1997 and June 30, 2000. Accordingly, the Parent agrees to cooperate
with CERA Inc. in CERA Inc.'s efforts to achieve the requisite level of revenue
growth, principally by providing CERA Inc.'s management with the authority to
manage and operate CERA Inc.'s business, subject to the reasonable oversight of
CERA Inc.'s Board of Directors.
1.7 No Fractional LLC Units. No certificates for fractions of LLC
Units shall be issued pursuant to Section 1.2, 1.3, 1.4, 1.5 or 1.6. If the
conversion of a Person's aggregate holdings of MGI Common Stock, or the
aggregate number of LLC Units issuable to a Person at any time pursuant to the
CERA Stock Exchange, the GS Partnership Interest Exchange or a Contingent Option
or in connection with the Contingent LLC Units, results in a fractional LLC
Unit, the aggregate number of LLC Units that such Person shall be entitled to
receive shall be rounded to the nearest whole LLC Unit and, in the event that
such aggregate number of LLC Units shall be rounded down, such Person shall not
be entitled to any payment in respect of such fractional LLC Unit.
1.8 Adjustments to Per Share MGI Allocated LLC Units, etc. The
number of Per Share MGI Allocated LLC Units, CERA Allocated LLC Units, CERA
Contingent Option LLC Units, Contingent LLC Units, GS Allocated LLC Units and GS
Contingent Option LLC Units set forth in this Agreement represents the
respective numbers of LLC Units initially agreed upon by the parties hereto.
Prior to the Closing, MGI, the Founding Stockholders and GS LP may agree upon
revised numbers of such LLC Units, such that the agreed-upon value per LLC Unit
at the time of the Closing shall be equal to $10.00. In such case, the
respective numbers of Per Share MGI Allocated LLC Units, CERA Allocated LLC
Units, CERA Contingent Option LLC Units, Contingent LLC Units, GS Allocated LLC
Units and GS Contingent Option LLC Units shall be adjusted by multiplying each
such number by the quotient obtained by dividing (i) the value per LLC Unit at
the time of the Closing that would result if the initial numbers of LLC Units
referred to above were not to be so revised by (ii) $10.00. In the event that
the numbers of such LLC Units are not so revised prior to the Closing pursuant
to this Section 1.8, the value per LLC Unit at the time of the Closing shall be
deemed to be equal to (A) the fair market value of the partnership interests in
CERA LP as of the Closing Date (as determined by Houlihan Valuation Associates
in the valuation report with respect to CERA LP to be prepared and delivered by
it at or prior to the Closing)
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minus the amount of the CERA Cash Distribution divided by (B) 1,500,000.
1.9 Treatment of the Transactions for Income Tax Purposes. The
parties hereto agree that:
(a) For Income Tax purposes, the conversion of MGI Common Stock into
LLC Units, and the conversion of common stock of Merger Sub into common
stock of the Surviving Corporation, in each case pursuant to the Merger,
shall be treated as a contribution of such MGI Common Stock to the Parent
in exchange for such LLC Units pursuant to section 721(a) of the Code.
(b) For Income Tax purposes, the exchange of CERA Common Stock for
LLC Units, Contingent LLC Units and CERA Contingent Options pursuant to
the CERA Stock Exchange shall be treated as a contribution of such CERA
Common Stock to the Parent in exchange for such LLC Units, such Contingent
LLC Units and the right to acquire LLC Units upon exercise of the CERA
Contingent Options pursuant to section 721(a) of the Code.
(c) For Income Tax purposes, the exchange of the GS Partnership
Interest owned by GS LP following the CERA Cash Distribution for LLC
Units, Contingent LLC Units and GS Contingent Options pursuant to the GS
Partnership Interest Exchange shall be treated as a contribution of such
GS Partnership Interest to the Parent in exchange for such LLC Units, such
Contingent LLC Units and the right to acquire LLC Units upon exercise of
the GS Contingent Options pursuant to section 721(a) of the Code.
(d) For Income Tax purposes, the fair market value of such MGI
Common Stock, CERA Common Stock and GS Partnership Interest at the time of
the contribution thereof for Income Tax purposes set forth in paragraphs
(a), (b) and (c), respectively, of this Section 1.8 shall be equal to the
values set forth therefor on Schedule B to the Amended and Restated
Limited Liability Company Agreement of the Parent, to be dated as of the
Closing Date (the "LLC Agreement").
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Stockholders and GS LP.
The Stockholders and GS LP hereby jointly represent and warrant to MGI, the
Parent and Merger Sub on the date hereof that the representations and warranties
contained in this Section 2.1 are true and correct as of the date hereof, except
to the extent that any such representation and warranty is expressly stated
herein to be as of a date other than the date hereof, in which case such
representation and warranty is true and correct as of such date, and in each
case except as set forth in the section of the disclosure letter delivered by
the Stockholders and GS LP to MGI on or before the date of this Agreement (the
"CERA Disclosure Letter") that corresponds to the subsection of this Agreement
in respect of which such exception is being made.
2.1.1. Existence and Good Standing; No Violations; Consents and
Approvals. (a) CERA Inc. is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts. CERA LP is
a limited partnership duly formed, validly existing and in good standing under
the laws of the State of Delaware. There is no bankruptcy, reorganization or
similar proceeding pending against CERA Inc., CERA LP or any of the partners of
CERA LP. Each of CERA Inc. and CERA LP has all necessary corporate or
partnership power and authority, as the case may be, to own, lease or license
the property owned or used by it, and to conduct its business as and in the
places where its business is now being conducted. Section 2.1.1(a) of the CERA
Disclosure Letter sets forth a description (including the name of each party
thereto and of each written agreement relating thereto or, if no such written
agreement exists, a description of the material terms thereof) of each joint
venture or partnership (other than CERA LP), or similar agreement or arrangement
involving a sharing of profits or expenses during the 10-month period ended
April 30, 1997 in excess of $10,000 in the case of any such agreement or
arrangement or $25,000 in the aggregate in the case of all such agreements or
arrangements, to which either CERA Inc. or CERA LP is a party or by which either
of them may be bound. Except as set forth in Section 2.1.1(a) of the CERA
Disclosure Letter, each of CERA Inc. and CERA LP is duly qualified or licensed
to do business and is in good standing in each of the jurisdictions in which the
nature of its business or the
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properties owned or leased by it makes such qualification or licensing
necessary, but any failure to so qualify or be licensed in any such jurisdiction
does not have and would not reasonably be expected to have a CERA Material
Adverse Effect.
(b) Except as set forth in Section 2.1.1(b) of the CERA Disclosure
Letter, the execution, delivery and performance by each of the Stockholders and
GS LP of this Agreement and the other agreements and instruments to be entered
into by it in connection herewith, and the consummation of the transactions
contemplated hereby and thereby to be consummated by it, do not and will not,
with or without the giving of notice or the lapse of time or both: (i) violate,
conflict with or result in a breach or default under any provision of the
Organizational Documents of CERA Inc. or CERA LP, including the Existing
Partnership Agreement; (ii) violate any statute, ordinance, rule, regulation or
Order of any court or of any Governmental Authority applicable to CERA Inc. or
CERA LP, or by which any of CERA Inc.'s or CERA LP's respective properties or
assets may be bound; (iii) require CERA Inc. or CERA LP to obtain the Consent of
any Governmental Authority or any other Person, except, in the case of the CERA
Roll-up only, for failures to obtain such Consents that, individually or in the
aggregate, would not reasonably be expected to have a CERA Material Adverse
Effect; or (iv) result in a violation or breach of, conflict with, constitute a
default (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Lien upon any of CERA
Inc.'s or CERA LP's properties or assets under, any of the terms of any note,
agreement, contract, license, lease or other instrument or obligation to which
CERA Inc. or CERA LP is a party or by which CERA Inc., CERA LP or their
respective properties or assets may be bound, except, with respect to clause
(iv) of this Section 2.1.1(b), in the case of the CERA Roll-up only, for
violations, breaches, conflicts, defaults, terminations, cancellations,
payments, accelerations and Liens that, individually or in the aggregate, would
not reasonably be expected to have a CERA Material Adverse Effect.
2.1.2. Capitalization; Ownership. (a) The authorized capital stock
of CERA Inc. consists of 200,000 shares of CERA Voting Common Stock, of which
188,000 shares are issued and outstanding as of the date hereof, and 200,000
shares of CERA Non-Voting Common Stock, of which 52,006 shares are issued and
outstanding as of the date hereof. All of the outstanding shares of CERA Common
Stock
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have been duly authorized and validly issued and are fully paid and
nonassessable.
(b) The general and limited partners of CERA LP are set forth in
Section 2.1.2(b) of the CERA Disclosure Letter and own such number of units
representing partnership interests in CERA LP as are set forth in Section
2.1.2(b) of the CERA Disclosure Letter. CERA LP has no Subsidiaries. Neither
CERA Inc. nor CERA LP holds, beneficially or of record, any capital stock or
other equity interests of any Person other than, in the case of CERA Inc., of
CERA LP, except for publicly traded equity securities not exceeding 10% of the
outstanding equity securities of such Person or in connection with short-term
investments or cash management. The partnership interests in CERA LP that are
owned, beneficially and of record, by CERA Inc. are described in Section
2.1.2(b) of the CERA Disclosure Letter, are owned by CERA Inc. free and clear of
any Liens, and will be so owned as of the Closing Date.
(c) Except as set forth in the CERA Stockholders Agreement, the
Existing Partnership Agreement or the GS Purchase Agreement, there are no
preemptive or similar rights with respect to the CERA Common Stock or
partnership interests in CERA LP. Except for this Agreement, the Existing
Partnership Agreement, the CERA Stockholders Agreement and the GS Purchase
Agreement and as set forth in Section 2.1.2(c)(i) of the CERA Disclosure Letter,
no (i) subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind obligating any
Stockholder, GS LP, CERA Inc. or CERA LP to issue or sell any shares of capital
stock of CERA Inc. or any other equity interests therein, or to issue or
transfer any partnership interests in CERA LP or (ii) securities convertible
into or exchangeable for any such shares or interests are outstanding, and no
authorization therefor has been given. Except as set forth in the GS Purchase
Agreement and the stock restriction agreements and documents listed in Section
2.1.2(c) of the CERA Disclosure Letter, there are no outstanding contractual
obligations of CERA Inc. or CERA LP to repurchase, redeem or otherwise acquire
any CERA Common Stock or any of its partnership interests, respectively.
2.1.3. Financial Statements. (a) CERA Inc. has delivered to MGI and
the Parent complete and correct copies of the audited financial statements of
CERA LP as at and for the fiscal years ended June 30, 1996, 1995 and 1994,
together with the respective opinions thereon of KPMG Peat
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Marwick LLP, the independent public accountants of CERA LP, for each such fiscal
year, and the unaudited financial statements of CERA LP as at and for the
nine-month period ended March 31, 1997, including in each case a balance sheet,
a statement of income, a statement of equity and a statement of cash flows, and,
in the case of such audited financial statements, accompanying notes (the "CERA
Financial Statements").
(b) The CERA Financial Statements present fairly in all material
respects the financial position of CERA LP as at the respective dates or for the
respective periods thereof, and have been prepared in accordance with generally
accepted accounting principles in the United States ("GAAP") applied on a
consistent basis throughout the periods presented in the CERA Financial
Statements subject, in the case of interim unaudited CERA Financial Statements,
only to normal recurring year-end adjustments and the absence of notes. The
books and records of CERA Inc. and CERA LP have been maintained in the ordinary
course of business.
2.1.4. Absence of Undisclosed Liabilities. Neither CERA LP nor CERA
Inc. has any liabilities or obligations of any nature, whether known, unknown,
absolute, accrued, contingent or otherwise and whether due or to become due,
except (a) as set forth in Section 2.1.4 of the CERA Disclosure Letter, (b) as
and to the extent disclosed or reserved against in the unaudited balance sheet
of CERA LP, dated March 31, 1997, that has been delivered to MGI, or
specifically disclosed in the notes thereto, (c) for liabilities and obligations
that are incurred in the ordinary course of business after the date of such
balance sheet, are consistent with past practices and are not prohibited by this
Agreement, (d) for liabilities and obligations that are expressly contemplated
by this Agreement and (e) for liabilities and obligations that, individually or
in the aggregate, are not and would not reasonably be expected to have a CERA
Material Adverse Effect.
2.1.5. Absence of Changes. Since March 31, 1997, except as set forth
in Section 2.1.5 of the CERA Disclosure Letter or except as expressly
contemplated by this Agreement, the business of CERA Inc. and CERA LP has been
conducted in the ordinary course consistent with past practices and neither CERA
Inc. nor CERA LP has: (a) suffered any CERA Material Adverse Effect, (b)
modified or amended any material term of any material agreement, contract or
commitment attached as an Exhibit to this Agreement or listed in Section 2.1.8
of the CERA Disclosure Letter, or (c)
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entered into any material transaction other than in the ordinary course of
business consistent with past practices. Since March 31, 1997, except as set
forth in Section 2.1.5 of the CERA Disclosure Letter, except as expressly
contemplated by this Agreement or, as of the Closing Date with respect to
matters occurring on or after the date hereof, except in compliance with the
provisions of Sections 3.1.1 and 3.1.2, neither CERA LP nor CERA Inc. has (i)
authorized, declared or paid or made any dividend or other distribution in
respect of its capital stock or partnership interests, as the case may be, or
purchased, redeemed, issued or transferred or agreed to purchase, redeem, issue
or transfer, directly or indirectly, any shares of its capital stock or
partnership interests, warrants, options or other rights to acquire any such
shares or partnership interests or securities convertible into or exchangeable
for any such shares or partnership interests, (ii) incurred any indebtedness for
borrowed money, guaranteed any such indebtedness, issued or sold any debt
securities or guaranteed any debt securities of others, (iii) (x) entered into
or amended any employment, retention, severance, change in control or similar
agreement or arrangement of the type described in Section 2.1.8(c) (taking into
account the dollar thresholds set forth in such subsection) with, (y)
established or amended any material employee compensation or benefit plan or
practice maintained for the benefit of, or (z) paid or accrued any bonus or
deferred compensation for or in respect of, any current or former director,
officer, stockholder, partner or employee of CERA Inc. or CERA LP, in the case
of clause (x) or (y), other than in the ordinary course of business consistent
with past practices, (iv) entered into any agreement, contract or commitment
(other than this Agreement) for the sale of CERA Inc., CERA LP, the assets of
CERA Inc. and/or CERA LP or any equity interests in CERA Inc. or partnership
interests in CERA LP, or (v) taken any action or omitted to take any action (or
committed to take any action or omit to take any action) that would result in
the occurrence of any of the foregoing.
2.1.6. Taxes. (a) Filing of Returns and Payment of Taxes. Except as
set forth in Section 2.1.6(a) of the CERA Disclosure Letter, all material
Returns required to be filed by or on behalf of CERA LP or CERA Inc. ("CERA
Returns") on or before the Closing Date have (or by the Closing Date will have)
been duly and timely filed, and neither CERA LP nor CERA Inc. is currently the
beneficiary of any extension of time within which to file any CERA Return.
Except for Taxes set forth in Section 2.1.6(a) of the CERA Disclosure Letter,
which are being contested in
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good faith and by appropriate proceedings or which can be paid without interest
or penalties, the following Taxes (collectively, "CERA Taxes") have (or by the
Closing Date will have) been duly and timely paid: (i) all Taxes shown to be due
on the CERA Returns and (ii) all material Taxes due and payable on or before the
Closing Date that are or may become payable by CERA LP or CERA Inc. or
chargeable as a Lien upon the assets thereof (whether or not shown on any CERA
Return). Except as set forth in Section 2.1.6(a) of the CERA Disclosure Letter,
all material Employment and Withholding Taxes required to be paid or withheld by
or on behalf of CERA LP or CERA Inc. or for which CERA LP or CERA Inc., as the
case may be, is or may become liable ("CERA Employment and Withholding Taxes")
have been either duly and timely paid to the proper Governmental Authority or
properly set aside in accounts for such purpose.
(b) Extensions, etc. Except as set forth in Section 2.1.6(b) of the
CERA Disclosure Letter, no written agreement or other document extending, or
having the effect of extending, the period of assessment or collection of any
CERA Taxes or CERA Employment and Withholding Taxes, and no power of attorney
with respect to any such Taxes, has been executed or filed with the IRS or any
other taxing authority.
(c) Tax Filing Groups; Income Tax Jurisdictions. Neither CERA LP nor
CERA Inc. is or has been a member of any affiliated, consolidated, combined or
unitary group for purposes of filing Returns or paying Taxes. Set forth in
Section 2.1.6(c) of the CERA Disclosure Letter are all countries, states,
provinces, cities or other jurisdictions in which CERA LP or CERA Inc. currently
files or has filed an Income Tax Return within the last three years.
(d) Copies of Returns; Audits, etc. The Founding Stockholders and GS
LP have (or by the Closing Date will have) delivered to MGI and the Parent
complete and accurate copies of all CERA Returns with respect to all periods
beginning on or after July 1, 1993 that have been filed or will be required to
be filed (after giving effect to all valid extensions of time for filing) by
CERA LP or CERA Inc. on or before the Closing Date. Except as set forth in
Section 2.1.6(d) of the CERA Disclosure Letter, (i) no CERA Taxes or CERA
Employment and Withholding Taxes have been asserted by any Governmental
Authority since January 1, 1994 to be due, (ii) no revenue agent's report or
written assessment for Taxes has been issued by any Governmental Authority in
the course of any audit that has been completed since
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July 1, 1993 with respect to CERA Taxes or CERA Employment and Withholding Taxes
and (iii) no issue has been raised by any Governmental Authority in the course
of any audit that has not been completed with respect to CERA Taxes or CERA
Employment and Withholding Taxes, which issue has been raised in a writing that
has been received by any of the Stockholders, GS LP, CERA LP or CERA Inc. Except
as set forth in Section 2.1.6(d) of the CERA Disclosure Letter, no CERA Return
is currently under audit by any other taxing authority, and no CERA Employment
and Withholding Taxes are currently under audit by any taxing authority. Except
as set forth in Section 2.1.6(d) of the CERA Disclosure Letter, neither the IRS
nor any other taxing authority is now asserting in writing against CERA LP or
CERA Inc. any adjustment or any deficiency or claim for additional Taxes or
Employment and Withholding Taxes.
(e) Section 1445(a) of the Code. No amount will be required to be
deducted or withheld pursuant to section 1445(a) of the Code in connection with
the CERA Cash Distribution, the CERA Stock Exchange or the GS Partnership
Interest Exchange.
(f) Tax Sharing Agreements. Neither CERA LP nor CERA Inc. is a party
to or bound by or has any obligation under any Tax sharing agreement or
arrangement.
(g) Tax Status of CERA LP and CERA Inc. CERA LP is not and has never
been at any time treated as an association taxable as a corporation for federal
Income Tax purposes. CERA LP is and has been since its inception treated as a
partnership for federal and all relevant state or local Income Tax purposes.
CERA Inc. is and has been duly qualified as an "S corporation" within the
meaning of section 1361(a) of the Code for federal Income Tax purposes, pursuant
to an election filed by CERA Inc. on December 5, 1986 and effective as of July
1, 1987. Section 2.1.6(g) of the CERA Disclosure Letter sets forth a list of
each Tax jurisdiction in which a valid S corporation election for
CERA Inc. is in effect, or CERA Inc. is otherwise treated as an S corporation
for state or local Income Tax purposes, and the date beginning with which such
election or treatment has been continuously in effect.
(h) Section 754 of the Code. An election under Section 754 of the
Code is not in effect with respect to CERA LP.
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(i) Disclosure. Each subsection of Section 2.1.6 of the CERA
Disclosure Letter sets forth, for each relevant item set forth in such
subsection thereof, the name of the entity, the taxing jurisdiction, the type of
Tax and the taxable period or periods involved.
2.1.7. Properties and Assets. (a) Except insofar as would not have,
or reasonably be expected to have, a CERA Material Adverse Effect, each of CERA
LP and CERA Inc. has good and valid title to, or otherwise has sufficient and
legally enforceable right to use, all of the properties and assets (real,
personal or mixed, tangible or intangible, including Intellectual Property),
used or held for use in connection with, necessary for the conduct of, or
otherwise material to, the businesses conducted by it (the "CERA Assets").
Except as set forth in Section 2.1.7(a) of the CERA Disclosure Letter, the CERA
Assets that are owned by CERA Inc. or CERA LP are owned free and clear of any
Liens other than (i) liens for Taxes not yet due and payable or that are being
contested in good faith and by appropriate proceedings, (ii) statutory liens
incurred in the ordinary course of business that, individually and in the
aggregate, have not had and would not reasonably be expected to have a CERA
Material Adverse Effect, and (iii) encumbrances and easements that do not
materially detract from the value or materially interfere with the use of the
properties affected thereby (the exceptions described in the foregoing clauses
(i), (ii) and (iii) being referred to as "Permitted CERA Liens").
(b) Neither CERA Inc. nor CERA LP owns any real property. Section
2.1.7(b) of the CERA Disclosure Letter contains a complete and correct list of
all real property leases, subleases and occupancy agreements to which either
CERA LP or CERA Inc. is a party (each, a "CERA Lease") setting forth the
address, landlord and tenant for each CERA Lease. CERA Inc. and CERA LP have
delivered to MGI and the Parent correct and complete copies of the CERA Leases.
Except insofar as would not have, or reasonably be expected to have, a CERA
Material Adverse Effect, (i) each CERA Lease, other than the CERA Lease with
respect to CERA LP's principal offices in Cambridge, Massachusetts, is legal,
valid, binding, in full force and effect and enforceable against CERA Inc. or
CERA LP, as the case may be, and, to the knowledge of any Stockholder, GS LP,
CERA Inc. or CERA LP, against the other parties thereto, (ii) neither CERA LP
nor CERA Inc. is in default, violation or breach under any such CERA Lease, and
no event has occurred and is continuing that constitutes or, with notice or the
passage of time or
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both, would constitute a default, violation or breach under any such CERA Lease
and (iii) each such CERA Lease grants the tenant under such CERA Lease the right
to use and occupy the premises and rights demised and intended to be demised
thereunder, which right is sufficient for the purposes for which such premises
and rights are or are contemplated to be used or occupied by such tenant. The
CERA Lease with respect to CERA LP's principal offices in Cambridge,
Massachusetts (the "CERA Headquarters Lease") is legal, valid, binding, in full
force and effect and enforceable against CERA Inc. or CERA LP, as the case may
be, and, to the knowledge of any Stockholder, GS LP, CERA Inc. or CERA LP, the
other parties thereto. Neither CERA LP nor CERA Inc. is in default, violation or
breach in any material respect under the CERA Headquarters Lease, and no event
has occurred and is continuing that constitutes or, with notice or the passage
of time or both, would constitute a default, violation or breach under the CERA
Headquarters Lease that would reasonably be expected to have a CERA Material
Adverse Effect. The CERA Headquarters Lease grants the tenant thereunder the
right to use and occupy the premises and rights demised and intended to be
demised thereunder, which right is sufficient for the purposes for which such
premises and rights are or are contemplated to be used or occupied by such
tenant.
2.1.8. Contracts. Section 2.1.8 of the CERA Disclosure Letter sets
forth a correct and complete list, as of the date hereof, of all agreements,
contracts and commitments (including the names of each party thereto), or, in
the case of clause (a) below, of all clients party to all agreements, contracts
and commitments, of the following types (taking into account any specified
dollar thresholds) to which either CERA LP or CERA Inc. or, if the subject
matter of such agreement, contract or commitment constitutes part of the
business conducted by CERA Inc. or CERA LP, any Founding Stockholder is a party
or by or pursuant to which either CERA LP or CERA Inc. is bound or is receiving
(or will receive) payments or other benefits even if not a party to such
agreement: (a) each client party to any contract or group of contracts,
including any oral arrangements relating thereto or extensions thereof, with
respect to which client CERA LP or CERA Inc. accrued (for financial reporting
purposes), for the 10-month period ended April 30, 1997, revenues in excess of
$200,000 in the aggregate, (b) loan agreements and other agreements relating to
indebtedness for borrowed money, promissory notes, bonds, guaranties, letters of
credit, credit facilities, mortgages, security agreements, pledge agreements,
deferred purchase price agree-
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ments, sale and leaseback agreements or similar agreements, (c) (i) employment,
consulting and agency agreements or arrangements involving, during the 10-month
period ended April 30, 1997, accruals (for financial reporting purposes) by CERA
Inc. or CERA LP in excess of $25,000 with respect to any particular such
agreement or arrangement, other than any employment or consulting agreement or
arrangement involving accruals during such period of less than $90,000 that is
terminable at will or subject to such limitations on termination as may be
imposed by Applicable Law, by the applicable employer or entity being provided
with consulting services, without the payment of any amount in excess of such
amount as may be required by Applicable Law, or (ii) severance, retention,
bonus, change in control and other similar agreements or arrangements involving,
during the 10-month period ended April 30, 1997 (or reasonably expected as of
the date hereof to involve in any fiscal year of CERA Inc. commencing after June
30, 1997), accruals (for financial reporting purposes) by CERA Inc. or CERA LP
in excess of $25,000 with respect to any particular such agreement or
arrangement or in excess of $100,000 with respect to all such agreements and
arrangements in the aggregate, (d) any contracts or other documents that on or
after the Closing Date substantially limit or will limit the freedom of CERA LP
or CERA Inc. to compete in any line of business and (e) any other contract or
commitment that is material to CERA LP, CERA Inc. or their respective businesses
or not made in the ordinary course of business. Neither CERA LP, CERA Inc., any
Stockholder, GS LP nor, to the knowledge of any Stockholder, GS LP, CERA LP or
CERA Inc., any other party, is in breach or default in any material respect
under any of the agreements, contracts or commitments set forth in Section 2.1.8
of the CERA Disclosure Letter and, except as set forth in Section 2.1.8 of the
CERA Disclosure Letter, there exists no event or condition (including the
Transactions) which has resulted or would result in a material breach or default
thereunder upon the giving of notice, the passage of time or both. All the
agreements, contracts and commitments set forth in Section 2.1.8 of the CERA
Disclosure Letter are legal, valid, binding, in full force and effect and
enforceable against CERA LP, CERA Inc. or the applicable Founding Stockholder,
as the case may be, except for such agreements, contracts and commitments as
would not reasonably be expected to result in a CERA Material Adverse Effect.
2.1.9. Intellectual Property. (a) Schedule of Intellectual Property.
Section 2.1.9(a) of the CERA Disclosure Letter sets forth a correct and complete
list of all
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of the material trade or service marks, registered copyrights and
all other material Intellectual Property (other than unregistered copyrights)
used or held for use in connection with, necessary for the conduct of, or
otherwise material to the business and operations of CERA Inc. and CERA LP (the
"CERA Intellectual Property") and sets forth the owner and nature of the
interest of CERA LP or CERA Inc. therein. All of the material copyrights used or
held for use in connection with, necessary for the conduct of, or otherwise
material to the business and operations of CERA Inc. and CERA LP have been duly
registered. Section 2.1.9(a) of the CERA Disclosure Letter sets forth a correct
and complete list of all material licenses, sublicenses or other similar
material agreements (including any amendments thereto) to which CERA Inc. or
CERA LP is a party, by which either of them is bound or under which either of
them receives any benefits, relating to any CERA Intellectual Property (the
"CERA Licenses"). Each CERA License is legal, valid, binding, in full force and
effect and enforceable against CERA LP or CERA Inc., as applicable, and neither
CERA Inc., CERA LP nor, to the knowledge of any Stockholder, GS LP, CERA LP or
CERA Inc., any other party thereto is in breach or default in any material
respect under any CERA License and there exists no event or condition (including
the Transactions) which has resulted or would result in a material breach or
default thereunder upon the giving of notice, the passage of time or both.
Except as set forth in Section 2.1.9(a) of the CERA Disclosure Letter, CERA LP
or CERA Inc. has and immediately after the Closing will have the legal right to
use the CERA Intellectual Property in connection with the business as currently
conducted or contemplated to be conducted by CERA Inc. and CERA LP.
(b) No Infringement, etc. Except as disclosed in Section 2.1.9(b) of
the CERA Disclosure Letter, the business and operations of CERA Inc. and CERA LP
as currently conducted do not infringe or otherwise conflict with any rights of
any Person in respect of any Intellectual Property, and neither CERA Inc., CERA
LP nor any of their Affiliates has received notice or has actual knowledge of
any such infringement or conflict, except such infringements and conflicts as,
individually and in the aggregate, have not had and would not reasonably be
expected to have a CERA Material Adverse Effect. To the knowledge of any of the
Stockholders, GS LP, CERA Inc. or CERA LP, none of the CERA Intellectual
Property owned by CERA Inc. or CERA LP is being materially infringed or, other
than pursuant to license agreements in the ordinary course of business,
otherwise materially used or available for use by any Person other
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than CERA Inc. or CERA LP. No CERA Intellectual Property owned by CERA Inc. or
CERA LP is subject to any outstanding Order or agreement restricting the use
thereof by CERA Inc. or CERA LP with respect to its business or restricting the
licensing thereof by CERA Inc. or CERA LP to any Person. Each trademark, trade
dress or service mark and any registration or application therefor, mask work,
copyright registration or application therefor included in any CERA Intellectual
Property owned by CERA Inc. or CERA LP is in proper form and has been properly
maintained in all material respects and has otherwise been duly registered with,
filed in or issued by, as the case may be, the United States Patent and
Trademark Office, the United States Copyright Office or such other applicable
filing offices, domestic or foreign, and CERA Inc. or CERA LP has taken
reasonable actions to ensure protection under any applicable laws, and such
registrations, filings, issuances and other actions remain in full force and
effect. Except as set forth in Section 2.1.9(b) of the CERA Disclosure Letter,
neither CERA Inc. nor CERA LP has entered into any agreement to indemnify any
other Person against any charge of infringement, dilution or violation of
Intellectual Property rights, other than pursuant to any such agreements entered
into in connection with the use of commercially available information systems
applications or entered into in the ordinary course of business in connection
with the provision to clients of reports by CERA Inc. or CERA LP.
2.1.10. Insurance. Set forth in Section 2.1.10 of the CERA
Disclosure Letter is a complete and correct list of all of the insurance
policies, including, without limitation, key man insurance policies, which are
maintained for the benefit of CERA LP or CERA Inc. or with respect to the
businesses conducted by CERA Inc. or CERA LP, the CERA Assets or both, together
with a description with respect to each policy of the amount and types of
coverage, limits and deductibles, inception and expiration dates and insurance
carrier. CERA Inc. and CERA LP have made available to MGI complete and correct
copies of all such policies together with all riders and amendments thereto.
Such policies are in full force and effect and all premiums due thereon have
been paid. Such policies, with respect to their amounts and types of coverage
and limitations as to deductibles and self-insured retentions, are, to the
knowledge of any of the Stockholders, GS LP, CERA Inc. or CERA LP, adequate and
customary to insure against risks to which CERA Inc., CERA LP or the CERA Assets
are normally exposed in the operation of the businesses conducted by CERA Inc.
and CERA LP.
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2.1.11. Litigation. Except as set forth in Section 2.1.11 of the
CERA Disclosure Letter, there is no claim, action, suit, litigation or
proceeding at law or in equity, or investigation, arbitration, administrative or
other proceeding (each, "Litigation") by or before any governmental or other
instrumentality or agency, pending (in the case of pending investigations only,
to the knowledge of any Stockholder, GS LP, CERA LP or CERA Inc., and in the
case of all other pending Litigation, without regard to knowledge), or, to the
knowledge of any Stockholder, GS LP, CERA LP or CERA Inc., threatened, (i)
against or affecting CERA LP, CERA Inc., the CERA Common Stock, the partnership
interests in CERA LP, the CERA Assets or the businesses conducted by CERA Inc.
and CERA LP, that would reasonably be expected to result in liability on the
part of CERA Inc. or CERA LP in an amount in excess of $100,000 in the aggregate
or (ii) seeking to prevent or challenging the transactions contemplated by this
Agreement. There are no outstanding orders, judgments, injunctions, awards,
decrees or writs (each, an "Order") issued by any federal, state or local
governmental authority, agency, board, commission, judicial, regulatory or
administrative body, to which either CERA LP or CERA Inc. is a party or against
either CERA LP or CERA Inc., or that, to the knowledge of any of the
Stockholders, GS LP, CERA Inc. or CERA LP, have or would reasonably be expected
to have a CERA Material Adverse Effect.
2.1.12. Compliance with Laws and Other Instruments. Each of CERA LP
and CERA Inc. and, to the extent that any action taken is or has been on behalf
of or for the benefit of the businesses conducted by CERA Inc. or CERA LP (and
excluding any actions solely in a Stockholder's personal capacity), each
Stockholder is operating, and has at all times operated such business, in
compliance with all laws, ordinances, rules and regulations (including all
Environmental Laws and the respective Organizational Documents of each of CERA
LP and CERA Inc.) and Orders applicable to CERA LP, CERA Inc., such business,
any of the CERA Assets or the use, ownership and operation thereof, except to
the extent that failures to be in such compliance would not, individually or in
the aggregate, reasonably be expected to result in a CERA Material Adverse
Effect.
2.1.13. Affiliate Relationships. Except as set forth in Section
2.1.13 of the CERA Disclosure Letter and other than (i) agreements listed in
Section 2.1.8(c) of the CERA Disclosure Letter regarding compensation payable to
officers and employees who are also Stockholders and (ii) the GS Advisory
Agreement, neither CERA LP nor CERA
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Inc. has entered into any agreement, arrangement or other commitment or
transaction with any Stockholder, GS LP or any of their Affiliates which
involved, during the ten-month period ended April 30, 1997 (or is reasonably
expected, during CERA Inc.'s fiscal year ending on June 30, 1998, to involve),
payments or receipts in excess of $25,000 in any individual case or, in the
aggregate, $100,000.
2.1.14. Information in Registration Statement and Offer Documents.
None of the information supplied by any of the Stockholders, GS LP, CERA LP or
CERA Inc. regarding any of them for inclusion or incorporation by reference in
the Registration Statement or Offer Documents will, in the case of the
Registration Statement, at the date of the effectiveness of the Registration
Statement, and, in the case of the Offer Documents, at the date such materials
are mailed to the holders of MGI Common Stock, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
2.1.15. Employees, Labor Matters, etc. Neither CERA Inc. nor CERA LP
is a party to or bound by any collective bargaining or other labor agreement,
and there are no labor unions or similar organizations representing, or, to the
knowledge of any of the Stockholders, GS LP, CERA Inc. or CERA LP, purporting to
represent or attempting to represent any employees employed by CERA Inc. or CERA
LP. Since June 30, 1994, there has not occurred or, to the knowledge of any of
the Stockholders, GS LP, CERA LP or CERA Inc., been threatened any slowdown,
work stoppage, concerted refusal to work overtime or other similar labor
activity with respect to any employees of CERA Inc. or CERA LP, in any such
case, that has had or would reasonably be expected to have or result in a CERA
Material Adverse Effect or a material change in CERA Inc. or CERA LP's relations
with employees. There are no material labor disputes currently subject to any
grievance procedure, arbitration or litigation and there is no representation
petition pending or, to the knowledge of any of the Stockholders, GS LP, CERA LP
or CERA Inc., threatened with respect to any employee of CERA Inc. or CERA LP.
Each of CERA Inc. and CERA LP has complied with all applicable laws pertaining
to the employment or termination of employment of their respective employees
except for any failure so to comply that, individually and in the aggregate,
have not had and would not reasonably be expected to have or result in a CERA
Material Adverse Effect.
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2.1.16. ERISA. (a) Section 2.1.16(a) of the CERA Disclosure Letter
sets forth a complete and correct list of each "employee benefit plan," as such
term is defined in section 3(3) of ERISA, and each bonus, incentive or deferred
compensation, severance, termination, retention, change of control,
equity-based, performance or other employee or retiree benefit or compensation
plan, program, arrangement, agreement, policy or understanding, whether written
or unwritten, maintained, sponsored or contributed to by CERA Inc. or with
respect to which CERA Inc. is obligated to contribute or is a party
(collectively, the "CERA Plans"). CERA LP does not maintain, sponsor, contribute
to or have an obligation to contribute to, and is not a party to, any such
employee benefit plan or employee or retiree benefit or compensation plan,
program, arrangement, agreement, policy or understanding. With respect to each
CERA Plan, CERA Inc. or CERA LP have provided MGI complete and correct copies of
(i) such CERA Plan, if written, or a description of such CERA Plan if not
written, and (ii) to the extent applicable to such CERA Plan, all trust
agreements, insurance contracts or other funding agreements or arrangements, the
most recent actuarial and trust report, the most recent Form 5500 required to
have been filed with the IRS and all schedules thereto, the most recent IRS
determination letter, all current summary plan descriptions and any and all
amendments to any such document. No other trade or business, whether or not
incorporated, is currently or, within the preceding six years, has been required
to be treated as a "single employer" together with CERA LP or CERA Inc. pursuant
to clause (b), (c) or (m) of section 414 of the Code.
(b) Each CERA Plan intended to be qualified under section 401(a) of
the Code, and the trust (if any) forming a part thereof, has received a
favorable determination letter from the IRS as to its qualification under the
Code and to the effect that each such trust is exempt from taxation under
section 501(a) of the Code, and nothing has occurred since the date of such
determination letter that could reasonably be expected to adversely affect such
qualification or tax-exempt status.
(c) No CERA Plan is (i) subject to section 412 of the Code or
section 302 or Title IV of ERISA, (ii) a "multiemployer plan" within the meaning
of section 4001(a) of ERISA or (iii) a "multiple employer plan" within the
meaning of section 4064 of ERISA.
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(d) Neither CERA Inc. nor CERA LP has incurred (either directly or
indirectly, including as a result of an indemnification obligation) any material
liability under or pursuant to Title I or IV of ERISA or the penalty, excise Tax
or joint and several liability provisions of the Code relating to employee
benefit plans and, to the knowledge of any of the Stockholders, GS LP, CERA Inc.
or CERA LP, no event, transaction or condition has occurred or exists that could
result in any such liability to CERA Inc. or CERA LP or, following the Closing,
the Parent or any of its Affiliates. All contributions and premiums required to
have been paid by CERA Inc. to any CERA Plan under the terms of any such CERA
Plan or its related trust, insurance contract or other funding arrangement, or
pursuant to any applicable law (including ERISA and the Code) or collective
bargaining agreement have been paid when due and, and to the extent not yet due,
have been properly and adequately reflected on the CERA Financial Statements.
(e) Each of the CERA Plans has been operated and administered in all
respects in compliance with its terms and all applicable laws except for any
failure so to comply that, individually and in the aggregate, has not had and
would not reasonably be expected to have or result in a CERA Material Adverse
Effect. There are no material pending or, to the knowledge of any of the
Stockholders, GS LP, CERA LP or CERA Inc., threatened claims by or on behalf of
any of the CERA Plans, by any current or former director, officer or employee of
CERA Inc. or CERA LP or otherwise involving any such CERA Plan or the assets of
any CERA Plan (other than routine claims for benefits, all of which have been
fully reserved for on the CERA Financial Statements).
(f) The consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits or the acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of or accrued on behalf of any
current or former director, officer or employee of CERA Inc. or CERA LP or
entitle any such director, officer or employee to any severance or similar
compensation or benefits.
2.1.17. Brokers. There is no agreement that obligates any party to
pay any broker's or finder's fee or commission or similar compensation to any
Person acting on behalf of the Stockholders, GS LP, CERA Inc. or CERA LP with
respect to any sale of CERA Inc., of CERA LP, the assets of CERA Inc. and/or
CERA LP or any equity interest or part-
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nership interest in either of them, other than to Wm. Sword & Co. and Mr. Edward
Jordan, whose fees shall be paid in accordance with Sections 8.2 and 5.5(i)(b),
respectively.
2.1.18. Clients. Except as set forth in Section 2.1.18 of the CERA
Disclosure Letter, no client of the business conducted by CERA Inc. and CERA LP
and required to be listed in Section 2.1.8(a) of the CERA Disclosure Letter has
given notice to CERA LP, CERA Inc. or any Founding Stockholder to cancel or
otherwise terminate or reduce, or, to the knowledge of any of the Stockholders,
GS LP, CERA LP or CERA Inc., threatened to cancel, terminate or reduce, a
material portion of its agreements or relationships with CERA LP or CERA Inc.,
or, to the extent it relates to such business, any Founding Stockholder, and
none of the Stockholders, GS LP, CERA LP or CERA Inc. has any knowledge of any
intention of any such client to do so.
2.2 Representations and Warranties of the Stockholders. Each of the
Stockholders hereby represents and warrants, severally but not jointly, to MGI,
the Parent and Merger Sub on the date hereof that the representations and
warranties contained in this Section 2.2 are true and correct as of the date
hereof, except as set forth in the section of the CERA Disclosure Letter that
corresponds to the subsection of this Agreement in respect of which such
exception is being made.
2.2.1. Authorization. Such Stockholder has the capacity to execute
and deliver this Agreement and the other agreements and instruments to be
entered into in connection herewith to which such Stockholder is or will be a
party, to perform such Stockholder's obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby to be consummated by
it. This Agreement has been duly executed and delivered by such Stockholder and
this Agreement constitutes and, when executed, such other agreements and
instruments to which such Stockholder is or will be a party will constitute,
valid and binding obligations of such Stockholder, enforceable against such
Stockholder in accordance with their respective terms. All Consents required to
authorize such Stockholder's execution of this Agreement and such other
agreements and instruments have been obtained.
2.2.2. No Violations; Consents and Approvals. Except as set forth in
Section 2.2.2 of the CERA Disclosure Letter, the execution, delivery and
performance by such Stockholder of this Agreement and the other agreements and
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instruments to be entered into by such Stockholder in connection herewith, and
the consummation of the transactions contemplated hereby and thereby to be
consummated by such Stockholder, do not and will not, with or without the giving
of notice or the lapse of time or both: (a) violate any statute, ordinance,
rule, regulation or Order of any court or of any Governmental Authority
applicable to such Stockholder, or by which such Stockholder's properties or
assets may be bound; (b) require such Stockholder to obtain the consent of any
Governmental Authority or any other Person or (c) result in a violation or
breach of, conflict with, or constitute a default (or give rise to any right of
termination, cancellation, payment or acceleration) under, any of the terms of
any note, agreement, contract, license, lease or other instrument or obligation
to which such Stockholder is a party or by which such Stockholder or its
properties or assets may be bound.
2.2.3. Ownership. As of the date hereof, such Stockholder owns,
beneficially and of record, all of the outstanding shares of CERA Common Stock
listed in Section 2.2.3 of the CERA Disclosure Letter as being owned by such
Stockholder (it being understood that, in the case of a Stockholder that is a
trust, such Stockholder shall not be required to list in such Section 2.2.3 the
grantor or the beneficiaries of such trust), free and clear of any Liens, and as
of the Closing Date, all of such shares of CERA Common Stock will be owned,
beneficially and of record, by such Stockholder, free and clear of any Liens.
Upon the CERA Stock Exchange, the Parent will acquire good and valid title to
all of the shares of CERA Common Stock exchanged by such Stockholder, free and
clear of any Liens.
2.3 Additional Representations and Warranties of GS LP. GS LP hereby
represents and warrants to MGI, the Parent and Merger Sub and each of the
Stockholders on the date hereof that the representations and warranties
contained in this Section 2.3 are true and correct as of the date hereof.
2.3.1. Existence and Good Standing; Power and Authority. GS LP is a
limited partnership duly formed, validly existing and in good standing under the
laws of the State of Delaware. There is no bankruptcy, reorganization or similar
proceeding pending against GS LP or any of its partners. GS LP has all necessary
partnership power and authority to execute and deliver this Agreement and the
other agreements and instruments to be entered into in connection herewith to
which GS LP is or will be a party, to
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perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby to be consummated by it. The
execution, delivery and performance by GS LP of this Agreement and the other
agreements and instruments to be entered into in connection herewith to which GS
LP is or will be a party, and the consummation of the transactions contemplated
hereby and thereby to be consummated by it, have been duly authorized and
approved by all necessary partnership action of GS LP. This Agreement has been
duly executed and delivered by GS LP, and this Agreement constitutes and, when
executed, such other agreements and instruments to which GS LP is or will be a
party will constitute, valid and binding obligations of GS LP, enforceable
against it in accordance with their respective terms. All Consents required to
authorize GS LP's execution of this Agreement and such other agreements and
instruments have been obtained.
2.3.2. No Violations; Consents and Approvals. The execution,
delivery and performance by GS LP of this Agreement and the other agreements and
instruments to be entered into in connection herewith to which GS LP is or will
be a party and the consummation of the transactions contemplated hereby and
thereby to be consummated by it do not and will not, with or without the giving
of notice or the lapse of time or both: (a) violate, conflict with, or result in
a breach or default under any provision of the limited partnership agreement or
other Organizational Documents of GS LP; (b) violate any statute, ordinance,
rule, regulation or Order of any court or of any Governmental Authority
applicable to GS LP or by which any of its properties or assets may be bound;
(c) require GS LP to obtain any Governmental Authority or any other Person; or
(d) result in a violation or breach of, conflict with, or constitute a default
(or give rise to any right of termination, cancellation, payment or
acceleration) under, any of the terms of any note, agreement, contract, license,
lease or other instrument or obligation to which GS LP is a party or by which it
or any of its properties or assets may be bound.
2.3.3. Ownership. As of the date hereof, GS LP owns, beneficially
and of record, the GS Partnership Interests, and as of the Closing Date, GS LP
will own, beneficially and of record, the portion of the GS Partnership
Interests not purchased by CERA Inc. as part of the CERA Cash Distribution, in
each case free and clear of any Liens. Upon the CERA Cash Distribution, CERA
Inc. will acquire good and valid title and all right and interest in
and to the
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portion of the GS Partnership Interest to be transferred to CERA Inc.
in the CERA Cash Distribution, free and clear of any Liens, and upon the GS
Partnership Interest Exchange, the Parent will acquire good and valid title and
all right and interest in and to the portion of the GS Partnership Interest
being transferred by GS LP in the GS Partnership Interest Exchange, free and
clear of any Liens.
2.4 Representations and Warranties of MGI. MGI hereby represents and
warrants to the Stockholders and GS LP on the date hereof that the
representations and warranties contained in this Section 2.4 are true and
correct as of the date hereof, except to the extent that any such representation
and warranty is expressly stated herein to be as of a date other than the date
hereof, in which case such representation and warranty is true and correct as of
such date, and in each case except as set forth in the section of the disclosure
letter delivered by MGI to CERA Inc. and GS LP on or before the date of this
Agreement (the "MGI Disclosure Letter") that corresponds to the subsection of
this Agreement in respect of which such exception is being made.
2.4.1. Authorization. MGI and each other MCM Company has all
requisite corporate power and authority to execute and deliver this Agreement
and the other agreements and instruments to be entered into by it in connection
herewith, as applicable, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby to be consummated
by it. The execution, delivery and performance by MGI or any other MCM Company
of this Agreement and the other agreements and instruments to be executed or
delivered by it in connection herewith to which MGI or such other MCM Company is
or will be a party, and the consummation of the transactions contemplated hereby
and thereby to be consummated by MGI or such other MCM Company, other than any
financing that may be necessary or appropriate in connection with such
consummation, have been duly authorized and approved by all necessary corporate
action of MGI or such other MCM Company, as the case may be. This Agreement has
been duly executed and delivered by MGI and this Agreement constitutes and, when
executed, such other agreements and instruments to be executed or delivered by
it or the applicable MCM Company in connection herewith to which MGI or any
other MCM Company is or will be a party will constitute, valid and binding
obligations of MGI or such other MCM Company, as the case may be, enforceable
against MGI and such other MCM Company, as applicable, in accordance with their
respective terms. All Consents required to authorize execution by MGI and each
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such other MCM Company, as applicable, of this Agreement and such other
agreements and instruments to which MGI or any other MCM Company is or will be a
party, as applicable, have been obtained.
2.4.2. No Violations; Consents and Approvals. Except as set forth in
Section 2.4.2 of the MGI Disclosure Letter, the execution, delivery and
performance by MGI of this Agreement and the execution, delivery and performance
by MGI or any other MCM Company, as the case may be, of the other agreements and
instruments to be entered into by MGI or such other MCM Company, as applicable,
in connection herewith, and the consummation of the transactions contemplated
hereby and thereby to be consummated by it, do not and will not, with or without
the giving of notice or the lapse of time or both: (a) violate, conflict with or
result in a breach or default under any provision of the Organizational
Documents of any MCM Company; (b) violate any statute, ordinance, rule,
regulation or Order of any court or of any Governmental Authority applicable to
any MCM Company, or by which any of its properties or assets may be bound; (c)
require any MCM Company to obtain the Consent of any Governmental Authority or
any other Person; or (d) result in a violation or breach of, conflict with,
constitute a default (or give rise to any right of termination, cancellation,
payment or acceleration) under, or result in the creation of any Lien upon any
of the properties or assets of any MCM Company under, any of the terms of any
note, agreement, contract, license, lease or other instrument or obligation to
which any MCM Company is a party, or by which any MCM Company or its properties
or assets may be bound.
2.4.3. Ownership. As of the date hereof, (i) The Clayton & Dubilier
Private Equity Fund IV Limited Partnership, a Connecticut limited partnership
("Fund IV"), owns, beneficially and of record, all of the outstanding shares of
MGI Common Stock listed in Section 2.4.3 of the MGI Disclosure Letter as being
owned by Fund IV, free and clear of any Liens, and as of the Closing Date, all
of such shares of MGI Common Stock will be owned, beneficially and of record, by
Fund IV, free and clear of any Liens, and (ii) each stockholder of MGI owns of
record all of the outstanding shares of MGI Common Stock listed in Section 2.4.3
of the MGI Disclosure Letter as being owned by such MGI stockholder.
2.4.4. Existence and Good Standing. MGI is a corporation duly
organized, validly existing and in good
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standing under the laws of the State of Delaware. There is no bankruptcy,
reorganization or similar proceeding pending against any of the MCM Companies.
MCM is a corporation duly organized, validly existing and in good standing under
the laws of the State of New York. Each of the MCM Companies is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, formation or organization (as the case may be), has all necessary
corporate power and authority to own, lease or license the property owned or
used by it, and to conduct its business as and in the places where its business
is now being conducted. Section 2.4.4(ii) of the MGI Disclosure Letter sets
forth a description (including the name of each party thereto and of each
written agreement relating thereto or, if no such written agreement exists, a
description of the material terms thereof) of each joint venture or partnership,
or similar agreement or arrangement involving a sharing of profits or expenses
during the year ended December 31, 1996 in excess of $10,000 in the case of any
such agreement or arrangement or $25,000 in the aggregate in the case of all
such agreements or arrangements, to which any MCM Company is a party or by which
any of them may be bound. Each MCM Company is duly qualified or licensed to do
business and is in good standing in each of the jurisdictions in which the
nature of its business or the properties owned or leased by it makes such
qualification or licensing necessary, except for such jurisdictions where the
failure to so qualify or be licensed does not have and would not reasonably be
expected to have an MGI Material Adverse Effect.
2.4.5. Capitalization; Ownership. (a) The authorized capital stock
of MGI consists of (i) 500,000 shares of MGI Class A Common Stock, of which
330,000 shares are issued and outstanding as of the date hereof, (ii) 60,000
shares of MGI Class B Common Stock, of which no shares are issued and
outstanding as of the date hereof and (iii) 80,000 shares of MGI Class C Common
Stock, of which 17,400 shares are issued and outstanding as of the date hereof.
All of the outstanding shares of MGI Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
(b) Section 2.4.5(b) of the MGI Disclosure Letter sets forth a
complete and correct (i) list of all members of the MCM Group other than MGI and
(ii) description of the authorized stock or other equity interests of each
member of the MCM Group (other than MGI) and the amount of such stock or other
equity interests that are issued and outstanding as of the date hereof. All of
such outstanding shares of stock
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or other equity interests of each member of the MCM Group (other than MGI) have
been duly authorized and validly issued and are fully paid and nonassessable.
All of such outstanding shares of capital stock or other equity interests of
each member of the MCM Group (other than MGI) are owned, beneficially and of
record, by the Person listed in Section 2.4.5(b) of the MGI Disclosure Letter as
being the owner of such shares or other equity interests. None of the MCM
Companies holds, beneficially or of record, any capital stock or other equity
interests of any Person that is not an MCM Company, except for publicly traded
equity securities not exceeding 10% of the outstanding equity securities of such
Person or in connection with short-term instruments or cash management.
(c) Other than as set forth in the Registration and Participation
Agreement and as set forth in Section 2.4.5(c) of the MGI Disclosure Letter,
there are no preemptive or similar rights with respect to the MGI Common Stock
or any other equity securities of any MCM Company. Except for this Agreement and
the Existing MGI Options, no (i) subscriptions, options, warrants, conversion or
other rights, agreements, commitments, arrangements or understandings of any
kind obligating any MCM Company to issue or sell any shares of capital stock of
any MCM Company or any other equity interests therein or (ii) securities
convertible into or exchangeable for any such shares or interests are
outstanding, and no authorization therefor has been given. Section 2.4.3 of the
MGI Disclosure Letter sets forth, as of the date hereof, a correct and complete
list of all holders of Existing MGI Options, setting forth with respect to each
such holder (x) the number and class of shares of MGI Common Stock subject to
the Existing MGI Options held by such holder and (y) the exercise price of the
Existing MGI Options held by such holder. Except for the MGI Management Stock
Subscription Agreements, there are no outstanding contractual obligations of any
MCM Company to repurchase, redeem or otherwise acquire any MGI Common Stock or
any other equity securities of any MCM Company.
2.4.6. Financial Statements. MGI has delivered to the Founding
Stockholders and GS LP complete and correct copies of the audited consolidated
financial statements of the MCM Group as at and for the fiscal years ended
December 31, 1996, 1995 and 1994, together with the respective opinions thereon
of KPMG Peat Marwick LLP, the independent public accountants of the MCM Group
for 1995 and 1994, respectively, and of Coopers & Lybrand LLP, the independent
public accountants of the MCM Group for 1996, and
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the unaudited consolidated financial statements of the MCM Group as at and for
the three-month period ended March 31, 1997, including in each case a balance
sheet, a statement of income, a statement of stockholders' equity and a
statement of cash flows, and, in the case of such audited consolidated financial
statements, accompanying notes (the "MGI Financial Statements").
The MGI Financial Statements present fairly in all material respects
the financial position of the MCM Group as at the respective dates or for the
respective periods thereof, and have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods presented in the MGI
Financial Statements subject, in the case of interim unaudited MGI Financial
Statements, only to normal recurring year-end adjustments and the absence of
notes. The books and records of the MCM Companies have been maintained in the
ordinary course of business.
2.4.7. Absence of Undisclosed Liabilities. The MCM Companies have no
liabilities or obligations of any nature, whether known, unknown, absolute,
accrued, contingent or otherwise and whether due or to become due, except (a) as
set forth in Section 2.4.7 of the MGI Disclosure Letter, (b) as and to the
extent disclosed or reserved against in the unaudited balance sheet of the MCM
Companies, dated March 31, 1997, that has been delivered to the Parent, the
Founding Stockholders and GS LP, or specifically disclosed in the notes thereto,
(c) for liabilities and obligations that are incurred in the ordinary course of
business after the date of such balance sheet, are consistent with past
practices and are not prohibited by this Agreement, (d) for liabilities and
obligations that are expressly contemplated by this Agreement and (e) for
liabilities and obligations that, individually or in the aggregate, are not and
would not reasonably be expected to have an MGI Material Adverse Effect.
2.4.8. Absence of Changes. Since March 31, 1997, except as set forth
in Section 2.4.8 of the MGI Disclosure Letter or except as expressly
contemplated by this Agreement, the businesses of the MCM Companies have been
conducted in the ordinary course consistent with past practices and the MCM
Companies have not: (a) suffered any MGI Material Adverse Effect, (b) modified
or amended any material term of any material agreement, contract or commitment
attached as an Exhibit to this Agreement or listed in Section 2.4.11 of the MGI
Disclosure Letter or (c) entered into any transaction other than in the ordinary
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course of business consistent with past practices. Since March 31, 1997, except
as set forth in Section 2.4.8 of the MGI Disclosure Letter, except as expressly
contemplated by this Agreement or, as of the Closing Date with respect to
matters occurring on or after the date hereof, except in compliance with the
provisions of Section 3.2.1 or 3.2.2, (i) neither MGI, MCM nor MCM Asia Pacific
Co., Ltd. has authorized, declared or paid or made any dividend or other
distribution in respect of its capital stock or purchased, redeemed, issued or
transferred or agreed to purchase, redeem, issue or transfer, directly or
indirectly, any shares of its capital stock, warrants, options or other rights
to acquire any such shares or securities convertible into or exchangeable for
any such shares, (ii) no MCM Company has (x) incurred any indebtedness for
borrowed money, guaranteed any such indebtedness, issued or sold any debt
securities or guaranteed any debt securities of others or (y) entered into or
amended any employment, retention, severance, change in control or similar
agreement or arrangement of the type described in Section 2.4.11(d) (taking into
account the dollar thresholds set forth in such subsection) with any current or
former director, officer, stockholder or employee of any MCM Company, other that
in the ordinary course of business consistent with past practices, (iii) neither
MGI nor any other MCM Company has (A) established or amended any material
employee compensation or benefit plan or practice maintained for the benefit of,
or (B) paid or accrued any bonus or deferred compensation for or in respect of,
any current or former director, officer, stockholder or employee of MGI or any
other MCM Company, in the case of clause (A), other than in the ordinary course
of business consistent with past practices, (iv) no MCM Company has entered into
any agreement, contract or commitment (other than this Agreement) for the sale
of MGI, MCM, the assets of MGI or MCM or any equity interests in MGI or MCM, or
the sale of any other MCM Company that is material to the MCM Companies taken as
a whole, the assets of any such MCM Company or any equity interests in any such
MCM Company, and (v) none of the applicable MCM Companies has taken any action
or omitted to take any action (or committed to take any action or omit to take
any action) that would result in the occurrence of any of the foregoing.
2.4.9. Taxes. (a) Filing of Returns and Payment of Taxes. Except as
set forth in Section 2.4.9(a) of the MGI Disclosure Letter, all material Returns
required to be filed by or on behalf of any MCM Company ("MCM Returns") on or
before the Closing Date have (or by the Closing Date will have) been duly and
timely filed, and none of the MCM Com-
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panies is currently the beneficiary of any extension of time within which to
file any MCM Return. Except for Taxes set forth in Section 2.4.9(a) of the MGI
Disclosure Letter, which are being contested in good faith and by appropriate
proceedings or which can be paid without interest or penalties, the following
Taxes (collectively, "MCM Taxes") have (or by the Closing Date will have) been
duly and timely paid: (i) all Taxes shown to be due on the MCM Returns and (ii)
all material Taxes due and payable on or before the Closing Date that are or may
become payable by any MCM Company or chargeable as a Lien upon the assets
thereof (whether or not shown on any Return). Except as set forth in Section
2.4.9(a) of the MGI Disclosure Letter, all material Employment and Withholding
Taxes required to be paid or withheld by or on behalf of any MCM Company or for
which any MCM Company is or may become liable ("MCM Employment and Withholding
Taxes") have been either duly and timely paid to the proper Governmental
Authority or properly set aside in accounts for such purpose.
(b) Extensions, etc. Except as set forth in Section 2.4.9(b) of the
MGI Disclosure Letter, no written agreement or other document extending, or
having the effect of extending, the period of assessment or collection of any
MCM Taxes or MCM Employment and Withholding Taxes, and no power of attorney with
respect to any such Taxes, has been executed or filed with the IRS or any other
taxing authority.
(c) Tax Filing Groups; Income Tax Jurisdictions. Except as set forth
in Section 2.4.9(c) of the MGI Disclosure Letter, none of the MCM Companies is
or has been a member of any affiliated, consolidated, combined or unitary group
for purposes of filing Returns or paying Taxes at any time since July 1, 1993.
Set forth in Section 2.4.9(c) of the MGI Disclosure Letter are all countries,
states, provinces, cities or other jurisdictions in which any MCM Company
currently files or has filed an Income Tax Return within the last three years.
(d) Copies of Returns; Audits, etc. MGI has (or by the Closing Date
will have) delivered to the Founding Stockholders and GS LP complete and
accurate copies of all MCM Returns with respect to federal consolidated Income
Taxes and separate state Income Taxes for all periods beginning on or after July
1, 1993 that have been filed or will be required to be filed (after giving
effect to all valid extensions of time for filing) on or before the Closing
Date. Except as set forth in Section 2.4.9(d) of
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the MGI Disclosure Letter, (i) no MCM Taxes or MCM Employment and Withholding
Taxes have been asserted by any Governmental Authority since January 1, 1994 to
be due, (ii) no revenue agent's report or written assessment for Taxes has been
issued by any Governmental Authority in the course of any audit that has been
completed since July 1, 1993 with respect to MCM Taxes or MCM Employment and
Withholding Taxes and (iii) no issue has been raised by any Governmental
Authority in the course of any audit that has not been completed with respect to
MCM Taxes or MCM Employment and Withholding Taxes, which issue has been raised
in a writing that has been received by any of the MCM Companies. Except as set
forth in Section 2.4.9(d) of the MGI Disclosure Letter, no Return is currently
under audit by any other taxing authority, and no Employment and Withholding
Taxes are currently under audit by any taxing authority. Except as set forth in
Section 2.4.9(d) of the MGI Disclosure Letter, neither the IRS nor any other
taxing authority is now asserting in writing against any of the MCM Companies
any deficiency or claim for additional Taxes or Employment and Withholding Taxes
or any adjustment of Taxes or Employment and Withholding Taxes.
(e) Section 1445(a) of the Code. No amount will be required to be
deducted or withheld pursuant to section 1445(a) of the Code in connection with
the Merger.
(f) Tax Sharing Agreements. Except as set forth in Section 2.4.9(f)
of the MGI Disclosure Letter, none of the MCM Companies is a party to or bound
by or has any obligation under any Tax sharing agreement or arrangement.
(g) Disclosure. Each subsection of Section 2.4.9 of the MGI
Disclosure Letter sets forth, for each relevant item set forth in such
subsection thereof, the name of the MCM Company, the taxing jurisdiction, the
type of Tax and the taxable period or periods involved.
2.4.10. Properties and Assets. (a) Except insofar as would not have,
or reasonably be expected to have, an MGI Material Adverse Effect, each MCM
Company has good and valid title to, or otherwise has sufficient and legally
enforceable right to use, all of the properties and assets (real, personal or
mixed, tangible or intangible, including Intellectual Property), used or held
for use in connection with, necessary for the conduct of, or otherwise material
to, the businesses conducted by it (the "MGI Assets"). The MGI Assets that are
owned by any MCM Company are owned free and clear of any Liens other than (i)
liens
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for Taxes not yet due and payable or that are being contested in good faith and
by appropriate proceedings, (ii) statutory liens incurred in the ordinary course
of business that, individually and in the aggregate, have not had and would not
reasonably be expected to have an MGI Material Adverse Effect, and (iii)
encumbrances and easements that do not materially detract from the value or
materially interfere with the use of the properties affected thereby (the
exceptions described in the foregoing clauses (i), (ii) and (iii) being referred
to as "Permitted MCM Liens").
(b) None of the MCM Companies owns any real property. Section
2.4.10(b) of the MGI Disclosure Letter contains a complete and correct list of
all real property leases, subleases and occupancy agreements to which any MCM
Company is a party (each, an "MGI Lease") setting forth the address, landlord
and tenant for each MGI Lease. MGI has delivered to the Founding Stockholders
and GS LP correct and complete copies of the MGI Leases. Except insofar as would
not have, or reasonably be expected to have, an MGI Material Adverse Effect, (i)
each MGI Lease, other than the MGI Lease with respect to MCM's principal offices
in New York, New York, is legal, valid, binding, in full force and effect and
enforceable against the applicable MCM Company and, to the knowledge of MGI,
against the other parties thereto, (ii) the applicable MCM Company is not in
default, violation or breach under any such MGI Lease, and no event has occurred
and is continuing that constitutes or, with notice or the passage of time or
both, would constitute a default, violation or breach under any such MGI Lease,
and (iii) each such MGI Lease grants the tenant under such MGI Lease the right
to use and occupy the premises and rights demised and intended to be demised
thereunder, which right is sufficient for the purposes for which such premises
and rights are or are contemplated to be used or occupied by such tenant. The
MGI Lease with respect to MCM's principal offices in New York, New York (the
"MCM Headquarters Lease") is legal, valid, binding, in full force and effect and
enforceable against MCM and, to the knowledge of MGI, the other parties thereto.
MCM is not in default, violation or breach in any material respect under the MCM
Headquarters Lease, and no event has occurred and is continuing that constitutes
or, with notice or the passage of time or both, would constitute a default,
violation or breach under the MCM Headquarters Lease that would reasonably be
expected to have an MGI Material Adverse Effect. The MCM Headquarters Lease
grants the tenant thereunder the right to use and occupy the premises and rights
demised and intended to be demised thereunder, which right is sufficient for the
purposes for
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which such premises and rights are or are contemplated to be used or occupied by
such tenant.
2.4.11. Contracts. Section 2.4.11 of the MGI Disclosure Letter sets
forth a correct and complete list, as of the date hereof, of all agreements,
contracts and commitments (including the names of each party thereto), or, in
the case of clause (b) below, of all customers party to all agreements,
contracts and commitments, of the following types (taking into account any
specified dollar thresholds) to which any MCM Company is a party or by or
pursuant to which any MCM Company is bound or is receiving (or will receive)
payments or other benefits even if not a party to such agreement: (a) all
contracts with vendor distribution firms, including any oral arrangements
relating thereto or extensions thereof, (b) each customer party to any contract
or group of contracts, including any oral arrangements relating thereto or
extensions thereof, with respect to which customer any MCM Company expects, as
of the date hereof, to receive, during the year ending December 31, 1997,
revenues in excess of $200,000 in the aggregate, (c) loan agreements and other
agreements relating to indebtedness for borrowed money, promissory notes, bonds,
guaranties, letters of credit, credit facilities, mortgages, security
agreements, pledge agreements, deferred purchase price agreements, sale and
leaseback agreements or similar agreements, (d) (i) employment, consulting and
agency agreements or arrangements involving, during the twelve-month period
ended March 31, 1997, accruals (for financial reporting purposes) by any MCM
Company in excess of $25,000 with respect to any particular such agreement or
arrangement, other than any employment or consulting agreement or arrangement
involving accruals during such period of less than $90,000 that is terminable at
will or subject to such limitations on termination as may be imposed by
Applicable Law, by the applicable employer or entity being provided with
consulting services, without the payment of any amount in excess of such amount
as may be required by Applicable Law, or (ii) severance, retention, bonus,
change in control and other similar agreements or arrangements involving, during
the twelve-month period ended March 31, 1997 (or reasonably expected as of the
date hereof to involve in any calendar year commencing on or after January 1,
1997), accruals (for financial reporting purposes) by any MCM Company in excess
of $25,000 with respect to any particular such agreement or arrangement or in
excess of $100,000 with respect to all such agreements and arrangements in the
aggregate, (e) any contracts or other documents that on or after the Closing
Date substantially limit or will limit the
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freedom of any MCM Company to compete in any line of business and (f) any other
contract or commitment that is material to any MCM Company or its business or
not made in the ordinary course of business. Neither the applicable MCM Company
nor, to the knowledge of MGI, any other party, is in breach or default in any
material respect under any of the agreements, contracts or commitments set forth
in Section 2.4.11 of the MGI Disclosure Letter and, except as set forth in
Section 2.4.11 of the MGI Disclosure Letter, there exists no event or condition
(including the Transactions) which has resulted or would result in a material
breach or default thereunder upon the giving of notice, the passage of time or
both. All the agreements, contracts and commitments set forth in Section 2.4.11
of the MGI Disclosure Letter are legal, valid, binding, in full force and effect
and enforceable against the applicable MCM Company, except for such agreements,
contracts and commitments as would not reasonably be expected to result in an
MGI Material Adverse Effect.
2.4.12. Intellectual Property. (a) Schedule of Intellectual
Property. Section 2.4.12(a) of the MGI Disclosure Letter sets forth a correct
and complete list of all of the material trade or service marks, registered
copyrights and all other material Intellectual Property (other than unregistered
copyrights) used or held for use in connection with, necessary for the conduct
of, or otherwise material to the business and operations of the MCM Companies
(the "MGI Intellectual Property") and sets forth the owner and nature of the
interest of the applicable MCM Company therein. All of the material copyrights
used or held for use in connection with, necessary for the conduct of, or
otherwise material to the business and operations of the MCM Companies have been
duly registered. Section 2.4.12(a) of the MGI Disclosure Letter sets forth a
correct and complete list of all material licenses, sublicenses or other similar
material agreements (including any amendments thereto) to which any MCM Company
is a party by which it is bound or under which it receives any benefits,
relating to any MGI Intellectual Property (the "MCM Licenses"). Each MCM License
is legal, valid, binding, in full force and effect and enforceable against the
MCM Company party thereto, and neither such MCM Company nor, to the knowledge of
MGI, any other party thereto is in breach or default in any material respect
under any MCM License and there exists no event or condition (including the
Transactions) which has resulted or would result in a material breach or default
thereunder upon the giving of notice, the passage of time or both. Except as set
forth in Section 2.4.12(a) of the MGI Disclosure
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Letter, the applicable MCM Company has and immediately after the Closing will
have the legal right to use the MGI Intellectual Property in connection with the
business as currently conducted or contemplated to be conducted by the MCM
Companies.
(b) No Infringement, etc. Except as disclosed in Section 2.4.12(b)
of the MGI Disclosure Letter, the business and operations of the MCM Companies
as currently conducted do not infringe or otherwise conflict with any rights of
any Person in respect of any Intellectual Property, and none of the MCM
Companies has received notice or has actual knowledge of any such infringement
or conflict, except such infringements and conflicts as, individually and in the
aggregate, have not had and would not reasonably be expected to have an MGI
Material Adverse Effect. To the knowledge of MGI, none of the MGI Intellectual
Property owned by any MCM Company is being materially infringed or, other than
pursuant to license agreements in the ordinary course of business, otherwise
materially used or available for use by any Person other than the MCM Companies.
No MGI Intellectual Property owned by any MCM Company is subject to any
outstanding Order or agreement restricting the use thereof by any MCM Company
with respect to its business or restricting the licensing thereof by the MCM
Companies to any Person. Each trademark, trade dress or service mark and any
registration or application therefor, mask work, copyright registration or
application therefor included in any MGI Intellectual Property owned by any MCM
Company is in proper form and has been properly maintained in all material
respects and has otherwise been duly registered with, filed in or issued by, as
the case may be, the United States Patent and Trademark Office, the United
States Copyright Office or such other applicable filing offices, domestic or
foreign, and the applicable MCM Company has taken reasonable actions to ensure
protection under any applicable laws, and such registrations, filings, issuances
and other actions remain in full force and effect. Except as set forth in
Section 2.4.12(b) of the MGI Disclosure Letter, none of the MCM Companies has
entered into any agreement to indemnify any other Person against any charge of
infringement, dilution or violation of Intellectual Property rights, other than
pursuant to any such agreements entered into in connection with the use of
commercially available information systems applications.
2.4.13. Insurance. Set forth in Section 2.4.13 of the MGI Disclosure
Letter is a complete and correct list of all of the insurance policies,
including, without limi-
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tation, key man insurance policies, which are maintained for the benefit of any
MCM Company or with respect to the businesses conducted by the MCM Companies,
the MGI Assets or both, together with a description with respect to each policy
of the amount and types of coverage, limits and deductibles, inception and
expiration dates and insurance carrier. MGI has made available to the Founding
Stockholders and GS LP complete and correct copies of all such policies together
with all riders and amendments thereto. Such policies are in full force and
effect and all premiums due thereon have been paid. Such policies, with respect
to their amounts and types of coverage and limitations as to deductibles and
self-insured retentions, are, to the knowledge of MGI, adequate and customary to
insure against risks to which the MCM Companies or the MGI Assets are normally
exposed in the operation of the businesses conducted by the MCM Companies.
2.4.14. Litigation. Except as set forth in Section 2.4.14 of the MGI
Disclosure Letter, there is no Litigation by or before any governmental or other
instrumentality or agency, pending (in the case of pending investigations only,
to the knowledge of MGI, and in the case of all other pending Litigation,
without regard to knowledge), or, to the knowledge of MGI, threatened, (i)
against or affecting the MCM Companies, the MGI Common Stock, the MGI Assets or
the businesses conducted by the MCM Companies, that would reasonably be expected
to result in liability on the part of the MCM Companies in an amount in excess
of $100,000 in the aggregate or (ii) seeking to prevent or challenging the
transactions contemplated by this Agreement. There are no outstanding Orders
issued by any federal, state or local governmental authority, agency, board,
commission, judicial, regulatory or administrative body, to which any MCM
Company is a party or against any MCM Company, or that, to the knowledge of MGI,
have or would reasonably be expected to have an MGI Material Adverse Effect.
2.4.15. Compliance with Laws and Other Instruments. The MCM
Companies have at all times operated their respective businesses in compliance
with all laws, ordinances, rules and regulations (including all Environmental
Laws and the respective Organizational Documents of each of the MCM Companies)
and Orders applicable to any MCM Company, such business, any of the MGI Assets
or the use, ownership and operation thereof, except to the extent that failures
to be in such compliance would not, individually or in the aggregate, reasonably
be expected to
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result in an MGI Material Adverse Effect.
2.4.16. Affiliate Relationships. Except as set forth in Section
2.4.16 of the MGI Disclosure Letter and other than the Fund IV Indemnification
Agreement, the CD&R Consulting Agreement and agreements listed in Section
2.4.11(d) of the MGI Disclosure Letter, none of the MCM Companies has entered
into any agreement, arrangement or other commitment or transaction with any
Affiliate (other than another MCM Company) which involved, during the
twelve-month period ended March 31, 1997 (or is reasonably expected, during the
calendar year ending December 31, 1998, to involve) payments or receipts in
excess of $25,000 in any individual case or, in the aggregate, $100,000.
2.4.17. Information in Registration Statement and Offer Documents.
None of the information supplied by any MCM Company regarding any MCM Company
for inclusion or incorporation by reference in the Registration Statement or
Offer Documents will, in the case of the Registration Statement, at the date of
the effectiveness of the Registration Statement, and, in the case of the Offer
Documents, at the date such materials are mailed to the holders of MGI Common
Stock, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
2.4.18. Employees, Labor Matters, etc. None of the MCM Companies is
a party to or bound by any collective bargaining or other labor agreement, and
there are no labor unions or similar organizations representing, or, to the
knowledge of MGI, purporting to represent or attempting to represent any
employees employed by any MCM Companies. Since June 30, 1994, there has not
occurred or, to the knowledge of MGI, been threatened any slowdown, work
stoppage, concerted refusal to work overtime or other similar labor activity
with respect to any employees of any MCM Company, in any such case, that has had
or would reasonably be expected to have or result in an MGI Material Adverse
Effect, or a material change in their relations with employees. There are no
material labor disputes currently subject to any grievance procedure,
arbitration or litigation and there is no representation petition pending or, to
the knowledge of MGI, threatened with respect to any employee of any MCM
Company. The MCM Companies have complied with all applicable laws pertaining to
the employment or termination of employment of their respective employees
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except for any failure so to comply that, individually and in the aggregate,
have not had and would not reasonably be expected to have or result in an MGI
Material Adverse Effect.
2.4.19. ERISA. (a) Section 2.4.19(a) of the MGI Disclosure Letter
sets forth a complete and correct list of each "employee benefit plan," as such
term is defined in section 3(3) of ERISA, and each bonus, incentive or deferred
compensation, severance, termination, retention, change of control,
equity-based, performance or other employee or retiree benefit or compensation
plan, program, arrangement, agreement, policy or understanding, whether written
or unwritten, maintained, sponsored or contributed to or established by any MCM
Company or with respect to which any MCM Company is obligated to contribute or
is a party (collectively, the "MGI Plans"). With respect to each MGI Plan, MGI
has provided the Founding Stockholders and GS LP complete and correct copies of
(i) such MGI Plan, if written or a description of such MGI Plan if not written
and (ii) to the extent applicable to such MGI Plan, all trust agreements,
insurance contracts or other funding agreements or arrangements, the most recent
actuarial and trust reports, the most recent Form 5500 required to have been
filed with the IRS and all schedules thereto, the most recent IRS determination
letter, all current summary plan descriptions, and any and all amendments to any
such document.
(b) Except as disclosed in Section 2.4.19(b) of the MGI Disclosure
Letter, each MGI Plan intended to be qualified under section 401(a) of the Code,
and the trust (if any) forming a part thereof, has received a favorable
determination letter from the IRS as to its qualification under the Code and to
the effect that each such trust is exempt from taxation under section 501(a) of
the Code, and nothing has occurred since the date of such determination letter
that could reasonably be expected to adversely affect such qualification or
tax-exempt status.
(c) No MGI Plan is (i) subject to section 412 of the Code or section
302 or Title IV of ERISA, (ii) a "multiemployer plan" within the meaning of
section 4001(a) of ERISA or (iii) a "multiple employer plan" within the meaning
of section 4064 of ERISA.
(d) None of the MCM Companies has incurred (either directly or
indirectly, including as a result of an indemnification obligation) any material
liability under or pursuant to Title I or IV of ERISA or the penalty, excise
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Tax or joint and several liability provisions of the Code relating to employee
benefit plans and, to the knowledge of MGI, no event, transaction or condition
has occurred or exists that could result in any such liability to any of the MCM
Companies or, following the Closing, the Parent or any of its Affiliates. All
contributions and premiums required to have been paid by any MCM Company to any
MGI Plan under the terms of any such MGI Plan or its related trust, insurance
contract or other funding arrangement, or pursuant to any applicable law
(including ERISA and the Code) or collective bargaining agreement have been paid
when due, and to the extent not yet due, have been properly and adequately
reflected on the MGI Financial Statements.
(e) Each of the MGI Plans has been operated and administered in all
respects in compliance with its terms and all applicable laws except for any
failure so to comply that, individually and in the aggregate, has not had and
would not reasonably be expected to have or result in an MGI Material Adverse
Effect. There are no material pending or, to the knowledge of MGI, threatened
claims by or on behalf of any of the MGI Plans, by any current or former
director, officer or employee of any MCM Company or otherwise involving any such
MGI Plan or the assets of any MGI Plan (other than routine claims for benefits,
all of which have been fully reserved for on the MGI Financial Statements).
(f) The consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits or the acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of or accrued on behalf of any
current or former director, officer or employee of MGI or entitle any such
director, officer or employee to any severance or similar compensation or
benefits.
2.4.20. Brokers. There is no agreement that obligates any party to
pay any broker's or finder's fee or commission or similar compensation to any
Person acting on behalf of MGI or MCM with respect to any sale of CERA Inc.,
CERA LP, the assets of CERA Inc. and/or CERA LP or any equity interest or
partnership interest in either of them, other than to Goldman, Sachs & Co. and
Brera Capital Partners, LLC, whose fees shall be paid in accordance with
Sections 8.2 and 5.5(i)(a), respectively.
2.4.21. Vendor Distribution Firms and Customers. Except as set forth
in Section 2.4.21 of the MGI Disclosure
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Letter, no vendor distribution firm that electronically distributes any of the
financial information provided by any MCM Company, and no customer of any MCM
Company required to be listed in Section 2.4.11(b) of the MGI Disclosure Letter,
has given notice to such MCM Company to cancel or otherwise terminate or reduce,
or, to the knowledge of any MCM Company, threatened to cancel, terminate or
reduce, a material portion of its agreements or relationships with such MCM
Company, and no MCM Company has any knowledge of the intention of any such
vendor distribution firm or such customer to do so.
2.5 Representations and Warranties of MGI, the Parent and Merger
Sub. MGI, the Parent and Merger Sub, jointly and severally, represent and
warrant to the Founding Stockholders and GS LP on the date hereof that the
representations and warranties contained in this Section 2.5 are true and
correct as of the date hereof, except as set forth in the section of the MGI
Disclosure Letter that corresponds to the subsection of this Agreement in
respect of which such exception is being made.
2.5.1. Limited Liability Company Status and Authority of the Parent.
The Parent is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware. The Parent has the
limited liability company power and authority to execute and deliver this
Agreement and the other agreements and instruments to be entered into by it in
connection herewith, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby to be consummated by
it. The execution, delivery and performance of this Agreement and such other
agreements and instruments have been duly authorized by all necessary limited
liability company action on the part of the Parent other than in respect of the
issuance of LLC Units, any financing that may be necessary or appropriate in
connection with the Transactions, and in respect of the authorization of the
filing of the Registration Statement. This Agreement has been duly executed and
delivered by the Parent and this Agreement constitutes and, when executed, such
other agreements and instruments to which the Parent is or will be a party will
constitute valid and binding obligations of the Parent, enforceable against the
Parent in accordance with their respective terms.
2.5.2. Ownership and Status of Parent. As of the date hereof, all of
the limited liability company interests in the Parent are owned and held,
beneficially and of
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record, and prior to the Closing will be owned and held, beneficially and of
record, by MGI and MCM. As of the date hereof, there are no preemptive or
similar rights, and prior to the Closing there will be no such rights, with
respect to the limited liability company interests in the Parent or the LLC
Units representing such interests. Except for this Agreement, as of the date
hereof, there are not, and prior to the Closing there will not be, any (i)
subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind obligating the Parent to
issue or sell any LLC Units or any other equity interests therein or (ii)
outstanding securities convertible into or exchangeable for any LLC Units or
such equity interests. Since the date of its formation, the Parent has not (i)
acquired any assets, (ii) undertaken any liabilities or obligations, (iii)
engaged in any activities or (iv) become a party to any agreement, commitment,
arrangement or understanding with any Person, in each case except for this
Agreement and the documents and instruments executed and delivered, or to be
executed and delivered, by the Parent in connection herewith or the transactions
contemplated hereby and thereby.
2.5.3. Corporate Status, Ownership and Authority of Merger Sub.
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. All of the outstanding shares
of capital stock of Merger Sub have been duly authorized and validly issued and
are fully paid and non-assessable. Merger Sub has the corporate power and
authority to execute and deliver this Agreement and the other agreements and
instruments to be entered into by it in connection herewith to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby to be consummated by it. The execution, delivery
and performance of this Agreement and such other agreements and instruments have
been duly authorized by all necessary corporate action on the part of Merger
Sub. This Agreement has been duly executed and delivered by Merger Sub and this
Agreement constitutes and, when executed, such other agreements and
instruments to which Merger Sub is or will be a party will constitute, valid and
binding obligations of Merger Sub, enforceable against Merger Sub in accordance
with their respective terms. Since the date of its incorporation, the Merger Sub
has not (i) acquired any assets, (ii) undertaken any liabilities or obligations,
(iii) engaged in any activities or (iv) become a party to any agreement,
commitment, arrangement or understanding with any Person, in each case except
for this Agreement and the documents and
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instruments executed and delivered, or to be executed and delivered, by the
Merger Sub in connection herewith or the transactions contemplated hereby and
thereby.
2.5.4. No Violations; Consents and Approvals. The execution,
delivery and performance by the Parent and Merger Sub of this Agreement and the
other agreements and instruments to be entered into by them in connection
herewith and the consummation of the transactions contemplated hereby and
thereby to be consummated by them do not and will not result in (i) any
violation of the Organizational Documents of the Parent or Merger Sub, (ii) any
breach or violation of Applicable Law applicable to the Parent or Merger Sub or
(iii) any breach or violation of or default under any agreement or other
instrument to which the Parent or Merger Sub is a party or by which the Parent,
Merger Sub or any of their respect the properties or assets is bound, except, in
the case of clauses (ii) and (iii), for such breaches, violations or defaults
that would not reasonably be expected to have a material adverse effect on the
ability of the Parent or Merger Sub to consummate the Merger and the other
transactions contemplated hereby. Except as set forth in Section 2.5.4 of the
MGI Disclosure Letter, no Governmental Approval or other Consent is required to
be obtained or made by the Parent or Merger Sub in connection with the execution
and delivery of this Agreement and the other agreements and instruments to be
entered into by either of them in connection herewith or the consummation by the
Parent and Merger Sub of the transactions contemplated hereby or thereby.
2.5.5. Information in Registration Statement and Offer Documents.
The Registration Statement (or any amendment thereof), at the date of its
effectiveness, and the Offer Documents (and any amendment or supplement thereto)
at the date that they are mailed to the holders of MGI Common Stock, the holders
of CERA Common Stock and the holders of partnership interests in CERA LP, will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made with respect to statements
made therein based on information supplied by or on behalf of MGI, the
Stockholders, GS LP, CERA LP or CERA Inc. for inclusion or incorporation by
reference in the Registration Statement or the Offer Documents. The Registration
Statement will comply as to form in all material respects with
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the provisions of the Securities Act and the rules and regulations thereunder.
2.5.6. Brokers. There is no agreement that obligates any party to
pay any broker's or finder's fee or commission or similar compensation to any
Person acting on behalf of the Parent or Merger Sub with respect to any sale of
CERA Inc., CERA LP, the assets of CERA Inc. and/or CERA LP or any equity
interest or partnership interest in either of them.
ARTICLE III
COVENANTS
3.1 Covenants of the Stockholders.
3.1.1. Conduct of Business. From the date hereof to the Closing
Date, except as expressly contemplated by this Agreement or the transactions
contemplated hereby, as described in Section 3.1.1 of the CERA Disclosure Letter
or as consented to by MGI, the Stockholders and GS LP will cause CERA Inc. and
CERA LP to:
(a) carry on their respective businesses in the ordinary course
consistent with past practices, and use all commercially reasonable
efforts to preserve intact their respective present business
organizations, keep available the services of their officers and key
employees and preserve their relationships with clients and others having
material business dealings with either of them, except to the extent that
the failure to do so would not, and would not reasonably be expected to,
result in a CERA Material Change;
(b) in the case of CERA Inc., not amend its articles of
incorporation, by-laws or other Organizational Documents, and, in the case
of CERA LP, not amend its certificate of limited partnership, limited
partnership agreement or other Organizational Documents;
(c) (x) not declare, set aside or pay any dividends on, or make any
other distributions in respect of, any shares of its capital stock in the
case of CERA Inc. and any of its partnership interests in the case of CERA
LP, or otherwise make any payments to the Stockholders, GS LP or the
present or future employees
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of (including individuals who are parties to consulting agreements or
arrangements with) CERA Inc. or CERA LP, other than (i) as expressly
provided in this Agreement, (ii) pursuant to the CERA Cash Distribution,
(iii) the payment to such employees of CERA Inc. or CERA LP, in their
capacities as such, of their respective base salaries (or, with respect to
consultants, base compensation) and other benefits and expense
reimbursements (but expressly excluding bonuses and other incentive
compensation), in each such case, in the ordinary course of business
consistent with past practices, provided that CERA Inc. and CERA LP shall
be entitled to increase such base salaries or base compensation and/or
other benefits and expense reimbursements, in an amount not to exceed
$20,000 in the case of any individual or $750,000 in the aggregate, (iv)
(A) cash bonuses to such employees of CERA Inc. or CERA LP in an aggregate
amount not to exceed $3.9 million or (B) signing bonuses in an amount in
the case of any individual not to exceed $50,000 and (v) dividends and
other distributions, in an aggregate amount not to exceed $50,000, by CERA
LP to CERA Inc. to enable CERA Inc. to pay its liabilities and (vi)
dividends and other distributions in an aggregate amount not to exceed the
sum of $195,800 and 44% of the amount of CERA LP's taxable income for the
period July 1, 1997 through the Closing Date to allow the partners of CERA
LP (or, in the case of CERA Inc., the shareholders of CERA Inc.) to pay
their tax liabilities with respect to the taxable income of CERA LP or (y)
not, other than pursuant to the CERA Cash Distribution, purchase, redeem
or otherwise acquire any shares of capital stock of CERA Inc. or
partnership interests in CERA LP or any other securities thereof or any
rights, warrants or options to acquire any such shares, partnership
interests or other securities;
(d) not issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of the capital stock of CERA Inc., partnership
interests in CERA LP or other securities (including, without limitation,
any rights, warrants or options to acquire any securities);
(e) other than the CERA Distribution Loan and borrowings in the
ordinary course of business under the $1,750,000 line of credit extended
to CERA LP by Cambridge Trust Company (as in effect on the date hereof),
not incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any
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debt securities or guarantee any debt securities of others, or make any
loans, advances or capital contributions to, or investments in, any other
Person;
(f) not acquire or agree to acquire, by merging or consolidating
with, by purchasing a substantial portion of the assets of or equity in,
or by any other manner, any business or any corporation, partnership,
company, association or other business organization or division thereof;
(g) not make or incur any capital expenditure or expenditures which,
individually, is in excess of $100,000 or, in the aggregate, are in excess
of $300,000;
(h) (i) not enter into or amend any employment or consulting
agreement or arrangement providing for cash compensation in excess of
$125,000 per year or any retention, severance, change in control or
similar agreement or arrangement with, (ii) not establish or amend any
employee or consultant compensation or benefit plan or practice that is
material to CERA Inc. and CERA LP, taken as a whole, and maintained for
the benefit of, and (iii) other than as permitted under clause (x) of
paragraph (c) of this Section 3.1.1, not pay or accrue any bonus or
deferred compensation for or in respect of, any current, former or future
director, officer or employee of or, in the case of an individual,
consultant to CERA Inc. or CERA LP, in each case in any material respect,
and in the case of clauses (i) and (ii), other than in the ordinary course
of business consistent with past practices, and other than any such
amendment to a CERA Plan that is made to maintain the qualified status of
such CERA Plan or its continued compliance with Applicable Law;
(i) not make any change in accounting practices or policies applied
in the preparation of their respective financial statements except as
required by GAAP;
(j) other than as may be permitted pursuant to Section 3.1.1(h)(i)
in respect of the employment or, in the case of any consulting agreement
or arrangement to which an individual is a party, consulting agreements or
arrangements of the type described in Section 2.1.8(c)(i), (x) not modify
in any material respect any of the agreements, contracts or commitments
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set forth in Section 2.1.8 of the CERA Disclosure Letter (other than
agreements, contracts and commitments with the clients listed in Section
2.1.8(a) of the CERA Disclosure Letter) or (y) not enter into any
agreement, contract or commitment of the type (taking into account any
dollar threshold set forth in Section 2.1.8) that would have been required
to be listed in Section 2.1.8 of the CERA Disclosure Letter (other than
any nonexclusive agreement, contract or commitment with a client that does
not provide for contingent transaction fees) if in existence on the date
hereof, in each case other than in the ordinary course of business
consistent with past practices, provided, that CERA Inc. and CERA LP shall
be entitled to enter into, outside of the ordinary course of business,
agreements, contracts and commitments of the type described in this clause
(y), after consultation with the Chairman of MGI, if entering into such
agreements, contracts and commitments, individually and in the aggregate,
would not, and would not reasonably be expected to, result in a CERA
Material Change; and
(k) not agree or commit to do any of the foregoing referred to in
clauses (a) through (j) of this Section 3.1.1.
3.1.2. CERA Cash Distribution. (a) Each of the Stockholders hereby
agrees to cause CERA Inc. to apply the proceeds from the CERA Distribution Loan,
immediately upon the receipt thereof, to pay the CERA Cash Distribution.
(b) Each of the Stockholders, on behalf of themselves and each of
their affiliates, agents, legal representatives, attorneys, trustees,
predecessors and assigns, hereby (i) releases and forever discharges CERA Inc.
and its subsidiaries, parent entities, affiliates, officers, directors,
employees, stockholders, agents, attorneys, trustees and assigns, from any and
all actions, causes of action, suits, covenants, contracts, agreements, damages,
claims, liabilities and demands of any nature whatsoever, including without
limitation any action pursuant to Section 45 or
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Section 61 of Chapter 156B of the Massachusetts General Laws, arising out of or
related to the CERA Cash Distribution or the CERA Distribution Loan, and (ii)
agrees that they will not commence or prosecute any action or proceeding against
CERA Inc. and its subsidiaries, parent entities, affiliates, officers,
directors, employees, stockholders, agents, attorneys, trustees and assigns,
including without limitation any action pursuant to Section 45 or Section 61 of
Chapter 156B of the Massachusetts General Laws, that concerns the CERA Cash
Distribution or the CERA Distribution Loan.
3.1.3. Access and Information. From the date hereof to the Closing
Date, the Stockholders will, and will cause CERA Inc. and CERA LP to, give to
MGI, the Parent and Merger Sub and MGI's, the Parent's and Merger Sub's
accountants, counsel and other representatives reasonable access during normal
business hours to such of CERA Inc.'s and CERA LP's offices, properties, books,
contracts, commitments, reports and records relating to CERA Inc. or CERA LP,
and to furnish them or provide them with access to all such documents, financial
data, records and information with respect to the properties and businesses of
CERA Inc. or CERA LP, as MGI or the Parent shall from time to time reasonably
request. In addition, from the date hereof to the Closing Date, the Stockholders
will, and will cause CERA Inc. and CERA LP to, permit MGI, the Parent or Merger
Sub and MGI's, the Parent's or Merger Sub's accountants, counsel and other
representatives reasonable access to such personnel of CERA Inc. and CERA LP
during normal business hours as may be reasonably requested by MGI, the Parent
or Merger Sub in its review of the properties of CERA Inc. and CERA LP, the
business affairs of CERA Inc. and CERA LP and the above-mentioned documents and
records.
3.1.4. Financial Information. From the date hereof to the Closing
Date, the Stockholders will cause CERA LP to make available to MGI, the Parent
and Merger Sub, promptly after the same become available, copies of such monthly
management reports, if any, for CERA LP as may be furnished to senior management
of CERA LP, together with such monthly financial statements as may be furnished
to such management.
3.1.5. No Solicitation. From the date hereof to the earlier of the
Closing and the termination of this Agreement, none of the Stockholders, any of
their Affiliates or any Person acting on their behalf shall (i) solicit,
initiate or encourage any inquiries or proposals for, or enter into any
discussions with respect to, the sale of CERA Inc., CERA LP, the assets of CERA
Inc. and/or CERA LP, any equity interest in CERA Inc. or any partnership
interest in CERA LP (any such inquiry or proposal, a "CERA Acquisition
Transaction") or (ii) furnish or cause to be furnished any non-public
information concerning CERA Inc. or CERA LP to any Person (other than MGI, the
Parent, GS LP and their respective representatives, and the professional
advisors to
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CERA LP, CERA Inc., the Stockholders and GS LP) in connection with any such
inquiries or proposals. The Stockholders shall promptly notify MGI of any
inquiry or proposal received by the Stockholders or any of their Affiliates with
respect to any such CERA Acquisition Transaction and will keep MGI fully
informed of the nature, details and status of any such inquiry or proposal.
3.1.6. FIRPTA Affidavits. Each Stockholder shall deliver to MGI and
CERA Inc. an affidavit, as contemplated under and meeting the requirements of
section 1.1445-2(b)(2)(i) of the Treasury Regulations, to the effect that such
Stockholder is not a "foreign person" within the meaning of the Code and
applicable Treasury Regulations.
3.2 Covenants of MGI.
3.2.1. Conduct of Business. From the date hereof to the Closing
Date, except as expressly contemplated by this Agreement or the transactions
contemplated hereby, as described in Section 3.2.1 of the MGI Disclosure Letter
or as consented to by the Founding Stockholders, MGI will, and will cause each
of the MCM Companies to:
(a) carry on their respective businesses in the ordinary course
consistent with past practices, and use all commercially reasonable
efforts to preserve intact their respective present business
organizations, keep available the services of their officers and key
employees and preserve their relationships with clients and others having
material business dealings with them, except to the extent that failure to
do so would not, and would not reasonably be expected to, result in an MGI
Material Change;
(b) in the case of MGI, not amend its certificate of incorporation,
by-laws or other Organizational Documents;
(c) with respect to MGI only, (x) not declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of its
capital stock, or (y) other than pursuant to any MGI Management Stock
Subscription Agreement or any agreement governing any Existing MGI Option,
not purchase, redeem or otherwise acquire any shares of capital stock of
MGI or any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
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(d) other than pursuant to any agreement governing any Existing MGI
Option, not issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of the capital stock of MGI or other securities (including,
without limitation, any rights, warrants or options to acquire any
securities) of MGI;
(e) other than amounts to be borrowed by MCM in connection with the
CERA Distribution Loan and the other transactions contemplated hereby and
other than indebtedness to any other MCM Company, not incur any
indebtedness for borrowed money or guarantee any such indebtedness or
issue or sell any debt securities or guarantee any debt securities of
others;
(f) not acquire or agree to acquire, by merging or consolidating
with, by purchasing a substantial portion of the assets of or equity in or
by any other manner, any business or any corporation, partnership,
company, association or other business organization or division thereof;
(g) not make or incur any capital expenditure or expenditures which,
individually, is in excess of $100,000 or, in the aggregate, are in excess
of $300,000;
(h) not make any change in accounting practices or policies applied
in the preparation of their respective financial statements except as
required by GAAP;
(i) (x) not modify in any material respect any of the agreements,
contracts or commitments set forth in Section 2.4.11 of the MGI Disclosure
Letter (other than the agreements, contracts or commitments with customers
listed in Section 2.4.11(b) of the MGI Disclosure Letter), and (y) not
enter into any agreement, contract or commitment of the type (taking into
account any dollar threshold set forth in Section 2.4.11) that
would have been required to be listed on Section 2.4.11 of the MGI
Disclosure Letter (other than any agreement, contract or commitment with a
customer) if in existence on the date hereof, in each case other than in
the ordinary course of business consistent with past practices, provided,
that an MCM Company shall be entitled to enter into, outside of the
ordinary course of business, agreements, contracts and commitments of the
type described in this clause (y), after consultation
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with Mr. Yergin, if entering into such agreements, contracts and
commitments, individually and in the aggregate, would not, and would not
reasonably be expected to, result in an MGI Material Change; and
(j) not agree or commit to do any of the foregoing referred to in
clauses (a) through (i) of this Section 3.2.1.
3.2.2. CERA Distribution Loan. Subject to obtaining the financing
set forth in Section 3.2.3, MGI hereby agrees to cause MCM to make the CERA
Distribution Loan to CERA Inc., on the day immediately preceding the Closing
Date, pursuant to a loan agreement in form and substance reasonably satisfactory
to MGI and CERA Inc., which shall provide that CERA Inc. will be required to
make cash payments in respect of principal or interest thereunder prior to June
30, 2000 only to the extent such payments are required to be made by the Board
of the Parent.
3.2.3. Financing. MGI shall cause MCM to use its reasonable best
efforts to enter into definitive financing agreements and to do all such acts
and things reasonably necessary to consummate the financing transactions
required to enable MCM to make the CERA Distribution Loan. MGI shall keep the
Founding Stockholders or their representatives fully informed in all material
respects concerning the general status and the terms and conditions of the
financing.
3.2.4. Access and Information. From the date hereof to the Closing
Date, the MCM Companies will give to the Founding Stockholders, GS LP, CERA Inc.
and CERA LP and the Stockholders', GS LP's, CERA Inc.'s and CERA LP's
accountants, counsel and other representatives reasonable access during normal
business hours to such of the MCM Companies' offices, properties, books,
contracts, commitments, reports and records relating to the MCM Companies, and
to furnish them or provide them with access to all such documents, financial
data, records and information with respect to the properties and businesses of
the MCM Companies, as the Founding Stockholders or GS LP shall from time to time
reasonably request. In addition, from the date hereof to the Closing Date, the
MCM Companies will permit the Stockholders, GS LP, CERA Inc. or CERA LP and the
Stockholders', GS LP's, CERA Inc.'s or CERA LP's accountants, counsel and other
representatives reasonable access to such personnel of the MCM Companies during
normal business hours as may be reasonably requested by the Stockholders or GS
LP
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in their review of the properties of the MCM Companies, the business affairs
of the MCM Companies and the above-mentioned documents and records.
3.2.5. Financial Information. From the date hereof to the Closing
Date, MGI will make available to the Founding Stockholders, promptly after the
same become available, copies of such monthly reports, if any, for MGI as may be
furnished to senior management of MGI, together with such monthly financial
statements as may be furnished to such management.
3.2.6. FIRPTA Certification. MGI shall deliver a certificate to the
Parent, dated no more than 30 days prior to the Closing Date and signed by a
responsible officer of MGI, that MGI is not, and has not been at any time since
its incorporation, a United States real property holding company, as defined in
section 897(c)(2) of the Code.
3.2.7. No Solicitation. From the date hereof to the earlier of the
Closing and the termination of this Agreement, neither MGI nor any of its
Affiliates or any Person acting on its behalf shall (i) solicit, initiate or
encourage any inquiries or proposals for, or enter into any discussions with
respect to, the sale of MGI, MCM or any other MCM Company material to the MCM
Companies, taken as a whole, the assets of MGI, MCM and/or any MCM Company or,
other than pursuant to the Existing MGI Options, any equity interest in MGI, MCM
or any such other MCM Company (any such inquiry or proposal, an "MGI Acquisition
Transaction") or (ii) furnish or cause to be furnished any non-public
information concerning the MCM Companies to any Person (other than CERA Inc.,
CERA LP, the Stockholders, GS LP and their respective representatives, and the
professional advisors to MGI, the Parent and the Merger Sub) in connection with
any such inquiries or proposals. MGI shall promptly notify the Founding
Stockholders of any inquiry or proposal received by MGI or any of its Affiliates
with respect to any such MGI Acquisition Transaction and will keep the Founding
Stockholders fully informed of the nature, details and status of any such
inquiry or proposal.
3.3 Covenants of GS LP.
3.3.1. No Solicitation. From the date hereof to the earlier of the
Closing and the termination of this Agreement, none of GS LP, any of its
Affiliates or any Person acting on their behalf shall (i) solicit, initiate or
encourage any inquiries or proposals for, or enter into any
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discussions with respect to, any CERA Acquisition Transaction or (ii) furnish or
cause to be furnished any non-public information concerning CERA Inc. or CERA LP
to any Person (other than MGI, the Parent and their respective representatives)
in connection with any such inquiries or proposals. GS LP shall promptly notify
MGI of any inquiry or proposal received by it or any of its Affiliates with
respect to any such CERA Acquisition Transaction and will keep MGI fully
informed of the nature, details and status of any such inquiry or proposal.
3.3.2. FIRPTA Affidavit. GS LP shall deliver to MGI and CERA Inc. an
affidavit, as contemplated under and meeting the requirements of section
1.1445-2(b)(2)(i) of the Treasury Regulations, to the effect that it is not a
"foreign person" within the meaning of the Code and applicable Treasury
Regulations.
3.3.3. Consent and Waiver. By its execution hereof, GS LP
unconditionally and irrevocably (i) consents to the execution and delivery by
each of the Stockholders of this Agreement and each document and instrument
(each, an "Ancillary Document") to be executed or delivered by such Stockholder
in connection herewith, the performance by each of the Stockholders of their
obligations hereunder and thereunder, and the consummation by all parties
hereto, CERA Inc. and CERA LP of the transactions contemplated hereby and
thereby, and (ii) waives, and agrees not to exercise, any and all rights it has,
had or may have, pursuant to or under, or by reason of or in connection with,
(A) the GS Purchase Agreement, (B) the Existing Partnership Agreement, (C) the
CERA Stockholders Agreement or (D) any other document or instrument, other than
the GS Advisory Agreement, executed or delivered in connection with the
acquisition by GS LP of the GS Partnership Interest, in each case including,
without limitation, any and all rights thereunder to consent or object to,
exercise pre-emptive, first refusal, repurchase or any other similar rights with
respect to or receive notices or notifications in respect of, (x) the
performance by the Stockholders of their obligations hereunder or under any
Ancillary Document, (y) the Closing or (z) the consummation of any of the
transactions contemplated hereby or by any Ancillary Document; provided that the
provisions of this Section 3.3.3 shall become null and void, and shall have no
further force or effect, upon (and in the event of) termination of this
Agreement prior to the Closing.
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3.4 Additional Agreements.
3.4.1. Confidentiality. (a) Termination of Existing Confidentiality
Agreements. (i) All parties hereto hereby agree that the letter agreement, dated
December 6, 1996, entered into with Wm. Sword & Co. Incorporated ("Sword"), in
Sword's capacity as financial advisor to CERA Inc., by Clayton, Dubilier & Rice,
Inc. ("CD&R"), on behalf of the MCM Companies, is hereby terminated effective as
of the date hereof.
(ii) All parties hereto hereby agree that (x) the letter agreement,
dated April 2, 1997, entered into with MCM by Sword, on behalf of CERA Inc., and
(y) the letter agreement, dated as of November 6, 1996, entered into with CD&R
by Sword, in Sword's capacity as financial advisor to CERA Inc., on behalf of
CERA Inc., are hereby terminated effective as of the date hereof.
(iii) None of the parties hereto or their Affiliates shall have any
further rights, obligations or liabilities thereunder or under any other
agreement entered into with Sword prior to the date hereof other than the
engagement letters between CERA and Sword, dated as of July 1, 1993, September
13, 1993 and January 25, 1995 (as such letters may be amended, modified,
supplemented or waived).
(iv) All parties hereto agree to use commercially reasonable efforts
to cause CERA Inc., MCM, CD&R and Sword to acknowledge and agree to the
termination of the agreements described in this Section 3.4.1 as being
terminated effective as of the date hereof.
(b) Confidentiality. Except as otherwise provided in this Agreement,
(x) the Stockholders, GS LP, CERA Inc. and CERA LP, will, and will cause their
Representatives to, keep confidential, and not use except in connection with
this Agreement and the transactions contemplated hereby, all information which,
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prior to the date hereof, has been or, from and after the date hereof, is
furnished to any of them by the MCM Companies or any of their Representatives,
or to which the Stockholders, GS LP, CERA Inc. or CERA LP, prior to the date
hereof, have been or, from and after the date hereof, are given access, that in
any way relates to the business of any of the MCM Companies and (y) MGI will,
and will cause its Representatives to, keep confidential, and not use except in
connection with this Agreement and the transactions contemplated hereby, all
information which, prior to the date hereof, has been or, from and after the
date hereof, is furnished to MGI or its Representatives, or to which MGI or its
Representatives, prior to the date hereof, have been or, from and after the date
hereof, are given access, that in any way relates to the business of CERA Inc.
or CERA LP. The provisions of this Section 3.4.1(b) shall not apply to the
disclosure or use by the Stockholders, GS LP, CERA Inc., CERA LP or their
respective Representatives, on the one hand, and MGI or its Representatives, on
the other hand, of any information, documents or materials (i) which are or
become generally available to the public other than as a result of a disclosure
by the receiving party or any Affiliate or Representative of the receiving party
in violation of this Section 3.4.1, (ii) received from a third party on a
non-confidential basis from a source other than the providing party or its
Representatives, which source, to the knowledge of the receiving party after due
inquiry, is not prohibited from disclosing such information to the receiving
party by a legal, contractual or fiduciary obligation to the providing party,
(iii) required by Applicable Law to be disclosed by such party, or (iv)
necessary to establish such party's rights under this Agreement or any related
agreement, provided that, in the case of clauses (iii) and (iv), the Person
intending to make disclosure of confidential information will promptly notify in
writing the party to whom it is obliged to keep such information confidential
and, to the extent practicable, provide such party a reasonable opportunity to
prevent public disclosure of such information or, if appropriate, waive
compliance with the terms of this Section 3.4.1.
(c) The agreements and undertakings of the Stockholders, GS LP, CERA
Inc. and CERA LP, on the one hand, and MGI, on the other hand, set forth in
Section 3.4.1(b) shall (x) continue until the earlier of (i) five years from the
date hereof or (ii) the Closing and (y) survive the termination of this
Agreement.
3.4.2. Registration Statement. (a) Each of the parties hereto shall,
and shall cause their respective Subsidiaries, controlled Affiliates, directors,
officers, employees and representatives to, assist the Parent in the preparation
and filing of the Registration Statement and furnish the Parent with all
information in their possession concerning CERA Inc., CERA LP, the Stockholders,
GS LP and the MCM Companies required for use in the Registration Statement,
including, without limitation, such financial statements as may be required to
be included in the Regis-
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tration Statement or that are necessary to prepare pro forma financial
statements and other information to be included in the Registration Statement.
If, at any time on or prior to the Closing Date, any event with respect to the
Stockholders, GS LP, CERA Inc., CERA LP, the MCM Companies or any of their
respective Affiliates should occur which is required to be described in an
amendment of or supplement to the Registration Statement, the party or parties
hereto that are familiar with such event shall provide the Parent with a
description of such event that is sufficient to enable the Parent or its
representatives to prepare such amendment or supplement and shall otherwise
assist the Parent in the preparation and filing of such amendment or supplement.
(b) Subject to the performance of the covenants set forth in Section
3.4.2(a), the Parent shall prepare the Registration Statement (or cause it to be
prepared), shall file it with the SEC promptly after the date hereof, shall use
its commercially reasonable efforts to cause it to be declared effective and to
remain effective through the Closing Date and, if at any time on or prior to the
Closing Date, any event with respect to the Stockholders, GS LP, CERA Inc., CERA
LP, the MCM Companies or any of their respective Affiliates shall occur which is
required to be described in an amendment of or supplement to the Registration
Statement, shall prepare such amendment or supplement (or cause it to be
prepared) and promptly file it with the SEC.
3.4.3. Public Announcements. From the date hereof to the Closing
Date, except as required by Applicable Law, each of the parties hereto shall
not, and shall not permit any of their Affiliates or representatives to, make
any public announcement in respect of this Agreement or the transactions
contemplated hereby without the prior consent of MGI and the Founding
Stockholders; provided that this Section 3.4.3 shall not apply to any oral
disclosures to be made to, or discussions to be held with, officers and
employees of CERA LP or CERA Inc., on the one hand, or of any member of the MCM
Group, on the other hand, by Representatives of CERA LP, CERA Inc. or any of the
Stockholders, or by Representatives of any member of the MCM Group, as the case
may be, and that CERA LP, CERA Inc. or any of the Stockholders, on the one hand,
and any member of the MCM Group, on the other hand, shall obtain the prior
consent of MGI or the Founding Stockholders, as applicable, for the use of any
written communications that are to be presented or distributed to such officers
and employees.
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3.4.4. Further Actions. (a) Generally. Each of the parties hereto
agrees to use its, his or her commercially reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated hereby.
(b) Filings; Consents. Each of the parties hereto shall, as promptly
as practicable, (i) file or supply, or cause to be filed or supplied, all
applications, notifications and information, including but not limited to
filings pursuant to the HSR Act, required to be filed or supplied by or on
behalf of it, him or her or any of its, his or her Affiliates pursuant to
Applicable Law and (ii) use its, his or her commercially reasonable efforts to
obtain, or cause to be obtained, all other Consents that may be required to be
obtained or made by it, in each case in connection with this Agreement, the
Transactions, the Registration Statement or the consummation of the other
transactions contemplated hereby.
(c) Other Actions. Each of the parties hereto shall use its, his or
her commercially reasonable efforts to take, or cause to be taken, all other
actions necessary, proper or advisable in order to fulfill its, his or her
obligations in respect of this Agreement and the transactions contemplated
hereby. Each of the parties hereto will coordinate and cooperate with the other
parties hereto in providing such information and supplying such reasonable
assistance as may be reasonably requested by any of them in connection with the
consummation of the transactions contemplated hereby.
(d) Notice of Certain Events. From the date hereof to the Closing
Date, each of the Stockholders and GS LP, on the one hand, shall promptly notify
MGI, and MGI, the Parent and Merger Sub, on the other, shall promptly notify the
Founding Stockholders, of:
(i) any fact, condition, event or occurrence known to any of them
that will or reasonably may be expected to result in the failure of any of
the conditions contained in Article IV to be satisfied; and
(ii) any actions, suits, claims, investigations or proceedings
commenced or, to the knowledge of the Stockholders, CERA Inc., CERA LP or
GS LP, on the one hand, or MGI, any other MCM Company, the Parent or
Merger Sub, on the other, threatened against, relating
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to or involving or otherwise affecting CERA Inc. or CERA LP, on the one
hand, or the MCM Companies, on the other, or any of their respective
Affiliates which, if pending on the date of this Agreement, would have
been required to have been disclosed pursuant to Section 2.1.11 or Section
2.4.14, as applicable, or that relate to the consummation of the
transactions contemplated by this Agreement.
3.4.5. Tax Affairs. Through the Closing Date, the MCM Companies, on
the one hand, and the Stockholders, on the other, shall, and in the case of the
Stockholders, shall cause each of CERA LP and CERA Inc. to, conduct all Tax
affairs relating to the MCM Companies or CERA LP and CERA Inc., as the case may
be, only in the ordinary course, in substantially the same manner as heretofore
conducted and in good faith in substantially the same manner as such affairs
would have been conducted if this Agreement had not been entered into.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Obligations of Each Party. The obligations of MGI,
the Parent and Merger Sub to effect the Merger and to consummate the other
transactions contemplated hereby, the obligations of the Stockholders and the
Parent to engage in the CERA Stock Exchange and to consummate the other
transactions contemplated hereby and the obligations of GS LP and the Parent to
engage in the GS Partnership Interest Exchange and to consummate the other
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions:
4.1.1. HSR Act Notification. In respect of the notifications of MGI,
on the one hand, and CERA Inc., on the other hand, pursuant to the HSR Act, the
applicable waiting period and any extensions thereof shall have expired or been
terminated.
4.1.2. Other Governmental Approvals. All other Governmental
Approvals required to be made or obtained by any party hereto or any of their
respective Affiliates in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby shall have
been made or obtained, other than, in the case of any Governmental Approval
solely in connection with the CERA
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Roll-up, where the failure to make or obtain any such Governmental Approval
would not have and would not reasonably be expected to have a CERA Material
Adverse Effect.
4.1.3. No Injunction, etc. Consummation of the transactions
contemplated hereby shall not have been restrained, enjoined or otherwise
prohibited by any Applicable Law, including any Order of any court or other
Governmental Authority (except, in the case of any such prohibition solely
because of the CERA Roll-up, for any such prohibition that would not, and would
not reasonably be expected to, have a CERA Material Adverse Effect), no action
or proceeding brought by any Governmental Authority shall be pending on the
Closing Date before any court or other Governmental Authority to restrain,
enjoin or otherwise prevent the consummation of the transactions contemplated
hereby, no court or other Governmental Authority shall have determined any
Applicable Law making illegal the consummation of the transactions contemplated
hereby to be applicable to this Agreement and no proceeding brought by any
Governmental Authority with respect to the application of any such Applicable
Law shall be pending.
4.1.4. Registration Statement. The Registration Statement shall have
been declared effective, no stop order suspending the effectiveness of the
Registration Statement shall have been entered and no proceedings for that
purpose shall have been initiated by the SEC.
4.1.5. Certain Distributions. The CERA Distribution Loan and the
CERA Cash Distribution shall have been made.
4.1.6. LLC Agreement. The LLC Agreement, substantially in the form
of Exhibit I hereto, shall have been executed and delivered by all parties
hereto other than the Parent or Merger Sub.
4.2 Conditions to Obligations of MGI, the Parent and Merger Sub. The
obligations of MGI, the Parent and Merger Sub to effect the Merger and to
consummate the other transactions contemplated hereby and the obligations of the
Parent to engage in the CERA Stock Exchange and the GS Partnership Interest
Exchange shall be subject to the fulfillment (or waiver by MGI), at or prior to
the Closing Date, of the following additional conditions:
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4.2.1. Representations, Performance, etc. (a) The representations
and warranties set forth in Sections 2.1, 2.2 and 2.3 (i) shall have been true
and correct at and as of the date hereof, provided that if any such
representation and warranty shall not have been true and correct at and as of
the date hereof, the Stockholders and GS LP, upon written notice (which shall
identify such representation and warranty and describe the respect in which it
shall not have been so true and correct) to MGI delivered not later than three
Business Days prior to the scheduled Closing Date, shall have until 30 days
after the date on which the Closing would otherwise have been required to occur
pursuant to Section 1.1.2 (without taking into account this proviso) to cure
such breach in all respects in the case of any representation and warranty
qualified by material adverse effect, and in any other case, to cure such breach
in all material respects, or otherwise in a manner reasonably satisfactory to
MGI; (ii) in the case of Section 2.1, shall be true and correct at and as of the
Closing Date as though made at and as of the Closing Date, except where the
aggregate effect of the failure of such representations and warranties to be
true and correct has not had and would not reasonably be expected to have a CERA
Material Adverse Effect; and (iii) in the case of Sections 2.2 and 2.3, shall be
true and correct in all material respects at and as of the Closing Date as
though made at and as of the Closing Date; provided in each case that the
accuracy of any specific representation or warranty that by its terms speaks
only as of the date hereof or another date prior to the Closing Date shall be
determined solely as of the date hereof or such other date, as the case may be.
The Stockholders and GS LP shall have duly performed and complied in all
material respects with all agreements and conditions required by this Agreement
to be performed or complied with by them prior to or on the Closing Date.
(b) The Stockholders and GS LP shall have delivered to MGI, the
Parent and Merger Sub a certificate or certificates, dated the Closing Date and
signed by each of them, with respect to the conditions set forth in Section
4.2.1(a) and 4.2.2.
4.2.2. Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall have occurred or come to exist
since the date hereof that, individually or in the aggregate, has had or
resulted in, or would be reasonably likely to have or result in, a CERA Material
Adverse Effect.
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4.2.3. Employment Agreements. Each of the Founding Stockholders
shall have executed and delivered an employment agreement (each, an "Employment
Agreement"), substantially in the form of Exhibit J hereto.
4.2.4. Consulting and Indemnification Agreements. CERA Inc. shall
have become a party to the CD&R Consulting Agreement and the Fund IV
Indemnification Agreement pursuant to an agreement or agreements in form and
substance reasonably satisfactory to MGI.
4.2.5. Opinions of Counsel. MGI, the Parent and Merger Sub shall
have received favorable opinions, addressed to each of them and dated the
Closing Date and in form and substance reasonably satisfactory to MGI and its
counsel, from (i) Hale and Dorr LLP, special counsel to the Stockholders,
including with respect to certain federal and Massachusetts Tax matters, and
(ii) counsel to GS LP.
4.2.6. FIRPTA Affidavit. MGI shall have received from each
Stockholder and GS LP an affidavit pursuant to Section 3.1.6 and Section 3.3.2.
4.2.7. Consents and Approvals. The Stockholders and GS LP shall have
received all requisite third party consents and approvals to or of the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby listed in Sections 2.1.1(b) or 2.2.2 of the
CERA Disclosure Letter, except, in the case of Section 2.1.1(b), for any
consents or approvals the failure of which to be made or obtained, individually
and in the aggregate, would not have a CERA Material Adverse Effect and would
not adversely affect the ability of any of the Stockholders to perform their
obligations hereunder.
4.2.8. Financing. MGI shall have caused MCM to obtain funds at least
in the amount contemplated in this Agreement to finance the CERA Distribution
Loan, on such terms as are satisfactory to MGI in its reasonable judgment.
4.2.9. CERA Board of Directors. Such directors of CERA Inc. shall
have resigned, and such other persons shall have been appointed as directors of
CERA Inc., such that, effective simultaneously with the Closing, the board of
directors of CERA Inc. shall be the same as the Board of the Parent.
4.2.10. CERA and GS LP Holder Information Forms. Each of the
Stockholders and GS LP shall have executed and
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delivered a CERA Holder Information Form or GS LP Holder Information Form, as
applicable, in accordance with Section 1.1.2(a) and (b).
4.2.11. Copyrights. The Founding Stockholders and CERA Inc. shall
have executed and delivered an agreement, in form and substance satisfactory to
MGI, pursuant to which CERA Inc. shall agree to assign to the applicable
Founding Stockholder(s) the copyrights in any book authored by such Founding
Stockholder(s) in the course of his employment with CERA Inc., and each of the
Founding Stockholders shall agree that CERA Inc. shall receive all of the
economic benefits of all such books.
4.2.12. CERA Organizational Documents. The articles of organization
and the by-laws of CERA Inc. shall be amended, effective immediately upon the
Closing, as necessary to contain the same provisions as contained in the LLC
Agreement in respect of supermajority board voting provisions and board
composition.
4.2.13. Termination of Line of Credit. At or prior to the Closing,
the Stockholders shall cause the $1,750,000 line of credit to CERA LP from
Cambridge Trust Company, as in effect on the date hereof, and any related
agreements, documents, financing statements, instruments or arrangements, to be
terminated and all amounts due and payable thereunder to be paid in full.
4.2.14. Proceedings. All proceedings of the Stockholders, CERA Inc.,
CERA LP and GS LP that are required in connection with the transactions
contemplated by this Agreement, and all documents and instruments incident
thereto, shall be reasonably satisfactory to MGI and its counsel, and MGI and
such counsel shall have received all such documents and instruments, or copies
thereof, certified if requested, as may be reasonably requested.
4.3 Conditions to Obligations of the Stockholders and GS LP. The
obligations of the Stockholders to engage in the CERA Stock Exchange and to
consummate the other transactions contemplated hereby and the obligations of GS
LP to engage in the GS Partnership Interest Exchange and to consummate the other
transactions contemplated hereby shall be subject to the fulfillment (or waiver
by each of the Founding Stockholders), at or prior to the Closing, of the
following additional conditions:
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4.3.1. Representations; Performance. (a) The representations and
warranties set forth in Sections 2.4 and 2.5 (i) shall have been true and
correct at and as of the date hereof, provided that if any such representation
and warranty shall not have been true and correct at and as of the date hereof,
MGI, upon written notice (which shall identify such representation and warranty
and describe the respect in which it shall not have been so true and correct) to
the Founding Stockholders delivered not later than three Business Days prior to
the scheduled Closing Date, shall have until 30 days after the date on which the
Closing would otherwise have been required to occur pursuant to Section 1.1.2
(without taking into account this proviso) to cure such breach in all respects
in the case of any representation and warranty qualified by material adverse
effect, and in any other case, to cure such breach in all material respects, or
otherwise in a manner reasonably satisfactory to the Founding Stockholders; (ii)
in the case of Section 2.4, shall be true and correct at and as of the Closing
Date as though made at and as of the Closing Date, except where the aggregate
effect of the failure of such representations and warranties to be true and
correct has not had and would not reasonably be expected to have an MGI Material
Adverse Effect; and (iii) in the case of Section 2.5, shall be true and correct
in all material respects at and as of the Closing Date as though made at and as
of the Closing Date; provided in each case that the accuracy of any specific
representation or warranty that by its terms speaks only as of the date hereof
or another date prior to the Closing Date shall be determined solely as of the
date hereof or such other date, as the case may be. MGI, the Parent and Merger
Sub shall have duly performed and complied in all material respects with all
agreements and conditions required by this Agreement to be performed or complied
with by them prior to or on the Closing Date.
(b) MGI, the Parent and Merger Sub shall have delivered to the
Stockholders and GS LP a certificate, dated the Closing Date and signed by an
authorized officer of each of MGI, the Parent and Merger Sub, with respect to
the conditions set forth in Section 4.3.1(a) and 4.3.2.
4.3.2. Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall have occurred or come to exist
since the date hereof that, individually or in the aggregate, has had or
resulted in, or would be reasonably likely to have or result in, an MGI Material
Adverse Effect.
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4.3.3. Opinion of Counsel. The Stockholders and GS LP shall have
received favorable opinions, addressed to each of them and dated the Closing
Date and in form and substance reasonably satisfactory to the Founding
Stockholders and their counsel, from (i) the General Counsel of MGI, (ii) from
Debevoise & Plimpton, special counsel to MGI and (iii) from Richards, Layton &
Finger, special Delaware counsel to the Parent.
4.3.4. Consents and Approvals. (a) MGI shall have received all
requisite third party consents and approvals to or of the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby listed in Section 2.4.2 of the MGI Disclosure Letter, except
for any consents or approvals the failure of which to be made or obtained,
individually and in the aggregate, would not have an MGI Material Adverse Effect
and would not adversely affect the ability of MGI to perform its obligations
hereunder.
4.3.5. MGI Board of Directors. Such directors of MGI and MCM shall
have resigned, and such other persons shall have been appointed as directors of
MGI and MCM, such that, effective simultaneously with the Closing, the boards of
directors of MGI and MCM shall be the same as the Board of the Parent.
4.3.6. MGI Organizational Documents. The certificates of
Incorporation and the by-laws of MGI and MCM shall be amended, effective
immediately upon the Closing, as necessary to contain the same provisions as
contained in the LLC Agreement in respect of supermajority board voting
provisions and board composition.
4.3.7. Proceedings. All proceedings of MGI, the Parent and Merger
Sub that are required in connection with the transactions contemplated by this
Agreement, and all documents and instruments incident thereto, shall be
reasonably satisfactory to the Founding Stockholders and their counsel, and the
Founding Stockholders and their counsel shall have received all such documents
and instruments, or copies thereof, certified if requested, as may be reasonably
requested.
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ARTICLE V
OTHER AGREEMENTS
5.1 Noncompetition. Each of Daniel H. Yergin, James P. Rosenfield
and Joseph A. Stanislaw (collectively, the "Founding Stockholders") hereby
agrees that during the period commencing on the Closing Date and ending on the
fourth anniversary of the Closing Date, he shall not, directly or indirectly,
(A) as an individual proprietor, partner, member, principal, officer, employee,
agent, consultant or stockholder, develop, produce, market, sell or render (or
assist any other person in developing, producing, marketing, selling or
rendering) products or services competitive anywhere in the United States or
elsewhere in the world with, or (B) engage in business with, serve as an agent
or consultant to, or become an individual proprietor, partner, member, principal
or stockholder (other than a holder of less than 1% of the outstanding voting
shares of any publicly held company) of or become employed in an executive
capacity by, any person, firm or other entity ("Competitor") a substantial
portion of whose business competes anywhere in the United States or elsewhere in
the world with a substantial portion of the business of the Parent, CERA Inc.,
MGI or any of their respective Subsidiaries (collectively, the "MGI/CERA Group")
that relates to the financial information, financial analysis, energy
information and analysis or any other business then engaged in by any member of
the MGI/CERA Group; provided that this Section 5.1 shall not be deemed to
prohibit any of the Founding Stockholders from teaching courses at educational
institutions or writing books or articles for public sale or making appearances
on television or preparing or otherwise participating in television programs;
and provided, further, that if the employment of a Founding Stockholder with
CERA Inc. shall be terminated after the Closing Without Cause (as such term
shall be defined in the applicable Employment Agreement between CERA Inc. and
such Founding Stockholder) or for Good Reason (also as shall be defined in such
Employment Agreement), the noncompetition period set forth in this Section 5.1
shall terminate with respect to such Founding Stockholder on the earlier of (x)
the fourth anniversary of the Closing Date and (y) the first anniversary of the
date of termination of such Founding Stockholder's employment. For the purposes
of this Section 5.1, a "substantial portion" (x) in the case of the business of
Competitor shall mean a line or lines of business that account for more than 50%
of the consolidated revenue of Competitor
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and (y) in the case of the MGI/CERA Group shall mean a line or lines of business
that account for more than 25% of the consolidated revenues of the MGI/CERA
Group, in each case for the fiscal year ended immediately prior to the date on
which the Founding Stockholder first proposes to engage in any of the activities
described in clause (B) of the immediately preceding sentence, provided,
however, that in the case of a Competitor that has had less than three full
years of operations, "substantial portion" shall mean a line or lines of
business accounting for more than 50% of the projected consolidated revenues of
such Competitor for the two fiscal years next succeeding the date on which
Founding Stockholder first proposes to engage in any of the activities described
in clause (B) of the immediately preceding sentence. Whether any such person,
firm or entity so competes shall be determined in good faith by Employer's Board
(as such term is defined in the applicable Employment Agreement). For purposes
of this Section 5.1, the phrase employment "in an executive capacity" shall mean
employment in any position in connection with which the applicable Founding
Stockholder has or reasonably would be viewed as having powers and authorities
with respect to any other person, firm or other entity or any part of the
business thereof that are substantially similar, with respect thereto, to the
powers and authorities assigned to any executive officer of CERA Inc. as
described in the By-Laws of CERA Inc. as in effect on the date hereof.
5.2 Enforceability of Covenants. The provisions of Sections 3.4.1
and 5.1 were negotiated in good faith by the parties hereto, and the parties
hereto agree that such provisions are reasonable and are not more restrictive
than necessary to protect the legitimate interests of the parties hereto. If any
provision contained in Section 3.4.1 or Section 5.1 shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of Section 3.4.1 or
Section 5.1. It is the intention of the parties hereto that if any of the
restrictions or covenants contained herein is held to cover a geographic area or
to be for a length of time that is not permitted by applicable law, or is any
way construed to be too broad or to any extent invalid, such provision shall not
be construed to be null, void and of no effect, but to the extent such provision
would be valid or enforceable under applicable law, a court of competent
jurisdiction shall construe and interpret or reform such provision to provide
for a restriction or covenant having the maximum enforceable geographic area,
time period and other provisions (not greater than those
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contained herein) as shall be valid and enforceable under applicable law.
5.3 Further Actions and Events. In connection with the Closing:
5.3.1. Termination or Adoption of Certain Arrangements. At the
Closing:
(a) CERA Stock Restriction Agreements. Each of the Stockholders
hereby agrees that, effective simultaneously with the Closing, each of the stock
restriction agreements and documents listed in Section 2.1.2(c) of the CERA
Disclosure Letter, including, without limitation, the Cambridge Energy Research
Associates, Inc. 1985 Restricted Stock Plan, as amended, shall terminate and
have no further force or effect (except to the extent that any provision thereof
shall expressly provide that such provision shall survive the termination of
such agreement or document), and that from and after the Closing, all of the
parties thereto shall be released from all of their liabilities and obligations
thereunder (other than any such liabilities or obligations that arose prior to
the Closing).
(b) Existing Arrangements with GS LP. Each of the Stockholders and
GS LP hereby agrees that, effective simultaneously with the Closing, each of the
GS Purchase Agreement, the CERA Stockholders Agreement and all other documents
and instruments executed or delivered in connection with the acquisition by GS
LP of the GS Partnership Interest (other than the Existing Partnership
Agreement, which shall be terminated by operation of law, and the GS Advisory
Agreement) shall terminate and have no further force or effect (except to the
extent that any provision thereof shall expressly provide that such provision
shall survive the termination of such agreement or document), and that from and
after the Closing, all of the parties thereto shall be released from all of
their liabilities and obligations thereunder (other than any such liabilities or
obligations that arose prior to the Closing).
(c) MGI and CERA LLC Unit Option Plans. MGI shall, and each of the
Stockholders shall cause CERA Inc. to, adopt the MCM Group, Inc. Management LLC
Unit Option Plan and the Cambridge Energy Research Associates, Inc. Management
LLC Unit Option Plan (the "CERA Option Plan"), respectively, substantially in
the respective forms of Exhibits K and L hereto, together with the respective
forms of management LLC Unit option agreements and management LLC Unit
subscription agreements attached as Exhibits A and B thereto.
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(d) CERA Inc. Bonus Plan. Each of the Stockholders shall cause CERA
Inc. to adopt a performance bonus program (the "CERA Bonus Plan"), in form and
substance mutually satisfactory to MGI and the Founding Stockholders, pursuant
to which the participants in the CERA Bonus Plan shall be entitled to receive
annual incentive awards based upon the annual operating targets and other
performance goals established, pursuant to the CERA Bonus Plan, by CERA Inc.'s
board of directors from time to time.
5.4 Certain Payments to CERA Management Members. The Parent hereby
agrees to cause CERA Inc. to pay to each CERA Management Member who shall have
received LLC Units pursuant to the distribution to CERA Management Members
promptly after the Closing Date as provided for in Section 1.5, within 30 days
after the due date (after taking into account any applicable extension) for
filing the U.S. federal Income Tax Return of CERA Inc. for each taxable year
ending after the Closing Date during which any deduction with respect to such
distribution is actually utilized by CERA Inc. for U.S. federal Income Tax
purposes (whether as a current deduction or as a deduction for a net operating
loss carryover resulting from any such deduction), cash (subject to applicable
withholding) in an amount equal to the product of (i) the quotient of (x) the
number of LLC Units received by such CERA Management Member pursuant to such
distribution divided by (y) the total number of LLC Units distributed by CERA
Inc. pursuant to such distribution and (ii) an amount equal to (x) the amount of
any such deduction so utilized by CERA Inc. during such taxable year (in the
case of any such loss carryover, net of any related gain included in the gross
income of CERA Inc. as a result of any examination of any U.S. federal Income
Tax Return of CERA Inc. for any such taxable year prior to such taxable year)
multiplied by (y) the highest corporate tax rate applicable for U.S. federal
Income Tax purposes for such taxable year, provided that the amount set forth in
subclause (ii)(x) shall not exceed CERA Inc.'s taxable income for such taxable
year after taking into account all available deductions, losses and net
operating loss carryovers but before taking into account the deduction described
in subclause (ii)(x).
5.5 Grants of Options to Purchase LLC Units. (i) On the Closing
Date, (a) MGI shall grant options to purchase an aggregate of 33,444 LLC Units
to Brera Capital
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Partners, LLC or its designees, at an exercise price of $23.55 per LLC Unit, and
(b) CERA Inc. shall grant options to purchase an aggregate of 11,132 LLC Units
to Mr. Edward Jordan, at an exercise price of $23.55 per LLC Unit, in full
payment of the fee due to him in respect of the Transactions and the other
transactions contemplated hereby and (ii) promptly after the Closing Date, CERA
Inc. will grant to each Initial CERA Option Grantee, pursuant to the CERA Option
Plan, options to purchase such number of LLC Units as is set forth opposite such
Initial CERA Option Grantee's name on Exhibit C hereto, at an exercise price of
$18.31 per LLC Unit.
ARTICLE VI
TERMINATION
6.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by the written agreement of the Founding Stockholders and MGI;
(b) by MGI, on the one hand, or the Founding Stockholders, on the
other hand, by written notice to the other after 5:00 p.m., New York City
time, on November 30, 1997 if the Closing Date shall not have occurred by
such date (unless the failure of the Closing Date to occur shall be due
to, in the case of any termination by MGI, any material breach of this
Agreement by MGI, the Parent or Merger Sub or, in the case of any
termination by the Founding Stockholders, any material breach of this
Agreement by the Stockholders or GS LP), unless such date is extended by
the mutual written consent of MGI and the Founding Stockholders;
(c) by MGI if there has been a breach on the part of the
Stockholders or GS LP of any of their covenants set forth herein, or any
failure on the part of the Stockholders or GS LP to perform their
obligations hereunder (provided that MGI, the Parent and Merger Sub shall
have performed and complied with, in all material respects, all agreements
and covenants required by this Agreement to have been performed or
complied with by them) prior to such time, such that, in any such case,
any of the conditions to the effectiveness of the Transactions set forth
in Section 4.1 or 4.2 could not
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(including without limitation through the use of diligent efforts to cure
such breach or failure) be satisfied on or prior to the termination date
contemplated by Section 6.1(b); or
(d) by any of the Founding Stockholders, if there has been a breach
on the part of MGI, the Parent or Merger Sub of any of their covenants set
forth herein, or any failure on the part of MGI, the Parent or Merger Sub
to perform their obligations hereunder (provided that the Stockholders and
GS LP shall have performed and complied with, in all material respects,
all agreements and covenants required by this Agreement to have been
performed or complied with by them) prior to such time, such that, in any
such case, any of the conditions to the effectiveness of the Transactions
set forth in Section 4.1 or 4.3 could not (including without limitation
through the use of diligent efforts to cure such breach or failure) be
satisfied on or prior to the termination date contemplated by Section
6.1(b).
6.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 6.1, this Agreement shall become void and have no
effect, without any liability to any Person in respect hereof or of the
transactions contemplated hereby on the part of any party hereto, or any of its
directors, officers, employees, agents, consultants, representatives, advisers,
stockholders, partners or Affiliates, except for any liability resulting from
any party's breach of this Agreement and except that the provisions of Sections
3.4.1(b) and (c), 8.2, 8.5.4, 8.5.7 and 8.5.8 shall survive any such
termination.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Stockholders and GS LP. To the fullest
extent permitted by applicable law, each of the Stockholders, severally and not
jointly, and GS LP covenants and agrees to defend, indemnify and hold harmless
each of the Parent, the Surviving Corporation, such of the other members of the
MCM Group (without duplication) as are, directly or indirectly, wholly owned by
the Parent and the respective officers, directors and employees of the Parent,
the Surviving Corporation and any such other member of the
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MCM Group (collectively, the "MGI Indemnitees") from and against, and pay or
reimburse the MGI Indemnitees for, any and all claims, demands, liabilities,
obligations, losses, fines, costs, expenses, Litigation, deficiencies or damages
(whether absolute, accrued, conditional or otherwise and whether or not
resulting from third party claims), including interest and penalties with
respect thereto and out-of-pocket expenses and reasonable attorneys' and
accountants' fees and expenses incurred in the investigation or defense of any
of the same or in asserting, preserving or enforcing any of their respective
rights hereunder (collectively, "Losses"), incurred or suffered by any MGI
Indemnitee (provided that any Loss incurred or suffered by any member of the MCM
Group that is not, directly or indirectly, wholly owned by the Parent shall be
deemed to be a Loss incurred or suffered by the Parent in an amount equal to the
amount of such Loss incurred or suffered by such member of the MCM Group
multiplied by a fraction, the numerator of which shall be the portion of the
outstanding common equity interests of such member of the MCM Group that,
directly or indirectly, is held by any wholly owned member of the MCM Group and
the denominator of which shall be all of the outstanding common equity interests
of such non-wholly owned member of the MCM Group) with respect to, resulting
from or arising out of:
(a) any inaccuracy of any representation or warranty by the
Stockholders or GS LP made in or pursuant to this Agreement or in any
certificate delivered by any Stockholder or GS LP in connection with the
Closing; or
(b) any failure by any of the Stockholders or GS LP to perform any
of their covenants or agreements hereunder or fulfill any other of their
obligations in respect hereof;
provided, that (i) in the case of any representation and warranty set forth in
Section 2.1, GS LP shall indemnify and hold harmless under this Section 7.1 for
only 10%, and each of the Stockholders shall indemnify and hold harmless under
this Section 7.1 for their respective percentages (as calculated pursuant to
Section 7.4(b)) of 90%, of each Loss incurred or suffered with respect to,
resulting from or arising out of such representation and warranty; (ii) GS LP
shall not indemnify and hold harmless under this Section 7.1 for Losses incurred
or suffered with respect to, resulting from or arising out of any representation
and warranty set forth in Section 2.2 or any breach or nonfulfillment by the
Stockholders of any covenant, agreement or obligation
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described in Section 7.1(b); and (iii) the Stockholders shall not indemnify and
hold harmless under this Section 7.1 for Losses incurred or suffered with
respect to, resulting from or arising out of any representation and warranty set
forth in Section 2.3 or any breach or nonfulfillment by GS LP of any covenant,
agreement or obligation described in Section 7.1(b).
7.2 Indemnification by MGI. To the fullest extent permitted by
applicable law, MGI covenants and agrees to defend, indemnify and hold harmless
each of the Stockholders and GS LP from and against, and pay or reimburse them
for, any and all Losses incurred or suffered by any of them with respect to,
resulting from or arising out of:
(a) any inaccuracy of any representation or warranty by MGI, the
Parent or Merger Sub made in or pursuant to this Agreement or in any
certificate delivered by MGI, the Parent or Merger Sub in connection with
the Closing; or
(b) any failure by MGI, the Parent or Merger Sub to perform any of
their covenants or agreements hereunder or fulfill any other of their
obligations in respect hereof.
7.3 Further Indemnification by GS LP. GS LP covenants and agrees to
defend, indemnify and hold harmless each of the Stockholders from and against,
and pay or reimburse them for, any and all Losses incurred or suffered by any of
them with respect to, resulting from or arising out of:
(a) any inaccuracy of any representation or warranty by GS LP made
in or pursuant to Section 2.3 of this Agreement or in any certificate
delivered by GS LP in connection with the Closing relating to any such
representation or warranty; or
(b) any failure by GS LP to perform any of its covenants or
agreements hereunder or fulfill any of its obligations in respect hereof.
7.4 Payment Adjustments, etc. Any indemnity payment made by any
Stockholder or GS LP to the MGI Indemnitees, on the one hand, or by MGI to the
Stockholders or GS LP, on the other hand, pursuant to this Article VII in
respect of any claim (i) shall be net of an amount equal to
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(x) any insurance proceeds realized by and paid to the Indemnified Party minus
(y) any related costs and expenses, including the aggregate cost of pursuing any
related insurance claims plus any correspondent increases in insurance premiums
or other chargebacks and (ii) shall be (a) reduced by an amount equal to the
Income Tax benefits, if any, attributable to such claim and (b) increased by an
amount equal to the Income Taxes, if any, attributable to the receipt of such
indemnity payment, but only to the extent that such Tax benefits are actually
realized, or such Income Taxes are actually paid, as the case may be, by the
Indemnified Party or any consolidated, combined or unitary group of which any
Indemnified Party is a member.
7.5 Indemnification Procedures; Limitations. (a) In the case of any
claim asserted by a third party against a party entitled to indemnification
under this Article VII (the "Indemnified Party"), notice shall be given by the
Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and the Indemnified Party
shall permit the Indemnifying Party (at the expense of such Indemnifying Party)
to assume the defense of any claim or any litigation resulting therefrom,
provided, that (i) counsel for the Indemnifying Party who shall conduct the
defense of such claim or litigation shall be reasonably satisfactory to the
Indemnified Party, and the Indemnified Party may participate in such defense at
such Indemnified Party's expense and (ii) the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its indemnification obligation under this Agreement except to the extent that
such failure results in a lack of actual notice to the Indemnifying Party and
such Indemnifying Party is materially prejudiced as a result of such failure to
give notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that provides for
injunctive or other non-monetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified
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Party's Tax liability or (in the case of an Indemnified Party that is an MGI
Indemnitee) the ability of any member of the MCM Group to conduct, in any
material respect, its business, or that the Indemnified Party may have available
to it one or more defenses or counterclaims that are inconsistent with one or
more of those that may be available to the Indemnifying Party in respect of such
claim or any litigation relating thereto, the Indemnified Party shall have the
right at all times to participate in the defense, settlement, negotiations or
litigation relating to any such claim with counsel of its own choosing, with all
of the fees and expenses of one (but not more than one) such counsel payable by
the Indemnifying Party, provided that if the Indemnified Party does so exercise
its right to participate, the Indemnified Party shall not settle such claim or
litigation without the written consent of the Indemnifying Party, such consent
not to be unreasonably withheld. In the event that the Indemnifying Party does
not accept the defense of any matter as above provided, the Indemnified Party
shall have the full right to defend against any such claim or demand, and shall
be entitled to settle or agree to pay in full such claim or demand.
(b) Notwithstanding anything to the contrary in the foregoing, (i)
the aggregate indemnification obligations hereunder of the Stockholders and GS
LP for Losses with respect to, resulting from or arising out of Section 7.1(a)
and (b) shall not exceed $5,000,000 and (ii) each of the Stockholders and GS LP
shall be required to indemnify and hold harmless under Section 7.1(a) and (b)
(x) only for each claim in respect of which the aggregate Losses exceed $50,000
and (y) only to the extent that the aggregate amount (without duplication and
without regard to the indemnification threshold set forth in clause (x) above)
of Losses incurred or suffered with respect to or in connection with the matters
described in such Sections exceeds $250,000. For purposes of calculating the
percentage of any Losses that any Stockholder shall be responsible for, the
percentage shall be based on the ratio on the date hereof of (i) the number of
shares of CERA Common Stock owned by such Stockholder to (ii) the aggregate
number of shares of CERA Common Stock owned by all the Stockholders; provided
that in the event that any Stockholder that is a trust for the benefit of any
other Stockholder and/or the family members of or other persons affiliated with
such other Stockholder shall fail to pay any or all of its pro rata portion of
any Losses of an Indemnified Party subject to indemnification under Section 7.1
promptly after a request therefor is made, such Indemnified Party shall be
entitled to recover, without
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duplication, the amount of such unpaid Losses in accordance with the provisions
hereof directly from such other Stockholder (in addition to any other payment in
respect of such Losses that may be due hereunder from such other Stockholder).
7.6 Survival of Representations and Warranties, etc. All claims for
indemnification under clause (a) or (b) of Section 7.1, clause (a) or (b) of
Section 7.2 or clause (a) or (b) of Section 7.3 must be asserted on or prior to
the date that is 30 days after the termination of the respective survival
periods set forth in this Section 7.6. The representations, warranties,
covenants and agreements made in or pursuant to this Agreement or in any
certificate delivered in connection with the Closing shall survive the execution
and delivery of this Agreement, any examination by or on behalf of the parties
hereto and the completion of the transactions contemplated herein, but only to
the extent specified below:
(a) except as set forth below, the representations, warranties,
covenants and agreements made in or pursuant to this Agreement or in any
certificate delivered in connection with the Closing shall survive until
the first anniversary of the Closing Date;
(b) the representations and warranties contained in Sections 2.1.6
and 2.4.9 shall survive until the expiration of any statutes of
limitations applicable to the particular Tax at issue, and the
representations and warranties contained in Sections 2.1.16 and 2.4.19
shall survive until the expiration of any statutes of limitations
applicable to the particular provision of ERISA at issue;
(c) the covenants and agreements set forth herein which, by their
terms, are to be performed subsequent to the Closing shall survive until
the expiration of any applicable statutes of limitation; and
(d) a representation and warranty, and a covenant and agreement,
shall survive after the applicable time period set forth in subparagraph
(a), (b) or (c) above only with respect to any claim that has been
asserted within the time period set forth in the first sentence of this
Section 7.6.
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ARTICLE VIII
DEFINITIONS; MISCELLANEOUS
8.1 Definition of Certain Terms. The terms defined in this Section
8.1, whenever used in this Agreement shall have the respective meanings
indicated below for all purposes of this Agreement. All references herein to a
Section, Article or Schedule are to a Section, Article or Schedule of or to this
Agreement, unless otherwise indicated.
Affiliate: of a Person means a Person that directly, or indirectly
through one or more intermediaries, Controls, is Controlled by, or is
under common Control with, the first Person, including but not limited to
a Subsidiary of the first Person, a Person of which the first Person is a
Subsidiary, or another Subsidiary of a Person of which the first Person is
also a Subsidiary. "Control" (including the terms "Controlled by" and
"under common Control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management policies
of a Person, whether through the ownership of voting securities, by
contract, as trustee or executor, or otherwise.
Agreement: this Plan of Merger and Exchange Agreement, including the
Exhibits hereto.
Ancillary Document: as defined in Section 3.3.3.
Applicable Law: all applicable provisions of all (i) statutes, laws,
rules, administrative codes, regulations or ordinances of any Governmental
Authority, (ii) Governmental Approvals and (iii) Orders of any
Governmental Authority.
Business Day: a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York or Cambridge, Massachusetts
are authorized or required by law to close.
CD&R: as defined in Section 3.4.1(a).
CD&R Consulting Agreement: the Consulting Agreement, dated as of
August 31, 1996, among MGI, MCM and CD&R, as amended, supplemented, waived
or otherwise modified from time to time.
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CERA Acquisition Transaction: as defined in Section 3.1.5.
CERA Allocated LLC Units: as defined in Section 1.3.
CERA Assets: as defined in Section 2.1.7(a).
CERA Bonus Plan: as defined in Section 5.3.1(d).
CERA CAGR: the compound annual growth rate, calculated as provided
in Exhibit M hereto, of the revenues of CERA Inc. from the businesses
engaged in by CERA Inc. or CERA LP on the date hereof (including the
revenues from such businesses or transactions that the Board of the Parent
may determine, at or prior to the time such businesses or transactions are
first engaged in or entered into, shall be part of the businesses engaged
in by CERA Inc. or CERA LP on the date hereof, but excluding all revenues
from the GS Advisory Agreement or any other agreement which (i) imposes an
exclusivity obligation on CERA Inc. or (ii) provides for compensation of
CERA Inc. in the form of contingent transaction fees) (the "Qualifying
Revenues"), determined in accordance with GAAP, from the fiscal year ended
June 30, 1997 to the fiscal year ending June 30, 2000; provided that upon
the first to occur, prior to June 30, 2000, of (x) a Public Offering or a
Qualifying Sale, the CERA CAGR shall be deemed to be 20%, or (y) a
Nonqualifying Sale, the CERA CAGR shall be deemed to be the compound
annual growth rate, calculated as provided in Exhibit M, of the Qualifying
Revenues from the fiscal year ended June 30, 1997 to the last day of the
calendar month immediately preceding the closing date of such
Nonqualifying Sale if such closing shall occur on or after the tenth day
of the following month, and otherwise to the last day of the second
calendar month immediately preceding such closing date.
CERA Cash Distribution: as defined in the third recital to this
Agreement.
CERA Common Stock: as defined in the second recital to this
Agreement.
CERA Contingent Option: as defined in Section 1.3.
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CERA Contingent Option LLC Units: as defined in Section 1.3.
CERA Disclosure Letter: as defined in Section 2.1.
CERA Distribution Loan: as defined in the third recital to this
Agreement.
CERA Employment and Withholding Taxes: as defined in Section
2.1.6(a).
CERA Financial Statements: as defined in Section 2.1.3(a).
CERA Headquarters Lease: as defined in Section 2.1.7(b).
CERA Holder Information Form: the CERA Holder Information Form
attached hereto as Exhibit D.
CERA Inc.: as defined in the first recital to this Agreement.
CERA Intellectual Property: as defined in Section 2.1.9(a).
CERA Lease: as defined in Section 2.1.7(b).
CERA Licenses: as defined in Section 2.1.9(a).
CERA LLC Unit Grant Agreement: a Management LLC Unit Grant Agreement
between CERA Inc. and a CERA Management Member, having terms that are
substantially the same (except with respect to purchase price and except
as specified in Section 1.5) as the corresponding terms of the form of
management LLC Unit subscription agreement attached as Exhibit B to the
CERA Option Plan, and pursuant to which CERA Inc. shall have granted to
such CERA Management Member LLC Units and a right to receive Contingent
LLC Units in accordance with Section 1.5.
CERA LLC Unit Grant Plan: as defined in the ninth recital to this
Agreement.
CERA LP: as defined in the first recital to this Agreement.
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CERA Management Members: as defined in the ninth recital to this
Agreement.
CERA Material Adverse Effect: a materially adverse effect on the
business, financial condition, results of operations or properties of CERA
Inc. and CERA LP, taken as a whole.
CERA Material Change: a material change, after the date hereof, in
the business, financial condition, results of operations or properties of
CERA Inc. and CERA LP, taken as a whole.
CERA Non-Voting Common Stock: as defined in the second recital to
this Agreement.
CERA Option Plan: as defined in Section 5.3.1(c).
CERA Plans: as defined in Section 2.1.16(a).
CERA Returns: as defined in Section 2.1.6(a).
CERA Roll-up: as defined in the sixth recital to this Agreement.
CERA Stock Exchange: as defined in the fourth recital to this
Agreement.
CERA Stockholders Agreement: the Agreement with Stockholders, dated
as of November 30, 1994, by and among CERA Inc., GS LP and certain
stockholders of CERA Inc. named therein.
CERA Stockholders Common Stock: as defined in the second recital to
this Agreement.
CERA Taxes: as defined in Section 2.1.6(a).
CERA Voting Common Stock: as defined in the second recital to this
Agreement.
CERA/GS Contingent Percentage: the percentage (rounded to the
nearest hundredth of a percentage point) equal to the sum of (i) 33% plus
(ii) the product of (x) 8.35% multiplied by (y) a fraction, the numerator
of which is the CERA CAGR minus 16% and the denominator of which is 4%.
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Certificate of Merger: as defined in Section 1.1.2(d).
Closing: as defined in Section 1.1.2.
Closing Date: as defined in Section 1.1.2.
Code: the Internal Revenue Code of 1986, as amended.
Competitor: as defined in Section 5.1.
Consent: any consent, approval, authorization, waiver, permit,
license, grant, exemption or order of, or registration, declaration or
filing with, any Person, including but not limited to any Governmental
Authority.
Contingent LLC Units: the additional LLC Units that the
Stockholders, GS LP and the CERA Management Members shall be entitled to
receive pursuant to Sections 1.3(c), 1.4(c) and 1.5 and the management LLC
Unit grant agreements to be entered into with each of the CERA Management
Members, respectively, in an aggregate amount determined as follows: (i)
if the CERA CAGR is less than 16%, the Contingent LLC Units shall be equal
to 0; (ii) if the CERA CAGR is equal to 16%, the Contingent LLC Units
shall be equal to 144,439; (iii) if the CERA CAGR is greater than 16% but
less than 20%, the Contingent LLC Units shall be equal to an aggregate
number of additional LLC Units such that the result obtained by dividing
(x) the sum of 1,500,000 plus the Contingent LLC Units by (y) the sum of
4,838,710 plus the Contingent LLC Units shall be equal to the CERA/GS
Contingent Percentage; and (iv) if the CERA CAGR is equal to or greater
than 20%, the Contingent LLC Units shall be equal to 853,890; provided
that the Contingent LLC Units may be adjusted pursuant to Section 1.8.
Contingent Option Agreement: as defined in Section 1.1.2(c).
Contingent Options: as defined in Section 1.4.
DGCL: the General Corporation Law of the State of Delaware, as in
effect from time to time.
Dissenting Shares: as defined in Section 1.2.5.
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Effective Time: as defined in Section 1.1.2(d).
Employment Agreement: as defined in Section 4.2.3.
Employment and Withholding Taxes: any federal, state, local, foreign
or other employment, unemployment, social security, disability, workers'
compensation, payroll, health care or other similar tax, duty or other
governmental charge or assessment or deficiencies thereof and all Taxes
required to be paid or withheld by or on behalf of each of the MCM
Companies, CERA LP or CERA Inc., as applicable, in connection with amounts
paid or owing to any employee, independent contractor, creditor or other
party (including, but not limited to all interest and penalties thereon
and additions thereto whether disputed or not).
Environmental Activity: any storage, holding, release, emission,
discharge, generation, disposal, handling or transportation of any
Hazardous Materials.
Environmental Laws: all Applicable Laws relating to the protection
of the environment, to human health and safety, or to any Environmental
Activity, including, without limitation, (i) the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act, and the Occupational Safety and Health Act,
and (ii) all other requirements pertaining to reporting, licensing,
permitting, investigation or remediation of emissions, discharges or
releases of Hazardous Materials into the air, surface water, groundwater
or land, or relating to the manufacture, processing, distribution, use,
sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Materials.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Exchange Act: the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Exchange Agent: the Person appointed by the Parent to administer the
exchange of MGI Certificates for LLC Certificates pursuant to Section
1.2.6.
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Existing MGI Options: as defined in Section 1.2.4(d).
Existing Partnership Agreement: the Amended and Restated Agreement
of Limited Partnership of CERA LP, dated as of November 30, 1994.
Founding Stockholders: as defined in Section 5.1.
Fund IV: as defined in Section 2.4.3.
Fund IV Indemnification Agreement: the Indemnification Agreement,
dated as of August 31, 1996, among MGI, MCM, CD&R and Fund IV, as amended,
supplemented, waived or otherwise modified from time to time.
GAAP: as defined in Section 2.1.3(b).
Governmental Approval: any Consent of, with or to any Governmental
Authority.
Governmental Authority: any nation or government, any state or other
political subdivision thereof, including, without limitation, any
governmental agency, department, commission or instrumentality of the
United States, any State of the United States or any political subdivision
thereof, or any stock exchange or self-regulatory agency or authority.
GS Advisory Agreement: the Advisory Agreement, dated as of November
30, 1994, between GS LP and CERA LP.
GS Allocated LLC Units: as defined in Section 1.4.
GS Contingent Option: as defined in Section 1.4.
GS Contingent Option LLC Units: as defined in Section 1.4.
GS LP: as defined in the introductory paragraph of this Agreement.
GS LP Holder Information Form: the GS LP Holder Information Form
attached hereto as Exhibit E.
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GS Partnership Interest: as defined in the second recital to this
Agreement.
GS Partnership Interest Exchange: as defined in the fifth recital to
this Agreement.
GS Purchase Agreement: the Purchase Agreement, dated as of November
30, 1994, by and among CERA LP, CERA Inc. and GS LP.
Hazardous Materials: any substance that: (i) is or contains
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum-derived substances or wastes, (ii) requires
investigation, removal or remediation under any Environmental Law, or is
defined as a "hazardous waste" or "hazardous substance" thereunder, or
(iii) is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is regulated by any
Governmental Authority or Environmental Law.
HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
Income Tax: any federal, state, local or foreign income,
alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits or windfall profits
tax or other similar tax, estimated tax, duty or other governmental charge
or assessment or deficiencies thereof (including, but not limited to, all
interest and penalties thereon and additions thereto whether disputed or
not).
Indemnified Party: as defined in Section 7.5.
Indemnifying Party: as defined in Section 7.5.
Initial CERA Option Grantees: as defined in the tenth recital to
this Agreement.
Intellectual Property: United States and foreign trademarks, service
marks, trade names, trade dress, copyrights, and similar rights, including
registrations and applications to register or renew the registration of
any of the foregoing; United States and foreign letters patent and patent
applications; and inventions,
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processes, designs, formulae, trade secrets, know-how and all similar
intellectual property rights.
IRS: the Internal Revenue Service.
Lien: any mortgage, pledge, hypothecation, security interest,
encumbrance, title retention agreement, lien, charge or other similar
restriction.
Litigation: as defined in Section 2.1.11.
LLC Agreement: as defined in Section 1.9(d).
LLC Certificate: as defined in Section 1.2.6(a).
LLC Units: as defined in the fourth recital to this Agreement.
Losses: as defined in Section 7.1.
MCM: as defined in the third recital to this Agreement.
MCM Employment and Withholding Taxes: as defined in Section
2.4.9(a).
MCM Group or MCM Company: collectively, MGI, MCM and each of its
Subsidiaries.
MCM Headquarters Lease: as defined in Section 2.4.10(b).
MCM Licenses: as defined in Section 2.4.12(a).
MCM Returns: as defined in Section 2.4.9(a).
MCM Taxes: as defined in Section 2.4.9(a).
Merger: as defined in the first recital to this Agreement.
Merger Sub: as defined in the introductory paragraph of this
Agreement.
MGI: as defined in the introductory paragraph of this Agreement.
MGI Acquisition Transaction: as defined in Section 3.2.7.
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MGI Assets: as defined in Section 2.4.10(a).
MGI/CERA Group: as defined in Section 5.1.
MGI Certificates: as defined in Section 1.2.6(a).
MGI Class A Common Stock: the Class A Common Stock, par value $.01
per share, of MGI.
MGI Class B Common Stock: the Class B Common Stock, par value $.01
per share, of MGI.
MGI Class C Common Stock: the Class C Common Stock, par value $.01
per share, of MGI.
MGI Common Stock: the MGI Class A Common Stock, the MGI Class B
Common Stock and the MGI Class C Common Stock.
MGI Disclosure Letter: as defined in Section 2.4.
MGI Employee Option: as defined in Section 1.2.4(d).
MGI Financial Statements: as defined in Section 2.4.6.
MGI Holder Information Form: the MGI Holder Information Form
attached hereto as Exhibit H.
MGI Indemnitees: as defined in Section 7.1.
MGI Intellectual Property: as defined in Section 2.4.12(a).
MGI Lease: as defined in Section 2.4.10(b).
MGI Management Option Plan: as defined in Section 1.2.4(d).
MGI Management Stock Subscription Agreements: the Management Stock
Subscription Agreements by and between MGI and each purchaser party
thereto, as amended, supplemented, waived or otherwise modified from time
to time, relating to the purchase of MGI Common Stock by such purchaser.
MGI Material Adverse Effect: a materially adverse effect on the
business, financial condition, results of
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operations or properties of the MCM Companies, taken as a whole.
MGI Material Change: a material change, after the date hereof, in
the business, financial condition, results of operations or properties of
the MCM Group, taken as a whole.
MGI Option Plans: as defined in Section 1.2.4(d).
MGI Plans: as defined in Section 2.4.19.
MGI Special Option: as defined in Section 1.2.4(d).
MGI Special Options Plan: as defined in Section 1.2.4(d).
Nonqualifying Sale: a Sale of the Parent or CERA Inc. or a Spin-Off
of CERA Inc. that does not constitute a Qualifying Sale.
Offer Documents: the prospectus, information statement or other
similar document or documents to be sent to the holders of MGI Common
Stock in connection with and prior to the Merger.
Order: as defined in Section 2.1.11.
Organizational Documents: as to any Person, if a corporation, its
articles or certificate of incorporation and by-laws; if a partnership,
its certificate of partnership and partnership agreement; and if some
other entity, its constituent documents.
Parent: as defined in the introductory paragraph of this Agreement.
Per Share MGI Allocated LLC Units: as defined in Section 1.2.4(a).
Permitted CERA Liens: as defined in Section 2.1.7(a).
Permitted MCM Liens: as defined in Section 2.4.10(a).
Person: any natural person or any firm, partnership, limited
liability partnership,
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association, corporation, limited liability company, trust, business
trust, Governmental Authority or other entity.
Public Offering: a sale to the public in the United States of LLC
Units or other equity interests in the Parent or its successor, or in CERA
Inc., pursuant to an underwritten public offering of such LLC Units or
other equity interests led by one or more underwriters, at least one of
which is of nationally recognized standing.
Qualifying Sale: (i) a Sale of the Parent or of CERA Inc. in which
the aggregate value (in the case of any contingent or non-cash
consideration, as determined in good faith by the board of directors or
managers of the Parent or its successor) of the consideration paid for the
equity interests in the Parent or its successor or in CERA Inc., as the
case may be, is equal to or greater than $225,000,000 in the case of the
Parent or such successor, or equal to or greater than $90,000,000 in the
case of CERA Inc., or (ii) a Spin-Off of CERA Inc. in which the aggregate
value (as determined in good faith by the board of directors or managers
of the Parent or its successors after consideration of such factors,
including a valuation of the capital stock of CERA Inc. by an independent
valuation firm, as such board of directors or managers shall deem to be
relevant) of the capital stock of CERA Inc. at the time of such Spin-Off
shall be equal to or greater than $90,000,000.
Registration and Participation Agreement: the Registration and
Participation Agreement, dated as of August 31, 1996, among MGI and the
stockholders of MGI that are parties thereto, as amended, supplemented,
waived or otherwise modified from time to time.
Registration Statement: the registration statement on Form S-4 to be
filed by the Parent with the SEC with respect to the LLC Units (including
the Contingent LLC Units and any LLC Units issuable upon exercise of the
Contingent Options) to be issued in connection with the Merger, the CERA
Stock Exchange and the GS Partnership Interest Exchange.
Representatives: as to any Person, its accountants, counsel,
consultants (including actuarial, insurance and industry consultants),
employees, agents
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and other representatives and advisors.
Return: any return, report, declaration, form, claim for refund or
information statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof, required to be
filed by or on behalf of any MCM Company, CERA LP or CERA Inc., as
applicable.
Sale: As applied to any entity, and whether accomplished through a
single transaction or a series of related transactions:
(i) the acquisition by any Person or "group" (as defined in Section
13(d) of the Exchange Act), other than any owner of equity interests in
such entity as of the Closing Date or any Affiliate of such owner, of 50%
or more of the combined voting power of such entity's or its successor's
then outstanding voting securities or other voting equity interests;
(ii) the merger or consolidation of such entity or its successor, as
a result of which Persons who were owners of equity interests in such
entity immediately prior to such merger or consolidation, do not,
immediately thereafter, own, directly or indirectly, securities or other
equity interests representing more than 50% of the combined voting power
entitled to vote generally in the election of directors or managers, as
the case may be, of the survivor of such merger or consolidation; or
(iii) the sale (directly or indirectly, whether through one or more
transfers of securities of one or more entities or otherwise) of all or
substantially all of the assets of such entity or its successor to one or
more Persons that are not, immediately prior to such sale, Affiliates of
such entity, such successor or owners of equity interests in such entity
or such successor.
SEC: the Securities and Exchange Commission.
Securities Act: the Securities Act of 1933, as amended.
Spin-Off of CERA Inc.: a distribution of all of the capital stock of
CERA Inc. to holders of equity interests in the Parent or its successor,
where no
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consideration is required to be paid for the capital stock so being
distributed.
Stockholders: as defined in the introductory paragraph of this
Agreement.
Sword: as defined in Section 3.4.1(a)(ii).
Subsidiary: each corporation or other Person in which a Person owns
or controls, directly or indirectly, capital stock or other equity
interests representing more than 50% of the outstanding voting stock or
other equity interests.
Surviving Corporation: as defined in Section 1.2.1.
Tax: (i) any federal, state, local, foreign or other income,
alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits,
gross receipts, value added, sales, use, excise, custom duties, transfer,
documentary, registration, stamp, premium, real property, ad valorem,
intangibles, rent, occupancy, license, occupational, employment,
unemployment, social security, disability, workers' compensation, payroll,
health care, withholding, estimated or other similar tax, duty or other
governmental charge or assessment or deficiency thereof of any kind
whatsoever (including, but not limited to, all interest and penalties
thereon and additions thereto whether disputed or not), (ii) any liability
of any MCM Company, CERA LP or CERA Inc., as applicable, for the payment
of any amounts of the type described in clause (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group, or of
being a party to any agreement or arrangement whereby liability of any MCM
Company, CERA LP or CERA Inc., as applicable, for payments of such amounts
was determined or taken into account with reference to the liability of
any other Person, and (iii) any liability of any MCM Company, CERA LP or
CERA Inc., as applicable, for the payment of any amounts as a result of
being party to any tax sharing or tax indemnity agreement or arrangement
with respect to the payment of any amounts of the type described in clause
(i) or (ii).
100
<PAGE> 108
Transactions: as defined in the fifth recital to this Agreement.
Transfer Taxes: all transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including but not limited to
any real property transfer Tax, whether based on value, proceeds or gain
and whether direct or indirect, and any similar Tax).
Treasury Regulations: the regulations prescribed under the Code.
8.2 Expenses. Each party hereto shall be responsible for its own
fees, costs and expenses (including attorneys' fees and expenses) in connection
with this Agreement and the transactions contemplated hereby; provided, that in
the event that the Closing shall occur, on the Closing Date MGI shall pay (i)
the fees and expenses of Goldman Sachs & Co. in respect of the Transactions,
(ii) the fees and expenses of Wm. Sword & Co. in respect of the Transactions, in
an aggregate amount not to exceed $1,355,811, and provided that any additional
amount shall be payable by the Stockholders and/or GS LP and (iii) any Transfer
Taxes that may be payable and due in respect of the Merger; and all of the other
fees, costs and expenses (including, without limitation, attorneys' and
accountants' fees and expenses) incurred in connection with this Agreement and
the transactions contemplated hereby, to the extent not previously paid, shall
be paid by MGI and CERA Inc.
8.3 Severability. If any provision of this Agreement is inoperative
or unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever. The
invalidity of any one or more phrases, sentences, clauses, Sections or
subsections of this Agreement shall not affect the remaining portions of this
Agreement.
8.4 Notices. All notices, requests, demands and other communications
made in connection with this Agreement shall be in writing and shall be (a)
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or (b) transmitted by hand delivery or reputable overnight
delivery service, addressed as follows:
101
<PAGE> 109
(i) if to MGI, to:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, Fl. 37
New York, New York 10005
Telecopy: (212) 908-4345
Telephone: (212) 509-5800
Attention: Mr. David D. Nixon
With copies to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Telecopy: (212) 407-5252
Telephone: (212) 407-5200
Attention: Mr. Donald J. Gogel
Brera Capital Partners, LLC
590 Madison Avenue, 18th Floor
New York, New York 10022
Telecopy: (212) 835-1399
Telephone: (212) 835-1350
Attention: Mr. Alberto Cribiore
and to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Steven R. Gross, Esq.
(ii) if to the Parent or Merger Sub to:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, F1.37
New York, New York 10005
Attention: Mr. David D. Nixon
102
<PAGE> 110
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Steven R. Gross, Esq.
(iii) if to a Stockholder, to such Stockholder at
the address set forth on Exhibit N hereto:
with copies to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telecopy: (617) 526-5000
Telephone: (617) 526-6000
Attention: Paul P. Brountas, Esq.
(iv) if to GS LP, to:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Telecopy: (212) 902-3000
Telephone: (212) 902-1000
Attention: Pierre F. Lapeyre
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
8.5 Miscellaneous.
8.5.1. Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
8.5.2. Entire Agreement. This Agreement, including the Exhibits,
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
8.5.3. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be
103
<PAGE> 111
deemed an original and all of which shall together constitute one and the same
instrument.
8.5.4. Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF
THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARENT, MERGER SUB, THE
STOCKHOLDERS, GS LP AND MGI HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE
COURTS OF THE STATES OF NEW YORK AND DELAWARE, AND THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA LOCATED IN THE STATE, CITY AND COUNTY OF NEW YORK OR IN
THE DISTRICT OF DELAWARE, AS APPLICABLE, SOLELY IN RESPECT OF THE INTERPRETATION
AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND OF THE DOCUMENTS
REFERRED TO IN THIS AGREEMENT, AND HEREBY AND THEREBY WAIVE, AND AGREE NOT TO
ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR
ENFORCEMENT HEREOF OR OF ANY SUCH DOCUMENT, THAT IT OR THEY ARE NOT SUBJECT
THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT
MAINTAINABLE IN SAID COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE OR
THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES
HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION OR
PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH NEW YORK STATE, DELAWARE STATE
OR FEDERAL COURT. THE PARENT, MERGER SUB, THE STOCKHOLDERS, GS LP AND MGI HEREBY
CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES
AND OVER THE SUBJECT MATTER OF ANY SUCH DISPUTE AND AGREE THAT, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, MAILING OF PROCESS OR OTHER PAPERS IN
CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION
8.4, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND
SUFFICIENT SERVICE THEREOF. EACH OF THE PARTIES HERETO AGREES THAT THIS
AGREEMENT INVOLVES AT LEAST $100,000.00 AND THAT THIS AGREEMENT HAS BEEN ENTERED
INTO IN EXPRESS RELIANCE UPON 6 Del. C. ss. 2708. EACH OF THE PARTIES HERETO
IRREVOCABLY AGREES, TO THE EXTENT SUCH PARTY IS NOT OTHERWISE SUBJECT TO SERVICE
OF PROCESS IN THE STATE OF DELAWARE, TO APPOINT AND MAINTAIN AN AGENT IN THE
STATE OF DELAWARE AS SUCH PARTY'S AGENT FOR ACCEPTANCE OF LEGAL PROCESS.
8.5.5. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
104
<PAGE> 112
8.5.6. Assignment. This Agreement shall not be assignable by any
party hereto without the prior written consent of the other parties hereto.
8.5.7. No Third Party Beneficiaries. Except for Article VII, nothing
in this Agreement shall confer any rights upon any person or entity other than
the parties hereto and their respective heirs, successors and permitted assigns.
8.5.8. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) IT MAKES THIS WAIVER
VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.5.8.
8.5.9. Amendment; Waivers. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder.
105
<PAGE> 113
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
MCM GROUP, INC.
By: /s/ David D. Nixon
------------------------
Name: David D. Nixon
Title: President and Chief
Executive Officer
GLOBAL DECISIONS GROUP LLC
By: /s/ Gordon McMahon
------------------------
Name: Gordon McMahon
Title: Vice President and
Secretary
GDG MERGER CORPORATION
By: /s/ Gordon McMahon
------------------------
Name: Gordon McMahon
Title: Vice President and
Secretary
106
<PAGE> 114
STOCKHOLDERS:
/s/ Daniel H. Yergin
--------------------------------
Daniel H. Yergin
/s/ Joseph A. Stanislaw
--------------------------------
Joseph A. Stanislaw
/s/ James P. Rosenfield
--------------------------------
James P. Rosenfield
/s/ Jamie W. Katz
--------------------------------
Jamie W. Katz, as Trustee for the
James P. Rosenfield Irrevocable Gift
Trust
/s/ Augusta McC. P. Stanislaw
--------------------------------
Augusta McC. P. Stanislaw, as Trustee
for the Joseph A. Stanislaw 1994 Trust
for Louis Joseph Perkins Stanislaw
/s/ Augusta McC. P. Stanislaw
--------------------------------
Augusta McC. P. Stanislaw, as Trustee
for the Joseph A. Stanislaw 1994 Trust
for Katrina Augusta Perkins Stanislaw
107
<PAGE> 115
/s/ Augusta McC. P. Stanislaw
--------------------------------
Augusta McC. P. Stanislaw, as Trustee
for the Joseph A. Stanislaw 1994 Trust
for Henry Winslow Perkins Stanislaw
/s/ I.C. Bupp
--------------------------------
I.C. Bupp
/s/ Stephen C. Aldrich
--------------------------------
Stephen C. Aldrich
THE GOLDMAN SACHS GROUP, L.P.
By: The Goldman Sachs Corporation, as
general partner of The Goldman
Sachs Group, L.P.
By: /s/ David Leuschen
--------------------------------
Name: David Leuschen
Title: Executive Vice President
108
<PAGE> 116
Exhibit A
CERA Management Members
<TABLE>
<CAPTION>
CERA GDG
PARTICIPANT LTICP UNITS LLC UNITS
----------- ----------- ---------
<S> <C> <C>
Kevin Lindemer 7,500 11,250
Phillippe Michelon 7,500 11,250
Thomas Robinson 7,500 11,250
Gary Simon 7,500 11,250
William Durbin 3,750 5,625
Thane Gustafson 3,750 5,625
Daniel Lucking 3,750 5,625
Alice Barsoomian 2,000 3,000
Simon Blakey 2,000 3,000
Dennis Eklof 2,000 3,000
Robert Esser 2,000 3,000
Odd Hassel 2,000 3,000
Edward Jordan 2,000 3,000
Micheline Manoncourt 2,000 3,000
Sue Lena Thompson 2,000 3,000
Ray Vernon 2,000 3,000
Julian West 2,000 3,000
Steve Aldrich 1,000 1,500
Ann Louise Hittle 1,000 1,500
Steve Haggett 1,000 1,500
Bruce Humphrey 1,000 1,500
Chuck Jordan 1,000 1,500
Susan Leland 1,000 1,500
Larry Makovich 1,000 1,500
Greg McCormack 1,000 1,500
James Placke 1,000 1,500
Brian Ward 1,000 1,500
TOTAL 71,250 108,875
</TABLE>
<PAGE> 117
Exhibit B
Exhibit B to the Plan of Merger and Exchange Agreement filed separately as
Exhibit 10.36
<PAGE> 118
Exhibit C
OPTIONS EXHIBIT
<TABLE>
<CAPTION>
# OF LLC UNITS EXERCISE
GROUP NAMES UNDER OPTION PRICE
----- ----- -------------- --------
<S> <C> <C> <C>
I Steve Aldrich 17,000 $18.31
Kevin Lindemer 17,000 $18.31
Dan Lucking 17,000 $18.31
Philippe Michelon 17,000 $18.31
Thomas Robinson 17,000 $18.31
Gary Simon 17,000 $18.31
II William Durbin 10,500 $18.31
Dennis Eklof 10,500 $18.31
Thane Gustafson 10,500 $18.31
Steve Haggett 10,500 $18.31
Sue Lena Thompson 10,500 $18.31
Julian West 10,500 $18.31
III Kimra Anderson Graves 2,000 $18.31
Peter Augustini 2,000 $18.31
Alice Barsoomian 2,000 $18.31
Simon Blakey 2,000 $18.31
Mack Brothers 2,000 $18.31
Lou Carranza 2,000 $18.31
Bob Esser 2,000 $18.31
Scott Foster 2,000 $18.31
Odd Hassel 2,000 $18.31
Peter Hughes 2,000 $18.31
Gary Hunt 2,000 $18.31
Ed Kelly 2,000 $18.31
</TABLE>
<PAGE> 119
Exhibit C
OPTIONS EXHIBIT - continued
<TABLE>
<CAPTION>
# OF LLC UNITS EXERCISE
GROUP NAMES UNDER OPTION PRICE
----- ----- -------------- --------
<S> <C> <C> <C>
II (cont'd) Ann Louise Hittle 2,000 $18.31
Mike Maddox 2,000 $18.31
Larry Makovich 2,000 $18.31
Micheline Manoncourt 2,000 $18.31
Susan Ruth 2,000 $18.31
Helen Sisley 2,000 $18.31
Brian Ward 2,000 $18.31
III Jennifer Battersby 1,250 $18.31
Claire Behrens 1,250 $18.31
Peter Bogin 1,250 $18.31
Ben Frickel 1,250 $18.31
Aldyn Hockstra 1,250 $18.31
Paul Hoffman 1,250 $18.31
Bruce Humphrey 1,250 $18.31
Huaibin Lu 1,250 $18.31
Elizabeth McCrary 1,250 $18.31
Jim Meitl 1,250 $18.31
Martin Meyers 1,250 $18.31
Jim Placke 1,250 $18.31
Laurent Ruseckas 1,250 $18.31
Sondra Scott 1,250 $18.31
Bill Veno 1,250 $18.31
V Mike Banville 325 $18.31
Paul Barnhill 325 $18.31
Teresa Chang 325 $18.31
</TABLE>
<PAGE> 120
Exhibit C
OPTIONS EXHIBIT - continued
<TABLE>
<CAPTION>
# OF LLC UNITS EXERCISE
GROUP NAMES UNDER OPTION PRICE
----- ----- -------------- --------
<S> <C> <C> <C>
V (cont'd) Susan Cummings Wiseman 325 $18.31
Frederic de Collar 325 $18.31
Ken Downey 325 $18.31
Frederic Egel 325 $18.31
Eduardo Fernandez 325 $18.31
Kelly Gemiti 325 $18.31
Judy Gideonse 325 $18.31
John Hoffman 325 $18.31
Chuck Jordan 325 $18.31
Mike Kelly 325 $18.31
Ross Kiener 325 $18.31
Roberta Klix 325 $18.31
Kelley Knight 325 $18.31
Sue Kroscup 325 $18.31
Pat Maio 325 $18.31
Greg McCormack 325 $18.31
Gig Moineau 325 $18.31
Susan Nardone 325 $18.31
Breda Nolan 325 $18.31
Les Peters 325 $18.31
Mary Alice Sanderson 325 $18.31
Joe Sannicandro 325 $18.31
Kirby Scudder 325 $18.31
Shankari Srinivasan 325 $18.31
William Stubblefield 325 $18.31
</TABLE>
<PAGE> 121
Exhibit C
OPTIONS EXHIBIT - continued
<TABLE>
<CAPTION>
# OF LLC UNITS EXERCISE
GROUP NAMES UNDER OPTION PRICE
----- ----- -------------- --------
<S> <C> <C> <C>
V (cont'd) Lietza von Wodtke 325 $18.31
Dagmar Wulf 325 $18.31
TOTAL 231,500 $18.31
</TABLE>
<PAGE> 122
Exhibit D
Global Decisions Group LLC
Holder Information Form
CERA, Inc. Shareholders
In order to register your interest and receive a LLC Certificate evidencing your
LLC Units in Global Decisions Group LLC, you must complete this Holder
Information Form by ______________ 1997 and return it to:
---------------------
---------------------
---------------------
---------------------
Required Information
1. Name:
-------------------------------------
2. Current Mailing Address:
-------------------------------------
-------------------------------------
-------------------------------------
3. Social Security or Employer
Identification Number: -------------------------------------
4. Country of Citizenship and
of Residency or Country and -------------------------------------
State or Province of Place
of Organization: -------------------------------------
5. State of Residency or State
of Principal Place of -------------------------------------
Business and of Principal
Office (if different):
6. Number of Shares of CERA,
Inc. Surrendered: -------------------------------------
<PAGE> 123
7. Federal Income Tax Basis of
the Shares of CERA, Inc. -------------------------------------
Surrendered:
8. Date CERA, Inc. Shares
Originally Acquired: -------------------------------------
2
<PAGE> 124
Exhibit E
Global Decisions Group LLC
Holder Information Form
The Goldman Sachs Group, L.P.
In order to register your interest and receive a LLC Certificate evidencing your
LLC Units in Global Decisions Group LLC, you must complete this Holder
Information Form by ______________ 1997 and return it to:
---------------------
---------------------
---------------------
---------------------
Required Information
1. Name:
-------------------------------------
2. Current Mailing Address:
-------------------------------------
-------------------------------------
-------------------------------------
3. Employer Identification
Number:
-------------------------------------
4. Country and State or
Province of Place of
Organization:
-------------------------------------
5. State of Principal Place of
Business and of Principal
Office (if different):
-------------------------------------
6. Federal Income Tax Basis of
the Partnership Interests
<PAGE> 125
in CERA LP Surrendered:
-------------------------------------
7. Date Partnership Interests
in CERA LP Originally
Acquired:
-------------------------------------
2
<PAGE> 126
Exhibit F
Exhibit F to the Plan of Merger and Exchange Agreement filed separately as
Exhibit 10.38
<PAGE> 127
Exhibit G
AMENDED CERTIFICATE OF INCORPORATION
OF
MCM GROUP, INC.
1. The name of the Corporation is MCM Group, Inc. (the
"Corporation").
2. The Corporation was incorporated as MCM Group, Inc. by
the filing of its original Certificate of Incorporation
with the Secretary of State of the State of Delaware on
_____________1996. This Amended Certificate of
Incorporation amends in its entirety the provisions of
the Certificate of Incorporation.
FIRST: The name of the Corporation is MCM Group, Inc.
SECOND: The Corporation's registered office in the State of Delaware
is at Corporation Trust Center, 1209 Orange Street in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The nature of the business of the Corporation and its purpose
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 1,000 shares of Common Stock, par value $ .01
per share (the "Common Stock").
FIFTH: The following provisions are inserted for the management of
the business and for the conduct of the affairs of the Corporation and for the
purpose of creating, defining, limiting and regulating the powers of the
Corporation and its directors and stockholders:
1. Generally. The business and affairs of the Corporation shall be
managed by or under the direction of
<PAGE> 128
its Board of Directors (the "Board") of the Corporation consisting of at least
three (3) natural persons ("Directors"). The Board shall have full, exclusive
and complete discretion to manage and control the business and affairs of the
Corporation, to make all decisions affecting the business and affairs of the
Corporation and to take all such actions as it deems necessary or appropriate to
accomplish the purposes of the Corporation as set forth herein, including,
without limitation, to exercise all of the powers of the Corporation.
2. Directors.
a. Election and Term of the Corporation's Board; Number of
Directors. At all times after the date of the Amended and Restated Limited
Liability Agreement (the "LLC Agreement") of Global Decisions Group LLC, a
Delaware limited liability corporation and the sole stockholder of the
Corporation (the "Parent") and until the settlement date of the first
underwritten public offering of equity interests in the Parent (an "Underwritten
Public Offering") after the date hereof, each of the stockholders of the
Corporation shall be required to vote all Common Stock now or hereafter owned by
such stockholder at any meeting of stockholders and in whatever other manner is
necessary to ensure that (x) the Board will at all times consist of all of and
only the persons who are directors of the Parent then in office, and shall
consist of the following persons: (A) two nominees shall be the two of Daniel H.
Yergin, Josef A. Stanislaw and James P. Rosenfield (the "CERA Principals") who
shall at the time of such nomination have been nominated as or have been elected
as directors of the Parent (the "CERA Nominees"), (B) one nominee shall be the
chief executive officer of McCarthy Crisanti & Maffei Inc., a New York
corporation and wholly owned subsidiary of the Corporation ("MCM") (the "MCM
Nominee"), (C) one nominee shall be the Chief Executive Officer, if any, of the
Parent (the "CEO Nominee"), (D) three nominees shall be such employees of
Clayton, Dubilier & Rice, Inc., a Delaware corporation ("CD&R"), Brera Capital
Partners, LLC, a Delaware limited liability company ("Brera") or other
Affiliates of Fund IV (as defined in the LLC Agreement) who shall at the time of
such nomination have been nominated as or have been elected as directors of the
Parent (the "Fund IV Nominees") and (E) up to six additional nominees, who shall
be persons not affiliated with CD&R, Fund IV, Brera or any of the CERA
Principals, who shall at the time of such nomination have been nominated as or
have been elected as directors of the Parent (the "Independent Nominees" and,
2
<PAGE> 129
together with the CERA Nominees, the MCM Nominee, the CEO Nominee and the Fund
IV Nominees, the "Nominees") and (y) all such Nominees shall be duly elected.
b. Special Voting Provisions. (w) until the earlier of (a) the
settlement date of the first Underwritten Public Offering after the date hereof
and (b) the issuance of the Contingent LLC Units (as defined in the Merger
Agreement), action to approve any of the following events shall require the
approval of at least 75% of the directors of the Corporation then in office:
(1) An acquisition or disposition by the Corporation of a business
or of assets having a value in excess of $15,000,000 individually or when
aggregated with all other transactions related to the same specific
business or asset;
(2) A capital expenditure by the Corporation or contractual
commitment therefor involving more than $15,000,000 individually or when
aggregated with all other transactions related to the same specific asset;
(3) The issuance by the Corporation in a single transaction or a
series of related transactions of stock, or securities convertible into or
exchangeable for stock or options, warrants or other rights to acquire
stock or such securities, for aggregate consideration in excess of
$15,000,000;
(4) The entry by the Corporation into new lines of business;
(5) The dissolution of the Corporation;
(6) A public offering of the Corporation's stock pursuant to an
effective registration statement under the Securities Act; or
(7) Incurring any indebtedness for borrowed money, or any guarantee
in respect of the same, in excess of $15,000,000, other than the renewal,
extension, refinancing or refunding of any other indebtedness, or any
guarantee in respect of the same, that may have previously been approved
by the Board;
c. Liability. No director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of his or her
fiduciary duty as
3
<PAGE> 130
a director, provided that nothing contained in this Article shall eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
the law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware or (iv) for any transaction from which the director derived an improper
personal benefit.
SIXTH: The Corporation reserves the right to amend or repeal any
provision contained in this Amended Certificate of Incorporation in the manner
now or hereafter prescribed by the laws of the State of Delaware, and all rights
herein conferred upon stockholders or directors are granted subject to this
reservation.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to
be executed by its [title of officer] thereunto duly authorized this day of ,
1997.
MCM Group, Inc.
By:
----------------------------------
Title:
4
<PAGE> 131
Exhibit H
Global Decisions Group LLC
Holder Information Form
MCM Group, Inc. Shareholders
In order to register your interest and receive a LLC Certificate evidencing your
LLC Units in Global Decisions Group LLC, you must complete this Holder
Information Form by ______________ 1997 and return it to:
---------------------
---------------------
---------------------
---------------------
Required Information
1. Name:
-------------------------------------
2. Current Mailing Address:
-------------------------------------
-------------------------------------
-------------------------------------
3. Social Security or Employer
Identification Number:
-------------------------------------
4. Country of Citizenship
and of Residency or
Country and State or
Province of Place of
Organization:
-------------------------------------
5. State of Residency or State
of Principal Place of
Business and Principal
Office (if different):
-------------------------------------
<PAGE> 132
6. Number of Shares of
MCM Group, Inc.
Surrendered in Merger:
---------------------------
7. Class of Stock of
MCM Group, Inc.:
---------------------------
8. Federal Income Tax Basis of
Shares of MCM Group, Inc.
Surrendered:
---------------------------(a)
9. Date MCM Group, Inc. Shares
Originally Acquired:
---------------------------(b)
- ----------
(a) For stock received in the spin-off of MCM Group, Inc. by
VK/AC Holding, Inc.: the amount that you reported for
federal income tax purposes as the value of such stock as of
August 31, 1996.
(b) For stock received in the spin-off of MCM Group, Inc. by
VK/AC Holding, Inc.: August 31, 1996.
2
<PAGE> 133
Exhibit I
Exhibit I to the Plan of Merger and Exchange Agreement filed separately as
Exhibit 3.3
<PAGE> 134
Exhibit J
Exhibit J to the Plan of Merger and Exchange Agreement filed separately as
Exhibit 10.5
<PAGE> 135
Exhibit K
MCM GROUP, INC.
LLC UNIT OPTION PLAN
[to be provided]
<PAGE> 136
Exhibit L
Exhibit L to the Plan of Merger and Exchange Agreement filed separately as
Exhibit 10.37
<PAGE> 137
EXHIBIT M
G = 100 x [(((R TEST)/(R 97)){symbol}(1/n))-1]
where
G = CERA CAGR, expressed as a percentage (rounded to the nearest
hundredth of a percentage point)
R 97 = the amount of Qualifying Revenues for the fiscal year ended June 30, 1997
reflected on the audited financial statements of CERA Inc. for such year
R TEST = (i) in the event that a Sale of the Parent or CERA Inc., a Spin-Off of
CERA Inc. or a Public Offering shall not have occurred prior to June 30, 2000,
the amount of Qualifying Revenues for the fiscal year ending June 30, 2000
reflected on the audited financial statements of CERA Inc. for such year; or
(ii) in the event that a Nonqualifying Sale shall occur prior to June 30, 2000,
the amount of Qualifying Revenues for the period of 12 consecutive months ending
on the last day of the month specified in the definition of CERA CAGR in Section
8.1, as determined in good faith by the management of CERA Inc. and approved by
the Board of the Parent and as set forth in an unaudited statement of income for
such period prepared in good faith by such management and reviewed by CERA
Inc.'s independent public accountants
n = the number of years, expressed (if necessary) as a decimal number, from June
30, 1997 to (i) June 30, 2000 if a Sale of the Parent or CERA Inc., a Spin-Off
or CERA Inc. or a Public Offering shall not have occurred prior to June 30,
2000, and (ii) the last day of the month specified in the definition of CERA
CAGR in Section 8.1 if a Nonqualifying Sale shall occur prior to June 30, 2000
<PAGE> 138
EXHIBIT N
Notice Addresses
STOCKHOLDERS:
Daniel H. Yergin
3710 Davenport St., N.W.
Washington, D.C. 20016
Joseph A. Stanislaw
27 bis quai Anatole
Paris 75005, FRANCE
James P. Rosenfield
16 Parker Street
Lexington, MA 01982
Jamie W. Katz, as Trustee for the
James P. Rosenfield Irrevocable Gift Trust
8 Eliot Street
Watertown, MA 02172
Augusta McC. P. Stanislaw, as Trustee
for the Joseph A. Stanislaw 1994 Trust
for Louis Josef Perkins Stanislaw
466 Highland Avenue
P.O. 2293
South Hamilton, MA 01982
Augusta McC. P. Stanislaw, as Trustee
for the Joseph A. Stanislaw 1994 Trust
for Katrina Augusta Perkins Stanislaw
466 Highland Avenue
P.O. 2293
South Hamilton, MA 01982
Augusta McC. P. Stanislaw, as Trustee
for the Joseph A. Stanislaw 1994 Trust
for Henry Winslow Perkins Stanislaw
466 Highland Avenue
P.O. 2293
South Hamilton, MA 01982
I.C. Bupp
61 Drayton Gardens
London SW10 ENGLAND
Stephen C. Aldrich
58 Waldo Road
Arlington, MA 02174
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF FORMATION
OF
GLOBAL DECISIONS GROUP LLC
This Certificate of Formation of Global Decisions Group LLC
(the "LLC"), dated as of June 30, 1997, is being duly executed and filed by
Melanie Johnson, as an authorized person, to form a limited liability company
under the Delaware Limited Liability Company Act (6 Del.C. Section 18-101, et.
seq.)
FIRST. The name of the limited liability company formed hereby
is Global Decisions Group LLC.
SECOND. The address of the registered office of the LLC in the
State of Delaware is c/o The Corporation Trust Company, Corporation Trust
Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.
THIRD. The name and address of the registered agent for
service of process on the LLC in the State of Delaware is The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Formation as of the date first above written.
/s/ Melanie Johnson
-----------------------------
Name: Melanie Johnson
Authorized Person
<PAGE> 1
Exhibit 3.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
GLOBAL DECISIONS GROUP LLC
This Limited Liability Company Agreement (this "Agreement") of
Global Decisions Group LLC, is entered into between MCM Group, Inc. ("MGI") and
McCarthy, Crisanti & Maffei, Inc. ("MCM"), as members (the "Members").
The Members hereby form a limited liability company pursuant
to and in accordance with the Delaware Limited Liability Company Act (6 Del. C.
Section 18-101, et seq.), as amended from time to time (the "Act"), and hereby
agree as follows:
i. Name. The name of the limited liability company formed
hereby is Global Decisions Group LLC (the "Company").
ii. Purpose. The Company is formed for the object and purpose
of, and the nature of the business to be conducted and promoted by the Company
is, engaging in any lawful act or activity for which limited liability companies
may be formed under the Act and engaging in any and all activities necessary or
incidental to the foregoing.
iii. Registered Office. The address of the registered office
of the Company in the State of Delaware is c/o The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801.
iv. Registered Agent. The name and address of the registered
agent of the Company for service of process on the Company in the State of
Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801.
v. Members. The names and mailing addresses of the Members
are as follows:
<PAGE> 2
Name Address
---- -------
MCM Group, Inc. c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza
Fl. 37
New York, NY 10005
McCarthy, Crisanti & Maffei, Inc. One Chase Manhattan Plaza
Fl. 37
New York, NY 10005
vi. Powers. The business and affairs of the Company shall
be managed by the Members. The Members shall have the power to do any and all
acts necessary or convenient to or for the furtherance of the purposes described
herein, including all powers, statutory or otherwise, possessed by members under
the laws of the State of Delaware. Melanie Johnson is hereby designated as an
authorized person, within the meaning of the Act, to execute, deliver and file
the certificate of formation of the Company (and any amendments and/or
restatements thereof) necessary for the Company to qualify to do business in a
jurisdiction in which the Company may wish to conduct business.
vii. Dissolution. The Company shall dissolve, and its
affairs shall be wound up, upon the first to occur of the following: (a)
December 31, 2095, (b) the written consent of the Members, (c) the death,
retirement, resignation, expulsion, bankruptcy or dissolution of a Member or the
occurrence of any other event which terminates the continued membership of a
Member in the Company, or (d) the entry of a decree of judicial dissolution
under Section 18-802 of the Act.
viii. Capital Contributions. The Members have contributed
the following amounts, in cash, and no other property, to the Company:
MGI $50
MCM $50
ix. Additional Contributions. No Member is required to
make any additional capital contribution to the Company.
x. Allocation of Profits and Losses. The Company's
profits and losses shall be allocated in proportion to the capital contributions
of the Members.
2
<PAGE> 3
xi. Distributions. Distributions shall be made to the
Members at the times and in the aggregate amounts determined by the Members.
Such distributions shall be allocated among the Members in the same proportion
as their then capital account balances.
xii. Assignments. A Member may not assign in whole or in
part his limited liability company interest.
xiii. Resignation. A Member may not resign from the Company
except pursuant to an amendment to this Agreement signed by all the Members and
such substituted or additional Members as may be admitted pursuant to such
amendment.
xiv. Admission of Additional Members. One (1) or more
additional members of the Company may be admitted to the Company with the
consent of the Members.
xv. Liability of Members. The Members shall not have any
liability for the obligations or liabilities of the Company except to the extent
provided in the Act.
xvi. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED UNDER, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICTS OF LAW, ALL RIGHTS AND REMEDIES BEING GOVERNED BY SAID
LAWS.
xvii. Entire Agreement. This Agreement and the Certificate
of Formation embody the entire agreement and understanding between the Members
with respect to the transactions referred to herein and supersede all prior
agreements and understandings, written or oral, relating to the formation of the
Company.
xviii. Miscellaneous. This Agreement may be executed in any
number of counterparts, each of which is an original, but all of which together
constitute but one instrument. Except as otherwise indicated, references herein
to any "Section" means a "Section" of this Agreement. The section headings in
this Agreement are for purposes of reference only and shall not limit or define
the meaning hereof.
xix. Specific Authorization. The Company may enter into
and perform the Plan of Merger and Exchange Agreement (the "Agreement"), to be
entered into among the Company, MCM Group, Inc., GDG Merger Corporation, certain
stockholders named therein, and The Goldman Sachs Group, L.P., and file a
registration statement on Form S-4 with the Securities and Exchange Commission
in
3
<PAGE> 4
respect of the issuance of LLC Units, as contemplated by the Agreement, without
any further act, vote or approval of any Member. Any Officer of any Member is
hereby authorized to execute the agreements described in the preceding sentence
on behalf of the Company, but such authorization shall not be deemed a
restriction on the power of such Officer to enter into other agreements on
behalf of the Company. The Company may also organize and own all of the common
stock of GDG Merger Corporation, a Delaware corporation. The Company and MGI and
MCM acting alone or together are hereby authorized to do and perform such acts
and things as any of them, in its discretion, may deem necessary or advisable in
connection with the foregoing.
4
<PAGE> 5
IN WITNESS WHEREOF, the undersigned, intending to be legally
bound hereby, have duly executed this Limited Liability Company Agreement as of
the 13th day of June, 1997.
MCM GROUP, INC.
By: /s/ David D. Nixon
______________________________________
Name: David D. Nixon
Title: President and CEO
MCCARTHY, CRISANTI & MAFFEI, INC.
By: /s/ David D. Nixon
______________________________________
Name: David D. Nixon
Title: President and CEO
5
<PAGE> 1
Exhibit 3.3
================================================================================
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GLOBAL DECISIONS GROUP LLC
Dated as of , 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS Page
ARTICLE I
DEFINED TERMS......................................................4
1.1. Definitions..................................................4
ARTICLE II
CONTINUATION AND TERM.............................................21
2.1. Continuation................................................21
2.2. Name........................................................22
2.3. Term of Company.............................................22
2.4. Registered Agent and Office.................................22
2.5. Principal Place of Business.................................23
2.6. Qualification in Other Jurisdictions........................23
2.7. Fiscal Year; Taxable Year...................................23
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY.................................23
3.1. Purposes....................................................23
3.2. Powers of the Company.......................................24
ARTICLE IV
MEMBERS...........................................................27
4.1. Powers of Members...........................................27
4.2. Partition...................................................27
4.3. Resignation.................................................27
4.4. Meetings of Members.........................................28
4.5. Business Transactions of a Member with the Company..........30
4.6. No Cessation of Membership upon Bankruptcy..................30
ARTICLE V
MANAGEMENT........................................................31
<PAGE> 3
5.1. Board.......................................................31
5.2. Annual and Regular Meetings.................................35
5.3. Special Meetings; Notice....................................35
5.4. Quorum and Acts of the Board................................35
5.5. Rules and Regulations; Manner of Acting.....................36
5.6. Electronic Communications...................................36
5.7. Committees of Directors.....................................36
5.8. Compensation of Directors...................................37
5.9. Reliance on Accounts and Reports, etc.......................37
5.10. Resignation................................................37
5.11. Directors as Agents........................................37
ARTICLE VI
OFFICERS..........................................................38
6.1. Officers....................................................38
6.2. Chief Executive Officer.....................................38
6.3. The Chief Financial Officer.................................39
6.4. President...................................................39
6.5. Vice Presidents.............................................40
6.6. The Secretary and Assistant Secretary.......................40
6.7. The Treasurer and Assistant Treasurer.......................40
6.8. Execution of Contracts......................................41
6.9. Officers as Agents..........................................41
6.10. Reliance by Third Parties..................................41
ARTICLE VII
AMENDMENTS........................................................42
7.1. Amendments..................................................42
ARTICLE VIII
CAPITAL CONTRIBUTIONS AND INTERESTS...............................43
8.1. Capital Units...............................................43
8.2. Capital Contributions of Property...........................43
8.3. Additional Capital Contributions............................43
<PAGE> 4
8.4. Member's Interest...........................................44
8.5. Certificates of LLC Units...................................44
8.6. Issuance of Non-Voting LLC Units............................44
8.7. Conversion and Exchange.....................................44
8.8. Certain Conversion and Exchange Procedures..................45
8.9. Signatures; Facsimile.......................................47
8.10. Lost, Stolen or Destroyed Certificates.....................47
8.11. Registration and Transfer of LLC Units.....................47
8.12. Transfer Agent, Exchange Agent and Registrar...............47
ARTICLE IX
ALLOCATIONS; DISTRIBUTIONS........................................48
9.1. Allocations.................................................48
9.2. Distributions...............................................48
9.3. Withholding.................................................50
9.4. Restricted Distributions....................................50
ARTICLE X
BOOKS AND RECORDS; TAX MATTERS....................................50
10.1. Books, Records and Financial Statements....................50
10.2. Filings of Returns and Other Writings; Tax Matters Partner.51
10.3. Accounting Method..........................................52
10.4. Audits.....................................................52
10.5. Other Tax Matters..........................................53
10.6. Section 754 Election.......................................53
ARTICLE XI
LIABILITY, EXCULPATION AND INDEMNIFICATION........................53
11.1. Liability..................................................53
11.2. Exculpation................................................53
11.3. Fiduciary Duty.............................................54
11.4. Indemnification............................................54
11.5. Severability...............................................57
11.6. Outside Businesses.........................................58
<PAGE> 5
ARTICLE XII
ADDITIONAL MEMBERS................................................58
12.1. Admission..................................................58
ARTICLE XIII
TRANSFER OF INTERESTS; SUBSTITUTE MEMBERS.........................59
13.1. Restrictions on LLC Unit Transfers.........................59
13.2. Participation Rights.......................................62
13.3. First Offer Rights.........................................65
13.4. Take-Along Rights..........................................67
13.5. Members' Rights to Purchase Additional LLC Units...........70
13.6. Registration Rights........................................71
13.7. Substitute Members.........................................72
13.8. Release of Liability.......................................72
ARTICLE XIV
DISSOLUTION, LIQUIDATION AND TERMINATION..........................73
14.1. Dissolving Events..........................................73
14.2. Dissolution and Winding-Up.................................73
14.3. Termination................................................74
14.4. Claims of the Members......................................74
ARTICLE XV
MISCELLANEOUS.....................................................74
15.1. Notices....................................................74
15.2. Legend on LLC Unit Certificates............................76
15.3. Headings...................................................78
15.4. Entire Agreement...........................................78
15.5. Counterparts...............................................78
15.6. Governing Law..............................................79
15.7. Term of Certain Provisions.................................79
15.8. Binding Effect.............................................79
<PAGE> 6
15.9. No Third-Party Beneficiaries...............................79
15.10. Consent to Jurisdiction...................................79
15.11. Waiver of Jury Trial......................................80
15.12. Severability..............................................81
SCHEDULE A
SCHEDULE B
SCHEDULE C
EXHIBIT A FORM OF LLC UNIT GRANT AGREEMENT
EXHIBIT B FORM OF BAILMENT AGREEMENT
<PAGE> 7
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
GLOBAL DECISIONS GROUP LLC
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of
GLOBAL DECISIONS GROUP LLC, a Delaware limited liability company (the
"Company"), is entered into as of ___________, 1997, by and among THE CLAYTON &
DUBILIER PRIVATE EQUITY FUND IV LIMITED PARTNERSHIP, a Connecticut limited
partnership, DANIEL H. YERGIN, JOSEPH A. STANISLAW, JAMES P. ROSENFIELD (Messrs.
Yergin, Stanislaw and Rosenfield, collectively, the "CERA Principals"), certain
other individuals and trusts listed on the signature pages hereto (together with
the CERA Principals, the "CERA Stockholders") and THE GOLDMAN SACHS GROUP, L.P.
("GS LP"), as members of the Company, and any other Persons who may be or become
members of the Company in accordance with the provisions hereof, and MCM GROUP,
INC., a Delaware corporation ("MGI"), and MCCARTHY, CRISANTI & MAFFEI, INC., a
New York corporation and a wholly owned subsidiary of MGI ("MCM"), as
withdrawing members,
RECITALS:
WHEREAS, MGI and MCM formed the Company as a limited liability
company pursuant to the Delaware Limited Liability Company Act (6 Del. C.
ss.18-101, et seq., as amended from time to time and including any successor
statute of similar import, the "Delaware Act"), to be treated as a partnership
for federal income tax purposes, by filing the Certificate with the office of
the Secretary of State of the State of Delaware on June 30, 1997, and entering
into a Limited Liability Company Agreement of the Company, dated as of June 30,
1997 (the "Original Agreement") (capitalized terms used in this Agreement
without definition have the respective meanings specified in Section 1.1.);
WHEREAS, MGI, the Company, GDG Merger Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company ("Merger Sub"), the
CERA Stockholders and GS LP are party to the Merger and Exchange Agreement;
WHEREAS, the Company was formed for the purpose of acquiring (i) all
of the outstanding shares of capital stock of MGI, through a merger of Merger
Sub with and into MGI (the "Merger") and (ii) acquiring all of the outstanding
shares of
<PAGE> 8
capital stock of Cambridge Energy Research Associates, Inc., a Massachusetts
corporation ("CERA Inc." or "CERA"), and certain of the limited partnership
interests of Cambridge Energy Research Associates Limited Partnership, a
Delaware limited partnership ("CERA LP"), the general partner of which is CERA
Inc., pursuant to the terms and conditions set forth in the Merger and Exchange
Agreement;
WHEREAS, prior to the Transactions, the CERA Stockholders owned in
the aggregate, beneficially and of record, all of the outstanding shares of
voting common stock, par value $.01 per share ("CERA Voting Common Stock"), and
non-voting common stock, par value $.01 per share ("CERA Non-Voting Common
Stock" and, together with the CERA Voting Common Stock, "CERA Common Stock"), of
CERA Inc., and GS LP owned, beneficially and of record, all of the outstanding
limited partnership interests in CERA LP other than such partnership interests
that were owned by CERA Inc. (the "GS Partnership Interest");
WHEREAS, on the day immediately preceding the date hereof, MCM lent
up to $25,000,000 to CERA Inc. (the "CERA Distribution Loan") , and CERA Inc.
applied a portion of such funds, together with CERA Inc.'s available cash, to
the extent necessary, to make a distribution to the Stockholders in an aggregate
amount equal to $21,510,000 and applied the remainder of such funds and
available cash to purchase a portion of the GS Partnership Interest from GS LP
for a purchase price of $2,390,000 (such applications of such funds and
available cash, the "CERA Cash Distribution");
WHEREAS, pursuant to the terms and conditions set forth in the
Merger and Exchange Agreement, on the date hereof each of the CERA Stockholders
shall contribute to the Company all of the shares of CERA Common Stock owned by
such CERA Stockholder, in exchange (the "CERA Stock Exchange") for (i) LLC
Units, (ii) CERA Contingent Options (as such term is defined in the Merger and
Exchange Agreement) and (iii) the right to receive, under certain circumstances,
Contingent LLC Units (as such term is defined in the Merger and Exchange
Agreement);
WHEREAS, pursuant to the terms and conditions set forth in the
Merger and Exchange Agreement, on the date hereof GS LP shall contribute to the
Company all of the GS Partnership Interest owned by it following the CERA Cash
Distribution in exchange (the "GS Partnership Interest Exchange" and, together
with the Merger and the CERA Stock Exchange, the "Transactions") for (i) LLC
Units, (ii) GS Contingent Options (as defined in the Merger and Exchange
Agreement, and, together with the CERA Contingent Options, the "Contingent
Options") and (iii) the right to receive, under certain circumstances,
Contingent LLC Units, whereupon the
2
<PAGE> 9
Company shall immediately transfer or cause to be transferred to CERA Inc. such
GS Partnership Interest;
WHEREAS, on the date hereof, upon such transfer to CERA Inc. of such
GS Partnership Interest, CERA Inc. shall become the sole partner of CERA LP and
CERA LP shall be dissolved by operation of law;
WHEREAS, pursuant to the terms and conditions set forth in the
Merger and Exchange Agreement, on the date hereof the Company, Merger Sub and
MGI shall have caused Merger Sub to be merged with and into MGI, and have caused
the then outstanding shares of MGI Common Stock (as defined in the Merger and
Exchange Agreement) to be converted into LLC Units;
WHEREAS, promptly following the date hereof, (i) the Company shall
issue to CERA Inc., and CERA Inc. shall transfer to certain management employees
of CERA Inc. listed on Schedule A hereto (the "CERA Management Members"), an
aggregate of 106,875 LLC Units and (ii) the Company shall enter into an
agreement with CERA Inc., granting CERA Inc. the right to purchase, under
certain circumstances, an aggregate of 7.125% of the Contingent LLC Units, and
CERA Inc. shall grant to the CERA Management Members a right to receive their
respective pro rata portions of such Contingent LLC Units, in each case pursuant
to the Cambridge Energy Research Associates, Inc. LLC Unit Grant Plan (the "CERA
LLC Unit Grant Plan") and LLC Unit Grant Agreements to be entered into with each
CERA Management Member;
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement to reflect, among other things, (i) the issuance of LLC Units to and
the admission of Fund IV, the CERA Stockholders, GS LP and the other Persons
listed on Schedule A hereto (other than the CERA Management Members) as members
of the Company, subject to Section 2.1(b) hereof, (ii) the transfer of LLC Units
to and the admission of the CERA Management Members as members of the Company
and (iii) the withdrawal of MGI and MCM from the Company as members of the
Company; and
WHEREAS, the Members desire to continue the Company as a limited
liability company under the Delaware Act without dissolution;
NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
3
<PAGE> 10
ARTICLE I
DEFINED TERMS
Section 1.1. Definitions. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified. All references herein to a Section, Article or
Schedule are to a Section, Article or Schedule of or to this Agreement, unless
otherwise indicated.
"Additional Member" shall have the meaning set forth in Section 12.1
hereof.
"Adjustment Date" shall mean (i) the last day of each Taxable Year,
(ii) the day before the date of admission of any substituted or additional
Member, (iii) the day before the date a Member ceases to be a member of the
Company or (iv) any other date determined by the Board as appropriate for a
closing of the Company's books.
"Affiliate" shall mean, with respect to a specified Person, any
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the specified
Person, including but not limited to a Subsidiary of the specified Person, a
Person of which the specified Person is a Subsidiary or another Subsidiary of a
Person of which the specified Person is also a Subsidiary. As used in this
definition, the term "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract, as trustee, as
executor or otherwise.
"Agreement" shall mean this Amended and Restated Limited Liability
Company Agreement of the Company, including the Schedules hereto, as such
Agreement and Schedules may be amended, modified, supplemented or restated from
time to time.
"Allocation Period" shall mean the period beginning on the day
following any Adjustment Date (or, in the case of the first Allocation Period,
beginning on the date of formation of the Company) and ending on the next
succeeding Adjustment Date.
4
<PAGE> 11
"Applicable Federal Rate" shall mean the Federal short-term rate
publicly announced from time to time by the U.S. Internal Revenue Service
pursuant to section 1274 of the Code.
"Applicable Laws" shall mean all applicable provisions of
(i) constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any governmental entity, (ii) any
consents or approvals of any governmental entity and (iii) any orders,
decisions, injunctions, judgments, awards, decrees of or agreements with any
governmental entity.
"Automatic Conversion" shall have the meaning provided in Section
8.7(b).
"Available Assets" shall mean, as of any date, the excess of the
cash and cash equivalent items held by the Company over the sum of the amount of
such items determined by the Board to be reasonably necessary for the payment of
the Company's expenses, liabilities and other obligations (whether fixed or
contingent), and for the establishment of appropriate reserves for such
expenses, liabilities and obligations as may arise, including the maintenance of
adequate working capital for the continued conduct of the Company's business.
"Board" shall have the meaning provided in Section 5.1(a).
"Book Value," as of any date, shall mean the value at which the
asset is reflected on the books and records of the Company as of such date, the
initial Book Value of each asset being its original cost to the Company for
federal income tax purposes, unless such asset is contributed to the Company by
a Member in which case the initial Book Value shall be the value of such asset
determined by the Board. The initial Book Values of the CERA Common Stock, the
portion of the GS Partnership Interest contributed to the Company (the Book
Value of which shall be added to the Book Value of the CERA Common Stock as a
result of the transfer of such portion to CERA Inc.) and the MGI Common Stock
shall be the respective values set forth on Schedule B hereto, provided that the
initial Book Values of the CERA Common Stock and of the portion of the GS
Partnership Interest contributed to the Company shall be redetermined in the
event that the CERA CAGR (as such term is defined in the Merger and Exchange
Agreement) shall be equal to or greater than 16%, in accordance with the formula
set forth on Schedule B. After the Merger, upon the occurrence of (a) a
contribution of money or other property to the Company by a new or existing
Member as consideration
5
<PAGE> 12
for LLC Units or (b) a distribution of money or other property by the Company to
a retiring or continuing Member as consideration for LLC Units (including but
not limited to a distribution upon the liquidation of the Company), the Book
Values of the assets of the Company shall be adjusted to reflect a revaluation
thereof, based on the fair market values of such assets as of the date of such
contribution, liquidation or distribution, to the extent deemed appropriate in
the sole discretion of the Executive Committee.
"Brera" shall mean Brera Capital Partners, LLC, a Delaware limited
liability company.
"Business Day" shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in New York or Massachusetts are authorized
or required under Applicable Law to close.
"CD&R" shall mean Clayton, Dubilier & Rice, Inc., a Delaware
corporation.
"CEO Nominee" shall have the meaning provided in Section 5.1(b).
"CERA Cash Distribution" shall have the meaning provided in the
fifth recital to this Agreement.
"CERA Common Stock" shall have the meaning provided in the fourth
recital to this Agreement.
"CERA Distribution Loan" shall have the meaning provided in the
fifth recital to this Agreement.
"CERA Inc." or "CERA" shall have the meaning provided in the third
recital to this Agreement.
"CERA LLC Unit Grant Plan" shall have the meaning set forth in the
tenth recital to this Agreement.
"CERA LP" shall have the meaning provided in the third recital to
this Agreement.
"CERA Management Members" shall have the meaning provided in the
tenth recital to this Agreement.
"CERA Nominees" shall have the meaning provided in Section 5.1(b).
6
<PAGE> 13
"CERA Non-Voting Common Stock" shall have the meaning provided in
the fourth recital to this Agreement.
"CERA Principals" shall have the meaning provided in the
introductory paragraph to this Agreement.
"CERA Stock Exchange" shall have the meaning provided in the sixth
recital to this Agreement.
"CERA Stockholders" shall have the meaning provided in the
introductory paragraph to this Agreement.
"CERA Trust" shall mean, with respect to any CERA Principal, a trust
the only actual beneficiaries under which are such CERA Principal and/or his
brothers and sisters (whether by whole or half blood), spouse, ancestors and
lineal descendants.
"CERA Voting Common Stock" shall have the meaning provided in the
fourth recital to this Agreement.
"Certificate" shall mean the Certificate of Formation of the Company
and any and all amendments thereto and restatements thereof filed on behalf of
the Company with the office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act.
"Closing" shall mean the consummation of the transactions
contemplated by the Merger and Exchange Agreement.
"Closing Date" shall have the meaning set forth in the Merger and
Exchange Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Company" shall have the meaning provided in the introductory
paragraph of this Agreement.
"Consenting CERA Principal" shall mean (a) Daniel H. Yergin or (b)
in the event of his death or legal incapacity or the termination of his
employment with CERA Inc. for Cause or as a result of any Disability (as each
such term is defined in
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<PAGE> 14
the employment agreement, dated as of the date hereof, to which he is a party),
either (i) one of the two other CERA Principals who is designated in writing by
both such CERA Principals (provided that if such CERA Principals do not make
such designation within 30 days after such death, incapacity or termination,
then the consent of a Consenting CERA Principal shall not be required
notwithstanding any such consent requirement contained in this Agreement until
such time as the Company shall have received written notice from such CERA
Principals of such designation) or (ii) in the event that one of such two other
CERA Principals shall have died or become legally incapable or his employment
with CERA Inc. shall have been terminated for Cause or as a result of any
Disability (as each such term is defined in the employment agreement, dated as
of the date hereof, to which such CERA Principal is a party), the remaining CERA
Principal (provided that if both of such two other CERA Principals shall have
died or become legally incapable or the employment thereof with CERA Inc. shall
have been so terminated, then the consent of a Consenting CERA Principal shall
not be required under this Agreement).
"Contingent Options" shall have the meaning provided in the seventh
recital to this Agreement.
"Controlling Group" shall have the meaning provided in Section
13.4(a).
"Conversion Transaction" shall mean any merger, consolidation,
conversion, reorganization, exchange of securities or liquidation of the Company
as a result of which the Persons who were Members immediately prior to such
transaction (other than such Persons who received cash payments in such
transaction in lieu of fractional interests) will, immediately thereafter, still
own (in the same proportion), directly or indirectly, all of the securities or
other equity interests representing the combined voting power of each successor
entity's then outstanding voting securities or other equity interests.
"Covered Person" shall mean a Member, a Director, any Affiliate of a
Member or a Director, any officers, directors, stockholders, partners, members,
employees, representatives or agents of a Member, a Director, the Company or
their respective Affiliates, or any Person who was, at the time of the act or
omission in question, such a Person.
"Credit Agreement" shall mean the Credit Agreement, dated as of
________, 1997, among MGI and [the lenders named therein], as amended,
supplemented, waived or otherwise modified from time to time.
"Custodian" shall have the meaning provided in Section 13.4(b).
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"Delaware Act" shall have the meaning provided in the first recital
to this Agreement.
"Directors" shall have the meaning provided in Section 5.1(a).
"Draft Sale Agreement" shall have the meaning provided in Section
13.4(a).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Established Securities Market" shall mean (i) a national securities
exchange, (ii) a foreign securities exchange (including but not limited to the
London International Financial Futures Exchange, the Marche a Terme
International de France, the International Stock Exchange of the United Kingdom
and the Republic of Ireland, the Frankfurt Stock Exchange and the Tokyo Stock
Exchange), (iii) a regional or local exchange or (iv) an interdealer quotation
system that regularly disseminates firm buy or sell quotations by identified
brokers or dealers by electronic means or otherwise (including but not limited
to NASDAQ).
"Excess Number" shall have the meaning provided in Section 13.2(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder. Any
reference to a particular section thereof shall include a reference to the
corresponding section, if any, of any such successor Federal statute, and the
rules and regulations thereunder.
"Existing CERA Trusts" shall mean each CERA Trust existing on the
date hereof.
"Existing MGI Options" shall mean all options to purchase MGI Common
Stock (which options have been converted into options to purchase LLC Units as a
result of the consummation of the Transactions) granted by MGI and outstanding
on the date hereof.
"First Offer LLC Units" shall have the meaning provided in Section
13.3.
"Fiscal Year" shall have the meaning provided in Section 2.7.
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"Fundamental Transaction" shall have the meaning provided in Section
13.1(a).
"Fund IV" shall mean The Clayton & Dubilier Private Equity Fund IV
Limited Partnership, a Connecticut limited partnership, and any successor
investment vehicle managed by CD&R.
"Fund IV Nominees" shall have the meaning provided in Section
5.1(b).
"GS LP" shall have the meaning provided in the introductory
paragraph of this Agreement.
"GS Partnership Interest" shall have the meaning provided in the
fourth recital to this Agreement.
"GS Partnership Interest Exchange" shall have the meaning provided
in the seventh recital to this Agreement.
"Independent Nominees" shall have the meaning provided in Section
5.1(b).
"Indirect LLC Interest" shall mean a financial instrument or
contract the value of which is determined in whole or in part by reference to
the Company (including the amount of distributions from the Company, the value
of the Company's assets, or the results of the Company's operations), other than
(i) an LLC Unit, (ii) an option to acquire an LLC Unit from the Company or any
of its Subsidiaries and (iii) a financial instrument or contract that (A) is
treated as debt for federal income tax purposes and (B) is not convertible into
or exchangeable for an interest in the capital or profits of the Company and
does not provide for a payment of equivalent value.
"Initial Holding Period" shall have the meaning provided in Section
13.1(a).
"LLC Interest" shall mean any Indirect LLC Interest and any interest
in the capital or profits of the Company (including the right to receive
distributions from the Company), including but not limited to an LLC Unit and an
option to acquire an LLC Unit from the Company or any of its Subsidiaries.
"LLC Unitholder" shall have the meaning provided in the introductory
paragraph to Schedule C hereto.
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"LLC Units" shall have the meaning provided in Section 8.1.
"LLC Unit Subscription Agreements" shall mean LLC Unit subscription
agreements, LLC Unit option agreements (other than the Contingent Option
Agreements (as defined in the Merger and Exchange Agreement)), LLC Unit Grant
Agreements and any other agreements, plans or arrangements pursuant to which LLC
Units or options, warrants or other rights in respect of LLC Units are granted,
issued or sold by the Company or any of its Subsidiaries to any party.
"Loan Documents" shall have the meaning provided in Section 3.2.
"Management LLC Unitholder" shall mean an LLC Unitholder who is also
an employee of the Company or any of its Subsidiaries or who has an arrangement
to provide services to the Company or any of its Subsidiaries.
"Manager" shall mean each Director and Officer and any other Person
designated by the Members or the Board as a manager of the Company within the
meaning of the Delaware Act.
"MCM" shall have the meaning provided in the introductory paragraph
of this Agreement.
"Member" means any Person listed as a member of the Company on the
Membership Register and includes any Person admitted as an Additional Member or
a Substitute Member pursuant to the provisions of this Agreement in such
Person's capacity as a member of the Company, within the meaning of the Delaware
Act. For purposes of the Delaware Act, the Members holding Voting LLC Units
shall constitute one class or group of Members, and the Members holding
Non-Voting LLC Units shall constitute a separate class or group of Members.
"Member Offer" shall have the meaning provided in Section 13.3(a).
"Member Offering Notice" shall have the meaning provided in Section
13.3(b).
"Membership Register" shall mean the register of the Company
containing the names and addresses of the Members and the other information
described in Section 2.1(c).
"Merger" shall have the meaning provided in the third recital to
this Agreement.
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"Merger and Exchange Agreement" shall mean the Plan of Merger and
Exchange Agreement, dated as of August 1, 1997, by and among MGI, the Company,
Merger Sub, the CERA Stockholders and GS LP.
"Merger Sub" shall have the meaning provided in the second recital
to this Agreement.
"MGI" shall have the meaning provided in the introductory paragraph
of this Agreement.
"MGI/CERA Additional Options" shall mean options to be granted by
MGI or CERA, as the case may be, pursuant to the MCM Group, Inc. LLC Unit Option
Plan and the Cambridge Energy Research Associates, Inc. LLC Unit Option Plan,
respectively, in respect of a total of up to 617,418 LLC Units.
"NASD" shall mean National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the NASD National Market System.
"Newco" shall have the meaning provided in Section 13.6(b).
"Nominees" shall have the meaning provided in Section 5.1(b).
"Non-Voting LLC Units" shall have the meaning provided in Section
8.1.
"Offer" shall have the meaning provided in Section 13.5(a).
"Offered Securities" shall have the meaning provided in Section
13.5(b).
"Offering Member" shall have the meaning provided in Section 13.3.
"Officers" shall have the meaning provided in Section 6.1.
"100% Buyer" shall have the meaning provided in Section 13.4(a).
"Original Agreement" shall have the meaning provided in the first
recital to this Agreement.
"Other LLC Unitholders" shall have the meaning provided in Section
13.4(a).
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"Permitted Transferee" shall mean:
(i) any transferee by bequest or the laws of descent or
distribution;
(ii) any trust for employees of the Company and/or any of the
Company's Subsidiaries established under a qualified employee benefit
plan;
(iii) in the case of any Member that is a trust, the trust
beneficiaries of such trust;
(iv) as to any Member which is a corporation, company, partnership
or other entity, any Specified Affiliate of such Member; and
(v) in the case of any Member that is an individual, any trust the
only actual beneficiaries under which are such individual and/or one or
more of his brothers and sisters (whether by whole or half blood), spouse,
ancestors and lineal descendants,
provided, in each such case, that the Permitted Transferee shall agree in
writing to be bound by the terms of this Agreement in accordance with Section
13.1(c) and shall otherwise acquire the LLC Units proposed to be transferred in
compliance with this Agreement.
"Person" shall mean any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company, or other legal entity or organization.
"Prime Rate" shall mean the rate of interest publicly announced from
time to time by The Chase Manhattan Bank as its prime rate.
"Private Transfer" shall mean:
(i) a Transfer in which the basis, for federal income tax purposes,
of the LLC Interest that is the subject of the Transfer in the hands of
the transferee is determined, in whole or in part, by reference to its
basis in the hands of the transferor or is determined under section 732 of
the Code;
(ii) a Transfer at death, including a Transfer from an estate or
testamentary trust;
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(iii) a Transfer between members of a family (as defined in section
267(c)(4) of the Code);
(iv) a Transfer involving the issuance of LLC Interests by (or on
behalf of) the Company in exchange for cash, property or services;
(v) a Transfer involving distributions from a retirement plan
qualified under section 401(a) of the Code or an individual retirement
account;
(vi) a block transfer (as defined in section 1.7704-1(e)(2) of the
Treasury Regulations);
(vii) a Transfer pursuant to a right under a redemption or
repurchase agreement (as defined in section 1.7704-1(e)(3) of the Treasury
Regulations) that is exercisable only upon (A) the death, disability or
mental incompetence of the Member whose LLC Interest is the subject of the
Transfer or (B) the retirement or termination of the performance of
services of an individual who actively participated in the management of,
or performed services on a full-time basis for, the Company;
(viii) a Transfer pursuant to a closed end redemption plan (as
defined in section 1.7704-1(e)(4) of the Treasury Regulations); and
(ix) a Transfer or Transfers by one or more Members of LLC Interests
representing in the aggregate 50 percent or more of the total interests in
the capital and profits of the Company in one transaction or a series of
related transactions.
"Prohibited Transaction" shall mean any Transfer of LLC Units which
would (i) cause the Company to be in violation of any Applicable Laws, (ii)
result in the assets of the Company constituting assets of one or more employee
benefit plans subject to ERISA, or constitute a prohibited transaction within
the meaning of section 406 of ERISA or section 4975 of the Code, (iii) cause the
Company to be controlled by or under common control with an "investment company"
for purposes of the Investment Company Act of 1940, as amended, (iv) cause the
Company to violate, breach or default under any then outstanding indebtedness of
the Company or any guarantee by the Company of indebtedness of any Subsidiary of
the Company, including MGI or CERA Inc., or any financing or security document
relating thereto, or require the payment of any such indebtedness prior to its
scheduled maturity or (v) require the Company to register any of its securities
pursuant to the Securities Act or
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Exchange Act, except in connection with a Public Offering approved by the Board
or pursuant to Schedule C hereto.
"Proportionate Share" shall have the meaning provided in Section
13.5(b).
"Public Market" shall mean such time as 30% of the then outstanding
LLC Units have been sold to the public pursuant to an effective registration
statement under the Securities Act or pursuant to Rule 144.
"Public Offering" shall mean a public offering of LLC Units pursuant
to an effective registration statement under the Securities Act.
"Qualifying Number" shall have the meaning provided in Section
13.2(b).
"Qualifying Sale" shall have the meaning provided in Section
13.2(b).
"Registrable Securities" shall mean (a) any LLC Units issued by the
Company pursuant to the Transactions, (b) any LLC Units transferred to CERA
Management Members promptly after the date hereof as described in the tenth
recital to this Agreement, (c) any Contingent LLC Units, (d) any LLC Units
issued upon exercise of any CERA Contingent Option or GS Contingent Option, (e)
LLC Units transferred to any Person upon exercise of any Existing MGI Option,
(f) any LLC Units transferred to any Person upon exercise of any MGI/CERA
Additional Options pursuant to the applicable LLC Unit Subscription Agreement
that provides that such LLC Units shall be Registrable Securities, (g) any
additional LLC Units granted, issued or sold pursuant to any LLC Unit
Subscription Agreement that provides that such LLC Units shall be Registrable
Securities, except for any such LLC Units issued pursuant to an effective
registration statement under the Securities Act on Form S-8, Form S-4, Form S-1
or any successor form to any thereof (unless such LLC Units are held by a
Management LLC Unitholder who is an Affiliate of the Company), (h) any LLC Units
issued pursuant to the terms of, and under the circumstances set forth in,
Section 13.5, and (i) any securities issued or issuable with respect to any LLC
Units referred to in the foregoing clauses (1) upon any conversion or exchange
thereof, (2) by way of a distribution of LLC Units or a split of the LLC Units,
(3) in connection with a combination of LLC Units or a recapitalization, merger,
consolidation or other reorganization of the Company or (4) otherwise, in all
cases subject to the penultimate paragraph of Section 1.3 of Schedule C hereto.
As to any particular Registrable Securities, once issued, such securities shall
cease to be Registrable Securities when (A) a registration statement (other than
a Special Registration pursuant
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to which such securities were transferred to a Management LLC Unitholder who is
an Affiliate of the Company) with respect to the sale of such securities shall
have become effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement, (B) such
securities shall have been distributed to the public in reliance upon Rule 144,
(C) subject to the relevant provisions of this Agreement and the LLC Unit
Subscription Agreement pursuant to which such securities shall have been
granted, issued or sold (if any), such securities shall have been otherwise
transferred, new certificates for such securities not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any similar state
law then in force, (D) except for purposes of Sections 13.2 and 13.5, such
securities have been held, or deemed, by virtue of tacking holding periods as
contemplated by Rule 144, to be held for a period of two years by a Person who
is not an Affiliate of the Company, (E) such securities shall have ceased to be
outstanding, (F) except for purposes of Sections 13.2 and 13.5, with respect to
any such securities acquired by a Management LLC Unitholder pursuant to the
exemption from the registration requirements of the Securities Act contained in
Rule 701 (or any successor provision) thereunder, at any time following the date
the Company registers a class of equity securities under section 12 of the
Exchange Act or (G) the Company shall have registered LLC Units under section 12
of the Exchange Act and such securities are held by a Person who is not an
Affiliate of the Company; provided that (x) for purposes of clauses (A) and (G)
above, (1) securities held by a Person who was not an Affiliate of the Company
at the time of the event specified in such clauses but who thereafter becomes an
Affiliate of the Company shall be and remain Registrable Securities for so long
as such Person is an Affiliate of the Company and (2) securities held by a
Person who was an Affiliate of the Company at the time of the event specified in
such clauses shall remain Registrable Securities for only so long as such Person
remains an Affiliate of the Company and (y) with respect to any securities that
were formerly Registrable Securities the Board may, under such circumstances as
it deems appropriate, designate such securities as Registrable Securities for
purposes of this Agreement.
"Registration Expenses" shall mean all expenses incident to the
Company's performance of its obligations under or compliance with Section 1 of
Schedule C hereto, including, but not limited to, all registration and filing
fees, all fees and expenses of complying with securities or blue sky laws, all
fees and expenses associated with listing securities on exchanges or NASDAQ,
all fees and other expenses associated with filings with the NASD (including, if
required, the fees and expenses of any "qualified independent underwriter" and
its counsel), all printing expenses, the fees and disbursements of counsel for
the Company and of its independent public accountants, and the expenses of any
special audits made by such
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accountants required by or incidental to such performance and compliance and the
fees and disbursements of one law firm (but not more than one) retained by the
holders holding a majority (by number of LLC Units) of the Registrable
Securities.
"Regulated Holder" shall mean any limited partner of Fund IV which
is not permitted, under any applicable law, regulation, order, rule or other
requirement of any governmental authority, to own, control or have the power to
vote more than a specified quantity of securities of any kind issued by the
Company.
"Regulated Securities" shall mean, with respect to any Regulated
Holder, the number of Voting LLC Units in excess of the amount such Regulated
Holder is permitted, under any applicable law, regulation, order, rule or other
requirement of any governmental authority to own, control or have the power to
vote.
"Remaining LLC Units" shall have the meaning provided in Section
13.3(b).
"Requisite Percentage of CERA Principals" shall mean, after the
Initial Holding Period, as to two requests under Section 1.1 of Schedule C, the
CERA Principals who, as of the Closing Date, held not less than 66-2/3% of the
LLC Units that all of the CERA Principals who, at the time of determination,
hold LLC Units, held on the Closing Date (including, for the purposes of
calculating the number of LLC Units held by a CERA Principal, any LLC Units held
by such CERA Principal's CERA Trusts).
"Requisite Percentage of LLC Unitholders" shall mean the holder or
holders (other than the CERA Principals and the CERA Principals' CERA Trusts) of
at least (a) as to the initial request under Section 1.1(a)(i) of Schedule C
hereto, 30% (by number of LLC Units of the Registrable Securities held at the
time outstanding or (b) as to any other request, 10% (by number of LLC Units) of
the Registrable Securities at the time outstanding.
"Restricted Holder" shall have the meaning provided in Section
13.1(a).
"Restricted Holder Sale" shall have the meaning provided in Section
13.5(a).
"Rule 144" shall mean Rule 144 (or any successor provision) under
the Securities Act.
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"Rule 144A" shall mean Rule 144A (or any successor provision) under
the Securities Act.
"Sale Notice" shall have the meaning provided in Section 13.2(a).
"Secondary Market" shall mean a market for LLC Interests (whether
maintained by the Company or any other Person) in which (i) LLC Interests are
regularly quoted by any Person, such as a broker or dealer, making a market in
the interests, (ii) any Person regularly makes available to the public
(including customers or subscribers) bid or offer quotes with respect to LLC
Interests and stands ready to effect buy or sell transactions at the quoted
prices for itself or on behalf of others, (iii) the holder of an LLC Interest
has a readily available, regular, and ongoing opportunity to sell or exchange
the interest through a public means of obtaining or providing information of
offers to buy, sell, or exchange LLC Interests or (iv) prospective buyers and
sellers otherwise have the opportunity to buy, sell, or exchange LLC Interests
in a time frame and with the regularity and continuity that is comparable to
that described in any of the preceding clauses (i), (ii) and (iii).
"Section 13.4 Closing" shall have the meaning provided in Section
13.4(a).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder. Any reference to a
particular section thereof shall include a reference to the corresponding
section, if any, of any such successor Federal statute, and the rules and
regulations thereunder.
"Special Distribution" shall mean a distribution to Members of (i)
the net proceeds of any sale or other disposition (other than in a Spin-Off),
prior to the earlier of the issuance of the Contingent LLC Units and June 30,
2000, of (A) all or any portion of the capital stock of MGI held by the Company
(whether by the sale of such stock, merger or otherwise), or more than 50% of
the assets (measured by their fair market value as determined by the Board in
good faith) of MGI if the proceeds thereof are distributed to the Company, or
(B) capital stock of CERA Inc. held by the Company, or more than 50% of the
assets (measured by their fair market value as determined by the Board in good
faith) of CERA Inc. if the proceeds thereof are distributed to the Company, and
sold or otherwise disposed of in any transaction or series of related
transactions not constituting a Sale (as such term is defined in the Merger and
Exchange Agreement) of CERA Inc. or (ii) prior to the earlier of the issuance of
the Contingent LLC Units and June 30, 2000, all or any portion of the capital
stock of MGI held by the Company or less than all of the capital stock of CERA
Inc. held by the Company.
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"Special Registration" shall mean (a) the registration of equity
securities and/or options or other rights in respect thereof to be offered to
directors, members of management, employees, consultants or sales agents,
distributors or similar representatives of the Company or its direct or indirect
Subsidiaries or senior executives of Persons controlled by an Affiliate of the
Company or (b) the registration of equity securities and/or options or other
rights in respect thereof solely on Form S-4 or S-8 or any successor form.
"Specified Affiliate" shall mean with respect to any Person, any
other Person controlling, controlled by or under common control with such first
Person solely by virtue of having the power to direct the affairs of the Person
by reason of ownership, directly or indirectly, of at least 75% of the
outstanding voting securities or other equity interests of such Person, other
than any such Person (other than a wholly owned Subsidiary of such first Person)
that was created or used solely for the purpose of holding LLC Units.
"Specified Laws" shall mean the Securities Act, the Exchange Act,
any applicable foreign securities laws, any state securities or "blue sky laws,"
the merger control laws of any foreign jurisdiction in which the Company is then
doing business, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and ERISA.
"Spin-Off" shall mean, with respect to MGI, CERA Inc. or any other
Subsidiary of the Company, as applicable, the distribution by the Company to
Members of all of the capital stock of MGI or CERA Inc., or all of the capital
stock or other voting securities or other equity interests of such Subsidiary,
as the case may be, owned by the Company.
"Subsidiary" shall mean with respect to any Person, any corporation
or other Person, a majority of the outstanding voting stock or other equity
interests of which is owned, directly or indirectly, by that Person.
"Substitute Director" shall have the meaning provided in Section
5.1(b).
"Substitute Member" shall mean a Person who is admitted to the
Company as a Member pursuant to Section 13.7 hereof and who is named as a Member
in the Membership Register.
"Take-Along Notice" shall have the meaning provided in Section
13.4(a).
"Take-Along Offer" shall have the meaning provided in Section
13.4(a).
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"Tax Liability Distribution" shall have the meaning provided in
Section 9.2.
"Tax Matters Partner" shall have the meaning provided in Section
10.2(c).
"Taxable Year" shall have the meaning provided in Section 2.7.
"Third Round" shall have the meaning provided in Section 13.3(b).
"Transactions" shall have the meaning provided in the seventh
recital to this Agreement.
"Transfer" (or any variation thereof used herein) shall mean any
direct or indirect sale, assignment, mortgage, transfer, pledge, hypothecation
or other disposition.
"Treasury Regulations" shall mean the Federal income tax
regulations, including any temporary or proposed regulations, promulgated under
the Code, as such Treasury Regulations may be amended from time to time (it
being understood that all references herein to specific sections of the Treasury
Regulations shall be deemed also to refer to any corresponding provisions of
succeeding Treasury Regulations).
"Underwritten Public Offering" shall mean an underwritten Public
Offering (whether by the Company, one or more Members or any combination
thereof), conducted in accordance with the provisions of this Agreement and led
by at least one underwriter of nationally recognized standing.
"Voting LLC Units" shall have the meaning provided in Section 8.1.
"Withdrawing Director" shall have the meaning provided in Section
5.1(b).
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ARTICLE II
CONTINUATION AND TERM
Section 2.1. Continuation. (a) The Members hereby agree to continue
the Company as a limited liability company under and pursuant to the provisions
of the Delaware Act and agree that the rights, duties and liabilities of the
Members shall be as provided in the Delaware Act, except as otherwise provided
herein.
(b) (i) upon the consummation of the GS Partnership Interest
Exchange and the CERA Stock Exchange, each of GS LP and each of the CERA
Stockholders listed on Schedule A hereto shall be admitted as members of the
Company, and the Company shall promptly issue to each such Person the number of
LLC Units set forth opposite such Person's name on Schedule A hereto, (ii) at
the Effective Time (as defined in the Merger and Exchange Agreement), Fund IV
and the other former stockholders of MGI listed on Schedule A hereto shall be
admitted as members of the Company, and the Company shall promptly issue to each
such Person the number of LLC Units set forth opposite such Person's name on
Schedule A hereto; provided that any such Person who holds Dissenting Shares (as
defined in the Merger and Exchange Agreement) shall not be admitted as a member
of the Company and shall not be issued LLC Units, except that if such Person
withdraws its demand for an appraisal of shares of MGI stock or otherwise loses
its right of appraisal of shares of MGI stock, in any case pursuant to the
General Corporation Law of the State of Delaware, such Person shall be deemed to
have been admitted as a member of the Company as of the date hereof and the
Company shall promptly issue to such Person the number of LLC Units set forth
opposite such Person's name on Schedule A hereto, (iii) upon the admission of
the Persons described in the foregoing clauses (i) and (ii), MGI and MCM shall
withdraw as members of the Company, and the remaining Members shall continue the
business of the Company without dissolution, and (iv) the day after the
consummation of the Transactions, each CERA Management Member listed on Schedule
A hereto who shall have executed and delivered an LLC Unit Grant Agreement,
substantially in the form attached hereto as Exhibit A, shall be admitted as a
member of the Company, and the Company shall promptly issue to CERA Inc., and
CERA Inc. shall promptly transfer to each such Person, the number of LLC Units
specified in the applicable LLC Unit Grant Agreement.
(c) The name, mailing address, employer identification number or
social security number and the number of LLC Units owned by each Member shall be
listed on the Membership Register of the Company kept at the Company's principal
office. The Chief Executive Officer, the President or the Secretary shall be
required to update the Membership Register from time to time as necessary to
accurately reflect
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the information required to be set forth therein, including with respect to the
resignation of any Member or the admission of any Additional Member or
Substitute Member. Any update or other revision to the Membership Register made
in accordance with this Agreement shall not be deemed an amendment to this
Agreement. Any reference in this Agreement to the Membership Register shall be
deemed to be a reference to the Membership Register as revised and in effect
from time to time.
(d) The Chairman, the Vice Chairman, the Chief Executive Officer,
the President or any other Officer authorized by the Board as an authorized
person within the meaning of the Delaware Act may execute, deliver and file
documents required by the Delaware Act to be filed with the Secretary of State
of the State of Delaware.
Section 2.2. Name. The name of the Company heretofore formed and
continued hereby is Global Decisions Group LLC. The business of the Company
shall be conducted under such name or such other names as the Board may from
time to time designate in accordance with the Delaware Act.
Section 2.3. Term of Company. The term of the Company shall be
deemed to have commenced on the date of the initial filing of the Certificate
with the Secretary of State of the State of Delaware. The Company shall continue
perpetually unless and until dissolved as provided in Article XIV.
Section 2.4. Registered Agent and Office. The Company's registered
agent and office in the State of Delaware shall be The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801. The Chairman, the Vice Chairman, the Chief Executive
Officer, the President or any other Officer authorized by the Board may
designate another registered agent and/or registered office from time to time in
accordance with the then applicable provisions of the Delaware Act and any other
applicable laws.
Section 2.5. Principal Place of Business. The principal place of
business of the Company shall be located at 20 University Road, Cambridge,
Massachusetts 02138. The location of the Company's principal place of business
may be changed by the Board from time to time in accordance with the then
applicable provisions of the Delaware Act and any other applicable laws.
Section 2.6. Qualification in Other Jurisdictions. The Chairman, the
Chief Executive Officer, the President or any other Officer shall cause the
Company to be qualified, formed or registered under assumed or fictitious name
statutes or similar
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laws in any jurisdiction in which the Company transacts business and where such
qualification, formation or registration shall be necessary or desirable. The
Chief Executive Officer, the President or any other Officer, as an authorized
person within the meaning of the Delaware Act, shall execute, deliver and file
any certificates (and any amendments and/or restatements thereof) necessary for
the Company to qualify to do business in a jurisdiction in which the Company may
wish to conduct business.
Section 2.7. Fiscal Year; Taxable Year. The fiscal year of the
Company for financial accounting purposes (the "Fiscal Year") shall end on June
30. The taxable year of the Company for federal, state and local income tax
purposes (the "Taxable Year") shall end on December 31.
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY
Section 3.1. Purposes. The purposes of the Company are, and the
Company shall have the power and authority, to acquire, hold, vote, sell or
otherwise dispose of, to receive, allocate and distribute distributions on and
other proceeds of, and to manage, investments in accordance with the terms of
this Agreement, to engage in all acts or activities as the Company deems
necessary, advisable, convenient or incidental to the furtherance and
accomplishment of the foregoing, including without limitation the acts described
in Section 3.2, and to engage in any other lawful act or activity for which
limited liability companies may be formed under the Delaware Act.
Section 3.2. Powers of the Company. The Company shall have the power
and authority to take any and all actions necessary, appropriate, proper,
advisable, incidental or convenient to or for the furtherance of the purpose set
forth in Section 3.1, including, but not limited to, the power and authority:
(i) to have and exercise the powers granted to a limited liability
company by the Delaware Act in any state, territory, district or
possession of the United States, or in any foreign country, that may be
necessary, advisable, convenient or incidental to the accomplishment of
the purposes of the Company;
(ii) to purchase, take, receive, subscribe for or otherwise acquire,
own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise
dispose of, and otherwise use and deal in and with, shares or other
interests in or obligations of domestic or foreign corporations,
associations, general or limited
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partnerships (including, without limitation, the power to be admitted as a
partner thereof and to exercise the rights and perform the duties created
thereby), trusts, limited liability companies (including, without
limitation, the power to be admitted as a member or appointed as a manager
thereof and to exercise the rights and perform the duties created
thereof), or individuals or direct or indirect obligations of the United
States or of any government, state, territory, governmental district or
municipality or of any instrumentality of any of them;
(iii) to enter into transactions contemplated by any financing
agreement and related documents entered into in connection with the
Transactions or otherwise, as any such agreement and related documents may
be amended, supplemented, waived or otherwise modified from time to time
("Loan Documents");
(iv) to own the capital stock of Merger Sub, MGI and CERA Inc., and
exercise rights and perform obligations in connection therewith;
(v) to enter into, and exercise rights and perform obligations in
respect of, or to take or omit to take such other action in connection
with, agreements of any kind, including without limitation, (A) Loan
Documents and any guarantee, surety or endorsement related to Loan
Documents to which the Company may be a party, and any other agreement to
which it is a party on the date hereof, in each case as amended,
supplemented, waived or otherwise modified from time to time, and any
refinancings, refundings, renewals or extensions thereof, (B) contracts
and agreements with officers, directors and employees of the Company or
any Subsidiary of the Company relating to their employment or
directorships, (C) insurance policies and related contracts and
agreements, and (D) equity subscription agreements, equity option
agreements, registration rights agreements, voting and other equityholder
agreements, engagement letters, underwriting agreements and other
agreements in respect of its equity securities or any offering, issuance
or sale thereof, including but not limited to in respect of the LLC Unit
Subscription Agreements, as may be necessary or desirable to further the
purposes of the Company;
(vi) to offer, issue and sell LLC Units;
(vii) to file registration statements, and comply with applicable
reporting and other obligations, under federal, state or other securities
laws;
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(viii) to list the Company's equity securities and comply with
applicable reporting and other obligations in connection therewith;
(ix) to retain transfer agents, private placement agents,
underwriters, counsel, accountants and other advisors and consultants;
(x) to perform obligations under and comply with the Company's
Certificate and this Agreement, or any applicable law, ordinance,
regulation, rule, order, judgment, decree or permit, including, without
limitation, as a result of or in connection with the activities of MGI or
CERA Inc. and their respective Subsidiaries;
(xi) to incur and pay its operating and business expenses and any
taxes for which it may be liable;
(xii) to lend money to, borrow money from (other than to finance any
acquisition of property), act as surety, guarantor or endorser for,
provide collateral for, and transact other business with third parties
including Members and Affiliates of the Company and to invest and reinvest
its funds, to take and hold real and personal property for the payment of
funds so loaned or invested;
(xiii) to establish, have, maintain or close one or more offices
within or without the State of Delaware and in connection therewith to
rent or acquire office space and to engage personnel;
(xiv) to open, maintain and close bank and brokerage accounts,
including the power to draw checks or other orders for the payment of
moneys, and to invest such funds as are temporarily not otherwise required
for Company purposes;
(xv) to bring and defend actions and proceedings at law or in equity
or before any governmental, administrative or other regulatory agency,
body or commission, and to pay, collect, compromise, or otherwise adjust
or settle any and all other claims or demands of or against the Company or
to hold such proceeds against the payment of contingent liabilities;
(xvi) to hire consultants, custodians, attorneys, accountants and
such other agents and employees of the Company as it may deem necessary or
advisable, to authorize each such agent and employee to act for and on
behalf of the Company and to fix the compensation of each such agent and
employee;
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(xvii) to make all elections, investigations, evaluations and
decisions, binding the Company thereby, that may, in the sole judgment of
the Directors or the Officers, be necessary or appropriate for the
acquisition, holding or disposition of securities for the Company;
(xviii) to enter into, perform and carry out contracts of any kind,
including, without limitation, contracts with the Directors, the Officers,
any Manager, any Member, any Affiliate thereof, or any agent or Affiliate
of the Company necessary to, in connection with, convenient to, or
incidental to the accomplishment of the purposes of the Company;
(xvix) to indemnify any Person in accordance with the Delaware Act
and to obtain any and all types of insurance;
(xx) to merge with, or consolidate into, another Delaware limited
liability company or other business entity (as defined in section
18-209(a) of the Delaware Act), including a corporation (pursuant to
section 264 of the Delaware General Corporation Law) in accordance with
Section 4.4(f) hereof;
(xxi) to cease its activities and cancel its Certificate;
(xxii) to enter into and perform its obligations under the Merger
and Exchange Agreement without any further act, vote or approval of any
Person, and all actions heretofore taken by the Company in connection with
the Merger and Exchange Agreement are hereby ratified (including the
execution and delivery of the Merger and Exchange Agreement on behalf of
the Company);
(xxiii) to make, execute, acknowledge and file any and all documents
or instruments, and to carry on any other activities in connection with
the foregoing, as may be necessary, convenient or incidental to the
accomplishment of the purpose of the Company; and
(xxiv) other activities incidental or related to the foregoing.
ARTICLE IV
MEMBERS
Section 4.1. Powers of Members. The Members shall have the power to
exercise any and all rights or powers granted to the Members pursuant to the
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express terms of this Agreement. Except as otherwise required by law, on all
matters submitted to the Members for a vote, the holders of Non-Voting LLC Units
shall have no right to vote with respect to such LLC Units. The approval or
consent of the Members shall not be required in order to authorize the taking of
any action by the Company unless and only to the extent that (i) this Agreement
shall expressly provide therefor, (ii) such approval or consent shall be
required by non-waivable provisions of the Delaware Act or (iii) the Board shall
determine that obtaining such approval or consent would be appropriate or
desirable. The Members shall have no power to bind the Company.
Section 4.2. Partition. Each Member waives, until termination of the
Company, any and all rights that such Member may have to maintain an action for
partition of the Company's property.
Section 4.3. Resignation. A Member may not resign from the Company
prior to the dissolution and winding up of the Company pursuant to Article XIV,
provided that a Member who Transfers 100% of the LLC Units which such Member
owns to a Transferee in accordance with Section 13.1 shall automatically cease
to be a Member, and provided, further, that such Member shall not be entitled to
receive any distributions from the Company upon or after a sale, assignment,
transfer or other disposition of 100% of the LLC Units that such Member owns.
Section 4.4. Meetings of Members. (a) Annual Meetings. The annual
meeting of the Members of the Company for the election of Directors and for the
transaction of such other business as properly may come before such meeting
shall be held at such place, either within or without the State of Delaware, and
at 10:00 a.m. local time on the third Tuesday in October beginning in October
1998 (or, if such day is not a Business Day, then on the next succeeding
Business Day), or at such other date and hour, as may be fixed from time to time
by resolution of the Board and set forth in the notice or waiver of notice of
the meeting.
(b) Special Meetings of the Members; Action by the Members. Meetings
of the Members (i) may be called by the Chairman, Vice Chairman or Chief
Executive Officer, or by the Board and (ii) shall be called by the Chairman or
the Secretary for any purpose or purposes upon the written request of a Member
or Members representing not less than 20% of the outstanding LLC Units as
described in Section 4.4(e).
(c) Notice of Meetings; Waiver of Notice. No notice of any meeting
of Members need be given to any Member who submits a signed waiver of notice,
whether before or after the meeting. Neither the business to be transacted at,
nor the
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purpose of, any regular or special meeting of the Members need be specified in a
written waiver of notice. The attendance of any Member at a meeting of Members
shall constitute a waiver of notice of such meeting, except when the Member
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business on the ground that the meeting is
not lawfully called or convened. Notice of any such meeting shall be given to
all Members not less than five (5) Business Days nor more than thirty (30) days
prior to the date of such meeting, and shall state the location and time of the
meeting and the nature of the business of be transacted.
(d) Quorum. Except as otherwise required by law or by the
Certificate, the presence in person or by proxy of the holders of record of a
majority of the LLC Units entitled to vote at a meeting of Members shall
constitute a quorum for the transaction of business at such meeting.
(e) Voting. If the Board has fixed a record date, every holder of
record of Voting LLC Units entitled to vote at a meeting of Members or to
consent in writing in lieu of a meeting of Members shall be entitled to one vote
for each Voting LLC Unit outstanding in his name on the books of the Company at
the close of business on such record date. If no record date has been so fixed,
then every holder of record of Voting LLC Units entitled to vote at a meeting of
Members or to consent in writing in lieu of a meeting of Members shall be
entitled to one vote for each Voting LLC Unit outstanding in his name on the
books of the Company at the close of business on the day next preceding the day
on which notice of the meeting is given or the first such consent in respect of
the applicable action is executed and delivered to the Company, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. In the event that the action to be considered by the Members
shall have been determined by the Board to constitute a Sale (as defined in the
Merger and Exchange Agreement) of the Company, MGI or CERA Inc., solely for the
purposes of determining the number of votes to which each holder of record of
Voting LLC Units shall be entitled in respect of any action to be taken by the
Members to approve such a Sale, such number of Contingent LLC Units shall be
deemed to be outstanding on the applicable record date or day next preceding the
day on which such notice is given or the first such consent is so executed and
delivered, as the case may be, and in such names, as the Board shall determine
would be issuable pursuant to Sections 1.3, 1.4, 1.5 and 1.6 of the Merger and
Exchange Agreement based upon the CERA CAGR (as defined in the Merger and
Exchange Agreement) as of the most recent available date prior to such
determination. Except as otherwise required by Applicable Law, the Certificate,
Section 4.4(f) or Section 7.1, the vote of a majority of the Voting LLC Units
represented in person or by proxy at
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any meeting at which a quorum is present shall be sufficient for the
transaction of any business at such meeting.
(f) Super-Majority Voting Requirements. Each of the following events
shall require the approval of at least two-thirds of the Members (by number of
LLC Units) then entitled to vote at a meeting of Members, upon the
recommendation of the Board that the Members give such approval:
(i) a merger, consolidation, conversion or reorganization of the
Company, other than a Conversion Transaction;
(ii) the dissolution of the Company pursuant to Section 14.1(a); and
(iii) the sale or other disposition of all or substantially all of
the assets of the Company or the sale or other disposition of all of the
capital stock of MGI or CERA Inc. owned by the Company, other than in a
Spin-Off of MGI or CERA.
Members shall not be entitled to appraisal rights in respect of their LLC Units,
including in connection with actions approved by the Members in accordance with
and pursuant to this Section 4.4(f) or upon a Conversion Transaction.
(g) Proxies. Each Member may authorize any Person to act for such
Member by proxy on all matters in which a Member is entitled to participate,
including waiving notice of any meeting, or voting or participating at a
meeting. Every proxy must be signed by the Member or such Member's
attorney-in-fact. No proxy shall be valid after the expiration of three years
from the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the Member executing it unless otherwise
provided in such proxy, such revocation shall not invalidate or otherwise affect
actions taken under such proxy prior to such revocation.
(h) Organization. Each meeting of Members shall be conducted by the
Chairman or by such other Person as the Board may designate.
(i) Action Without a Meeting. Unless otherwise provided in this
Agreement, any action which may be taken at any meeting of the Members may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by Members having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all Members entitled to vote were
present. Prompt notice
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of the taking of the action without a meeting by less than unanimous written
consent shall be given to those Members who have not consented in writing.
Section 4.5. Business Transactions of a Member with the Company. A
Member may lend money to, borrow money from, act as surety or endorser for,
guaranty or assume one or more specific obligations of, provide collateral for,
or transact any other business with the Company, provided that any such
transaction pursuant to any agreement entered into after the date hereof shall
be either (i) on terms not less favorable to the Company than those obtainable
from third parties or (ii) approved by a majority of Directors not affiliated
with, or related to, the interested Member.
Section 4.6. No Cessation of Membership upon Bankruptcy. A Person
shall not cease to be a Member of the Company upon the happening, with respect
to such Person, of any of the events specified in section 18-304 of the Delaware
Act.
ARTICLE V
MANAGEMENT
Section 5.1. Board. (a) Generally. The business and affairs of the
Company shall be managed by or under the direction of a committee of the Company
(the "Board") consisting of at least three (3) natural persons ("Directors"),
which persons are either named in the first sentence of Section 5.1(b)(i) or
elected as provided in Section 5.1(b). The Board shall have full, exclusive and
complete discretion to manage and control the business and affairs of the
Company, to make all decisions affecting the business and affairs of the Company
and to take all such actions as it deems necessary or appropriate to accomplish
the purposes of the Company as set forth herein, including, without limitation,
to exercise all of the powers of the Company set forth in Section 3.2.
(b) Voting Agreement.
(i) Election and Term of the Company's Board; Number of Directors.
Upon consummation of the Transactions, the Directors will be [list names of
initial Directors], and Mr. Cribiore shall be the Chairman and Mr. Yergin shall
be the Vice Chairman. Except as provided in the preceding sentence, the
Directors shall be elected at each annual meeting of the Members. Each person
named in the first sentence of this Section 5.1(b)(i) or hereafter elected a
Director, by such naming or election, as the case may be, shall be deemed to
have been designated as a Manager
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for purposes of the Delaware Act. Subject to this Section 5.1(b), the number of
Directors may be modified from time to time by resolution of the Board. Each
Director shall hold office until a successor is elected as provided herein or
until such Director's earlier death, resignation or removal. Except as otherwise
provided in this Section 5.1(b), at each meeting of the Members for the election
of Directors, provided a quorum is present, the Directors shall be elected by a
majority of the votes validly cast in such election. If any vacancies shall
occur in the Board, by reason of death, resignation, removal or otherwise, the
Directors then in office shall continue to act, and such vacancies may be filled
by the Members, subject to the provisions of paragraph (b)(ii) of this Section
5.1, or, following the settlement date of the first Underwritten Public Offering
after the date hereof, by a majority vote of the Directors then in office (even
if less than a quorum). If the authorized number of Directors shall be
increased, newly created directorships may be elected at a meeting of the
Members, subject to this Section 5.1(b).
Directors need not be Members. Each of the Members agrees that such
Member will, at all times after the date of this Agreement and until the
settlement date of the first Underwritten Public Offering after the date hereof,
vote all LLC Units now or hereafter owned by such Member at any meeting of
Members and in whatever other manner is necessary to ensure that (x) the Board
will at all times consist of at least (A) two nominees who shall be any two of
the CERA Principals nominated by the CERA Principals (the "CERA Nominees"), (B)
one nominee who shall be the chief executive officer of MCM (the "MCM Nominee"),
(C) one nominee who shall be the Chief Executive Officer, if any, of the Company
(the "CEO Nominee"), (D) three nominees who shall be such employees of CD&R,
Brera or other Affiliates of Fund IV as shall be nominated by Fund IV and such
of its Permitted Transferees who hereafter become owners of LLC Units (the "Fund
IV Nominees") and (E) up to six additional nominees, who shall be persons not
affiliated with CD&R, Fund IV, Brera or any of the CERA Principals, as may be
nominated by Fund IV with the written consent of the Consenting CERA Principal,
whose consent shall not be unreasonably withheld (the "Independent Nominees"
and, together with the CERA Nominees, the MCM Nominee, the CEO Nominee and the
Fund IV Nominees, the "Nominees") and (y) all such Nominees shall be duly
elected. Of the Directors on the date hereof, Messrs. Yergin and _______ shall
be the CERA Nominees, Mr. David D. Nixon shall be the MCM Nominee, Messrs.
Cribiore, Gordon McMahon and _______ shall be the Fund IV Nominees and Messrs.
_______, _______, _______, _______, _______ and _______ shall be the Independent
Nominees. Until the settlement date of the first Underwritten Public Offering
after the date hereof, the Chairman shall always be a Fund IV Nominee and the
Vice Chairman shall always be a CERA Nominee.
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(ii) Replacement Nominees. If, prior to his or her election to the
Board pursuant to Section 5.1(b)(i), any Nominee shall be unable or unwilling to
serve as a Director, the Member or Members who nominated such Nominee in
accordance with Section 5.1(b)(i) or, following the settlement date of the first
Underwritten Public Offering after the date hereof, the Board shall be entitled
to nominate a replacement who shall then be a Nominee for purposes of this
Section 5.1. If, following election to the Board pursuant to Section 5.1(b)(i),
any Nominee shall resign or be removed or be unable to serve for any reason
prior to the expiration of his or her term as a Director (a "Withdrawing
Director"), the Member or Members who nominated such Withdrawing Director shall
appoint a replacement Nominee (a "Substitute Director") to fill the unexpired
term of the Withdrawing Director whom such Substitute Director is replacing,
provided that any Independent Nominee shall be replaced with the written consent
of the Consenting CERA Principal, whose consent shall not be unreasonably
withheld. If a Member or Members shall fail to so appoint a Substitute Director
in the manner provided above, the seat of such Substitute Director shall remain
vacant. Notwithstanding the preceding sentences of this paragraph (ii), if,
following the settlement date of the first Underwritten Public Offering after
the date hereof, any vacancies shall occur in the Board or if the authorized
number of Directors shall be increased, the Directors then in office shall
continue to act, and such vacancies and newly created directorships may be
filled by a majority of the Directors then in office, although less than a
quorum, and any such vacancy or newly created directorship may also be filled at
any time by vote of the Members.
(iii) Removal. Members shall have the right to remove any Director
at any time for cause upon the affirmative vote of the holders of a majority of
outstanding LLC Units entitled to vote for the election of such Director. The
Member or Members that nominate any Director pursuant to Section 5.1(b) or,
following the settlement date of the first Underwritten Public Offering after
the date hereof, the holders of a majority of the outstanding LLC Units entitled
to vote for the election of Directors shall have the right to remove such
Director at any time, with or without cause, by delivery of written notice to
the Board or by action taken at any meeting of Members, and shall, upon any such
removal, appoint a Substitute Director, in accordance with Section 5.1(b)(ii). A
majority of the Directors then in office shall have the right to remove a
Director for cause. Upon taking such action, the Director shall cease to be a
Director. In the event that a Director is removed by the Board for cause, until
the settlement date of the first Underwritten Public Offering after the date
hereof, only the Member or Members who nominated or appointed such removed
Director shall be entitled to appoint his replacement. Until the settlement date
of the first Underwritten Public Offering after the date hereof, no Director
shall be removed without cause without the consent of the Member or Members that
nominated or appointed such Director.
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(iv) Special Voting Provisions. (w) Until the earlier of (a) the
settlement date of the first Underwritten Public Offering after the date hereof
and (b) the issuance of the Contingent LLC Units, action to approve any of the
following events shall require the approval of at least 75% of the Directors
then in office:
(A) An acquisition or disposition by the Company of a business or of
assets having a value in excess of $15,000,000 individually or when
aggregated with all other transactions related to the same specific
business or asset;
(B) A capital expenditure by the Company or contractual commitment
therefor involving more than $15,000,000 individually or when aggregated
with all other transactions related to the same specific asset;
(C) The issuance by the Company in a single transaction or a series
of related transactions of LLC Units, or securities convertible into or
exchangeable for LLC Units or options, warrants or other rights to acquire
LLC Units or such securities, for aggregate consideration in excess of
$15,000,000, other than the Contingent LLC Units, the CERA Contingent
Options, the GS Contingent Options, the Existing MGI Options, the MGI/CERA
Additional Options and the LLC Units issuable upon exercise thereof;
(D) The entry by the Company into new lines of business;
(E) The dissolution of the Company pursuant to Section 14.1(a);
(F) A Public Offering by the Company; or
(G) Incurring any indebtedness for borrowed money, or any guarantee
in respect of the same, in excess of $15,000,000, other than (1) any
guarantee of indebtedness under the Credit Agreement or under any renewal,
extension, refinancing or refunding of any such indebtedness or (2) the
renewal, extension, refinancing or refunding of any other indebtedness, or
any guarantee in respect of the same, that may have previously been
approved by the Board pursuant to this subclause (G);
(x) until the settlement date of the first Underwritten Public Offering after
the date hereof, the appointment or replacement of the Chief Executive Officer
of the Company shall require (i) the approval of the Fund IV Nominees then in
office and (ii) the written consent of the Consenting CERA Principal, whose
consent shall not be unreasonably withheld; (y) until the settlement date of the
first Underwritten Public Offering after the date hereof, the Company shall
cause each of and only the Directors
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then in office to be elected as directors of each of MGI and CERA Inc., and each
Director shall vote in favor of the nomination and election of such Directors as
the directors of MGI and CERA Inc. whenever such matters are considered by the
Board; and (z) until the earlier of (a) the settlement date of the first
Underwritten Public Offering after the date hereof and (b) the issuance of the
Contingent LLC Units, the Sale (as defined in the Merger and Exchange Agreement)
or Spin-Off of CERA Inc. shall require the written approval of the Consenting
CERA Principal.
Section 5.2. Annual and Regular Meetings. The annual meeting of the
Board for the purpose of electing Officers and for the transaction of such other
business as may come before the meeting shall be held as soon as possible
following adjournment of the annual meeting of the Members at the place of such
annual meeting of the Members. Notice of such annual meeting of the Board need
not be given. The Board from time to time may by resolution provide for the
holding of regular meetings and fix the place (which may be within or without
the State of Delaware) and the date and hour of such meetings. Notice of regular
meetings need not be given, provided that if the Board shall fix or change the
time or place of any regular meeting, notice of such action shall be mailed
promptly, or sent by telegram, radio or cable, to each Director who shall not
have been present at the meeting at which such action was taken, addressed to
him at his usual place of business, or shall be delivered to him personally.
Notice of such action need not be given to any Director who attends the first
regular meeting after such action is taken without protesting the lack of notice
to him, prior to or at the commencement of such meeting, or to any Director who
submits a signed waiver of notice, whether before or after such meeting.
Section 5.3. Special Meetings; Notice. Special meetings of the Board
shall be held whenever called by the Chairman, the Vice Chairman or the Chief
Executive Officer, or by the Board, at such place (within or without the State
of Delaware), date and hour as may be specified in the respective notices or
waivers of notice of such meetings. Special meetings of the Board may be called
on 24 hours' notice, if notice is given to each Director personally or by
telephone or telegram, or on at least three days' notice, if notice is mailed to
each Director, addressed to him at his usual place of business. Notice of any
special meeting need not be given to any Director who attends such meeting
without protesting the lack of notice to him, prior to or at the commencement of
such meeting, or to any Director who submits a signed waiver of notice, whether
before or after such meeting, and any business may be transacted thereat.
Section 5.4. Quorum and Acts of the Board. At all meetings of the
Board the presence of a majority of the Directors then in office shall
constitute a quorum for the transaction of business and, except as otherwise
provided in this
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Agreement, the vote of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board. If a quorum shall not be
present at any meeting of the Board, the Directors present thereat may adjourn
the meeting to another time or place, without notice other than announcement at
the meeting, until a quorum shall be present. Any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting, if all of the members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.
Section 5.5. Rules and Regulations; Manner of Acting. To the extent
consistent with applicable law, the Certificate and this Agreement, the Board
may adopt such rules and regulations for the conduct of meetings of the Board
and for the management of the property, affairs and business of the Company as
the Board may deem appropriate.
Section 5.6. Electronic Communications. Members of the Board, or any
committee designated by the Board, may participate in a meeting of the Board, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
Section 5.7. Committees of Directors. (a) The Board may, by
resolution, designate one or more committees of the Board, which resolution
shall specify the duties, members and quorum requirements of such committee,
each such committee to consist of one or more of the Directors, provided that
the Consenting CERA Principal shall be entitled to be a member of any committee
of the Board having substantially the same powers as the Board or the Executive
Committee that has a member who is not an Independent Nominee. The Board may
designate one or more Directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member or alternate member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such members constitute a quorum, may unanimously appoint
another member of the Board to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise all the powers and
authority of the Board in the management of the property, business and affairs
of the Company, but no such committee shall have the power or authority to take
any action hereunder requiring (i) a vote greater than a majority of Directors
present as set forth in Section 5.4 or (ii) the
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consent or approval of the Consenting CERA Principal or any one or more of the
Fund IV Nominees, or authorizing any distribution by the Company to Members.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board. Each committee shall keep
regular minutes of its meetings and report the same to the Board when required.
(b) The Board shall have a committee of the Board designated as the
Executive Committee, which shall consist of the Chairman, the Consenting CERA
Principal, the CEO Nominee (if any), the MCM Nominee (if any) and such other
Directors as may be designated by the Board. During the intervals between
meetings of the Board, the Executive Committee shall have and may exercise all
the powers and authority of the Board in the management of the property,
business and affairs of the Company, except that the Executive Committee shall
not have the power or authority to take any action hereunder requiring (i) a
vote greater than a majority of Directors present as set forth in Section 5.4 or
(ii) the consent or approval of the Consenting CERA Principal or any one or more
of the Fund IV Nominees listed in Section 5.1(b)(iv) or authorizing any
distribution by the Company to Members.
Section 5.8. Compensation of Directors. The Board shall have the
authority to fix the compensation of Directors. The Directors may be paid their
expenses, if any, of attendance at such meeting of the Board and may be paid a
fixed sum for attendance at each meeting of the Board or a stated salary as
Director. No such payment shall preclude any Director from serving the Company
in any other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
Section 5.9. Reliance on Accounts and Reports, etc. A Director, or a
member of any Committee designated by the Board, shall, in the performance of
his duties, be fully protected in relying in good faith upon the records of the
Company and upon information, opinions, reports or statements presented to the
Company by any of the Company's Officers or employees, or Committees designated
by the Board, or by any other person as to the matters the member reasonably
believes are within such other Person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the Company.
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Section 5.10. Resignation. Any Director may resign at any time by
delivering a written notice of resignation to the Chief Executive Officer or the
Secretary. The resignation of any Director shall take effect upon receipt of
such notice or at such later time as shall be specified in the notice; and,
unless otherwise specified in the notice, the acceptance of the resignation by
the Company, the Members or the remaining Directors shall not be necessary to
make such resignation effective.
Section 5.11. Directors as Agents. The Directors, to the extent of
their powers set forth in this Agreement, are agents of the Company for the
purpose of the Company's business, and the actions of the Directors taken in
accordance with such powers shall bind the Company. Except as otherwise provided
in this Agreement, no single Director shall have the power to bind the Company,
and the Board shall have the power to act only collectively in the manner
specified herein.
ARTICLE VI
OFFICERS
Section 6.1. Officers. The Board may select natural persons who are
employees of the Company to be designated as officers of the Company
("Officers"), with such titles as the Board shall determine. Any number of
offices may be held by the same person. The Board may appoint a Chief Executive
Officer, a President, a Chief Financial Officer, a Secretary and a Treasurer and
one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers as
the Board may determine, provided that until the settlement date of the first
Underwritten Public Offering after the date hereof, the Fund IV Nominees shall
appoint, with the written consent of the Consenting CERA Principal (whose
consent shall not be unreasonably withheld), the Chief Executive Officer. The
Board may appoint such other Officers as it shall deem necessary or advisable
who shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board. The
salaries (if any) of all Officers shall be fixed by or in the manner prescribed
by the Board. The Officers shall hold office until their successors are chosen
and qualified. Any Officer may resign at any time upon written notice to the
Company. Any Officer may be removed at any time by the affirmative vote of a
majority of the Board. Any vacancy occurring in any office of the Company shall
be filled by the Board. The Officers shall have such powers and duties in the
management of the Company as may be delegated to them in this Agreement or by
the Board, except that in any event each Officer shall exercise such powers and
perform such duties as may be required by law. The Board may require any Officer
or agent
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to give security for the faithful performance of his or her duties. Each person
elected or appointed as an Officer, by such election or appointment, as the case
may be, shall be deemed to have been designated as a Manager for purposes of the
Delaware Act.
Section 6.2. Chief Executive Officer. The Chief Executive Officer of
the Company shall have general charge of the business, affairs and property of
the Company and general supervision over its other Officers and agents. In
general, the Chief Executive Officer shall perform all duties incident to the
office of the chief executive officer of such a company and shall see that all
orders and resolutions of the Board are carried into effect. The Chief Executive
Officer shall have the authority to sign, in the name and on behalf of the
Company, checks, orders, contracts, leases, notes, drafts and other documents
and instruments in connection with the business of the Company, and together
with the Secretary or an Assistant Secretary, conveyances of real estate and
other documents and instruments. The Chief Executive Officer shall have the
authority to cause the employment or appointment of such employees and agents of
the Company as the conduct of the business of the Company may require, to fix
the compensation of such employees and agents and, subject to the direction of,
and subject to general or specific resolutions approved by the Board, of such
Officers as the Board may determine, and to remove or suspend any employee
(other than a CERA Principal) or agent of the Company elected or appointed by
the Chief Executive Officer or the Board. The Chief Executive Officer shall
perform such other duties and have such other powers as the Board may from time
to time prescribe. The Board from time to time may confer like powers upon any
other Person or Persons.
Section 6.3. The Chief Financial Officer. The Chief Financial
Officer shall have charge and supervision over and be responsible for the
moneys, securities, receipts and disbursements of the Company, and shall keep or
cause to be kept full and accurate records of all receipts of the Company. The
Chief Financial Officer shall render to the Board, whenever requested, a
statement of the financial condition of the Company and of all his transactions
as Chief Financial Officer, and render a full financial report at the annual
meeting of the Members, if called upon to do so. The Chief Financial Officer
shall be empowered from time to time to require from all officers or agents of
the Company reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Company. The Chief
Financial Officer shall perform, in general, all duties incident to the office
of chief financial officer of a Delaware corporation and such other duties as
may be specified in this Agreement or as may be assigned to him from time to
time by the Board or the Chairman and the Vice Chairman. The Chief Financial
Officer shall report to the Chairman and the Vice Chairman.
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Section 6.4. President. The President, subject to the authority of
the Chief Executive Officer, shall have primary responsibility for, and
authority with respect to, the management of the day-to-day business and affairs
of the Company. The President shall have the authority to sign, in the name and
on behalf of the Company, checks, orders, contracts, leases, notes, drafts and
other documents and instruments. Except as otherwise performed by the Board or
the Chief Executive Officer, the President shall have the authority to cause the
employment or appointment of such employees and agents of the Company as the
conduct of the business of the Company may require, to fix their compensation,
and to remove or suspend any employee or agent elected or appointed by the
President.
Section 6.5. Vice Presidents. In the absence of the Chief Executive
Officer and the President or in the event of the Chief Executive Officer and the
President's inability to act, the Vice President, if any (or in the event there
be more than one Vice President, the Vice Presidents in the order designated by
the Board, or in the absence of any designation, then in the order of their
election) shall perform the duties of the Chief Executive Officer and the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President. The Vice Presidents, if any, shall
perform such other duties and have such other powers as the Board or the Chief
Executive Officer or President may from time to time prescribe.
Section 6.6. The Secretary and Assistant Secretary. The Secretary
shall attend all meetings of the Board and all meetings of the Members and
record all the proceedings of the meetings of the Members and of the Board in a
book to be kept for that purpose and shall perform like duties for the standing
committees when required. The Secretary shall give, or cause to be given, notice
of all meetings of the Members and special meetings of the Board, and shall
perform such other duties as may be prescribed by the Board or Chief Executive
Officer or President, under whose supervision the Secretary shall be. The
Secretary shall properly maintain and file all books, reports, statements,
certificates and all other documents and records required by law, the
Certificate or by this Agreement. The Assistant Secretary, or if there be more
than one, the Assistant Secretaries in the order determined by the Board (or if
there be no such determination, then in order of their election) shall, in the
absence of the Secretary or in the event of the Secretary's inability to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board, the Chief Executive
Officer or the President may from time to time prescribe.
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Section 6.7. The Treasurer and Assistant Treasurer. The Treasurer
shall cause the moneys and other valuable effects of the Company to be deposited
in the name and to the credit of the Company in such banks or trust companies or
with such bankers or other depositaries of the Company. The Treasurer shall
cause the moneys of the Company to be disbursed by checks or drafts upon the
authorized depositaries of the Company and cause to be taken and preserved
proper vouchers for all moneys disbursed. The Treasurer may sign (unless an
Assistant Treasurer or the Secretary or an Assistant Secretary shall have
signed) certificates representing LLC Units the issuance of which shall have
been authorized by the Board. The Treasurer shall perform, in general, all
duties incident to the office of treasurer of a Delaware corporation and such
other duties as may be specified in this Agreement or as may be assigned to him
from time to time by the Board or the Chief Financial Officer, to whom he shall
report. The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board (or if there be no
such determination, then in the order of their election), shall, in the absence
of the Treasurer or in the event of the Treasurer's inability to act, perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board or the Chief Financial Officer or
the Chairman and the Vice Chairman may from time to time prescribe.
Section 6.8. Execution of Contracts. In addition to the authority
afforded to the Chief Executive Officer and President pursuant to Sections 6.3
and 6.5, respectively, contracts, documents or instruments in writing that
require the signature of the Company and that have been authorized under this
Agreement or by the Board may be signed by any Officer authorized to sign
pursuant to a resolution of the Board. The term "contracts, documents or
instruments in writing" as used in this Agreement shall include deeds, pledges,
mortgages, hypothecations, charges, conveyances, leases, licenses, transfers and
assignments of property, real or personal, immoveable or moveable, agreements,
releases, receipts and discharges for the payment of money or other obligations,
conveyances, transfers and assignments of shares, warrants, bonds, notes,
debentures or other securities and any instrument in writing.
Section 6.9. Officers as Agents. The Officers, to the extent of
their powers set forth in this Agreement or in a resolution of the Board, are
agents of the Company for the purpose of the Company's business, and the actions
of the Officers taken in accordance with such powers shall bind the Company.
Section 6.10. Reliance by Third Parties. Any Person dealing with the
Company or any Officer may rely upon a certificate signed by the Chief Executive
Officer, the President, any Vice President, the Secretary or any Assistant
Secretary as to:
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(a) the identity of the Chief Executive Officer, the President or
any Member or other Officer;
(b) the existence or non-existence of any fact or facts which
constitute a condition precedent to acts by the Chief Executive Officer,
the President or in any other manner germane to the affairs of the
Company;
(c) the Persons who are authorized to execute and deliver any
instrument or document of or on behalf of the Company; or
(d) any act or failure to act by the Company or as to any other
matter whatsoever involving the Company or any Member.
ARTICLE VII
AMENDMENTS
Section 7.1. Amendments. This Agreement may not be modified or
amended except by a written agreement signed by the Company and a majority of
the Members (by number of Voting LLC Units); provided that (i) any amendment or
modification of any provision hereof requiring, or providing for, (x) the
affirmative vote of a greater percentage than a majority of the Directors then
in office, or (y) the consent or approval of the Consenting CERA Principal or
any one or more Fund IV Nominees, shall also require an affirmative vote of such
greater percentage of such Directors or the consent or approval of the
applicable person or persons specified in subclause (y) above, as the case may
be, (ii) any amendment or modification of any provision hereof requiring, or
providing for, the affirmative vote of a specified percentage or proportion of
the Members or holders of LLC Units shall require the affirmative vote of such
percentage or proportion of the Members or such holders, as the case may be,
(iii) any amendment or modification of any provision hereof providing for, or
resulting in, the direct reduction or elimination of any right, preference or
benefit granted hereunder to any particular Person or group of specified Persons
(including, without limitation, any right to nominate or appoint, or consent to
or approve any nomination or appointment of, any Director, to grant or withhold
consent or approval with respect to any matter, to require registration of LLC
Units held by such Person, or to receive distributions of cash or other property
with respect to the LLC Units held by such Person) shall require the consent of
such Person or group of specified Persons, (iv) any amendment or modification of
the definition of Requisite Percentage of LLC Unitholders shall require the
affirmative vote of two-thirds of the Members (by number of Voting LLC Units),
and (v) any modification or
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amendment of any other provision of this Agreement (A) to satisfy any
requirements, conditions, guidelines or opinions contained in any opinion,
directive, order, ruling or regulation of the Commission, the Internal Revenue
Service or any other United States federal or state agency, or in any United
States federal or state statute, compliance with which the Board deems in good
faith to be in the best interests of the Company and (B) to cure any ambiguity
or mistake or correct or supplement any provision of this Agreement that may be
incomplete or inconsistent with any other provision contained herein, may be
signed by the Company only, without any approval of the Members being required,
if such modification or amendment shall have been authorized by the Board.
Anything in this Agreement to the contrary notwithstanding, any modification or
amendment of this Agreement by a written agreement signed by, or binding upon, a
Member shall be valid and binding upon any and all Persons who may, at any time,
have or claim any rights under or pursuant to this Agreement in respect of the
LLC Units originally acquired by such Member.
ARTICLE VIII
CAPITAL CONTRIBUTIONS AND INTERESTS
Section 8.1. Capital Units. The limited liability company interests
of the Company shall be represented by two classes of units of capital of the
Company, which shall consist of voting limited liability company interests
("Voting LLC Units") and non-voting limited liability company interests
("Non-Voting LLC Units" and, together with Voting LLC Units, the "LLC Units").
The Company shall have authority to issue (a) LLC Units to the Members (other
than the CERA Management Members) listed on Schedule A hereto, in the amounts
set forth thereon, and to CERA Inc. for transfer to the CERA Management Members,
in accordance with Section 2.1(b), (b) the Contingent LLC Units, (c) the LLC
Units issuable upon the exercise of CERA Contingent Options and GS Contingent
Options, (d) the LLC Units to be transferred upon the exercise of Existing MGI
Options and MGI/CERA Additional Options and (e) such additional LLC Units as may
be authorized from time to time by the Board.
Section 8.2. Capital Contributions of Property. On the Closing Date,
each Member listed on Schedule A hereto other than the CERA Management Members
shall be deemed to have contributed to the capital of the Company property
having the value set forth opposite such Member's name as such Member's capital
contribution on Schedule A hereto. Any contributions of property after the
Closing Date (including contributions in exchange for the issuance of LLC Units
by the Company) shall have the value determined by the Board.
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Section 8.3. Additional Capital Contributions. No Member shall be
required to make any additional capital contribution to the Company in respect
of the LLC Units then owned by such Member. However, a Member may make such
additional capital contributions to the Company, but only with the written
consent of the Board. The provisions of this Section 8.3 are intended solely to
benefit the Members and, to the fullest extent permitted by applicable law,
shall not be construed as conferring any benefit upon any creditor of the
Company (and no such creditor shall be a third party beneficiary of this
Agreement), and no Member shall have any duty or obligation to any creditor of
the Company to make any additional capital contributions or to cause the Board
to consent to the making of additional capital contributions. Members shall be
deemed to have contributed such additional capital upon issuance of additional
LLC Units equal to the cash purchase price for such LLC Units or, if no cash is
paid or there is non-cash consideration, in the amount of the fair market value
of such non-cash consideration as determined by the Board in good faith at or
prior to issuance of such LLC Units.
Section 8.4. Member's Interest. A Member's LLC Units shall for all
purposes be personal property. A Member has no interest in specific Company
property.
Section 8.5. Certificates of LLC Units. The LLC Units shall be
represented by certificates, provided that the Board may provide by resolution
or resolutions that some or all of any or all classes or groups of the LLC Units
shall be uncertificated LLC Units. Any such resolution shall not apply to LLC
Units represented by a certificate until such certificate is surrendered to the
Company. Notwithstanding the adoption of such a resolution by the Board, upon
request a holder of uncertificated LLC Units shall be entitled to have a
certificate signed by or in the name of the Company, by the Chief Executive
Officer or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, representing the number of LLC Units held
by such holder. Such certificate shall be in such form as the Board may
determine, to the extent consistent with applicable law, the Certificate and
this Agreement.
Section 8.6. Issuance of Non-Voting LLC Units. The Company shall not
issue or sell any Non-Voting LLC Units except in connection with an exchange of
Voting LLC Units as provided in Section 8.7.
Section 8.7. Conversion and Exchange. (a) Special Exchange of Voting
LLC Units for Non-Voting LLC Units. Voting LLC Units held by Fund IV may be
exchanged for the same number of Non-Voting LLC Units for the sole purpose of a
distribution by Fund IV to one or more of its limited partners which is a
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Regulated Holder, provided that the number of Voting LLC Units so exchanged does
not exceed the number of Regulated Securities required for any such Regulated
Holder. The subsequent transfer of any Non-Voting LLC Units by any such
Regulated Holder shall be subject to the provisions of Section 8.7(b)(ii), and
such Regulated Holder shall be permitted to convert Non-Voting LLC Units into
Voting LLC Units to the extent set forth in Section 8.7(b)(i).
(b) Conversion of Non-Voting LLC Units into Voting LLC Units. (i)
Optional Conversion of Non-Voting LLC Units. Each record holder of Non-Voting
LLC Units shall be entitled to convert any or all of such holder's Non-Voting
LLC Units into the same number of Voting LLC Units, provided that no holder of
Non-Voting LLC Units shall be entitled to convert any Non-Voting LLC Units to
the extent that, as a result of such conversion, such holder or the Affiliates
thereof would directly or indirectly own, control or have power to vote a
greater quantity of securities of any kind issued by the Company than such
holder and the Affiliates thereof permitted to own, control or have power to
vote under any law, regulation, order, rule or other requirement of any
governmental authority at any time applicable to such holder and the Affiliates
thereof.
(ii) Automatic Conversion of Non-Voting LLC Units. Upon the sale or
transfer of any Non-Voting LLC Units by the holder thereof to any Person who is
not an Affiliate of such holder (but including, without limitation, any sale or
transfer to an underwriter in connection with a Public Offering of Voting LLC
Units regardless of whether such underwriter is an Affiliate of such holder),
such Non-Voting LLC Units shall automatically be converted without further
action (an "Automatic Conversion") into an equal number of Voting LLC Units,
provided that a distribution of Non-Voting LLC Units by Fund IV to a Regulated
Holder shall not result in an Automatic Conversion.
Section 8.8. Certain Conversion and Exchange Procedures. (a) Each
conversion of Non-Voting LLC Units into Voting LLC Units (other than an
Automatic Conversion contemplated by Section 8.7(b)(ii)) and each exchange of
Voting LLC Units for Non-Voting LLC Units will be effected by the surrender of
the certificate or certificates representing the LLC Units to be converted or
exchanged, as the case may be, at the principal office of the Company or the
transfer agent designated by the Company, if any, at any time during normal
business hours, together with a written notice by the holder of such LLC Units
stating either (i) the number of Non-Voting LLC Units that such holder desires
to convert into Voting LLC Units (and such statement will obligate the Company
to issue such Voting LLC Units), or (ii) the number of Voting LLC Units that
such holder desires to exchange for Non-Voting LLC Units and that such exchange
is required in order for such holder to make a
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distribution of LLC Units to a proposed distributee that is a Regulated Holder
(and such statement will obligate the Company to issue such Non-Voting LLC
Units). Such conversion or exchange will be deemed to have been effected as of
the close of business on the date on which such certificate or certificates have
been surrendered and such notice has been received, and at such time the rights
of any such holder with respect to the converted Non-Voting LLC Units or
exchanged Voting LLC Units, as the case may be, will cease and the person or
persons in whose name or names the certificate or certificates for Voting LLC
Units or Non-Voting LLC Units, as the case may be, are to be issued upon such
conversion or exchange will be deemed to have become the holder or holders of
record of the Voting LLC Units or Non-Voting LLC Units, as the case may be,
represented thereby.
(b) Promptly after such surrender and the receipt of the written
notice referred to in Section 8.8(a), the Company will issue and deliver in
accordance with the surrendering holder's instructions the certificate or
certificates for the Voting LLC Units or Non-Voting LLC Units, as the case may
be, issuable upon such conversion or exchange and a certificate representing any
Voting LLC Units or Non-Voting LLC Units, as the case may be, which was
represented by the certificate or certificates delivered to the Company in
connection with such conversion or exchange but which was not converted or
exchanged. The Company shall be entitled to rely upon any written notice
delivered pursuant to Section 8.8(a) and such notice shall, in the absence of
manifest error, be binding and conclusive upon the Company.
(c) From and after an Automatic Conversion pursuant to Section
8.7(b)(ii), (i) each certificate formerly representing Non-Voting LLC Units
which NonVoting LLC Units were held by the holder thereof or any Affiliate
thereof and which were converted pursuant to such Automatic Conversion shall
thereafter be deemed to represent (A) only the like number of Voting LLC Units
into which such Non-Voting LLC Units have been converted pursuant to such
Automatic Conversion (and no Person shall thereafter have any rights in respect
of such Non-Voting LLC Units), plus (B) if all the Non-Voting LLC Units
represented by such certificate were not converted pursuant to such Automatic
Conversion, such number of Non-Voting LLC Units which were not so converted and
(ii) upon any surrender for transfer of any such certificate accompanied by a
written notice certifying that an Automatic Conversion has occurred and
specifying the number of LLC Units so converted, the Company will issue and
deliver (A) a certificate or certificates representing the Voting LLC Units into
which such Non-Voting LLC Units have been converted pursuant to such Automatic
Conversion and (B) if all the Non-Voting LLC Units represented by such
certificate or certificates were not converted pursuant to such Automatic
Conversion, a certificate or certificates representing such number of Non-Voting
LLC Units which were not so converted. The Company shall be entitled to rely on
any written notice
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delivered to the effect that an Automatic Conversion has occurred and such
notice shall, in the absence of manifest error, be binding and conclusive upon
the Company.
Section 8.9. Signatures; Facsimile. Any or all of such signatures on
the certificate representing LLC Units may be a facsimile, engraved or printed,
to the extent permitted by law. In case any Officer, transfer or exchange agent
or registrar who has signed, or whose facsimile signature has been placed upon,
such a certificate shall have ceased to be such officer, transfer or exchange
agent or registrar before such certificate is issued, it may be issued by the
Company with the same effect as if he were such Officer, transfer agent or
registrar at the date of issue.
Section 8.10. Lost, Stolen or Destroyed Certificates. The Board may
direct that a new certificate representing LLC Units be issued in place of any
certificate theretofore issued by the Company alleged to have been lost, stolen
or destroyed, upon delivery to the Board of an affidavit of the owner or owners
of such certificate, setting forth such allegation. The Board may require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to give the Company a bond sufficient to indemnify it against
any claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of any such new certificate.
Section 8.11. Registration and Transfer of LLC Units. Upon surrender
to the Company or the transfer agent of the Company, if any, of a certificate
for LLC Units, duly endorsed or accompanied by appropriate evidence of
succession, assignment or authority to transfer, in compliance with the
provisions hereof, the Company shall issue a new certificate representing LLC
Units to the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Subject to the provisions of the Certificate and
this Agreement, the Board may prescribe such additional rules and regulations as
it may deem appropriate relating to the issue, transfer and registration of LLC
Units.
Section 8.12. Transfer Agent, Exchange Agent and Registrar. The
Board may appoint one or more transfer agents, one or more exchange agents and
one or more registrars, and may require all certificates representing LLC Units
to bear the signature of any such transfer agents, exchange agents or
registrars.
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ARTICLE IX
ALLOCATIONS; DISTRIBUTIONS
Section 9.1. Allocations. (a) Except as provided in Section 9.1(b),
the income, gains, losses, credits and deductions of the Company for each
Allocation Period shall be determined as of the end of such Allocation Period
and shall be allocated for federal, state and local income tax purposes, to the
extent permitted under the Code and the Treasury Regulations, among the Members
in accordance with the respective LLC Units owned by the Members (as set forth
on the Membership Register) during such Allocation Period, or, in the case of
any such income, gains, losses, credits and deductions arising out of any sale
or other disposition described in clause (i) of the definition of Special
Distribution, in accordance with such LLC Units and the number of Contingent LLC
Units treated as owned by the Members pursuant to the second sentence of Section
9.2. Allocations of income, gains, losses and expenses of the Company for all
other purposes shall be made consistently with the allocations made pursuant to
the immediately preceding sentence.
(b) In accordance with section 704(c) of the Code and the Treasury
Regulations thereunder, any income, gain, loss, credit and deduction with
respect to any asset contributed to the capital of the Company by any Member
shall, solely for income tax purposes, be allocated among the Members so as to
take account of any variation between the adjusted basis of such asset to the
Company for income tax purposes and its initial Book Value (determined in
accordance with the definition of Book Value set forth in Article I). The method
of allocating such income, gain, loss, credit and deduction shall be such method
set forth in section 1.704-3(b) of the Treasury Regulations. In the event the
Book Value of any asset of the Company is subsequently adjusted in accordance
with the last sentence of such definition of Book Value, subsequent allocations
of any income, gain, loss, credit and deduction with respect to such asset shall
be determined using the principles specified in section 1.704-1(b)(2)(iv)(g) of
the Treasury Regulations and shall take account of any variation between the
adjusted basis of the asset to the Company for income tax purposes and its Book
Value (excluding any portion of such variation subject to the first sentence of
this Section 9.1(b)) in the manner required under section 1.704-1(b)(4)(i) of
the Treasury Regulations, using the method set forth in section 1.704-3(b) of
the Treasury Regulations.
Section 9.2. Distributions. Any distribution by the Company, whether
in kind or in cash, other than a Special Distribution, shall be made in
accordance with the respective LLC Units owned by the Members (as set forth on
the Membership Register) at the time of such distribution (except that cash
payments may be made
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upon the occurrence of a Spin-Off in lieu of distributing fractional interests
in the Subsidiary that is the subject of such Spin-Off). Any Special
Distribution by the Company, whether in kind or in cash, shall be made in
accordance with the respective LLC Units owned by the Members (as set forth on
the Membership Register) (i) at the time of the applicable sale or other
disposition in the case of a sale or other disposition described in clause (i)
of the definition of Special Distribution, and (ii) at the time of the
applicable distribution in the case of a distribution described in clause (ii)
of the definition of Special Distribution (the applicable time described in
clause (i) or (ii) above, the "Measurement Time") (except that cash payments may
be made upon the occurrence of a distribution described in clause (ii) of the
definition of Special Distribution in lieu of distributing fractional interests
in MGI or CERA Inc., as applicable); provided that each Member who, at the
Measurement Time, had a right to receive, under certain circumstances,
Contingent LLC Units pursuant to Section 1.3, 1.4 or 1.5 of the Merger and
Exchange Agreement, shall be treated, solely for the purposes of the applicable
Special Distribution, as if such Member owned the number of Contingent LLC Units
that would have been issuable to such Member, based on the CERA CAGR (as such
term is defined in the Merger and Exchange Agreement) as of the Measurement Time
(as determined in good faith by the Board), if the closing of a Non-qualifying
Sale (as defined in the Merger and Exchange Agreement) had occurred at the
Measurement Time. The Board shall determine in good faith whether a distribution
is a Special Distribution. The Board shall, in its sole discretion, determine
the time and the amount of any distribution, provided that, for each Taxable
Year, the Company shall make a cash distribution to the Members to the extent of
Available Assets in amounts intended to enable the Members (or any Person whose
tax liability is determined by reference to the income of a Member) to discharge
their United States federal, state and local income tax liabilities arising from
the allocations made pursuant to Section 9.1 (the "Tax Liability Distribution"),
except for any such allocations arising out of any variation between the
adjusted tax basis of any asset and its Book Value, and except to the extent
that cash distributions shall have theretofore been made during such Taxable
Year. The amount of any such Tax Liability Distribution shall be determined by
the Board in its sole discretion, taking into account (a) the greater of (i) the
maximum combined tax rate for United States federal, New York State and New York
City income tax purposes, (ii) the maximum combined tax rate for United States
federal and Massachusetts income tax purposes and (iii) the maximum combined tax
rate for United States federal income tax purposes and for purposes of any
income tax imposed by the jurisdiction in which the principal office of the
Company is located, in each case applicable to individuals or corporations
(whichever is higher) on ordinary income and net short-term capital gain or on
net long-term capital gain, as applicable, and taking into account the
deductibility of state and local income taxes for United States federal income
tax purposes and the deductibility of local income taxes for state income tax
purposes (and the assumptions
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described in this clause (a) shall be applied equally to each Member regardless
of such Member's place of residence or tax status), and (b) the amounts of
ordinary income, net short-term capital gain and net long-term capital gain so
allocated to the Members, and otherwise based on such reasonable assumptions as
the Board determines in good faith to be appropriate.
Section 9.3. Withholding. The Company shall withhold and pay over,
or otherwise pay, any withholding or other taxes payable by the Company with
respect to such Member or as a result of such Member's participation in the
Company pursuant to any applicable tax law. If and to the extent that the
Company shall be required to with hold or pay any such taxes, such Member shall
be deemed for all purposes of this Agreement to have received a payment from the
Company as of the time such with holding or tax is required to be paid, which
payment shall be deemed to be a distribution to the extent that such Member is
then entitled to receive a distribution and shall reduce the amount of
distributions otherwise to be made to such Member pursuant to Section 9.2. To
the extent that the aggregate of such payments to a Member for any period
exceeds the distributions to which such Member is entitled for such period, the
amount of such excess shall be considered a loan from the Company to such Member
with interest at the Prime Rate (or the Applicable Federal Rate if the Prime
Rate is less than the Applicable Federal Rate) until discharged by such Member
by repayment, which may be made out of distributions to which such Member would
otherwise be subsequently entitled. The withholdings referred to in this Section
9.3 shall be made at the maximum applicable statutory rate under the applicable
tax law unless the Company shall have received an opinion of counsel or other
evidence, satisfactory to the Company, to the effect that a lower rate is
applicable, or that no withholding is applicable.
Section 9.4. Restricted Distributions. Notwithstanding any provision
to the contrary contained in this Agreement, the Company shall not make a
distribution to any Member on account of such Member's interest in the Company
if such distribution would violate section 18-607 of the Delaware Act or other
applicable law.
ARTICLE X
BOOKS AND RECORDS; TAX MATTERS
Section 10.1. Books, Records and Financial Statements. (a) At all
times during the continuance of the Company, the Company shall maintain, at its
principal place of business, separate books of account for the Company that
shall show a true and accurate record of all costs and expenses incurred, all
charges made, all
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credits made and received and all income derived in connection with the
operation of the Company business in accordance with generally accepted
accounting principles consistently applied, and, to the extent inconsistent
therewith, in accordance with this Agreement. Such books of account, together
with an executed copy of this Agreement and of the Certificate, shall at all
times be maintained at the principal place of business of the Company, and such
books of account and such other materials as may be required to be provided to
any Member pursuant to section 18-305(a) of the Delaware Act shall be open to
inspection and examination at reasonable times during business hours by each
Member and the duly authorized representatives thereof upon reasonable written
notice for any purpose reasonably related to such Member's interest in the
Company, provided that the Directors shall have the right to withhold any such
information pursuant to section 18- 305(c) of the Delaware Act and otherwise
establish such lawful conditions for disclosure of information to the Members as
the Board may deem necessary or appropriate.
(b) The Treasurer shall prepare and maintain, or cause to be
prepared and maintained, the books of account of the Company.
(c) The Secretary shall cause to be maintained the Membership
Register.
Section 10.2. Filings of Returns and Other Writings; Tax Matters
Partner. (a) The Treasurer shall cause the preparation and timely filing of all
Company tax returns and shall, on behalf of the Company, timely file all other
writings required by any governmental authority having jurisdiction to require
such filing. The Company shall use its reasonable best efforts to send, no later
than 60 days after the end of each Taxable Year, to each Person that was a
Member at any time during such Taxable Year copies of (i) United States Internal
Revenue Service Form 1065, "U.S. Partnership Return of Income," or any successor
form, required to be filed by the Company, together with all schedules and
exhibits to such return (including Schedule K-1, "Partner's Share of Income,
Credits, Deductions, Etc.," or any successor schedule or form, for such Person),
together with such additional information (including information with respect to
unrelated business taxable income, if any, within the meaning of section 512 of
the Code, of the Company) as may be necessary for such Person (or any other
Person whose tax liability is determined by reference to the income of such
Person that was a Member and who is identified in writing by such Person that
was a Member to the Company) to file such Person's United States federal income
tax returns and (ii) such similar returns as are required to be filed by the
Company for United States state and local income tax purposes.
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(b) Each Member shall provide such information to the Company as may
be reasonably necessary for purposes of the Company's preparing any required tax
return or information return.
(c) The Board shall appoint a Member who is a Manager as the tax
matters partner (the "Tax Matters Partner") for the Company, who shall meet the
requirements set forth in section 301.6231(a)(7)-2 of the Treasury Regulations
and who shall serve as the Tax Matters Partner until such time as such Member
shall notify the Board that he, she or it is resigning as the Tax Matters
Partner or the Board shall appoint another such Member as the Tax Matters
Partner in accordance with this Section 10.2(c). Each Member hereby consents to
such designation and agrees that upon the request of the Tax Matters Partner,
such Member will execute, certify, acknowledge, deliver, swear to, file and
record at the appropriate public offices such documents as may be necessary or
appropriate to evidence such consent.
(d) Promptly following the written request of the Tax Matters
Partner, the Company shall, to the fullest extent permitted by law, reimburse
and indemnify the Tax Matters Partner for all reasonable expenses, including
reasonable legal and accounting fees, claims, liabilities, losses and damages
incurred by the Tax Matters Partner in connection with any administrative or
judicial proceeding with respect to the tax liability of the Company or the
Members, except to the extent arising from the bad faith, gross negligence,
willful violation of law, fraud or breach of this Agreement by such Tax Matters
Partner.
(e) The provisions of this Section 10.2 shall survive the
termination of the Company or the termination of any Member's interest in the
Company and shall remain binding on the Members for as long a period of time as
is necessary to resolve with the Internal Revenue Service any and all matters
regarding the federal income taxation of the Company or the Members.
Section 10.3. Accounting Method. For both financial and tax
reporting purposes, the books and records of the Company shall be kept on the
accrual method of accounting applied in a consistent manner and shall reflect
all Company transactions.
Section 10.4. Audits. At any time at the Board's sole discretion,
but at least annually, the financial statements of the Company may be audited by
the independent certified public accountants, with such audit to be accompanied
by a report of such accountants containing their opinion. The cost of such
audits will be an expense of the Company. A copy of any such audited financial
statements and accountant's report will be made available for inspection by the
Members.
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Section 10.5. Other Tax Matters. (a) The Company shall not elect to
be treated as an association taxable as a corporation for United States federal,
state or local income tax purposes under Treasury Regulations section 301.7701-3
or under any corresponding provision of state or local law.
(b) The Company shall use its best efforts to structure its
investments and activities so as to avoid the incurrence of any income which is
in the hands of any Member (or any other Person whose tax liability is
determined by reference to the income of a Member) "unrelated business taxable
income" (as such term is defined in section 512 of the Code). The Company will
generally not invest in partnership interests in partnerships or in interests in
other entities treated as partnerships for federal income tax purposes if such
investment would cause any non-United States Person that is a Member (or any
other non-United States Person whose U.S. federal income tax liability is
determined by reference to the income of a Member) to be deemed to be engaged in
a trade or business within the United States pursuant to section 875 of the Code
or any Member (or any other Person whose U.S. federal income tax liability is
determined by reference to the income of a Member) to incur unrelated business
taxable income pursuant to section 512(c) of the Code.
Section 10.6. Section 754 Election. The Company shall elect,
pursuant to section 754 of the Code, to adjust the basis of the property of the
Company as permitted and provided in sections 734 and 743 of the Code.
ARTICLE XI
LIABILITY, EXCULPATION AND INDEMNIFICATION
Section 11.1. Liability. Except as otherwise provided by the
Delaware Act, the debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be solely the debts, obligations
and liabilities of the Company, and no Covered Person shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Covered Person.
Section 11.2. Exculpation. (a) No Covered Person shall be liable to
the Company or any other Covered Person for any loss, damage or claim incurred
by reason of any act or omission performed or omitted by such Covered Person in
the good faith belief that such action was in, or was not opposed to, the best
interests of the Company and in a manner believed to be within the scope of
authority conferred on such Covered Person by or pursuant to this Agreement,
except that a Covered
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Person shall be liable for any such loss, damage or claim incurred by reason of
such Covered Person's gross negligence or willful misconduct.
(b) A Covered Person shall be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any Person as to matters the
Covered Person believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Company, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits or losses or any other facts
pertinent to the existence and amount of assets from which distributions to
Members might properly be paid.
Section 11.3. Fiduciary Duty. Subject to the provisions of Section
11.2 and Section 11.6, each Director, Officer and Member of the Company shall be
subject to the fiduciary duties of care and loyalty to the full extent that such
duties would be imposed on, or applicable to, a director, an officer or a
stockholder, respectively, of a corporation organized and existing pursuant to
the General Corporation Law of the State of Delaware (including legislative
history and judicial interpretations and applications thereof); provided that no
Covered Person acting under this Agreement shall be liable to the Company or,
with respect to any matter relating to the Company or its business, to any other
Covered Person for such Person's good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they restrict or
modify the duties and liabilities of a Covered Person otherwise existing at law
or in equity, are agreed by the parties hereto to replace such other duties and
liabilities of such Covered Person.
Section 11.4. Indemnification. (a) Nature of Indemnity. The Company
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was or has agreed to become a Director, Officer, employee or agent
of the Company, or is or was serving or has agreed to serve at the request of
the Company as a director, officer, employee or agent, of another company,
partnership, joint venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such capacity, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with such
action, suit or proceeding and any appeal therefrom, if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or proceeding
had no reasonable cause to believe his conduct was unlawful; except that in the
case of an action or suit by or in the right of the Company to procure a
judg-
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ment in its favor (1) such indemnification shall be limited to expenses
(including attorneys' fees) actually and reasonably incurred by such person in
the defense or settlement of such action or suit, and (2) no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Company unless and only to the
extent that the Delaware Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Delaware
Court of Chancery or such other court shall deem proper; provided that any
indemnity under this Section 11.4 shall be provided out of and to the extent of
Company assets only, and no Member or Director, Officer, employee or agent of
the Company shall have any personal liabilities with respect to such indemnity.
The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) Successful Defense. To the extent that a Director, Officer,
employee or agent of the Company has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in Section 11.4(a)
hereof or in defense of any claim, issue or matter therein, he shall be
indemnified by the Company against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
(c) Determination That Indemnification Is Proper. Any
indemnification under Section 11.4(a) hereof (unless ordered by a court) shall
be made by the Company unless a determination is made that indemnification of
the director, officer, employee or agent is not proper in the circumstances
because he has not met the applicable standard of conduct set forth in Section
11.4(a) hereof. Any such determination shall be made (1) by a majority vote of
the Directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) if there are no such Directors, or, if such
Directors so direct, by independent legal counsel in a written opinion, or (3)
by Members holding at least 66 2/3% of the LLC Units.
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(d) Advance Payment of Expenses. To the fullest extent permitted by
Applicable Law, expenses (including attorneys' fees) incurred by a Covered
Person in defending any civil, criminal, administrative or investigative claim,
demand, action, suit or proceeding shall, from time to time, be paid by the
Company in advance of the final disposition of such claim, demand, action, suit
or proceeding upon receipt by the Company of an undertaking by or on behalf of
the Covered Person to repay such amount if it shall ultimately be determined
that the Covered Person is not entitled to be indemnified by the Company as
authorized in this Section 11.4. Such expenses (including attorneys' fees)
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board deems appropriate. The Board may authorize the
Company's counsel to represent such director, officer, employee or agent in any
action, suit or proceeding, whether or not the Company is a party to such
action, suit or proceeding.
(e) Procedure for Indemnification of Directors and Officers. Any
indemnification of a person seeking indemnification under Sections 11.4(a) and
11.4(b), or advance of costs, charges and expenses to such person under Section
11.4(d) hereof, shall be made promptly, and in any event within 30 days, upon
the written request of such person. If a determination by the Company that such
person is entitled to indemnification pursuant to this Section 11.4 is required,
and the Company fails to respond within 60 days to a written request for
indemnity, the Company shall be deemed to have approved such request. If the
Company denies a written request for indemnity or advancement of expenses, in
whole or in part, or if payment in full pursuant to such request is not made
within 30 days, the right to indemnification or advances as granted by this
Section 11.4 shall be enforceable by the indemnified person in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Company. It shall be a
defense to any such action (other than an action brought to enforce a claim for
the advance of costs, charges and expenses under Section 11.4(d) where the
required undertaking, if any, has been received by the Company) that the
claimant has not met the standard of conduct set forth in Section 11.4(a) of
this Section 11.4, but the burden of proving such defense shall be on the
Company. Neither the failure of the Company (including its Board and its
independent legal counsel) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Section 11.4(a) hereof, nor the fact that there has been an actual
determination by the Company (including its Board, its independent legal
counsel, or Members holding at least 66 2/3% of the LLC Units) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
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(f) Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the Company
and each director, officer, employee and agent who serves in any such capacity
at any time while these provisions are in effect and any modification thereof
shall not affect any right or obligation then existing with respect to any state
of facts then or previously existing or any action, suit or proceeding
previously or thereafter brought or threatened based in whole or in part upon
any such state of facts. Such a "contract right" may not be modified
retroactively without the consent of such director, officer, employee or agent.
The indemnification and advancement of expenses provided by this
Section 11.4 shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any provision of this Agreement, vote of
disinterested Directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
(g) Insurance. The Company may purchase and maintain insurance, to
the extent and in such amounts as the Board shall, in its sole discretion, deem
reasonable, on behalf of Covered Persons and such other Persons as the Board
shall determine, against any liability that may be asserted against or expenses
that may be incurred by any such Person in connection with the activities of the
Company or such indemnities, regardless of whether the Company would have the
power to indemnify such Person against such liability under the provisions of
this Agreement. The Company may enter into indemnity contracts with Covered
Persons and such other Persons as the Board shall determine and adopt written
procedures pursuant to which arrangements are made for the advancement of
expenses and the funding of obligations under Section 11.4(d) hereof and
containing such other procedures regarding indemnification as are appropriate.
Section 11.5. Severability. To the fullest extent permitted by
applicable law, if any portion of this Article shall be invalidated on any
ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify each person who is or was serving or has agreed to serve
at the request of the Company as a Director, Officer, employee or agent of the
Company, or who is or was serving or has agreed to serve at the request of the
Company as a director, officer, employee or agent of another company,
partnership, joint venture, trust or other enterprise, as to costs, charges and
expenses (including reasonable attorneys' fees), judgments, fines and amounts
paid in settlement with respect to any action, suit or proceeding, whether
civil, criminal, administrative or investigative, including an action by or in
the right of
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the Company, to the fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated.
Section 11.6. Outside Businesses. Any Member or Affiliate thereof
may engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Company, and the Company, the Directors and the Members shall have no
rights by virtue of this Agreement in and to such independent ventures or the
income or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the business of the Company, shall not be deemed wrongful or
improper. No Member, Director or Affiliate thereof shall be obligated to present
any particular investment opportunity to the Company even if such opportunity is
of a character that, if presented to the Company, could be taken by the Company,
and any Member, Director or Affiliate thereof shall have the right to take for
such Person's own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment opportunity, provided that
this Section 11.6 shall not apply to Members who are employees of the Company or
any of its Subsidiaries.
ARTICLE XII
ADDITIONAL MEMBERS
Section 12.1. Admission. By approval of the Board, the Company is
authorized to admit any Person as an additional member of the Company (each, an
"Additional Member" and collectively, the "Additional Members"), subject to
compliance with the provisions of Article XIII of this Agreement. With respect
to the Persons exercising options to purchase LLC Units, each such Person shall
be deemed admitted as a Member upon execution of an LLC Unit Subscription
Agreement and such other documents as may be required pursuant to such LLC Unit
Subscription Agreement and as the Board may reasonably require, and the payment
of the applicable option exercise price, if any. Each Person other than a Person
admitted pursuant to Section 2.1(b) or a Person exercising options to purchase
LLC Units shall be admitted as an Additional Member at the time such Person (i)
executes a counterpart to this Agreement, (ii) complies with the applicable
Board resolution, if any, with respect to such admission and (iii) is named as a
Member in the Membership Register.
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ARTICLE XIII
TRANSFER OF INTERESTS; SUBSTITUTE MEMBERS
Section 13.1. Restrictions on LLC Unit Transfers. (a) Initial
Holding Period for Restricted Holders. No Member who, together with such
Member's Existing CERA Trusts (if any), owns, as of the date hereof, 5% or more
of the then outstanding LLC Units (any such Member, a "Restricted Holder"), no
Existing CERA Trust and none of such Member's or such trust's Permitted
Transferees who shall have become owners of LLC Units after the date hereof
shall, for a period ending on the earlier of three years after the Closing Date
(the "Initial Holding Period") and one year after the first Underwritten Public
Offering after the date hereof, Transfer any LLC Units (including any Transfer
pursuant to Section 13.2) except, subject to Section 13.1(c), (i) to an
unaffiliated third party (x) in a sale of all of the LLC Units pursuant to
Section 13.4, or (y) pursuant to a merger, conversion, consolidation or
reorganization of the Company, other than a Conversion Transaction (any such
sale, merger, conversion, consolidation or reorganization, a "Fundamental
Transaction"), (ii) in any Conversion Transaction, (iii) in a Public Offering,
(iv) Transfers to a Permitted Transferee or (v) Transfers to the Company or any
Subsidiary of the Company. This Section 13.1(a) shall not apply to Transfers by
MGI or CERA Inc. to the extent such Transfers are otherwise covered in Section
13.1(g).
(b) Restrictions on Other Transfers. No Member other than a
Restricted Holder, any Existing CERA Trust and any of such Restricted Holder's
or such trust's Permitted Transferees who shall have become owners of LLC Units
after the date hereof, and, after the earlier of the expiration of the Initial
Holding Period and one year after the first Underwritten Public Offering after
the date hereof, no Member, shall Transfer any LLC Units except, subject to
Section 13.1(c), (i) in a Fundamental Transaction, (ii) in a Conversion
Transaction, (iii) in a Public Offering, (iv) for Transfers to a Permitted
Transferee or to any Member who was a Member as of the Closing Date, (v) for
Transfers to the Company or any Subsidiary of the Company, (vi) subject to
compliance with Sections 13.2, 13.3 and 13.4, as applicable, for Transfers to
Restricted Holders or third parties for cash only in transactions which would be
exempt from the registration requirements of section 5 of the Securities Act by
virtue of the exemption provided by section 4(2) of the Securities Act if the
transferor were the issuer of the LLC Units, provided that, for purposes of this
clause (vi), the transferee is an "accredited investor" within the meaning of
Rule 501(a) under the Securities Act or (vii) following the first Underwritten
Public Offering after the date hereof and subject to compliance with Section
13.2 and Rule 144 or Rule 145 (or any successor provision) under the Securities
Act, if applicable, for any other Transfers to third parties. This Section
13.1(b) shall not apply to Transfers made by
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MGI or CERA Inc. to the extent such Transfers are covered in Section 13.1(g).
(c) Transfer Conditions. No Member shall Transfer any LLC Units if
such Transfer would constitute a Prohibited Transaction. The Board shall
evaluate each Transfer request, and the proposed transferor shall furnish such
information as may be requested by the Board, to determine if such Transfer
would constitute a Prohibited Transaction, which determination shall be
conclusive and binding absent manifest error. The Board shall promptly notify
the proposed transferor of the Board's determination. In addition, it shall be a
further condition of any LLC Unit Transfer pursuant to Section 13.1(a)(iv),
13.1(b)(iv) or 13.1(b)(vi) (other than pursuant to Section 13.4) that (i) the
transferee agrees in writing to be bound by the obligations and restrictions
applicable to Members and/or LLC Units under this Agreement, (ii) the
transferring Member and the transferee shall have complied with all requirements
of any applicable LLC Unit Subscription Agreement, (iii) the proposed transferee
provides to the Company the information required pursuant to Section 13.7(c),
and (iv) such transferring Member delivers to the Company (A) an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to the
Company, to the effect that (1) the Transfer does not violate and will not cause
the Company to be in violation of any Specified Laws, (2) the transferor and the
Specified Affiliate (in the case of a Transfer to a Permitted Transferee
described in clause (iv) of the definition of such term) have made all filings
and obtained all consents of any governmental entity and any other Person
required to be made or obtained by the transferor and the Specified Affiliate,
and have complied with all applicable requirements of Specified Laws in
connection with the Transfer of such LLC Units and (3) the transferring Member
and the transferee have complied with all requirements of this Agreement and any
applicable LLC Unit Subscription Agreement and (B) a certificate setting forth
the basis on which such Transfer is permitted under Section 13.1(a) or 13.1(b),
as the case may be, and, in the case of a Transfer of the type specified in
Section 13.1(b)(vi), describing compliance with Sections 13.2, 13.3 and 13.4, as
applicable.
(d) Restrictions to Avoid Publicly Traded Partnership Status. (i)
Notwithstanding any other provision to the contrary in this Agreement, until the
settlement date of the first Underwritten Public Offering, no Member shall
Transfer any LLC Interest (other than in a Private Transfer) in any form,
including but not limited to by entering into an Indirect LLC Interest, if such
transfer is made on an Established Securities Market or a Secondary Market.
Except for Transfers of LLC Units pursuant to Section 13.1(a)(i), (ii), (iii) or
(v) or Section 13.1(b)(i), (ii), (iii) or (v), the Member proposing to make any
Transfer of an LLC Interest prior to the settlement date of the first
Underwritten Public Offering shall (A) deliver to the Company a certificate
setting forth the basis on which such Member purports that such Transfer is not
prohibited under the immediately preceding sentence and (B) furnish
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such information as may be requested by the Board to determine if such Transfer
would be so prohibited.
(ii) Until the settlement date of the first Underwritten Public
Offering, the Company shall not (A) allow any LLC Interests to be listed or
traded on an Established Securities Market, (B) participate in the inclusion of
any LLC Interests on any Secondary Market or (C) recognize any Transfer of LLC
Interests (other than a Private Transfer) in any form, including but not limited
to the entering into of an Indirect LLC Interest, if such Transfer is made on an
Established Securities Market or a Secondary Market, including but not limited
to (1) by redeeming the transferor Member (in the case of a redemption or
repurchase by the Company) or (2) by admitting the transferee as a Member or
otherwise recognizing any rights of the transferee, including but not limited to
the right to receive distributions from the Company (directly or indirectly) or
to acquire an interest in the capital or profits of the Company.
(e) Custody of the LLC Unit Certificates. Unless otherwise agreed to
in writing by the Company, until the settlement date of the first Underwritten
Public Offering after the date hereof, each Member shall maintain such Member's
LLC Unit certificates in custody, pursuant to the Bailment Agreement, dated as
of the date hereof, between the Company, as bailee thereunder, Fund IV, the CERA
Principals and GS LP, substantially in the form of Exhibit B attached hereto,
the terms of which (including any amendments and supplements to such agreement
adopted in accordance with the terms thereof) are hereby acknowledged and agreed
to by, and shall be binding upon, each Member.
(f) Distributions Following Transfers. The Company shall, from the
effective date of any Transfer permitted under this Section 13.1, thereafter pay
all further distributions on account of the LLC Units (or part thereof) so
transferred to the transferee of such LLC Units (or part thereof). Any Transfer
of LLC Units in violation of this Section 13.1 shall be null and void ab
initio, and the Company shall not register, recognize or give effect to any such
Transfer, nor shall the intended transferee acquire any rights in such LLC Units
for any purposes of this Agreement. All Transfers permitted hereunder are
subject to Section 13.7.
(g) Transfers Involving MGI or CERA. The Transfer restrictions set
forth in Sections 13.1(a) and (b) shall not apply to transfers by MGI or CERA
Inc. to any Person to whom MGI or CERA Inc., as the case may be, may be
obligated to Transfer LLC Units pursuant to any agreement existing on the date
hereof, the Merger and Exchange Agreement (including the exhibits thereto), any
of the agreements entered into in connection with the transactions contemplated
thereby, or as
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contemplated by this Agreement, including (but not limited to) the following
types of Transfers: the grant of LLC Units to the CERA Management Members, the
transfer of the Contingent LLC Units to the CERA Management Members, the
transfer of LLC Units in connection with the exercise of Existing MGI Options,
MGI/CERA Additional Options or any other options granted pursuant to an LLC Unit
Subscription Agreement and transfers to Restricted Holders in connection with
the purchase by MGI or CERA Inc., as the case may be, of LLC Units pursuant to
any LLC Unit Subscription Agreement.
13.2. Participation Rights. So long as any Registrable Securities
remain outstanding and a Public Market has not been established with respect to
the LLC Units, no Restricted Holder, no Existing CERA Trust and no Permitted
Transferee of any Restricted Holder or any such trust shall make any sale or
transfer of LLC Units owned by such Member, trust or Permitted Transferee which
would constitute a Qualifying Sale, except pursuant to Section 13.4 or the
following provisions of this Section 13.2:
(a) Procedures for Qualifying Sales. At least 30 days prior to
making any Qualifying Sale, the applicable Restricted Holder, Existing CERA
Trust and/or such Restricted Holder's or such trust's Permitted Transferee will
send a written notice (the "Sale Notice") to the Company and the other holders
of Registrable Securities. The Sale Notice will disclose the identity of the
prospective transferee and the material terms and conditions of the proposed
Qualifying Sale, including the number of LLC Units that the prospective
transferee is willing to purchase and the intended consummation date of such
Qualifying Sale. The Restricted Holder, each of such Restricted Holder's
Existing CERA Trusts and each of such Restricted Holder's and such trusts'
Permitted Transferees that owns any LLC Units agrees not to consummate any
Qualifying Sale until at least 30 days after the related Sale Notice has been
sent to each holder of Registrable Securities, unless the Restricted Holder,
Existing CERA Trust or such Restricted Holder's and/or such trust's Permitted
Transferee, as the case may be, shall have received a notice from each holder of
Registrable Securities indicating whether or not such holder has elected to
participate in such Qualifying Sale and the number of LLC Units to be sold by
each such holder so electing to participate has been finally determined pursuant
hereto prior to the expiration of such 30-day period. Each holder of Registrable
Securities may elect to participate in the contemplated Qualifying Sale by
giving written notice to the applicable Restricted Holder, Existing CERA Trust
and/or such Restricted Holder's or such trust's Permitted Transferee and the
Company within 30 days after such Restricted Holder, Existing CERA Trust or such
Restricted Holder's and/or such trust's Permitted Transferee, as the case may
be, has sent the related Sale Notice to such holder. If a holder of Registrable
Securities elects to participate, such holder will be entitled to sell in the
contem-
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plated Qualifying Sale, at the same price and on the same terms and conditions
as set forth in the related Sale Notice, an amount of Registrable Securities
equal to the product of (i) the quotient determined by dividing (A) the
percentage of Registrable Securities then held by such holder of Registrable
Securities so electing to participate by (B) the aggregate percentage of
Registrable Securities represented by the Registrable Securities then held by
the selling Restricted Holder, such Restricted Holder's Existing CERA Trusts and
such Restricted Holder's and such trusts' Permitted Transferees and all holders
of Registrable Securities so electing to participate (in each case under this
clause (i) on a partially diluted basis taking into account only such options to
purchase LLC Units as are then exercisable and held by the selling Restricted
Holder, such Existing CERA Trusts, such Permitted Transferees or the holders of
Registrable Securities so electing to participate, as applicable) and (ii) the
number of Registrable Securities such transferee has agreed to purchase in the
contemplated sale (or in the case of a "Qualifying Sale" within the meaning of
clause (ii) of Section 13.2(b), the Excess Number of shares which such
transferee has agreed to purchase). If such right to participate in a Qualifying
Sale shall not have been exercised prior to the expiration of the 30-day period,
then at any time during the 90 days following the expiration of the 30- day
period, subject to extension for not more than an additional 90 days to the
extent reasonably required to comply with Applicable Laws in connection with
such purchase, the Restricted Holder, such Restricted Holder's Existing CERA
Trusts and such Restricted Holder's and such trusts' Permitted Transferees, as
applicable, may sell to the prospective transferee the number of LLC Units and
at the price and on the terms and conditions indicated in the Sale Notice. Upon
request of the Restricted Holder, Existing CERA Trust or such Restricted
Holder's and/or such trust's Permitted Transferee, as the case may be, in
connection with any contemplated Sale Notice, the Company will provide the
Restricted Holder, Existing CERA Trust or such Restricted Holder's and/or such
trust's Permitted Transferee, as the case may be, with a current list of holders
of Registrable Securities and their addresses.
(b) Qualifying Sale Defined. The term "Qualifying Sale" shall mean
(i) any sale or transfer of LLC Units proposed to be made by a Restricted
Holder, or any of such Restricted Holder's Existing CERA Trusts or such
Restricted Holder's or such trust's Permitted Transferees, pursuant to Section
13.1(b)(vi) or 13.1(b)(vii) (other than any sales or transfers to other
Restricted Holders pursuant to Section 13.3 following compliance with the right
of first offer procedures set forth in Section 13.3), at any time after the
Restricted Holder and/or such Restricted Holder's Existing CERA Trusts or such
Restricted Holder's or such trust's Permitted Transferees have sold or
transferred pursuant to Section 13.1(b)(vi) or 13.1(b)(vii) in the aggregate 5%
of the LLC Units owned by such Restricted Holder and such Restricted Holder's
Existing CERA Trusts, if any, at the time of the Closing and any LLC Units
acquired by such
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Restricted Holder, such Existing CERA Trust or any of such Restricted Holder's
or such trust's Permitted Transferees thereafter (the "Qualifying Number") or
(ii) in the event that prior to the sale or transfer by such Restricted Holder,
such Existing CERA Trust and/or such Permitted Transferees of an aggregate of
the Qualifying Number of LLC Units, the Restricted Holder, such Existing CERA
Trust or any of such Restricted Holder's or such trust's Permitted Transferees
proposes to sell or transfer pursuant to Section 13.1(b)(vi) or 13.1(b)(vii) a
number of LLC Units which when combined with any prior such sales or transfers
of LLC Units by such Restricted Holder, such Existing CERA Trust and/or such
Permitted Transferees exceeds the Qualifying Number, the sale or transfer
pursuant to Section 13.1(b)(vi) or 13.1(b)(vii) of a number of LLC Units (the
"Excess Number") equal to the excess of (A) the sum of any LLC Units previously
so sold or transferred by such Restricted Holder, such Existing CERA Trust
and/or such Restricted Holder's or such trust's Permitted Transferees and the
aggregate number of LLC Units proposed to be sold or transferred in such
contemplated sale, over (B) the Qualifying Number of LLC Units. In determining
whether there is a "Qualifying Sale," equitable adjustments shall be made to
reflect any LLC Unit split or combination, distribution of LLC Units,
recapitalization or similar transaction.
(c) Exclusion from Qualifying Sale. The obligations of a Restricted
Holder, an Existing CERA Trust and such Restricted Holder's and such trust's
Permitted Transferees and the rights of the holders of Registrable Securities
pursuant to this Section 13.2 will not apply to any sale or transfer by the
Restricted Holder, an Existing CERA Trust or any such Permitted Transferee
pursuant to a distribution and/or sale to the public (whether pursuant to a
registered Public Offering, Rule 144, broker's transactions or otherwise (but
not pursuant to Rule 144A under the Securities Act or any successor provision)).
Any LLC Units referred to, or covered by any sale or transfer referred to, in
the preceding sentence shall not be included in the computation of "Qualifying
Sale."
Section 13.3. First Offer Rights. In the event that any Member (such
Member, an "Offering Member") shall determine to offer to sell or to sell, prior
to the settlement date of the first Underwritten Public Offering after the date
hereof, for cash pursuant to Section 13.1(b)(vi) LLC Units owned by such
Offering Member (the "First Offer LLC Units"):
(a) Offer Required. The Offering Member shall make an offer (the
"Member Offer") of the First Offer LLC Units, in accordance with this Section
13.3, to the Company (or to MGI or CERA Inc., as applicable, if the Company
shall have assigned its right to accept the applicable Member Offer to MGI or
CERA Inc.) and (if applicable) each Restricted Holder (other than the Offering
Member if the Offering Member is a Restricted Holder).
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(b) First Offer Rights; Procedures. If the Offering Member is
required to make a Member Offer pursuant to this Section 13.3, the Offering
Member shall deliver to the Company a written notice (a "Member Offering
Notice") setting forth the number of LLC Units to be offered or sold, the
proposed date of offer or sale (which shall be not less than 70 days after the
date of delivery of the Member Offering Notice), and the terms and conditions of
the proposed offer or sale. The Member Offering Notice shall include an offer to
sell the First Offer LLC Units at the price and on the terms and conditions as
set forth in the Member Offering Notice, which offer by its terms shall remain
open for a period of 60 days from the date of the Company's receipt of the
Member Offering Notice. The Company may assign to MGI or CERA Inc. its right to
accept any Member Offer by delivery of written notice of such assignment to the
Offering Member and MGI or CERA Inc., as applicable, at any time prior to the
21st day after the delivery of the Member Offering Notice to the Company. In the
event of any such assignment, each reference to the Company in this Section
13.3(b) shall be deemed to refer to MGI or CERA Inc., as the case may be, unless
the context otherwise requires. Prior to the 21st day after the delivery of the
Member Offering Notice to the Company, the Company may accept the offer of First
Offer LLC Units in whole or in part by delivering to the Offering Member a
written notice of acceptance setting forth the number of First Offer LLC Units
which the Company shall elect to purchase. If the Company does not elect to
purchase all of the First Offer LLC Units included in the Member Offer, the
Company shall forward the Member Offering Notice to each Restricted Holder,
together with written notice of the number of First Offer LLC Units the Company
shall have elected not to purchase (the "Remaining LLC Units"). In accordance
with the procedures set forth in this Section 13.3 and for a second successive
period of 20 days, each such Restricted Holder shall have the right to elect to
purchase such Restricted Holder's pro rata portion (determined as of the date of
the Member Offering Notice and on a partially diluted basis taking into account
only such options to purchase LLC Units as are then exercisable and held by the
applicable Restricted Holder, and including any LLC Units held by such
Restricted Holder's CERA Trusts) of the Remaining LLC Units by delivering
written notice to the Company setting forth the number of the Remaining LLC
Units such Restricted Holder has so elected to purchase. If such Restricted
Holders in the aggregate do not elect to purchase all of the Remaining LLC
Units, then the Company shall send a written notice to each Restricted Holder
who had elected to purchase all of such Restricted Holder's pro rata portion of
the Remaining LLC Units during such 20-day period, which notice shall state the
number of Remaining LLC Units as to which elections have not been made, and for
a third successive period of 20 days (the "Third Round"), each such Restricted
Holder shall have the right to purchase additional Remaining LLC Units, in an
amount equal to either (i) the product of (x) the number of such Remaining LLC
Units in respect of
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which offers to purchase had not been accepted in the prior offering period and
(y) a fraction, the numerator of which shall be the number of LLC Units held by
such Restricted Holder (on a partially diluted basis taking into account only
such options to purchase LLC Units as are then exercisable and held by such
Restricted Holder, and including any LLC Units held by such Restricted Holder's
CERA Trusts) as of the date of the Member Offering Notice and the denominator of
which shall be the aggregate number of LLC Units then held by each Restricted
Holder that had subscribed for all of the Remaining LLC Units offered to such
Restricted Holder in the prior offering period (on a partially diluted basis
taking into account only such options to purchase LLC Units as are then
exercisable and held by any such Restricted Holder, and including any LLC Units
held by such Restricted Holder's CERA Trusts) or (ii) such other amount as shall
be agreed upon by all such Restricted Holders. Upon expiration of the Third
Round in accordance with the procedures set forth above, (x) if the Company and
the Restricted Holders in the aggregate have not accepted the Member Offer with
respect to all of the First Offer LLC Units, the Offering Member may proceed
with the proposed offer and sale of, and sell, all of the First Offer LLC Units
(and the Company and the Restricted Holders shall not be entitled to purchase
any of the First Offer LLC Units), at a price equal to no less than 90% of the
price set forth in the Member Offering Notice and on other terms and conditions
substantially the same as those set forth in the Member Offering Notice, at any
time during a period of 30 days after the last day of the Third Round or (y) if
the Company and the Restricted Holders in the aggregate have accepted the Member
Offer with respect to all of the First Offer LLC Units, the Company and (as
applicable) such Restricted Holders shall purchase from the Offering Member, and
the Offering Member shall sell to the Company and (as applicable) such
Restricted Holders, the First Offer LLC Units, on the terms and conditions
specified in the Member Offering Notice; provided that any Restricted Holder may
revoke such Restricted Holder's acceptance of any Member Offering Notice by
written notice to the Company and the Offering Member at any time within 20 days
following delivery of such Restricted Holder's initial acceptance thereof if
such Restricted Holder is unable to secure financing for such purchase in an
amount and on such terms and conditions as are reasonably acceptable to such
Restricted Holder, in which event the LLC Units covered by such revoked
acceptance shall thereupon be deemed Remaining LLC Units and reoffered, for a
period of 14 days, to each other Restricted Holder that elected to purchase all
of the Remaining LLC Units offered to such Restricted Holder in any offering
period, with such reoffering to be conducted as if such LLC Units were Remaining
LLC Units subject to a Third Round offering, as provided above.
Section 13.4. Take-Along Rights. (a) Take-Along Notice. Subject to
the prior application of the provisions of Section 13.3, if the holders of more
than 50% (a "Controlling Group") of the LLC Units (including LLC Units issuable
upon exercise
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of then exercisable options to purchase LLC Units and such number of Contingent
LLC Units as the Board shall determine would be issuable immediately prior to
the Section 13.4 Closing (as defined below) pursuant to Sections 1.3, 1.4, 1.5
and 1.6 of the Merger and Exchange Agreement based upon the CERA CAGR (as such
term is defined in the Merger and Exchange Agreement) as of the most recent
available date prior to such determination), acting jointly, intend to effect a
sale of all of their LLC Units (including such Contingent LLC Units and, if
applicable, their Contingent Options) to an unaffiliated third party (a "100%
Buyer") and elect to exercise their rights under this Section 13.4, such
Controlling Group shall deliver written notice (a "Take-Along Notice") to the
Company and the other Members (collectively, the "Other LLC Unitholders"), which
notice shall (a) state (i) that the Controlling Group wishes to exercise its
rights under this Section 13.4 with respect to such transfer, (ii) the name and
address of the 100% Buyer, (iii) the per LLC Unit amount and form of
consideration the Controlling Group proposes to receive for its LLC Units and
(iv) drafts of purchase and sale documentation setting forth the terms and
conditions of payment of such consideration and all other material terms and
conditions of such transfer (the "Draft Sale Agreement"), (b) contain an offer
(the "Take-Along Offer") by the 100% Buyer to purchase from the Other LLC
Unitholders all of their LLC Units, Contingent LLC Units and, if applicable,
their Contingent Options, on and subject to the same price, terms and conditions
offered to the Controlling Group and (c) state the anticipated time and place of
the closing of such transfer (a "Section 13.4 Closing"), which (subject to such
terms and conditions) shall occur not fewer than five days nor more than 90 days
after the date such Take-Along Notice is delivered, provided that if such
Section 13.4 Closing shall not occur prior to the expiration of such 90-day
period, the Controlling Group shall be entitled to deliver another Take-Along
Notice with respect to such Take-Along Offer. Upon request of a
Controlling Group, the Company shall provide the Controlling Group with a
current list of the names and addresses of the Other LLC Unitholders.
(b) Conditions to Take-Along. Upon delivery of a Take-Along Notice,
each of the Other LLC Unitholders shall have the obligation to transfer all of
such LLC Unitholder's LLC Units and Contingent LLC Units and, if applicable,
such LLC Unitholder's Contingent Options pursuant to the Take-Along Offer, as
such offer may be modified from time to time, provided that the Controlling
Group transfers all of its LLC Units and Contingent LLC Units and, if
applicable, its Contingent Options to the 100% Buyer at the Section 13.4 Closing
and that all LLC Units held by the Controlling Group and the Other LLC
Unitholders are sold to the 100% Buyer at the same price, and on the same terms
and conditions. In the event that any such Other LLC Unitholder shall determine
that the transfer of such LLC Unitholder's LLC Units, Contingent LLC Units or
Contingent Options to the 100% Buyer would constitute a prohibited transaction
under ERISA or the Code, such Other LLC Unitholder shall use
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reasonable best efforts to structure the transfer in a manner that would not
constitute a non-exempt prohibited transaction, including requesting an
individual exemption from the Department of Labor with respect to such transfer
and any other reasonable action. Within 10 days of receipt of the Take-Along
Notice, each of the Other LLC Unitholders shall (i) deliver or cause to be
delivered to the member or an Affiliate of the member of the Controlling Group
designated in the Take-Along Notice (the "Custodian") certificates representing
such Other LLC Unitholder's LLC Units, duly endorsed for transfer or accompanied
by duly executed instruments of transfer, and/or such agreements or other
instruments as shall be requested by the 100% Buyer to effect the transfer of
the Contingent LLC Units, and (ii) execute and deliver to the Custodian a power
of attorney and a letter of transmittal and custody agreement in favor of the
Custodian, and in form and substance reasonably satisfactory to the Controlling
Group, appointing the Custodian as the true and lawful attorney-in-fact and
custodian for such Other LLC Unitholder, with full power of substitution, and
authorizing the Custodian to execute and deliver a purchase and sale agreement
substantially in the form of the Draft Sale Agreement and to take such actions
as the Custodian may deem necessary or appropriate to effect the sale and
transfer of the LLC Units to the 100% Buyer, upon receipt of the purchase price
therefor set forth in the Take-Along Notice at the Section 13.4 Closing, free
and clear of all security interests, liens, claims, encumbrances, charges,
options, restrictions on transfer, proxies and voting and other agreements of
whatever nature, together with all other documents delivered with such Notice
and required to be executed in connection with the sale thereof pursuant to the
Take-Along Offer. The Custodian shall hold such LLC Units and other documents in
trust for such Other LLC Unitholder pending completion or abandonment of such
sale. If, within 90 days after the Controlling Group delivers the Take-Along
Notice, the Controlling Group has not completed the sale of all of the LLC Units
owned by the Controlling Group and the Other LLC Unitholders to the 100% Buyer
and another Take- Along Notice with respect to such Take-Along Offer has not
been sent to the Other LLC Unitholders, the Custodian shall return to each Other
LLC Unitholder all certificates representing the LLC Units and all other
documents that such Other LLC Unitholder delivered in connection with such sale.
The Controlling Group shall be permitted to send only two Take-Along Notices
with respect to any one Take-Along Offer. Promptly after the Section 13.4
Closing, the Custodian shall give notice thereof to the Other LLC Unitholders,
shall remit to each of the Other LLC Unitholders the total consideration for the
LLC Units of such Other LLC Unitholders sold pursuant thereto, and shall furnish
such other evidence of the completion and time of completion of such sale and
the terms thereof as may reasonably be requested by any of the Other LLC
Unitholders.
(c) Remedies. Each of the Other LLC Unitholders acknowledges that
the Controlling Group would be irreparably damaged in the event of a breach or a
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threatened breach by such Other LLC Unitholder of any of such LLC Unitholder's
obligations under this Section 13.4 and each of the Other LLC Unitholders agrees
that, in the event of a breach or a threatened breach by such Other LLC
Unitholder of any such obligation, the Controlling Group shall, in addition to
any other rights and remedies available to it in respect of such breach, be
entitled to an injunction from a court of competent jurisdiction (without any
requirement to post bond) granting it specific performance by such Other LLC
Unitholder of such LLC Unitholder's obligations under this Section 13.4. In the
event that the Controlling Group shall file suit to enforce the covenants
contained in this Section 13.4 (or obtain any other remedy in respect of any
breach thereof), the prevailing party in the suit shall be entitled to recover,
in addition to all other damages to which such party may be entitled, the costs
incurred by such party in conducting the suit, including reasonable attorneys'
fees and expenses. In the event that, following a breach by any Other LLC
Unitholder of the provisions of this Section 13.4, the Controlling Group does
not obtain an injunction granting it specific performance of such LLC
Unitholder's obligations under this Section 13.4 in connection with any proposed
sale prior to the time the Controlling Group completes the sale of its LLC Units
or the Controlling Group, in its sole discretion, abandons such sale, then the
Company shall have the option to purchase the LLC Units from such Other LLC
Unitholder at a purchase price per LLC Unit equal to the price per LLC Unit at
which such LLC Units were originally purchased from the Company or, if such LLC
Units were obtained by such Other LLC Unitholder pursuant to the Transactions,
equal to the amount of such Other LLC Unitholder's deemed capital contribution
per LLC Unit pursuant to Section 8.2.
Section 13.5. Members' Rights to Purchase Additional LLC Units. (a)
Restricted Holder Sale. If at any time after the date of this Agreement and
prior to the establishment of a Public Market with respect to the LLC Units, the
Company shall propose to issue or sell any additional LLC Units to any
Restricted Holder or any Affiliate (other than such officers or employees of or
consultants to the Company or any of its Subsidiaries who are not Restricted
Holders) of any Restricted Holder (a "Restricted Holder Sale"), the Company
shall offer to each holder of Registrable Securities that is an accredited
investor (as such term is defined in Rule 501 of Regulation D under the
Securities Act) the right to purchase that number of additional LLC Units, on
the same terms and conditions as the proposed Restricted Holder Sale, such that
such holder would have the opportunity to hold the same percentage of LLC Units
(on a partially diluted basis taking into account only such options to purchase
LLC Units as are then exercisable) after giving effect to the Restricted Holder
Sale, as such holder held immediately prior thereto (an "Offer").
Notwithstanding the foregoing, none of the following transactions shall
constitute a Restricted Holder Sale: the issuance by the Company of (x) any
Contingent LLC Units or (y) any LLC Units (A) pursuant to the Transactions, (B)
in connection with the transfer to the CERA
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Management Members promptly following the date hereof as described in the tenth
recital hereof, (C) in exchange for Voting LLC Units, (D) upon conversion of
Non-Voting LLC Units pursuant to Section 8.7 hereof, (E) upon or in connection
with exercise of Existing MGI Options or MGI/CERA Additional Options, (F) upon
or in connection with exercise of options granted pursuant to an LLC Unit
Subscription Agreement or (G) upon exercise of the CERA Contingent Options or
the GS Contingent Options.
(b) Offer Procedures. The Company shall make an Offer by delivering
to each holder of Registrable Securities at least 30 Business Days' prior
written notice of the proposed Restricted Holder Sale. Such notice will identify
the class and number of LLC Units (the "Offered Securities"), the proposed date
of issuance and the price and other terms of the issuance. Such notice will also
include an offer to sell to each such holder that number of the Offered
Securities such that such holder would have the opportunity to hold the same
percentage of LLC Units (on a partially diluted basis taking into account only
such options to purchase LLC Units as are then exercisable) after giving effect
to the Restricted Holder Sale, as such holder held immediately prior thereto
(such holder's "Proportionate Share"), at the same price and on the same other
terms as are proposed for such Restricted Holder Sale, which offer by its terms
shall remain open for a period of 15 Business Days from the date of receipt of
such notice, provided that in the event that the Offered Securities are
Non-Voting LLC Units, any holder not required by law to hold non-voting
securities of the Company may purchase such holder's Proportionate Share in
shares of Voting LLC Units. Each such holder shall give notice to the Company of
such holder's intention to accept an Offer prior to the end of the 15-Business
Day period of such Offer, setting forth such portion of the Offered Securities
which such holder elects to purchase. If any holder fails to subscribe in full
for such holder's Proportionate Share of the Offered Securities, the other
subscribing holders shall be entitled to purchase such Offered Securities as are
not subscribed for by such holder in such proportion of the Offered Securities
as they shall have theretofore agreed to purchase until there are no unmet
demands of subscribing holders or all Offered Securities shall have been
subscribed for. The Company shall notify each holder five (5) Business Days
following the expiration of the 15-Business Day period described above of the
amount of Offered Securities which each such holder may purchase pursuant to the
foregoing sentence, and each such holder shall then have 10 Business Days from
the delivery of such notice to indicate such additional amount, if any, that
such holder wishes to purchase. Upon the closing of the Restricted Holder Sale
as to which the Company has given notice, such holder shall purchase from the
Company, and the Company shall sell to such holders, the Offered Securities
subscribed for by such holders on the terms specified in the Offer, which shall
be the same terms at which all other Persons acquire such securities in
connection with such sale or issuance. In the event that
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<PAGE> 76
such holders do not subscribe for all of the Offered Securities, the Company
shall have 30 Business Days from the end of the foregoing 15-Business Day or
30-Business Day period, whichever is applicable, to sell all or any part of such
Offered Securities as to which such holders have not accepted an Offer to any
other Persons, in all material respects on terms and conditions that are no more
favorable to such other Persons or less favorable to the Company than those set
forth in the Offer. Any Offered Securities not purchased by such holders or
other Persons in accordance with this Section 13.5 may not be sold or otherwise
disposed of by the Company until they are again offered to such holders under
the procedures specified in this Section 13.5.
Section 13.6. Registration Rights. (a) The Members shall have the
registration rights set forth in Schedule C hereto.
(b) In the event of a determination by the Company, made in
accordance with the provisions of this Agreement, to cause (i) a Transfer of all
or substantially all of (x) the assets of the Company or (y) the LLC Units to a
newly organized stock corporation or other business entity ("Newco"), (ii) a
merger of the Company into a Newco by merger or consolidation as provided under
section 18-209 of the Delaware Act or otherwise or (iii) any other restructuring
of the LLC Units, in any case in anticipation of a Public Offering, each Member
shall take such steps to effect such Transfer, merger, consolidation or other
restructuring as may be requested by the Company, including, without limitation,
Transferring such Member's LLC Units to Newco in exchange for capital stock of
Newco; provided that no Member shall be required to take any action or omit to
take any action to the extent such action or omission violates Applicable Law.
In addition or alternatively, subject to Section 7.1, the terms and provisions
of this Agreement may be amended at any time by the Company to permit the
Company to register LLC Units under the Securities Act, which amendments may
include, without limitation, any changes in form and structure as may be deemed
by the Company to be necessary, convenient, desirable or incidental to
facilitate the public offering of LLC Units and may cause, among other things,
the Company or its successor to be taxed as a corporation.
Section 13.7. Substitute Members. In the event any Member Transfers
such Member's LLC Units in compliance with the other provisions of this Article
XIII, the transferee thereof shall become a Substitute Member of the Company
only upon satisfaction of the following:
(a) such Member and such transferee shall execute such instruments
as the Board or any Officer deems reasonably necessary or desirable to
effect such substitution;
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<PAGE> 77
(b) the transferee of such Member's LLC Units accepts and agrees in
writing to be bound by all of the terms and provisions of this Agreement;
and
(c) the transferee of such Member's LLC Units accepts and agrees in
writing to provide the Company with such information, including its
employer identification number or social security number, as applicable,
and the amount paid for the LLC Units, as the Company may in its
discretion request from time to time.
The Board in its sole discretion may agree to waive any or all of the conditions
set forth in subparagraphs (a) through (c) of this Section 13.7.
Section 13.8. Release of Liability. In the event any Member shall
sell or otherwise dispose of (other than by a pledge or collateral assignment)
all the LLC Units which such Member owns, in compliance with the provisions of
this Agreement without retaining any interest therein, then the selling Member
shall cease to be a Member, and shall be relieved of any further liability
arising hereunder for events occurring from and after the date of such Transfer.
ARTICLE XIV
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 14.1. Dissolving Events. The Company shall be dissolved in
the manner hereinafter provided upon the happening of any of the following
events:
(a) the Board and the Members shall vote or agree in writing to
dissolve the Company pursuant to Section 5.1(b)(iv) or 4.4(f), as
applicable; or
(b) any event which under Applicable Law would cause the dissolution
of the Company, provided that, unless required by law, the Company shall
not be wound up as a result of any such event and the business of the
Company shall be continued.
Notwithstanding the foregoing, the death, retirement, resignation, expulsion,
bankruptcy or dissolution of any Member or the occurrence of any other event
that terminates the continued membership of any Member in the Company under the
Delaware Act shall not, in and of itself, cause the dissolution of the Company.
In such event, the remaining Member(s) shall continue the business of the
Company without dissolution.
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<PAGE> 78
Section 14.2. Dissolution and Winding-Up. Upon the dissolution of
the Company, the assets of the Company shall be liquidated or distributed under
the direction of and to the extent determined by the Board and the business of
the Company wound up, provided that this Agreement shall remain in full force
and effect, notwithstanding any prior dissolution of the Company, until
termination of the Company in accordance with Section 14.3. Within a reasonable
time after the effective date of dissolution of the Company, the Company's
assets shall be distributed in the following manner and order:
(a) to all creditors of the Company, to the extent otherwise
permitted by law, in satisfaction of liabilities of the Company, including
any amounts the Company may owe under the indemnity provided in Section
11.4 hereof (whether by payment or the making of reasonable provision for
payment thereof); and
(b) with respect to any remaining proceeds, to make distributions to
the Members in accordance with Section 9.2;
provided that no payment or distribution in any of the foregoing categories
shall be made until all obligations in each prior category shall have been
satisfied in full, and provided, further, that if the payments due to be made in
any of the foregoing categories exceed the remaining assets available for such
purpose, such payments shall be made to the Persons within such categories
entitled to receive the same pro rata in accordance with the respective amounts
due to them.
Section 14.3. Termination. The Company shall terminate when the
winding up of the Company's affairs has been completed, all of the assets of the
Company have been distributed and the Certificate has been canceled, all in
accordance with the Delaware Act.
Section 14.4. Claims of the Members. The Members and former Members
shall look solely to the Company's assets for the return of their capital
contributions, and if the assets of the Company remaining after payment of or
due provision for all debts, liabilities and obligations of the Company are
insufficient to return such capital contributions, the Members and former
Members shall not be entitled to have such capital contributions returned to
them and shall have no recourse against the Company or any other Member.
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ARTICLE XV
MISCELLANEOUS
Section 15.1. Notices. All notices, demands and other communications
made in connection with this Agreement shall be in writing. Any notice or other
communication in connection herewith shall be deemed duly given to any party (a)
three Business Days after it is sent by express, registered or certified mail,
return receipt requested, postage prepaid or (b) two Business Days after it is
sent by overnight courier guaranteeing next day delivery, in each case, to the
address of such party set forth in the Membership Register in the case of any
Member or as set forth below in the case of the Company, or to such other
address as such party may have designated to the Company in writing, and:
(a) if given to the Company, at the address set forth below:
Global Decisions Group LLC
20 University Road
Cambridge, Massachusetts 02138
Facsimile:
Telephone:
Attention:
or at such other address or addresses where the Company's principal office
may be located. Copies of any notice or other communication given under
the Agreement shall also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Facsimile: (212) 407-5252
Telephone: (212) 407-5200
Attention: Donald J. Gogel
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<PAGE> 80
Brera Capital Partners, LLC
590 Madison Avenue, 18th Floor
New York, New York 10022
Facsimile: (212) 835-1399
Telephone: (212) 835-1350
Attention: Alberto Cribiore
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Facsimile: (212) 909-6836
Telephone: (212) 909-6000
Attention: Steven R. Gross, Esq.
(b) if given to any CERA Stockholder or CERA Trust, to such Person
at the address set forth in the Membership Register, with copies to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Telecopy: (617) 526-5000
Telephone: (617) 526-6000
Attention: Paul P. Brountas, Esq.; and
(c) if given to any other Member, at the address set forth for such
Member in the Membership Register or at such other address as such Member
may hereafter designate by written notice to the Company.
Any party may give any notice or other communication in connection herewith
using any other means (including, but not limited to, personal delivery,
messenger service, facsimile, telex or ordinary mail), but no such notice or
other communication shall be deemed to have been duly given unless and until it
is actually received by the individual for whom it is intended.
Section 15.2. Legend on LLC Unit Certificates. A copy of this
Agreement shall be filed with the Secretary of the Company and kept with the
records of the Company. Each certificate representing LLC Units that are issued
on the date hereof or granted to the CERA Management Members on the day
following the date hereof is subject to this Agreement and shall bear the
following legend:
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<PAGE> 81
"THE LLC UNITS REPRESENTED HEREBY ARE ENTITLED TO THE BENEFITS OF
AND ARE BOUND BY THE OBLIGATIONS, AND ARE SUBJECT TO THE TRANSFER
RESTRICTIONS, HOLDBACK AND OTHER PROVISIONS OF THE AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY, DATED
AS OF ______ __, 1997, AS SUCH AGREEMENT MAY BE AMENDED,
SUPPLEMENTED OR MODIFIED FROM TIME TO TIME (THE "LLC AGREEMENT"),
AND NEITHER THIS CERTIFICATE NOR THE LLC UNITS REPRESENTED BY IT ARE
ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH LLC AGREEMENT, A COPY OF WHICH AGREEMENT IS ON
FILE WITH THE SECRETARY OF THE COMPANY."
Each certificate representing LLC Units that are issued subsequent
to the date hereof (other than the Contingent LLC Units and LLC Units issued
upon exercise of the Contingent Options) shall bear a legend substantially to
the following effect in place of the legend set forth above:
"THE LLC UNITS REPRESENTED HEREBY ARE ENTITLED TO THE BENEFITS OF
AND ARE BOUND BY THE OBLIGATIONS, AND ARE SUBJECT TO THE TRANSFER
RESTRICTIONS, HOLDBACK AND OTHER PROVISIONS OF A [MANAGEMENT] LLC
UNIT [SUBSCRIPTION] [GRANT] AGREEMENT, DATED AS OF ______ __, ___,
AS THE SAME MAY BE AMENDED, SUPPLEMENTED OR MODIFIED FROM TIME TO
TIME (THE "[SUBSCRIPTION] [GRANT] AGREEMENT"), AND THE AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF THE COMPANY, DATED
AS OF ______ __, 1997, AS SUCH AGREEMENT MAY BE AMENDED,
SUPPLEMENTED OR MODIFIED FROM TIME TO TIME (THE "LLC AGREEMENT"),
AND NEITHER THIS CERTIFICATE NOR THE LLC UNITS REPRESENTED BY IT ARE
ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH SUBSCRIPTION AGREEMENT AND LLC AGREEMENT, COPIES
OF WHICH AGREEMENTS ARE ON FILE WITH THE SECRETARY OF THE COMPANY."
"THE LLC UNITS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS
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<PAGE> 82
AMENDED, OR UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT
BE TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS (i) (A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
(B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE COMPANY AN OPINION
OF COUNSEL, WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH DISPOSITION IS
EXEMPT FROM THE PROVISIONS OF SECTION 5 OF SUCH ACT, OR (C) A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION,
REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, SHALL HAVE BEEN
OBTAINED WITH RESPECT TO SUCH DISPOSITION AND (ii) SUCH DISPOSITION
IS PURSUANT TO REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION THEREFROM."
Any LLC Unit certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon the
completion of a public distribution of securities of the Company represented
thereby or otherwise if the holder of the LLC Units represented by such
certificate shall have delivered to the Company an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to the Company, that the
Securities Act permits such certificate to be issued without such legend or with
a legend modified as set forth in such opinion) shall also bear such legend. The
provisions of this Agreement shall be binding upon, and shall inure to the
benefit of, the Members and all subsequent holders of LLC Units who acquired the
same directly or indirectly from a Member to the extent set forth herein. The
Company agrees that it will not transfer on its books any certificate
representing LLC Units in violation of the provisions of this Agreement.
In the event of any merger, consolidation, reorganization, exchange
of securities, recapitalization, liquidation or similar transaction where the
LLC Units are converted into or exchanged for other securities, all references
in this Agreement (including the Schedules hereto) to LLC Units shall be deemed
to refer to such securities into which the LLC Units shall have been converted
or for which the LLC Units shall have been exchanged.
Section 15.3. Headings. The headings contained in this Agreement are
for purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
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Section 15.4. Entire Agreement. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
Section 15.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which shall together constitute one and the same instrument.
Section 15.6. Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE INTERNAL
LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICT OF LAWS.
Section 15.7. Term of Certain Provisions. In the event of a
termination of this Agreement pursuant to a Conversion Transaction, the
provisions of Sections 13.1 through 13.6 (including Schedule C hereto), other
than Section 13.1(d), shall continue in full force and effect until the
occurrence of a Fundamental Transaction or until such provisions shall have
terminated or ceased to have any further force or effect in accordance with
their terms, provided that upon the occurrence of the first Underwritten Public
Offering after the date hereof, the provisions of Sections 13.3 and 13.4 shall
terminate but the provisions of Section 13.1, 13.2, 13.5 and 13.6 (including
Schedule C hereto) shall continue in full force and effect until such provisions
shall have terminated or ceased to have any further force or effect in
accordance with their terms.
Section 15.8. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, the other Members and their
respective successors and permitted assigns.
Section 15.9. No Third-Party Beneficiaries. Except as provided in
Section 11.4 with respect to indemnification of directors, officers, employees
or agents, nothing in this Agreement shall confer any rights upon any person or
entity other than the parties hereto and their respective successors and
permitted assigns.
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<PAGE> 84
Section 15.10. Consent to Jurisdiction. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATES OF NEW YORK AND DELAWARE AND THE
FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE, CITY AND
COUNTY OF NEW YORK OR IN THE DISTRICT OF DELAWARE, AS APPLICABLE, SOLELY IN
RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT AND OF THE DOCUMENTS REFERRED TO IN THIS AGREEMENT, AND HEREBY AND
THEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR
PROCEEDING FOR THE INTERPRETATION OR ENFORCEMENT HEREOF OR OF ANY SUCH DOCUMENT,
THAT THEY ARE NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY
NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT THE VENUE THEREOF
MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO
SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH NEW YORK STATE,
DELAWARE STATE OR FEDERAL COURT. THE PARTIES HERETO HEREBY CONSENT TO AND GRANT
ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT
MATTER OF ANY SUCH DISPUTE AND AGREE THAT, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH
ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 15.1, OR IN SUCH OTHER
MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE
THEREOF. EACH OF THE PARTIES HERETO AGREES THAT THIS AGREEMENT INVOLVES AT LEAST
$100,000.00 AND THAT THIS AGREEMENT HAS BEEN ENTERED INTO IN EXPRESS RELIANCE
UPON 6 Del. C. ss. 2708. EACH OF THE PARTIES HERETO IRREVOCABLY AGREES, TO THE
EXTENT SUCH PARTY IS NOT OTHERWISE SUBJECT TO SERVICE OF PROCESS IN THE STATE OF
DELAWARE, TO APPOINT AND MAINTAIN AN AGENT IN THE STATE OF DELAWARE AS SUCH
PARTY'S AGENT FOR ACCEPTANCE OF LEGAL PROCESS.
Section 15.11. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
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<PAGE> 85
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH,
TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (B) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY,
AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.11.
Section 15.12. Severability. If any provision of this Agreement is
in operative or unenforceable for any reason, such circumstances shall not have
the effect of rendering the provision in question inoperative or unenforceable
in any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any extent
whatsoever, so long as this Agreement, taken as a whole, still expresses the
material intent of the parties hereto. The invalidity of any one or more
phrases, sentences, clauses, Sections or subsections of this Agreement shall not
affect the remaining portions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above stated.
MEMBERS:
THE CLAYTON & DUBILIER PRIVATE
EQUITY FUND IV LIMITED PARTNERSHIP
By: Clayton & Dubilier Associates IV
Limited Partnership,
the General Partner
By:
----------------------------
a general partner
-----------------------------
Daniel H. Yergin
-----------------------------
Joseph A. Stanislaw
-----------------------------
James P. Rosenfield
-----------------------------
Jamie W. Katz, as Trustee for the James P.
Rosenfield Irrevocable Gift Trust
-----------------------------
Augusta McC. P. Stanislaw, as Trustee for
the Joseph A. Stanislaw 1994 Trust for
Louis Joseph Perkins Stanislaw
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<PAGE> 87
-----------------------------
Augusta McC. P. Stanislaw, as Trustee for
the Joseph A. Stanislaw 1994 Trust for
Katrina Augusta Perkins Stanislaw
-----------------------------
Augusta McC. P. Stanislaw, as Trustee for
the Joseph A. Stanislaw 1994 Trust for
Henry Winslow Perkins Stanislaw
-----------------------------
I.C. Bupp
-----------------------------
Stephen C. Aldrich
THE GOLDMAN SACHS GROUP, L.P.
By: The Goldman Sachs Corporation,
as general partner of The Goldman
Sachs Group, L.P.
By:
---------------------------------
Name:
Title:
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<PAGE> 88
WITHDRAWING MEMBERS:
MCM GROUP, INC.
By:
---------------------------------
Name:
Title:
MCCARTHY, CRISANTI & MAFFEI, INC.
By:
---------------------------------
Name:
Title:
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<PAGE> 89
Schedule A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
MEMBERS
- -------------------------------------------------------------------------------------------------------------
Name Mailing Address Number of LLC Value of Property Deemed
Units Issued to to Have Been Contributed
Member to Company
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The Clayton & Dubilier Private 270 Greenwich Avenue
Equity Fund IV Limited Greenwich, Connecticut
Partnership 06830
- -------------------------------------------------------------------------------------------------------------
Daniel H. Yergin
- -------------------------------------------------------------------------------------------------------------
Joseph A. Stanislaw
- -------------------------------------------------------------------------------------------------------------
James P. Rosenfield
- -------------------------------------------------------------------------------------------------------------
Jamie W. Katz, as Trustee for the
James P. Rosenfield Irrevocable
Gift Trust
- -------------------------------------------------------------------------------------------------------------
Augusta McC. P. Stanislaw, as
Trustee for the Joseph A. Stanislaw
1994 Trust for Louis Joseph
Perkins Stanislaw
- -------------------------------------------------------------------------------------------------------------
Augusta McC. P. Stanislaw, as
Trustee for the Joseph A. Stanislaw
1994 Trust for Katrina Augusta
Perkins Stanislaw
- -------------------------------------------------------------------------------------------------------------
Augusta McC. P. Stanislaw, as
Trustee for the Joseph A. Stanislaw
1994 Trust for Henry Winslow
Perkins Stanislaw
- -------------------------------------------------------------------------------------------------------------
I.C. Bupp
- -------------------------------------------------------------------------------------------------------------
Stephen C. Aldrich
- -------------------------------------------------------------------------------------------------------------
The Goldman Sachs Group, L.P. c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
- -------------------------------------------------------------------------------------------------------------
[Former stockholders of MGI to be
listed]
- -------------------------------------------------------------------------------------------------------------
CERA Management Members: [To [N/A]
Come]
- -------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 90
SCHEDULE B
The initial Book Values of the CERA Common Stock, the portion of the GS
Partnership Interest contributed to the Company and the MGI Common Stock shall
be equal to the respective number of LLC Units received in exchange therefor
pursuant to the Merger and Exchange Agreement on the Closing Date (not including
any Contingent LLC Units), multiplied by the value per LLC Unit as of the
Closing Date set forth in (or agreed upon pursuant to the provisions of) Section
1.8 of the Merger and Exchange Agreement.
In the event that the CERA CAGR (as such term is defined in the Merger and
Exchange Agreement) shall be equal to or greater than 16%, the initial Book
Values of the CERA Common Stock and of the portion of the GS Partnership
Interest contributed to the Company shall be equal to the respective number of
LLC Units received in exchange therefor pursuant to the Merger and Exchange
Agreement on the Closing Date plus the respective number of LLC Units issued as
additional consideration therefor pursuant to Sections 1.3(c) and 1.4(c) of the
Merger and Exchange Agreement, multiplied by the value per LLC Unit as of the
Closing Date set forth in (or agreed upon pursuant to the provisions of) Section
1.8 of the Merger and Exchange Agreement.
<PAGE> 91
SCHEDULE C
This Schedule C describes certain registration rights of the holders
of Registrable Securities (collectively, the "LLC Unitholders"). Capitalized
terms used herein without definition shall have the meanings set forth in the
Amended and Restated Limited Liability Company Agreement, dated as of
______________, 1997 (the "Agreement"), of Global Decisions Group LLC, a
Delaware limited liability company (the "Company"). In the event that, at the
time any rights under Section 13.6 of the Agreement are exercised, the equity
securities of the Company or its successor are not comprised of limited
liability company interests of a limited liability company, all references
herein to LLC Units shall be deemed to refer to such equity securities and the
other provisions of this Schedule C shall be appropriately applied, with such
adjustment as shall be necessary to give effect to the intent of such
provisions. The words "hereby," "herein," "hereof," "hereunder" and words of
similar import refer to this Schedule C as a whole and not merely to the
specific section, paragraph or clause in which such word appears. All references
herein to Sections shall be deemed references to this Schedule C unless the
context shall otherwise require.
1.1 Registration Upon Request.
(a) Requests. Subject to the provisions of Section 1.6, at any time
or from time to time (i) the Requisite Percentage of LLC Unitholders shall have
the right to make one or more written requests, and (ii) the Requisite
Percentage of CERA Principals shall have the right to make two (2) written
requests, that the Company effect the registration under the Securities Act of
all or part of the Registrable Securities of the holder or holders of such
securities and their trusts making such request, which requests shall specify
the intended method of disposition thereof by such holder or holders of such
securities and their trusts.
(b) Obligation to Effect Registration. Upon receipt by the Company
of any request for registration pursuant to Section 1.1(a), the Company will
promptly give written notice of such requested registration to all holders of
Registrable Securities, and thereupon will use its best efforts to effect the
registration under the Securities Act of
(i) the Registrable Securities which the Company has been so
requested to register pursuant to Section 1.1(a), and
<PAGE> 92
(ii) all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request given to
the Company within 30 days after the Company has given such written notice
(which request shall specify the intended method of disposition of such
Registrable Securities),
all to the extent required to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered. Notwithstanding the preceding sentence:
(x) the Company shall not be required to effect a registration
requested (a) pursuant to Section 1.1(a)(i) if the aggregate number of
Registrable Securities referred to in clauses (i) and (ii) of this Section
1.1(b) included in such registration shall be less than 20% of the
Registrable Securities at the time outstanding and (b) pursuant to Section
1.1(a)(ii) if the aggregate number of Registrable Securities referred to
in clauses (i) and (ii) of this Section 1.1(b) included in such
registration shall be, in the case of the first request, less than 50%,
and in the case of the second request, less than one-third, of the LLC
Units held by the CERA Principals (including LLC Units held by CERA
Trusts) on the Closing Date; and
(y) if the Board determines in its good faith judgment, after
consultation with a firm of nationally recognized underwriters, that there
will be an adverse effect on a then contemplated initial Underwritten
Public Offering of LLC Units, then the Requisite Percentage of LLC
Unitholders or the Requisite Percentage of CERA Principals, as the case
may be, shall be given notice of such fact and shall be deemed to have
withdrawn such request and such registration shall not be deemed to have
been effected or requested pursuant to this Section 1.1.
(c) Registration Statement Form. Each registration requested
pursuant to this Section 1.1 shall be effected by the filing of a registration
statement on Form S-1, Form S-2 or Form S-3 (or any other form which includes
substantially the same information as would be required to be included in a
registration statement on such forms as presently constituted), unless the use
of a different form is (i) required by law or (ii) permitted by law and agreed
to in writing by holders holding at least a majority (by number of LLC Units) of
the Registrable Securities as to which registration has been requested pursuant
to this Section 1.1. At any time after the date hereof that the Company shall
have issued and sold any LLC Units registered under an effective registration
statement under the Securities Act, or after the Company shall have registered
any class of equity securities pursuant to Section 12 of the Exchange
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<PAGE> 93
Act, it will use its best efforts to qualify for registration on Form S-2 or
Form S-3 (or any other comparable form hereinafter adopted).
(d) Expenses. The Company will pay all Registration Expenses in
connection with the first two registrations which are effected as requested
under Section 1.1(a) (i) and each of the two registrations which are effected as
requested under Section 1.1(a)(ii). The Registration Expenses in connection with
each other registration, if any, requested under this Section 1.1 shall be
apportioned among the holders whose Registrable Securities are then being
registered, on the basis of the respective amounts (by number of LLC Units) of
Registrable Securities then being registered by them or on their behalf.
However, in the case of all registrations requested under Section 1.1(a), the
Company shall pay all amounts in respect of (i) any allocation of salaries of
personnel of the Company and its Subsidiaries or other general overhead expenses
of the Company and its Subsidiaries or other expenses for the preparation of
financial statements or other data normally prepared by the Company and its
Subsidiaries in the ordinary course of its business, (ii) the expenses of any
officers' and directors' liability insurance, (iii) the expenses and fees for
listing the securities to be registered on each exchange on which similar
securities issued by the Company are then listed or, if no such securities are
then listed on an exchange selected by the Company and (iv) all fees associated
with filings required to be made with the NASD (including, if applicable, the
fees and expenses of any "qualified independent underwriter" and its counsel as
may be required by the rules and regulations of the NASD).
(e) Inclusion of Other Securities. The Company shall not register
securities (other than Registrable Securities) for sale for the account of any
Person other than the Company in any registration requested pursuant to Section
1.1(a) unless permitted to do so by the written consent of holders holding at
least a majority (by number of LLC Units) of the Registrable Securities
proposed to be sold in such registration.
(f) Effective Registration Statement. A registration requested
pursuant to Section 1.1(a) will not be deemed to have been effected unless it
has become effective for the period specified in Section 1.3(b). Notwithstanding
the preceding sentence, a registration requested pursuant to Section 1.1(a)
which does not become effective after the Company has filed a registration
statement with respect thereto solely by reason of the refusal to proceed of the
holder or holders of Registrable Securities requesting the registration shall be
deemed to have been effected by the Company at the request of such holder or
holders.
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(g) Pro Rata Allocation. If the holders of a majority (by number of
LLC Units) of the Registrable Securities for which registration is being
requested pursuant to Section 1.1(a) determine, based on consultation with the
managing underwriters or, in an offering which is not underwritten, with an
investment banker, that the number of securities to be sold in any such
offering should be limited due to market conditions or otherwise, all holders of
Registrable Securities proposing to sell their securities in such registration
shall share pro rata in the number of securities being offered (as determined by
the holders holding a majority (by number of LLC Units) of the Registrable
Securities for which registration is being requested in consultation with the
managing underwriters or investment banker, as the case may be) and registered
for their account, such sharing to be based on the number of Registrable
Securities as to which registration was requested by such holders, and any
securities that the Company shall have proposed to sell for its own account in
such offering shall be included only if all Registrable Securities as to which
registration was requested are included therein.
1.2. Incidental Registration. If the Company at any time proposes to
register any of its equity securities (as defined in the Exchange Act) under the
Securities Act (other than pursuant to Section 1.1 or pursuant to a Special
Registration), whether or not for sale for its own account, and the registration
form to be used may be used for the registration of Registrable Securities, it
will each such time give prompt written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
Section and, upon the written request of any holder of Registrable Securities
given to the Company within 30 days after the Company has given any such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such holder and the intended method of disposition thereof), the Company
will use its best efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to register
by the holders thereof, to the extent required to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, provided that:
(a) if such registration shall be in connection with the
Underwritten Public Offering of the Common Stock, the Company shall not
include any Registrable Securities in such proposed registration if the
Board shall have deter mined, after consultation with the managing
underwriters for such offering, that it is not in the best interests of
the Company to include any Registrable Securities in such registration,
provided that, if the Board makes such a determination, the Company shall
not include in such registration any securities not being sold for the
account of the Company;
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(b) if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities,
the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities or other securities
that was previously notified of such registration and, thereupon, shall
not register any Registrable Securities in connection with such
registration (but shall nevertheless pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any
holder or holders of Registrable Securities to request that a registration
be effected under Section 1.1;
(c) if the Company shall be advised in writing by the managing
underwriters (or, in connection with an offering which is not
underwritten, by an investment banker) (and the Company shall so advise
each holder of Registrable Securities requesting registration of such
advice) that in their or its opinion the number of securities requested to
be included in such registration (whether by the Company, pursuant to this
Section 1.2 or pursuant to any other rights granted by the Company to a
holder or holders of its securities to request or demand such registration
or inclusion of any such securities in any such registration) exceeds the
number of such securities which can be sold in such offering,
(i) the Company shall include in such registration the number
(if any) of Registrable Securities so requested to be included which
in the opinion of such underwriters or investment banker, as the
case may be, can be sold and shall not include in such registration
any securities (other than securities being sold by the Company,
which shall have priority in being included in such registration) so
requested to be included other than Registrable Securities unless
all Registrable Securities requested to be so included are included
therein, and
(ii) if in the opinion of such underwriters or investment
banker, as the case may be, some but not all of the Registrable
Securities may be so included, all holders of Registrable Securities
requested to be included therein shall share pro rata in the number
of Registrable Securities included in such Underwritten Public
Offering on the basis of the number of Registrable Securities
requested to be included therein by such holders, provided that, in
the case of a registration initially requested or demanded by a
holder or holders of securities other than Registrable Securities,
the holders of the Registrable Securities
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requested to be included therein and the holders of such other
securities shall share pro rata (based on the number of LLC Units if
the requested or demanded registration is to cover only LLC Units
and, if not, based on the proposed offering price of the total
number of securities included in such Underwritten Public Offering
requested to be included therein),
and the Company shall so provide in any registration agreement hereinafter
entered into with respect to any of its securities; and
(d) if prior to the effective date of the registration statement
filed in connection with such registration, the Company is informed by the
managing underwriter (or, in connection with an offering which is not
underwritten, by an investment banker) that the price at which such
securities are to be sold is a price below that price which the requesting
holders shall have indicated to be acceptable, the Company shall promptly
notify the requesting holders of such fact, and each such requesting
holder shall have the right to withdraw its request to have its
Registrable Securities included in such registration statement.
The Company will pay all Registration Expenses in connection with
each registration of Registrable Securities requested pursuant to this Section
1.2. No registration effected under this Section 1.2 shall relieve the Company
from its obligation to effect registrations upon request under Section 1.1.
1.3. Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 1.1 and 1.2, the
Company will promptly:
(a) subject to clauses (x) and (y) of Section 1.1(b), prepare and
file with the Commission a registration statement with respect to such
securities, make all required filings with the NASD and use best efforts
to cause such registration statement to become effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith and such other documents as may be necessary to keep
such registration statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof set forth in such
registration statement, but in no event
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for a period of more than six months after such registration statement
becomes effective;
(c) furnish to counsel (if any) selected by the holders of a
majority (by number of LLC Units) of the Registrable Securities covered by
such registration statement copies of all documents proposed to be filed
with the Commission in connection with such registration, which documents
will be subject to the review of such counsel;
(d) furnish to each seller of such securities, without charge, such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case, including all exhibits and
documents filed therewith (other than those filed on a confidential
basis), except that the Company shall not be obligated to furnish any
seller of securities with more than two copies of such exhibits and
documents), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any
summary prospectus) in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably request in
order to facilitate the disposition of the securities owned by such
seller;
(e) use its best efforts (x) to register or qualify the securities
covered by such registration statement under such other securities or blue
sky laws of such jurisdictions as each seller shall request, (y) to keep
such registration or qualification in effect for so long as such
registration statement remains in effect and (z) to do any and all other
acts and things which may be necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the securities
owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, subject
itself to taxation in any jurisdiction wherein it is not so subject, or
take any action which would subject it to general service of process in
any jurisdiction wherein it is not so subject;
(f) in connection with an Underwritten Public Offering only, furnish
to each seller a signed counterpart, addressed to the sellers, of
(i) an opinion of counsel for the Company experienced in
securities law matters, dated the effective date of the registration
statement, and
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(ii) a "comfort" letter signed by the independent public
accountants who have issued an audit report on the Company's
financial statements included in the registration statement, subject
to such seller having executed and delivered to the independent
public accountants such certificates and documents as such
accountants shall reasonably request and provided that such
accountants shall be permitted by the standards applicable to
certified public accountants to deliver a "comfort" letter to such
seller,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
Underwritten Public Offerings of securities;
(g) (i) notify each holder of Registrable Securities covered by such
registration statement if such registration statement, at the time it or
any amendment thereto became effective, (x) contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading
upon discovery by the Company of such material misstatement or omission or
(y) upon discovery by the Company of the happening of any event as a
result of which the Company believes there would be such a material
misstatement or omission, and, as promptly as practicable, prepare and
file with the Commission a post-effective amendment to such registration
statement and use best efforts to cause such post-effective amendment to
become effective such that such registration statement, as so amended,
shall not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) notify each holder of
Registrable Securities covered by such registration statement, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, if the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading upon discovery by the Company
of such material misstatement or omission or upon discovery by the Company
of the happening of any event as a result of which the Company believes
there would be a material misstatement or omission, and, as promptly as is
practicable, prepare and furnish to such holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as
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may be necessary so that, as thereafter delivered to the purchasers of
such securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(h) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
of the Company complying with the provisions of Section 11(a) of the
Securities Act and Rule 158 under the Securities Act;
(i) notify each seller of any securities covered by such
registration statement (i) when such registration statement, or any
post-effective amendment to such registration statement, shall have become
effective, or any amendment of or supplement to the prospectus used in
connection therewith shall have been filed, (ii) of any request by the
Commission to amend such registration statement or to amend or supplement
such prospectus or for additional information, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of such
registration statement or of any order preventing or suspending the use of
any preliminary prospectus, and (iv) of the suspension of the
qualification of such securities for offering or sale in any jurisdiction,
or of the institution of any proceedings for any of such purposes;
(j) use its best efforts (i) (A) to list such securities on any
securities exchange on which the LLC Units are then listed or, if no LLC
Units are then listed, on an exchange selected by the Company, if such
listing is then permitted under the rules of such exchange or (B) if such
listing is not practicable or the Board determines that quotation as a
NASDAQ security is preferable, to secure designation of such securities as
a NASDAQ "national market system security" within the meaning of Rule
11Aa2-1 under the Exchange Act and (ii) to provide and cause to be
maintained a transfer agent and registrar for such Registrable Securities
not later than the effective date of such registration statement; and
(k) use every reasonable effort to obtain the lifting of any stop
order that might be issued suspending the effectiveness of such
registration statement or of any order preventing or suspending the use of
any preliminary prospectus, provided that if the Company is unable to
obtain the lifting of any such stop order in connection with a
registration pursuant to Section 1.1(a), the request for registration
shall not be deemed exercised for purposes of determining
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whether such registration has been effected for purposes of Section 1.1(a)
or (d).
The Company may require each seller of any securities as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law
in connection therewith. Each such holder agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such holder not materially
misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any securities covered thereby by name, or otherwise
identifies such seller as the holder of any securities of the Company, without
the consent of such seller, such consent not to be unreasonably withheld, except
that no such consent shall be required for any disclosure that is required by
law.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company pursuant to Section 1.3(g), such holder will promptly
discontinue such holder's disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such holder
shall have received, in the case of clause (i) of Section 1.3(g), notice from
the Company that such registration statement has been amended, as contemplated
by Section 1.3(g), and, in the case of clause (ii) of Section 1.3(g), copies of
the supplemented or amended prospectus contemplated by Section 1.3(g). If so
directed by the Company, each holder of Registrable Securities will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, in such holder's possession of the prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event that the Company
shall give any such notice, the period mentioned in Section 1.3(b) shall be
extended by the number of days during the period from and including the date of
the giving of such notice to and including the date when each seller of any
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 1.3(g).
Although Voting LLC Units, Non-Voting LLC Units and LLC Units issued
upon the exercise of options are included in the definition of Registrable
Securities, the Company shall, in respect of any such Registrable Securities
requested to be
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registered pursuant hereto, be required to include in any registration statement
only Voting LLC Units.
1.4. Underwritten Offerings. The provisions of this Section 1.4 do
not establish additional registration rights but instead set forth procedures
applicable, in addition to those set forth in Sections 1.1 through 1.3, to any
registration which is an underwritten offering.
(a) Underwritten Offerings Exclusive. Whenever a registration
requested pursuant to Section 1.1 is for an underwritten offering, only
securities which are to be distributed by the underwriters may be included in
the registration.
(b) Underwriting Agreement. If requested by the underwriters for any
underwritten offering by holders of Registrable Securities pursuant to a
registration requested under Section 1.1(a), the Company shall enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the holders of a majority
(by number of LLC Units) of the Registrable Securities to be covered by such
registration and to the underwriters and to contain such representations and
warranties by the Company and such other terms and provisions as are customarily
contained in agreements of this type, including, but not limited to, indemnities
to the effect and to the extent provided in Section 1.7, provisions for the
delivery of officers' certificates, opinions of counsel and accountants'
"comfort" letters and hold-back arrangements. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to such
underwriting agreement and may, at their option, require that any or all of the
representations and warranties by, and the agreements on the part of, the
Company to and for the benefit of such underwriters be made to and for the
benefit of such holders of Registrable Securities and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement shall also be conditions precedent to the obligations of
such holders of Registrable Securities. In the event that any condition to the
obligations under any such underwriting agreement are not met or waived, and
such failure to be met or waived is not attributable to the fault of the selling
LLC Unitholders requesting a demand registration pursuant to Section 1.1(a),
such request for registration shall not be deemed exercised for purposes of
determining whether such registration has been effected for purposes of Section
1.1(a) or (d). No holder of Registrable Securities shall be required by the
Company to make any representations or warranties to, or agreements with, the
Company or the underwriters other than as set forth in Sections 1.4(e) and
1.7(b), representations, warranties or agreements regarding such holder and such
holder's intended method of distribution and any other representations required
by applicable law.
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(c) Selection of Underwriters. Whenever a registration requested
pursuant to Section 1.1(a) is for an underwritten offering, the Company will
have the right to select the managing underwriters to administer the offering
(subject to the consent (not to be unreasonably withheld) of the holders of a
majority of the LLC Units requested to be registered by CERA Principals
(including the CERA Trusts) in the case of a registration requested pursuant to
Section 1.1(a)(ii)), which managing underwriters shall be underwriters of
nationally recognized standing. If the Company at any time pro poses to register
any of its securities under the Securities Act for sale for its own account and
such securities are to be distributed by or through one or more underwriters,
the Company will have the right to select the managing underwriters to
administer the offering at least one of which shall be an underwriter of
nationally recognized standing.
(d) Incidental Underwritten Offerings. Subject to the provisions of
the proviso to the first sentence of Section 1.2, if the Company at any time
proposes to register any of its equity securities under the Securities Act
(other than pursuant to Section 1.1 or pursuant to a Special Registration),
whether or not for its own account, and such securities are to be distributed by
or through one or more underwriters, the Company will give prompt written notice
to all holders of Registrable Securities of its intention to do so and, if
requested by any holder of Registrable Securities, will use its best efforts to
arrange for such underwriters to include the Registrable Securities to be
offered and sold by such holder among those to be distributed by such
underwriters. The holders of Registrable Securities to be distributed by such
underwriters shall be parties to the under writing agreement between the Company
and such underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of the underwriters under such
underwriting agreement shall also be conditions precedent to the obligations of
such holders of Registrable Securities. No such holder of Registrable
Securities shall be required by the Company to make any representations or
warranties to, or agreements with, the Company or the underwriters other than as
set forth in Sections 1.4(e) and 1.7(b), representations, warranties or
agreements regarding such holder and such holder's intended method of
distribution and any other representations required by applicable law.
(e) Hold Back Agreements. If and whenever the Company proposes to
register any of its equity securities under the Securities Act, whether or not
for its own account (other than pursuant to a Special Registration), or is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 1.1 or 1.2, each holder
of Registrable Securities agrees by acquisi-
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tion of such Registrable Securities not to effect (other than pursuant to such
registration) any public sale or distribution, including, but not limited to,
any sale pursuant to Rule 144 or Rule 144A, of any Registrable Securities, any
other equity securities of the Company or any securities convertible into or
exchangeable or exercisable for any equity securities of the Company for one
year after, and during the 20 days prior to, the effective date of such
registration and the Company agrees to cause each holder of any equity security,
or of any security convertible into or exchangeable or exercisable for any
equity security, of the Company purchased from the Company at any time other
than in a Public Offering to enter into a similar agreement with the Company.
The Company further agrees not to effect (other than pursuant to such
registration or pursuant to a Special Registration) any public sale or
distribution, or to file any registration statement (other than such
registration or a Special Registration) covering any, of its equity securities,
or any securities convertible into or exchangeable or exercisable for such
securities, during the 20 days prior to, and for one year after, the effective
date of such registration if required by the managing underwriter.
1.5. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of such
Registrable Securities so to be registered and their underwriters, if any, and
their respective counsel and accountants the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have issued audit reports on its financial
statements as shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
1.6. Other Registrations. If and whenever the Company is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act pursuant to Section 1.1 or 1.2, and if such
registration shall not have been withdrawn or abandoned, the Company shall not
be obligated to and shall not file any registration statement with respect to
any of its securities (including Registrable Securities) under the Securities
Act (other than a Special Registration), whether of its own accord or at the
request or demand of any holder or holders of such securities, until a period of
six months shall have elapsed from the effective date of such previous
registration; and the Company shall so provide in any registration rights
agreement with respect to any of its equity securities.
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1.7. Indemnification.
(a) Indemnification by the Company. In the event of any registration
of any Registrable Securities under the Securities Act pursuant to Section 1.1
or 1.2, the Company will and hereby does indemnify and hold harmless each seller
of such securities, its directors, officers, and employees, each other person
who participates as an underwriter, broker or dealer in the offering or sale of
such securities and each other person, if any, who controls such seller or any
such participating person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all losses,
claims, damages or liabilities, joint or several, to which such seller or any
such director, officer, employee, participating person or controlling person may
become subject under the Securities Act or otherwise (including, without
limitation, the reasonable fees and expenses of legal counsel incurred in
connection with any claim for indemnity hereunder), insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein or related thereto, or
any amend ment or supplement thereto, or (ii) any omission or alleged omission
to state a fact required to be stated in any such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement or necessary to make the statements therein not misleading; and the
Company will reimburse such seller and each such director, officer, employee,
participating person and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding, provided that the Company
shall not be liable in any such case to the extent that any such loss, claim,
dam age, liability or expense arises out of or is based upon an untrue statement
or omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such seller or participating person expressly for use in the
preparation thereof and provided, further, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the prospectus, if such untrue
statement or alleged untrue statement or omission or alleged omission is
completely corrected in an amendment or supplement to the prospectus and the
seller of Registrable Securities thereafter fails to deliver such prospectus as
so amended or supplemented prior to or concurrently with the sale of Registrable
Securities to the person asserting such loss, claim, damage, liability or
expense after the Company had furnished such seller with a sufficient number of
copies of the same or if the seller received notice from the Company
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of the existence of such untrue statement or alleged untrue statement or
omission or alleged omission and the seller continued to dispose of Registrable
Securities prior to the time of the receipt of either (A) an amended or
supplemented prospectus which completely corrected such untrue statement or
omission or (B) a notice from the Company that the use of the existing
prospectus may be resumed. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
director, officer, employee, participating person or controlling person and
shall survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. In the event of any registration
of any Registrable Securities under the Securities Act pursuant to Section 1.1
or 1.2, each of the prospective sellers of such securities will indemnify and
hold harmless the Company, each director of the Company, each officer of the
Company who shall sign such registration statement, each other person who
participates as an underwriter, broker or dealer in the offering or sale of such
securities and each other person, if any, who controls the Company or any such
participating person within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer, employee, participating person or controlling person may become subject
under the Securities Act or otherwise (including, without limitation, the
reasonable fees and expenses of legal counsel incurred in connection with any
claim for indemnity hereunder), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a fact contained
in, or any omission or alleged omission to state a fact with respect to such
seller required to be stated in, any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein or related thereto, or
any amendment or supplement thereto, if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company by such seller expressly for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement; and the seller will reimburse the Company and each such
director, officer, employee, participating person and controlling person for
any legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding, provided that the liability of each such seller will be in
proportion to and limited to the net amount received by such seller (after
deducting any underwriting discount and expenses) from the sale of Registrable
Securities pursuant to such registration statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
the Company or any such director, officer, participating person or controlling
person and shall survive the transfer of such securities by such seller.
15
<PAGE> 106
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 1.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party hereunder, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified party
to give notice as provided therein shall not relieve the indemnifying party of
its obligations under the preceding paragraphs of this Section 1.7. In case any
such action is brought against an indemnified party, the indemnifying party will
be entitled to participate therein and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, provided that if such indemnified
party and the indemnifying party reasonably determine, based upon advice of
their respective independent counsel, that a conflict of interest may exist
between the indemnified party and the indemnifying party with respect to such
action and that it is advisable for such indemnified party to be represented by
separate counsel, such indemnified party may retain other counsel, reasonably
satisfactory to the indemnifying party, to represent such indemnified party, and
the indemnifying party shall pay all reasonable fees and expenses of such
counsel. No indemnifying party, in the defense of any such claim or litigation,
shall, except with the consent of such indemnified party, which consent shall
not be unreasonably withheld, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to that specified
in the preceding paragraphs of this Section 1.7 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of such Registrable
Securities under any Federal or state law or regulation of governmental
authority other than the Securities Act.
(e) Other Remedies. If for any reason the foregoing indemnity under
Section 1.7(a) or (b) is unavailable, or is insufficient to hold harmless an
indemnified party, other than by reason of the exceptions provided therein, then
the indemnifying party and the indemnified party under Section 1.7(a) or (b)
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the
16
<PAGE> 107
relative fault of the indemnifying party on the one hand and the indemnified
party on the other or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, in such proportion as is appropriate to
reflect not only the relative fault of the indemnifying party on the one hand
and the indemnified party on the other but also the relative benefits received
by the indemnifying party and the indemnified party from the offering of
Registrable Securities (taking into account the portion of the proceeds of the
offering realized by each such party) as well as any other relevant equitable
considerations. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any party's obligation to contribute pursuant to this Section
1.7(e) is several (in proportion to the relative value of their Registrable
Securities covered by a registration statement) and not joint with the
obligations of any other party. No party shall be liable for contribution under
this Section 1.7(e) except to the extent and under such circumstances as such
party would have been liable to indemnify under this Section 1.7 if such
indemnification were enforceable under applicable law.
(f) Officers and Directors. As used in this Section 1.7, the terms
"officers" and "directors" shall include the partners of the holders of
Registrable Securities which are partnerships and the trustees of CERA trusts.
(g) Indemnification Payments. The indemnification and contribution
required by this Section 1.7 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred; provided that in the
event it is ultimately determined that any amounts so paid were not subject to
indemnification or contribution hereunder, the recipient thereof shall promptly
return such amounts to payor thereof.
17
<PAGE> 1
Exhibit 10.1
NAME: Cambridge Energy
Research Associates, LP
ADDRESS: 20 University Road
Cambridge, MA 02138
SECURED GRID NOTE [COMPANY SEAL]
CAMBRIDGE TRUST COMPANY
Harvard Sq.|Kendall Sq.|353 Huron Ave.|1720 Massachusetts Ave.
University Place|Weston|Concord|Member FDIC|876-5550
$1,750,000.00 Date: March 25, 1997
Cambridge, Massachusetts
On demand, for value received, the undersigned promises to pay to the
order of the CAMBRIDGE TRUST COMPANY, (the "Bank") at the main office of the
Bank at 1336 Massachusetts Avenue, Cambridge, Massachusetts 02238, or such other
place as the holder hereof shall designate.
One Million Seven Hundred Fifty Thousand DOLLARS and 00/100
or, if less, the aggregate unpaid principal amount of all loans made by the Bank
to the undersigned, together with interest on unpaid balances from the date
hereof, payable monthly in arrears on the first day of each month or earlier on
demand. Interest shall be payable at a fluctuating interest rate per annum equal
to TWO (2.0%) PERCENTAGE POINTS |X| above the Wall Street Journal Prime Rate,
adjusted as hereinafter set forth. Such interest rate shall be adjusted as of
the day of a change in the prime rate as reflected in the Wall Street Journal.
The "Wall Street Journal Prime Rate" shall mean the base rate on corporate loans
at large money center commercial banks (or the highest of such rates, if there
is more than one such rate) as reported in the Wall Street Journal.
Interest shall be calculated on the basis of actual days elapsed and a 360
day year.
All loans hereunder and all payments on account of principal and interest
hereof shall be recorded by the Bank. The entries on the records of the Bank
(including any appearing on this note) shall be prima facie evidence of amounts
outstanding hereunder.
Any deposits or other sums at any time credited by or due from the holder
to any maker, endorser, or guarantor hereof and any securities or other property
of any
<PAGE> 2
such maker, endorser, or guarantor at any time in the possession of the holder
may at all times be held and treated as collateral for the payment of this note
and any and all other liabilities (direct or indirect; absolute or contingent;
sole, joint or several; secured or unsecured; due or to become due; now existing
or hereafter arising) of any such maker to the holder. Regardless of the
adequacy of collateral, the holder may apply or set off such deposits or other
sums against such liabilities at any time in the case of makers, but only with
respect to matured liabilities in the case of endorsers or guarantors.
Every maker, endorser, and guarantor hereof hereby waives presentment,
demand, notice, protest, and all other demands and notices in connection with
the delivery, acceptance, performance, default, or enforcement hereof and
consents that no indulgence, and no substitution, release, or surrender of
collateral, and no discharge or release of any other party primarily or
secondarily liable hereon shall discharge or otherwise affect the liability of
any such maker, endorser, or guarantor. No delay or omission on the part of the
holder in exercising any right hereunder shall operate as a waiver of such right
or of any other right hereunder, and a waiver of any such right on any one
occasion shall not be construed as a bar to or waiver of any such right on any
future occasion.
Each maker and endorser hereof agrees, jointly and severally, to pay on
demand all costs and expenses (including legal costs and attorney's fees)
incurred or paid by the holder in enforcing this note on default. This note
shall take effect as a sealed instrument and shall be governed by the laws of
the Commonwealth of Massachusetts.
This note is secured by any and all collateral at any time granted to the
Bank to secure any obligations of the maker hereof.
Cambridge Energy Research Associated, LP
----------------------------------------
(Company Name)
WITNESS: SIGNATURE: /s/ Daniel H. Lucking
----------------------------
- ----------------------------- Name Print: Daniel H. Lucking, CFO
---------------------------
(Title)
Account No.: 57-436-8-01 SIGNATURE:
----------------- ----------------------------
Taxpayer I.D. No.: 04-2806111 Name Print:
----------- ---------------------------
(Title)
-2-
<PAGE> 1
Exhibit 10.2
CAMBRIDGE TRUST COMPANY
INVENTORY AND ACCOUNTS RECEIVABLE SECURITY AGREEMENT
-------------
(Date)
Cambridge Energy Research Associates, Limited Partnership, the debtor
hereunder (hereinafter called the "Borrower") for valuable consideration,
receipt whereof is hereby acknowledged, hereby grants to The Cambridge Trust
Company, 1336 Massachusetts Avenue, Cambridge, Massachusetts, the secured party
hereunder (hereinafter called the "Bank"), a continuing security interest in
Borrower's inventory, including all goods, merchandise, raw materials, goods and
work in process, finished goods, and other tangible personal property now owned
or hereafter acquired and held for sale or lease or furnished or to be furnished
under contracts of service or used or consumed in Borrower's business (all
hereinafter called the "Inventory"), and in all accounts, contracts, notes,
bills, drafts, acceptances, general intangibles, instruments and documents
(whether negotiable or non-negotiable), chattel paper, choses in action, and all
other debts, obligations and liabilities in whatever form, owing to Borrower
from any person, firm or corporation or any other legal entity, whether now
existing or hereafter arising, now or hereafter received by or belonging or
owing to Borrower, for goods sold by it or for services rendered by it, or
however otherwise the same may have been established or created, all guarantees
and securities therefor, all right, title and interest of Borrower in the
merchandise or services which gave rise thereto, including the rights of
reclamation and stoppage in transit, all rights of an unpaid seller of
merchandise or services and in the products and proceeds thereof, including,
without limitation, all proceeds of credit, fire or other insurance, and any tax
refunds (which, with Inventory, is all hereinafter called "Collateral").
The security interest granted hereby is to secure payment and performance
of all debts, liabilities and obligations of Borrower to the Bank hereunder and
also any and all other debts, liabilities and obligations of Borrower to Bank of
every kind and description, direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, including without limiting the
generality of the foregoing, any debt, liability or obligation of Borrower to
others, which Bank may have obtained by assignment or otherwise, and further,
including, without litigation, all interest, fees, charges and expenses (all
hereinafter called "Obligations").
BORROWER'S PLACES OF BUSINESS. Borrower warrants that Borrower has no
places of business other than that shown at the end of this Agreement, unless
other places of business are listed immediately below, in which event Borrower
represents that it has additional places of business at the following locations
and none other:
14 rue Duphot, 75001 Paris France
1999 Harrison St., Oakland, CA 94612
<PAGE> 2
Gml. Drammensvei 45, P.O. 72, N-1321, Stabekk, Norway and if Borrower has
an office in more than one state, the Borrower's chief executive office and the
office where Borrower keeps its records concerning its accounts and other
property, is 20 University Road, Charles Square, Cambridge, MA 02138 or if left
blank, is that shown at the end of this Agreement. All Inventory presently owned
by Borrower is stored at the following locations: N/A
Borrower will promptly notify Bank in writing of any change in the location of
any place of business or the location of any Inventory or the establishment of
any new place of business or location of Inventory or office where its aforesaid
records are kept which would be shown in this Agreement if it were executed
after such change.
BORROWER'S ADDITIONAL REPRESENTATIONS AND WARRANTIES. Borrower represents
and warrants that:
(a) Borrower is a Limited Partnership duly organized and existing under
the laws of the State of Delaware and is duly qualified and in good standing in
every other state in which it is doing business.
(b) the execution, delivery and performance hereof are within the
Borrower's corporate powers, have been duly authorized, are not in contravention
of law or the terms of the Borrower's charter, by-laws or other incorporation
papers, or of any indenture, agreement or undertaking to which the Borrower is a
party or by which it is bound.
(c) The most recent financial statements relating to the Borrower
heretofore delivered to the Bank are complete and correct and present fairly,
subject, in the case of interim statements, to year-end audit and adjustments,
the financial condition of the Borrower and of its subsidiaries, if any, as of
the dates thereof and for the periods included therein, all in accordance with
generally accepted accounting principles and practices consistently applied
throughout the periods involved, and since the date of such financial statements
there has been no material adverse change in such condition.
(d) No approval or authorization or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery or performance by the Borrower of this Agreement or the
consummation of the transactions contemplated hereby.
(e) The extent that the Borrower has an employee benefit plan or other
plan maintained for employees of Borrower or any subsidiary which is covered by
Title IV
-2-
<PAGE> 3
of the Employee Retirement Income Security Act of 1974, no reportable event, as
defined in such Act, has occurred and is continuing with respect to any such
employee benefit plan.
(f) No litigation is either threatened, contemplated or pending which will
materially and adversely affect the Borrower's financial condition.
(g) The Borrower is and will be the lawful owner of all Collateral free
and clear of all liens, encumbrances and security interests (other than the
security interest hereby granted to the Bank or other security interests
approved in writing by the Bank), with full power and authority to grant the
Bank a security interest therein, and the Borrower will defend the same against
the claims and demands of all persons.
COLLECTIONS; NOTICE OF ASSIGNMENT; EXPENSES. Except as hereinafter
provided, the Borrower is authorized to collect all accounts of the Borrower as
the Bank's collection agent. The Borrower agrees that, upon the request of Bank,
it will hold all such collections in trust for the Bank without commingling the
same with other funds of the Borrower and will promptly, on the day of receipt
thereof, transmit such collections to the Bank in the identical form in which
they were received by the Borrower, with such endorsements as may be
appropriate, accompanied by a report, in form approved by the Bank, showing the
amount of such collections and the cash discounts applicable thereto. At such
intervals as the Bank may request, such reports shall also set forth the amount
of allowances, adjustments, discounts and other credits not previously reported
to the Bank and the amount owing on accounts which the Borrower deems should be
charged off.
All collections in the form of cash, checks or other demands remittances
so transmitted to the Bank shall upon receipt by the Bank be credited to an
account on the Bank's books in which will be recorded all collections of
Collateral and all amounts paid from such account against the Obligations (the
"Trust Account"). Each such credit shall be conditioned upon final payment to
the Bank at its office referred to at the beginning of this agreement of all
items giving rise to such credit. If any items is not so paid, the credit for
such item shall be reversed whether or not the item has been returned. All
collections in the form of notes, drafts, acceptances or other instruments not
payable on demand shall be delivered by the Borrower to the collection
department of the Bank. When such items are collected, the amount thereof shall
be credited by the Bank to the Trust Account, with appropriate advice to the
Borrower. Until such items are collected, the Borrower will not, without the
consent of the Bank, make any entry on its books or records indicating that the
same were received in payment of the account giving rise thereto.
At such times as the Bank shall determine, the Bank, by charging the Trust
Account, shall apply the full amount on deposit in the Trust Account in
reduction or payment of Obligations then outstanding such application to be
subject to final
-3-
<PAGE> 4
payment in cash of all items theretofore credited to the Trust Account. In lieu
of applying the funds in the Trust Account in reduction or payment of
outstanding Obligations, the Bank may at such intervals and on such conditions
as may be permitted by the Bank upon receiving a current certificate of
Collateral, release to the Borrower funds in the Trust Account in consideration
of the acquisition by the Bank of a security interest in additional Collateral
acquired by the Borrower since the immediately previous certificate.
Any and all deposits or other sums at any time credited by or due from
Bank to Borrower shall at all times constitute additional security for
Obligations and may be set-off against any Obligations at any time whether or
not they are then due or other security held by Bank is considered by Bank to be
adequate. Any and all instruments, documents, policies and certificates of
insurance, securities, goods, accounts, choses in action, general intangibles,
chattel paper, cash, property and the proceeds thereof (whether or not the same
are Collateral) owned by Borrower or in which Borrower has an interest, which
now or hereafter are at any time in the possession or control of Bank or in
transit by mail or carrier to or from Bank or in the possession of any third
party acting in Bank's behalf, without regard to whether Bank received the same
in pledge, for safekeeping, as agent for collection or transmission or otherwise
or whether Bank had conditionally released the same, shall constitute additional
security for Obligations and may be applied at any time to Obligations which are
then owing, whether due or not due.
The Bank may upon the occurrence of an Event of Default or at any time
thereafter notify account debtors that Collateral has been assigned to Bank and
that payments shall be made directly to Bank. Upon request of Bank at any time,
Borrower will so notify such account debtors and will indicate on all billings
to such account debtors that their accounts must be paid to Bank. The Bank shall
have full power to collect, compromise, endorse, sell or otherwise deal with the
Collateral in its own name or in the name of the Borrower. Borrower shall pay to
Bank on demand any and all reasonable counsel fees and other expenses incurred
by the Bank in connection with the preparation of this Agreement, documents
relating thereto or modifications thereof, and any and all expenses, including,
but not limited, to a collection charge on all accounts collected, all
attorneys' fees and expenses, and all other expenses of like or unlike nature
which may be expended by the Bank to obtain or enforce payment of any account
either as against the account debtor, Borrower or any guarantor or surety of
Borrower or in the prosecution or defense of any action or concerning any matter
growing out of or connected with the subject matter of this Agreement, the
Obligations or the Collateral or any of Bank's rights or interests therein or
thereto, including, without limiting the generality of the foregoing, any
counsel fees or expenses incurred in any bankruptcy or insolvency proceedings.
Borrower does hereby make, constitute and appoint any officer or agent of
Bank as Borrower's true and lawful attorney-in-fact, with power to endorse the
name
-4-
<PAGE> 5
of Borrower or any of Borrower's officers or agents upon any notes, checks,
drafts, money orders, or other instruments of payment (including payments
payable under any policy of insurance on the Collateral) or Collateral that may
come into possession of the Bank in full or part payment of any amounts owing to
Bank; to sign and endorse the name of Borrower or any of Borrower's officers or
agents upon any invoice, freight or express bill, bill of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications and
notices in connection with accounts, and any instrument or document relating
thereto or to Borrower's rights therein and to give written notice to such
office and officials of the United States Post Office to effect such change or
changes of address so that all mail addressed to Borrower may be delivered
directly to Bank. The Borrower grants to said attorney full power to do any and
all things necessary to be done in and about the premises as fully and
effectually as Borrower might or could do, and hereby ratifying all that said
attorney shall lawfully do or cause to be done by virtue hereof. This power of
attorney shall be irrevocable for the term of this Agreement and all
transactions hereunder and thereafter as long as Borrower may be indebted to
Bank.
FINANCING STATEMENTS. At the request of Bank, Borrower will join with Bank
in executing one or more Financing Statements pursuant to the Uniform Commercial
Code or other notices appropriate under applicable law in form satisfactory to
Bank and will pay the cost of filing the same in all public offices wherever
filing is deemed by Bank to be necessary or desirable. The Borrower will not
change its name, identify or corporate structure without giving the bank prior
written notice thereof and in connection with any such change execute and
deliver, or cause to be executed and delivered, to the Bank all such additional
security agreements, financing statements and other documents as the Bank shall
reasonably require. This provision shall not be deemed to constitute consent to
any change of identity or corporate structure otherwise prohibited in any
agreement between the Borrower and the Bank. The Bank may file, as financing
statement, a carbon, photographic or other reproduction of a financing statement
or of this Agreement.
BORROWER'S REPORTS. Borrower will furnish Bank within sixty days after the
close of each quarterly period of Borrower's fiscal year a balance sheet and
statement of profit and loss reflecting the financial condition of Borrower at
the end of such period and the results of its operation during such period, such
balance sheet and statement of profit and loss to be certified by Borrower's
President or Treasurer to fairly present the financial condition at the end of
such period and the results of its operations during such period in accordance
with generally accepted accounting principles consistently applied.
Borrower will furnish Bank annually, within ninety days after the close of
each fiscal year, a full and complete signed copy of a report or reports, by
certified public accountants acceptable to Bank, which report or reports shall
include balance sheets of Borrower as at the end of such year and a statement of
profit and loss of Borrower
-5-
<PAGE> 6
reflecting its operations during such year, such report or reports bearing the
certificate of such certified public accountants.
The Borrower shall from time to time deliver to Bank such other
information and such reports as to the Collateral as the Bank shall request and
in form required by the Bank.
GENERAL AGREEMENTS OF BORROWER. Borrower agrees to keep all the Inventory
insured with coverage and amounts not less than that usually carried by one
engaged in a like business and in any event not less than that required by Bank
with loss payable to the Bank and Borrower, as their interests may appear,
hereby appoint Bank as attorney for Borrower in obtaining, adjusting, settling
and canceling such insurance and endorsing any drafts. As further assurance for
the payment and performance of the Obligations, Borrower hereby assigns to Bank
all sums, including returns or unearned premiums, which may become payable under
any policy of insurance on the Collateral and Borrower hereby directs each
insurance company issuing any such policy to make payment of such sums directly
to Bank. The Bank or its agents have the right to inspect the Inventory and all
records pertaining thereto at intervals to be determined by Bank and without
hindrance or delay.
Borrower will at all times keep accurate and complete records of
Borrower's Inventory, accounts and other Collateral, and Bank, or any of its
agents, shall have the right to call at Borrower's place or places of business
at intervals to be determined by Bank, and without hindrance or delay, to
inspect, audit, check and make extracts from any copies of the books, records,
journals, orders, receipts or correspondence which relate to Borrower's
accounts, and other Collateral or other transactions, between the parties
thereto and the general financial condition of Borrower and Bank may remove any
of such records temporarily for the purpose of having copies made thereof.
Borrower, during the term of this Agreement, will not assign any accounts
or other Collateral to any other party, nor create or permit to exist any lien,
encumbrance or security interest of any kind covering any of the Collateral,
other than for the benefit of the Bank.
Borrower will maintain its corporate existence in good standing and comply
with all laws and regulations of the United States or of any state or states
thereof or of any political subdivision thereof, or of any governmental
authority which may be applicable to it or to its business.
Borrower will not sell or dispose of any of its assets except in the
ordinary and usual course of its business.
-6-
<PAGE> 7
The Bank may in its own name or in the name of others communicate with
account debtors in order to verify with them to Bank's satisfaction the
existence, amount and terms of any accounts.
This Agreement may but need not be supplemented by separate assignment of
accounts and if such assignments are given the rights and security interests
given thereby shall be in addition to and not in limitation of the rights and
security interests given by this Agreement.
If any of Borrower's accounts arise out of contracts with the United
States or any department, agency, or instrumentality thereof, Borrower will
immediately notify Bank thereof in writing and execute any instruments and take
any steps required by Bank in order that all monies due and to become due under
such contracts shall be assigned to Bank and notice thereof given to the
Government under the Federal Assignment of Claims Act.
If any of Borrower's accounts should be evidenced by promissory notes,
trade acceptances, or other instruments for the payment of money, Borrower will
immediately deliver same to Bank, appropriately endorsed to Bank's order and,
regardless of the form of such endorsement, Borrower hereby waives presentment,
demand, notice of dishonor, protest and notice of protest and all other notices
with respect thereto.
At the option of the Bank, Borrower will furnish to Bank, from time to
time, within five (5) days after the accrual in accordance with applicable law
of Borrower's obligation to make deposits for F.I.C.A. and withholding taxes,
proof satisfactory to Bank that such deposits have been made as required.
Borrower hereby grants to Bank for a term to commence on the date of this
Agreement and continuing thereafter until all debts and Obligations of any kind
or character owing from Borrower to Bank are fully paid and discharged, the
right to use of all premises or places of business which Borrower presently has
or may hereafter have and where any of said Collateral may be located, at a
total rental for the entire period of $1.00. Bank agrees not to exercise the
rights granted in this paragraph unless and until Bank determines to exercise
its rights against the Collateral herein.
Borrower will promptly pay when due all taxes and assessments upon the
Collateral or for its use or operation or upon this Security Agreement, or upon
any note or notes evidencing the Obligations, and will, at the request of Bank,
promptly furnish Bank the receipted bills therefor. At its option, Bank may
discharge taxes, liens or security interests or other encumbrances at any time
levied or placed on the Collateral, may pay for insurance on the Collateral and
may pay for the maintenance and preservation of the Collateral. Borrower agrees
to reimburse Bank on demand
-7-
<PAGE> 8
for any payments made, or any expenses incurred by Bank pursuant to the
foregoing authorization, and upon failure of the Borrower so to reimburse Bank,
any such sums paid or advanced by Bank shall be deemed secured by the Collateral
and constitute part of the Obligations.
EVENTS OF DEFAULT; CERTAIN RIGHTS OF THE BANK. In addition to and not in
limitation of any and all other rights of the Bank hereunder or under applicable
law, the Borrower shall be in default hereunder upon the occurrence of any of
the following events (i) default in the payment or performance of any
Obligation; (ii) default in the performance of any covenant or agreement
contained herein; (iii) default by any guarantor of any of the Obligations in
respect of any liability of such guarantor to the Bank; (iv) any representation,
warranty or statement contained herein or in any certificate, report or document
furnished by the Borrower to the Bank proves not to have been true and complete
as of the time it was made or furnished; (v) any event which results in the
acceleration of the maturity of indebtedness of the Borrower to others under any
indenture, agreement or undertaking; (vi) the assertion of any adverse claim
with respect to any of the Collateral; or (vii) the Borrower or any such
guarantor shall have become Insolvent. The Borrower, any guarantor or any other
person shall be considered to be "Insolvent" when any of the following events
shall have occurred in respect of the Borrower or any guarantor: admission in
writing of its inability, or be generally unable, to pay its debts as they
become due, death, dissolution, termination of existence, cessation of normal
business operations, insolvency, appointment of a receiver of any part of the
property of, legal or equitable assignment, conveyance or transfer of property
for the benefit of creditors by, or the commencement of any proceedings under
any bankruptcy or insolvency laws by or against, such person. Upon the
occurrence of any of such events of default, any or all Obligations shall, at
the option of the Bank and notwithstanding any time allowed by any instrument
evidencing of an Obligation, become immediately due and payable, without notice
or demand, provided, that in the event the Borrower shall become Insolvent, all
Obligations shall become immediately due and payable, without notice or demand.
Upon the occurrence of any of such events of default, and at any time or
times thereafter, the Bank shall have power and authority to sell or otherwise
dispose of any or all Collateral. Such sale or other disposition, subject to any
requirements of applicable law, may be by public or private proceedings and may
be by way of one or more contracts, as a unit or in parcels, at such time and
place, by such method, in such manner and on such terms as the Bank may
determine. Except as required by applicable law, such sale or other disposition
may be made without advertisement or any notice to the Borrower or to any other
person. Where reasonable notification of the time or place of such sale or other
disposition is so required, such requirement shall be met if such notice is
mailed, postage prepaid, at least seven days before the time of such sale or
other disposition to each person entitled thereto at each such person's last
address known to the Bank. The Bank may at any time require the
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Borrower to assemble any tangible personal property constituting Collateral and
make it available to the Bank at a place to be designated by the Bank which is
reasonably convenient to both parties. The Bank may buy at any public sale and
if the Collateral is of a type customarily sold on a recognized market or the
subject of widely distributed standard price quotations the Bank may buy at
private sale. After deducting all costs and expenses of collection, storage,
custody, sale or other disposition and delivery (including legal costs and
reasonable attorneys' fees) and all other charges against the Collateral, the
residue of the proceeds of any such sale or disposition shall be applied to the
payment of any and all Obligations, in such order of preference as the Bank may
determine, proper allowance for interest on Obligations not then due being made,
and, unless otherwise provided by law, any surplus shall be returned to the
Borrower. The Borrower shall remain liable for any deficiency.
PROCESSING AND SALES OF INVENTORY. So long as Borrower is not in default
hereunder, Borrower shall have the right, in the regular course of business, to
process and sell Borrower's Inventory. A sale in the ordinary course of business
shall not include transfer in total or partial satisfaction of a debt.
TERM OF AGREEMENT. The term of this Agreement shall commence with the date
hereof and continue in full force and effect and be binding upon the Borrower
until all Obligations of Borrower to Bank shall have been fully paid and
satisfied, and until so paid and satisfied, Borrower shall continue to assign
accounts to Bank and turn over all collections to Bank, as herein provided, and
Bank shall be entitled to retain its security interest in all existing and
future accounts, Inventory and other Collateral.
No delay or omission on the part of Bank in exercising any rights shall
operate as a waiver of such right or any other right. Waiver on any one occasion
shall not be construed as a bar to or waiver of any right or remedy on any
future occasion. All Bank's rights and remedies, whether evidenced hereby or by
any other agreement, instrument or paper, shall be cumulative and may be
exercised singularly or concurrently.
The laws of Massachusetts shall govern the construction of this Agreement
and the rights and duties of the parties hereto. Signed, sealed and delivered on
the day and year first above written.
CAMBRIDGE ENERGY RESEARCH
ASSOCIATES, LIMITED PARTNERSHIP
Witnessed by: --------------------------------
(Borrower)
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/s/ Eileen P. Jordan By: /s/ Daniel H. Lucking Jr.
- -------------------------- ---------------------------------
(Title)
Address: 20 University Road-Charles Square
------------------------------------
(Number and Street)
Cambridge, MA 02138
----------------------------
(City, County and State)
Accepted:
The Cambridge Trust Company
By:
-------------------------------
Levin L. Waters V, Sr. V.P.
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Exhibit 10.3
Cambridge, Massachusetts
DATE OF LEASE EXECUTION: July 27, 1995 (To be completed by Landlord)
ARTICLE I
REFERENCE DATA
1.1 SUBJECTS REFERRED TO:
Each reference in this Lease to any of the following subjects shall be
construed to incorporate the data stated for that subject in this Section 1.1:
LANDLORD: Richard L. Friedman, John L, Hall, II, Bert
Rahuba and H. Vaughan Blaxter III, TRUSTEES
OF KSA REALTY TRUST, under Declaration of
Trust dated June 11, 1982 and recorded with
the Middlesex South Registry of Deeds in
Book 14635, Page 542.
MANAGING AGENT: CH & S Limited Partnership
LANDLORD'S & MANAGING c/o Carpenter & Company, Inc.
AGENT'S ADDRESS: 175 Federal Street, Suite 900
Boston, MA 02210
LANDLORD' S REPRESENTATIVE: Gary J. Gianino
TENANT: Cambridge Energy Research Associates
Limited Partnership, a Delaware limited
partnership
TENANT'S ADDRESS (FOR 20 University Road
NOTICE AND BILLING): Cambridge, Massachusetts 02138
TENANT'S REPRESENTATIVE: Alice Barsoomian
BUILDING ADDRESS: 20 University Road
Cambridge, Massachusetts 02138
<PAGE> 2
TENANT'S EXISTING 16,445 rentable square feet on the fourth
SPACE: floor of the Office Component of the Charles
Square Site and shown on the floor plan
attached hereto as Exhibit A-2.
TENANT'S INITIAL SPACE: 18,755 rentable square feet on the fourth
floor of the Office Component of the Charles
Square Site and shown on the floor plan
attached hereto as Exhibit A-2.
TENANT'S SPACE: From the Commencement Date through June 30,
1996, Tenant's Initial Space; from July 1,
1996, through the balance of the Term,
Tenant's Initial Space and the Expansion
Space.
EXPANSION SPACE: 2,760 rentable square feet on the fourth
floor of the Office Component of the Charles
Square Site and shown on the floor plan
attached hereto as Exhibit A-2.
TOTAL RENTABLE FLOOR
AREA OF THE OFFICE
COMPONENT: 109,295 rentable square feet
COMMENCEMENT DATE: July 1, 1995
TERM EXPIRATION DATE: June 30, 2000, subject to Tenant's right to
extend the Term under Section 2.3.
TERM: Five (5) Years, subject to Tenant's right
to extend the Term under Section 2.3.
EXTENSION OPTION: One (1) option to extend the Term for a
period of five (5) years, exercisable
pursuant to the provisions of Section 2.3 of
this Lease.
ANNUAL BASE RENT: Lease Year 1: $487,630 per annum,
$40,635.83 per month (i.e.,
$26.00 per rentable square
foot)
Lease Year 2: $580,905 per annum,
$48,408.75 per month (i.e.,
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$27.00 per rentable square
foot)
Lease Year 3: $623,935 per annum,
$51,994.58 per month (i.e.,
$29.00 per rentable square
foot)
Lease Years 4:
and 5: $645,450 per annum,
$53,787.50 per month (i.e.,
$30.00 per rentable square
foot)
(See July 1995 and July 1996 rent abatement
per Section 4.1.)
ANNUAL OPERATING COST Actual Landlord's Operating Costs (as
FOR 1994: defined in Section 4.2) for calendar year
1994
ANNUAL REAL ESTATE Actual real estate taxes for calendar
TAXES FOR 1994: year 1994
PERMITTED USES: General Office use consistent with the
operation of a first class office building
and no other use.
PUBLIC LIABILITY BODILY INJURY: $1,000,000 per
INSURANCE: occurrence/$3,000,000 in the general
aggregate
PROPERTY DAMAGE: $500,000
1.2 EXHIBITS.
The exhibits listed below in this Section 1.2 are incorporated in this
Lease by reference and are to be construed as part of this Lease:
EXHIBIT A Plan of Charles Square Site.
EXHIBIT A-1 Legal Description of Charles Square Site.
EXHIBIT A-2 Plan Showing Tenant's Space.
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EXHIBIT B Landlord's Services.
EXHIBIT C Rules and Regulations.
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1.3 TABLE OF CONTENTS.
ARTICLE I - REFERENCE DATA...................................................1
1.1 SUBJECTS REFERRED TO:............................................1
1.2 EXHIBITS.........................................................3
1.4 DEFINITIONS......................................................9
ARTICLE II - PREMISES AND TERM..............................................10
2.1 PREMISES........................................................10
2.1.1 Expansion Space...........................................12
2.2 TERM............................................................12
2.3 OPTION TO EXTEND TERM...........................................13
2.3.1 Extension Option..........................................13
2.3.2 Extension Rent............................................13
2.3.3 Procedure for Establishing Extension Rent.................13
2.3.4 Conditions Precedent to Extension Option..................16
2.4 TENANT TERMINATION OPTION.......................................17
ARTICLE III - CONSTRUCTION..................................................18
3.1 GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION...................18
3.2 REPRESENTATIVES.................................................19
ARTICLE IV - RENT...........................................................19
4.1 RENT............................................................19
4.2 OPERATING COSTS; ESCALATION.....................................20
4.3 REAL ESTATE TAXES; ESCALATION...................................23
4.4 ESTIMATED ESCALATION PAYMENTS...................................25
4.5 CHANGE OF FISCAL YEAR...........................................27
4.6 PAYMENTS........................................................27
4.7 TENANT'S RIGHT TO AUDIT LANDLORD'S BOOKS........................28
ARTICLE V - LANDLORD' S COVENANTS...........................................28
5.1 LANDLORD' S COVENANTS DURING THE TERM...........................28
5.1.1 Building Services.........................................28
5.1.2 Additional Building Services..............................29
5.1.3 Repairs...................................................29
5.1.4 Quiet Enjoyment...........................................29
5.1.5 Signage...................................................30
5.1.6 Hotel Conference Rooms....................................30
5.1.7 Security..................................................30
5.1.8 Common Area Improvements..................................30
5.2 INTERRUPTIONS...................................................30
5.3 RECOVERY OF TENANT'S COSTS......................................32
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5.4 LANDLORD'S INSURANCE.............................................32
ARTICLE VI - TENANT'S COVENANTS..............................................32
6.1 TENANT'S COVENANTS DURING THE TERM...............................32
6.1.1 Tenant's Payments.........................................32
6.1.2 Repairs and Yielding Up...................................33
6.1.3 Occupancy and Use.........................................33
6.1.4 Rules and Regulations.....................................34
6.1.5 Safety Appliances.........................................34
6.1.6 Assignment and Subletting.................................34
6.1.7 Indemnity.................................................35
6.1.8 Tenant's Liability Insurance..............................36
6.1.9 Tenant's Worker's Compensation Insurance..................36
6.1.10 Landlord's Right of Entry.................................36
6.1.11 Loading...................................................37
6.1.12 Landlord's Costs..........................................37
6.1.13 Tenant's Property.........................................37
6.1.14 Labor or Materialmen's Liens..............................38
6.1.15 Changes or Additions......................................38
6.1.16 Holdover..................................................39
ARTICLE VII - CASUALTY AND TAKING............................................39
7.1 CASUALTY AND TAKING..............................................39
7.2 RESERVATION OF AWARD.............................................41
ARTICLE VIII - RIGHTS OF MORTGAGEE...........................................42
8.1 PRIORITY OF LEASE................................................42
8.2 RIGHTS OF MORTGAGE HOLDERS; LIMITATION OF MORTGAGEE'S
LIABILITY........................................................43
8.3 MORTGAGEE'S ELECTION.............................................45
8.4 NO PREPAYMENT OR MODIFICATION, ETC...............................45
8.5 NO RELEASE OR TERMINATION........................................46
8.6 CONTINUING OFFER.................................................46
8.7 MORTGAGEE'S APPROVAL.............................................47
ARTICLE IX - DEFAULT.........................................................48
9.1 EVENTS OF DEFAULT................................................48
9.2 TENANT'S OBLIGATIONS AFTER TERMINATION...........................49
ARTICLE X - MISCELLANEOUS....................................................51
10.1 NOTICE OF LEASE..................................................51
10.2 CONSTRUCTION ON ADJACENT PREMISES; EXPANSION.....................51
10.3 NOTICES FROM ONE PARTY TO THE OTHER..............................52
10.4 BIND AND INURE...................................................52
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10.5 NO SURRENDER....................................................53
10.6 NO WAIVER, ETC..................................................53
10.7 NO ACCORD AND SATISFACTION......................................54
10.8 CUMULATIVE REMEDIES.............................................54
10.9 LANDLORD'S RIGHT TO CURE........................................55
10.10 ESTOPPEL CERTIFICATE............................................55
10.11 WAIVER OF SUBROGATION...........................................56
10.12 ACTS OF GOD.....................................................57
10.13 BROKERAGE.......................................................57
10.14 SUBMISSION NOT AN OFFER.........................................58
10.15 LANDLORD REMEDIES...............................................58
10.16 APPLICABLE LAW AND CONSTRUCTION.................................59
10.17 LIMITATION OF LANDLORD'S LIABILITY..............................60
10.18 PARKING.........................................................60
ARTICLE XI - LEASEHOLD IMPROVEMENTS; TENANT ALLOWANCE ......................61
11.1 PLANS FOR LEASEHOLD IMPROVEMENTS ...............................61
11.2 CONSTRUCTION BY TENANT..........................................63
11.3 TENANT ALLOWANCE................................................64
11.4 LANDLORD'S RIGHT TO TERMINATE LEASE PRIOR TO
COMMENCEMENT DATE...............................................64
11.5 EXPANSION SPACE.................................................65
ARTICLE XII - RIGHT OF FIRST OFFER .........................................65
12.1 RIGHT OF FIRST OFFER............................................65
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1.4 DEFINITIONS.
Certain terms used in this Lease are defined hereinafter in those Sections
in which the same are first mentioned. For convenience, certain other terms are
defined in this Section 1.4 as follows:
1.4.1 The term "Building" shall mean the office building comprising the
Office Component and shown on Exhibit A.
1.4.2 The term "Charles Square Site" shall mean the entire area shown on
Exhibit A (as the same may be expanded), as more particularly described on
Exhibit A-1, which is leased by Landlord herein pursuant to the Ground Lease.
1.4.3 The term "Ground Lease" shall mean the ground lease from EMI
Cambridge Limited Partnership as ground lessor to Landlord as ground lessee
dated as of December 16, 1985, as amended.
1.4.4 The term "Office Component" shall mean the building, consisting of
approximately 109,295 rentable square feet, located at the Building Address and
devoted to office and related uses.
1.4.5 The term "rentable area" shall mean the area within demising walls,
measured from the glass line to the center line of demising partitions, together
with a pro rata share of the floor area of common facilities, which pro rata
share shall be the ratio of the floor area of Tenant Space to the total floor
area of the Office Component.
1.4.6 The term "Lease Year" shall mean a period of twelve consecutive
calendar months beginning on the first day of July and ending on the following
June 30.
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ARTICLE II
PREMISES AND TERM
2.1 PREMISES.
Subject to and with the benefit of the provisions of this Lease and the
Ground Lease relating to the Charles Square Site, Landlord hereby leases to
Tenant, and Tenant leases from Landlord, Tenant's Space in the Building,
together with the telephone system and existing hard cable wiring presently in
Tenant's Space, excluding exterior faces of exterior walls. Tenant's Space, with
such exclusions and together with the Appurtenant Rights (as hereinafter
defined), is hereinafter referred to as the "Premises."
As of the date of this Lease, Tenant occupies Tenant's Existing Space
under a lease dated as of August 25, 1987, as amended by First Amendment to
Lease dated as of December 1, 1987, as further amended by Second Amendment to
Lease dated as of May 1, 1988, as further amended by Third Amendment to Lease
dated as of January 26, 1990, as further amended by Fourth Amendment to Lease
dated as of February 1, 1991, and as further amended by Fifth Amendment to Lease
dated as of August 1, 1993, all of the foregoing instruments being between
Landlord and Tenant (said lease, as so amended, to be referred to hereinafter as
the "Existing Lease"). Landlord shall deliver the balance of Tenant's Initial
Space to Tenant on the Commencement Date, in broom clean condition, free of
tenants and occupants, but otherwise as-is, without representation or warranty.
Landlord shall reimburse Tenant for the cost of
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improvements to Tenant's Initial Space up to a maximum of $50,000 pursuant to
the terms of Section 11.4 of this Lease. Before the Commencement Date, Landlord,
at its sole expense, shall paint and install new carpet in the hallways and
lobbies outside of Tenant's Space and the other common areas on the fourth floor
of the Office Component using colors and materials standard in the Building.
Tenant shall have, as appurtenant to the Premises, the right (the
"Appurtenant Rights") to use in common with others entitled thereto: (a) the
driveways, service roads, ramps, sidewalks and walkways necessary for access to
the Charles Square Site and the Building, (b) the stairways, elevators, hallways
and lobbies necessary for access to Tenant's Space, (c) the restrooms located
outside of Tenant's Space on the fourth floor of the Office Component, (d) the
heating, ventilating, air-conditioning and other fixtures, equipment and systems
serving Tenant's Space in common with other portions of the Charles Square Site,
and (e) such other common areas and facilities of the Charles Square Site as
Landlord may provide or designate from time to time (collectively, the "Common
Areas").
Landlord reserves the right from time to time, with reasonable advance
notice to Tenant except in the case of an emergency in which case no notice
shall be required, without material interference with Tenant's use and enjoyment
of the Premises or access thereto, (a) to install, repair, replace, use,
maintain and relocate for service to the Premises and to other parts of the
Building or either, building service fixtures and equipment wherever located in
the Building and (b) to alter or relocate any other common facilities; provided,
however, Landlord shall not reduce the
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rentable area of the Premises and shall use reasonable efforts to perform such
activities at times other than during Tenant's ordinary business hours.
2.1.1 Expansion Space. Landlord shall deliver the Expansion Space to
Tenant on July 1, 1996 in broom clean condition, free of tenants and occupants,
but otherwise as-is, without representation or warranty. Effective upon the date
of delivery, the Expansion Space shall become part of the Premises and all of
the terms and conditions of this Lease shall become applicable thereto. Within
ten days after substantial completion of Tenant's Leasehold Improvements (as
hereinafter defined) of the Expansion Space, Landlord shall reimburse Tenant for
Tenant's costs and expenses for the Leasehold Improvements in the Expansion
Space (excluding any architectural, design, engineering, construction
management, insurance or other soft costs in excess of $5,000 in the aggregate)
up to a maximum of $25,000 (the "Extension Allowance"). At Tenant's option, all
or any portion of the Expansion Allowance shall be applied toward, and paid by
Landlord to Tenant on account of, any changes, additions, alterations or
improvements made to any portion of the Premises after July 1, 1996, in
accordance with Section 6.1.5 after July 1, 1996 but prior to January 1, 1997.
2.2 TERM.
To have and to hold for a period (the "Term") commencing on the
Commencement Date and continuing until the Term Expiration Date, unless sooner
terminated as provided in Section 7.1 or in ARTICLE IX, or extended as provided
in Section 2.3.
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2.3 OPTION TO EXTEND TERM.
2.3.1 Extension Option. Tenant shall have one (1) right and option to
extend the Term (the "Extension Option") with respect to all (but not just a
portion of) the Premises for one period of five (5) years (such period being
herein referred to as the "Extension Period"), exercisable by notice to Landlord
given not later than eight (8) months prior to the expiration of the initial
Term; provided, however, that if Tenant fails to give timely notice to Landlord
of Tenant's exercise of the Extension Option, Tenant shall be deemed to have
waived its Extension Option rights. The word "Term" as used in this Lease
includes the Term, as extended, where the context so requires.
2.3.2 Extension Rent. All of the terms, provisions, covenants, and
conditions of this Lease shall continue to apply during the Extension Period,
except that the Annual Base Rent shall be the fair market rent being paid in the
vicinity of the Premises in Cambridge, Massachusetts, for leases with five-year
terms commencing as of the beginning of the Extension Period, for space
comparable to the Premises, used for the Permitted Uses and with rights and
obligations comparable to those of Tenant under this Lease (the "Extension
Rent").
2.3.3 Procedure for Establishing Extension Rent. At least 180 days before
the end of the initial Term (the "Rent Notice Deadline"), Landlord shall give to
Tenant written notice (an "Extension Rent Notice") of the Extension Rent, as
calculated by Landlord. If Landlord fails so to notify Tenant at least 150 days
before the expiration of the Initial Term, Tenant shall have the right to give
written notice (also an
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"Extension Rent Notice") to Landlord of the Extension Rent, as calculated by
Tenant. If either Tenant or Landlord wishes to dispute the other party's
calculation of the Extension Rent, either party may give written notice (a
"Dispute Notice") to the other party within 30 days after receiving such other
party's Extension Rent Notice. Any Dispute Notice shall set forth the Extension
Rent, as calculated by the disputing party. If Landlord and Tenant are unable to
resolve any such dispute within seven days after such Dispute Notice is given,
such dispute shall be resolved according to the following procedures.
2.3.3.1 At any time after such seven-day period, Landlord and Tenant
each shall have the right, by written notice (a "Notice of Arbitration") to the
other, to demand arbitration of the calculation of the Extension Rent. The party
demanding arbitration shall appoint an arbitrator in the Notice of Arbitration.
Within seven days after the Notice of Arbitration is given, the other party
shall by notice to the other party appoint a second arbitrator. If the second
arbitrator shall not have been appointed within such seven-day period, the
position taken by the party demanding arbitration shall be deemed to be the
correct calculation of the Extension Rent.
2.3.3.2 Within seven days after the designation of the second
arbitrator, Landlord and Tenant shall submit their respective positions with
respect to the calculation of the Extension Rent to the two arbitrators.
Thereafter, the two arbitrators shall conduct such hearings and investigations
as they deem appropriate and shall, within fourteen days after the designation
of the second arbitrator, determine the correct calculation of the Extension
Rent. The arbitrators, or either of
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them, shall give notice of such resolution (or notice of their inability to
reach agreement, as the case may be) to the parties within said fourteen-day
period, and the agreement, if any, of the two arbitrators shall be binding upon
the parties to this Lease.
2.3.3.3 If the two arbitrators are unable to reach an agreement
within such fourteen-day period, the two arbitrators shall, within fourteen days
after the designation of the second arbitrator, designate a third arbitrator. If
the two arbitrators shall fail to agree upon the designation of a third
arbitrator within said fourteen-day period, then they or either of them shall
give notice of such failure to agree to Landlord and Tenant within such
fourteen-day period and, if Landlord and Tenant fail to agree upon the selection
of such third arbitrator within seven days after the arbitrators give such
notice, then either party on behalf of both may apply to the president of the
Greater Boston Real Estate Board or, on his or her failure, refusal or inability
to act, to a court of competent jurisdiction, for the designation of such third
arbitrator.
2.3.3.4 Within seven business days after the designation of the
third arbitrator, the parties shall submit their respective positions with
respect to the calculation of the Extension Rent to the third arbitrator.
Thereafter, the third arbitrator shall conduct such hearings and investigations
as he or she may deem appropriate and shall, within fourteen days after the date
of the designation of the third arbitrator, determine the correct calculation of
the Extension Rent. Within such fourteen-day period, the third arbitrator shall
give notice of such resolution to
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Landlord and Tenant and the third arbitrator's determination shall be binding
upon Landlord and Tenant.
2.3.3.5 All arbitrators shall be qualified real estate professionals
who shall have had at least ten years of experience appraising first-class
buildings substantially similar to the Office Component in the Greater Boston
area. Landlord and Tenant shall each be entitled to present evidence to the
arbitrators in support of their respective positions. The arbitrators shall not
make any determination inconsistent with the terms of this Lease. The
arbitrators shall not have the power to add to, modify or change any of the
provisions of this Lease. The determination of the arbitrator(s), as provided
above, shall be conclusive and shall have the same force as a judgment in a
court of competent jurisdiction. Judgment on the determination made by the
arbitrator(s) under the foregoing provisions may be entered in any court of
competent jurisdiction.
2.3.3.6 Each party shall pay the fees, costs and expenses of the
arbitrator appointed by such party and of the attorneys and expert witnesses of
such party and one-half of the other fees, costs and expenses of arbitration
properly incurred under this Lease.
2.3.3.7 None of the foregoing shall be construed so as to extend the
date by which Tenant must exercise its extension option or entitle Tenant to
revoke its exercise of such option if exercised.
2.3.4 Conditions Precedent to Extension Option. Notwithstanding any
contrary provision of this Section 2.3 or any other provision of this Lease, the
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Extension Option and any exercise by Tenant of the Extension Option shall be
void and of no force or effect unless on the date Tenant notifies Landlord that
it is exercising the Extension Option and on the date of commencement of the
Extension Period (i) this Lease is in full force and effect; and (ii) Tenant is
not in default of any of its obligations under this Lease after the giving of
any required notice and the expiration of any applicable grace period.
2.4 TENANT TERMINATION OPTION
Tenant shall have the right and option, exercisable by notice delivered to
Landlord at any time during Lease Years 4 or 5, to terminate this Lease, such
termination to be effective on the date that is six (6) months after the date of
delivery of such notice (the "Termination Date"), provided that (a) at the time
of Tenant's exercise there exists no default by Tenant under this Lease which
continues after the giving of any required notice and the expiration of any
applicable grace period, and (b) Tenant delivers to Landlord with its exercise
notice a certified check payable to Landlord in an amount equal to four months'
of Annual Base Rent and additional rent for the Premises in effect at the time
of such exercise. Said termination payment shall not relieve Tenant of its
obligation to pay rent hereunder for the remaining six months of the Term. If
Tenant delivers such notice and makes such payment to Landlord, this Lease and
all of the obligations of Landlord and Tenant shall terminate as of the
Termination Date as if such date were the date of the ordinary expiration of the
Term of this Lease.
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ARTICLE III
CONSTRUCTION
3.1 GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION.
All construction work required or permitted by this Lease shall be done in
a good and workmanlike manner and in compliance with all applicable laws and all
lawful ordinances, regulations and orders of governmental authority and insurers
of the Building. Landlord may inspect the work of the Tenant at reasonable times
and promptly shall give notice of observed defects. Landlord will not approve
any construction, alterations, or additions requiring unusual expense to readapt
the Premises to normal office use on lease termination or increasing the cost of
construction, insurance or taxes on the Building or of Landlord's services
called for by Section 5.1 of this Lease unless Tenant first gives assurances
acceptable to Landlord that such readaptation will be made prior to such
termination without expense to Landlord and makes provisions acceptable to
Landlord for payment of such increased cost. Landlord will also disapprove any
alterations or additions requested by Tenant which in Landlord's reasonable
opinion would be harmful to the Building or its tenants. All changes and
additions shall be part of the Building except Tenant's trade fixtures,
equipment and personal property and such items as by writing at the time of
approval the parties agree either shall be removed by Tenant on termination of
this Lease or shall be removed or left at Tenant's election.
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3.2 REPRESENTATIVES.
Each party authorizes the other to rely in connection with their
respective rights and obligations under this ARTICLE III upon approval and other
actions on the party's behalf by Landlord's Representative in the case of
Landlord or Tenant's Representative in the case of Tenant or by any person
designated in substitution or addition by notice to the party relying.
ARTICLE IV
RENT
4.1 RENT.
Commencing on the Commencement Date, Tenant shall pay to Landlord rent at
an annual rate equal to the Annual Base Rent, without any offset or reduction,
which rent shall be paid in equal installments of 1/12th of the Annual Base
Rent, in advance on the first day of each calendar month included in the Term,
but for any portion of a calendar month at the beginning or end of the Term, the
monthly installment shall be prorated based on the number of days in such
calendar month falling within the Term. Notwithstanding any contrary provision
of this Lease, Tenant shall be required to pay with respect to the month of July
1995 and July 1996 installments of Annual Base Rent equal to one-half of the
monthly installment otherwise payable (i.e., $20,317.92 for July 1995 and
$24,204.38 for July 1996, instead of $40,635.83 and $48,408.75, respectively).
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4.2 OPERATING COSTS; ESCALATION.
Tenant shall pay to Landlord, as additional rent, Operating Cost
Escalation (as defined below), if any, on or before the thirtieth day following
receipt by Tenant of Landlord's Statement (as defined below). Within 120 days
after the end of Landlord's fiscal year ending during the Term and after Lease
termination, Landlord shall render a statement ("Landlord's Statement") in
reasonable detail and according to generally accepted accounting practices
certified by Landlord and showing for the preceding fiscal year or fraction
thereof, as the case may be, Landlord's Operating Costs. As used in this Lease,
"Landlord's Operating Costs" shall mean all of Landlord's costs and expenses
paid in operating, managing, repairing, replacing and maintaining the Office
Component or the Charles Square Site generally.
excluding (notwithstanding any provision of this Lease to the contrary)
the interest and amortization of principal and other charges relating to
mortgages for the Building and the Charles Square Site or leasehold interests
therein; the cost of special services rendered to tenants (including Tenant) for
which a special charge is made; leasehold improvements which are made in
connection with the preparation of any portion of the Charles Square Site for
occupancy by a new tenant or which are not provided generally for the benefit of
tenants of the Charles Square Site; costs, expenses or charges properly
chargeable to a particular tenant; efforts to lease portions of the Charles
Square Site or to procure tenants for the Charles Square Site, including
advertising and leasing commissions and attorneys' fees; depreciation of any
component of the Charles Square Site; repairs and replacements arising out of a
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fire or other casualty occurring at the Charles Square Site; fees, fines or
penalties arising out of Landlord's breach of any obligations (contractual or at
law), including attorneys' fees; costs associated with vacant space; wages and
benefits of any employee, contractor or agent, except to the extent included
below; services which benefit only the Hotel Component or Retail Component, as
defined in the Ground Lease, of the Charles Square Site, without any direct
benefit to the Office Component; fees for licenses, permits or inspections which
are not part of routine maintenance, do not benefit Tenant or tenants of the
Office Component generally or result from the negligence of Landlord or any
other tenant; environmental compliance, testing or remediation; compliance by
Landlord with laws existing as of the date of this Lease, including without
limitation the Americans with Disabilities Act; sculpture, paintings and other
works of art; capital improvements (as defined under generally accepted
accounting principles), except to the extent included below; and repairs
necessary to cure defects in the construction of the Charles Square Site.
but including, without limitation: expenses of any proceedings for
abatement of real estate taxes and assessments with respect to any fiscal year
or fraction of a fiscal year; premiums for insurance covering the Office
Component or the Charles Square Site generally; compensation and all fringe
benefits, worker's compensation insurance premiums and payroll taxes paid by
Landlord to, for or with respect to Carpenter & Company's Vice-President for
Finance and Development and all persons at or below the level of building
manager engaged in the operating, maintaining or cleaning of the Building and
the Charles Square Site, but in all cases adjusted so that
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the percentage of such wages and benefits allocated to the Charles Square Site
equals the percentage of such person's working time for Landlord devoted to the
Charles Square Site; all utility charges not billed directly to tenants by
Landlord or the utility; payments to independent contractors under service
contracts for cleaning, operating, managing, maintaining and repairing the
Building and the Charles Square Site; management fees (which payments may be to
affiliates of Landlord) provided such fees do not exceed market rates; rent paid
by the managing agent or imputed cost equal to the loss of rent by Landlord for
making available to the managing agent space for a Building office on the ground
floor or above (provided that the rent, or the imputed cost, is comparable to
the rent charged for similar space in the Building); costs of new capital
improvements (as opposed to replacements of existing capital items) made to (a)
reduce operating expenses, (b) comply with laws enacted after the date hereof or
(c) maintain the Office Component as a first-class office building, provided
such costs shall be amortized over the useful life of the improvement in
question utilizing a commercially reasonable discount rate; and all other
reasonable and necessary expenses paid in connection with the cleaning,
operating, managing, maintaining and repairing of the Building and the Charles
Square Site, or either. With respect to Landlord's Operating Costs relating to
the Charles Square Site (or any part thereof other than solely to the Office
Component), Landlord shall allocate to the Office Component a portion of such
costs and expenses which shall be reasonable and which shall take into
consideration the benefits received by the Office Component with respect to such
expenses. Any operating costs which were incurred
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for the sole benefit or necessity of the Office Component shall be allocated
solely to the Office Component.
"Operating Cost Escalation" for any fiscal year or fraction thereof shall
be equal to the difference, if any, between
(a) the product of Landlord's Operating Costs for such fiscal year or
fraction thereof and a fraction, the numerator of which shall be the rentable
area of Tenant's Space and the denominator of which shall be one-half of the
Total Rentable Floor Area of the Office Component plus one-half of the average
number of such square feet as are occupied during such fiscal year or fraction
thereof, and
(b) the product of the Annual Operating Costs for 1994 and a fraction, the
numerator of which shall be the rentable area of Tenant's Space and the
denominator of which shall be the Total Rentable Floor Area of the Office
Component.
4.3 REAL ESTATE TAXES; ESCALATION
The term "real estate taxes" as used above shall mean for any fiscal year
or portion thereof all taxes of every kind and nature and installments and
interest on assessments for public betterments or public improvements assessed
by any governmental authority on the Charles Square Site, the Building and
improvements, or both, which the Landlord shall become obligated to pay in such
fiscal year or portion thereof because of or in connection with the ownership,
leasing and operation of the Charles Square Site, the Building and improvements,
or both, subject to the following: There shall be excluded from such taxes all
income taxes, personal property taxes, excess profits taxes, excise taxes,
franchise taxes and estate,
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succession, inheritance and transfer taxes, provided, however, that if at any
time during the Term the present system of ad valorem taxation of real property
shall be changed so that in lieu of the whole or any part of the ad valorem tax
on real property, there shall be assessed on Landlord a capital levy or other
tax on the gross rents received with respect to the Charles Square Site, the
Building and improvements, or both, or a federal, state, county, municipal or
other local income, franchise, excise, single business or similar tax,
assessment, levy or charge (distinct from any now in effect) measured by or
based, in whole or in part, upon any such gross rents, then any and all of such
taxes, assessments, levies or charges, to the extent so measured or based, shall
be deemed to be included within the term "real estate taxes."
In the case of real estate taxes becoming due and payable in any tax year
during the Lease Term, a portion of the real estate taxes shall be allocated to
the Office Component in accordance with the allocation for the Office Component
for the real estate taxes set forth in the invoice for real estate taxes or an
advisory letter from the tax assessor for the City of Cambridge which
establishes the allocation of real estate taxes among the various components of
the Charles Square Site. In the event the invoice for the real estate taxes does
not specify the portion of the total real estate taxes attributable to the
Office Component and the Landlord, after due diligence, cannot obtain a current
advisory letter from said tax assessor, the allocation for the Office Component
will be determined by Landlord acting in its reasonable discretion,
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and, if appropriate, will be based on the then most recent advisory letter. The
amount so allocated is hereinafter "Office Component Taxes."
Tenant shall pay to Landlord, as additional rent, Real Estate Tax
Escalation (as defined below), if any, on or before the thirtieth day following
receipt by Tenant of a statement from Landlord showing the amount of Real Estate
Tax Escalation ("Landlord's Tax Statement").
"Real Estate Tax Escalation" shall be equal to the difference, if any,
between
(a) the product of Office Component Taxes and a fraction, the numerator of
which shall be the rentable area of Tenant's Space and the denominator of which
shall be one-half of the Total Rentable Floor Area of the Office Component plus
one-half of the average number of such square feet of rentable area as are
occupied in the Office Component during such fiscal year or fraction thereof and
(b) the product of the Annual Real Estate Taxes For 1994 and a fraction,
the numerator of which shall be the rentable area of Tenant's Space and the
denominator of which shall be the Total Rentable Floor Area of the Office
Component.
4.4 ESTIMATED ESCALATION PAYMENTS.
If, with respect to any fiscal year or fraction thereof during the Term,
Landlord reasonably estimates that Tenant shall be obligated to pay Operating
Cost Escalation or Real Estate Tax Escalation, then Tenant shall pay, as
additional rent, on the first day of each month of such fiscal year and each
ensuing fiscal year thereafter, "Estimated Monthly Escalation Payments" equal to
1/12th of the sum of the Operating Cost Escalation and Real Estate Tax
Escalation for the respective fiscal year
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set forth on the most recent reasonable written estimate provided by Landlord to
Tenant (the "Estimate"). In the event of an overpayment or underpayment by
Tenant on account of Operating Cost Escalation or Real Estate Tax Escalation, an
appropriate adjustment shall be made, (i) for Operating Cost Escalation, within
30 days after Landlord's Statement is delivered to Tenant and (ii) for Real
Estate Tax Escalation, within 30 days after Landlord's Tax Statement is
delivered to Tenant. If such adjustment arises out of an overpayment by Tenant,
Tenant shall receive such adjustment as a credit against payments of rent or
additional rent due under this Lease or, upon the expiration or termination of
this Lease, by a payment from Landlord to Tenant. Landlord may adjust such
Estimated Monthly Escalation Payment from time to time and at any time during a
fiscal year by delivering an updated Estimate to Tenant, and Tenant shall pay,
as additional rent, on the first day of each month following receipt of
Landlord's notice thereof, the adjusted Estimated Monthly Escalation Payment.
Notwithstanding any other provision of this Section 4.4, if the Term
expires or is terminated as of a date other than the last day of a fiscal year,
then for such fraction of a fiscal year at the end of the Term, Tenant's last
payment to Landlord under Sections 4.2 and 4.3 shall be made on the basis of
Landlord's best estimate of the items otherwise includable in Landlord's
Statement and Landlord's Tax Statement and shall be made on or before the later
of (a) 10 days after Landlord delivers such estimate to Tenant or (b) the last
day of the Term, with an appropriate payment or
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refund to be made upon submission of Landlord's Statement or Landlord's Tax
Statement, as applicable.
4.5 CHANGE OF FISCAL YEAR.
Landlord shall have the right from time to time to change the periods of
accounting under this Lease to any annual period other than the initial fiscal
year and, upon any such change, all items referred to in this Section 4.5 shall
be appropriately apportioned. In all Landlord's Statements and Landlord's Tax
Statements rendered under this Section 4.5, amounts for periods partially within
and partially without the accounting periods shall be appropriately apportioned
and any items which are not determinable at the time of such Statements shall be
included therein on the basis of Landlord's reasonable estimate and, with
respect thereto, Landlord shall render promptly after such determination is
possible a supplemental Landlord's Statement or Landlord's Tax Statement, and
appropriate adjustment shall be made according thereto. All Landlord's
Statements and Landlord's Tax Statements shall be prepared on an accrual basis
of accounting.
4.6 PAYMENTS.
All payments of Annual Base Rent and additional rent shall be made to
Managing Agent, or to such other person as Landlord may from time to time
designate in writing to Tenant. If any installment of Annual Base Rent or
additional rent or on account of leasehold improvements is paid more than five
days after the due date thereof, at Landlord's election, it shall bear interest
from the due date to the date paid at a rate equal to the average prime
commercial rate from time to time
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established by the three largest national banks in Boston, Massachusetts from
such due date, but in no event less than an annual rate equal to 14% percent,
which interest shall be immediately due and payable as further additional rent.
4.7 TENANT'S RIGHT TO AUDIT LANDLORD'S BOOKS.
Within 30 days after delivery of Landlord's statement of Landlord's
Operating Costs, upon the prior written request of Tenant, Tenant shall be
permitted to examine, in the office of Landlord's Managing Agent, the books and
records ("Books") relating to the calculation of Operating Cost Escalation and
Real Estate Tax Escalation, and have conducted (by an accountant of its
selection reasonably approved by Landlord) an audit of Landlord's Statement and
Landlord's Operating Costs. Landlord shall make all Books readily available for
such examination. Any such audit shall be done at Tenant's expense. To the
extent any such audit discloses a discrepancy in Landlord's Statement, after
Landlord's verification of such discrepancy, Landlord shall adjust Landlord's
Statement and the Estimated Monthly Escalation Payment accordingly.
ARTICLE V
LANDLORD' S COVENANTS
5.1 LANDLORD' S COVENANTS DURING THE TERM.
Landlord covenants during the Term:
5.1.1 Building Services - To furnish, through Landlord's employees or
independent contractors, the services listed in Exhibit B, but the use of
freight
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elevators shall be scheduled through Landlord's Representative with reasonable
advance notice;
5.1.2 Additional Building Services - To furnish, through Landlord's
employees or independent contractors, reasonable additional Building operation
services upon reasonable advance request of Tenant at equitable rates from time
to time established by Landlord to be paid by Tenant, but Landlord shall not
impose an additional charge on Tenant for heat, ventilation and air conditioning
after normal business hours.
5.1.3 Repairs - Except as otherwise provided in ARTICLE VII of this Lease,
to perform such maintenance, to make such repairs to the Common Areas, roof,
exterior walls, floor slabs, other structural components, the heating,
ventilation, air-conditioning and other mechanical systems and the other common
facilities of the Building as may be necessary to keep them in good condition
and working order; to keep all exterior driveways, service roads, ramps,
sidewalks and walkways on the Charles Square Site free of ice and snow; and to
comply with all laws, regulations and orders of governmental authorities
applicable to the Building or the Charles Square Site generally (as
distinguished from laws, regulations and orders applicable to Tenant's use of
the Premises); and
5.1.4 Quiet Enjoyment - That Tenant, upon paying the rent and performing
its obligations hereunder, shall peacefully and quietly have, hold and enjoy the
Premises throughout the Term, with access 24 hours per day, 7 days per week, 52
weeks per year, without any manner of hindrance or molestation (including
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transmission of noise, other than noise customarily associated with office
premises, from other parts of the Building) from Landlord or anyone claiming
under Landlord, subject however to all the terms and provisions hereof, and to
the terms of the Ground Lease.
5.1.5 Signage. Subject to Landlord's prior written approval, Tenant shall
have the right, at its sole cost and expense, to place appropriate custom
signage on the entry doors to the Premises. Landlord, at its sole cost and
expense, shall include Tenant's name of the lobby directory.
5.1.6 Hotel Conference Rooms. Tenant shall be entitled to contract with
the Charles Square Hotel for use of conference rooms and guest rooms at
preferred corporate rates.
5.1.7 Security. Landlord shall provide security for the Building,
including without limitation monitoring by security officers at all times,
patrols by security officers after normal business hours and a card-key access
system for after-hours entry into the Building which records the card number for
later review.
5.1.8 Common Area Improvements. Before the Commencement Date, Landlord
shall have re-carpeted and painted the common areas on the fourth floor of the
Office Component, at Landlord's sole cost and expense, using colors and
materials standard for the Building.
5.2 INTERRUPTIONS.
Landlord shall not be liable to Tenant for any compensation or reduction
of rent by reason of inconvenience or annoyance or for loss of business arising
from
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power losses or shortages or from the necessity of Landlord's entering the
Premises for any of the purposes in this Lease authorized or for repairing the
Premises or any portion of the Building or Lot. In case Landlord is prevented or
delayed from making any repairs, alterations or improvements, or furnishing any
service or performing any other covenant or duty to be performed on Landlord's
part, by reason of any cause reasonably beyond Landlord's control, Landlord
shall not be liable to Tenant therefor, nor, except as expressly otherwise
provided in ARTICLE VII, shall Tenant be entitled to any abatement or reduction
of rent by reason thereof, nor shall the same give rise to a claim in Tenant's
favor that such failure constitutes actual or constructive, total or partial,
eviction from the Premises. Landlord shall use reasonable efforts to avoid
inconvenience to Tenant arising from interruptions in services and to restore
such services and make related repairs as expeditiously as is practicable.
Landlord reserves the right to stop any service or utility system when
necessary by reason of accident or emergency or until necessary repairs have
been completed. Except in case of emergency repairs, Landlord will give Tenant
reasonable advance notice of any contemplated stoppage and will use reasonable
efforts to avoid unnecessary inconvenience to Tenant by reason thereof.
Landlord also reserves the right to institute such policies, programs and
measures as may be necessary, required or expedient for the conservation or
preservation of energy or energy services or as may be necessary or required to
comply with applicable codes, rules, regulations or standards.
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5.3 RECOVERY OF TENANT'S COSTS.
In the event (i) Tenant successfully enforces against Landlord its rights
under this Lease or (ii) Tenant issued by Landlord or joined in a suit against
Landlord and it is found that Tenant is not liable and Landlord is liable,
Landlord shall pay Tenant all of its reasonable costs and expenses, including
without limitation reasonable attorneys' fees, incurred by or imposed upon
Tenant in connection with such enforcement or suit.
5.4 LANDLORD'S INSURANCE.
Landlord shall maintain, with responsible companies qualified to do
business in Massachusetts, fire and other casualty insurance covering all
buildings and improvements on the Charles Square Site, in amounts not less than
100 percent of the replacement cost of such buildings and improvements, with
extended coverage endorsements.
ARTICLE VI
TENANT'S COVENANTS
6.1 TENANT'S COVENANTS DURING THE TERM.
Tenant covenants during the Term and such further time as Tenant occupies
any part of the Premises:
6.1.1 Tenant's Payments - To pay when due (a) all Annual Base Rent and
additional rent, (b) all taxes which may be imposed on Tenant's personal
property in the Premises (including, without limitation, Tenant's fixtures and
equipment) regardless to whomever assessed, (c) all charges by public utilities
for telephone and
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other utility services (including service inspections therefor) rendered to the
Premises not otherwise required hereunder to be furnished by Landlord without
charge and not consumed in connection with any services required to be furnished
by Landlord without charge and (d) as additional rent, all charges of Landlord
for services rendered pursuant to Section 5.1.2 hereof;
6.1.2 Repairs and Yielding Up - Except as otherwise provided in ARTICLE
VII and Section 5.1.3 of this Lease, to keep the Premises in good order, repair
and condition, reasonable wear and tear and damage by fire, casualty or eminent
domain only excepted; and at the expiration or termination of this Lease
peaceably to yield up the Premises and all changes and additions therein in such
order, repair and condition, first removing all goods and effects of Tenant and
any items, the removal of which is required by agreement or specified herein to
be removed at Tenant's election and which Tenant elects to remove, and repairing
all damage caused by such removal and restoring the Premises and leaving them
clean and neat;
6.1.3 Occupancy and Use - Continuously from the Commencement Date, to use
and occupy the Premises only for the Permitted Uses; not to injure or deface the
Premises, Building, or the Charles Square Site; and not to permit in the
Premises any use thereof which is offensive, contrary to law or ordinances
(including, without limitation, City of Cambridge anti-smoking ordinances), or
which creates a nuisance or invalidates or increases the premiums for any
insurance on the Building or its contents (the Landlord representing and
warranting to Tenant that the use of the Premises for the Permitted Uses shall
not by itself invalidate or increase the
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premiums for any insurance) or liable to render necessary any alteration or
addition to the Building;
6.1.4 Rules and Regulations - To comply with the Rules and Regulations set
forth in Exhibit C and all other reasonable Rules and Regulations hereafter made
by Landlord, of which Tenant has been given notice, which Rules and Regulations
shall be applicable to all office tenants in the Building, for the care and use
of the Building and the Charles Square Site, it being understood that Landlord
shall not be liable to Tenant for the failure of other tenants of the Building
to conform to such Rules and Regulations;
6.1.5 Safety Appliances - To keep the Premises equipped with all safety
appliances required by law or ordinance or any other regulation of any public
authority because of any use made by Tenant and to procure all licenses and
permits so required because of such use and, if requested by Landlord, to do any
work so required because of such use, it being understood that the foregoing
provisions shall not be construed to broaden in any way Tenant's Permitted Uses;
6.1.6 Assignment and Subletting - Not without the prior written consent of
Landlord to assign this Lease, to make any sublease, or to permit occupancy of
the Premises or any part thereof by anyone other than Tenant, provided, however,
that so long as (a) the proposed subtenant or assignee is a reputable person or
entity which satisfies Landlord's reasonable financial review for a subtenant or
assignee of the space in question, (b) Tenant remains liable in the Lease, and
(c) Tenant gives Landlord reasonable advance notice of such sublease or
assignment, Landlord's
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consent shall not be unreasonably withheld, delayed or conditioned; as
additional rent to reimburse Landlord promptly for reasonable legal and other
expenses incurred by Landlord in connection with any request by Tenant for
consent to assignment or subletting; no assignment or subletting shall affect
the continuing primary liability of Tenant (which, following assignment, shall
be joint and several with the assignee); no consent to any of the foregoing in a
specific instance shall operate as a waiver in any subsequent instance.
Notwithstanding any provision of this Lease to the contrary, Tenant shall have
the right to assign this Lease or sublet any portion of the Premises to any
business organization controlled by, controlling, or under common control with
Tenant or which is the successor to Tenant by merger or through the sale of all
or substantially all of Tenant's assets (an "Affiliate"), provided Tenant
demonstrates to Landlord's reasonable satisfaction that the creditworthiness of
the Affiliate is at least equal to the greater of Tenant's creditworthiness (a)
on the date hereof or (b) on the date of such assignment or sublease.
Notwithstanding the foregoing provisions of this Section 6.1.6, Tenant
covenants not to enter into any sublease the rental of which is based in whole
or in part on the net revenues, net income or profits derived by any tenant
within the meaning of Section 856(d)(2)(A) of the Internal Revenue Code of 1954,
as amended.
6.1.7 Indemnity - To defend, with counsel reasonably acceptable to
Landlord, save harmless and indemnify Landlord from any liability for injury,
loss, accident or damage to any person or property and from any claims, actions,
proceedings and expenses and costs in connection therewith (including, without
implied limitation,
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counsel's reasonable fees): (i) arising from the omission, fault, willful act,
negligence or other misconduct of Tenant or from any use made or thing done or
occurring on the Premises not due to the negligence or willful misconduct of
Landlord or (ii) resulting from the failure of Tenant to perform and discharge
its covenants and obligations under this Lease;
6.1.8 Tenant's Liability Insurance - To maintain public liability
insurance on the Premises in amounts which shall, at the beginning of the Term,
be at least equal to the limits set forth in Section 1.1 of this Lease, and from
time to time during the Term, shall be for such higher limits, if any, as are to
Tenant's actual knowledge customarily carried in the area in which the Premises
are located on property similar to the Premises and used for similar purposes
and to furnish Landlord with certificates thereof;
6.1.9 Tenant's Worker's Compensation Insurance - To keep all of Tenant's
employees working in the Premises covered by worker's compensation insurance in
statutory amounts and to furnish Landlord with certificates thereof;
6.1.10 Landlord's Right of Entry - To permit Landlord and Landlord's
agents entry upon reasonable advance notice to Tenant, except in the case of
emergency in which case no notice shall be required, to examine the Premises at
reasonable times and, if Landlord shall so elect, to make repairs or
replacements (provided, however, Landlord shall use reasonable efforts to
prevent material adverse effects on Tenant's use and enjoyment of the Premises);
to remove, at Tenant's expense, any changes, additions, signs, curtains, blinds,
shades or the like not consented to in writing; and
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to show the Premises to prospective tenants during the 12 months preceding
expiration of the Term or the Extension Period (as applicable) and to
prospective purchasers and mortgagees at all reasonable times;
6.1.11 Loading - Not to place a load upon the Premises exceeding an
average rate of 50 pounds of live load per square foot of floor area; and not to
move any safe, vault or other heavy equipment in, about or out of the Premises
except in such manner and at such times as Landlord shall in each instance
approve; Tenant's business machines and mechanical equipment which cause
vibration or noise that may be transmitted to the Building structure or to any
other leased space in the Building shall be placed and maintained by Tenant in
settings of cork, rubber, spring or other types of vibration eliminators
sufficient to eliminate such vibration or noise;
6.1.12 Landlord's Costs - In case Landlord shall be made party to any
litigation commenced by or against Tenant or by or against any parties in
possession of the Premises or any part thereof claiming under Tenant, which is
not exempted from Tenant's indemnity by the terms of Section 6.1.7, to pay, as
additional rent, all costs including, without implied limitation, counsel's
reasonable fees incurred by or imposed upon Landlord in connection with such
litigation and, as additional rent, also to pay all such costs and fees incurred
by Landlord in connection with the successful enforcement by Landlord of any
obligations of Tenant under this Lease;
6.1.13 Tenant's Property - All the furnishings, fixtures, equipment,
effects and property of every kind, nature and description of Tenant and of all
persons claiming by, through or under Tenant which, during the continuance of
this Lease or any
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occupancy of the Premises by Tenant or anyone claiming under Tenant, may be on
the Premises or elsewhere in the Building or on the Charles Square Site shall be
at the sole risk and hazard of Tenant and, if the whole or any part thereof
shall be destroyed or damaged by fire, water or otherwise, by the leakage or
bursting of water pipes, steam pipes or other pipes, by theft or from any other
cause, no part of said loss or damage is to be charged to or to be borne by
Landlord unless due to the gross negligence or other similar misconduct of
Landlord;
6.1.14 Labor or Materialmen's Liens - To pay promptly when due the entire
cost of any work done on the Premises by Tenant, its agents, employees or
independent contractors; not to cause or permit any liens for labor or materials
performed or furnished in connection therewith to attach to the Premises; and
immediately to discharge (by payment, bond or other method) any such liens which
may so attach;
6.1.15 Changes or Additions - Not to make any non-structural changes or
alterations to the Premises without Landlord's prior written consent, which
consent shall not be unreasonably withheld; not to make any structural changes
or additions to the Premises without Landlord's prior written consent, provided
that Tenant shall reimburse Landlord for all reasonable costs incurred by
Landlord in reviewing Tenant's proposed changes or additions, and provided
further that, in order to protect the functional integrity of the Building, all
such changes and additions shall be performed by contractors selected from a
list of approved contractors prepared by Landlord from time to time; and
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6.1.16 Holdover - To pay to Landlord 150% of the total of the Annual Base
Rent and additional rent then applicable for each month or portion thereof
Tenant shall retain possession of the Premises or any part thereof after the
termination of this Lease, whether by lapse of time or otherwise, and also to
pay all damages sustained by Landlord on account thereof, consequential and
otherwise; the provisions of this subsection shall not operate as a waiver by
Landlord of any right of re-entry provided in this Lease.
ARTICLE VII
CASUALTY AND TAKING
7.1 CASUALTY AND TAKING.
In case during the Term all or any substantial part of the Premises,
Building or the Charles Square Site, or any one or more of them, are (i) damaged
materially by fire or any other cause or by action of public or other authority
in consequence thereof or (ii) taken by eminent domain or Landlord receives
compensable damage by reason of anything lawfully done in pursuance of public or
other authority and as a consequence all or any substantial part of the
Premises, Building or Charles Square Site are damaged materially, this Lease
shall terminate at Landlord's election, which may be made, notwithstanding
Landlord's entire interest may have been divested, by notice to Tenant within 30
days after the occurrence of the event giving rise to the election to terminate,
which notice shall specify the effective date of termination which shall be not
less than 30 nor more than 60 days after the date of notice of such termination
and a just proportion of the Annual Base Rent and additional rent
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according to the nature and extent of the injury and the effect on Tenant's use
and enjoyment of the Premises shall be abated from and after the occurrence of
the event giving rise to the election to terminate. If in any such case the
Premises, Building or the Charles Square Site, are rendered unfit for use and
occupation and the Lease is not so terminated, Landlord shall use due diligence
to put the Premises, Building or the Charles Square Site, or, in case of a
taking, what may remain thereof (excluding any items installed or paid for by
Tenant which Tenant may be required or permitted to remove) into substantially
the same condition that existed before such fire, casualty or taking to the
extent permitted by the net award of insurance or damages available to Landlord,
and a just proportion of the Annual Base Rent and additional rent according to
the nature and extent of the injury shall be abated until the Premises, Building
or the Charles Square Site, or such remainder shall have been put by Landlord in
such condition; and in case of a taking which permanently reduces the area of
the Premises, Building or Lot, a just proportion of the Annual Base Rent and
additional rent shall be abated according to the nature and extent of the injury
and the effect on Tenant's use and enjoyment of the Premises for the remainder
of the Term and an appropriate adjustment shall be made to the Annual Operating
Expenses. If in any such case the Lease is not so terminated and the Premises,
Building or the Charles Square Site (or in the case of a taking, at least 90
percent thereof) have not been put into proper condition for use and occupation
within one year after the damage or taking occurs, or, in the reasonable
judgment of Landlord's architect expressed within 60 days of such fire, casualty
or taking, are not capable of
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being put into such condition within one year, this Lease shall terminate at
Tenant's election, which may be made by notice to Landlord within ten (10) days
after expiration of such year or within ten (10) days after notice that the
damage cannot reasonably be repaired within one year, as the case may be, and
shall be effective on the date such notice is given and all of Tenant's
obligations hereunder shall then cease except to pay rent accrued prior to the
termination, as such rent shall have been reduced pursuant to this Section on
account of the damage or taking.
7.2 RESERVATION OF AWARD.
Landlord reserves to itself any and all rights to receive awards made for
damages to the Premises, Building or the Charles Square Site and the leasehold
hereby created, or any one or more of them, accruing by reason of exercise of
eminent domain or by reason of anything lawfully done in pursuance of public or
other authority. Tenant hereby releases and assigns to Landlord all Tenant's
rights to such awards and covenants to deliver such further assignments and
assurances thereof as Landlord may from time to time request and hereby
irrevocably designates and appoints Landlord as its attorney in fact to execute
and deliver in Tenant's name and behalf all such further assignments thereof. It
is agreed and understood, however, that Landlord does not reserve to itself, and
Tenant does not assign to Landlord, any damages payable for (i) trade fixtures,
equipment and personal property installed by Tenant, or anybody claiming under
Tenant, at the Premises or (ii) relocation or business interruption expenses or
damages of a similar nature recoverable by Tenant from such authority in a
separate action.
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ARTICLE VIII
RIGHTS OF MORTGAGEE
8.1 PRIORITY OF LEASE.
This Lease is and shall continue to be subject and subordinate to any
presently existing mortgage, ground lease or deed of trust of record covering
the Lot or Building or both (the "mortgaged premises"), provided that Landlord
shall use diligent efforts to obtain on Tenant's behalf a nondisturbance
agreement from the holders of any such mortgages, deeds of trust or ground
leases within six (6) months after the date hereof (which nondisturbance
agreement may be in the standard form used by such holders). The holder of any
such presently existing mortgage or deed of trust or lessor under any such
ground lease shall have the election to subordinate the same to the rights and
interests of Tenant under this Lease exercisable by filing with the appropriate
recording office a notice of such election, whereupon the Tenant's rights and
interests hereunder shall have priority over such mortgage, ground lease or deed
of trust.
Unless the option provided for in the next following sentence shall be
exercised, this Lease shall be superior to and shall not be subordinate to, any
mortgage, deed of trust or other voluntary lien hereafter placed on the
mortgaged premises. The holder of any such mortgage, deed of trust or other
voluntary lien shall have the option to subordinate this Lease to the same,
provided that such holder enters into a nondisturbance and attornment agreement
with Tenant, under
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which the holder will agree to recognize the rights of Tenant under this Lease
and to accept Tenant as tenant of the Premises under the terms and conditions of
this Lease in the event of acquisition of title by such holder through
foreclosure proceedings or otherwise and Tenant will agree to recognize the
holder of such mortgage or lessor under such ground lease as Landlord in such
event, which agreement shall be made to expressly bind and inure to the benefit
of the successors and assigns of Tenant and of the holder or ground lessor and
upon anyone purchasing the mortgaged premises at any foreclosure sale. Any such
mortgage or ground lease to which this Lease shall be subordinated may contain
such terms, provisions and conditions as the holder or ground lessor deems usual
or customary.
8.2 RIGHTS OF MORTGAGE HOLDERS; LIMITATION OF MORTGAGEE'S LIABILITY.
The word "mortgage" as used herein includes mortgages, deeds of trust or
other similar instruments evidencing other voluntary liens or encumbrances and
modifications, consolidations, extensions, renewals, replacements and
substitutes thereof. The word "holder" shall mean a mortgagee and any subsequent
holder or holders of a mortgage. Until the holder of a mortgage shall enter and
take possession of the Premises for the purpose of foreclosure, such holder
shall have only such rights of Landlord as are necessary to preserve the
integrity of this Lease as security. Upon entry and taking possession of the
Premises for the purpose of foreclosure, such holder shall have all the rights
of Landlord. Notwithstanding any other provision of this Lease to the contrary,
including without limitation Section 10.4, no such holder of a mortgage or
ground lessor shall be liable either as
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mortgagee or as assignee to perform, or be liable in damages for failure to
perform, any of the obligations of Landlord unless and until such holder or
ground lessor shall enter and take possession of the Premises for the purpose of
foreclosure, and such holder or ground lessor shall not in any event be liable
to perform or for failure to perform the obligations of Landlord under Article
III of this Lease. Upon entry for the purpose of foreclosure, such holder or
ground lessor shall be liable to perform all of the obligations of Landlord
(except for the obligations under Article III of this Lease), subject to and
with the benefit of the provisions of Section 10.4 of this Lease, provided that
a discontinuance of any foreclosure proceeding shall be deemed a conveyance
under said provisions to the owner of the equity of the Premises.
No holder of a mortgage on or ground lessor of Landlord's interest in the
Premises shall (i) be bound by any modification of this Lease not made as
expressly provided for in this Lease or by any previous prepayment of more than
one month's rent, unless such modification or prepayment shall have been
expressly approved in writing by the holder of the superior mortgage or ground
lessor of the ground lease through or by reason of which the holder or ground
lessor shall have succeeded to the rights of Landlord; or (ii) be liable for the
performance of Landlord's covenants and agreements contained in this Lease
except to the extent of the holder's or ground lessor's ownership in the
Premises, and no other property of such holder shall be subject to levy,
attachment, execution or other enforcement procedure for the satisfaction of
Tenant's remedies.
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8.3 MORTGAGEE'S ELECTION.
Notwithstanding any other provision to the contrary contained in this
Lease, if prior to substantial completion of Landlord's obligations under
ARTICLE XI and Section 2.1.1, any holder of a first mortgage on the mortgaged
premises or ground lessor under a ground lease enters and takes possession
thereof for the purpose of foreclosing the mortgage or terminating the ground
lease, such holder or ground lessor may elect, by written notice given to Tenant
and Landlord at any time within 90 days after such entry and taking of
possession, not to perform Landlord's obligations under ARTICLE XI and/or
Section 2.1.1 and, in such event, such holder or ground lessor and all persons
claiming under it shall be relieved of all obligations to perform, and all
liability for failure to perform, said Landlord's obligations under ARTICLE XI
and/or Section 2.1.1, and Tenant may terminate this Lease and all its
obligations hereunder by written notice to Landlord and such holder or ground
lessor given within 30 days after the day on which such holder or ground lessor
shall have given its notice as aforesaid.
8.4 NO PREPAYMENT OR MODIFICATION, ETC.
Tenant shall not pay Annual Base Rent, additional rent or any other charge
more than 10 days prior to the due dates thereof. No prepayment of Annual Base
Rent, additional rent or other charge, no assignment of this Lease and no
agreement to modify so as to reduce the rent, change the Term or otherwise
materially change the rights of Landlord under this Lease, or to relieve Tenant
or any Guarantor of any
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obligations or liability under this Lease, shall be valid unless consented to in
writing by Landlord's mortgagees or ground lessors of record, if any.
8.5 NO RELEASE OR TERMINATION.
No act or failure to act on the part of Landlord which would entitle
Tenant under the terms of this Lease, or by law, to be relieved of Tenant's
obligations hereunder or to terminate this Lease, shall result in a release or
termination of such obligations or a termination of this Lease unless (i) Tenant
shall have first given written notice of Landlord's act or failure to act to
Landlord's mortgagees or ground lessors of record, if any (provided Tenant has
received written notice of the identity and address of such mortgagees or ground
lessors), specifying the act or failure to act on the part of Landlord which
could or would give basis to Tenant's rights and (ii) such mortgagees or ground
lessors, after receipt of such notice, have failed or refused to correct or cure
the condition complained of within a reasonable time thereafter, but nothing
contained in this Section 8.5 shall be deemed to impose any obligation on any
such mortgagee or ground lessor to correct or cure any such condition.
"Reasonable time" as used above means and includes a reasonable time to obtain
possession of the mortgaged premises, if the mortgagee or ground lessor elects
to do so, and a reasonable time to correct or cure the condition if such
condition is determined to exist.
8.6 CONTINUING OFFER.
The covenants and agreements contained in this Lease with respect to the
rights, powers and benefits of a mortgagee or ground lessor (particularly,
without
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limitation thereby, the covenants and agreements contained in this ARTICLE VIII)
constitute a continuing offer to any person, corporation or other entity, which
by accepting or requiring an assignment of this Lease or by entry or foreclosure
assumes the obligations herein set forth with respect to such mortgagee or
ground lessor; such mortgagee and ground lessor are each hereby constituted a
party to this Lease as an obligee hereunder to the same extent as though its
name was written hereon as such; and such mortgagee or ground lessor shall be
entitled to enforce such provisions in its own name. Tenant agrees on request of
Landlord to execute and deliver from time to time any agreement which may
reasonably be deemed necessary to implement the provisions of this ARTICLE VIII.
8.7 MORTGAGEE'S APPROVAL.
Landlord's and Tenant's obligations to perform their covenants and
agreements under this Lease are subject to the condition precedent that this
Lease be approved by the current mortgagee of the Charles Square Site (Aetna
Life and Casualty Company) and the lessor under the Ground Lease. Landlord shall
use diligent efforts to obtain such approvals. Unless Landlord notifies Tenant
within 45 days after the date hereof that the Lease has been disapproved, the
condition set forth in this Section 8.7 shall be deemed satisfied.
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ARTICLE IX
DEFAULT
9.1 EVENTS OF DEFAULT.
If any default by Tenant continues after notice, in case of the failure to
make payments of Annual Base Rent, additional rent, or any other monetary
obligation to Landlord, for more than 10 days or, in the case of any other
failure by Tenant to perform its obligations under this Lease, for more than 30
days and such additional time, if any, as is reasonably necessary to cure the
default if the default is of such a nature that it cannot reasonably be cured in
30 days and Tenant diligently endeavors to cure such default; or if Tenant
becomes insolvent, files a petition under any chapter of the U.S. Bankruptcy
Code, 11 U.S.C. 101 et seq., as it may be amended (or any similar petition under
any insolvency law of any jurisdiction), or if such petition is filed against
Tenant and is not dismissed within 60 days; or if Tenant proposes any
dissolution, liquidation, composition, financial reorganization or
recapitalization with creditors, makes an assignment or trust mortgage for the
benefit of creditors, or if a receiver, trustee, custodian or similar agent is
appointed or takes possession with respect to any property of Tenant and is not
dismissed within 60 days; or if the leasehold hereby created is taken on
execution or other process of law in any action against Tenant; then, and in any
such case, Landlord and the agents and servants of Landlord may, in addition to
and not in derogation of any remedies for any preceding breach of covenant,
immediately or at any time thereafter while such default continues and without
further notice exercise any and all remedies permitted
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by state or federal law. Tenant hereby waives all statutory rights (including,
without limitation, rights of redemption, if any) to the extent such rights may
be lawfully waived and Landlord, without notice to Tenant but no earlier than
the expiration of the applicable cure period, may store Tenant's effects and
those of any person claiming through or under Tenant at the expense and risk of
Tenant and, if Landlord so elects, may sell such effects at public auction or
private sale and apply the net proceeds to the payment of all sums due to
Landlord from Tenant, if any, and pay over the balance, if any, to Tenant.
9.2 TENANT'S OBLIGATIONS AFTER TERMINATION.
In the event that this Lease is terminated under any of the provisions
contained in Section 9.1 of this Lease or shall be otherwise lawfully terminated
for breach of any obligation of Tenant, Tenant covenants to pay forthwith to
Landlord, as liquidated damages, the present value of the excess of the total
rent reserved for the residue of the Term over the rental value of the Premises
for said residue of the Term, calculated using a commercially reasonable
discount rate. In calculating the rent reserved, there shall be included, in
addition to the Annual Base Rent and all additional rent, the value of all other
consideration agreed to be paid or performed by Tenant for said residue. Until
Landlord demands such liquidated damages, Tenant further covenants after any
such termination to pay punctually to Landlord all the sums and perform all the
obligations which Tenant covenants in this Lease to pay and to perform in the
same manner and to the same extent and at the same time as if this Lease had not
been terminated. In calculating the amounts to be paid by Tenant
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under the next foregoing covenant, Tenant shall be credited with the net
proceeds of any rents obtained by Landlord by reletting the Premises, after
deducting all Landlord's expenses in connection with such reletting, including,
without implied limitation, all repossession costs, brokerage commissions, fees
for legal services and expenses of preparing the Premises for such reletting, it
being agreed by Tenant that Landlord may (i) relet the Premises or any part or
parts thereof for a term or terms which may at Landlord's option be equal to or
less than or exceed the period which would otherwise have constituted the
balance of the Term and may grant such concessions and free rent as Landlord in
its sole judgment considers advisable or necessary to relet the same and (ii)
make such alterations, repairs and decorations in the Premises as Landlord in
its sole judgment considers advisable or necessary to relet the same, and no
action of Landlord in accordance with the foregoing or failure to relet or to
collect rent under reletting shall operate or be construed to release or reduce
Tenant's liability as aforesaid; provided, however, that if Landlord uses or
permits any person or entity in control of, under common control with or
controlled by Landlord to use the Premises during any part of the balance of the
Term or Extended Term, no less than the fair rental value of the Premises during
such period of use shall be credited against all sums due from Tenant.
Nothing contained in this Lease shall, however, limit or prejudice the
right of Landlord to prove and obtain in proceedings for bankruptcy or
insolvency by reason of the termination of this Lease an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in
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which, the damages are to be proved, whether or not the amount be greater, equal
to or less than the amount of the loss or damages referred to above.
ARTICLE X
MISCELLANEOUS
10.1 NOTICE OF LEASE.
Upon request of either party, both parties shall execute and deliver,
after the Term begins, a short form of this Lease in form appropriate for
recording or registration and, if this Lease is terminated before the Term
expires, an instrument in such form acknowledging the date of termination.
10.2 CONSTRUCTION ON ADJACENT PREMISES; EXPANSION.
If any excavation, alteration, addition, repair, or other building
operation shall be about to be made or shall be made on the Premises, the
Building or the Lot or on any premises adjoining the Lot, Tenant shall permit
Landlord, its agents, employees, licensees and contractors, with reasonable
advance notice to Tenant, except in the case of emergency, in which case no
notice shall be required, to enter the Premises and to shore the foundations
and/or walls thereof, and to erect scaffolding and/or protective barricades
around and about the Premises (but not so as to preclude entry thereto) and to
do any act or thing necessary for the safety or preservation of the Premises;
provided, however, Landlord shall not materially interfere with Tenant's use and
enjoyment of the Premises. Tenant's obligations under this Lease shall not be
affected by any such construction or excavation work or any such shoring-up so
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long as Landlord does not materially interfere with Tenant's use and enjoyment
of the Premises. Provided Landlord does not interfere with Tenant's use and
enjoyment of the Premises, Landlord shall not be liable for any inconvenience,
disturbance, loss of business or any other annoyance arising from any such
construction, excavation shoring-up, scaffolding or barricades, but Landlord
shall use its best efforts so that such work will cause such little
inconvenience, annoyance and disturbance to Tenant as possible.
10.3 NOTICES FROM ONE PARTY TO THE OTHER.
All notices required or permitted hereunder shall be in writing and
addressed, if to the Tenant, at Tenant's Address or such other address as Tenant
shall have last designated by notice in writing to Landlord, with a copy to
Testa, Hurwitz & Thibeault, 53 State Street, Boston, Massachusetts 02109,
Attention: Real Estate Department, and, if to Landlord, at Landlord's Address or
such other address as Landlord shall have last designated by notice in writing
to Tenant, with a copy by like means to Andrew H. Cohn, Esq., Hale and Dorr, 60
State Street, Boston, Massachusetts 02109. Any notice shall be deemed duly given
three days after being mailed to such address postage prepaid, registered or
certified mail, return receipt requested, or when delivered to such address by
hand.
10.4 BIND AND INURE.
The obligations of this Lease shall run with the land and this Lease shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Landlord named herein and
each successive
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owner of the Charles Square Site shall be liable only for the obligations
accruing during the period of its ownership. The obligations of Landlord shall
be binding upon the assets of Landlord which comprise the Charles Square Site
but not upon other assets of Landlord. No individual partner, trustee,
stockholder, officer, director, employee or beneficiary of Landlord shall be
personally liable under this Lease and Tenant shall look solely to Landlord's
interest in the Charles Square Site in pursuit of its remedies upon an event of
default hereunder, and the general assets of the individual partners, trustees,
stockholders, officers, employees or beneficiaries of Landlord shall not be
subject to levy, execution or other enforcement procedure for the satisfaction
of the remedies of Tenant, upon an event of default hereunder.
10.5 NO SURRENDER.
The delivery of keys to any employee of Landlord or to Landlord's agent or
any employee thereof shall not operate as a termination of this Lease or a
surrender of the Premises.
10.6 NO WAIVER, ETC.
The failure of Landlord or of Tenant to seek redress for violation of, or
to insist upon the strict performance of, any covenant or condition of this
Lease or any of the Rules and Regulations referred to in Section 6.1.4 of this
Lease, whether heretofore or hereafter adopted by Landlord, shall not be deemed
a waiver of such violation nor prevent a subsequent act, which would have
originally constituted a violation, from having all the force and effect of an
original violation, nor shall the failure of Landlord to enforce any of said
Rules and Regulations against any other
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tenant in the Building be deemed a waiver of any such Rules or Regulations. The
receipt by Landlord of Annual Base Rent or additional rent with knowledge of the
breach of any covenant of this Lease shall not be deemed a waiver of such breach
by Landlord, unless such waiver be in writing and signed by Landlord. No consent
or waiver, express or implied, by Landlord or Tenant to or of any breach of any
agreement or duty shall be construed as a waiver or consent to or of any other
breach of the same or any other agreement or duty.
10.7 NO ACCORD AND SATISFACTION.
No acceptance by Landlord of a lesser sum than the Annual Base Rent and
additional rent then due shall be deemed to be other than on account of the
earliest installment of such rent due, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment as rent be deemed as
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such installment or
pursue any other remedy in this Lease provided.
10.8 CUMULATIVE REMEDIES.
The specific remedies to which Landlord may resort under the terms of this
Lease are cumulative and are not intended to be exclusive of any other remedies
or means of redress to which it may be lawfully entitled in case of any breach
or threatened breach by Tenant of any provisions of this Lease. In addition to
the other remedies provided in this Lease, Landlord and Tenant each shall be
entitled to the restraint by injunction of the violation or attempted or
threatened violation of any of
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the covenants, conditions or provisions of this Lease or to a decree compelling
specific performance of any such covenants, conditions or provisions.
10.9 LANDLORD'S RIGHT TO CURE.
If Tenant shall at any time default in the performance of any obligation
under this Lease and such default should continue after notice and the
expiration of the applicable grace period, Landlord shall have the right, but
shall not be obligated, to enter upon the Premises and to perform such
obligation, notwithstanding the fact that no specific provision for such
substituted performance by Landlord is made in this Lease with respect to such
default. In performing such obligation, Landlord may make any payment of money
or perform any other act. All sums so paid by Landlord (together with interest
at the rate of four percent per annum in excess of the then average prime
commercial rate of interest being charged by the three largest national banks in
Boston, Massachusetts), and all necessary incidental costs and expenses in
connection with the performance of any such act by Landlord, shall be deemed to
be additional rent under this Lease and shall be payable to Landlord immediately
on demand. Landlord may exercise the foregoing rights without waiving any other
of its rights or releasing Tenant from any of its obligations under this Lease.
10.10 ESTOPPEL CERTIFICATE.
Tenant agrees, from time to time upon not less than 15 days' prior written
request by Landlord, to execute, acknowledge and deliver to Landlord a statement
in writing certifying, to the extent true, that this Lease is unmodified and in
full force
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and effect; that, to Tenant's knowledge, Tenant has no defenses, offsets or
counterclaims against its obligations to pay the Annual Base Rent and additional
rent and to perform its other covenants under this Lease; that, to Tenant's
knowledge, there are no uncured defaults of Landlord or Tenant under this Lease
(or, if there have been any modifications, that this Lease is in full force and
effect as modified and stating the modifications and, if there are any defenses,
offsets, counterclaims, or defaults of which Tenant has knowledge, setting them
forth in reasonable detail); and the dates to which the Annual Base Rent,
additional rent and other charges have been paid. Any such statement delivered
pursuant to this Section 10.10 shall be in a form reasonably acceptable to and
may be relied upon by any prospective purchaser or mortgagee of premises which
include the Premises or any prospective assignee of any such mortgagee.
10.11 WAIVER OF SUBROGATION.
Any insurance carried by either party with respect to the Premises and
property therein or occurrences thereon shall include a clause or endorsement
denying to the insurer rights of subrogation against the other party to the
extent rights have been waived by the insured prior to occurrences of injury or
loss. Each party, notwithstanding any provisions of this Lease to the contrary,
hereby waives any rights of recovery against the other for injury or loss due to
hazards covered by insurance containing such clause or endorsement to the extent
of the indemnification received thereunder.
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10.12 ACTS OF GOD.
In any case where either party hereto is required to do any act, delays
caused by or resulting from Acts of God, war, civil commotion, fire, flood or
other casualty, labor difficulties, shortages of labor, materials or equipment,
government regulations, unusually severe weather or other causes beyond such
party's reasonable control shall not be counted in determining the time during
which work shall be completed, whether such time be designated by a fixed date,
a fixed time or a "reasonable time", and such time shall be deemed to be
extended by the period of such delay. Notwithstanding anything herein contained,
however, the provisions of this Section 10.12 shall not be applicable to
Tenant's obligation to pay rent under the provisions of Article IV, or its
obligations to pay any other sums, monies, costs, charges or expenses required
to be paid by the Tenant hereunder or to Tenant's right to terminate this Lease
pursuant to Section 7.1.
10.13 BROKERAGE.
Landlord and Tenant represent and warrant that they have dealt with no
broker in connection with this transaction other than Carpenter and Company and
Landlord agrees to defend, indemnify and save Tenant harmless from and against
any and all cost, expense or liability for any compensation, commissions or
charges claimed by any broker or agent other than Carpenter and Company with
respect to Tenant's dealings in connection with this Lease.
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10.14 SUBMISSION NOT AN OFFER.
The submission of a draft of this Lease or a summary of some or all of its
provisions does not constitute an offer to lease or demise the Premises, it
being understood and agreed that neither Landlord nor Tenant shall be legally
bound with respect to the leasing of the Premises unless and until this Lease
has been executed by both Landlord and Tenant and a fully executed copy has been
delivered to each of them.
10.15 LANDLORD REMEDIES.
In addition to Landlord's other remedies, Landlord shall have the right,
during the Term of this Lease, to impose upon Tenant a fine of fifty dollars
($50.00) per day for each and every violation by Tenant of reasonable rules and
regulations of Landlord, as such may be promulgated from time to time or for
breach of the terms of this Lease. Such fine may be imposed no sooner than one
(1) business day following written notice by Landlord to Tenant of the breach of
the rules or regulations or terms of this Lease, unless such breach by Tenant of
the rules and regulations or the terms of this Lease cannot be cured within such
one (1) business day period, in which case such fine may be imposed no sooner
than thirty (30) days following written notice by Landlord to Tenant of the
breach of the rules or regulations or the terms of this Lease, provided however,
that if Tenant does not commence to cure such breach of the rules and
regulations or terms of this Lease upon receipt of notice from Landlord and
diligently pursue the curing of the same
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during such thirty (30) day period, such fine may be imposed during such thirty
(30) day period.
10.16 APPLICABLE LAW AND CONSTRUCTION.
This Lease shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts. If any term, covenant, condition or
provision of this Lease or the application thereof to any person or
circumstances shall be declared invalid or unenforceable by the final ruling of
a court of competent jurisdiction having final review, the remaining terms,
covenants, conditions and provisions of this Lease and their application to
persons or circumstances shall not be affected thereby and shall continue to be
enforced and recognized as valid agreements of the parties, and in the place of
such invalid or unenforceable provision, there shall be substituted a like, but
valid and enforceable provision which comports to the findings of the aforesaid
court and most nearly accomplishes the original intention of the parties.
There are no oral or written agreements between Landlord and Tenant
affecting this Lease. This Lease may be amended, and the provisions hereof may
be waived or modified, only by instruments in writing executed by Landlord and
Tenant.
The titles of the several Articles and Sections contained herein are for
convenience only and shall not be considered in construing this Lease.
Unless repugnant to the context, the words "Landlord" and "Tenant"
appearing in this Lease shall be construed to mean those named above and their
respective
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heirs, executors, administrators, successors and assigns, and those claiming
through or under them respectively. If there be more than one tenant, the
obligations imposed by this Lease upon Tenant shall be joint and several.
10.17 LIMITATION OF LANDLORD'S LIABILITY
Tenant agrees in all events to look solely to Landlord's interest in the
Charles Square Site for satisfaction of any claim against Landlord hereunder and
Tenant agrees that Tenant shall have no other recourse against Landlord, nor
shall Tenant have any recourse against (i) any other property or assets of
Landlord or (ii) the partners, trustees, beneficiaries, shareholders, employees,
officers, directors, agents or principals of Landlord or any of their property
or assets.
10.18 PARKING.
Tenant and its employees, agents, contractors and invitees shall have the
right to use, on a non-exclusive basis, a number of parking spaces in the
parking garage on the Charles Square Site equal to one parking space for every
1,000 square feet of rentable area in Tenant's Space from time to time. Tenant
shall pay a monthly charge to Landlord on account of each parking space so used
in any month, which charge shall be equal to the then current market rates;
provided, however, during Lease Years 1 and 2, the monthly charge of the first
four parking spaces so used shall not exceed $100 per month per parking space;
and provided, further, during Lease Year 1, the monthly charge for any parking
spaces above the first four so used shall not exceed $180 per month per parking
space. Tenant and its employees, agents, contractors and invitees shall have
access to said parking garage from the hours of
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<PAGE> 60
6:00 A.M. to 1:00 A.M. only. Tenant shall not permit its employees who have
parking passes for the parking garage to share passes with others who do not
have passes, nor shall Tenant allow its employees to leave vehicles in the
parking garage over weekends or while they are traveling, it being understood
and agreed by Tenant that the parking garage is to be used for purposes of daily
commuting only.
ARTICLE XI
LEASEHOLD IMPROVEMENTS; TENANT ALLOWANCE
11.1 PLANS FOR LEASEHOLD IMPROVEMENTS
11.1.1 Tenant, at Tenant's sole cost and expense, shall cause to be
prepared and delivered to Landlord for Landlord's approval two sets of
preliminary plans and specifications ("preliminary plans") for the renovations
and improvements to Tenant's Initial Space prepared by a registered architect.
11.1.2 Following Landlord's approval of the preliminary plans, Tenant, at
Tenant's sole cost and expense, shall cause to be prepared and delivered for
Landlord's approval four sets of working drawings and specifications ("working
drawings") for the renovations and improvements to Tenant's Initial Space
prepared by a registered architect in conformity with the approved preliminary
plans and with Landlord's reasonable requirements and shall make any revisions
reasonably requested by Landlord and shall obtain Landlord's approval on or
before the date that is thirty (30) days after the date hereof; provided,
however, that Landlord shall review the working drawings and respond to Tenant
within three business days of receipt of said drawings and shall not
unreasonably withhold its approval of the
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working drawings. Landlord shall evidence its approval by causing one set of
such working drawings to be initialed on its behalf and returned to the Tenant.
Before beginning construction of Leasehold Improvements in the Expansion Space,
Tenant shall cause to be prepared and delivered to Landlord four sets of working
drawings for the Expansion Space prepared by a registered architect and shall
make any revisions reasonably requested by Landlord and shall obtain Landlord's
approval; provided, however, Landlord shall review the working drawings and
respond to Tenant within three business days of receiving the working drawings
and shall not unreasonably withhold its approval of the working drawings.
Landlord will not approve any construction, alterations or additions requiring
unusual expense to readapt the Premises for office use on lease termination or
unusually increasing the cost of construction, insurance or taxes on the Office
Component or of Landlord's services unless Tenant first gives assurances
acceptable to Landlord that such readaptation will be made prior to such
termination without expense to Landlord and makes provisions acceptable to
Landlord for the payment of such increased cost. Landlord will also disapprove
any alterations or additions requested by Tenant which will in Landlord's
reasonable opinion be harmful to the Office Component or other tenants. All
changes and additions shall be part of the Premises upon termination of the
Lease unless Landlord and Tenant agree otherwise in writing at the time of
approval of such changes or additions.
11.1.3 After Landlord's approval of the working drawings, no change shall
be made thereto except as provided in this Section 11.1.3:
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<PAGE> 62
(i) No change may be made by either party without the prior written
consent of the other (which shall not be unreasonably withheld or
delayed).
(ii) All architectural services necessitated shall be rendered by
Tenant's architect at the expense of the party requesting the
change; and
(iii) All construction work necessitated by any change shall be performed
by Tenant's contractor; if the change was requested by Landlord,
Tenant's Allowance (as hereinafter defined) shall be adjusted to
reflect any increase in the cost of the Leasehold Improvements (as
defined below) resulting therefrom.
11.2 CONSTRUCTION BY TENANT.
All work described in the working drawings (the "Leasehold Improvements")
shall be performed by Tenant's general contractor, the identity of which must be
approved by Landlord, which approval shall not be unreasonably withheld. The
construction of the Leasehold Improvements shall be coordinated with any work
being performed by Landlord in such manner as to maintain harmonious labor
relations and not to damage or, in Landlord's reasonable opinion, unreasonably
interfere with operations of or require the making of any structural changes to
the Office Component.
Before commencing construction of the Leasehold Improvements, Tenant at
its own expense shall provide any necessary appropriate riders for fire and
extended coverage and comprehensive general public liability and property damage
insurance covering the risks during the course of such work and certificates
showing that necessary Workmen's Compensation and Employer's Liability Insurance
has been taken out to protect all employees engaged in the work during the
course of such construction. The provisions of Sections 3.1 and 6.1.7 of this
Lease shall apply to any
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work done by Tenant or any agent, employee, invitee or visitor of Tenant under
this Section.
11.3 TENANT ALLOWANCE.
Within ten days after substantial completion of the Leasehold Improvements
in Tenant's Initial Space, delivery to Landlord of a certificate of occupancy
for the Premises and first occupancy by Tenant of the Initial Space, Landlord
shall reimburse Tenant for Tenant's costs and expenses of the Leasehold
Improvements in Tenant's Initial Space, up to a maximum of $50,000 (the "Initial
Allowance"). At Tenant's option all or any portion of the Initial Allowance
shall be applied toward, and paid by Landlord to Tenant on account of, any
charges, additions, alterations or improvements made to any portion of the
Premises in accordance with Section 6.1.15 prior to January 1, 1997.
11.4 LANDLORD'S RIGHT TO TERMINATE LEASE PRIOR TO COMMENCEMENT DATE.
If during the period between the date of execution of this Lease and the
Commencement Date Tenant shall fail to comply with any requirements of this
Article XI, and if such failure shall continue for more than ten (10) days after
written notice from Landlord specifying the failure and if within said ten (10)
day period Tenant has not commenced diligently to correct the failure, then
Landlord may, at its option, cancel and terminate this Lease on the date stated
in said notice. Upon such cancellation neither party shall have any continuing
liability to the other hereunder except that Tenant shall repay to Landlord
immediately upon demand by Landlord therefor all payments made by Landlord to
Tenant, if any, as part of the tenant
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<PAGE> 64
allowance and each party shall remain responsible according to the terms and
provisions of the Lease for its acts or neglects occurring prior to such
cancellation.
11.5 EXPANSION SPACE.
The provisions of this Article XI shall apply to the Expansion Space also,
except that (a) the thirty-day period described in Section 11.1.2 shall run from
the date of delivery of the Expansion Space to Tenant, rather than from the date
hereof, (b) references herein to the "Premises" or the "Initial Space" shall be
deemed to be references to the "Expansion Space" where appropriate, and (c) the
maximum tenant allowance under Section 11.3 for the Expansion Space shall be
$25,000.
ARTICLE XII
RIGHT OF FIRST OFFER
12.1 RIGHT OF FIRST OFFER
Landlord hereby grants to Tenant a right of first offer to lease (the
"Offer Right") space in the Office Component (the "Offer Space") if such Offer
Space becomes available for occupancy before the fourth (4th) anniversary of the
Commencement Date (or before the end of the initial Term, in the event Tenant
has validly exercised its extension option under Section 2.3). The term of any
lease of Offer Space leased pursuant to this Section shall end on the last day
of the Term of this Lease.
If Landlord desires to lease the Offer Space, Landlord shall first send
Tenant notice of the specific terms and conditions, including, without
limitation, the
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<PAGE> 65
applicable annual base rent and the length of term, upon which Landlord desires
to lease such Offer Space (the "Proposed Terms"). Tenant shall have five (5)
business days subsequent to receipt by Tenant of such notice from Landlord (the
"Offer Date") in which to exercise its option to lease the Offer Space on the
Proposed Terms.
Within five (5) business days after the Offer Date, Tenant shall by notice
to Landlord accept or reject the offer on the Proposed Terms (failure of Tenant
to respond within such five-business-day period shall be deemed a rejection of
the offer). In the event Tenant does not accept the offer on the Proposed Terms,
Landlord shall be free for a period up to six (6) months to lease such Offer
Space to any third party on substantially the same terms and conditions as set
forth in the Proposed Terms; provided, however, that Landlord shall be entitled
to include in any lease to any such third party, in addition to the Proposed
Terms, commercially reasonable provisions relating to allowances for tenant
improvements. In the event Landlord has not within such six-month period signed
a commitment to lease the applicable Offer Space to a third party on
substantially the same terms and conditions as are contained in the Proposed
Terms, Tenant's rights under this Section shall again be effective with respect
to such Offer Space. Notwithstanding the foregoing, Tenant's right to accept any
offer hereunder and to lease any Offer Space is subject to the additional
conditions precedent that at the time Tenant exercises its right to lease any
such Offer Space and at the time the lease for any such Offer Space commences
(i) Tenant shall not be in default under this Lease beyond applicable
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<PAGE> 66
grace or cure periods, and (ii) Tenant shall not have sublet any portion of the
Premises or assigned this Lease pursuant to Section 6.1.6 hereof.
The rights of Tenant under this Section are expressly subordinate to, and
shall not apply to any extension, expansion or first offer rights granted to
other tenants of the Office Component prior to the date hereof. The rights of
Tenant set forth in this Section shall not be binding upon any institution or
mortgagee which acquires title to the Building or any portion thereof through
foreclosure by sale or deed in lieu thereof, or to anyone claiming by, through
or under such institution or mortgagee.
Any person dealing with the Offer Space may, without further inquiry, rely
upon a representation in a certificate of Landlord or its successor in title as
to whether or not the provisions of this Section have been satisfied. Time is of
the essence with respect to this Section.
EXECUTED as a sealed instrument in two or more counterparts on the day and
year first above written.
LANDLORD:
TRUSTEES OF KSA REALTY TRUST
By: /s/ H. Vaughan Blaxter, III
-----------------------------------
, as Trustee of KSA
Realty Trust and for Co-Trustees, but
not individually
By: /s/ Richard L. Friedman
-----------------------------------
, as Trustee of KSA
Realty Trust and for Co-Trustees, but
not individually
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<PAGE> 67
TENANT:
CAMBRIDGE ENERGY RESEARCH
ASSOCIATES LIMITED PARTNERSHIP
By: /s/ CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
----------------------------------------------
General Partner
By: /s/ Daniel Yergin
-----------------------------------
Name: Daniel Yergin
Title: President/CEO
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<PAGE> 68
EXECUTION
FIRST AMENDMENT TO LEASE
------------------------
THIS FIRST AMENDMENT TO LEASE (the "Amendment") is dated as of September
26, 1996 by and between TRUSTEES OF KSA REALTY TRUST under Declaration of Trust
dated June 11, 1982 and recorded with Middlesex South Registry of Deeds in Book
14635, Page 542, as amended ("Landlord"), and CAMBRIDGE ENERGY RESEARCH
ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Tenant").
R E C I T A L S
---------------
WHEREAS, Landlord and Tenant are parties to (a) that certain Lease dated
July 27, 1995 relating to 21,515 rentable square feet of space (the "Original
Premises") on the fourth floor of the office component of the Charles Square
complex in Cambridge, Massachusetts (the "Lease"), and (b) that certain side
letter agreement dated September 26, 1995 relating to the Lease (the "Letter
Agreement"); and
WHEREAS, Landlord and Tenant desire to amend the Lease to include within
the premises leased thereunder 1,070 rentable square feet located on the third
floor of the office component, on the terms and conditions set forth below.
A G R E E M E N T
-----------------
NOW, THEREFORE, in consideration of Ten Dollars ($10.00), and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and agreed, Landlord and Tenant hereby agree as follows:
1. ADDITIONAL PREMISES. Effective as of October 1, 1996, the Premises
shall include the 1,070 rentable square feet of space shown on the floor plan
attached hereto as Exhibit A (the "Additional Premises"). Landlord shall deliver
the Additional Premises to Tenant on October 1, 1996 broom-clean and free of all
occupants but otherwise as-is, where-is and with all faults and expressly
without representation or warranty of any kind.
2. ANNUAL BASE RENT. Annual Base Rent for the Additional Premises shall
be payable commencing on November 1, 1996, in the same manner and at the same
times as Annual Base Rent is payable for the Original Premises, at the following
rates:
<PAGE> 69
November 1, 1996 - $14,623.33 ($1,827.92 per
June 30, 1997: month, $20.50 per annum per
rentable square foot)
July 1, 1997 - $25,284.10 ($2,107.01 per
June 30, 1998: month, $23.63 per annum per
rentable square foot)
July 1, 1998 - $26,155.56 ($2,179.63 per
June 30, 2000: month, $24.44 per annum per
rentable square foot)
3. OPERATING COST ESCALATION. Operating Cost Escalation for the
Additional Premises shall be payable, commencing on January 1, 1997, in the same
manner and at the same times as Operating Cost Escalation is payable for the
original Premises, except that the calculation to be performed under Section
4.2(b) of the Lease shall, with respect to the Additional Premises (but not the
Original Premises), be performed using Landlord's Operating Costs for calendar
year 1996 instead of Annual Operating Costs for 1994.
4. REAL ESTATE TAX ESCALATION. Real Estate Tax Escalation for the
Additional Premises shall be payable, commencing on January 1, 1997, in the same
manner and at the same times as Real Estate Tax Escalation is payable for the
original Premises, except that the calculation to be performed under Section
4.3(b) of the Lease shall, with respect to the Additional Premises (but not the
Original Premises), be performed using Landlord's Real Estate Taxes for calendar
year 1996 instead of Annual Operating Costs for 1994.
5. ELECTRICITY. All of the provisions of Section II of the Letter
Agreement relating to the original Premises shall apply as well to the
Additional Premises.
6. MISCELLANEOUS. Capitalized terms used herein but not defined shall
have the meanings ascribed to them in the Lease. Except as amended hereby, the
Lease shall remain unmodified and in full force and effect, and the Lease is
hereby ratified and confirmed. This Amendment may be executed in counterpart
originals which, taken together, shall constitute a single original instrument.
<PAGE> 70
EXECUTED as an instrument under seal as of the date first above written.
LANDLORD:
/s/ Richard L. Friedman
------------------------------------------
Richard L. Friedman, as Trustee of KSA
Realty Trust but not individually
/s/ H. Vaughan Blaxter, III
------------------------------------------
H. Vaughan Blaxter, III, as Trustee of KSA
Realty Trust but not individually
TENANT:
CAMBRIDGE ENERGY RESEARCH
ASSOCIATES LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Cambridge Energy Research
Associates, Inc.
By: /s/ Daniel H. Lucking, Jr.
---------------------------------
Name:Daniel H. Lucking, Jr.
Title:Chief Financial Officer
<PAGE> 71
September 26, 1995
Cambridge Energy Research Associates
Limited Partnership
20 University Road
Cambridge, MA 02138
Re: Lease dated July __, 1995
by and between Trustees of KSA Realty
Trust ("Landlord") and Cambridge Energy
Research Associates ("Tenant") for
Premises at Charles Square, Cambridge,
Massachusetts (the "Lease")
----------------------------------------
Ladies and Gentlemen:
This side letter agreement is entered into in connection with the Lease to
memorialize (a) certain representations and warranties of Landlord made to
Tenant and (b) the agreement of Landlord and Tenant with respect to electrical
service to the Premises. Capitalized terms used herein but not defined shall
have the meanings ascribed to them in the Lease.
I. LANDLORD REPRESENTATIONS AND WARRANTIES
Landlord hereby represents and warrants to Tenant as follows:
A. GROUND LEASE AND MORTGAGE
(i) Landlord has delivered to Tenant a true, correct and complete
copy of the ground lease affecting the Charles Square complex
(the "Ground Lease");
(ii) EMI Cambridge Limited Partnership ("Ground Lessor") is the
<PAGE> 72
Cambridge Energy Research Associates
Limited Partnership
Page 2
September 26, 1995
current holder of the ground lessor's interest under the Ground
Lease;
(iii) To the best of Landlord's knowledge, neither Ground
Lessor nor Landlord is in default under the Ground
Lease, nor has any event occurred which, after any
applicable notice and/or the expiration of any
applicable grace period, shall constitute a default
under the Ground Lease;
(iv) All rent, additional rent and other charges due under
the Ground Lease have been paid through July 31, 1995;
(v) The only mortgage, deed of trust or similar security
instrument present encumbering the Charles Square Site
is held by Aetna Life and Casualty Company
("Mortgagee");
(vi) Mortgagee is the current holder of the mortgagee's
interest under the Mortgage;
(vii) To the best of Landlord's knowledge, Landlord is not in
default under the Mortgage or the other documents
creating obligations secured by the Mortgage, nor has an
event occurred which, after any applicable notice and/or
expiration of any applicable grace period, shall
constitute a default under the Mortgage or such
documents; and
(viii) All principal, interest and other charges due under the
Mortgage and such documents has been paid through July
31, 1995.
B. PRIOR EXPANSION/FIRST OFFER AND REFUSAL RIGHTS
Set forth on the schedule attached to this letter is a list of existing
tenants of the Office Component which have expansion, first offer and/or first
refusal rights that precede and are superior to those granted to Tenant in the
Lease.
II. ELECTRICITY
A. Tenant shall pay Landlord for all electrical energy used in or
for the benefit of the Premises, such payments to be considered additional rent.
Tenant
<PAGE> 73
Cambridge Energy Research Associates
Limited Partnership
Page 3
September 26, 1995
initially shall pay an amount equal to $1.20 per annum per square foot of
rentable area in the Premises (i.e., $22,506 per annum, $1,875.50 per month), in
equal installments in advance on the first day of each calendar month included
in the Term.
B. Landlord shall have the right to meter Tenant's actual
consumption of electrical energy (at Landlord's cost). Landlord may adjust the
monthly payments described above to reflect Tenant's actual consumption of
electrical energy.
C. Tenant's use of electrical energy in the Premises shall not at
any time exceed the capacity of any of the electrical conductors or equipment in
or otherwise serving the Premises. In order to insure that such capacity is not
exceeded and to avert possible adverse effect upon the Office Component electric
service, Tenant shall not, without prior written notice to Landlord in each
instance, connect to the Office Component electric distribution system any
fixtures, appliances or equipment which operate on a voltage in excess of 120
volts nominal or make any alteration or addition to the electric system of the
Premises. Unless Landlord shall reasonably object to the connection of any such
fixtures, appliances or equipment, all additional risers or other equipment
required there for shall be provided by Landlord, and the cost thereof shall be
paid by Tenant upon Landlord's demand. In the event of any such connection,
Tenant agrees to an increase in the monthly payments described above by an
amount which will reflect the cost to Landlord of the additional service to be
furnished by Landlord, such increase to be effective as of the date of any such
connection. If Landlord and Tenant cannot agree on such amount, such amount
shall be conclusively determined by a reputable independent electrical engineer
or consulting firm to be selected by Landlord and paid equally by both parties.
D. If at any time after the date of the Lease, the rates at which
Landlord purchases electrical energy from the public utility supplying
electrical service to the Office Component, or any charges incurred or taxes
payable by Landlord in connection therewith, shall be increased or decreased,
the monthly payments described above shall be increased or decreased, as the
case may be, by an amount equal to the estimated increase or decrease, as the
case may be, in Landlord's cost of furnishing the electricity referred to above
as a result of such increase or decrease in rates, charges or taxes. If Landlord
and Tenant cannot agree on such amount, such amount shall be conclusively
determined by a reputable independent electrical engineer or consulting firm to
be selected by Landlord and paid equally by both parties. Any such increase or
decrease shall be effective as of the date of the increase or decrease in such
rate, charges or taxes.
<PAGE> 74
Cambridge Energy Research Associates
Limited Partnership
Page 4
September 26, 1995
E. Landlord may, at any time, elect to discontinue the furnishing
of electrical energy. In the event of any such election by Landlord: (1)
Landlord agrees to give reasonable advance notice of any such discontinuance to
Tenant; (2) Landlord agrees to permit Tenant to receive electrical service
directly from the public utility supplying service to the Office Component and
to permit the existing feeders, risers, wiring and other electrical facilities
serving the Premises to be used by Tenant and/or such public utility for such
purpose to the extent they are suitable and safely capable; (3) Landlord agrees
to pay such charges and costs, if any, as such public utility may impose in
connection with installation of Tenant's meters and to make or, at such public
utility's election, to pay for such other installations as such public utility
may require, as a condition of providing comparable electrical service to
Tenant; (4) Tenant shall no longer be required to pay the monthly payments
described above; and (5) Tenant shall thereafter pay, directly to the utility
furnishing the same, all charges for electrical services to the Premises.
Kindly acknowledge your consent to the foregoing by signing and
returning the enclosed counterpart of this side letter agreement.
TRUSTEES OF KSA REALTY TRUST
By: Carpenter & Company, Inc.,
Managing Agent
By: /s/ Gary J. Gianino
--------------------------------------
Name: Gary J. Gianino
--------------------------------
Title: Vice President Finance
-------------------------------
and Adminstration
-------------------------------
ACCEPTED AND AGREED:
CAMBRIDGE ENERGY RESEARCH
ASSOCIATES LIMITED PARTNERSHIP
By: /s/ Daniel H. Lucking, Jr.
--------------------------------------
Name: Daniel H. Lucking, Jr.
--------------------------------
Title: Chief Financial Officer
-------------------------------
<PAGE> 1
EXHIBIT 10.4
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
ADVISORY AGREEMENT
Dated as of November 30, 1994
between
THE GOLDMAN SACHS GROUP, L.P.
and
CAMBRIDGE ENERGY RESEARCH ASSOCIATES
LIMITED PARTNERSHIP
<PAGE> 2
TABLE OF CONTENTS
Section Page
- ------- ----
Parties and Recitals.........................................................1
ARTICLE I
BUSINESS DEVELOPMENT AND CONSULTING
Section 1.01 Engagement and Obligations...........................2
Section 1.02 Recommendation of Services...........................3
Section 1.03 Industry Conferences and Seminars....................3
Section 1.04 Access to Goldman Sachs Operations...................3
Section 1.05 Exclusivity..........................................4
Section 1.06 Administration of Relationship.......................5
ARTICLE II
COMPENSATION
Section 2.01 Consulting Fees......................................5
Section 2.02 Special Consulting Fees..............................5
Section 2.03 Credits..............................................7
Section 2.04 Expenses.............................................7
ARTICLE III
TERM OF AGREEMENT
Section 3.01 Term of Agreement....................................9
Section 3.02 Termination of Fees.................................10
Section 3.03 Survival............................................10
ARTICLE IV
MISCELLANEOUS
Section 4.01 Effectiveness.......................................11
Section 4.02 Confidentiality.....................................11
Section 4.03 Relationship of Parties; Indemnity..................12
Section 4.04 Publicity...........................................13
Section 4.05 Roll-up Transaction.................................13
Section 4.06 No Assignment.......................................13
Section 4.07 Non-Solicitation....................................14
Section 4.08 Arbitration: Injunctive Relief......................14
Section 4.09 Entire Agreement; Severability......................15
Section 4.10 Amendment; Waiver...................................16
-i-
<PAGE> 3
Section 4.11 Descriptive Headings; Language Interpretation.......16
Section 4.12 Counterparts........................................16
Section 4.13 GOVERNING LAW.......................................17
Section 4.14 Notices.............................................17
-ii-
<PAGE> 4
ADVISORY AGREEMENT (this "Agreement"), dated as of November 30, 1994,
between The Goldman Sachs Group, L.P., a New York limited partnership ("Goldman
Sachs"), and Cambridge Energy Research Associates Limited Partnership, a
Delaware limited partnership (the "Partnership").
W I T N E S S E T H:
WHEREAS, Goldman Sachs is engaged in a broad range of investment banking
and financial advisory activities on an international basis;
WHEREAS, the partnership is an international research and consulting firm
specializing in the global energy industry, having succeeded to all of the
business previously carried on by Cambridge Energy Research Associates, Inc.
("CERA");
WHEREAS, Goldman Sachs seeks to establish an advisory relationship with
the Partnership and the parties hereto otherwise desire to work together in a
manner that is intended to enhance their respective business opportunities in
the global energy industry;
WHEREAS, the parties hereto are concurrently herewith entering into the
Purchase Agreement, dated the date hereof (the "Purchase Agreement"), whereby,
subject to the terms and conditions thereof, the Partnership will issue and
sell, and Goldman Sachs will purchase, certain limited partnership units in the
Partnership for a total consideration of $2.8 million;
WHEREAS, the parties hereto and certain stockholders of CERA are
concurrently herewith entering into the Agreement With Stockholders, dated the
date hereof (the "Agreement With Stockholders"), providing for certain matters
with respect to the common stock and composition of the Board of Directors of
CERA;
<PAGE> 5
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, it is hereby covenanted and agreed by Goldman Sachs and the
Partnership as follows:
ARTICLE I
BUSINESS DEVELOPMENT AND CONSULTING
Section 1.01 Engagement and Obligations.
In consideration of Goldman Sachs' payment of the Consulting Fees (as
defined in Section 2.01 hereof) and the Special Consulting Fees (as defined in
Section 2.02 hereof), the Partnership agrees that it (i) will work as a
consultant to Goldman Sachs, on an exclusive basis in the manner set forth in
Section 1.05 hereof, in its efforts to develop strategic financial advisory and
other investment banking assignments and opportunities in the global energy
industry (the "Field") and (ii) will advise Goldman Sachs in connection with its
principal investments in the Field (collectively the "Advisory Matters"). In
connection with providing these services, the Partnership agrees that Messrs.
Yergin, Stanislaw and Rosenfield (the "Principals"), while employed by the
Partnership, and such other employees of the Partnership as may be appropriate,
will be reasonably available to Goldman Sachs' representatives (as coordinated
in the manner set forth in Section 1.06 hereof) and will be available to make
joint calls with Goldman Sachs on such existing clients and potential new
clients as may be mutually agreed upon by the parties. The Partnership agrees
that, at the request of Goldman Sachs, representatives of the Partnership will
introduce Goldman Sachs' representatives to the Partnership's clients, where
mutually agreed
-2-
<PAGE> 6
upon by the parties. The Partnership agrees to provide Goldman Sachs with all
research and other written materials generally made available by the Partnership
to its regular retainer clients; it being understood and agreed that such
materials will be used only for internal purposes at Goldman Sachs and will not
be provided or distributed to third parties, in whole or in part, without the
prior consent of the Partnership.
Section 1.02 Recommendation of Services.
Goldman Sachs and the Partnership additionally agree that, to the extent
consistent with each firm's independent consulting or advisory responsibilities,
each will, and will cause its respective directors, officers, partners and
employees to, recommend the services of the other party hereto to its clients.
Section 1.03 Industry Conferences and Seminars.
If Goldman Sachs or the Partnership sponsors or hosts any industry
conference or seminar, representatives of the other firm will be allowed to
attend (without charge) and, within reason and as deemed appropriate in the sole
opinion of the sponsor or host, will be offered the right to appear (without
charge) as a panelist or speaker thereat. Goldman Sachs and the Partnership will
also cooperate in hosting, where mutually agreed, joint conferences.
Section 1.04 Access to Goldman Sachs Operations.
To the extent practicable and consistent with client confidentiality
obligations, Goldman Sachs agrees to provide the Partnership's Principals with
reasonable access to Goldman Sachs' global operations, including, on an
availability basis, temporary
-3-
<PAGE> 7
visitation space in its offices worldwide. Any such requests shall be
coordinated in the manner set forth in Section 1.06.
Section 1.05 Exclusivity.
During the term of this Agreement, the Partnership will not, and will
cause its Representatives not to, (i) participate with, assist or advise any
Investment Banking Firm (as defined below) other than Goldman Sachs in
developing or executing strategic financial advisory or other investment banking
assignments in the Field or (ii) assist or advise any Investment Banking Firm
other than Goldman Sachs in making principal investments in the Field; provided,
however, that the Partnership and its Representatives shall continue to have the
right to provide the following services ("permitted Services"): (i) basic
retainer services and retainer enhancements (as described in Exhibit I), other
than custom on-site presentations and on-call professional time, to Investment
Banking Firms, (ii) services pursuant to contracts and commitments set forth on
Exhibit II attached hereto, (iii) services on behalf of existing and future
clients which are not Investment Banking Firms, including those that separately
engage Investment Banking Firms other than Goldman Sachs, and (iv) any other
services or activities approved by Goldman Sachs in its sole discretion. For
purposes of this Agreement, "Investment Banking Firms" shall mean investment
banking firms and the investment banking activities of any commercial banks.
Nothing herein shall restrict the Partnership or its directors, officers,
partners and employees from making principal investments independent of Goldman
Sachs.
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<PAGE> 8
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Section 1.06 Administration of Relationship.
The Principals and Messrs. Leuschen and Fine from Goldman Sachs will
coordinate contacts between the two firms, recognizing that other points of
contact may develop as the business relationship develops and as a result of the
firms working together on client specific or project specific matters. If
Messrs. Leuschen and/or Fine become no longer available to coordinate contacts
between the two firms, Goldman Sachs will identify an additional person or
persons to coordinate such contacts on behalf of Goldman Sachs, which person or
persons shall be reasonably acceptable to the Partnership.
ARTICLE II
COMPENSATION
Section 2.01 Consulting Fees.
During the term of this Agreement, and in consideration of the services
contemplated herein, Goldman Sachs agrees to pay consulting fees (the
"Consulting Fees") to the Partnership in the amount of ******* per quarter
(paid in arrears); it being agreed that the first payment of ******* will be
due February 1, 1995 covering the period beginning the date hereof and ending on
January 31, 1995.
Section 2.02 Special Consulting Fees.
Beginning on May 1, 1995, and every three months thereafter, Goldman Sachs
will pay a mutually agreed fee to the Partnership (a "Special Consulting Fee"),
subject to the Credits (as defined in Section 2.03 hereof), in recognition of
the Partnership's services during such three month period (or, in the case of
the first such payment,
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<PAGE> 9
during the period commencing on the date hereof and ending on April 30, 1995) if
Goldman Sachs derives fee revenue during such period from any advisory or
investment banking engagements ("Engagements") entered into by Goldman Sachs as
a result of assistance or contributions by the Partnership. In certain
instances, Goldman Sachs may pay a Special Consulting Fee before the end of the
relevant quarterly period. In determining the Special Consulting Fees, the
parties shall not consider those Engagements in which the parties have otherwise
established a specific fee with respect to such Engagement. The Partnership
shall also be entitled to Special Consulting Fees in an amount to be mutually
agreed upon by the parties in connection with any principal investment made by
Goldman Sachs and/or its affiliates as a result of assistance or contributions
by the Partnership. The parties will meet in person or by telephone quarterly to
discuss the Special Consulting Fees. In determining the Special Consulting Fees,
the parties shall consider the degree of assistance or contribution by
representatives of the Partnership in connection with the Engagement or
principal investment. It is agreed by the parties that it may be in their mutual
best interest, when feasible, to have the client separately retain each party
hereto. The parties shall reasonably attempt to coordinate their efforts in this
regard. In no event will any Special Consulting Fees be paid (i) relating to any
underwritten public offering in the United States if such payment would be
contrary to NASD Rules of Fair Practice or (ii) that would violate any
applicable law or regulation.
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<PAGE> 10
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Section 2.03 Credits.
Upon each payment of Consulting Fees, an amount equal to one-half of such
payment will be creditable (a "Credit"), and shall be credited, against any
Special Consulting Fees that shall become due to the Partnership; provided,
however, that until aggregate Special Consulting Fees payable to the Partnership
(without regard to any Credits) under this Agreement exceed *******, the
Credit applied to any particular Special Consulting Fee will not exceed *****
******* of the Special Consulting Fee payable. Any Credits not applied
against Special Consulting Fees payable shall be preserved and will be credited,
subject to the foregoing proviso, against future Special Consulting Fees as they
become payable.
Section 2.04 Expenses.
(a) The Partnership will track expenses incurred by it in connection with
work performed pursuant to this Agreement at the request of Goldman Sachs,
including expenses incurred in connection with (i) Engagements, (ii) matters
relating to potential Engagements for which neither party has yet been engaged
by a client but which have been identified by either the Partnership or Goldman
Sachs to the other as a potential Engagement by establishing a specific project
name therefor ("Prospective Engagements"), and (iii) presentations or other
consulting services performed at the request of Goldman Sachs not related to an
Engagement or a Prospective Engagement ("General Matters").
(b) Except as set forth below, to the extent the Partnership incurs
transportation, hotel and other travel-related expenses ("Travel Expenses") for
work
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<PAGE> 11
done at the request of Goldman Sachs in connection with a General Matter
("General Travel Expenses"), as of the end of each quarter beginning January 31,
1995, the Partnership will be entitled to deduct an amount equal to such General
Travel Expenses from the Credit available to Goldman Sachs; provided, however,
that in no event will the Credit be reduced to less than zero. Notwithstanding
the foregoing, Goldman Sachs will directly reimburse the Partnership on a
monthly basis for all General Travel Expenses ("Reimbursable General Travel
Expenses") if the Partnership notifies Goldman Sachs of its intention to treat
such General Travel Expenses as Reimbursable General Travel Expenses prior to
the date such expenses are incurred. The Partnership shall not be entitled to
deduct any Reimbursable General Travel Expenses from the Credit available to
Goldman Sachs.
(c) To the extent the Partnership incurs Travel Expenses for work done at
the request of Goldman Sachs in connection with (i) an Engagement and the
Partnership is not entitled to be reimbursed for such Travel Expenses pursuant
to (x) its own engagement letter or (y) an engagement letter entered into by
Goldman Sachs or (ii) a Prospective Engagement that the parties have determined
will not result in an Engagement, as of the end of each quarter, beginning
January 31, 1995, the Partnership will be entitled to deduct an amount equal to
such Travel Expenses from the Credit available to Goldman Sachs; provided,
however, that in no event will the Credit be reduced to less than zero.
(d) General Travel Expenses will only be deductible in the quarter
incurred and other Travel Expenses will only be deductible in the quarter in
which it is
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<PAGE> 12
determined that they will not be reimbursed.
(e) Upon request, the Partnership will provide reasonable documentation of
its Travel Expenses.
(f) The Partnership will use commercially reasonable efforts to minimize
Travel Expenses.
ARTICLE III
TERM OF AGREEMENT
Section 3.01 Term of Agreement.
(a) This Agreement will terminate on October 31, 1997, unless terminated
earlier by either party (i) on October 31, 1995 or October 31, 1996 by written
notice given at least 30 days in advance of such date or (ii) as a result of the
material breach or bad faith of the other party in performing any of its
material obligations under this Agreement, the Purchase Agreement or the
Agreement With Stockholders, following 30 days' notice and a reasonable
opportunity to cure within such 30-day period.
(b) Recognizing that it may be difficult to assess the benefit to the
parties of the arrangements contemplated by this Agreement by October 31, 1995,
it is the expressed intention of both parties to continue this Agreement until
at least October 31, 1996. Accordingly, it is agreed that neither party will
terminate the Agreement pursuant to clause (i) of Section 3.01(a) above on or
before October 31, 1995 unless the relationship has been materially less
advantageous than such party, in its sole discretion, anticipated.
(c) Notwithstanding anything in the foregoing to the contrary, Goldman
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<PAGE> 13
Sachs may terminate the Agreement upon the occurrence of any Note Repurchase
Event or Cash Repurchase Event (as such terms are defined in the Purchase
Agreement).
Section 3.02 Termination of Fees.
(a) Consulting Fees, Special Consulting Fees and Reimbursable General
Travel Expenses will be paid through the termination date of this Agreement as
provided in this Agreement. Notwithstanding the termination or expiration of
this Agreement, if Goldman Sachs is engaged in any Engagement at the termination
or expiration date of this Agreement or obtains an Engagement within one year of
the termination or expiration date of this Agreement, and such Engagement was
entered into by Goldman Sachs as a result of assistance or contributions by the
Partnership, the parties will agree on the Special Consulting Fees relating to
each such Engagement and such Special Consulting Fees shall be paid to CERA when
and if fee revenue is received by Goldman Sachs.
(b) Interest at a floating rate equal to the base rate announced from time
to time by the First National Bank of Boston shall accrue on that portion of any
fees not paid when due during the period beginning on the date falling 60 days
after such payment is due and ending on the date such fees are paid in full.
Section 3.03 Survival.
The obligations of the parties in Sections 2, 3.02, 3.03, 4.02, 4.03, 4.07
and 4.08 shall survive the termination or expiration of this Agreement.
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<PAGE> 14
ARTICLE IV
MISCELLANEOUS
Section 4.01 Effectiveness.
Regardless of when executed, this Agreement shall be effective as of
September 1, 1994.
Section 4.02 Confidentiality.
The parties acknowledge that, in the course of their relationship, they
will obtain confidential information relating to the business of certain
entities, including, but not limited to, clients of one or both of the parties,
and the possibility of certain significant transactions. The parties will keep,
and will use their respective reasonable best efforts to cause their respective
directors, officers, partners, employees, agents and other representatives
("Representatives") and, if applicable, such other persons and entities
controlled by them to keep, in confidence all proprietary and confidential
information furnished to them by the other party and to use such information
only in connection with the matters relating to this Agreement. Each party will
provide to the other party confidential and proprietary information about any
client of such party only with the consent of such client and in reliance on the
foregoing undertaking. If requested, each party will enter into a separate
confidentiality agreement, in a form customary for such party, with any client
of such party or the other party. For purposes hereof, proprietary and
confidential information does not include information which (i) is or becomes
generally available to the public other than as a result of a disclosure by the
party to which disclosure
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<PAGE> 15
was made or by its directors, officers, employees, agents or advisors, (ii) is
independently developed by the party to which disclosure was made without
reference to or reliance on the information disclosed by the party making
disclosure, (iii) becomes available to the party receiving such information (the
"Receiving Party") from a source (other than the party making disclosure or its
advisors) not known by the Receiving Party to be bound by a confidentiality
agreement with, or other obligation of secrecy to, the party making disclosure,
provided, however, that upon being made aware that such source is so bound or
obligated, the Receiving Party shall thereupon treat such information in the
manner required by the other provisions of this Section 4.02, or (iv) is
required to be disclosed by the party to which disclosure was made to comply
with applicable laws, provided that such party provides prior written notice of
such disclosure to the other party and takes reasonable actions to avoid and/or
minimize the extent of such disclosure.
Section 4.03 Relationship of Parties; Indemnity.
The relationship created by this Agreement is not, and is not intended to
create, a joint venture, agency or Partnership between the parties and neither
party is authorized to act for, on behalf of or as a representative of, the
other party. The Partnership and Goldman Sachs will perform their respective
client services as non-agent independent contractors. Each party hereto hereby
agrees to indemnify and hold the other party hereto and such other party's
Representatives harmless for any and all losses, claims, damages, liabilities or
expenses incurred with respect to third parties ("Third Party Losses") as the
result of actions or inactions taken or
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<PAGE> 16
omitted to be taken by the other party or its Representatives. In no event will
either party have any liability under this Agreement (other than as provided
above with respect to Third Party Losses) to the other party hereto for any
general, direct, indirect, special, incidental or consequential damages in
connection with or arising out of this Agreement, except to the extent such
liabilities result from the breach of this Agreement or from the gross
negligence or willful misconduct of such party.
Section 4.04 Publicity.
The parties agree that they will not issue any press releases or other
public announcements using the name of the other party without the prior written
consent of the other party. The parties may, in discussing any Engagement or
Prospective Engagement with a third party, refer generally to the relationship
created hereby and to the potential involvement of the other party to this
Agreement in such Engagement or Prospective Engagement.
Section 4.05 Roll-up Transaction.
The Partnership shall not effect a Roll-up Transaction (as defined in the
Purchase Agreement), and any such purported transaction shall be null and void,
unless simultaneous with the consummation of such transaction CERA shall assume
all of the Partnership's rights and obligations under this Agreement.
Section 4.06 No Assignment.
Neither this Agreement nor any rights hereunder may be assigned or
transferred in any way, including by merger, consolidation or operation of law,
by either party hereto without the prior written consent of the other party;
provided,
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<PAGE> 17
however, that no consent shall be required hereunder in connection with a
Roll-up Transaction.
Section 4.07 Non-Solicitation.
During the term of this Agreement and for one year after the termination
or expiration hereof, each party agrees that it will not directly or indirectly,
including through the use of any agent or intermediary, recruit, solicit or
persuade, or attempt to persuade, any of the partners, directors, officers or
employees of the other party to terminate their employment with, or otherwise
cease their relationship with, the other party.
Section 4.08 Arbitration; Injunctive Relief.
Any dispute, controversy or claim between the parties arising out of or
relating to this Agreement, a breach hereof or the transactions contemplated
hereby, shall be settled in accordance with the then prevailing Commercial
Arbitration Rules of the American Arbitration Association and judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction. Any arbitration pursuant to this Section 4.08 shall be conducted
by a single arbitrator appointed by the Boston, Massachusetts office of the
American Arbitration Association upon the request of either party. The
arbitrator shall have a minimum of five years of experience in the area of
business relevant to the particular dispute. Each party shall be permitted to
submit only one proposal to the arbitrator, and the arbitrator shall be required
to choose one of such two proposals as the resolution of the dispute. The
arbitrator may proceed to a resolution notwithstanding the failure of a party to
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<PAGE> 18
participate in the proceedings. Each of the parties shall pay its own costs and
expenses in connection with any such arbitration, and the parties shall share
equally in the fees and expenses of the arbitrator. The parties hereby agree
that any such arbitration will occur in Boston, Massachusetts. Any such
arbitration award shall be final and binding upon the parties and shall not be
appealable by either party in any court.
Notwithstanding anything in the foregoing to the contrary, each party
hereto acknowledges that it would be impossible to determine the amount of
damages that would result from any breach of any of the provisions of this
Agreement and that the remedy at law for any breach, or threatened breach, of
any of such provisions would likely be inadequate and, accordingly, agrees that
each other party shall be entitled to seek from the arbitrator or from any court
of competent jurisdiction such equitable and injunctive relief as may be
available from any court of competent jurisdiction to compel specific
performance of, or restrain any party from violation, any of such provisions. In
connection with any action or proceeding for temporary or permanent injunctive
relief, each party hereto hereby waives the claim or defense that a remedy at
law alone is adequate and agrees, to the maximum extent permitted by law, to
have each provision of this Agreement specifically enforced against it, without
the necessity of posting bond or other security against him or it.
Section 4.09 Entire Agreement; Severability.
This Agreement and the other agreements referred to herein set forth the
entire agreement among Goldman Sachs and the Partnership relating to the subject
matter
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<PAGE> 19
hereof and supersede and cancel all prior written and oral agreements and
understandings with respect to the subject matter of this Agreement. In the
event that any provision or portion of this Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and effect.
Section 4.10 Amendment; Waiver.
This Agreement and any of the terms contained herein may be amended only
by a written instrument duly executed by Goldman Sachs and the Partnership.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon breach thereof shall constitute a waiver of any
such breach or of any other covenant, duty, agreement or condition, any such
waiver being effective only if contained in a writing executed by the waiving
party.
Section 4.11 Descriptive Headings; Language Interpretation.
The descriptive headings of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement. In the interpretation of
this Agreement, unless the context otherwise requires, (a) words importing the
singular shall be deemed to import the plural and vice versa, (b) words denoting
gender shall include all genders and (c) references to persons shall include
corporations or other bodies and vice versa.
Section 4.12 Counterparts.
This Agreement may be executed in any number of counterparts, each of
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<PAGE> 20
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
Section 4.13 GOVERNING LAW.
ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF
THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 4.14 Notices.
All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and
will be deemed to have been given when delivered personally or by reputable
overnight courier or three days after being mailed by certified or registered
mail, return receipt requested and postage prepaid, to the recipient. Such
notices, demands and other communications will be sent to the parties at the
addresses indicated below:
If to the Partnership:
Cambridge Energy Research Associates
Limited Partnership
20 University Road
Cambridge, Massachusetts 02138
Attn: President
With a copy to:
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
Attn: Joseph P. Barri, Esq.
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<PAGE> 21
If to Goldman Sachs:
The Goldman Sachs Group, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Scott Fine and
David Greenwald
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: James C. Morphy, Esq.
[Remainder of page intentionally left blank.]
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<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
CAMBRIDGE ENERGY RESEARCH
ASSOCIATES LIMITED Partnership
By: Cambridge Energy Research
Associates, Inc., its General
Partner
By: /s/ Daniel H. Yergin
----------------------------
Name: Daniel H. Yergin
Title: President
THE GOLDMAN SACHS GROUP, L.P.
By: /s/ David M. Leuschen
----------------------------------
Name: David M. Leuschen
Title: Partner
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<PAGE> 1
Exhibit 10.5
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of , 1997, between
Cambridge Energy Research Associates, Inc. (and any successor thereto,
"Employer"), a Massachusetts corporation, and (the "Employee").
W I T N E S S E T H:
WHEREAS, on , 1997 (the "Effective Date"), Global
Decisions Group LLC, a Delaware limited liability company (together with any
successor thereto, the "Parent LLC"), acquired (x) all of the outstanding
capital stock of MCM Group, Inc., a Delaware corporation ("MGI"), pursuant to
the merger of GDG Merger Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent LLC, with and into MGI, with MGI as the surviving
corporation, and (y) all of the capital stock of Employer and certain of the
limited partnership interests of Cambridge Energy Research Associates Limited
Partnership, a Delaware limited partnership ("CERA LP"), pursuant to the
exchange of such capital stock and such partnership interests for limited
liability company interests and certain other contingent interests in the Parent
LLC (the "Transactions");
WHEREAS, on the Effective Date, the Parent LLC contributed to
Employer the partnership interests of CERA LP so acquired by the Parent LLC,
whereupon Employer became the sole partner of CERA LP and CERA LP was dissolved
by operation of law;
WHEREAS, prior to the Effective Date, the Employee was
employed by CERA LP pursuant to an employment agreement, dated , 199
(the "Prior Agreement");
WHEREAS, in order to secure the continued services of the
Employee following the Transactions, Employer desires to enter into this
agreement embodying the terms of such employment (this "Agreement"), which
Agreement shall replace and supersede the Prior Agreement in all respects;
WHEREAS, the Employee desires to accept such continued
employment on the terms and conditions set forth herein and enter into this
Agreement, whereupon the Prior Agreement shall be deemed to have been terminated
and to have no continuing force or effect;
<PAGE> 2
WHEREAS, Employer and the Employee agree that the Employee
will have a prominent role in the management of the business, and the
development of the goodwill, of the Parent LLC, Employer, MGI and their
respective subsidiaries (the Parent LLC, Employer, MGI and such subsidiaries
collectively referred to as the "MGI/CERA Group") and will establish and develop
relations and contacts with the principal customers of the MGI/CERA Group in the
United States and the rest of the world, all of which constitute valuable
goodwill of, and could be used by the Employee to compete unfairly with, the
MGI/CERA Group; and
WHEREAS, (i) in the course of his employment by Employer and
any provision of services to the other members of the MGI/CERA Group, the
Employee will obtain confidential information and trade secrets concerning the
worldwide business and operations of the MGI/CERA Group that could be used to
compete unfairly with the MGI/CERA Group, (ii) the covenants and restrictions
contained in Sections 8 through 13, inclusive, are intended to protect the
legitimate interests of the MGI/CERA Group and to protect their respective
goodwill, trade secrets and other confidential information and (iii) the
Employee desires to agree to be bound by such covenants and restrictions and to
enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration,
Employer and the Employee hereby agree as follows:
1. Agreement to Employ. Upon the terms and subject to the
conditions of this Agreement, Employer hereby employs the Employee and the
Employee hereby accepts employment by Employer.
2. Term; Position and Responsibilities.
(a) Term of Employment. Unless the Employee's employment shall
sooner terminate pursuant to Section 7, Employer shall employ the Employee for
an initial term commencing on the date hereof and ending on the third
anniversary thereof. Employment shall thereafter be deemed to be automatically
extended, upon the same terms and conditions, for successive periods of one
year each, unless either Employer or the Employee, at least six (6) months prior
to the expiration of the initial term or any extended term, shall give written
notice to the other of its intention not to renew such employment. The period
during
2
<PAGE> 3
which the Employee is employed pursuant to this Agreement, including any
extension thereof in accordance with the preceding sentence, shall be referred
to as the "Employment Period".
(b) Position and Responsibilities. During the Employment
Period, the Employee will serve as [title to be inserted, as applicable] of
Employer and have such duties and responsibilities as are customarily assigned
to individuals serving in such position and such other duties consistent with
the Employee's position as the Board of Directors of Employer ("Employer's
Board") shall specify from time to time. Additionally, Employer, in its sole
discretion and giving due consideration to the Employee's duties and
responsibilities in respect of the Employee, may request that the Employee
perform similar services for any member of the MGI/CERA Group. If the Employee
declines such request, the Employee may be required to perform such services
upon a vote of 75% of the members of Employer's Board of Directors. The Employee
will devote all of his skill, knowledge and working time to the performance of
such duties, responsibilities and services, except for (i) reasonable vacation
time as provided in Section 6(c) hereof and absence for sickness or similar
disability and (ii) to the extent that it does not interfere with the
performance of the Employee's duties hereunder, (A) such reasonable time as may
be devoted to service on boards of directors or the fulfillment of civic or
charitable responsibilities, (B) reasonable time as may be necessary from
time-to-time for personal financial matters and (C) reasonable time as may be
devoted to personal, non-business related writings and to the teaching of
university courses and similar activities to enhance the Employee's professional
reputation. The Employee shall perform his duties, responsibilities and services
from Employer's offices in [Cambridge, Massachusetts] [and] [Washington, D.C.]
[Paris, France] and shall not be required by Employer to be personally based or
transferred anywhere other than the metropolitan area in which such office(s)
is/are now located, without the Employee's prior written consent. The Employee
represents that he is entering into this Agreement voluntarily and that his
employment hereunder and compliance by him with the terms and conditions of this
Agreement will replace and supersede the terms and conditions of the Prior
Agreement in all respects, and that the Prior Agreement shall be deemed to have
been terminated and to have no continuing force or effect. The Employee further
represents that this Agreement does not conflict with or result in the breach of
any agreement to which he is a party or by which he may be bound.
3
<PAGE> 4
3. Base Salary. As compensation for the services to be
performed by the Employee hereunder, Employer will pay the Employee an annual
base salary of $________ during the Employment Period. Employer will review the
Employee's base salary from time to time during the Employment Period, but not
less than on an annual basis, and, in the discretion of the Employer's Board,
may increase such base salary from time to time based upon such factors as
Employer's Board shall consider relevant. (The annual base salary payable to the
Employee under this Section 3, as the same may be increased from time to time,
shall hereinafter be referred to as the "Base Salary".) The Base Salary payable
under this Section 3 shall be reduced to the extent that the Employee elects to
defer such Base Salary under the terms of any deferred compensation or savings
plan maintained or established by Employer. Employer shall pay the Employee the
Base Salary in installments based on the Employer's regular payroll practices,
or in such other installments as may be mutually agreed upon by Employer and the
Employee.
4. Incentive Compensation. During the Employment Period, the
Employee shall participate in Employer's incentive compensation programs for its
executive officers existing from time to time, at a level commensurate with his
position and duties with the MGI/CERA Group, including [insert name of
performance bonus program to be adopted at Closing] (the "CERA Bonus Plan"),
pursuant to which the Employee shall be entitled to receive an annual incentive
award if [Employer] [the MGI/CERA Group] achieves the annual operating targets
and the Employee achieves the performance goals established by the Employer's
Board from time to time[, such performance bonus (i) to equal ___% of the
Employee's Base Salary for a fiscal year of Employer, if [Employer] [the
MGI/CERA Group] and the Employee achieve 100% of the performance objectives
established for such fiscal year and (ii) to be increased or reduced, in
accordance with the CERA Bonus Plan, if [Employer] [the MGI/CERA Group] or the
Employee exceeds or fails to achieve 100% of such performance objectives for
such fiscal year, respectively].
5. Employee Benefits. During the Employment Period, the
Employee will be entitled to participate in all of Employer's employee and
welfare benefits programs and plans, including, without limitation, life,
hospital, medical, dental and disability insurance ("Welfare Benefits") in
accordance with plans and programs of the MGI/CERA Group then available to
executive employees, as the same may be amended and in effect from time to time,
4
<PAGE> 5
provided that such Welfare Benefits shall be at least as favorable for three
years commencing on the date hereof as those provided to the Employee
immediately prior to the execution and delivery of this Agreement. The Employee
shall also be entitled to participate in all of Employer's profit sharing,
pension, retirement, deferred compensation and savings plans, if any, as the
same may be amended and in effect from time to time, at levels and having
interests commensurate with the Employee's then current period of service,
compensation and position.
6. Perquisites and Expenses.
(a) General. During the term of the Employee's employment
hereunder, the Employee shall be entitled to participate in the Cambridge Energy
Research Associates, Inc. LLC Unit Option Plan and any other special benefit or
perquisite program generally available from time to time to executive officers
of Employer, on the terms and conditions then prevailing under such plan or
program.
(b) Business Travel, Lodging, etc. Employer shall reimburse
the Employee for reasonable travel, lodging and meal expenses incurred by him in
connection with his performance of services hereunder upon submission of
evidence, satisfactory to Employer, of the incurrence and purpose of each such
expense and otherwise in accordance with Employer's business travel
reimbursement policies applicable to executives, as in effect from time to time,
provided that such policies shall permit the Employee to incur such expenses on
a first class or other equivalent basis.
(c) Vacation and Sick Days. The Employee shall be entitled to
five weeks of paid vacation per year, or such other longer period as Employer's
Board, in its discretion, may determine to be appropriate, without, except as
permitted in the discretion of the chairman of Employer's Board, carry-over
accumulation. The Employee shall be entitled to continue to accumulate paid sick
days in accordance with the policies of Employer in effect from time to time.
7. Termination of Employment.
(a) Termination Due to Death or Disability. In the event that
the Employee's employment hereunder terminates due to death, Employer will pay
the Employee's estate (or designated beneficiary) his Base Salary for a period
of
5
<PAGE> 6
12 months after the date of his death. In the event the Employee's employment is
terminated by Employer due to the Employee's Disability (as defined below), no
termination benefits shall be payable to or in respect of the Employee except as
provided in Section 7(f)(ii). For purposes of this Agreement, "Disability" shall
mean a physical or mental disability that prevents the performance by the
Employee of substantially all of his duties hereunder lasting for a continuous
period of six months or longer. The good faith judgment of Employer's Board as
to the Employee's Disability shall be final and shall be based on the
determination (evidenced by a written report or certificate) by a physician
selected by Employer or its insurers, and acceptable to the Employee or the
Employee's legal representative, that the Employee is incapable, due to mental
or physical illness, to perform his duties on a full-time basis for a
continuous period of six months or longer.
(b) Termination by Employer for Cause. The Employee's
employment may be terminated for "Cause" by Employer. "Cause" shall mean (i) the
willful failure of the Employee substantially to perform his duties as an
employee of, or in connection with his provision of services to, any member of
the MGI/CERA Group (other than any such failure due to physical or mental
illness), (ii) in the reasonable judgment of the Board, the Employee's engaging
in willful and serious misconduct that is injurious to Employer or any member of
the MGI/CERA Group, (iii) the Employee's conviction of, or entering a plea of
nolocontendere to, a crime that constitutes a felony, (iv) the material
violation by the Employee of any material federal or state securities law or (v)
the willful and material breach by the Employee of any of the covenants set
forth under Section 8, 9, 10 or 11 hereof or of any take-along or similar
covenants applicable to the limited liability company interests, or options to
purchase such limited liability company interests, of the Parent LLC held by the
Employee. Termination of employment of the Employee shall not be deemed to be
for Cause hereunder unless and until (A) in the event of any Cause defined in
clauses (i), (ii), (iv) and (v) of this paragraph (b), a written notice has been
delivered to the Employee by Employer which specifically identifies the Cause
which is the basis for termination and the Employee has failed to cure or remedy
the act or omission so identified within a period of fourteen (14) business days
after the Employee's receipt of Employer's notice and (B) Employer's Board of
Directors has voted to terminate the Employee for Cause, which vote shall be an
affirmative vote of not less than a majority of the members
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<PAGE> 7
of Employer's Board of Directors (excluding the Employee if he is a member of
such Board), after reasonable notice has been provided to the Employee and the
Employee shall have been given an opportunity, together with counsel, to be
heard before Employer's Board of Directors. For purposes of this provision, no
act or failure to act on the part of the Employee shall be considered "willful"
unless it is done, or omitted to be done, by the Employee in bad faith or
without reasonable belief that the Employee's action or omission was in the best
interests of the MGI/CERA Group. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Employer's Board of
Directors or upon the instructions of such Board or based upon the advice of
counsel for Employer shall be conclusively presumed to be done, or omitted to be
done, by the Employee in good faith and in the best interests of the MGI/CERA
Group.
(c) Termination Without Cause. A termination "Without Cause"
shall mean a termination of employment by Employer other than due to Disability
as described in Section 7(a) or Cause as defined in Section 7(b).
(d) Termination by the Employee for Good Reason. The Employee
may terminate his employment for "Good Reason." "Good Reason" shall mean a
termination of employment by the Employee within 30 days following the
occurrence, without the Employee's consent, of the following: (i) any assignment
to the Employee of any duties that are significantly different from, and result
in a significant diminution of, the duties that he is to assume on the date
hereof pursuant to this Agreement (or duties pursuant to such other position
with Employer to which Employee may have been promoted with Employee's
approval), (ii) the failure of Employer to obtain the assumption of this
Agreement by any successor as contemplated by Section 14, (iii) any reduction of
the Employee's Base Salary or Welfare Benefits or incentive compensation
opportunity from the levels set forth in Sections 3, 4(a) and 5 hereof,
respectively, not including any increases thereof pursuant to such Sections or
(iv) Employer's requiring the Employee to be based at any office or location
other than as provided in Section 2 hereof or the Employer's requiring the
Employee to travel on Employer business to a substantially greater extent than
reasonably and customarily required in the performance of his responsibilities.
(e) Notice of Termination. Any termination by Employer
pursuant to Section 7(a), 7(b) or 7(c), or by the
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<PAGE> 8
Employee pursuant to Section 7(d), shall be communicated by a written "Notice of
Termination" addressed to the other party to this Agreement. A "Notice of
Termination" shall mean a notice stating that the Employee's employment here
under has been or will be terminated, setting forth the termination date, which
shall be no earlier than the date on which the Notice of Termination is given,
indicating the specific termination provisions in this Agreement relied upon and
setting forth in reasonable detail the facts and circumstances claimed to
provide a basis for such termination of employment.
(f) Payments Upon Certain Terminations.
(i) In the event of a termination of the Employee's
employment by Employer Without Cause or a termination by the Employee
of his employment for Good Reason during the Employment Period, subject
to Section 7(h), Employer shall pay to the Employee (or following his
death, to the Employee's beneficiary):
(A)(1) his Base Salary, payable in installments, based on the
Employer's regular payroll practices, for the period
beginning on the Date of Termination and ending on the last
day of the Employment Period, determined without regard to the
fact of the termination of the Employee's employment (as the
Employment Period may have been extended prior to the Date of
Termination pursuant to Section 2(a) or otherwise); and
(2) an amount equal to the greater of
(i) the excess of:
(x) if, as of the Date of Termination, the -
MGI/CERA Group has achieved at least the pro
rata portion (based on the number of days
from the beginning of the then current
fiscal year to the Date of Termination (the
"Proportionate Period")) of the applicable
targets established under the CERA Bonus
Plan for the fiscal year that includes the
Date of Termination, an amount equal to the
amount of incentive compensation that would
have been payable to the Employee for such
fiscal year under the
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<PAGE> 9
CERA Bonus Plan had he remained employed for the
entire fiscal year, over
(y) the amount of incentive compensation previously paid
or, at the election of the Employee, deferred for the
Proportionate Period, and
(ii)
(x) the pro rata portion (based on the Proportionate
Period) of an amount computed by multiplying the
amount of incentive compensation that would have been
payable to the Employee for such fiscal year under
the CERA Bonus Plan had he remained employed for the
entire fiscal year and assuming all targets had been
met pursuant to such Plan by a percentage equal to
the average of the percentages of the incentive
compensation bonuses actually paid to [list other two
CERA Principals] for such fiscal year under the CERA
Bonus Plan], over
(y) the amount of incentive compensation previously paid
or, at the election of the Employee, deferred for the
Proportionate Period,
in either case payable in one lump sum as soon as reasonably
practicable following receipt by Employer of the MGI/CERA
Group's financial statements for the applicable fiscal year
(accompanied by an audit report of its accountants), less
(B) any amount paid or to be paid to the Employee under the terms
of any severance plan or program of Employer, if any, as in
effect on the Date of Termination;
provided that Employer may, in its sole discretion, at any time, pay to
the Employee in a single lump sum and in satisfaction of Employer's
obligations under clauses (A)(1) and (2) of this sentence, an amount
equal to (x) the installments of the Base Salary then remaining
to be paid to the Employee pursuant to clause (A)(1) of
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<PAGE> 10
this sentence, and the amount, if any, then remaining to be paid to the
Employee pursuant to clause (A)(2) of this sentence, less (y) the
amount, if any, remaining to be paid to the Employee pursuant to any
plan or program referred to in clause (B) of this sentence. If the
Employee's employment shall so terminate, (1) for the balance of the
Employment Period, (determined without regard to the fact of the
termination of the Employee's employment (as the Employment Period may
have been extended prior to the Date of Termination pursuant to Section
2(a) or otherwise) or such longer period as may be provided by the
terms of the applicable plan, program, practice or policy, Employer
shall continue to provide to the Employee and/or Employee's family
Welfare Benefits (other than disability insurance) at least equal to
those that would have been provided to him or them in accordance with
Section 5 if the Employee's employment had not been so terminated or,
if more favorable to the Employee, as in effect generally during such
Employment Period with respect to other senior executives of the
Company and their families and (2) the Employee shall have no
affirmative duty to seek new employment. If the Employee obtains new
employment and the Employer has not paid a lump sum to the Employee
pursuant to the proviso to the first sentence of this Section 7(f)(i),
any salary continuation payments to which the Employee may be entitled
pursuant to clause (A)(1) of the first sentence of this Section 7(f)(i)
shall be reduced or canceled to the extent that any salary, fees or
other cash compensation from such employment is paid or payable to or
on behalf of the Employee. Any benefits payable to the Employee and/or
the Employee's family under clause (1) of the second sentence of this
Section 7(f)(i) or any otherwise applicable plans, policies and
practices of Employer, including all Welfare Benefits described in
Section 5 hereof, shall be reduced or canceled to the extent of any
comparable benefit cover age offered to the Employee for whom the
Employee performs services, including consulting services.
(ii) If, during the Employment Period, the Employee's
employment shall terminate upon his death, Disability or retirement on
or after age 60, or if the Employee shall terminate his employment
without Good Reason or if Employer shall terminate the Employee's
employment for Cause, subject to Section 7(h), Employer shall pay the
Employee his Base Salary through the Date of Termination or, in the
case of the Employee's death,
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<PAGE> 11
through twelve months following the Date of Termination, plus, in the
case of termination upon the Employee's death, Disability or retirement
on or after age 60, the excess of (x) if, as of the Date of
Termination, [Employer] [the MGI/CERA Group] has achieved at least the
pro rata portion (based on the Proportionate Period) of the applicable
targets established under the CERA Bonus Plan for the fiscal year that
includes the Date of Termination, an amount equal to the product of (A)
the amount of incentive compensation that would have been payable to
the Employee for such fiscal year under the CERA Bonus Plan had he
remained employed for the entire fiscal year and (B) a fraction, the
numerator of which is equal to the number of days in such fiscal year
that precedes the Date of Termination (but not including any time
between the onset of a physical or mental disability that is determined
to be a Disability and the resulting Date of Termination) and the
denominator of which is equal to 365, over (y) the amount of incentive
compensation previously paid or, at the election of the Employee,
deferred for the Proportionate Period. Any benefits, including Welfare
Benefits and disability benefits, if any, pursuant to Employer's
disability program, payable to or in respect of the Employee under any
otherwise applicable plans, policies and practices of Employer shall
not be limited by this provision.
(g) Date of Termination. As used in this Agreement, the term
"Date of Termination" shall mean (i) if the Employee's employment is terminated
by his death or retirement on or after age 60, the date of his death or
retirement, (ii) if the Employee's employment is terminated by the Employee
without Good Reason, the date of termination set forth in the Notice of
Termination, (iii) if the Employee's employment is terminated by Employer for
Cause, the date of termination set forth in the Notice of Termination, and (iv)
if the Employee's employment is terminated by Employer Without Cause, due to the
Employee's Disability or by the Employee for Good Reason, 30 days after the date
of termination set forth in the Notice of Termination.
(h) Resignation from Offices and Board Member ships. Effective
as of any Date of Termination under this Section 7 or otherwise as of the date
of the Employee's termination of employment with Employer, the Employee shall
resign in writing from all (i) offices then held by him with Employer or any
other member of the MGI/CERA Group and (ii) Board memberships then held by him
on the Boards of
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<PAGE> 12
(x) Employer or any other member of the MGI/CERA Group or (y) any other
organization with which he is affiliated by virtue of his position with Employer
or any other member of the MGI/CERA Group. The Employee shall execute all
documents and instruments and take all other actions reasonably requested by
Employer to effectuate such resignations. All payments due or to become due to
the Employee pursuant to this Agreement, including any such payments pursuant to
Section 7(f), and, to the fullest extent permitted by applicable law, pursuant
to any otherwise applicable plan, policy, program or practice of Employer or any
other member of the MGI/CERA Group, shall be subject to such resignations by the
Employee and the performance by Employee of each of his obligations under this
Section 7(h).
8. Unauthorized Disclosure. During the period of the
Employee's employment with Employer or any other member of the MGI/CERA Group
and the five-year period following any termination of such employment, without
the prior written consent of Employer's Board or its authorized representative,
except to the extent required by an order of a court having apparent
jurisdiction or under subpoena from an appropriate government agency, in which
event, the Employee will use reasonable efforts to consult with Employer's Board
prior to responding to any such order or subpoena, and except as required in the
performance of his duties here under, the Employee shall not disclose any
confidential or proprietary trade secrets, customer lists, proprietary designs,
information regarding product development, marketing plans, sales plans, prices,
profits, costs, contracts, management organization information (including data
and other information relating to members of Employer's Board or of the Board of
any other member of the MGI/CERA Group, or management of Employer or any other
member of the MGI/CERA Group), operating policies or manuals, business plans,
financial records, or other financial, commercial, business or technical
information relating to Employer or any other member of the MGI/CERA Group that
Employer or any other member of the MGI/CERA Group may receive belonging to
suppliers, customers or others who do business with Employer or any other member
of the MGI/CERA Group (collectively, "Confidential Information") to any third
person. Notwithstanding the foregoing, "Confidential Information" shall not
include (i) any information that has been previously disclosed to the public or
is in the public domain other than as a result of the Employee's breach of this
Section 8, (ii) any information which is or becomes available to the Employee on
a non-confidential basis from a third party, provided that such third party was
not known by
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<PAGE> 13
the Employee to be bound by a confidentiality agreement or contractual
obligation of confidentiality with respect to such information, (iii) is
disclosed by Employer to a third party without a duty of confidentiality or (iv)
is independently developed by a third party without the advice or assistance of
the Employee.
9. Non-Competition. During the period of Employee's
employment and, following any termination thereof, (x) if the Employee's
employment shall have been terminated by Employer Without Cause or by the
Employee for Good Reason, the period ending on the first anniversary of the Date
of Termination and (y) if such employment shall have been terminated for any
other reason, the period ending on the later of (i) the first anniversary of the
Date of Termination and (ii) the last day upon which any payments are made
pursuant to Section 7(f)(i)(A)(1) or 7(f)(i)(B), the Employee shall not,
directly or indirectly, (A) as an individual proprietor, partner, member,
principal, officer, employee, agent, consultant or stockholder, develop,
produce, market, sell or render (or assist any other person in developing,
producing, marketing, selling or rendering) products or services competitive
anywhere in the United States or elsewhere in the world with, or (B) engage in
business with, serve as an agent or consultant to, become an individual
proprietor, partner, member, principal or stockholder (other than a holder of
less than 1% of the outstanding voting shares of any publicly held company) of
or become employed in an executive capacity by, any person, firm or other entity
("Competitor") a substantial portion of whose business competes anywhere in the
United States or elsewhere in the world with a substantial portion of the
business of the MGI/CERA Group that relates to the financial information,
financial analysis, energy information and analysis or any other business then
engaged in by any members of the MGI/CERA Group, provided, that this Section 9
shall not be deemed to prohibit the Employee from teaching courses at
educational institutions or writing books or articles for public sale or making
appearances on television or preparing or otherwise participating in television
programs. For the purposes of this Section 9, a "substantial portion" (x) in the
case of the business of Competitor shall mean a line or lines of business that
account for more than 50% of the consolidated revenues of Competitor and (y) in
the case of the MGI/CERA Group shall mean a line or lines of business that
account for more than 25% of the consolidated revenues of the MGI/CERA Group, in
each case for the fiscal year ended immediately prior to the date on which the
Employee first proposes to engage in any
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<PAGE> 14
of the activities described in clause (B) of the immediately preceding sentence;
provided, however, that in the case of a Competitor that has had less than three
full years of operations, a "substantial portion" shall mean a line or lines of
business accounting for more than 50% of the projected consolidated revenues of
such Competitor for the two fiscal years next succeeding the date on which the
Employee first proposes to engage in any of the activities described in clause
(B) of the immediately preceding sentence. Whether any such person, firm or
entity so competes shall be determined in good faith by Employer's Board. For
purposes of this Section 9, the phrase employment "in an executive capacity"
shall mean employment in any position in connection with which the Employee has
or reasonably would be viewed as having powers and authorities with respect to
any other person, firm or other entity or any part of the business thereof that
are substantially similar, with respect thereto, to the powers and authorities
assigned to any executive officer of Employer as described in the By-Laws of
Employer as in effect on the date hereof, a copy of the relevant portions of
which has been delivered to and reviewed by the Employee on or prior to the date
hereof.
10. Non-Solicitation of Employees. Except in connection with
the performance of his duties for the MGI/CERA Group, during the period of the
Employee's employment with Employer or any other member of the MGI/CERA Group
and thereafter for any period that the Employee is receiving payments pursuant
to Section 7(f)(i)(A)(1) or 7(f)(i)(B) (the "Restriction Period"), the Employee
shall not, directly or indirectly, for his own account or the account of any
other person or entity with which he shall become associated in any capacity,
(a) solicit for employment or employ the services of any person who at the time
is employed by or otherwise engaged to perform services for Employer or any
other member of the MGI/CERA Group, regard less of whether such employment is
direct or through an entity with which such person is employed or associated, or
otherwise intentionally interfere with the relationship of Employer or any other
member of the MGI/CERA Group with any person or entity who or which is at the
time employed by or otherwise engaged to perform services for the Employer or
any other member of the MGI/CERA Group, including under this clause (a) any
person who performs services on behalf of the Employer or any other member of
the MGI/CERA Group as an independent sales agent or sales representative or (b)
induce any employee of Employer or any other member of the MGI/CERA Group to
engage in any activity which the Employee
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<PAGE> 15
is prohibited from engaging in under Sections 9, 10 and 11 hereof or to
terminate his employment with Employer or any other member of the MGI/CERA
Group.
11. Non-Solicitation of Clients. During the Restriction
Period, the Employee shall not, directly or indirectly, solicit for himself or
any other person, firm or entity anywhere in the United States or elsewhere in
the world any business relationship of a nature that is substantially
competitive with the business or relationship of Employer or any other member of
the MGI/CERA Group with any person, firm or corporation which was a customer,
client or distributor of Employer or any other member of the MGI/CERA Group at
any time during the Employment Period (in the case of any such activity during
the Employment Period) or during the twelve-month period preceding the date of
Employee's termination of employment with or the provision of services to
Employer or any other member of the MGI/CERA Group other than any such
solicitation during Employee's employment with Employer or any other member of
the MGI/CERA Group on behalf of Employer or any other member of the MGI/CERA
Group.
12. Return of Documents. In the event of the termination of
the Employee's employment for any reason, the Employee will deliver to Employer
all property and non-personal documents and data of any nature and in whatever
medium pertaining to employment with or, the provision of services to, Employer
or any other member of the MGI/CERA Group, and he will not take with him any
such property, documents or data of any description or any reproduction thereof,
or any documents containing or pertaining to any Confidential Information.
Whether documents or data are "personal" or "non-personal" shall be determined
as follows: the Employee shall present any documents or data that he wishes to
take with him to the chief legal officer of Employer for his review. Such chief
legal officer shall make an initial determination whether any such documents or
data are personal or non-personal, and with respect to such documents or data
that he determines to be non-personal, shall notify the Employee either that
such documents or data must be retained by Employer or that Employer must make
and retain a copy thereof before the Employee may take such documents or data
with him. Any disputes as to the personal or non-personal nature of any such
documents or data shall first be presented to the Chairman of Employer's Board
or to another representative designated by Employer's Board (such Chairman or
representative, the "Chairman"), and if such disputes are not promptly resolved
by the Employee and the
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<PAGE> 16
Chairman, such disputes shall be resolved through arbitration pursuant to
Section 17(b).
13. Injunctive Relief with Respect to Covenants. Employee
acknowledges and agrees that the covenants, obligations and agreements of the
Employee with respect to noncompetition, nonsolicitation, confidentiality and
Employer property relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants, obligations or agreements will
cause Employer irreparable injury for which adequate remedies are not available
at law. Therefore, the Employee agrees that Employer shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) as a court of competent jurisdiction may deem
necessary or appropriate to restrain the Employee from committing any violation
of the covenants, obligations or agreements referred to in this Section 13.
These in junctive remedies are cumulative and in addition to any other rights
and remedies Employer may have. If Employer does not prevail in obtaining the
injunctive relief it seeks, Employer shall reimburse the Employee for any legal
expenses incurred by him in defending against the imposition of such injunctive
relief. Employer and the Employee hereby irrevocably submit to the exclusive
jurisdiction of the courts of the States of New York and Delaware and the
Federal courts of the United States of America, located in the State, City and
County of New York or in the District of Delaware, as applicable, in respect of
the injunctive remedies set forth in this Section 13 and the interpretation and
enforcement of Sections 8, 9, 10, 11, 12 and 13 insofar as such interpretation
and enforcement relate to any request or application for injunctive relief in
accordance with the provisions of this Section 13, and the parties hereto hereby
irrevocably agree that (i) the sole and exclusive appropriate venue for any suit
or proceeding relating solely to such injunctive relief shall be in such a
court, (ii) all claims with respect to any request or application for such
injunctive relief shall be heard and determined exclusively in such a court,
(iii) any such court shall have exclusive jurisdiction over the person of such
parties and over the subject matter of any dispute relating to any request or
application for such injunctive relief and (iv) each hereby waives any and all
objections and defenses based on forum, venue or personal or subject matter
jurisdiction as they may relate to an application for such injunctive relief in
a suit or proceeding brought before such a court in accordance with the
provisions of this Section 13. All disputes not relating to any request or
application for injunctive relief
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<PAGE> 17
in accordance with this Section 13 shall be resolved by arbitration as
contemplated by Section 17(b).
14. Assumption of Agreement. Employer will require any
successor (by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer, by agreement in
form and substance reasonably satisfactory to the Employee, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that Employer would be required to perform it if no such succession had taken
place. Failure of Employer to obtain such agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and shall entitle the
Employee to compensation from Employer in the same amount and on the same terms
as the Employee would be entitled hereunder if Employer terminated his
employment Without Cause as contemplated by Section 7, except that for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
15. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof,
and all promises, representations, understandings and arrangements with respect
thereto. All prior correspondence and proposals (including summaries of proposed
terms) and all prior promises, representations, understandings, arrangements and
agreements relating to such subject matter (including but not limited to those
made to or with the Employee by any other person or entity) are merged herein
and superseded hereby.
16. Indemnification. Employer agrees that it shall indemnify
and hold harmless the Employee to the fullest extent permitted by Delaware law
from and against any and all liabilities, costs, claims and expenses including
without limitation all costs and expenses incurred in defense of litigation,
including attorneys' fees, arising out of the employment of the Employee
hereunder, except to the extent arising out of or based upon the bad faith or
willful misconduct of the Employee. Costs and expenses incurred by the Employee
in defense of litigation, including attorneys' fees, shall be paid by Employer
in advance of the final disposition of such litigation upon receipt of an
undertaking adequate under Delaware law made by or on behalf of the Employee to
repay such amount if it shall ultimately be determined that the Employee is not
entitled to be indemnified by Employer under this Agreement.
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<PAGE> 18
17. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding on and
inure to the benefit of Employer and its successors and permitted assigns. This
Agreement shall also be binding on and inure to the benefit of the Employee and
his heirs, executors, administrators and legal representatives. This Agreement
shall not be assignable by either party hereto without the prior written consent
of the other party hereto, except pursuant to this Section 17(a) as hereinafter
provided. Each of Parent LLC and Employer may effect such an assignment without
prior written approval of the Employee upon the transfer of all or substantially
all of its business and/or assets (whether by purchase, merger, consolidation or
otherwise), provided that the successor to such business and/or assets shall
expressly assume and agree to perform this Agreement in accordance with the
provisions of Section 14.
(b) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement (except in connection with any request or
application for injunctive relief in accordance with Section 13) shall be
resolved by binding arbitration. The arbitration shall be held in The City of
New York, New York and except to the extent in consistent with this Agreement,
shall be conducted in accordance with the Commercial Arbitration rules of the
American Arbitration Association then in effect at the time of the arbitration,
and otherwise in accordance with principles which would be applied by a court of
law or equity. The arbitrator shall be acceptable to both Employer and the
Employee. If the parties cannot agree on an acceptable arbitrator, the dispute
shall be heard by a panel of three arbitrators, one appointed by Employer, one
appointed by the Employee, and the third appointed by the other two arbitrators.
All expenses of arbitration shall be borne by the respective party who incurs
the expense, or, in the case of joint expenses, by both parties in equal
portions, except that, in the event the Employee prevails on the principal
issues of such dispute or controversy, all such expenses shall be borne by the
Employer.
(c) Governing Law. This Agreement shall be governed by and
constructed in accordance with the laws of the State of Delaware.
(d) Taxes. Employer may withhold from any payments made under
the Agreement all federal, state, city or
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other applicable taxes as shall be required pursuant to any law, governmental
regulation or ruling.
(e) Amendments. No provision of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
approved by Employer's Board or a person authorized thereby and is agreed to in
writing by the Employee and, in the case of any such modification, waiver or
discharge affecting the rights or obligations of the Parent LLC, is approved by
the Board of Directors of Parent LLC or such officer of the Parent LLC as may be
specifically designated for such purpose by such Board. No waiver by any party
hereto at any time of any breach by any other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No waiver of any provision of
this Agreement shall be implied from any course of dealing between or among the
parties hereto or from any failure by any party hereto to assert its rights
hereunder on any occasion or series of occasions.
(f) Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
(g) Notices. Any notice or other communication required or
permitted to be delivered under this Agreement shall be (i) in writing, (ii)
delivered personally, by courier service or by certified or registered mail,
first-class postage prepaid and return receipt requested, (iii) deemed to have
been received on the date of delivery or on the third business day after the
mailing thereof, and (iv) addressed as follows (or to such other address as the
party entitled to notice shall hereafter designate in accordance with the terms
hereof):
(A) if to Employer, to it at:
Cambridge Energy Research Associates, Inc.
Charles Square
20 University Road
Cambridge, Massachusetts 02138
Attention: President
19
<PAGE> 20
(B) if to the Employee, to him at the address listed on the
signature page hereof.
Copies of any notices or other communications given under this Agreement shall
also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Attention: Donald J. Gogel
Brera Capital Partners, LLC
590 Madison Avenue, 18th Floor
New York, New York 10022
Attention: Alberto Cribiore
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Steven R. Gross, Esq.
and
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
Attention: Paul P. Brountas, Esq.
(h) Survival. Sections 7(h), 8, 9, 10, 11, 12, 13, 14, 15, 16
and 17 and, if the Employee's employment terminates in a manner giving rise to a
payment under Section 7(f), Section 7(f) shall survive the termination of the
employment of the Employee hereunder.
(i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
(j) Headings. The section and other headings contained in this
Agreement are for the convenience of the parties only and are not intended to be
a part hereof or to affect the meaning or interpretation hereof.
20
<PAGE> 21
IN WITNESS WHEREOF, Employer has duly executed this Agreement
by its authorized representatives and the Employee has hereunto set his hand, in
each case effective as of the date first above written.
CAMBRIDGE ENERGY RESEARCH ASSOCIATES,
INC.
By:
-----------------------------------
Name:
Title:
[ ]
------------------
Name of Employee
--------------------------------
Address:
21
<PAGE> 1
Exhibit 10.6
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
20 UNIVERSITY ROAD
CAMBRIDGE, MASSACHUSETTS 02138
July 2, 1993
Mr. Philippe Michelon
360 Everett Avenue
Apartment 2C
Palo Alto, California 94301
Re: Your new position with Cambridge Energy
Research Associates, Inc. ("CERA")
Dear Philippe:
As we discussed, this letter constitutes an employment agreement
between you and CERA, unless by mutual agreement we decide to replace this
agreement by a more complete one. The terms of our agreement are as follows:
1. POSITION. You will join Joe, Jamey and me as a Managing Director
(an officer of CERA) reporting to me. Your role will be to focus
on administration, coordination and planning of all material
aspects of CERA's businesses.
2. TERM OF CONTRACT. The initial term of employment will be for
three years, commencing no later than September 1, 1993, and your
employment will be renewable for additional one-year periods
unless either party provides three months' notice prior to the
expiration of the initial term or any renewal period.
3. BASE SALARY. Your base salary will be $225,000 for the first
year. Your salary during any subsequent year may be subject to
upward adjustment by Joe, Jamey and me.
4. BONUS. You will be eligible to participate in the senior
executive bonus pool from which you may receive for the first
year a bonus, as determined by Joe, Jamey and me, in an amount up
to 33% of your base salary, payable within three months after the
end of the year.
5. BENEFITS. You will be entitled to the standard CERA benefits for
senior executives, as set forth on the attachment hereto.
<PAGE> 2
Mr. Philippe Michelon
July 2, 1993
Page 2
6. EQUITY. You will be eligible to participate in any equity program
for senior executives. Such a program is expected to be developed
by you during the initial term of your employment.
7. RELOCATION. CERA will reimburse you a lump sum of $25,000 for
real estate brokers' and legal fees. In additional, you will be
reimbursed for moving expenses and travel costs associated with
identifying a new residence in Massachusetts. In addition, if
necessary, CERA will provide a six-month bridge loan of up to
$300,000.
8. SEVERANCE. If your employment with CERA is terminated without
cause or in connection with the merger or sale of CERA, you will
be entitled to a severance payment in the amount of your then
current annual base salary for a period equal to the remainder of
the initial three-year term, or one year, whichever is greater,
in lieu of any other damages. The amount of the severance payable
to you will be paid at the rate of your then current salary, in
six-month increments commencing on the severance date, until the
amount is paid in full.
9. NON-COMPETITION AND NON-DISCLOSURE. In the event that you leave
CERA for any reason, you will not be entitled to compete with
CERA for a one-year period and you will be required to maintain
in confidence and abstain from using for your or anyone else's
benefit any proprietary information of CERA.
All of us at CERA look forward to the commencement of our new
relationship and to doing great things together. Kindly indicate your agreement
to the foregoing terms and conditions by signing on the line provided below and
returning a copy to me at your earliest convenience.
Very best regards.
Sincerely,
/s/ Daniel H. Yergin
--------------------------------
Daniel H. Yergin, President
Accepted by:
/s/ Phillippe Michelon
- --------------------------
Phillippe Michelon
<PAGE> 3
CAMBRIDGE ENERGY RESEARCH ASSOCIATES
LIMITED PARTNERSHIP
20 UNIVERSITY ROAD
CAMBRIDGE, MA 02138
February 24, 1995
Mr. Philippe Michelon
21 Lowell Street
Cambridge, MA 02138
Re: Your employment agreement with Cambridge Energy Research
Associates Limited Partnership ("CERA")
Dear Philippe:
This letter formalizes our previous discussions of September of last
year. As agreed then, I confirm on behalf of CERA that the terms of your
employment agreement described in my letter to you of July 2, 1993, Re: Your new
position with Cambridge Energy Research Associates, Inc. (the "Employment
Agreement") are modified as follows:
- - CLAUSE 2, TERM OF CONTRACT, OF THE EMPLOYMENT AGREEMENT IS REPLACED BY THE
FOLLOWING:
a) The initial term of employment will be for three years, commencing no
later than September 1, 1993. However, if a controlling portion of CERA is
merged or sold during this initial three-year term, the initial term of your
employment will be extended for a period of two years beyond the date of the
change of control, and your salary, benefits and status will be maintained.
b) Your employment will thereafter be extended for additional two-year
periods unless either party provides twelve months' notice prior to the
expiration of the applicable initial term or any renewal period.
- - CLAUSE 8, SEVERANCE, OF THE EMPLOYMENT AGREEMENT IS REPLACED BY THE FOLLOWING:
a) If a controlling portion of CERA is merged or sold during the initial
three-year term of your employment and your employment is not extended beyond
the first two years following the date of change of control, and if your
employment is terminated without cause, you will be entitled to a severance
payment in the amount of your then current annual salary, amount payable on the
day of termination of your
<PAGE> 4
Mr. Philippe Michelon
Page 2
February 24, 1995
then current annual salary, amount payable on the day of termination of your
employment, in lieu of any other damages.
b) If a controlling portion of CERA is merged or sold after the initial
three-year term of your employment, and your employment is terminated without
cause, you will be entitled to a severance payment in the amount of twice your
then current annual salary, amount payable on the day of termination of your
employment, in lieu of any other damages.
- - ASSIGNMENT
Your Employment Agreement with Cambridge Energy Research Associates, Inc. has
been assigned to CERA.
Except as amended above, the Employment Agreement remains in full force
and effect.
Kindly indicate your agreement to the foregoing by signing on the line
provided below and returning a copy to me at your earliest convenience.
Sincerely,
CAMBRIDGE ENERGY RESEARCH
ASSOCIATES LIMITED PARTNERSHIP
By: Cambridge Energy Research
Associates, Inc., its General Partner
By: /s/ Daniel H. Yergin
--------------------------------
Daniel H. Yergin, President
Agreed and accepted by:
/s/ Philippe Michelon
- ---------------------------
Philippe Michelon
Date: March 6, 1995
<PAGE> 1
Exhibit 10.7
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
20 UNIVERSITY ROAD
CAMBRIDGE, MASSACHUSETTS 02138
September 21, 1994
Mr. Daniel H. Lucking, Jr.
c/o Cambridge Energy Research Associates, Inc.
20 University Road
Cambridge, MA 02138
Re: Severance Agreement
Dear Dan:
This letter constitutes a severance agreement between you and Cambridge
Energy Research Associates, Inc. ("CERA"). The terms of our agreement are as
follows:
1. Severance. For the three-year period beginning as of the date
hereof, if your employment with CERA is terminated in connection
with the merger or sale of all or controlling portion of CERA or
without cause subsequent to the merger or sale of all or a
controlling portion of CERA, you will be entitled to a severance
payment in the amount of your then current annual base salary, in
lieu of any other payments or damages. Your severance amount will
be paid at the rate of your then current salary, over a one-year
period beginning on the date of termination of your employment,
until the amount is paid in full. Notwithstanding the above, your
severance payments will be conditioned upon the execution of a
mutual release satisfactory to you and CERA.
2. Non-Disclosure. In the event that you leave CERA for any reason, you
agree to maintain in confidence and abstain from using for your or
anyone else's benefit any proprietary information of CERA.
3. Nondisparagement. You agree that you will not make any statements
now or in the future to any current or former CERA employees or to
any other person, which is disparaging of the business, reputation,
competence, fairness or character of CERA or any officer, director,
shareholder or employee of CERA. A disparaging statement is any
comment, oral or written, which would, if publicized, cause
humiliation or embarrassment or cause the recipient to question the
business condition, integrity, competence or good character of any
of these persons or entities.
<PAGE> 2
Mr. Daniel H. Lucking, Jr.
September 21, 1994
Page 2
Kindly indicate your agreement to the foregoing by signing on the line
provided below and returning a copy to me at your earliest convenience.
Very truly yours,
/s/ Daniel H. Yergin
Daniel H. Yergin, President
Agreed and Accepted by:
/s/ Daniel H. Lucking, Jr.
- -----------------------------
Daniel H. Lucking, Jr.
<PAGE> 3
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, L.P.
20 UNIVERSITY ROAD
CAMBRIDGE, MASSACHUSETTS 02138
April 14, 1997
Mr. Daniel H. Lucking, Jr.
c/o Cambridge Energy Research Associates, Inc.
20 University Road
Cambridge, MA 02138
Re: Amendment to Severance Agreement
Dear Dan:
This letter shall serve as an amendment to the Severance Agreement between
you and Cambridge Energy Research Associates, Inc. dated as of September 21,
1994.
This letter shall also serve to confirm that all rights and obligations of
Cambridge Energy Research Associates, Inc. under the Severance Agreement have
been assigned to, and assumed by, Cambridge Energy Research Associates, L.P.
The first sentence of the first paragraph of the Severance Agreement shall
be deleted in its entirety and replaced with the following sentence:
"This letter constitutes a severance agreement between you and Cambridge
Energy Research Associates Limited Partnership, A Delaware limited
partnership ("CERA").
The first sentence of numbered paragraph 1 of the Severance Agreement
shall be deleted in its entirety and replaced with the following sentence:
"For the period beginning as of the date of this letter and ending on
December 31, 1998, if your employment with Cambridge Energy Research
Associates, L.P. is terminated in connection with the merger or sale of
all or a controlling portion of CERA or without cause subsequent to the
merger or sale of all or a controlling portion of CERA, you will be
entitled to a severance payment in the amount of your then current annual
base salary, in lieu of any other payments or damages."
<PAGE> 4
Mr. Daniel H. Lucking
April 14, 1997
Page 2
Kindly indicate your agreement to the foregoing by signing on the line
provided below and returning a copy to me at your earliest convenience.
Very truly yours,
CAMBRIDGE ENERGY RESEARCH ASSOCIATES
LIMITED PARTNERSHIP
By: Cambridge Energy Research Associates, Inc.
its General Partner
By: /s/ Daniel H. Yergin
------------------------------------
Daniel H. Yergin, President
AGREED AND ACCEPTED
By: /s/ Daniel H. Lucking, Jr.
---------------------------
Daniel H. Lucking, Jr.
<PAGE> 1
Exhibit 10.8
================================================================================
MCM GROUP, INC.
REGISTRATION AND PARTICIPATION AGREEMENT
Dated as of August 31, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. Background.................................................................1
2. Definitions................................................................2
3. Registration...............................................................6
3.1. Registration on Request...........................................6
(a) Requests...............................................6
(b) Obligation to Effect Registration......................6
(c) Registration Statement Form............................7
(d) Expenses...............................................8
(e) Inclusion of Other Securities..........................8
(f) Effective Registration Statement.......................8
(g) Pro Rata Allocation....................................9
3.2. Incidental Registration...........................................9
3.3. Registration Procedures..........................................12
3.4. Underwritten Offerings...........................................17
(a) Underwritten Offerings Exclusive......................17
(b) Underwriting Agreement................................17
(c) Selection of Underwriters.............................18
(d) Incidental Underwritten Offerings.....................18
(e) Hold Back Agreements..................................19
3.5. Preparation; Reasonable Investigation............................20
3.6. Other Registrations..............................................20
3.7. Indemnification..................................................21
(a) Indemnification by the Company........................21
(b) Indemnification by the Sellers........................22
(c) Notices of Claims, etc................................23
(d) Other Indemnification.................................24
(e) Other Remedies........................................24
(f) Officers and Directors................................25
(g) Indemnification Payments..............................25
4. Participation Rights......................................................25
(a) Procedures for Qualifying Sales.......................25
(b) Qualifying Sale Defined...............................26
(c) Exclusion from Qualifying Sale. .....................27
i
<PAGE> 3
Page
5. Investors' Rights to Purchase Additional
Capital Stock........................................................27
(a) C&D Sale....................................................27
(b) Offer Procedures............................................27
6. Miscellaneous.............................................................29
6.1. (a) Rule 144....................................................29
(b) Legend on Stock Certificates................................29
6.2. Amendments and Waivers...........................................30
6.3. Nominees for Beneficial Owners...................................30
6.4. Successors, Assigns and Transferees..............................31
6.5. Notices..........................................................31
6.6. No Inconsistent Agreements.......................................32
6.7. Remedies; Attorneys' Fees........................................32
6.8. Stock Splits, etc................................................33
6.9. Term ...........................................................33
6.10. Severability....................................................33
6.11. Headings........................................................33
6.12. Counterparts....................................................33
6.13. Governing Law...................................................34
6.14. No Third Party Beneficiaries....................................34
6.15. Consent to Jurisdiction.........................................34
6.16. Waiver of Jury Trial............................................34
6.17. Entire Agreement................................................34
ii
<PAGE> 4
EXHIBIT 10.8
REGISTRATION AND PARTICIPATION AGREEMENT
REGISTRATION AND PARTICIPATION AGREEMENT, dated as of August
31, 1996, among MCM Group, Inc., a Delaware corporation (the "Company"), THE
CLAYTON & DUBILIER PRIVATE EQUITY FUND IV LIMITED PARTNERSHIP ("C&D Fund IV")and
the undersigned parties hereto (each, a "Shareholder").
1. Background. (a) The Company was formed by VK/AC Holding,
Inc., a Delaware corporation ("VKAC Holding"), for the purpose of holding all of
the outstanding shares of common stock of its wholly owned subsidiary, McCarthy,
Crisanti & Maffei, Inc., a New York corporation ("MCM").
(b) VKAC Holding has distributed all of the outstanding shares
of the Company's Class A common stock, par value $0.01 per share (the "Class A
Common Stock") by means of a one-time special dividend (the "Distribution") to
the common stockholders of VKAC Holding of record on the record date for the
Distribution in proportion to each such stockholder's respective holdings of
VKAC Holding common stock.
(c) Shares of the Class A Common Stock are, under certain
limited circumstances specified in the Company's Certificate of Incorporation,
exchangeable for shares of the Company's Class B common stock, par value $0.01
per share (the "Class B Common Stock"), and shares of the Class B Common Stock
and of the Company's Class C common stock, par value $0.01 per share (the "Class
C Common Stock" and, together with the Class A Common Stock and the Class B
Common Stock, the "Common Stock") are, under certain limited circumstances
specified in the Company's Certificate of Incorporation, convertible into shares
of the Class A Common Stock.
(d) The Company has adopted a special option plan providing
for a one-time special grant of options to purchase shares of the Class A Common
Stock to those executive officers and current and former employees of VKAC
Holding and its subsidiaries who hold as of the date hereof options to purchase
shares of the Class A Common Stock, par value $0.01 per share, of VKAC Holding.
(e) The Company may in the future issue or sell shares of
Class C Common Stock to certain key executives and employees of the Company or
one of its subsidiaries and has
<PAGE> 5
adopted an option plan, and may in the future adopt additional option plans,
that will permit executive officers and certain employees of the Company and its
subsidiaries to acquire shares of the Company's Class C Common Stock.
(f) The Company may in the future issue or sell, and/or grant
options to purchase, shares of Class C Common Stock to certain directors of the
Company or directors or senior executives of corporations in which entities
managed or sponsored by CD&R have made substantial equity investments or other
individuals with whom CD&R has a consulting or advisory relationship.
(g) This Agreement shall become effective as of the date
hereof with respect to any Registrable Securities (as hereinafter defined)
distributed by VKAC Holding in the Distribution and, with respect to any other
Registrable Securities, upon the issuance or sale of Common Stock to any party
pursuant to any Stock Subscription Agreement (as defined hereinafter) that
provides such Common Stock shall be Registrable Securities.
2. Definitions. For purposes of this Agreement, the following
terms have the following respective meanings:
"Affiliate": With respect to any Person, any other Person
directly or indirectly Controlling, Controlled by or under common Control with
such first Person, provided that any director or member of management or other
employee of the Company or any of its subsidiaries shall not be deemed to be an
Affiliate of C&D Fund IV.
"Business Day": A day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required to
close.
"C&D Sale": See Section 4(a).
"C&D Fund IV": The Clayton & Dubilier Private Equity Fund IV
Limited Partnership, a Connecticut limited partnership.
"CD&R": Clayton, Dubilier & Rice, Inc., a Delaware
corporation.
"Class A Common Stock": See Section 1(b).
"Class B Common Stock": See Section 1(c).
2
<PAGE> 6
"Class C Common Stock": See Section 1(c).
"Common Stock": See Section 1(e).
"Company": See the introduction to this Agreement.
"Control": The power to direct the affairs of a Person by
reason of ownership of voting stock, by control or otherwise.
"Distribution": See Section 1(b).
"Exchange Act": The Securities Exchange Act of 1934, as
amended
"Management Investor": Any executive or employee of the
Company or any of its subsidiaries who holds Registrable Securities.
"NASD": National Association of Securities Dealers, Inc.
"NASDAQ": The NASD Automated Quotation System.
"Offer": See Section 5(a).
"Offered Securities": See Section 5(b).
"Person": Any natural person, firm, partnership, association,
corporation, company, trust, business trust, governmental entity or other entity
and any successor (by merger or otherwise) of such entity.
"Proportionate Share": See Section 5(b).
"Public Market": A "Public Market" for the Company's Common
Stock shall be deemed to have been established at such time as 30% of the Common
Stock (on a fully diluted basis) has been sold to the public pursuant to an
effective registration statement under the Securities Act or pursuant to Rule
144.
"Public Offering": An underwritten public offering of Common
Stock led by at least one underwriter of nationally recognized standing.
"Qualifying Number": See Section 4(b).
3
<PAGE> 7
"Qualifying Sale": See Section 4(b).
"Registrable Securities": (a) Any shares of Class A Common
Stock distributed by VKAC Holding to its common stockholders pursuant to the
Distribution, (b) any shares of Common Stock issued pursuant to any Stock
Subscription Agreement that provides that such Common Stock shall be Registrable
Securities, except for any such Common Stock issued pursuant to an effective
registration statement under the Securities Act on Form S-8, Form S-4, Form S-1
or any successor form to any thereof (unless such Common Stock is held by a
Management Investor who is an Affiliate of the Company), (c) any shares of
Common Stock issued pursuant to the terms of, and under the circumstances set
forth in, Section 5, and (d) any securities issued or issuable with respect to
any Common Stock referred to in the foregoing clauses (i) upon any conversion or
exchange thereof, (ii) by way of stock dividend or stock split, (iii) in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or (iv) otherwise, in all cases subject to the
penultimate paragraph of Section 3.3. As to any particular Registrable
Securities, once issued, such securities shall cease to be Registrable
Securities when (A) a registration statement (other than a Special Registration
pursuant to which such securities were issued by the Company to a Management
Investor who is an Affiliate of the Company) with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (B) such securities shall have been distributed to the public in
reliance upon Rule 144, (C) subject to the relevant provisions of the Company's
Certificate of Incorporation and the Stock Subscription Agreement pursuant to
which such securities shall have been issued, such securities shall have been
otherwise transferred, new certificates for such securities not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any similar state
law then in force, (D) except for purposes of Sections 4 and 5, such securities
have been held, or deemed, by virtue of tacking holding periods as contemplated
by Rule 144, to be held for a period of three years by a Person who is not an
Affiliate of the Company, (E) such securities shall have ceased to be
outstanding, (F) except for purposes of Articles 4 and 5, with respect to any
such securities acquired by a Management Investor pursuant to the exemption
from the registration requirements of
4
<PAGE> 8
the Securities Act contained in Rule 701 (or any successor provision)
thereunder, at any time following the date the Company registers a class of
equity securities under Section 12 of the Exchange Act or (G) the Company shall
have registered the Class A Common Stock under Section 12 of the Exchange Act
and such securities are held by a Person who is not an Affiliate of the Company;
provided that (x) for purposes of clauses (A) and (G) above, (1) securities held
by a Person who was not an Affiliate of the Company at the time of the event
specified in such clauses but who thereafter becomes an Affiliate of the Company
shall be and remain Registrable Securities for so long as such Person is an
Affiliate of the Company and (2) securities held by a Person who was an
Affiliate of the Company at the time of the event specified in such clauses
shall remain Registrable Securities for only so long as such Person remains an
Affiliate of the Company and (y) with respect to any securities that were
formerly Registrable Securities the Board of Directors may, under such
circumstances as it deems appropriate, designate such securities as Registrable
Securities for purposes of this Agreement.
"Registration Expenses": All expenses incident to the
Company's performance of its obligations under or compliance with Section 3,
including, but not limited to, all registration and filing fees, all fees and
expenses of complying with securities or blue sky laws, all fees and expenses
associated with listing securities on exchanges or NASDAQ, all fees and other
expenses associated with filings with the NASD (including, if required, the fees
and expenses of any "qualified independent underwriter" and its counsel), all
printing expenses, the fees and disbursements of counsel for the Company and of
its independent public accountants, and the expenses of any special audits made
by such accountants required by or incidental to such performance and
compliance and the fees and disbursements of one law firm (but not more than
one) retained by the holders holding a majority (by number of shares) of the
Registrable Securities.
"Requisite Percentage of Stockholders": The holder or holders
of at least (a) as to the initial request under Section 3.1, 50% (by number of
shares) of the Registrable Securities held at the time outstanding or (b) as to
any other request, 10% (by number of shares) of the Registrable Securities at
the time outstanding.
"Rule 144": Rule 144 (or any successor provision) under the
Securities Act.
5
<PAGE> 9
"Rule 144A": Rule 144A (or any successor provision) under the
Securities Act.
"Sale Notice": See Section 4(a).
"Securities Act": The Securities Act of 1933, as amended.
"Securities and Exchange Commission": The Securities and
Exchange Commission or any other Federal agency at the time administering the
Securities Act or the Exchange Act.
"Special Registration": (a) The registration of shares of
equity securities and/or options or other rights in respect thereof to be
offered to directors, members of management, employees, consultants or sales
agents, distributors or similar representatives of the Company or its direct or
indirect Subsidiaries or senior executives of Persons controlled by an Affiliate
of the Company or (b) the registration of equity securities and/or options or
other rights in respect thereof solely on Form S-4 or S-8 or any successor form.
"Stock Subscription Agreements": Stock subscription
agreements, stock option agreements and any other agreements, plans or
arrangements pursuant to which Common Stock is issued or sold by the Company to
any party.
"Subsidiary": With respect to any Person, any corporation or
Person, a majority of the outstanding voting stock or other equity interests of
which is owned, directly or indirectly, by that Person.
"VK/AC Holding": See Section 1.
3. Registration.
3.1. Registration on Request.
(a) Requests. Subject to the provisions of Section 3.6, at
any time or from time to time the Requisite Percentage of Stockholders shall
have the right to make one or more written requests that the Company effect the
registration under the Securities Act of all or part of the Registrable
Securities of the holder or holders making such request, which requests shall
specify the intended method of disposition thereof by such holder or holders.
6
<PAGE> 10
(b) Obligation to Effect Registration. Upon receipt by the
Company of any request for registration pursuant to Section 3.1(a), the Company
will promptly give written notice of such requested registration to all holders
of Registrable Securities, and thereupon will use its best efforts to effect the
registration under the Securities Act of
(i) the Registrable Securities which the Company
has been so requested to register pursuant to Section 3.1(a), and
(ii) all other Registrable Securities which the Company has
been requested to register by the holders thereof by written request
given to the Company within 30 days after the Company has given such
written notice (which request shall specify the intended method of
disposition of such Registrable Securities),
all to the extent required to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered. Notwithstanding the preceding sentence:
(x) the Company shall not be required to effect a registration
requested pursuant to Section 3.1 if the aggregate number of
Registrable Securities referred to in clauses (i) and (ii) of this
Section 3.1(a) included in such registration shall be less than 20% of
the Registrable Securities at the time outstanding; and
(y) if the Board of Directors of the Company (the "Board")
determines in its good faith judgment, after consultation with a firm
of nationally recognized underwriters, that there will be an adverse
effect on a then contemplated initial public offering of the Common
Stock, the Requisite Percentage of Stockholders shall be given notice
of such fact and shall be deemed to have withdrawn such request and
such registration shall not be deemed to have been effected or
requested pursuant to this Section 3.1.
(c) Registration Statement Form. Each registration requested
pursuant to this Section 3.1 shall be effected by the filing of a registration
statement on Form S-1, Form S-2 or Form S-3 (or any other form which includes
substantially the same information as would be required to be included in a
registration statement on such forms as presently constituted), unless the use
of a different form is
7
<PAGE> 11
(i) required by law or (ii) permitted by law and agreed to in writing by holders
holding at least a majority (by number of shares) of the Registrable Securities
as to which registration has been requested pursuant to this Section 3.1. At any
time after the Company has issued and sold any shares of its capital stock
registered under an effective registration statement under the Securities Act,
or after the Company shall have registered any class of equity securities
pursuant to Section 12 of the Exchange Act, it will use its best efforts to
qualify for registration on Form S-2 or Form S-3 (or any other comparable form
hereinafter adopted).
(d) Expenses. The Company will pay all Registration Expenses
in connection with the first three registrations which are effected as
requested under Section 3.1(a). The Registration Expenses in connection with
each other registration, if any, requested under this Section 3.1 shall be
apportioned among the holders whose Registrable Securities are then being
registered, on the basis of the respective amounts (by number of shares) of
Registrable Securities then being registered by them or on their behalf.
However, in the case of all registrations requested under Section 3.1(a), the
Company shall pay all amounts in respect of (i) any allocation of salaries of
personnel of the Company and its Subsidiaries or other general overhead
expenses of the Company and its Subsidiaries or other expenses for the
preparation of financial statements or other data normally prepared by the
Company and its Subsidiaries in the ordinary course of its business, (ii) the
expenses of any officers' and directors' liability insurance, (iii) the expenses
and fees for listing the securities to be registered on each exchange on which
similar securities issued by the Company are then listed or, if no such
securities are then listed on an exchange selected by the Company and (iv) all
fees associated with filings required to be made with the NASD (including, if
applicable, the fees and expenses of any "qualified independent underwriter" and
its counsel as may be required by the rules and regulations of the NASD).
(e) Inclusion of Other Securities. The Company shall not
register securities (other than Registrable Securities) for sale for the
account of any Person other than the Company in any registration requested
pursuant to Section 3.1(a) unless permitted to do so by the written consent of
holders holding at least a majority (by number of shares) of the Registrable
Securities proposed to be sold in such registration.
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(f) Effective Registration Statement. A registration
requested pursuant to Section 3.1(a) will not be deemed to have been effected
unless it has become effective for the period specified in Section 3.3(b).
Notwithstanding the preceding sentence, a registration requested pursuant to
Section 3.1(a) which does not become effective after the Company has filed a
registration statement with respect thereto solely by reason of the refusal to
proceed of the holder or holders of Registrable Securities requesting the
registration shall be deemed to have been effected by the Company at the request
of such holder or holders.
(g) Pro Rata Allocation. If the holders of a majority (by
number of shares) of the Registrable Securities for which registration is being
requested pursuant to Section 3.1(a) determine, based on consultation with the
managing underwriters or, in an offering which is not under written, with an
investment banker, that the number of securities to be sold in any such offering
should be limited due to market conditions or otherwise, all holders of
Registrable Securities proposing to sell their securities in such registration
shall share pro rata in the number of securities being offered (as determined by
the holders holding a majority (by number of shares) of the Registrable
Securities for which registration is being requested in consultation with the
managing underwriters or investment banker, as the case may be) and registered
for their account, such sharing to be based on the number of Registrable
Securities as to which registration was requested by such holders and the number
of securities that the Company proposed to sell for its own account in such
offering, respectively.
3.2. Incidental Registration. If the Company at any time
proposes to register any of its equity securities (as defined in the Exchange
Act) under the Securities Act (other than pursuant to Section 3.1 or pursuant to
a Special Registration), whether or not for sale for its own account, and the
registration form to be used may be used for the registration of Registrable
Securities, it will each such time give prompt written notice to all holders of
Registrable Securities of its intention to do so and of such holders' rights
under this Section and, upon the written request of any holder of Registrable
Securities given to the Company within 30 days after the Company has given any
such notice (which request shall specify the Registrable Securities intended to
be disposed of by such holder and the in tended method of disposition thereof),
the Company will use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Com-
9
<PAGE> 13
pany has been so requested to register by the holders there of, to the extent
required to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so to be registered,
provided that:
(a) if such registration shall be in connection with the
initial public offering of the Common Stock, the Company shall not
include any Registrable Securities in such proposed registration if
the Board shall have determined, after consultation with the managing
underwriters for such offering, that it is not in the best interests of
the Company to include any Registrable Securities in such
registration, provided that, if the Board makes such a determination,
the Company shall not include in such registration any securities not
being sold for the account of the Company;
(b) if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register such
securities, the Company may, at its election, give written notice of
such determination to each holder of Registrable Securities or other
securities that was previously notified of such registration and, there
upon, shall not register any Registrable Securities in connection with
such registration (but shall nevertheless pay the Registration
Expenses in connection therewith), without prejudice, however, to the
rights of any holder or holders of Registrable Securities to request
that a registration be effected under Section 3.1;
(c) if the Company shall be advised in writing by the managing
underwriters (or, in connection with an offering which is not
underwritten, by an investment banker) (and the Company shall so advise
each holder of Registrable Securities requesting registration of such
advice) that in their or its opinion the number of securities requested
to be included in such registration (whether by the Company, pursuant
to this Section 3.2 or pursuant to any other rights granted by the
Company to a holder or holders of its securities to request or demand
such registration or inclusion of any such securities in any such
registration) exceeds the number of such securities which can be sold
in such offering,
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<PAGE> 14
(i) the Company shall include in such registration the number
(if any) of Registrable Securities so requested to be included which
in the opinion of such underwriters or investment banker, as the case
may be, can be sold and shall not include in such registration any
securities (other than securities being sold by the Company, which
shall have priority in being included in such registration) so
requested to be included other than Registrable Securities unless all
Registrable Securities requested to be so included are included
therein, and
(ii) if in the opinion of such underwriters or investment
banker, as the case may be, some but not all of the Registrable
Securities may be so included, all holders of Registrable Securities
requested to be included therein shall share pro rata in the number of
shares of Registrable Securities included in such public offering on
the basis of the number of Registrable Securities requested to be
included therein by such holders, provided that, in the case of a
registration initially requested or demanded by a holder or holders of
securities other than Registrable Securities, the holders of the
Registrable Securities requested to be included therein and the holders
of such other securities shall share pro rata (based on the number of
shares if the requested or demanded registration is to cover only
Common Stock and, if not based on the proposed offering price of the
total number of securities included in such public offering requested
to be included therein),
and the Company shall so provide in any registration agreement hereinafter
entered into with respect to any of its securities; and
(d) if prior to the effective date of the registration statement filed
in connection with such registration, the Company is informed by the managing
underwriter (or, in connection with an offering which is not underwritten, by
an investment banker) that the price at which such securities are to be sold is
a price below that price which the Requesting Holders shall have indicated to be
acceptable, the Company shall promptly notify the Requesting Holders of such
fact, and each such Requesting Holder shall have the right to
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<PAGE> 15
withdraw its request to have its Registrable Securities
included in such registration statement.
The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
Section 3.2. No registration effected under this Section 3.2 shall relieve the
Company from its obligation to effect registrations upon request under Section
3.1.
3.3. Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 3.1 and 3.2, the
Company will promptly:
(a) subject to clauses (x) and (y) of Section 3.1(b), prepare
and file with the Securities and Exchange Commission a registration
statement with respect to such securities, make all required filings
with the NASD and use best efforts to cause such registration
statement to become effective;
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith and such
other documents as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof set forth in such registration
statement, but in no event for a period of more than six months after
such registration statement becomes effective;
(c) furnish to counsel (if any) selected by the holders of a
majority (by number of shares) of the Registrable Securities covered by
such registration statement copies of all documents proposed to be
filed with the Securities and Exchange Commission in connection with
such registration, which documents will be subject to the review of
such counsel;
(d) furnish to each seller of such securities, without charge,
such number of conformed copies of such registration statement and of
each such amendment and
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<PAGE> 16
supplement thereto (in each case, including all exhibits and documents
filed therewith (other than those filed on a confidential basis),
except that the Company shall not be obligated to furnish any seller of
securities with more than two copies of such exhibits and documents),
such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any summary
prospectus) in conformity with the requirements of the Securities Act,
and such other documents, as such seller may reasonably request in
order to facilitate the disposition of the securities owned by such
seller;
(e) use its best efforts (x) to register or qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller shall
request, (y) to keep such registration or qualification in effect for
so long as such registration statement remains in effect and (z) to do
any and all other acts and things which may be necessary or advisable
to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the
Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified, subject itself to taxation in any jurisdiction
wherein it is not so subject, or take any action which would subject it
to general service of process in any jurisdiction wherein it is not so
subject;
(f) in connection with an underwritten public offering only,
furnish to each seller a signed counterpart, addressed to the sellers,
of
(i) an opinion of counsel for the Company
experienced in securities law matters, dated the
effective date of the registration statement, and
(ii) a "comfort" letter signed by the independent public
accountants who have issued an audit report on the Company's
financial statements included in the registration statement,
subject to such seller having executed and delivered to the
independent public accountants such certificates and documents
as such accountants shall reasonably request and provided that
such accountants shall be permitted by the standards
applicable to certified public accountants to deliver a
"comfort"
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<PAGE> 17
letter to such seller,
covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) and, in
the case of such accountants' letter, with respect to events subsequent
to the date of such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to
the underwriters in underwritten public offerings of securities;
(g)(i) notify each holder of Registrable Securities covered
by such registration statement if such registration statement, at the
time it or any amendment thereto became effective, (x) contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading upon discovery by the Company of such material
misstatement or omission or (y) upon discovery by the Company of the
happening of any event as a result of which the Company believes there
would be such a material misstatement or omission, and, as promptly as
practicable, prepare and file with the Securities and Exchange
Commission a post-effective amendment to such registration statement
and use best efforts to cause such post-effective amendment to become
effective such that such registration statement, as so amended, shall
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) notify each holder of
Registrable Securities covered by such registration statement, at any
time when a prospectus relating thereto is required to be delivered
under the Securities Act, if the prospectus included in such
registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading upon
discovery by the Company of such material misstatement or omission or
upon discovery by the Company of the happening of any event as a result
of which the Company believes there would be a material misstatement or
omission, and, as promptly as is practicable, prepare and furnish to
such holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such
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<PAGE> 18
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(h) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange
Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement of the Company complying
with the provisions of Section 11(a) of the Securities Act and Rule 158
under the Securities Act;
(i) notify each seller of any securities covered by such
registration statement (i) when such registration statement, or any
post-effective amendment to such registration statement, shall have
become effective, or any amendment of or supplement to the prospectus
used in connection therewith shall have been filed, (ii) of any request
by the Securities and Exchange Commission to amend such registration
statement or to amend or supplement such prospectus or for additional
information, (iii) of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of such
registration statement or of any order preventing or suspending the use
of any preliminary prospectus, and (iv) of the suspension of the
qualification of such securities for offering or sale in any
jurisdiction, or of the institution of any proceedings for any of such
purposes;
(j) use its best efforts (i) (A) to list such securities on
any securities exchange on which the Common Stock is then listed or, if
no Common Stock is then listed, on an exchange selected by the Company,
if such listing is then permitted under the rules of such exchange or
(B) if such listing is not practicable or the Board determines that
quotation as a NASDAQ National Market System security is preferable, to
secure designation of such securities as a NASDAQ "national market
system security" within the meaning of Rule 11Aa2-1 under the Exchange
Act and (ii) to provide and cause to be maintained a transfer agent and
registrar for such Registrable Securities not later than the effective
date of such registration statement; and
(k) use every reasonable effort to obtain the lifting of any
stop order that might be issued suspend-
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<PAGE> 19
ing the effectiveness of such registration statement or of any order
preventing or suspending the use of any preliminary prospectus,
provided that if the Company is unable to obtain the lifting of any
such stop order in connection with a registration pursuant to Section
3.1(a), the request for registration shall not be deemed exercised for
purposes of determining whether such registration has been effected for
purposes of Section 3.1(a) or (d).
The Company may require each seller of any securities as to
which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request in writing and as shall be
required by law in connection therewith. Each such holder agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such holder not
materially misleading.
The Company agrees not to file or make any amendment to any
registration statement with respect to any Registrable Securities, or any
amendment of or supplement to the prospectus used in connection therewith, which
refers to any seller of any securities covered thereby by name, or otherwise
identifies such seller as the holder of any securities of the Company, without
the consent of such seller, such consent not to be unreasonably withheld, except
that no such consent shall be required for any disclosure that is required by
law.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company pursuant to Section 3.3(g), such holder will promptly
discontinue such holder's disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such holder
shall have received, in the case of clause (i) of Section 3.3(g), notice from
the Company that such registration statement has been amended, as contemplated
by Section 3.3(g), and, in the case of clause (ii) of Section 3.3(g), copies of
the supplemented or amended prospectus contemplated by Section 3.3(g). If so
directed by the Company, each holder of Registrable Securities will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, in such holder's possession of the prospectus covering such Registrable
Securities at the time of receipt of such notice. In the
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<PAGE> 20
event that the Company shall give any such notice, the period mentioned in
Section 3.3(b) shall be extended by the number of days during the period from
and including the date of the giving of such notice to and including the date
when each seller of any Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 3.3(g).
Although shares of Class B Common Stock and of Class C Common
Stock and shares of Class A Common Stock issued upon the exercise of options are
included in the definition of Registrable Securities, the Company shall, in
respect of any such Registrable Securities requested to be registered pursuant
hereto, be required to include in any registration statement only shares of
Class A Common Stock issuable upon conversion of Class B Common Stock or Class C
Common Stock or upon exercise of such options and only if the Company has
received assurances, reasonably satisfactory to it, that such Class B Common
Stock or Class C Common Stock, as the case may be, will be transferred in
connection with a public offering so as to automatically convert into Class A
Common Stock as provided in the Company's Certificate of Incorporation or such
options will be exercised, as the case may be, promptly after such registration
statement has become effective or the sale to an underwriter has been
consummated so that only Class A Common Stock shall be distributed to the public
under such registration statement.
3.4. Underwritten Offerings. The provisions of this Section
3.4 do not establish additional registration rights but instead set forth
procedures applicable, in addition to those set forth in Sections 3.1 through
3.3, to any registration which is an underwritten offering.
(a) Underwritten Offerings Exclusive. Whenever a registration
requested pursuant to Section 3.1 is for an underwritten offering, only
securities which are to be distributed by the underwriters may be included in
the registration.
(b) Underwriting Agreement. If requested by the underwriters
for any underwritten offering by holders of Registrable Securities pursuant to a
registration requested under Section 3.1(a), the Company shall enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be reasonably satisfactory in substance and form to the holders of a majority
(by number of shares)
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<PAGE> 21
of the Registrable Securities to be covered by such registration and to the
underwriters and to contain such representations and warranties by the Company
and such other terms and provisions as are customarily contained in agreements
of this type, including, but not limited to, indemnities to the effect and to
the extent provided in Section 3.7, provisions for the delivery of officers'
certificates, opinions of counsel and accountants' "comfort" letters and
hold-back arrangements. The holders of Registrable Securities to be distributed
by such underwriters shall be parties to such underwriting agreement and may, at
their option, require that any or all of the representations and warranties by,
and the agreements on the part of, the Company to and for the benefit of such
underwriters be made to and for the benefit of such holders of Registrable
Securities and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement shall also be conditions
precedent to the obligations of such holders of Registrable Securities. In the
event that any condition to the obligations under any such underwriting
agreement are not met or waived, and such failure to be met or waived is not
attributable to the fault of the selling stockholders requesting a demand
registration pursuant to Section 3.1(a), such request for registration shall not
be deemed exercised for purposes of determining whether such registration has
been effected for purposes of Section 3.1(a) or (d). No holder of Registrable
Securities shall be required by the Company to make any representations or
warranties to, or agreements with, the Company or the underwriters other than as
set forth in Sections 3.4(e) and 3.7(b), representations, warranties or
agreements regarding such holder and such holder's intended method of
distribution and any other representations required by applicable law.
(c) Selection of Underwriters. Whenever a registration
requested pursuant to Section 3.1(a) is for an underwritten offering, the
Company will have the right to select the managing underwriters to administer
the offering, which managing underwriters shall be underwriters of nationally
recognized standing. If the Company at any time proposes to register any of its
securities under the Securities Act for sale for its own account and such
securities are to be distributed by or through one or more underwriters, the
Company will have the right to select the managing underwriters to administer
the offering at least one of which shall be an underwriter of nationally
recognized standing.
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<PAGE> 22
(d) Incidental Underwritten Offerings. Subject to the
provisions of the proviso to the first sentence of Section 3.2, if the Company
at any time proposes to register any of its equity securities under the
Securities Act (other than pursuant to Section 3.1 or pursuant to a Special
Registration), whether or not for its own account, and such securities are to
be distributed by or through one or more underwriters, the Company will give
prompt written notice to all holders of Registrable Securities of its intention
to do so and, if requested by any holder of Registrable Securities, will use
its best efforts to arrange for such underwriters to include the Registrable
Securities to be offered and sold by such holder among those to be distributed
by such underwriters. The holders of Registrable Securities to be distributed by
such underwriters shall be parties to the underwriting agreement between the
Company and such underwriters and may, at their option, require that any or all
of the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such holders of Registrable Securities and that any or
all of the conditions precedent to the obligations of the underwriters under
such underwriting agreement shall also be conditions precedent to the
obligations of such holders of Registrable Securities. No such holder of
Registrable Securities shall be required by the Company to make any
representations or warranties to, or agreements with, the Company or the
underwriters other than as set forth in Sections 3.4(e) and 3.7(b),
representations, warranties or agreements regarding such holder and such
holder's intended method of distribution and any other representations required
by applicable law.
(e) Hold Back Agreements. If and whenever the Company proposes
to register any of its equity securities under the Securities Act, whether or
not for its own account (other than pursuant to a Special Registration), or is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 3.1 or 3.2, each holder
of Registrable Securities agrees by acquisition of such Registrable Securities
not to effect (other than pursuant to such registration) any public sale or
distribution, including, but not limited to, any sale pursuant to Rule 144 or
Rule 144A, of any Registrable Securities, any other equity securities of the
Company or any securities convertible into or exchangeable or exercisable for
any equity securities of the Company for 180 days after, and during the 20 days
prior to, the effective date of such registration and the Company
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<PAGE> 23
agrees to cause each holder of any equity security, or of any security
convertible into or exchangeable or exercisable for any equity security, of the
Company purchased from the Company at any time other than in a Public Offering
to enter into a similar agreement with the Company. The Company further agrees
not to effect (other than pursuant to such registration or pursuant to a Special
Registration) any public sale or distribution, or to file any registration
statement (other than such registration or a Special Registration) covering
any, of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the 20 days prior to,
and for 180 days after, the effective date of such registration if required by
the managing underwriter.
3.5. Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement registering
Registrable Securities under the Securities Act, the Company will give the
holders of such Registrable Securities so to be registered and their
underwriters, if any, and their respective counsel and accountants the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Securities and Exchange
Commission, and each amendment thereof or supplement thereto, and will give
each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers and the independent public
accountants who have issued audit reports on its financial statements as shall
be necessary, in the opinion of such holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
3.6. Other Registrations. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 3.1 or 3.2, and if such
registration shall not have been withdrawn or abandoned, the Company shall not
be obligated to and shall not file any registration statement with respect to
any of its securities (including Registrable Securities) under the Securities
Act (other than a Special Registration), whether of its own accord or at the
request or demand of any holder or holders of such securities, until a period of
six months shall have elapsed from the effective date of such previous
registration; and the Company shall so provide in any registration rights
agreement with respect to any of its equity securities.
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<PAGE> 24
3.7. Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any Registrable Securities under the Securities Act pursuant to
Section 3.1 or 3.2, the Company will and hereby does indemnify and hold harmless
each seller of such securities, its directors, officers, and employees, each
other person who participates as an underwriter, broker or dealer in the
offering or sale of such securities and each other person, if any, who controls
such seller or any such participating person within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
and all losses, claims, damages or liabilities, joint or several, to which such
seller or any such director, officer, employee, participating person or
controlling person may become subject under the Securities Act or otherwise
(including, without limitation, the reasonable fees and expenses of legal
counsel incurred in connection with any claim for indemnity hereunder), insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a fact contained in any registration statement under
which such securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein or related
thereto, or any amendment or supplement thereto, or (ii) any omission or
alleged omission to state a fact required to be stated in any such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement or necessary to make the statements therein not
misleading; and the Company will reimburse such seller and each such director,
officer, employee, participating person and controlling person for any legal or
any other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, liability, action or proceeding, provided
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is based upon an
untrue statement or omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such seller or participating person expressly for use in the
preparation thereof and provided, further, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in
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<PAGE> 25
the prospectus, if such untrue statement or alleged untrue statement or omission
or alleged omission is completely corrected in an amendment or supplement to the
prospectus and the seller of Registrable Securities thereafter fails to deliver
such prospectus as so amended or supplemented prior to or concurrently with the
sale of Registrable Securities to the person asserting such loss, claim, damage,
liability or expense after the Company had furnished such seller with a
sufficient number of copies of the same or if the seller received notice from
the Company of the existence of such untrue statement or alleged untrue
statement or omission or alleged omission and the seller continued to dispose of
Registrable Securities prior to the time of the receipt of either (A) an amended
or supplemented prospectus which completely corrected such untrue statement or
omission or (B) a notice from the Company that the use of the existing
prospectus may be resumed. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
director, officer, employee, participating person or controlling person and
shall survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. In the event of any
registration of any Registrable Securities under the Securities Act pursuant to
Section 3.1 or 3.2, each of the prospective sellers of such securities will
indemnify and hold harmless the Company, each director of the Company, each
officer of the Company who shall sign such registration statement, each other
person who participates as an underwriter, broker or dealer in the offering or
sale of such securities and each other person, if any, who controls the Company
or any such participating person within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all losses,
claims, damages or liabilities, joint or several, to which the Company or any
such director, officer, employee, participating person or controlling person may
become subject under the Securities Act or otherwise (including, without
limitation, the reason able fees and expenses of legal counsel incurred in
connection with any claim for indemnity hereunder), insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a fact contained in, or any omission or alleged omission to state a fact with
respect to such seller required to be stated in, any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary pro-
22
<PAGE> 26
spectus contained therein or related thereto, or any amendment or supplement
thereto, if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company by such seller
expressly for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement; and
the seller will reimburse the Company and each such director, officer, employee,
participating person and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding, provided that the liability
of each such seller will be in proportion to and limited to the net amount
received by such seller (after deducting any underwriting discount and expenses)
from the sale of Registrable Securities pursuant to such registration statement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director, officer,
participating person or controlling person and shall survive the transfer of
such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section 3.7,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party hereunder, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified party
to give notice as provided therein shall not relieve the indemnifying party of
its obligations under the preceding paragraphs of this Section 3.7. In case any
such action is brought against an indemnified party, the indemnifying party will
be entitled to participate therein and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof, provided that if such
indemnified party and the indemnifying party reasonably determine, based upon
advice of their respective independent counsel, that a conflict of interest may
exist between the indemnified party and the indemnifying party with respect to
such action and that it is advisable for such indemnified party to be
represented by separate counsel,
23
<PAGE> 27
such indemnified party may retain other counsel, reasonably satisfactory to the
indemnifying party, to represent such indemnified party, and the indemnifying
party shall pay all reasonable fees and expenses of such counsel. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of such indemnified party, which consent shall not be
unreasonably withheld, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding paragraphs of this Section 3.7 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
such Registrable Securities under any Federal or state law or regulation of
governmental authority other than the Securities Act.
(e) Other Remedies. If for any reason the foregoing indemnity
under Section 3.7(a) or (b) is unavailable, or is insufficient to hold harmless
an indemnified party, other than by reason of the exceptions provided therein,
then the indemnifying party and the indemnified party under Section 3.7(a) or
(b) shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and the indemnified party on the other or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, or
provides a lesser sum to the indemnified party than the amount hereinafter
calculated, in such proportion as is appropriate to reflect not only the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other but also the relative benefits received by the indemnifying
party and the indemnified party from the offering of Registrable Securities
(taking into account the portion of the proceeds of the offering realized by
each such party) as well as any other relevant equitable considerations. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Any party's obligation
to contribute pursuant to this Section 3.7(e) is several (in proportion to the
relative value of
24
<PAGE> 28
their Registrable Securities covered by a registration statement) and not joint
with the obligations of any other party. No party shall be liable for
contribution under this Section 3.7(e) except to the extent and under such
circumstances as such party would have been liable to indemnify under this
Section 3.7 if such indemnification were enforceable under applicable law.
(f) Officers and Directors. As used in this Section 3.7, the
terms "officers" and "directors" shall include the partners of the holders of
Registrable Securities which are partnerships.
(g) Indemnification Payments. The indemnification and
contribution required by this Section 3.7 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred;
provided that in the event it is ultimately determined that any amounts so paid
were not subject to indemnification or contribution hereunder, the recipient
thereof shall promptly return such amounts to payor thereof.
4. Participation Rights. So long as any Registrable
Securities remain outstanding and a Public Market has not been established with
respect to the Common Stock, C&D Fund IV hereby agrees not to make any sale or
transfer of Common Stock owned by C&D Fund IV which would constitute a
Qualifying Sale, except pursuant to the following provisions of this Section 4:
(a) Procedures for Qualifying Sales. At least 30 days prior to
making any Qualifying Sale, C&D Fund IV will deliver a written notice (the "Sale
Notice") to the Company and the other holders of Registrable Securities. The
Sale Notice will fully disclose the identity of the prospective transferee and
the terms and conditions of the proposed Qualifying Sale, including the number
of shares of Common Stock that the prospective transferee is willing to purchase
and the intended consummation date of such Qualifying Sale. C&D Fund IV agrees
not to consummate any Qualifying Sale until at least 30 days after the related
Sale Notice has been given to each holder of Registrable Securities, unless C&D
Fund IV shall have received a notice from each holder of Registrable Securities
indicating whether or not such holder has elected to participate in such
Qualifying Sale and the number of shares of Common Stock to be sold by each such
holder so electing to participate has been finally determined pursuant hereto
prior to the expiration of such 30-day
25
<PAGE> 29
period. Each holder of Registrable Securities may elect to participate in the
contemplated Qualifying Sale by giving written notice to C&D Fund IV and the
Company within 30 days after C&D Fund IV has given the related Sale Notice to
such holder. If a holder of Registrable Securities elects to participate, such
holder will be entitled to sell in the contemplated Qualifying Sale, at the same
price and on the same terms and conditions as set forth in the related Sale
Notice, an amount of Registrable Securities equal to the product of (i) the
quotient determined by dividing (A) the percentage of Registrable Securities
then held by such holder of Registrable Securities so electing to participate by
(B) the aggregate percentage of Registrable Securities represented by the
Registrable Securities then held by C&D Fund IV and all holders of Registrable
Securities so electing to participate and (ii) the number of shares of
Registrable Securities such transferee has agreed to purchase in the
contemplated sale (or in the case of a "Qualifying Sale" within the meaning of
clause (ii) of Section 4(b), the Excess Number of shares which such transferee
has agreed to purchase). If such right to participate in a Qualifying Sale shall
not have been exercised prior to the expiration of the 30-day period, then at
any time during the 90 days following the expiration of the 30-day period,
subject to extension for not more than an additional 60 days to the extent
reasonably required to comply with Applicable Laws in connection with such
purchase, C&D Fund IV may sell to the prospective transferee the number of
shares of Common Stock and at the price and on the terms and conditions
indicated in the Sale Notice. Upon receipt of a Sale Notice, the Company will
provide C&D Fund IV with a current list of holders of Registrable Securities and
their addresses.
(b) Qualifying Sale Defined. The term "Qualifying Sale" shall
mean (i) any sale or transfer of Common Stock proposed to be made by C&D Fund IV
at any time after C&D Fund IV has sold or transferred in the aggregate 5% of the
shares of Class A Common Stock acquired by C&D Fund IV in the Distribution
(excluding any sales or transfers by C&D Fund IV to Management Investors and
Individual Investors, the "Qualifying Number") or (ii) in the event that prior
to the sale or transfer by C&D Fund IV of an aggregate of the Qualifying Number
of shares of Class A Common Stock, C&D Fund IV proposes to sell or transfer a
number of shares of Class A Common Stock which when combined with any prior
sales or transfers of such shares by C&D Fund IV exceeds the Qualifying Number,
the sale or transfer of a number of shares (the "Excess Number") equal to the
excess of (A) the sum of any shares previously sold or transferred by a C&D
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<PAGE> 30
Fund IV and the aggregate number of shares proposed to be sold or transferred in
such contemplated sale, over (B) the Qualifying Number of shares. In determining
whether there is a "Qualifying Sale," equitable adjustments shall be made to
reflect any stock split, stock dividend, stock combination, recapitalization or
similar transaction.
(c) Exclusion from Qualifying Sale. The obligation of C&D
Fund IV and the rights of the holders of Registrable Securities pursuant to this
Section 4 will not apply to any sale or transfer by C&D Fund IV pursuant to a
distribution to the public (whether pursuant to a registered Public Offering or
pursuant to Rule 144 or otherwise (but not pursuant to Rule 144A under the
Securities Act or any successor provision)). Any shares referred to, or covered
by any sale, transfer or distribution referred to, in the preceding sentence
shall not be included in the computation of "Qualifying Sale."
5. Investors' Rights to Purchase Additional Capital Stock.
(a) C&D Sale. If at any time after the date of this Agreement
and prior to the establishment of a Public Market with respect to the Common
Stock, the Company shall propose to issue or sell any additional shares of its
capital stock (or any securities that may be exchanged for or converted into
such capital stock) to C&D Fund IV or any Affiliate of C&D Fund IV (a "C&D
Sale"), the Company shall offer to each holder of Registrable Securities that is
an accredited investor (as such term is defined in Rule 501 of Regulation D
under the Securities Act) the right to purchase that number of additional shares
of the Company's capital stock (or such other security), on the same terms and
conditions as the proposed C&D Sale, such that such holder would have the
opportunity to hold the same percentage of shares of the Company's capital stock
(on a fully diluted basis) after giving effect to the C&D Sale, as such holder
held immediately prior thereto (an "Offer"). Notwithstanding the foregoing,
none of the following transactions shall constitute a C&D Sale: the issuance by
the Company of any shares of its capital stock (or any securities that may be
exchanged for or converted into such capital stock) (A) pursuant to the
transactions described in Section 1, (B) in exchange for Class A Common Stock or
(C) upon conversion of Class B Common Stock.
(b) Offer Procedures. The Company shall make an Offer by
delivering to each holder of Registrable Securities
27
<PAGE> 31
at least 30 Business Days' prior written notice of the proposed C&D Sale. Such
notice will identify the class and number of shares or amount of securities to
be issued (the "Offered Securities"), the proposed date of issuance and the
price and other terms of the issuance. Such notice will also include an offer to
sell to each such holder that number of the Offered Securities such that such
holder would have the opportunity to hold the same percentage of shares of the
Company's capital stock (on a fully diluted basis) after giving effect to the
C&D Sale, as such holder held immediately prior thereto (such holder's
"Proportionate Share"), at the same price and on the same other terms as are
proposed for such C&D Sale, which offer by its terms shall remain open for a
period of 15 Business Days from the date of receipt of such notice, provided
that in the event that the Offered Securities are shares of Class B Common
Stock, any holder not required by law to hold non-voting securities of the
Company may purchase such holder's Proportionate Share in shares of Class A
Common Stock. Each such holder shall give notice to the Company of its intention
to accept an Offer prior to the end of the 15-Business Day period of such Offer,
setting forth such portion of the Offered Securities which such holder elects to
purchase. If any holder fails to subscribe for its Proportionate Share of the
Offered Securities, the other subscribing holders shall be entitled to purchase
such Offered Securities as are not subscribed for by such holder in such
proportion of the Offered Securities as they shall have theretofore agreed to
purchase until there are no unmet demands of subscribing holders or all Offered
Securities shall have been subscribed for. The Company shall notify each holder
five Business Days following the expiration of the 15-Business Day period
described above of the amount of Offered Securities which each such holder may
purchase pursuant to the foregoing sentence, and each such holder shall then
have 10 Business Days from the delivery of such notice to indicate such
additional amount, if any, that such holder wishes to purchase. Upon the closing
of the C&D Sale as to which the Company has given notice, such holder shall
purchase from the Company, and the Company shall sell to such holders, the
Offered Securities subscribed for by such holders on the terms specified in the
Offer, which shall be the same terms at which all other persons or entities
acquire such securities in connection with such sale or issuance. In the event
that such holders do not subscribe for all of the Offered Securities, the
Company shall have 30 Business Days from the end of the foregoing 15-Business
Day or 30-Business Day period, whichever is applicable, to sell all or any part
of such Offered Securities as to which such holders have not accepted
28
<PAGE> 32
an Offer to any other persons or entities, in all material respects on terms and
conditions that are no more favorable to such other persons or entities or less
favorable to the Company than those set forth in the Offer. Any Offered
Securities not purchased by such holders or other persons or entities in
accordance with this Section 6 may not be sold or otherwise disposed of by the
Company until they are again offered to such holders under the procedures
specified in this Section 6.
6. Miscellaneous.
6.1. (a) Rule 144. If the Company shall have filed a
registration statement pursuant to Section 12 of the Exchange Act or a
registration statement pursuant to the Securities Act relating to any class of
equity securities (other than a registration statement pursuant to a Special
Registration), the Company covenants that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder (or, if
the Company is not required to file such reports, it will, upon the request of
any holder of Registrable Securities, make publicly available such information
as necessary to permit sales pursuant to Rule 144), and will take such further
action as any holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell shares of
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144, as such rule may be
amended from time to time, or (b) any successor rule or regulation hereafter
adopted by the Securities and Exchange Commission.
(b) Legend on Stock Certificates. In addition to such other
legends as may be required by the Company's Certificate of Incorporation or any
Stock Subscription Agreement pursuant to which Registrable Securities are
issued, each certificate or certificates representing Registrable Securities
shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ENTITLED TO
THE BENEFITS OF AND ARE BOUND BY THE OBLIGATIONS SET FORTH IN
A REGISTRATION AND PARTICIPATION AGREEMENT, DATED AS OF
AUGUST 31, 1996, AND ANY AMENDMENTS, SUPPLEMENTS OR
MODIFICATIONS THERETO, AMONG THE COMPANY AND CERTAIN STOCK
HOLDERS OF THE COMPANY AND NEITHER THIS CERTIFICATE NOR THE
SHARES REPRESENTED BY IT ARE
29
<PAGE> 33
ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN ACCORDANCE WITH
THE PROVISIONS OF SUCH REGISTRATION AND PARTICIPATION
AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
HOLDBACK PROVISIONS CONTAINED IN SECTION 3.4 OF THE
REGISTRATION AND PARTICIPATION AGREEMENT AND IN THE COMPANY'S
CERTIFICATE OF INCORPORATION, WHICH PROVISIONS PROHIBIT ANY
TRANSFER OF SUCH SHARES DURING THE 20 DAYS PRIOR TO AND THE
180 DAYS AFTER THE EFFECTIVE DATE OF ANY REGISTRATION
STATEMENT (SUBJECT TO CERTAIN LIMITED EXCEPTIONS) FILED BY THE
COMPANY FOR ANY OF THE SHARES OF THE COMPANY, WITHOUT REGARD
TO THE APPLICABILITY OF RULE 144 OR RULE 144A UNDER THE
SECURITIES ACT."
The Company agrees that it will not issue new certificates for shares formerly
representing Registrable Securities without a legend unless such shares have
been sold to the public pursuant to an effective registration statement under
the Securities Act or Rule 144.
6.2. Amendments and Waivers. This Agreement may be amended,
and the Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, only if the Company shall have
obtained the written consent to such amendment, action or omission to act, of
the holder or holders of at least a majority of the shares of Registrable
Securities. Each holder of any Registrable Securities at the time or thereafter
outstanding shall be bound by any consent authorized by this Section 6.2,
whether or not such Registrable Securities shall have been marked to indicate
such consent.
6.3. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election and unless notice is otherwise
given to the Company by the record owner, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
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<PAGE> 34
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
6.4. Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of, or are binding upon the parties hereto other than the Company
shall also be for the benefit of, binding upon and enforceable by any subsequent
holder of any Registrable Securities, subject to the provisions respecting the
minimum numbers or percentages of shares of Registrable Securities required in
order to be entitled to certain rights, or to take certain actions, contained
herein.
6.5. Notices. All notices, requests, demands or other communications
provided for hereunder shall be in writing and shall be deemed to have been duly
given to any party (a) when delivered personally (by courier service or
otherwise), (b) when delivered by telex and confirmed by receipt of the proper
telex answerback, (c) five days after being mailed by first class mail, postage
prepaid (registered or certified mail, return receipt requested), (d) when
receipt acknowledged, if telecopied, or (e) the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery, in each case to the applicable address set forth beneath its name on
the schedules hereto, or to such other address as such party may have designated
to the Company in writing, or if to any other holder of Registrable Securities
at the address of such holder in the stock record books of the Company, and if
to the Company or C&D Fund IV to the following addresses:
(i) if to the Company, to:
MCM Group, Inc.
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: President
(ii) if to C&D Fund IV, to:
The Clayton & Dubilier Private Equity
Fund IV Limited Partnership
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<PAGE> 35
270 Greenwich Avenue
Greenwich, Connecticut 06830
Attention: Clayton & Dubilier Associates IV
Limited Partnership
Attention: Joseph L. Rice, III
or at such other address or addresses as the Company or C&D Fund IV, as the case
may be, may have designated in writing to each holder of Registrable Securities
at the time outstanding. Copies of any notice or other communication given under
the Agreement shall also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Facsimile: (212) 407-5252
Telephone: (212) 407-5200
Attention: Alberto Cribiore
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Facsimile: (212) 909-6836
Telephone: (212) 909-6000
Attention: Franci J. Blassberg, Esq.
Any party may give any notice or other communication in connection herewith
using any other means (including, but not limited to, personal delivery,
messenger service, facsimile, telex or ordinary mail), but no such notice or
other communication shall be deemed to have been duly given unless and until it
is actually received by the individual for whom it is intended.
6.6. No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with the
rights granted to the holders of Registrable Securities by this Agreement.
6.7. Remedies; Attorneys' Fees. Each holder of Registrable Securities,
in addition to being entitled to exercise all rights provided herein or granted
by law, including recovery of damages, will be entitled to specific performance
of its rights under this Agreement. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any provision of this Agreement and hereby agrees to waive the defense
in any
32
<PAGE> 36
action for specific performance that a remedy at law would be adequate. In any
action or proceeding brought to enforce any provision of this Agreement, the
successful party shall be entitled to recover reasonable attorneys' fees in
addition to its costs and expenses and other available remedy.
6.8. Stock Splits, etc. Each party hereto agrees that it will vote to
effect a stock split (forward or reverse, as the case may be) with respect to
any Registrable Securities in connection with any registration of such
Registrable Securities hereunder, or otherwise, if the managing underwriter
shall advise the Company in writing (or, in connection with an offering that is
not underwritten, if an investment banker shall advise the Company in writing)
that in their or its opinion such a stock split would facilitate or increase the
likelihood of success of the offering. Each party hereto agrees that any number
of shares of Common Stock referred to in this Agreement shall be equitably
adjusted to reflect any stock split, stock dividend, stock combination,
recapitalization or similar transaction.
6.9. Term. This Agreement shall be effective as of the date hereof and
shall continue in effect thereafter until the earliest of (a) its termination by
the consent of the parties hereto or their respective successors in interest,
(b) the date on which no Registrable Securities remain outstanding and (c) the
dissolution, liquidation or winding up of the Company.
6.10. Severability. If any provision of this Agreement is inoperative
or unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever. The
invalidity of any one or more phrases, sentences, clauses, Sections or sub-
sections of this Agreement shall not affect the remaining portions of this
Agreement.
6.11. Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
6.12. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
together constitute one and the same instrument.
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<PAGE> 37
6.13. Governing Law. This Agreement shall be governed in all respects,
including, but not limited to, as to validity, interpretation and effect, by the
internal laws of the State of New York without regard to principles of
conflicts of law.
6.14. No Third Party Beneficiaries. Except as provided in Sections
1(g), 3.7 and 6.4, nothing in this Agreement shall confer any rights upon any
Person other than the parties hereto and each such party's respective heirs,
successors and permitted assigns.
6.15. Consent to Jurisdiction. Each party irrevocably submits to the
exclusive jurisdiction of (a) the Supreme Court of the State of New York, New
York County, and (b) the United States District Court for the Southern District
of New York, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby (and agrees not to
commence any such suit, action or proceeding except in such courts). Each party
further agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth above shall be
effective service of process for any such suit, action or proceeding. Each party
irrevocably and unconditionally waives any objection to the laying of venue of
any such suit, action or proceeding in (i) the Supreme Court of the State of New
York, New York County, and (ii) the United States District Court for the
Southern District of New York, that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.
6.16. Waiver of Jury Trial. Each party hereby waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in
respect of any suit, action or proceeding arising out of this Agreement or any
transaction contemplated hereby. Each party (a) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of litigation, seek
to enforce the foregoing waiver and (b) acknowledges that it and the other
parties have been induced to enter into the Agreement by, among other things,
the mutual waivers and certifications in this Section 6.16.
6.17. Entire Agreement. This Agreement constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
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<PAGE> 38
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
MCM GROUP, INC.
By: /s/ David Nixon
----------------------------------------
Name: David Nixon
Title: President and Chief Executive
Officer
THE CLAYTON & DUBILIER PRIVATE
EQUITY FUND IV LIMITED PARTNERSHIP
By: Clayton & Dubilier Associates IV
Limited Partnership,
the general partner
By: /s/ Alberto Cribiore
----------------------------------------
a General Partner
THE PARTIES NAMED
ON SCHEDULE A HERETO
By:
----------------------------------------
Name:
Title: Attorney-in-Fact
35
<PAGE> 39
SCHEDULE A
INVESTORS
Robert C. Acri
Laurence J. Althoff
B. Robert Baker
James H. Behrmann
Patricia A. Bettlach
Carol S. Biegel
Ellis S. Bigelow
Stephen L. Boyd
James J. Boyne
Robert E. Broman
Elizabeth Brown
Linda M. Brown
Timothy K. Brown
William N. Brown
William F. Burke
Thomas M. Byron
Glenn M. Cackovic
Joseph Caggiano
Richard B. Callaghan
Max C. Chapman, Jr.
Richard J. Charlino
Jeanne M. Cliff
Eleanor M. Cloud
Dominick Cogliandro
Michael R. Colston
Malcolm A. Cook
Thomas R. Cooper
Suzanne Cummings
C&D Fund IV
Nicholas Dalmaso
Michael C. Delaney
Gary DeMoss
Bonnie L. DeNardo
Thomas Dercks
Susan M. Desanto
Howard A. Doss
John E. Doyle
John R. Dragstrem
Christine J. Drusch
Judith R. Duncan
<PAGE> 40
Jerome M. Dybzinski
Edward D. Jones & Co.
Charles E. Fisher
James S. Fosdick
William J. Fow
Charles D. Friday
Robert J. Froehlich
Keith K. Furlong
Nori L. Gabert
Douglas B. Gehrman
Erich P. Gerth
Richard A. Gilleland
James A. Gilligan
Mark J. Giura
Wayne D. Godlin
Roy W. Haley
John A. Hanhauser
Eric J. Hargens
Evan G. Harrel
Mark Harris
Peter M. Harvey
Peter W. Hegel
Donald P. Henczel
Robert J. Hickey
Steven M. Hill
Susan J. Hill
Mark Hoffman
Larry H. Holswade
Richard D. Humphrey
Kim M. Izzarelli
Jerald C. Jackson
Lowell M. Jackson
David C. Johnson
Denise Johnson
Michael P. Kamradt
John Keim
Lawrence Kiefer
Dana R. Klein
Ann Marie Klingenhagen
Frederick R. Kohly
David R. Kowalski
Kevin L. Kubik
<PAGE> 41
Thomas F. Lanio
S. William Lehew, III
Gary M. Lewis
Anne K. Lorsung
edward F. Lynch
Walter Lynn
Jeffrey W. Maillet
Mary Jayne Byrne Maly
Anastasia A. Mancuso
Michele L. Manley
Marvin L. Mann
Kevin S. Marsh
Dominic Martellaro
Scott E. Martin
Carl E. Mayfield
John M. McCareins
Mark R. McClure
Dennis J. McDonnell
Mark T. McGannon
Ruth L. McKeel
William D. McLaughlin
Gordon McMahon
Joanne T. Merrick
james A. Miller
Jay A. Miller
Charles G. Millington
Thomas L. Millner
John R. Mills
Bradley Mincke
Mary Jane V. Minier
William R. Molinari
Charles Monroe
Curt W. Morell
Robert F. Muller
Theodore V. Mundy
Jeff D. New
Debra A. Nichols
Ronald A. Nyberg
Daniel J. O'Keefe
Marvin J. Pace
David B. Partain
Robert Peck, Jr.
<PAGE> 42
James D. Phillips
Joseph A. Piraro
Don G. Powell
Trust for Jeffrey John Powell
Trust for Michael Scott Powell
Ronald E. Pratt
Craig S. Prichard
Bill C. Provenzano
Walter E. Rein
John R. Reynoldson
John T. Rogers
Michael W. Rohr
James B. Ross
Franklin Ruben
James J. Ryan
William R. Rybak
Heather F. Sabo
Alan T. Sachtleben
Charles D. Scavone
Andrew Scherer
Ronnie J. Schuster
Tamara Scott
Tadd C. Seitz
Frederick Shepherd
Barnet Sherman
John Shields
Janice C. Sibley
Thomas J. Slefinger
Mary K. Soetaert
Grant H. Sperry
Walter W. Stabell, III
Darren D. Stabler
Michael L. Stallard
Christopher J. Staniforth
William C. Strafford
John L. Sullivan
David M. Swanson
James C. Taylor
John F. Tierney
Travelers Indemnity Co.
Edward A. Treichel
David R. Troth
Eric K. Tutterow
Curtis L. Ulvestad
Jeffrey A. Urbina
Andrew S. Veasey
David Walker
F. Blake Wallace
Sandra A. Waterworth
Kathleen A. Wennerstrum
William A. Westrate
Robert S. West
Steven T. West
Weston B. Wetherell
Kirk D. Wiggins
Melinda Wilhelm
Paul R. Wolkenberg
Edward C. Wood, III
James R. Yount
Patrick Zacchea
Lea S. Zeitman
John H. Zimmerman, Jr.
<PAGE> 1
EXHIBIT 10.9
INTERIM SERVICES AGREEMENT
INTERIM SERVICES AGREEMENT, dated as of August 31, 1996 (the
"Agreement"), among VK/AC Holding, Inc., a Delaware corporation ("VK/AC
Holding"), Van Kampen American Capital, Inc., a Delaware corporation and wholly
owned subsidiary of VK/AC Holding ("VKAC"), MCM Group, Inc., a Delaware
corporation ("MGI"), and McCarthy Crisanti & Maffei, Inc., a New York
corporation and wholly owned subsidiary of MGI ("MCM").
W I T N E S S E T H:
WHEREAS, the Board of Directors of VK/AC Holding has authorized VK/AC
Holding to effect a spin-off of MGI, a company formed to hold all of the
outstanding stock of MCM, to VK/AC Holding's common stockholders in proportion
to their respective holdings of VK/AC Holding common stock;
WHEREAS, the parties desire to enter into an agreement to continue the
provision of certain services on an interim basis by VK/AC Holding and VKAC
(herein referred to as the "Services Providers") and their subsidiaries to MGI,
MCM and their subsidiaries, McCarthy, Crisanti & Maffei, S.A., a French company,
MCM Asia Pacific Company Limited, a Japanese company, and McCarthy, Crisanti &
Maffei (Europe) Ltd., a U.K. company (collectively, the "Subsidiaries");
NOW, THEREFORE, in consideration of the foregoing premises, and for
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Services. Subject to the terms and conditions set forth in this
Agreement, the Services Providers shall, and shall cause their subsidiaries to,
provide to MGI, MCM and the Subsidiaries each of the services set forth on
Schedule A hereto (each a "Service" and collectively, the "Services") for the
period beginning on the date hereof and ending, (i) with respect to all of the
Services, on the effective date of a notice of termination delivered by the
Services Providers pursuant to Section 2(a) hereof and (ii) with respect to each
Service, on the effective date of a notice of withdrawal delivered by MGI and
MCM pursuant to Section 2(b) hereof. The Services shall be provided at a level
of quality and performance consistent with the provision of such Services by the
Services Providers and their affiliates during the twelve-month period preceding
the date hereof.
2. Term. (a) The Services Providers shall have the right to terminate
their obligation under Section 1 hereof upon one year's advance written notice
to MGI and MCM. After the effective date of such termination, the Services
Providers shall have no further obligation pursuant to this Agreement to provide
the Services to MGI, MCM or any of their Subsidiaries, and MGI and MCM shall
have no further
<PAGE> 2
obligation to pay any fees (other than accrued fees) for Services after such
date. Notwithstanding the foregoing, the Service listed as Item 4 on Schedule A
hereto (i.e, human resources services, including benefits management and the
continuation of the inclusion in the 401-k, medical, dental and other group
benefit plans of VK/AC of employees of the Company who are eligible as of August
31, 1996 to participate in such plans) shall terminate without further action
hereunder on the earlier to occur of (i) the closing of the transactions
contemplated by the Agreement and Plan of Merger, dated as of June 21, 1996 (the
"Merger Agreement"), among VK/AC Holding, Morgan Stanley Group, Inc., MSAM
Holdings II, Inc. and MSAM Acquisition Inc. and (ii) December 31, 1996.
(b) MGI and MCM shall have the right to terminate or withdraw
from the use of any or all of the Services upon thirty (30) days' advance
written notice to the Services Providers. Upon the effective date of any such
termination or withdrawal from the use of any of the Services, the Services
Providers shall have no further obligation pursuant to this Agreement to provide
such Service to MGI, MCM or any of their Subsidiaries, and MGI and MCM shall
have no further obligation to pay any fees (other than accrued fees) for such
discontinued Service after such date.
3. Fees for Services; Expenses.
(a) MGI and MCM, jointly and severally, agree to pay to the
Services Providers the fees set forth in Schedule A with respect to each
Service. The parties acknowledge that the fees set forth in Schedule A hereto
include the Services Providers' overhead expenses attributable to the provision
of the Services.
(b) MGI and MCM, jointly and severally, agree to reimburse
the Services Providers for such reasonable out-of-pocket expenses as may be
incurred by the Services Providers and their employees and reasonably approved
of in advance in writing by MCM in the course or on account of rendering of any
Services hereunder.
4. Invoicing and Payment. VKAC, on behalf of the Services Providers,
shall submit to MCM on a monthly basis an invoice for the Services rendered to
MGI, MCM and their Subsidiaries and, subject to Section 3(b), any related
out-of-pocket expenses during the preceding month in accordance with Section 3
hereof. MCM shall pay such amounts due within fifteen (15) days of receipt of
such invoice in accordance with the payment instructions specified therein or,
if no instructions are so specified, in accordance with the standing payment
instructions in effect from time to time between VKAC and MCM.
5. Indemnification. MGI and MCM, jointly and severally, shall indemnify
and hold harmless each of the Services Providers and its affiliates and their
respective officers, directors, employees, shareholders, controlling persons,
agents, affiliated persons, representatives, advisors, successors and assigns
(each an "Indemnitee" and, collectively, the "Indemnitees") from and against any
and all losses, liabilities, obligations, claims, damages, costs and expenses
(including attorneys' fees and disbursements) to which any such Indemnitee may
become subject arising out of the provision by the Services Providers or their
affiliates to MGI, MCM and their Subsidiaries of the Services, except to the
extent that such losses, liabilities, obligations, claims, damages, costs and
expenses arise out of the willful misfeasance, bad faith or gross negligence of
any such Indemnitee.
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<PAGE> 3
6. Limitation of Liability. In providing Services hereunder, neither
the Services Providers and their affiliates nor any of their respective
officers, directors, employees, shareholders, controlling persons, agents,
affiliated persons, representatives, advisors, successors or assigns shall be
liable to MGI, MCM or their Subsidiaries for any loss incurred by MGI, MCM or
their Subsidiaries in connection with the provision of Services hereunder or any
other matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of any of the
Services Providers and their affiliates.
7. No Warranties; Limitation of Remedy. THE SERVICES PROVIDERS MAKE NO
WARRANTIES AS TO THE MERCHANTABILITY OR FITNESS FOR MGI'S, MCM'S, THEIR
SUBSIDIARIES' OR ANY OTHER PARTY'S PURPOSE OF ANY EQUIPMENT, MATERIALS OR DATA
PROVIDED HEREUNDER. The exclusive remedy of MGI, MCM or any of their
Subsidiaries for any loss, damage or expense that any of them may incur as a
result of errors or defects in performance by the Services Providers or their
affiliates or which otherwise relates to the provision of Services hereunder,
whether based upon negligence, contract, tort, warranty or otherwise, shall be:
(a) in the case of errors or defects in performance, the furnishing by the
Services Providers or their affiliates, free of charge, of the services of the
Services Providers' or their affiliates' personnel (including machine time), in
units of time equivalent to those for which there was an applicable default by a
Service Provider or an affiliate, and (b) in all other cases (including loss of
or damage to data or programs), general money damages in an amount not to exceed
the average monthly amount previously billed hereunder to MGI and MCM for such
Services, for which the Services Providers shall be jointly and severally
liable. In no event shall either Services Provider or any of its affiliates be
liable for lost profits or claims by MGI, MCM or any Subsidiary or any other
party or for any special, consequential, punitive or exemplary damages.
8. Force Majeure. Neither the Services Providers nor any of their
subsidiaries or affiliates shall be liable for failure to provide the Services
if such failure is due to causes beyond their reasonable control.
9. Further Assurances. Each of the parties will make, execute,
acknowledge and deliver such other instruments and documents, and take all such
other actions, as any other party may reasonably request, or as may reasonably
be required, in order to effectuate the purposes of this Agreement and to carry
out the terms hereof.
10. Amendment and Waiver. Except as otherwise provided herein, this
Agreement and any term or provision hereof may be amended, modified or waived
only by a written instrument executed by the parties hereto.
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<PAGE> 4
11. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
hereto.
12. Independent Contractor. Each of the Services Providers and its
affiliates is an independent contractor and, during the term hereof, the
relationship between the Services Providers and their affiliates, on the one
hand, and MGI, MCM and their Subsidiaries, on the other hand, is that of vendor
and vendee. Neither of such parties (nor its agents or employees) shall under
any circumstances be deemed agents, partners, joint venturers or representatives
of the other. Neither of such parties shall have the right to bind the other
party in any respect except as expressly provided herein.
13. Notices. All communications hereunder shall be in writing,
delivered in person, by first-class mail (postage prepaid) or facsimile, and
addressed as follows:
(a) if to the Services Providers,
VK/AC Holding, Inc.
Van Kampen American Capital, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Telecopy: (708) 684-6155
Telephone: (708) 684-6097
Attention: William R. Rybak
with a copy to:
VK/AC Holding, Inc.
Van Kampen American Capital, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Telecopy: (708) 684-6155
Telephone: (708) 684-6363
Attention: Ronald A. Nyberg
(b) if to MGI and MCM,
MCM Group, Inc.
McCarthy Crisanti & Maffei, Inc.
One Chase Manhattan Plaza
37th Floor
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<PAGE> 5
New York, New York 10005
Telecopy: (212) 908-4345
Telephone: (212) 908-4320
Attention: David D. Nixon
with a copy to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
18th Floor
New York, New York 10152
Telecopy: (212) 407-5252
Telephone: (212) 407-5231
Attention: Alberto Cribiore
or to such other address as any party hereto shall have designated by notice in
writing to the other parties.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after having been deposited in the mail, postage prepaid, if mailed; and
when receipt is acknowledged, if telecopied.
14. Miscellaneous. The headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning,
construction or interpretation of this Agreement. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, and all
of which together shall constitute one and the same instrument. THIS AGREEMENT
IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OR RULES THEREOF).
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<PAGE> 6
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
VK/AC HOLDING, INC.
By /s/ Ronald A. Nyberg
--------------------------------
Name: Ronald A. Nyberg
Title: Executive Vice President
VAN KAMPEN AMERICAN CAPITAL, INC.
By /s/ Ronald A. Nyberg
--------------------------------
Name: Ronald A. Nyberg
Title: Executive Vice President
MCM GROUP, INC.
By /s/ David Nixon
--------------------------------
Name: David Nixon
Title: President and Chief Executive
Officer
McCARTHY CRISANTI & MAFFEI, INC.
By /s/ David Nixon
--------------------------------
Name: David Nixon
Title: President and Chief Executive
Officer
<PAGE> 7
Exhibit 10.9
Schedule A
Services
1. General management services, including building management, furniture
and equipment maintenance, insurance, mail and delivery services,
travel services, purchasing, rental and lease arrangements and
supplies:
Fees: $2,000 per month
2. Executive management services, including executive advisory services
provided by senior management of the Services Providers:
Fees: $3,000 per month
3. Financial and accounting services, including all treasury and cash
management functions, accounts payable, commission accounting,
financial statement preparation, management reporting, regulatory
reporting and filings, tax planning and advice (but not including any
income tax return preparation, except as hereinafter provided), and
the preparation of pro forma tax returns and the related schedules for
MGI, MCM and their subsidiaries with respect to VK/AC's or its
affiliates' consolidated, combined or unitary income tax returns for
the period beginning January 1, 1996 and ending August 31, 1996:
Fees: $8,000 per month
4. Human resources services, including benefits management and the
continuation of the inclusion in the 401-k, medical, dental and other
group benefit plans of VK/AC of employees of the Company who are
eligible as of August 31, 1996 to participate in such plans:
Fees: $1,500 per month
5. Payroll processing services:
Fees: $500 per month
<PAGE> 1
EXHIBIT 10.10
TAX SHARING AGREEMENT
TAX SHARING AGREEMENT, dated as of August 31, 1996, by and among VK/AC
Holding, Inc., a Delaware corporation ("VK/AC"), MCM Group, Inc., a Delaware
corporation ("MGI"), and McCarthy, Crisanti & Maffei, Inc., a New York
corporation and a subsidiary of MGI ("MCM").
WHEREAS, from February 17, 1993 through December 20, 1994, MCM was a
wholly-owned subsidiary of Van Kampen American Capital, Inc., a wholly-owned
subsidiary of VK/AC formerly named The Van Kampen Merritt Companies, Inc. ("Van
Kampen");
WHEREAS, from December 21, 1994 through the date hereof MCM was a
wholly-owned subsidiary of VK/AC;
WHEREAS, on August 22, 1996 VK/AC contributed all of the outstanding
shares of capital stock of MCM to MGI in exchange for 330,000 shares of the
capital stock of MGI, constituting at that time all of the outstanding shares of
the capital stock of MGI;
WHEREAS, pursuant to certain resolutions adopted by the Board of
Directors of VK/AC, all of the outstanding shares of the capital stock of MGI
were distributed on the date hereof to the VK/AC common shareholders of record
as of August 22, 1996, all as set out in the Information Statement relating to
such distribution dated the date hereof (such distribution, the "Spin-Off");
WHEREAS, prior to the date hereof, there have existed certain
tax-sharing arrangements between MCM, VK/AC and Van Kampen, pursuant to certain
resolutions of their respective Boards of Directors;
WHEREAS, it is a condition to the obligations of Morgan Stanley Group
Inc., MSAM Holdings II, Inc. and MSAM Acquisition Inc. to effect the merger and
consummate the other transactions contemplated by the Agreement and Plan of
Merger, dated as of June 21, 1996, among VK/AC and such persons that a tax
sharing agreement reasonably satisfactory to MSAM Acquisition Inc. shall have
been entered into by MCM; and
WHEREAS, VK/AC, MGI and MCM wish to set forth their agreement with
respect to certain tax matters as set forth below;
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<PAGE> 2
NOW THEREFORE, in consideration of the promises and the mutual covenants and
agreements set forth herein, the parties hereby agree as follows:
1. Definitions. The following terms as used herein have the following
meanings:
"Affiliate": of any Person means any other Person that, directly or
indirectly through one or more intermediaries, Controls, is Controlled by or is
under common Control with the first Person, including but not limited to a
Subsidiary of the first Person, a Person of which the first Person is a
Subsidiary, or another Subsidiary of a Person of which the first Person is also
a Subsidiary.
"Agreement": this Tax Sharing Agreement.
"Code": the Internal Revenue Code of 1986, as amended.
"Combined Income Taxes": any Income Taxes with respect to which MGI or
any of its Subsidiaries has filed or is required to file a Return with a member
of any VK/AC Group on a consolidated, combined, or unitary basis.
"Control": the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a Person, whether
through the ownership of securities, by contract or otherwise.
"Income Tax": any federal, state, local, provincial, foreign or other
income, alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits or other
similar tax, duty or other governmental charge or assessment or deficiencies
thereof (including but not limited to all interest and penalties thereon and
additions thereto).
"Indemnified Party": as defined in Section 9.3.
"Indemnifying Party": as defined in Section 9.3.
"Losses": as defined in Section 9.1.
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<PAGE> 3
"MCM Indemnitees": as defined in Section 9.1.
"Non-Company Affiliate": any Affiliate of VK/AC other than MGI and its
Subsidiaries.
"Person": any natural person, firm, partner ship, joint venture,
association, corporation, company, trust, business trust, governmental authority
or other entity.
"Return": any return, report, declaration, form, claim for refund or
information statement relating to Income Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Spin-Off": as defined in the Recitals to this Agreement.
"Stand Alone Tax Amount": as defined in Section 2.2(a).
"Subsidiary": of any Person means any other Person in which the first
Person owns or controls, directly or indirectly, capital stock or other equity
interests representing more than 50% of the outstanding voting power (including
but not limited to the ability to elect a majority of the board of directors or
other body performing similar functions for such other Person) or more than 50%
of the equity interests in such other Person.
"Tax Dispute Accountants": as defined in Section 7.
"Tax Dispute Resolution Mechanism": as defined in Section 7.
"Taxing Authority": any governmental authority responsible for any
Income Tax.
"VK/AC Group": with respect to Income Taxes, any consolidated,
combined, or unitary group of Persons of which VK/AC or any Non-Company
Affiliate (or any predecessor thereof or successor thereto) is a member.
"VK/AC Indemnitees": as defined in Section 9.2.
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<PAGE> 4
2. Termination of Existing Tax Sharing Arrangements; Tax Sharing
Payments.
2.1 Tax Sharing Arrangements. On the date of the Spin-Off, all existing
tax sharing agreements and arrangements between MGI or any of its Subsidiaries,
on the one side, and VK/AC or any Non-Company Affiliate, on the other side,
shall be terminated, and no additional payments shall be made thereunder. After
the Spin-Off, neither MGI, any of its Subsidiaries, VK/AC nor any Non-Company
Affiliate shall have any further rights or liabilities under any such agreements
or arrangements for any taxable year (whether the current year, a future year,
or a past year).
2.2 Tax Sharing Payments. The provisions of this Section 2.2 shall
become effective upon the Spin-Off:
(a) With respect to all Combined Income Taxes relating to MGI or any of
its Subsidiaries for any period (or a portion thereof) beginning on or after
February 17, 1993 and ending prior to or on the date of the Spin-Off, such
Income Taxes shall be computed as if none of MGI or any of its Subsidiaries had
been included in any consolidated, combined or unitary Return with any member of
any VK/AC Group, and as if, instead, MGI and its Subsidiaries had filed their
Returns relating to such Income Taxes on a stand alone basis, and MGI shall pay
to VK/AC the amount of the Income Taxes covered by such pro forma Returns (in
installments, if provided with respect to such Combined Income Taxes by the
applicable Taxing Authorities), as so computed, as provided for in Section
2.2(d), based upon the applicable items of income, gain, loss, deduction and
credit as reflected on such pro forma Returns relating to MGI and its
Subsidiaries (the "Stand Alone Tax Amount"), on each date after the date of the
Spin-Off on which VK/AC is required to make payment in respect of such Combined
Income Taxes (or, if applicable, an installment thereof) to the applicable
Taxing Authorities if MGI and its Subsidiaries had filed their Returns on a
stand alone basis. If MGI and its Subsidiaries have made payments (whether
offsets through accounting entry, the settlement of intercompany accounts or
actual payments) to VK/AC or to any Non-Company Affiliate in a manner consistent
with past practice or payments to any Taxing Authorities in respect of such
Combined Income Taxes that exceed the amount of such Stand Alone Tax Amount, as
so computed, VK/AC shall pay to MGI an amount equal to such excess on each date
hereafter on which Returns relating to such Combined Income Taxes are filed with
the applicable Taxing Authorities. In the case of each Return for the 1995
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<PAGE> 5
taxable year, final payments shall be made by MGI or VK/AC, as the case may be,
on the date that is 60 days after VK/AC shall have delivered to MGI a draft of
the pro forma Return relating to such Return.
(b) For the purposes of this Section 2.2, (i) credit against payments
required to be made after the date of the Spin-Off shall be given for amounts
paid by or on behalf of MGI or any of its Subsidiaries (whether through
accounting entry, the settlement of intercompany accounts or actual payments) to
VK/AC, to any Non-Company Affiliate in a manner consistent with past practice or
to any Taxing Authority on or prior to the date of the Spin-Off to the extent
such amounts are in respect of such Combined Income Taxes that are due after the
date of the Spin-Off, (ii) each Stand Alone Tax Amount shall be computed
consistent with past practices of VK/AC, Van Kampen and MCM in a manner
consistent with paragraph 40 of Statement of Financial Accounting Standards No.
109, and as if MGI or MCM, as the case may be, and each of its relevant
Subsidiaries had filed a consolidated, combined or unitary Return as a separate
affiliated group to the extent that filing in such manner would have been
allowed by the applicable Taxing Authorities if neither VK/AC nor any
Non-Company Affiliate had owned any of the stock of MGI or MCM, (iii) such Stand
Alone Tax Amount shall not include any amounts of Income Tax arising solely from
MGI's, MCM's or any of their Subsidiaries' ceasing, as a result of the Spin-Off,
to be a member of any VK/AC Group, including, without limitation, the
restoration of income or gain on any deferred intercompany transaction and the
inclusion in income of any excess loss account, and (iv) the obligation to make
any payment under this Section 2.2 shall be based solely on the pro forma
Returns provided for in Section 2.2(d). Any disagreement between VK/AC and MGI
or MCM as to the determination of such Stand Alone Tax Amount shall be resolved
pursuant to the Tax Dispute Resolution Mechanism.
(c) In addition to the Stand Alone Tax Amount, MGI shall pay to VK/AC
the amount by which the sum of the amounts determined under clauses (i) and (ii)
of this Section 2.2(c) exceeds $500,000:
(i) any amount of Income Tax arising solely from MGI's, MCM's or any of
their Subsidiaries' ceasing, as a result of the Spin-Off, to be a member of any
VK/AC Group (including, without limitation, the restoration of income or gain on
any deferred intercompany transaction and the inclusion in income of any excess
loss account) to the extent
5
<PAGE> 6
that such amount of Income Tax would have been included in the Stand Alone Tax
Amount but for clause (iii) of Section 2.2(b); and
(ii) any increase in the Stand Alone Tax Amount reflected on revised
pro forma Returns relating to MGI and its Subsidiaries, computed as provided in
Section 2.2(d), arising as a result of an amendment of any Return for any period
(or a portion thereof) beginning on or after February 17, 1993 and ending prior
to or on the date of the Spin-Off or any adjustment of the amount of tax
liability reflected in such Return.
No amount shall be included twice in determining the amount of payment
under this Section 2.2 under any circumstance. Any payment pursuant to this
Section 2.2(c) shall be made no later than 30 days after MGI's receipt from
VK/AC of revised pro forma Returns pursuant to Section 2.2(d).
(d) For the purposes of this Section 2.2, VK/AC shall (or shall cause
the Non-Company Affiliates to) deliver to MGI (i) a draft of each pro forma
Return relating to MGI and its Subsidiaries for any period (or a portion
thereof) for which a Return in respect of Combined Income Taxes has not been
filed (provided that items attributable to MGI or any of its Subsidiaries are
included in such Return) no later than the date that is 60 days prior to the
date on which the Return relating to such pro forma Return is required to be
filed with the applicable Taxing Authority (or, in the case of Returns for the
1995 taxable year, no later than the due date for filing such Returns) or (ii) a
draft of each revised pro forma Return relating to MGI and its Subsidiaries for
any period (or a portion thereof) for which a payment is required to be made by
MGI to VK/AC pursuant to Section 2.2(c). Except as otherwise provided in this
Agreement, the pro forma Returns shall be consistent with the Returns relating
thereto as filed with the applicable Taxing Authorities, and shall not be
affected by any amendments to such Returns, audit adjustments or claims for
refunds. MGI and MCM shall have the right at their expense to review all work
papers and procedures used to prepare each such draft pro forma Return. Unless
MGI or MCM timely delivers notice of objection as specified in this Section
2.2(d), each such draft pro forma Return shall be final and binding on the
parties without further adjustment. If MGI or MCM objects to any item on any
such draft pro forma Return, it shall, within 15 days after delivery of such
draft pro forma Return, notify VK/AC in writing that it so objects, specifying
any such item and stating the factual
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<PAGE> 7
or legal basis for any such objection. If a notice of objection shall be duly
delivered, disputed items shall be resolved pursuant to the Tax Dispute
Resolution Mechanism. Upon resolution of all disputed items, such pro forma
Return shall be adjusted to reflect such resolution and shall be final and
binding on the parties without further adjustment.
3. Payments.
3.1 VK/AC's Responsibility. As between VK/AC and the Non-Company
Affiliates, on the one hand, and MGI and its Subsidiaries, on the other hand,
VK/AC shall pay or cause to be paid to the applicable Taxing Authority (a) all
Combined Income Taxes payable with respect to MGI and its Subsidiaries for any
period (or a portion thereof) ending prior to or on the date of the Spin-Off and
(b) all Income Taxes attributable to VK/AC or any Non-Company Affiliate for
which MGI or any of its Subsidiaries may be held liable, pursuant to section
1.1502-6(a) of the Treasury Regulations prescribed under the Code, or any state,
local, provincial, foreign or other law with respect to Income Taxes, as a
member of any VK/AC Group.
3.2 MGI's Responsibility. As between VK/AC and the Non-Company
Affiliates, on the one hand, and MGI and its Subsidiaries, on the other hand,
MGI shall pay or cause to be paid to the applicable Taxing Authority all Income
Taxes payable with respect to MGI or any of its Subsidiaries that are not
described as being the responsibility of VK/AC in Section 3.1.
4. Returns.
4.1 VK/AC's Responsibility. To the extent permitted by applicable law,
VK/AC shall, and shall cause the Non-Company Affiliates to, join, for any period
(or a portion thereof) ending prior to or on the date of the Spin-Off, together
with MGI and its Subsidiaries, as applicable, in any Return of the VK/AC Group
if (a) such a Return has been filed by or on behalf of MGI or any of its
Subsidiaries for the most recent taxable period for which a Return has been
filed prior to the Spin-Off and may be filed by or on behalf of MGI or any of
its Subsidiaries for subsequent taxable periods or (b) MGI or any of its
Subsidiaries is required by the applicable Taxing Authority to file such a
Return. VK/AC shall file or cause to be filed all Returns set forth in the
immediately preceding sentence. The income, gains, deductions, losses, credits
and recapture of credits of MGI and its Subsidiaries for any
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<PAGE> 8
period (or a portion thereof) ending prior to or on the date of the Spin-Off
shall be included in the Returns of the VK/AC Group, where applicable. VK/AC
shall file or cause to be filed all other Income Tax Returns relating to the
business or assets of MGI and its Subsidiaries required to be filed on or prior
to the date of the Spin-Off. Any such Returns shall, to the extent permitted by
applicable Income Tax law, be filed on a basis consistent with the last previous
such Returns filed in respect of MGI and its Subsidiaries.
4.2 MGI's Responsibility. To the extent permitted by applicable law,
MGI shall, and shall cause its Subsidiaries to, join, together with VK/AC and
the Non-Company Affiliates, as applicable, in the Returns set forth in the first
sentence of Section 4.1. MGI shall file or cause to be filed all Returns
relating to the business or assets of MGI and its Subsidiaries other than those
Returns described in Section 4.1. The income, gains, deductions, losses, credits
and recapture of credits of MGI and its Subsidiaries, other than those required
to be included in the Returns described in Section 4.1, shall be included in the
Returns described in the immediately preceding sentence. Any such Returns shall,
insofar as they relate to items for any period (or a portion thereof) ending on
or prior to the date of the Spin-Off, and to the extent permitted by applicable
law, be filed on a basis consistent with the last previous such Returns filed in
respect of MGI and its Subsidiaries.
4.3 Amendment of Returns. Notwithstanding other provisions in this
Agreement, VK/AC shall not, and shall not permit any Non-Company Affiliate to,
amend any Return filed pursuant to Section 4.1, in a way that has a material
adverse effect on any tax liability or obligation of MGI or any of its
Subsidiaries without MGI's express written consent, which consent shall not be
unreasonably withheld, provided that VK/AC shall be permitted to amend such
Return as a result of a final audit adjustment.
5. Refunds. (a) VK/AC or the Non-Company Affiliates shall be entitled
to retain, or VK/AC shall be entitled to receive immediate payment from MGI or
MCM of, any refund or credit with respect to Income Taxes, plus any interest
received with respect thereto from the applicable Taxing Authorities, relating
to MGI or any of its Subsidiaries that are described as being the responsibility
of VK/AC in Section 3.1, and (b) MGI or its Subsidiaries shall be entitled to
retain, or shall be entitled to receive
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<PAGE> 9
immediate payment from VK/AC of, any refund or credit with respect to Income
Taxes, plus any interest received with respect thereto from the applicable
Taxing Authorities, relating to MGI or any of its Subsidiaries that are
described as being the responsibility of MGI in Section 3.2, provided that
neither MGI nor any of its Subsidiaries shall be required to carry back any item
of loss, deduction or credit from a Return described as being the responsibility
of MGI in Section 4.2 to a Return relating to Income Taxes that are described as
being the responsibility of VK/AC in Section 3.1. Notwithstanding the foregoing,
MGI or its Subsidiaries shall be entitled to retain, or shall be entitled to
receive immediate payment from VK/AC of, any refund or credit with respect to
any Combined Income Taxes in respect of which a payment has been made by MGI or
on behalf of MGI to VK/AC pursuant to Section 2.2.
6. Audits. Each of MGI and VK/AC shall promptly notify the other in
writing within 10 business days from its receipt of notice of (a) any pending or
threatened Income Tax audits or assessments of MGI or any of its Subsidiaries,
as long as any period (or a portion thereof) ending on or prior to the date of
the Spin-Off remain open, and (b) any pending or threatened Income Tax audits or
assessments of MGI or VK/AC, or any of the Affiliates thereof, that reasonably
could be expected to affect the Income Tax liabilities of MGI or any of its
Subsidiaries, in each case for any period (or a portion thereof) ending on or
prior to the date of the Spin-Off. VK/AC shall have the right to represent the
interests of MGI and its Subsidiaries in any Income Tax audit or administrative
or court proceeding to the extent relating to Income Taxes that are described as
being the responsibility of VK/AC in Section 3.1, and to employ counsel of its
choice at its expense, provided that VK/AC shall give notice to MGI, keep MGI
reasonably informed and consult with MGI with respect to any issue relating to
such audit or proceeding that has an effect on any item (including, but not
limited to income, gain, deduction, loss and credit) relating to MGI, MCM or any
of its Subsidiaries. Notwithstanding the immediately preceding sentence, VK/AC
shall not, and shall not permit any Non-Company Affiliate to, compromise or
settle any issue relating to Income Taxes (i) in respect of which MGI is
required to make a payment to VK/AC pursuant to Section 2.2(c) or (ii) that has
a material adverse effect on any Tax liability or obligation of MGI or any of
its Subsidiaries without MGI's prior written consent, which consent shall not be
unreasonably withheld. MGI shall have the right to represent the interests of
MCM and its Subsidiaries in any other Income Tax audit or administrative
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<PAGE> 10
or court proceeding not described as being VK/AC's right under this Section 6
and to employ counsel of its choice at its expense. MGI and VK/AC shall
cooperate, and shall cause their respective Affiliates to cooperate, with
respect to any Income Tax audit or administrative or court proceeding relating
to Income Taxes referred to in this Section 6. Such cooperation shall include
providing all relevant information available to VK/AC or MGI (through MCM or
otherwise), as the case may be, with respect to any such audit or proceeding and
making personnel available at and for reasonable times, including, without
limitation, to prepare responses to requests for information, provided that the
foregoing shall be done in a manner so as not to interfere unreasonably with the
conduct of the business of the parties.
7. Tax Dispute Resolution Mechanism. Wherever in this Agreement it
shall be provided that a dispute shall be resolved pursuant to the "Tax Dispute
Resolution Mechanism," such dispute shall be resolved as follows: (a) the
parties will in good faith attempt to negotiate a prompt settlement of the
dispute; (b) if the parties are unable to negotiate a resolution of the dispute
within 15 days, the dispute will be submitted to the New York office of a firm
of independent accountants of nationally recognized standing reasonably
satisfactory to VK/AC and MGI (or, if VK/AC and MGI do not agree on such a firm,
then a firm chosen by the Arbitration and Mediation Committee of the New York
Society of Certified Public Accountants) (the "Tax Dispute Accountants"); (c)
the parties will present their arguments and submit the proposed amount of each
item in dispute to the Tax Dispute Accountants within 10 days after submission
of the dispute to the Tax Dispute Accountants; (d) the Tax Dispute Accountants,
whose decision shall be final, conclusive and binding on the parties, shall
resolve the dispute, in a fair and equitable manner and in accordance with
applicable Income Tax law and the provisions of this Agreement, by selecting,
for each item in dispute, the proposed amount for such item submitted by one
party or the other party within 15 days after the parties have presented their
arguments to the Tax Dispute Accountants; (e) notwithstanding any other
provision of this Agreement, any payment to be made as a result of the
resolution of a dispute shall be made, and any other action to be taken as a
result of the resolution of a dispute shall be taken, on or before the later of
(i) the date on which such payment or action would otherwise be required or (ii)
the third business day following the date on which the dispute is resolved (in
the case of a dispute resolved by the Tax Dispute
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<PAGE> 11
Accountants, such date being the date on which the parties receive written
notice from the Tax Dispute Accountants of their resolution), provided that if a
dispute with respect to an item in a Return shall not be resolved on or before
the date that is three business days prior to the latest date on which such
Return may be filed under applicable Income Tax law, then the party having the
responsibility for filing such Return pursuant to Section 4 shall file such
Return reflecting all disputed items that have been resolved in the manner so
resolved, and reflecting all unresolved disputed items in the manner proposed by
such party, and shall, if necessary, upon the resolution of all such unresolved
disputed items, file an amended Return reflecting the resolution thereof in the
manner so resolved; and (f) the fees and expenses of the Tax Dispute Accountants
in resolving a dispute will be borne equally by VK/AC and MGI.
8. Cooperation on Tax Matters. (a) MGI and VK/AC agree to furnish or
cause to be furnished to each other, upon request, as promptly as practicable,
such information (including access to books and records) relating to MGI and
its Subsidiaries as is reasonably necessary for the preparation of the Returns,
for the filing of all relevant Returns, for the preparation for any audit, and
for the prosecution or defense of any claim, suit or proceeding relating to any
proposed adjustment and any claim subject to Section 9.3.
(b) MGI and VK/AC agree to retain or cause to be retained all books,
records, Returns, schedules, documents, work papers and other material items of
information relating to Income Taxes with respect to MGI and its Subsidiaries
for any period (or a portion thereof) prior to or ending on the date of the
Spin-Off for the longer of (i) the seven-year period beginning on the date of
the Spin-Off or (ii) the full period of the applicable statute of limitations,
including any extension thereof, and to abide by all record retention agreements
entered into with any Taxing Authority. MGI and VK/AC agree to give each other
reasonable notice prior to transferring, discarding or destroying any such
materials relating to Income Taxes with respect to MGI and its Subsidiaries,
and, if the other party so requests, to allow the other party to take possession
of such materials.
9. Indemnification.
9.1 Indemnification by VK/AC. VK/AC covenants and agrees, from and
after the date of the Spin-Off, to
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defend, indemnify and hold harmless each of MGI, MCM and their respective
Subsidiaries and Affiliates (collectively, the "MCM Indemnitees") from and
against, and pay or reimburse the MCM Indemnitees for, any and all actual
claims, demands, liabilities, obligations, losses, fines, costs, expenses,
deficiencies or damages (collectively, "Losses"), whether or not resulting from
third party claims, including interest, additions and penalties with respect
thereto and out-of-pocket expenses and reasonable attorneys' and accountants'
fees and expenses incurred in the investigation or defense of any of the same
or in asserting, preserving or enforcing any of their respective rights under
this Agreement, in each case resulting from or arising out of any failure of
VK/AC or any of Non-Company Affiliates to perform any agreement or covenant of
VK/AC or any of Non-Company Affiliates under this Agreement. VK/AC shall not
have any liability under any provision of this Agreement for any Losses to the
extent that any such Losses arise from actions taken by MGI, MCM or any of their
Subsidiaries after the Spin-Off, or from the failure of any thereof to take any
required action, except for failure to give notice as provided in Section 9.3.
MGI shall take and cause MCM and their respective Subsidiaries to take all
reasonable steps to mitigate any Losses with respect to which VK/AC could have
an indemnification obligation under this Section 9.1 upon any of the MCM
Indemnitees' becoming aware of any event which could reasonably be expected to
give rise thereto.
9.2 Indemnification by MGI. MGI covenants and agrees, from and after
the date of the Spin-Off, to defend, indemnify and hold harmless each of VK/AC
and the Non-Company Affiliates (collectively, the "VK/AC Indemnitees") from and
against, and pay or reimburse the VK/AC Indemnitees for, any and all Losses, in
each case resulting from or arising out of any failure of MGI or any of its
Subsidiaries to perform any agreement or covenant of MGI or any of its
Subsidiaries under this Agreement. MGI shall not have any liability under any
provision of this Agreement for any Losses to the extent that any such Losses
arise from actions taken by VK/AC or any of the Non-Company Affiliates after the
Spin-Off, or from the failure of any thereof to take any required action, except
for failure to give notice as provided in Section 9.3. VK/AC shall take and
cause the Non-Company Affiliates to take all reasonable steps to mitigate any
Losses with respect to which MGI could have an indemnification obligation under
this Section 9.2 upon any of the VK/AC Indemnitees' becoming aware of any event
which could reasonably be expected to give rise thereto.
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9.3 Indemnification Procedures. In the case of any claim asserted by a
third party against a party entitled to indemnification under this Section 9
(the "Indemnified Party"), notice shall be given by the Indemnified Party to
the party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought (which notice shall state the basis of the claim
and the agreement or covenant alleged not to have been performed), and the
Indemnified Party shall permit the Indemnifying Party (at the expense of such
Indemnifying Party) to assume the defense of any claim or any litigation
resulting therefrom, provided that the failure of any Indemnified Party to give
notice as provided in this Section 9.3 shall not relieve the Indemnifying Party
of its indemnification obligations under this Section 9 except to the extent
that such failure results in a lack of actual notice to the Indemnifying Party
and such Indemnifying Party is materially prejudiced as a result of such failure
to give notice. The Indemnified Party shall promptly deliver to the Indemnifying
Party copies of all notices and documents (including court papers) received by
the Indemnified Party relating to the third party claim. Except with the prior
written consent of the Indemnified Party, no Indemnifying Party, in the defense
of any such claim or litigation, shall consent to entry of any judgment or enter
into any settlement (a) that provides for injunctive or other nonmonetary relief
affecting the Indemnified Party, (b) that reasonably could be expected to affect
adversely any Income Tax liability of any Indemnified Party with respect to
which the Indemnifying Party has no indemnification obligation under this
Section 9 or (c) that does not include as an unconditional term thereof the
giving by each claimant or plaintiff to such Indemnified Party of a release from
all liability with respect to such claim or litigation. In the event that the
Indemnifying Party does not accept the defense of any matter as above provided,
the Indemnified Party shall have the full right to defend against any such claim
or demand, and shall be entitled to settle or agree to pay in full such claim or
demand.
10. Confidentiality. Each of MGI and MCM, on the one hand, and VK/AC,
on the other hand, shall, and shall use reasonable efforts to cause its
respective Affiliates, agents, advisors and representatives and its and their
respective officers, directors or employees to, keep confidential and not
disclose to others or use in any way except to further the purposes of this
Agreement, without the written consent of VK/AC or MGI, respectively, all
information of the other party and their respective
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Affiliates that has been acquired in connection with this Agreement.
11. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given upon (a) transmitter's confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) the expiration of five
business days after the day when mailed in the United States by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to VK/AC, to:
VK/AC Holding, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Telecopy: (708) 684-6155
Telephone: (708) 684-6097
Attention: William R. Rybak
(b) if to MGI or MCM, to:
MCM Group, Inc.
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza 37th Floor
New York, New York 10005
Telecopy: (212) 908-4345
Telephone: (212) 908-4320
Attention: David D. Nixon
12. Governing Law. Except to the extent federal, state, local,
provincial, foreign or other tax laws, rules, or regulations govern the filing
of Returns or the positions taken with respect to Income Taxes in Returns, and
regardless of the law that might otherwise be applied under principles of
conflicts of laws, this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York.
13. Counterparts. This Agreement may be executed in more than one
counterpart, each of which shall be deemed an original, but all such
counterparts when executed shall constitute one and the same agreement.
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14. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
15. Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law of otherwise) without the prior
written consent of the other parties.
16. No Third Party Beneficiaries. Except as provided in Section 9 with
respect to indemnification of Indemnified Parties hereunder, nothing in this
Agreement, express or implied, is intended to or shall confer any rights,
benefits or remedies of any nature whatsoever upon any Person other than the
parties hereto and their respective successors and permitted assigns.
17. Waivers. Any party hereto may by written notice to the other
parties (a) extend the time for the performance of any of the obligations or
other actions of the other parties under this Agreement, (b) waive compliance
with any of the conditions or covenants of the other parties contained in this
Agreement and (c) waive or modify performance of any of the obligations of the
other parties under this Agreement. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement shall be deemed to
constitute a waiver by the party taking such action of compliance with any
covenants or agreements contained herein. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any preceding or succeeding breach, and no failure by a party to
exercise any right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a waiver of such
party's rights to exercise the same at any subsequent time or times hereunder.
18. Amendments. This Agreement may not be modified, amended, altered or
supplemented except by an instrument in writing executed on behalf of each of
the parties hereto.
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19. Termination; Survival. This Agreement shall be terminated upon the
later of (i) the seven-year period beginning on the date of the Spin-Off or (ii)
the expiration of the applicable statute of limitations, including any extension
thereof, for the Returns filed with respect to Income Taxes that are described
as being the responsibility of VK/AC in Section 3.1.
20. Headings. The headings contained in this Agreement are for
convenience of reference only and shall not be deemed for any purpose to
constitute a part of or to affect in any way the meaning or interpretation of
this Agreement.
21. Entire Agreement. This Agreement constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
VK/AC HOLDING, INC.
By: /s/ Ronald A. Nyberg
------------------------------------
Name: Ronald A. Nyberg
Title: Executive Vice President
MCM GROUP, INC.
By: /s/ David Nixon
------------------------------------
Name: David Nixon
Title: President and Chief
Executive Officer
MCCARTHY, CRISANTI & MAFFEI, INC.
By: /s/ David Nixon
------------------------------------
Name: David Nixon
Title: President and Chief
Executive Officer
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EXHIBIT 10.11
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of August 31, 1996, among MCM
Group, Inc., a Delaware corporation (the "Company"), McCarthy, Crisanti &
Maffei, Inc., a New York corporation ("MCM), Clayton, Dubilier & Rice, Inc., a
Delaware corporation ("CD&R"), and The Clayton & Dubilier Private Equity Fund IV
Limited Partnership, a Connecticut limited partnership ("C&D Fund IV").
Capitalized terms used herein without definition have the meanings set forth in
Section 1 of this Agreement.
W I T N E S S E T H:
WHEREAS, C&D Fund IV is a private investment fund managed by CD&R, and
the general partner of C&D Fund IV is Clayton & Dubilier Associates IV Limited
Partnership, a Connecticut limited partnership (together with any general
partner of any other investment fund managed by CD&R, "C&D Associates");
WHEREAS, as of the date hereof, VK/AC Holding, Inc., a Delaware
corporation ("VK/AC"), has made a distribution of the outstanding Class A Common
Stock, par value $.01 per share, of the Company, to its common stockholders in
proportion to their respective holdings of VK/AC common stock (such
distribution, the "MGI Spin-Off");
WHEREAS, C&D Fund IV holds a majority of the outstanding shares of
common stock of VK/AC and, after giving effect to the MGI Spin-Off, holds a
majority of the outstanding shares of common stock of the Company;
WHEREAS, CD&R has performed financial, management advisory and other
services for the Company and MCM in connection with the MGI Spin-Off, the
Management Offering and certain associated transactions, including but not
limited to (i) the formation and capitalization of the Company, (ii) the
preparation and negotiation of a transitional services agreement, a tax sharing
agreement, a registration and participation agreement and other agreements
relating to the MGI Spin-Off and the grant of the Special MGI Options, (iii) the
preparation and negotiation of subscription and other agreements relating to the
Special MGI Options and the MGI Management Options, (iv) the preparation and
circulation of the Information Statement and other materials to the stockholders
of VK/AC in connection
<PAGE> 2
with the MGI Spin-Off, (v) the preparation and circulation of the Management
Offering Memorandum to the MGI Management Investors in connection with the
Management Offering, and (vi) the structuring, implementation and consummation
of the MGI Spin-Off, the Management Offering and certain associated transactions
(such transactions collectively, the "Transactions");
WHEREAS, concurrently with the execution and delivery of this
Agreement, each of the Company and MCM is entering into a Consulting Agreement,
dated as of the date hereof (the "Consulting Agreement"), among the Company, MCM
and CD&R;
WHEREAS, the parties hereto recognize the possibility that claims
might be made against and liabilities incurred by CD&R, C&D Fund IV, C&D
Associates or related persons or affiliates under applicable securities laws or
otherwise in connection with the Transactions or any Subsequent Offering, or
relating to other actions or omissions of or by the Company, MCM or their
Subsidiaries, or relating to the provision by CD&R of management consulting,
monitoring and financial advisory services to the Company, MCM and the
Subsidiaries, and the parties hereto accordingly wish to provide for CD&R, C&D
Fund IV, C&D Associates and related persons and affiliates to be indemnified in
respect of any such claims and liabilities; and
WHEREAS, the parties hereto recognize that claims might be made against
and liabilities incurred by directors and officers of the Company, MCM or any
Subsidiary in connection with their acting in such capacity, and accordingly
wish to provide for such directors and officers to be indemnified to the fullest
extent permitted by law in respect of any such claims and liabilities;
NOW, THEREFORE, in consideration of the foregoing premises, and the
mutual agreements and covenants and provisions herein set forth, the parties
hereto hereby agree as follows:
1. Definitions.
(a) "Claim" means, with respect to any Indemnitee, any claim against
such Indemnitee involving any Obligation with respect to which such Indemnitee
may be entitled to be defended and indemnified by the Company and MCM under this
Agreement.
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(b) "Indemnitee" means each of CD&R, C&D Fund IV, C&D Associates, their
respective successors and assigns, and their respective directors, officers,
partners, employees, agents, advisors, representatives and controlling persons
(within the meaning of the Securities Act of 1933, as amended (the "Securities
Act")) and each other person who is or becomes a director or an officer of the
Company, MCM or any Subsidiary.
(c) "Information Statement" means the information statement dated the
date hereof relating to the MGI Spin-Off, delivered to the common stockholders
of VK/AC.
(d) "Management Offering" means the offering of the Management Shares
and the grant of the MGI Management Options by the Company to the MGI Management
Investors.
(e) "Management Offering Memorandum" means the offering memorandum
relating to the Management Offering and delivered to the MGI Management
Investors.
(f) "Management Shares" means shares of the Company's Class C Common
Stock, par value $.01 per share, offered to the MGI Management Investors in the
Management Offering.
(g) "MGI Management Investors" means those key employees of the
Company, MCM and the Subsidiaries who have subscribed for Management Shares and
to whom the Company has granted MGI Management Options.
(h) "MGI Management Options" means options to purchase additional
shares of the Company's Class C Common Stock, par value $.01 per share, granted
to subscribers of Management Shares.
(i) "Obligations" means, collectively, any and all claims, obligations,
liabilities, causes of actions, actions, suits, proceedings, investigations,
judgments, decrees, losses, damages, fees, costs and expenses (including
without limitation interest, penalties and fees and disbursements of attorneys,
accountants, investment bankers and other professional advisors), in each case
whether incurred, arising or existing with respect to third parties or otherwise
at any time or from time to time.
(j) "Redemption" means any repurchase, redemption or other acquisition
by the Company, MCM or any Subsidiary of any of its securities outstanding from
time to time.
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<PAGE> 4
(k) "Related Document" means any agreement, certificate, instrument or
other document to which the Company, MCM or any Subsidiary may be a party or by
which it or any of its properties or assets may be bound or affected from time
to time relating in any way to the MGI Spin-Off or any Securities Offering or
any of the transactions contemplated thereby, including without limitation, in
each case as the same may be amended, modified, waived or supplemented from time
to time, (A) any registration statement filed by or on behalf of the Company,
MCM or any Subsidiary with the Securities Exchange Commission (the "Commission")
in connection with any Securities Offering, including all exhibits, financial
statements and schedules appended thereto, and any submissions to the Commission
in connection therewith, (B) any prospectus, preliminary or otherwise, included
in such registration statements or otherwise filed by or on behalf of the
Company, MCM or any Subsidiary in connection with any Securities Offering or
used to offer or confirm sales of their respective securities in any Securities
Offering, (C) the Information Statement or other information or materials
distributed by or on behalf of VK/AC, the Company or MCM in connection with the
MGI Spin-Off, (D) any private placement or offering memorandum (including the
Management Offering Memorandum) or circular, or other information or materials
distributed by or on behalf of the Company, MCM or any Subsidiary or any
placement agent or underwriter in connection with any Securities Offering, (E)
any federal, state or foreign securities law or other governmental or regulatory
filings or applications made in connection with any Securities Offering, the MGI
Spin-Off or any of the transactions contemplated thereby, (F) any
dealer-manager, underwriting, subscription, purchase, stockholders, bailment,
option or registration rights agreement or plan entered into or adopted by the
Company, MCM or any Subsidiary in connection with any Securities Offering or the
MGI Spin-Off, (G) any purchase, repurchase, redemption or other agreement
entered into by the Company, MCM or any Subsidiary in connection with any
Redemption, or (H) any quarterly, annual or current reports filed by the
Company, MCM or any Subsidiary with the Commission.
(l) "Securities Offerings" means the Management Offering and any
Subsequent Offering.
(m) "Special Options" means the special options to purchase the
Company's Class A Common Stock, par value $.01 per share, granted by the Company
on a one-time basis to executive officers, managers and employees of VK/AC and
its Subsidiaries holding options to purchase shares of the
4
<PAGE> 5
Class A common stock, par value $0.01 per share, of VK/AC in proportion (other
than fractional options to purchase the Company's stock) to their respective
holdings of such options.
(n) "Subsequent Offering" means any offer and sale by the Company, MCM
or any Subsidiary of equity or debt securities, including pursuant to the
exercise of the Special Options.
(o) "Subsidiary" means each corporation or other person or entity in
which the Company or MCM owns or controls, directly or indirectly, capital stock
or other equity interests representing at least 50% of the outstanding voting
stock or other equity interests.
2. Indemnification.
(a) Each of the Company and MCM (each an "Indemnifying Party, and
collectively, the "Indemnifying Parties"), jointly and severally, agrees to
indemnify, defend and hold harmless each Indemnitee:
(i) from and against any and all Obligations, whether incurred with
respect to third parties or otherwise, in any way resulting from, arising
out of or in connection with, based upon or relating to (A) the Securities
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any other applicable securities or other laws, in connection with the MGI
Spin-Off, any Securities Offering, any Related Document or any of the
transactions contemplated thereby, (B) any other action or failure to act of
the Company, MCM or any Subsidiary or any of their predecessors, whether
such action or failure has occurred or is yet to occur or (C) except to the
extent that any such Obligation is found in a final judgment by a court of
competent jurisdiction to have resulted from the gross negligence or
intentional misconduct of CD&R, the performance by CD&R of management
consulting, monitoring, financial advisory or other services for the
Company, MCM or any of the Subsidiaries (whether performed prior to the date
hereof, hereafter, pursuant to the Consulting Agreement or otherwise); and
(ii) to the fullest extent permitted by Delaware law, from and against
any and all Obligations in any way resulting from, arising out of or in
connection with, based upon or relating to (A) the fact that such Indemnitee
is or was a director or an officer of the
5
<PAGE> 6
Company, MCM or any Subsidiary, as the case may be, or is or was
serving at the request of such corporation as a director, officer, employee
or agent of or advisor or consultant to another corporation, partnership,
joint venture, trust or other enterprise or (B) any breach or alleged breach
by such Indemnitee of his or her fiduciary duty as a director or an officer
of the Company, MCM or any Subsidiary, as the case may be;
in each case including but not limited to any and all fees, costs and expenses
(including without limitation fees and disbursements of attorneys) incurred by
or on behalf of any Indemnitee in asserting, exercising or enforcing any of its
rights, powers, privileges or remedies in respect of this Agreement or the
Consulting Agreement.
(b) Without in any way limiting the foregoing Section 2(a), each of the
Indemnifying Parties agrees, jointly and severally, to indemnify, defend and
hold harmless each Indemnitee from and against any and all Obligations resulting
from, arising out of or in connection with, based upon or relating to
liabilities under the Securities Act, the Exchange Act or any other applicable
securities or other laws, rules or regulations in connection with (i) the
inaccuracy or breach of or default under any representation, warranty, covenant
or agreement in any Related Document, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any Related Document or (iii)
any omission or alleged omission to state in any Related Document a material
fact required to be stated therein or necessary to make the statements therein
not misleading. Notwithstanding the foregoing, none of the Indemnifying Parties
shall be obligated to indemnify such Indemnitee from and against any such
Obligation to the extent that such Obligation arises out of or is based upon an
untrue statement or omission made in such Related Document in reliance upon and
in conformity with written information furnished to the Company or MCM, as the
case may be, in an instrument duly executed by such Indemnitee and specifically
stating that it is for use in the preparation of such Related Document.
3. Contribution.
(a) Except to the extent that Section 3(b) is applicable, if for any
reason the indemnity provided for in Section 2(a) is unavailable or is
insufficient to hold harmless any Indemnitee from any of the Obligations covered
by such indemnity, then each of the Indemnifying Parties, jointly and severally,
shall contribute to the amount paid
6
<PAGE> 7
or payable by such Indemnitee as a result of such Obligation in such proportion
as is appropriate to reflect (i) the relative fault of each of the Company, MCM
and the Subsidiaries, on the one hand, and such Indemnitee, on the other, in
connection with the state of facts giving rise to such Obligation, (ii) if such
Obligation results from, arises out of, is based upon or relates to any
Securities Offering, the relative benefits received by each of the Company, MCM
and the Subsidiaries, on the one hand, and such Indemnitee, on the other, from
such Securities Offering, as the case may be, and (iii) if required by
applicable law, any other relevant equitable considerations.
(b) If for any reason the indemnity specifically provided for in
Section 2(b) is unavailable or is insufficient to hold harmless any Indemnitee
from any of the Obligations covered by such indemnity, then the Indemnifying
Parties, jointly and severally, shall contribute to the amount paid or payable
by such Indemnitee as a result of such Obligation in such proportion as is
appropriate to reflect (i) the relative fault of each of the Company, MCM and
the Subsidiaries, on the one hand, and such Indemnitee, on the other, in
connection with the information contained in or omitted from any Related
Document, which inclusion or omission resulted in the inaccuracy or breach of or
default under any representation, warranty, covenant or agreement therein, or
which information is or is alleged to be untrue, required to be stated therein
or necessary to make the statements therein not misleading, (ii) if such
Obligation results from, arises out of, is based upon or related to any
Securities Offering, the relative benefits received by the Company, MCM and the
Subsidiaries, on the one hand, and such Indemnitee, on the other, from such
Securities Offering, as the case may be, and (iii) if required by applicable
law, any other relevant equitable considerations.
(c) For purposes of Section 3(a), the relative fault of each of the
Company, MCM and the Subsidiaries, on the one hand, and of the Indemnitee, on
the other, shall be determined by reference to, among other things, their
respective relative intent, knowledge, access to
7
<PAGE> 8
information and opportunity to correct the state of facts giving rise to such
Obligation. For purposes of Section 3(b), the relative fault of each of the
Company, MCM and the Subsidiaries, on the one hand, and of the Indemnitee, on
the other, shall be determined by reference to, among other things, (i) whether
the included or omitted information relates to information supplied by the
Company, MCM and the Subsidiaries, on the one hand, or by such Indemnitee, on
the other, and (ii) their respective relative intent, knowledge, access to
information and opportunity to correct such inaccuracy, breach, default, untrue
or alleged untrue statement, or omission or alleged omission. For purposes of
Section 3(a) or 3(b), the relative benefits received by each of the Company, MCM
and the Subsidiaries, on the one hand, and the Indemnitee, on the other, shall
be determined by weighing the direct monetary proceeds to the Company, MCM and
the Subsidiaries, on the one hand, and such Indemnitee, on the other, from such
Securities Offering.
(d) The parties hereto acknowledge and agree that it would not be just
and equitable if contributions pursuant to Section 3(a) or 3(b) were determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to in such respective
Section. The Indemnifying Parties shall not be liable under Section 3(a) or
3(b), as applicable, for contribution to the amount paid or payable by any
Indemnitee except to the extent and under such circumstances any Indemnifying
Party would have been liable to indemnify, defend and hold harmless such
Indemnitee under the corresponding Section 2(a) or 2(b), as applicable, if such
indemnity were enforceable under applicable law. No Indemnitee shall be entitled
to contribution from any Indemnifying Party with respect to any Obligation
covered by the indemnity specifically provided for in Section 2(b) in the event
that such Indemnitee is finally determined to be guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) in
connection with such Obligation and the Indemnifying Parties are not guilty of
such fraudulent misrepresentation.
4. Indemnification Procedures.
(a) Whenever any Indemnitee shall have actual knowledge of the
reasonable likelihood of the assertion of a Claim, CD&R (acting on its own
behalf or, if requested by any such Indemnitee other than itself, on behalf of
such Indemnitee) or such Indemnitee shall notify any Indemnifying Party in
writing of the Claim (the "Notice of Claim") with reasonable promptness after
such Indemnitee has such knowledge relating to such Claim and has notified CD&R
thereof. The Notice of Claim shall specify all material facts known to CD&R (or
if given by such Indemnitee, such Indemnitee) that may give rise to such Claim
and the monetary amount or an estimate of the monetary amount of the Obligation
involved if CD&R (or if given by such Indemnitee, such Indemnitee) has knowledge
of such amount or a reasonable basis for making such an estimate. The failure of
CD&R or such Indemnitee to give such Notice of Claim
8
<PAGE> 9
shall not relieve the Indemnifying Parties of their respective indemnification
obligations under this Agreement except to the extent that such omission results
in a failure of actual notice to them and they are materially injured as a
result of the failure to give such Notice of Claim. The Indemnifying Parties
shall, at their expense, undertake the defense of such Claim with attorneys of
their own choosing satisfactory in all respects to CD&R. CD&R may participate in
such defense with counsel of CD&R's choosing at the expense of the Indemnifying
Parties. In the event that none of the Indemnifying Parties undertakes the
defense of the Claim within a reasonable time after CD&R has given the Notice of
Claim, CD&R may, at the expense of the Indemnifying Parties and after giving
notice to any Indemnifying Party of such action, undertake the defense of the
Claim and compromise or settle the Claim, all for the account of and at the risk
of the Indemnifying Parties. In the defense of any Claim, the Indemnifying
Parties shall not, except with the consent of CD&R, consent to entry of any
judgment or enter into any settlement that includes any injunctive or other
non-monetary relief, or that does not include as an unconditional term thereof
the giving by the person or persons asserting such Claim to such Indemnitee of a
release from all liability with respect to such Claim and any other Claim that
was or could have been asserted by such person or persons. In each case, CD&R
and each other Indemnitee seeking indemnification hereunder will cooperate with
the Indemnifying Parties, so long as the Indemnifying Parties are conducting the
defense of the Claim, in the preparation for and the prosecution of the defense
of such Claim, including making available evidence within the control of CD&R or
such Indemnitee, as the case may be, and persons needed as witnesses who are
employed by CD&R or such Indemnitee, as the case may be, in each case as
reasonably needed for such defense and provided that the cost of making
available such evidence or persons, to the extent reasonably incurred, shall be
paid by the Indemnifying Parties.
(b) The Indemnifying Parties hereby agree to advance costs and
expenses, including attorney's fees, incurred by CD&R (acting on its own behalf
or, if requested by any such Indemnitee other than itself, on behalf of such
Indemnitee) or any Indemnitee in defending any Claim in advance of the final
disposition of such Claim upon receipt of an undertaking by or on behalf of CD&R
or such Indemnitee to repay amounts so advanced if it shall ultimately be
determined that CD&R or such Indemnitee is not entitled to be indemnified by any
Indemnifying Party as authorized by this Agreement.
9
<PAGE> 10
(c) CD&R shall notify the Indemnifying Parties in writing of the amount
of any Claim actually paid by CD&R (the "Notice of Payment"). The amount of any
Claim actually paid by CD&R or by any Indemnitee shall bear simple interest at
the rate equal to the prime rate of Chemical Bank (or any successor by merger)
as of the date of such payment plus 2% per annum, from the date any Indemnifying
Party receives the Notice of Payment to the date on which any Indemnifying Party
shall repay the amount of such Claim plus interest thereon to CD&R or such
Indemnitee, as the case may be.
5. Certain Covenants. The Company agrees to cause MCM to perform its
obligations under this Agreement. The rights of each Indemnitee to be
indemnified under any other agreement, document, certificate or instrument or
applicable law are independent of and in addition to any rights of such
Indemnitee to be indemnified under this Agreement. The rights of each Indemnitee
and the obligations of the Company and MCM hereunder shall remain in full force
and effect regardless of any investigation made by or on behalf of such
Indemnitee. The Company shall maintain the State of Delaware as its state of
incorporation and MCM shall maintain the State of New York as its state of
incorporation (provided that MCM may reincorporate in the State of Delaware) and
shall implement and maintain in full force and effect any and all corporate
charter and by-law provisions that may be necessary or appropriate to enable it
to carry out its obligations hereunder to the fullest extent permitted by
Delaware or New York corporate law, as the case may be, including without
limitation, with respect to the Company, a provision of its certificate of
incorporation eliminating liability of a director for breach of fiduciary duty
to the fullest extent permitted by Section 102(b)(7) (or any successor section
thereto) of the General Corporation Law of the State of Delaware, as amended
from time to time.
6. Notices. All notices and other communications hereunder shall be in
writing and shall be delivered by certified or registered mail (first class
postage prepaid and return receipt requested), telecopier, overnight courier or
hand delivery, as follows:
10
<PAGE> 11
(a) if to the Company or MCM:
MCM Group, Inc.
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza
37th Floor
New York, NY 10005
Facsimile: (212) 908-4345
Telephone: (212) 908-4320
Attention: David Nixon
(b) if to CD&R, to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
18th Floor
New York, New York 10152
Telephone: (212) 407-5200
Facsimile: (212) 407-5252
Attention: Alberto Cribiore
(c) if to C&D Fund IV, to:
The Clayton & Dubilier Private Equity Fund IV
Limited Partnership
270 Greenwich Avenue
Greenwich, Connecticut 06830
Telephone: (203) 661-3998
Attention: Clayton & Dubilier Associates IV
Limited Partnership
Attention: Joseph L. Rice, III
or to such other address or such other person as the Company, MCM, CD&R or C&D
Fund IV, as the case may be, shall have designated by notice to the other
parties hereto. All communications hereunder shall be effective upon receipt by
the party to which they are addressed. A copy of any notice or other
communication given under this Agreement shall also be given to:
11
<PAGE> 12
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Facsimile: (212) 909-6836
Attention: Franci J. Blassberg, Esq.
7. Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the law of the State of New
York, regardless of the law that might be applied under principles of conflict
of laws, except to the extent that the corporate law of the State of Delaware
specifically and mandatorily applies, in which case such law shall apply.
8. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
9. Miscellaneous. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement shall be binding upon and inure
to the benefit of each party hereto and its successors and permitted assigns,
and each other Indemnitee, but neither this Agreement nor any right, interest or
obligation hereunder shall be assigned, whether by operation of law or
otherwise, by the Company or MCM without the prior written consent of CD&R and
C&D Fund IV. This Agreement is not intended to confer any right or remedy
hereunder upon any person other than each of the parties hereto and their
respective successors and permitted assigns and each other Indemnitee. Upon any
consolidation or merger, or any conveyance, transfer or lease of all or
substantially all of the assets of the Company or MCM, the successor corporation
formed by such consolidation or into which the Company or MCM is merged or to
which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, the Company or MCM, as the case may be, under this Agreement
with the same effect as if such successor corporation had been a party thereto.
No such consolidation, merger or conveyance, transfer or lease of all or
substantially all of the assets of the Company or MCM shall have the effect of
terminating this Agreement or of releasing the Company or MCM, as the case may
be, or any such successor corporation from its obligations hereunder. No
amendment, modification, supplement or discharge of this Agreement, and no
waiver
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<PAGE> 13
hereunder shall be valid and binding unless set forth in writing and duly
executed by the party or other Indemnitee against whom enforcement of the
amendment, modification, supplement or discharge is sought. Neither the waiver
by any of the parties hereto or any other Indemnitee of a breach of or a default
under any of the provisions of this Agreement, nor the failure by any party
hereto or any other Indemnitee on one or more occasions, to enforce any of the
provisions of this Agreement or to exercise any right, powers or privilege
hereunder, shall be construed as a waiver of any other breach or default of a
similar nature, or as a waiver of any provisions hereof, or any rights, powers
or privileges hereunder. The rights and remedies herein provided are cumulative
and are not exclusive of any rights or remedies that any party or other
Indemnitee may otherwise have at law or in equity or otherwise. This Agreement
may be executed in several counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same
instrument.
13
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement by their authorized representatives as of the date first above
written.
MCM GROUP, INC.
By: /s/ David Nixon
--------------------------------
Name: David Nixon
Title: President and Chief
Executive Officer
McCARTHY, CRISANTI & MAFFEI, INC.
By: /s/ David Nixon
--------------------------------
Name: David Nixon
Title: President and Chief
Executive Officer
CLAYTON, DUBILIER & RICE, INC.
By: /s/ Alberto Cribiore
--------------------------------
Name:
Title:
THE CLAYTON & DUBILIER PRIVATE EQUITY
FUND IV LIMITED PARTNERSHIP
By: Clayton & Dubilier Associates IV
Limited Partnership, its General
Partner
By: /s/ Alberto Cribiore
----------------------------
Name: Alberto Cribiore
Title: a General Partner
14
<PAGE> 1
EXHIBIT 10.12
CONSULTING AGREEMENT
This CONSULTING AGREEMENT, dated as of August 31, 1996, among MCM
Group, Inc., a Delaware corporation (the "Company"), McCarthy, Crisanti &
Maffei, Inc., a New York corporation ("MCM and, together with the Company, the
"Company Group"), and Clayton, Dubilier & Rice, Inc., a Delaware corporation
("CD&R").
W I T N E S S E T H:
WHEREAS, CD&R manages a private investment fund known as The Clayton &
Dubilier Private Equity Fund IV Limited Partnership, a Connecticut limited
partnership ("C&D Fund IV"), and the general partner of C&D Fund IV is Clayton &
Dubilier Associates IV Limited Partnership, a Connecticut limited partnership
(together with any general partner of any other investment fund managed by CD&R,
"C&D Associates");
WHEREAS, as of the date hereof, VK/AC Holding, Inc., a Delaware
corporation ("VK/AC"), has made a distribution of the outstanding Class A Common
Stock, par value $.01 per share, of the Company, to its common stockholders in
proportion to their respective holdings of VK/AC common stock (such
distribution, the "MGI Spin-Off");
WHEREAS, C&D Fund IV holds a majority of the outstanding shares of
common stock of VK/AC and, after giving effect to the MGI Spin-Off, holds a
majority of the outstanding shares of common stock of the Company;
WHEREAS, concurrently with the execution and delivery of this
Agreement, each member of the Company Group is entering into an Indemnification
Agreement, dated as of the date hereof (the "Indemnification Agreement", to
which reference is made for the definitions of capitalized terms used herein
without definition), among the Company, MCM, CD&R and C&D Fund IV;
WHEREAS, CD&R has performed financial, management advisory and other
services for the Company and MCM in connection with the MGI Spin-Off, the
Management Offering and certain associated transactions, including but not
limited to (i) the formation and capitalization of the Company, (ii) the
preparation and negotiation of an interim services agreement, a tax sharing
agreement, a registration and participation agreement and other agreements
relating to the MGI Spin-Off and the grant of the Special MGI Options and MGI
Management Options, (iii) the preparation and
<PAGE> 2
negotiation of subscription and other agreements relating to the Special MGI
Options and the MGI Management Options, (iv) the preparation and circulation of
the Information Statement and other materials to the stockholders of VK/AC in
connection with the MGI Spin-Off, (v) the preparation and circulation of the
Management Offering Memorandum to the MGI Management Investors in connection
with the Management Offering, and (vi) the structuring, implementation and
consummation of the MGI Spin-Off, the Management Offering and certain associated
transactions (such services collectively, the "Transaction Services");
WHEREAS, each member of the Company Group desires to receive financial
and managerial advisory services from CD&R, and CD&R desires to provide such
services to each member of the Company Group and their subsidiaries.
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth and the mutual benefits to be derived herefrom,
the parties hereto hereby agree as follows:
1. Engagement. Each member of the Company Group, jointly and severally,
hereby engages CD&R as a consultant, and CD&R hereby agrees to provide financial
and managerial advisory services to the Company Group and their Subsidiaries,
all on the terms and subject to the conditions set forth below.
2. Services, etc. (a) CD&R hereby agrees during the term of this
Agreement to assist, advise and consult with the respective Boards of Directors
and management of each member of the Company Group and their subsidiaries in
such manner and on such business, management and financial matters, and provide
such other financial and managerial advisory services, as may be reasonably
requested from time to time by the Board of Directors of any member of the
Company Group, including but not limited to assistance in:
(i) establishing and maintaining banking, legal and other business
relationships for each such member and its subsidiaries;
(ii) developing and implementing corporate and business strategy
and planning for each such member and its subsidiaries,
including plans and programs for improving operating,
marketing and financial performance, budgeting of future
corporate investments, acquisition and divestiture
strategies, and reorganizational programs;
<PAGE> 3
(iii) arranging future debt and equity financings and refinancings;
and
(iv) providing professional employees to serve as directors or
officers of each member of the Company Group.
(b) Each member of the Company Group will furnish CD&R with such
information as CD&R believes appropriate to its engagement hereunder (all such
information so furnished being referred to herein as the "Information"). Each
member of the Company Group recognizes and confirms that (i) CD&R will use and
rely primarily on the Information and on information available from generally
recognized public sources in performing the services to be performed hereunder
and (ii) CD&R does not assume responsibility for the accuracy or completeness of
the Information and such other information.
3. Compensation; Payment of Expenses. (a) MCM agrees to pay to CD&R, as
compensation for services rendered and to be rendered by CD&R hereunder, on
behalf of all members of the Company Group, a fee of $150,000 per year (the
"Fee"), payable in installments of $12,500 in arrears on the last business day
of each month, commencing on September 1, 1996. The Fee may, in the sole
discretion of a majority of the members of MCM's Board of Directors who are not
affiliated with CD&R, be increased but may not be decreased without the prior
written consent of CD&R. If any employee of CD&R shall be elected to serve on
the Board of Directors or as an officer of any member of the Company Group or
any Subsidiary thereof (a "Designated Director"), in consideration of the Fee
being paid to CD&R, CD&R shall cause such Designated Director to waive any and
all fees to which such Designated Director would otherwise be entitled as a
director or officer for any period for which the Fee or any installment thereof
is paid.
(b) MCM shall reimburse CD&R for such reasonable travel and other
out-of-pocket expenses ("Expenses") as may be incurred by CD&R and its
employees, agents and advisors in the course or on account of rendering of any
services hereunder, including but not limited to any fees and expenses of any
legal, accounting or other professional advisors to CD&R engaged in connection
with the services being provided hereunder and any expenses incurred by any
Designated Director in connection with the performance of his duties. CD&R may
submit monthly expense statements, which shall be payable within thirty days.
<PAGE> 4
4. Term, etc. (a) This Agreement shall be in effect until, and shall
terminate upon, the earlier to occur of (x) the tenth anniversary of the date
hereof and (y) the date on which C&D Fund IV no longer owns any shares of the
capital stock of the Company, and may be earlier terminated by either party
hereto upon 30 days' prior written notice to the other party hereto. The
provisions of this Agreement shall survive any termination of this Agreement,
except for the provisions of Section 1, Section 2(a), the first sentence of
Section 2(b) and (solely as to any portion of the Fee or any Expense not paid or
reimbursed prior to such termination and required to be paid or reimbursed
thereafter pursuant to Section 4(c) hereof) Section 3 hereof.
(b) Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of any member of the Company
Group, the successor corporation formed by such consolidation or into which such
member of the Company Group is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, such member of the
Company Group under this Agreement with the same effect as if such successor
corporation had been a party thereto. No such consolidation, merger or
conveyance, transfer or lease of all or substantially all of the assets of any
member of the Company Group shall have the effect of terminating this Agreement
or of releasing such member of the Company Group or any such successor
corporation from its obligations hereunder.
(c) Upon any termination of this Agreement, any accrued and unpaid
installment of the Fee or portion thereof (pro rated, with respect to the month
in which such termination occurs, for the portion of such month that precedes
such termination), and any unpaid and unreimbursed Expenses that shall have been
incurred prior to such termination (whether or not such Expenses shall then have
become payable), shall be immediately paid or reimbursed, as the case may be, by
the Company. In the event of the liquidation of MCM, all amounts due CD&R
hereunder shall be paid to CD&R before any liquidating distributions or similar
payments are made to stockholders of MCM.
5. Indemnification. (a) Each member of the Company Group confirms and
reaffirms its obligations pursuant to the Indemnification Agreement. Without
limiting the generality of the foregoing, each member of the Company Group
confirms and agrees that (a) it shall indemnify, defend and hold harmless CD&R,
C&D Fund IV, C&D Associates, their respective successors and assigns and each of
the respective directors, officers, partners, employees, agents,
<PAGE> 5
advisors, representatives and controlling persons (within the meaning of the
Securities Act of 1933, as amended) of CD&R, C&D Fund IV and C&D Associates and
their respective successors and assigns (collectively, "Indemnitees") from and
against any and all claims, obligations, liabilities, causes of action, actions,
suits, proceedings, investigations, judgments, decrees, losses, damages, fees,
costs and expenses (including without limitation interest, penalties and fees
and disbursements of attorneys, accountants, investment bankers and other
professional advisors) (collectively, "Obligations"), whether incurred with
respect to third parties or otherwise, in any way resulting from, arising out of
or in connection with, based upon or relating to, the performance of the
Transaction Services or the services contemplated hereby, except to the extent
that any such Obligation is found in a final judgment by a court having
jurisdiction to have resulted from the gross negligence or intentional
misconduct of CD&R, (b) no Indemnitee shall have any liability (whether direct
or indirect, in contract or tort or otherwise) to a member of the Company Group
or any Subsidiary thereof or their respective security holders or creditors with
respect to any Obligation in any way resulting from, arising out of or in
connection with, based upon or relating to, the performance of the Transaction
Services or the services contemplated hereby, except to the extent that any such
Obligation is found in a final judgment by a court having jurisdiction to have
resulted from the gross negligence or intentional misconduct of CD&R, and (c)
the rights of each Indemnitee to be indemnified under any agreement, document,
certificate or instrument or applicable law are independent of and in addition
to any rights of such Indemnitee under any other agreement, document,
certificate or instrument or applicable law.
(b) Each member of the Company Group agrees to advance costs and
expenses, including attorneys' fees, incurred by CD&R (acting on its own behalf
or, if requested by any such Indemnitee other than itself, on behalf of such
Indemnitee) or any Indemnitee in defending any claim relating to any Obligation
in advance of the final disposition of such claim within 30 days of receipt from
CD&R of (i) a notice setting forth the amount of such costs and expenses (a
"Payment Notice") and (ii) an undertaking by or on behalf of CD&R or such
Indemnitee to repay amounts so advanced if it shall ultimately be determined
that CD&R or such Indemnitee is not entitled to be indemnified by the Company as
authorized by this Agreement. CD&R may submit Payment Notices to MCM monthly,
and MCM shall forward any such notice to each other member of the Company Group.
<PAGE> 6
6. Independent Contractor Status. The parties agree that CD&R shall
perform services hereunder as an independent contractor, retaining control over
and responsibility for its own operations and personnel. Neither CD&R nor any of
its employees or agents shall, solely by virtue of this Agreement or the
arrangements hereunder, be considered employees or agents of any member of the
Company Group or any Subsidiary thereof nor shall any of them have authority to
contract in the name of a member of or bind any member of the Company Group or
any Subsidiary thereof, except (a) to the extent that any professional employee
of CD&R may be serving as a director or an officer of a member of the Company
Group or any Subsidiary thereof pursuant to Section 2(a)(iv) hereof or (b) as
expressly agreed to in writing by a member of the Company Group. Any duties of
CD&R arising out of its engagement to perform services hereunder shall be owed
solely to the Company Group.
7. Notices. Any notice or other communication required or permitted to
be given or made under this Agreement by one party to the other parties shall be
in writing and shall be deemed to have been duly given and effective (i) on the
date of delivery if delivered personally or (ii) when sent if sent by prepaid
telegram, or mailed first-class, postage prepaid, registered or certified mail,
or facsimile transmission as follows (or to such other address as shall be given
in writing by one party to the other parties in accordance herewith):
If to the Company, to:
MCM Group, Inc.
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza
37th Floor
New York, NY 10005
Facsimile: (212) 908-4345
Telephone: (212) 908-4320
Attention: David D. Nixon
If to MCM, to:
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza
37th Floor
New York, NY 10005
Facsimile: (212) 908-4345
Telephone: (212) 908-4320
<PAGE> 7
Attention: David D. Nixon
If to CD&R, to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
18th Floor
New York, New York 10152
Telephone: (212) 407-5200
Telecopy: (212) 407-5252
Attention: Alberto Cribiore
With a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Telecopy: (212) 909-6836
Attention: Franci J. Blassberg, Esq.
8. Entire Agreement. This Agreement, together with the Indemnification
Agreement, (a) contains the complete and entire understanding and agreement of
CD&R and each member of the Company Group with respect to the subject matter
hereof and (b) supersedes all prior and contemporaneous understandings,
conditions and agreements, oral or written, express or implied, in respect of
the subject matter hereof, including but not limited to in respect of the
engagement of CD&R in connection with the subject matter hereof. There are no
representations or warranties of CD&R in connection with this Agreement or the
services to be provided hereunder, except as expressly made and contained in
this Agreement.
9. Headings. The headings contained in this Agreement are for purposes
of convenience only and shall not affect the meaning or interpretation of this
Agreement.
10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
11. Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
successors and assigns and to each Indemnitee, provided that none of CD&R or any
member of the Company Group may assign any of its
<PAGE> 8
rights or obligations under this Agreement without the express written consent
of the other party hereto. This Agreement is not intended to confer any right or
remedy hereunder upon any person other than the parties to this Agreement and
their respective successors and permitted assigns and each Indemnitee.
12. Governing Law. This Agreement shall be deemed to be a contract made
under, and is to be governed and construed in accordance with, the laws of the
State of New York, without regard to the conflict of laws principles or rules
thereof. Each member of the Company Group and CD&R hereby irrevocably submit to
the jurisdiction of the courts of the State of New York and the Federal courts
of the United States of America, in each case located in the State, City and
County of New York, solely in respect of the interpretation and enforcement of
the provisions of this Agreement, and hereby waive, and agree not to assert, as
a defense in any action, suit or proceeding for the interpretation or
enforcement hereof, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in such courts or that the
venue thereof may not be appropriate or that this Agreement may not enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a New
York State or Federal court. Each member of the Company Group and CD&R hereby
consent to and grant any such court jurisdiction over the person of such parties
and over the subject matter of any such dispute and agree that mailing of
process or other papers in connection with any such action or proceeding in the
manner provided in Section 7, or in such other manner as may be permitted by
law, shall be valid and sufficient service thereof.
13. Waiver of Jury Trial. Each party hereto acknowledges and agrees
that any controversy that may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore it hereby irrevocably and
unconditionally waives any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of or relating to this
Agreement, or the breach, termination or validity of this Agreement, or the
transactions contemplated by this Agreement. Each party certifies and
acknowledges that (a) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (b) it understands
and has considered the implications of this waiver, (c) it makes this waiver
voluntarily, and (d) it has been induced to enter into this Agreement by, among
other
<PAGE> 9
things, the mutual waivers and certifications contained in this Section 13.
14. Amendment; Waivers. No amendment, modification, supplement or
discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party or Indemnitee against
whom enforcement of the amendment, modification, supplement, discharge or waiver
is sought (and in the case of a member of the Company Group, approved by
resolution of the Board of Directors or the sole stockholder of such member of
the Company Group). Any such waiver shall constitute a waiver only with respect
to the specific matter described in such writing and shall in no way impair the
rights of the party or Indemnitee granting such waiver in any other respect or
at any other time. Neither the waiver by any of the parties hereto or any
Indemnitee of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any party hereto or any Indemnitee on one or more
occasions, to enforce any of the provisions of this Agreement or to exercise any
right, powers or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights, power or privileges hereunder. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party or Indemnitee may otherwise have at law or in equity or
otherwise.
<PAGE> 10
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
MCM GROUP, INC.
By: /s/ David Nixon
-------------------------------
Name: David Nixon
Title: President and Chief
Executive Officer
McCARTHY, CRISANTI &
MAFFEI, INC.
By: /s/ David Nixon
-------------------------------
Name: David Nixon
Title: President and Chief
Executive Officer
CLAYTON, DUBILIER & RICE, INC.
By: /s/ Alberto Cribiore
-------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.13
MCM INDEMNIFICATION AGREEMENT
MCM INDEMNIFICATION AGREEMENT, dated as of August 31, 1996, made by
McCarthy, Crisanti & Maffei, Inc., a New York corporation (the "Company"), in
favor of VK/AC Holding, Inc., a Delaware corporation ("VKAC Holding") and Morgan
Stanley Group Inc., a Delaware corporation ("Morgan Stanley").
WHEREAS, VKAC Holding has entered into an Agreement and Plan of Merger
with Morgan Stanley, Holdco and the Buyer, dated as of June 21, 1996 (as such
agreement may be amended, the "Merger Agreement");
WHEREAS, as of the date hereof, VKAC Holding has distributed to its
common stockholders (the "MCM Spin-off") all of the outstanding common stock of
MCM Group, Inc., a Delaware corporation ("MGI") formed by VKAC Holding for the
purpose of holding all of the outstanding common stock of the Company, which at
the date of the Merger Agreement was a wholly-owned subsidiary of VKAC Holding
(collectively, MGI, the Company and the subsidiaries of the Company, the "MCM
Group");
WHEREAS, in connection with the MCM Spin-off, the Company and VKAC
Holding have entered into a Tax Sharing Agreement, dated as of August 31, 1996,
(the "Tax Sharing Agreement"); and
WHEREAS, pursuant to Section 4.2.3 of the Merger Agreement, it is a
condition to the obligations of Morgan Stanley and the Buyer that the Company
shall have entered into an Indemnification Agreement with respect to the
ownership of the stock of the Company and of MGI prior to the MCM Spin-off;
NOW THEREFORE, in consideration of the promises herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Company, VKAC Holding and Morgan Stanley hereby agree
as follows:
1. Indemnity. (a) The Company (hereinafter sometimes referred to as the
"Indemnitor") hereby agrees to indemnify and hold harmless VKAC Holding, Morgan
Stanley and their respective affiliates, successors and assigns (collectively,
the "Indemnitees"), from and against, and to pay or reimburse each Indemnitee
for, any and all claims, actions, causes of action, suits, judgments, losses,
taxes,
<PAGE> 2
liabilities, damages, obligations, costs and expenses including, but not limited
to, reasonable attorneys' fees (and the costs and expenses, including reasonable
attorneys' fees and expenses, of enforcing the Company's obligations hereunder)
incurred by any of the Indemnitees in connection with or arising from (each, an
"Indemnifiable Loss") incurred or suffered by any of the Indemnitees, whether
arising before, on or after the MCM Spin-off, (i) except as otherwise provided
in the Tax Sharing Agreement, of or relating to the MCM Group or arising from or
in connection with the conduct of the business of the MCM Group, including but
not limited to taxes of the MCM Group to the extent that such taxes are
attributable to income, assets or operations of the MCM Group and VKAC Holding
has not previously received a payment with respect thereto, (ii) the ownership
of the stock of the Company and MGI prior to the MCM Spin-off (other than any
taxes imposed upon VKAC Holding or any of its subsidiaries as a consequence of
the Spin-Off) and (iii) the Guarantee, dated December 7, 1993, by Van Kampen
American Capital, Inc. of the Company's obligations under the Lease Agreement,
dated December 7, 1993, between the Company, as lessee, and The Chase Manhattan
Bank, N.A., as lessor, with respect to certain premises occupied by the Company
on the 37th floor of the building located at One Chase Manhattan Plaza, New
York, New York.
(b) Any indemnity payable hereunder shall be made on an after-tax basis
(taking into account both the deductibility of the Indemnifiable Loss and the
inclusion in income of the indemnity payment and using for this purpose the
maximum statutory rate applicable to the recipient of such indemnity payment for
the relevant taxable year).
2. Claims. In the case of any claim asserted by a third party against
an Indemnitee, notice shall be given by such Indemnitee to the Indemnitor
promptly after such Indemnitee shall have received (i) notice of the
commencement by a third party of any suit or other proceeding against or
otherwise involving such Indemnitee or (ii) information from a third party
alleging the existence of a claim against such Indemnitee, in either case, with
respect to which indemnification may be sought under this Agreement (a
"Third-Party Claim"); provided that the failure of such Indemnitee to give
notice as provided by this Section 2 shall not relieve the Indemnitor of its
obligations under this Agreement, except to the extent that the Indemnitor is
materially damaged as a result of such failure to give notice. Within 30 days
after receipt of such notice, the Indemnitor may (i) by giving written notice
2
<PAGE> 3
thereof to such Indemnitee, acknowledge liability for such indemnification claim
and at its option and at its sole cost and expense assume the defense of any
claim or any litigation resulting therefrom, provided that counsel for the
Indemnitor, who shall conduct the defense of such claim or litigation, shall be
reasonably satisfactory to such Indemnitee, and such Indemnitee may participate
in such defense at such Indemnitee's expense, or (ii) object to the claim for
indemnification set forth in the notice delivered by such Indemnitee pursuant to
this Section 2, provided that if the Indemnitor does not within such 30-day
period give such Indemnitee written notice objecting to such indemnification
claim and setting forth the grounds therefor, the Indemnitor shall be deemed to
have acknowledged its liability for such indemnification claim. The Indemnitor,
in the defense of any such claim or litigation, shall not, except with the prior
written consent of the Indemnitee against whom the claim was made or the
litigation was brought, consent to entry of any judgment or enter into any
settlement that provides for injunctive or other non-monetary relief affecting
such Indemnitee or that does not include as an unconditional term thereof the
giving by each claimant or plaintiff to such Indemnitee of a release from all
liability with respect to such claim or litigation. In the event that an
Indemnitee shall in good faith determine that such Indemnitee has available to
it one or more defenses or counterclaims that conflict with one or more of those
that may be available to the Indemnitor in respect of such claim or any
litigation relating thereto, such Indemnitee shall have the right at all times
to take over and assume control over the defense, settlement, negotiations or
litigation relating to any such claim at the sole cost of the Indemnitor,
provided that if such Indemnitee does so take over and assume control, such
Indemnitee shall not consent to entry of any judgment or settle such claim or
litigation without the prior written consent of the Indemnitor. In the event
that the Indemnitor does not exercise its right to assume the defense of any
matter as above provided, the Indemnitee shall have the right (but not the
obligation) to defend against any such claim or demand.
3. Cooperation. The Indemnitees and their affiliates shall make
available to the Indemnitor and its attorneys and accountants, and the
Indemnitor and its affiliates shall make available to the Indemnitees and their
attorneys and accountants, at reasonable times and for reasonable periods,
during normal business hours, all books and records in its possession or under
its control
3
<PAGE> 4
reasonably requested by the Indemnitor relating to any matter with respect to
which indemnification is being provided pursuant to this Agreement, and the
Indemnitees and the Indemnitor, and their respective affiliates, shall render to
the Indemnitor or the Indemnitees, as the case may be, such assistance as may be
reasonably required to ensure prompt and adequate prosecution or the defense of
any suit, claim or proceeding, including using its reasonable efforts to make
available for interviews and to give testimony those officers or employees of
the Indemnitees or the Indemnitor, or their respective affiliates, as the
Indemnitor or the Indemnitees, as the case may be, may reasonably request;
provided, however, that in each such case, any expense reasonably incurred by
the Indemnitees in connection therewith shall be promptly paid by the Indemnitor
upon submission to the Indemnitor of an itemized request for such payment.
4. Subrogation. The Indemnitor shall be subrogated to any claims or
rights of the Indemnitees against any other person with respect to any
Indemnifiable Loss assumed or borne by the Indemnitor. The Indemnitees shall
cooperate with the Indemnitor to the extent reasonable under the circumstances
consistent with the provisions of Section 3, at the expense of the Indemnitor,
in connection with the assertion by the Indemnitor of any such claim against any
such other persons.
5. Addresses for Notices. All notices and other communications provided
for hereunder shall be in writing and addressed to:
(i) if to the Indemnitor:
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza
New York, New York 10005
Attention: President
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
(ii) if to the Indemnitees:
4
<PAGE> 5
VK/AC Holding, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60187
Telecopy: (708) 684-6155
Telephone: (708) 684-6363
Attention: Ronald A. Nyberg, Esq.
with a copy to:
Morgan Stanley Asset Management, Inc.
1221 Avenue of the Americas
New York, New York 10020
Telecopy: (212) 296-7778
Telephone: (212) 296-7125
Attention: James M. Allwin
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopy: (212) 450-4800
Telephone: (212) 450-4000
Attention: John R. Ettinger, Esq.
(iii) or, as to any party, at such other address as shall be designated by such
party in a written notice to other parties.
All such notices and other communications shall be made by certified
mail, postage prepaid, and shall be effective the third business day after being
deposited in the mails; provided that such notices and other communications may
be faxed, telegraphed, telexed or delivered by hand delivery, but in any such
case shall be effective only when receipt is confirmed in writing by the party
to which sent.
6. Waivers; Remedies. No failure on the part of Indemnitees to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
5
<PAGE> 6
7. Amendments, Etc. No amendment, waiver, modification, discharge or
termination of any provisions of this Agreement, and no consent to any departure
by the Indemnitor herefrom, shall in any event be effective unless the same
shall be in writing and signed by the Indemnitee or Indemnitees affected
thereby, and then such amendment, waiver, modification, discharge, termination
or consent shall be effective only in the specific instance and for the specific
purpose for which given. Any such amendment, waiver, modification, discharge,
termination or consent shall be effective only if approved by the directors of
the applicable Indemnitees who are unaffiliated with the Indemnitor.
8. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW).
9. Parties in Interest. This Agreement shall not be assignable by any
party hereto without the prior written consent of the other parties hereto, and
any attempt to assign this Agreement without such consent shall be void and of
no effect. This Agreement shall be binding on and enforceable against the
Indemnitor and its successors and permitted assigns, and shall inure to the
benefit of and be enforceable by the Indemnitees and their respective successors
and permitted assigns.
10. Headings. The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
6
<PAGE> 7
11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the Indemnitor and the Indemnitees has
caused this Indemnification Agreement to be duly executed and delivered by its
officer duly authorized as of the date first written above.
MCCARTHY, CRISANTI &
MAFFEI, INC.
By /s/ David Nixon
--------------------------------
Name: David Nixon
Title: President and Chief
Executive Officer
VK/AC HOLDING, INC.
By /s/ Ronald A. Nyberg
--------------------------------
Name: Ronald A. Nyberg
Title: Executive Vice President
MORGAN STANLEY GROUP INC.
By /s/ James M. Allwin
--------------------------------
Name:
Title:
7
<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 31, 1996, among McCarthy,
Crisanti & Maffei, Inc., a New York corporation ("Employer"), MCM Group, Inc.,
a Delaware corporation ("Holding"), and David D. Nixon (the "Employee").
W I T N E S S E T H :
WHEREAS, on August 31, 1996, 100% of the outstanding shares of common
stock of Holding was distributed to the stockholders of record of VK/AC Holding,
Inc. on the record date for such distribution (such distribution, the
"Spin-off");
WHEREAS, in order to secure the continued services of the Employee
following the Spin-off, Employer desires to enter into an agreement embodying
the terms of such employment (the "Agreement"); and
WHEREAS, the Employee desires to accept such continued employment and
enter into such Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, Employer and the
Employee hereby agree as follows:
1. Agreement to Employ. Upon the terms and subject to the conditions of
this Agreement, Employer hereby employs the Employee and the Employee hereby
accepts employment by Employer.
2. Term; Position and Responsibilities.
(a) Term of Employment. Unless the Employee's employment shall sooner
terminate pursuant to Section 7, Employer shall employ the Employee for an
initial term commencing on the date hereof and ending on the third anniversary
thereof. Employment shall thereafter be deemed to be automatically extended,
upon the same terms and conditions, for successive periods of two years each,
unless either party, at least one year prior to the expiration of the initial
term or any extended term, shall give written notice to the other of its
intention not to renew such employment. The period during which Employee is
employed pursuant to this Agreement, including any extension thereof in
accordance with the preceding sentence, shall be referred to as the "Employment
Period".
<PAGE> 2
(b) Position and Responsibilities. During the term of the Employee's
employment hereunder, the Employee will serve as President and Chief Executive
Officer of Holding and Employer and the Employee will devote all of his skill,
knowledge and working time (except for (i) reasonable vacation time and absence
for sickness or similar disability and (ii) to the extent that it does not
interfere with the performance of the Employee's duties hereunder, (A) such
reasonable time as may be devoted to service on boards of directors or the
fulfillment of civic responsibilities, (B) reasonable time as may be necessary
from time-to-time for personal financial matters and (C) reasonable time as may
be devoted to the teaching of university courses and similar activities to
enhance Employee's professional reputation to the conscientious performance of
such duties. The Employee represents that he is entering into this Agreement
voluntarily and that his employment hereunder and compliance by him with the
terms and conditions of this Agreement will not conflict with or result in the
breach of any agreement to which he is a party or by which he may be bound.
3. Base Salary. As compensation for the services to be performed by the
Employee hereunder, Employer will pay the Employee an annual base salary of
$234,000 during the Employment Period and, in the event that employment
hereunder is terminated by death, for six months thereafter. Employer will
review the Employee's base salary from time to time during the Employment
Period, but not less than on an annual basis, and, in the discretion of the
Board of Directors of Employer ("Employer's Board"), may increase such base
salary from time to time based upon the performance of the Employee, the
financial condition of Employer, prevailing industry salary scales and such
other factors as Employer's Board shall consider relevant. (The annual base
salary payable to the Employee under this Section 3, as the same may be
increased from time to time, shall hereinafter be referred to as the "Base
Salary".) The Base Salary payable under this Section 3 shall be reduced to the
extent that the Employee elects to defer such Base Salary under the terms of any
deferred compensation or savings plan maintained or established by Employer.
Employer shall pay the Employee the Base Salary in semi-monthly installments, or
in such other installments as may be mutually agreed upon by Employer and the
Employee.
2
<PAGE> 3
4. Incentive Compensation Arrangements.
(a) Incentive Compensation. During the Employment Period, the Employee
shall participate in Employer's incentive compensation programs for its
executive officers existing from time to time, including an annual performance
bonus program pursuant to which the Employee shall be entitled to receive an
annual incentive award if Employer achieves the annual operating targets and
Employee achieves the performance goals established by Employers' Board from
time to time, such performance bonus (i) to equal 100% of the Employee's Base
Salary for a fiscal year of Employer if Employer and the Employee achieve 100%
of the performance objectives established for such fiscal year and (ii) to be
increased or reduced if Employer and the Employee exceed or fail to achieve 100%
of such performance objectives for such fiscal year, respectively, on a
proportionate basis, in accordance with the Performances Ranges and
corresponding Bonus Award levels set forth in the letter, dated May 15, 1995,
from Dennis J. McDonnell, President of Van Kampen American Capital Investment
Advisory Corp., to the Employee, provided that, if Employer fails to achieve at
least 80% of the performance objectives established by the Board for such fiscal
year, any incentive award paid to the Employee hereunder for such fiscal year
shall be paid in the sole discretion of the Board.
(b) Opportunity to Purchase Shares. The Employee shall be given the
opportunity to purchase up to 3,000 shares (the "Shares") of the Class C Common
Stock of Holding, par value $.01 per share (the "Common Stock"), at a purchase
price of $100 per share, but in no event shall Holding be required to offer to
sell or to sell any Shares to the Employee at any time at which making such an
offer or selling any such Shares would violate any applicable securities law.
The terms and conditions of the Employee's purchase of any Shares, including the
right of first refusal of Holding with respect to such Shares, the right of
Holding to purchase such Shares from the Employee under certain circumstances
and the right of the Employee to require Holding to purchase such Shares under
certain circumstances, shall be set forth in a separate Management Stock
Subscription Agreement, substantially in the form attached hereto as Exhibit A,
to be entered into by Holding and the Employee.
(c) Options. Upon the purchase of the Shares pursuant to Section 4(b),
the Employee shall be granted non-qualified stock options to purchase
additional shares of the
3
<PAGE> 4
Common Stock, each such option to be granted pursuant to the terms of the MCM
Group, Inc. Stock Option Plan (the "Stock Option Plan") and to have a ten year
term, as follows: (i) Employee shall be granted options to purchase up to an
aggregate of 7,260 shares of Common Stock (or, if less, a number of shares of
Common Stock equal to the product of (x) the number of Shares purchased by the
Employee pursuant to Section 4(b), multiplied by (y) 2.42) (the Options"), (ii)
one-half of the Options shall be granted at an exercise price per share equal to
$100 (the "Initial Value Options") and the remaining one-half of such Options
shall be granted at an exercise price of $143.60 (the "Premium Options"), (iii)
one-half of the Initial Value Options and one-half of the Premium Options shall
generally become exercisable in five equal annual installments on each of the
first five anniversaries of the date of grant and (iv) the remaining one-half of
the Initial Value Options and the remaining one-half of the Premium Options
shall generally become exercisable (A) as of the third anniversary of the date
of grant, if and only if Holding and its subsidiaries shall have achieved the
maximum EBITDA target provided for under the terms of the Option Agreement (as
defined below), provided that if Holding and its subsidiaries shall have
achieved EBITDA as of such anniversary date greater than the minimum EBITDA
target specified in the Option Agreement but less than the maximum EBITDA target
so specified, a proportionate share of the Performance Options shall become
exercisable as of such date, or (B) nine years following the date of grant,
subject, in each such case under the following clauses (iii) and (iv), to the
Employee's continuous employment through the applicable vesting date. The terms
and conditions of the Options (including those described herein) shall be set
forth in the Stock Option Plan and a separate Management Stock Option Agreement,
substantially in the form attached hereto as Exhibit B, to be entered into by
the Employee and Holding (the "Option Agreement").
5. Employee Benefits. During the term of the Employee's employment
hereunder, employee benefits, including life, medical, dental and disability
insurance, will be provided to the Employee in accordance with programs of
Employer then available to executive employees. The Employee shall also be
entitled to participate in all of Employer's profit sharing, pension,
retirement, deferred compensation and savings plans, as the same may be amended
and in effect from time to time, at levels and having interests commensurate
with the Employee's then current period of service, compensation and position.
The benefits
4
<PAGE> 5
to be provided pursuant to this Section 5 shall be at least generally comparable
in the aggregate to those prevailing from time to time in Employer's industry.
6. Perquisites and Expenses.
(a) General. During the term of the Employee's employment hereunder,
the Employee shall be entitled to participate in any special benefit or
perquisite program generally available from time to time to executive officers
of Employer on the terms and conditions then prevailing under such program.
(b) Business Travel, Lodging, etc. Employer shall reimburse the
Employee for reasonable travel, lodging and meal expenses incurred by him in
connection with his performance of services hereunder upon submission of
evidence, satisfactory to Employer, of the incurrence and purpose of each such
expense.
(c) Vacation and Sick Days. The Employee shall be entitled to four
weeks of paid vacation per year, or such other longer period as Employer's Board
may determine to be appropriate, without, except as permitted in the discretion
of the chairman of Employer's Board, carry-over accumulation. The Employee shall
be entitled to continue to accumulate paid sick days in accordance with the
current policies of the Employer.
7. Termination of Employment.
(a) Termination Due to Death or Disability. In the event that the
Employee's employment hereunder terminates due to death or is terminated by
Employer due to the Employee's Disability (as defined below), no termination
benefits shall be payable to or in respect of the Employee except as provided in
Section 7(f)(ii). For purposes of this Agreement, "Disability" shall mean a
physical or mental disability that prevents the performance by the Employee of
substantially all of his duties hereunder lasting for a continuous period of six
months or longer. The reasoned and good faith judgment of Employer's Board as to
the Employee's Disability shall be final and shall be based on such competent
medical evidence as shall be presented to it by the Employee or by any physician
or group of physicians or other competent medical experts employed by the
Employee or Employer to advise Employer's Board.
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<PAGE> 6
(b) Termination by Employer for Cause. The Employee's employment may be
terminated for "Cause" by Employer. "Cause" shall mean (i) the willful failure
of the Employee substantially to perform his duties hereunder (other than any
such failure due to Disability) for a period of three business days after a
written demand for substantial performance is delivered to the Employee by
Employer's Board, which written notice identifies the manner in which Employer's
Board believes that the Employee has not substantially performed his duties,
(ii) in the reasonable judgment of the Board, the Employee's engaging in willful
and serious misconduct that is injurious to Employer or any of its affiliates,
(iii) the Employee's conviction of, or entering a plea of nolo contendere to, a
crime that constitutes a felony, (iv) the violation by the Employee of any
federal or state securities law, other than an immaterial violation of a
procedural law, or (v) the willful and material breach by the Employee of any of
his material obligations hereunder, or the breach by the Employee of any written
covenant or agreement with Employer or any of its affiliates not to disclose any
information pertaining to Employer or any of its affiliates, not to compete or
interfere with Employer or any of its affiliates or with respect to any
take-along or similar covenants applicable to the Shares, Options or any other
common stock of Holding held by the Employee, including without limitation the
covenants set forth in Sections 8, 9, 10 and 11 hereof.
(c) Termination Without Cause. A termination "Without Cause" shall mean
a termination of employment by Employer other than due to Disability as
described in Section 7(a) or Cause as defined in Section 7(b).
(d) Termination by the Employee. The Employee may terminate his
employment for "Good Reason". "Good Reason" shall mean a termination of
employment by the Employee within 30 days following (i) any assignment to the
Employee of any duties that are significantly different from, and result in a
substantial diminution of, the duties that he is to assume on the date hereof,
(ii) the failure of Employer to obtain the assumption of this Agreement by any
successor as contemplated by Section 14 or (iii) any reduction of the Employee's
Base Salary or incentive compensation opportunity from the levels set forth in
Sections 3 and 4(a) hereof, respectively.
(e) Notice of Termination. Any termination by Employer pursuant to
Section 7(a), 7(b) or 7(c), or by the Employee pursuant to Section 7(d), shall
be communicated by
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<PAGE> 7
a written "Notice of Termination" addressed to the other parties to this
Agreement. A "Notice of Termination" shall mean a notice stating that the
Employee's employment hereunder has been or will be terminated, indicating the
specific termination provisions in this Agreement relied upon and setting forth
in reasonable detail the facts and circumstances claimed to provide a basis for
such termination of employment.
(f) Payments Upon Certain Terminations.
(i) In the event of a termination of the Employee's employment by
Employer Without Cause or a termination by the Employee of his employment
for Good Reason during the Employment Period, subject to Section 7(h),
Employer shall pay to the Employee (A) the sum of (1) his Base Salary, if
any, for the period from the Date of Termination and ending on the later of
(x) the last day of the Employment Period, determined without regard to this
Section 7, and (y) the first anniversary of the Date of Termination, and (2)
the excess of (I) the pro rata amount of incentive compensation for the
portion of the calendar year preceding the Employee's Date of Termination
(such portion, the "Proportionate Period"), that would have been payable to
the Employee if he had remained employed for the entire year and assuming
that all applicable targets had been met, over (II) the amount of incentive
compensation previously paid or, at the election of the Employee, deferred
for the Proportionate Period, less (B) any amount paid or to be paid to the
Employee under the terms of any severance plan or program of Employer, if
any, as in effect on the Date of Termination, provided that Employer may, at
any time, pay to the Employee in a single lump sum an amount equal to (x)
Employer's good faith determination of the sum of the present values of the
installments of the Base Salary remaining to be paid to the Employee
pursuant to clause (A)(1) above, and the amount determined under clause
(A)(2) above not paid at that time, in each case as of the date of such lump
sum payment, calculated using a discount rate equal to the weighted average
cost of Employer's bank indebtedness obligations outstanding on the Date of
Termination or, if there are no such obligations outstanding, one percentage
point greater than the average prime rate charged on such date by Chase Bank
or such other nationally recognized bank designated by Employer, less (y)
the amount determined under clause (B) above. If the Employee's employment
shall
7
<PAGE> 8
terminate and he is entitled to receive salary continuation payments
under this Section 7(f)(i), (1) Employer shall continue to provide to the
Employee the welfare benefits (other than disability insurance) referred to
in Section 5 for the greater of (a) the remainder of the calendar year in
which the Date of Termination occurs, or (b) six months from the Date of
Termination and (2) if the Employee's employment shall terminate hereunder
pursuant to circumstances under which he is entitled to receive payments
under this Section 7(f)(i), and the Employer has not paid a lump sum to
Employee pursuant to the proviso to the first sentence of Section 7(f)(i),
the Employee shall have an affirmative duty to seek new employment which is
suitable to his skills and training, provided that the Employee's conduct in
satisfaction of such duty shall be consistent with Section 9, unless
Employer elects to waive its rights under Section 9. If the Employee obtains
new employment, any salary continuation payments to which the Employee may
be entitled pursuant to this Section 7(f)(i) shall be reduced or cancelled
to the extent that any salary or other cash compensation from such
employment is paid or payable to or on behalf of the Employee. Any benefits
payable to the Employee under any otherwise applicable plans, policies and
practices of Employer shall not be limited by this provision.
(ii) If, during the Employment Period, the Employee's employment shall
terminate upon his death, Disability or retirement on or after age 60, or if
the Employee shall terminate his employment without Good Reason or if
Employer shall terminate the Employee's employment for Cause, subject to
Section 7(h), Employer shall pay the Employee his full Base Salary through
the Date of Termination or, in the case of the Employee's death, through one
month following the Date of Termination, plus, in the case of termination
upon the Employee's death, Disability or retirement on or after age 60, the
excess of (x) the pro rata amount of incentive compensation for the
Proportionate Period preceding the Employee's Date of Termination (exclusive
of any time between the onset of the Disability and the resulting Date of
Termination), that would have been payable to the Employee if he had
remained employed for the entire year and assuming that all applicable
targets had been met, over (y) the amount of incentive compensation
previously paid or, at the election of the Employee, deferred for the
Proportionate Period. Any
8
<PAGE> 9
benefits payable to or in respect of the Employee under any otherwise
applicable plans, policies and practices of Employer shall not be limited by
this provision.
(g) Date of Termination. As used in this Agreement, the term "Date of
Termination" shall mean (i) if the Employee's employment is terminated by his
death or retirement on or after age 60, the date of his death or retirement,
(ii) if the Employee's employment is terminated by the Employee without Good
Reason, the date of his termination, (iii) if the Employee's employment is
terminated by Employer for Cause, the date on which Notice of Termination is
given as contemplated by Section 7(e), and (iv) if the Employee's employment is
terminated by Employer Without Cause, due to the Employee's Disability or by the
Employee for Good Reason, 30 days after the date on which Notice of Termination
is given as contemplated by Section 7(e) or, if no such Notice is given, 30
days after the date of termination of employment.
(h) Resignation from Offices and Board Memberships. Effective as of any
Date of Termination under this Section 7 or otherwise as of the date of the
Employee's termination of employment with Employer, the Employee shall resign
from all (i) offices then held by him in Holding, Employer or any of their
respective subsidiaries and (ii) Board memberships then held by him on the
Boards of (x) Holding, Employer or any of their respective subsidiaries or (y)
any other organization with which he is affiliated by virtue of his position
with Holding, Employer or any of their respective subsidiaries. The Employee
shall execute all documents and instruments and take all other actions
reasonably requested by Holding or Employer to effectuate such resignations. All
payments due or to become due to the Employee pursuant to this Agreement,
including any such payments pursuant to Section 7(f), and, to the fullest extent
permitted by applicable law, pursuant to any otherwise applicable plan, policy,
program or practice of Holding, Employer or any of their respective subsidiaries
shall be subject to such resignations by the Employee and the performance by
Employee of each of his obligations under this Section 7(h).
8. Unauthorized Disclosure. During and after the term of his
employment, the Employee shall not, without the written consent of the
Employer's Board or a person authorized thereby, disclose to any person (other
than an officer, other employee or director of Employer or its affiliates, or a
person to whom disclosure is reasonably
9
<PAGE> 10
necessary or appropriate in connection with the performance by the Employee of
his duties as an executive of Employer) any confidential or proprietary
information, knowledge or data that is not theretofore publicly known and in the
public domain obtained by him while in the employ of Employer with respect to
Employer or any of its subsidiaries or affiliates or with respect to any
products, improvements, customers, methods of distribution, sales, prices,
profits, costs, contracts, suppliers, business prospects, business methods,
techniques, research, trade secrets or know-how of Employer or any of its
subsidiaries or affiliates (collectively, "Proprietary Information"), except as
may be required by law or as may be required in connection with any judicial or
administrative proceedings or inquiry.
9. Non-Competition. During the period commencing on the date hereof and
ending on the later of (i) the greater of (x) twelve months and (y) the number
of months, if any, providing the basis for calculating any termination payment
to the Employee under Section 7(f)(i) and (ii) in the event that the Employee
had, but did not exercise, the contractual right to put to Holding for
repurchase securities of Holding, the expiration of any period following
termination of the Employee's employment during which the Employee is a
beneficial owner of securities of Holding (except any time during which a
repurchase by Employer, pursuant to a repurchase commitment permitted or
required under Section 6(a) of the Management Stock Subscription Agreement is
prevented solely by the terms of Section 11(a) of the Management Stock
Subscription Agreement), the Employee shall not engage directly or indirectly
in, become employed by, serve as an agent or consultant to, or become a partner,
principal or stockholder of any partnership, corporation or other entity in
connection with a business of any such partnership, corporation or other entity
which competes with the financial information, financial analysis or any other
business of Holding, the Employer or any of their respective subsidiaries in any
geographical area in which Holding, Employer or any of their respective
subsidiaries is then engaged in such business.
10. Non-Solicitation of Employees. Except in connection with the
performance of his duties for Holding, Employer and their respective
subsidiaries during the period of the Employee's employment with Employer,
during the period of the Employee's employment and thereafter for three years
(the "Non-Solicitation Restriction Period") the Employee shall not, directly or
indirectly, for his own account or the account of any other person or entity
with
10
<PAGE> 11
which he shall become associated in any capacity, (a) solicit for employment or
employ the services of any person who at the time of such solicitation for
employment is employed by or otherwise engaged to perform services for Holding,
Employer or any of their respective subsidiaries, regardless of whether such
employment is direct or through an entity with which such person is employed or
associated, or otherwise intentionally interfere with the relationship of
Holding, Employer or any of their respective subsidiaries with, any person or
entity who or which is at the time employed by or otherwise engaged to perform
services for Employer, including under this clause (a) any person who performs
services on behalf of Holding, Employer or any of their respective subsidiaries
as an independent sales agent or sales representative, or (b) induce any
employee of Holding, Employer or any of their respective subsidiaries to engage
in any activity which the Employee is prohibited from engaging in under Sections
9, 10 and 11 hereof or to terminate his employment with Holding, Employer or any
of their respective subsidiaries.
11. Non-Solicitation of Clients. Except in connection with the
performance of his duties for Holding, Employer and their respective
subsidiaries during the period of the Employee's employment with Employer,
during the Non-Solicitation Restriction Period, the Employee shall not solicit
or otherwise attempt to establish for himself or any other person, firm or
entity any business relationship with any person, firm or corporation which
during the twelve-month period preceding the date his employment terminates was
a customer, client or distributor of Holding, Employer or any of their
respective subsidiaries (an "Employer Client"), provided that nothing in this
Section 11 shall prohibit the Employee from (i) attempting to establish any
business relationship for the provision of services other than financial
information or financial analysis services; or (ii) advertising or promoting his
provision of services generally to the investing public so long as such
advertising does not include direct written or oral solicitation of any Employer
Clients.
12. Return of Documents. In the event of the termination of the
Employee's employment for any reason, the Employee will deliver to Employer all
non-personal documents and data of any nature pertaining to his work with
Employer, and he will not take with him any documents or data of any description
or any reproduction thereof, or any documents or data containing or pertaining
to any Proprietary Information.
11
<PAGE> 12
13. Injunctive Relief with Respect to Covenants. The Employee
acknowledges and agrees that the covenants and obligations of the Employee with
respect to noncompetition, nonsolicitation, confidentiality and Employer
property relate to special, unique and extraordinary matter and that a violation
of any of the terms of such covenants and obligations will cause Employer
irreparable injury for which adequate remedies are not available at law.
Therefore, the Employee agrees that Employer shall be entitled to an injunction,
restraining order or such other equitable relief (without the requirement to
post bond) as a court of competent jurisdiction may deem necessary or
appropriate to restrain the Employee from committing any violation of the
covenants and obligations referred to in this Section 13. These injunctive
remedies are cumulative and in addition to any other rights and remedies
Employer may have at law or in equity.
14. Assumption of Agreement. Employer will require any successor (by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Employer, by agreement in form and substance
reasonably satisfactory to the Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Employer
would be required to perform it if no such succession had taken place. Failure
of Employer to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Employee to
compensation from Employer in the same amount and on the same terms as the
Employee would be entitled hereunder if Employer terminated his employment
Without Cause as contemplated by Section 7, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
15. Entire Agreement. Except as otherwise expressly provided herein,
this Agreement (including the Exhibits hereto) constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof, and all
promises, representations, understandings, arrangements and prior agreements
relating to such subject matter (including those made to or with the Employee by
any other person or entity) are merged herein and superseded hereby.
16. Indemnification. Employer agrees that it shall indemnify and hold
harmless the Employee to the
12
<PAGE> 13
fullest extent permitted by Delaware law from and against any and all
liabilities, costs, claims and expenses including without limitation all costs
and expenses incurred in defense of litigation, including attorneys' fees,
arising out of the employment of the Employee hereunder, except to the extent
arising out of or based upon the gross negligence or willful misconduct of the
Employee. Costs and expenses incurred by the Employee in defense of litigation,
including attorneys' fees, shall be paid by Employer in advance of the final
disposition of such litigation upon receipt of an undertaking by or on behalf of
the Employee to repay such amount if it shall ultimately be determined that the
Employee is not entitled to be indemnified by Employer under this Agreement.
17. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding on and inure to the
benefit of Employer and its successors and permitted assigns. This Agreement
shall also be binding on and inure to the benefit of the Employee and his heirs,
executors, administrators and legal representatives.
(b) Arbitration. Any dispute or controversy arising under or in
connection with this Agreement (except any dispute or controversy arising under
Section 8, 9, 10, 11 or 13 hereof) shall be resolved by binding arbitration. The
arbitration shall be held in the City of New York, New York and except to the
extent inconsistent with this Agreement, shall be conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration Association then in
effect at the time of the arbitration, and otherwise in accordance with
principles which would be applied by a court of law or equity. The arbitrator
shall be acceptable to both Employer and the Employee. If the parties cannot
agree on an acceptable arbitrator, the dispute shall be heard by a panel of
three arbitrators one appointed by each of the parties and the third appointed
by the other two arbitrators. Any expense of arbitration shall be borne by the
party who incurs such expense and joint expenses shall be shared equally,
provided that in the event that the Employee prevails in any such arbitration on
all disputes raised by the Employee, Employer shall bear all expenses thereof,
including those of the Employee.
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<PAGE> 14
(c) Governing Law. This Agreement shall be governed by and constructed
in accordance with the laws of the State of New York.
(d) Taxes. Employer may withhold from any payments made under the
Agreement all federal, state, city or other applicable taxes as shall be
required pursuant to any law, governmental regulation or ruling.
(e) Amendments. No provisions of this Agreement may be modified, waived
or discharged unless such modification, waiver or discharge is approved by
Employer's Board or a person authorized thereby and is agreed to in writing by
the Employee and such officer as may be specifically designated by Employer's
Board. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No waiver of any provision of this Agreement shall be implied
from any course of dealing between or among the parties hereto or from any
failure by any party hereto to assert its rights hereunder on any occasion or
series of occasions.
(f) Severability. In the event that any one or more of the provisions
of this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected thereby.
(g) Notices. Any notice or other communication required or permitted to
be delivered under this Agreement shall be (i) in writing, (ii) delivered
personally, by courier service or by certified or registered mail, first-class
postage prepaid and return receipt requested, (iii) deemed to have been received
on the date of delivery or on the third business day after the mailing thereof,
and (iv) addressed as follows (or to such other address as the party entitled to
notice shall hereafter designate in accordance with the terms hereof):
(A) if to Employer, to it at:
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
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<PAGE> 15
Attention: General Counsel
(B) if to Holding, to it at:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: General Counsel
(C) if to the Employee, to him at the address listed on
the signature page hereof.
Copies of any notices or other communications given under this Agreement shall
also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Attention: Mr. Alberto Cribiore
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
(h) Survival. Sections 7(h), 8, 9, 10, 11, 12, 13, 14, 16 and 17 and,
if the Employee's employment terminates in a manner giving rise to a payment
under Section 7(f), Section 7(f) shall survive the termination of the
employment of the Employee hereunder.
(i) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
(j) Headings. The section and other headings contained in this
Agreement are for the convenience of the parties only and are not intended to be
a part hereof or to affect the meaning or interpretation hereof.
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<PAGE> 16
IN WITNESS WHEREOF, Employer and Holding have duly executed this
Agreement by their authorized representatives and the Employee has hereunto set
his hand, in each case effective as of the date first above written.
McCARTHY, CRISANTI & MAFFEI, INC.
By: /s/ David Nixon
------------------------------------
Name: David Nixon
Title:
MCM GROUP, INC
By: /s/ David Nixon
------------------------------------
Name: David Nixon
Title:
DAVID D. NIXON
/s/ David D. Nixon
------------------------------------
David D. Nixon
Address:
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<PAGE> 17
EXHIBIT A
[Form of Management Stock
Subscription Agreement]
<PAGE> 18
Exhibit A
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, dated as of October
8, 1996, between MCM Group, Inc., a Delaware corporation (the "Company"), and
the Purchaser whose name appears on the signature page hereof (the "Purchaser").
W I T N E S S E T H:
WHEREAS, on August 31, 1996, 100% of the outstanding Class A
common stock of the Company (the "Company Common Stock") was distributed to the
stockholders of record of VK/AC Holding, Inc. ("VK/AC") on the record date for
such distribution (such distribution, the "Spin-off"), including the Clayton &
Dubilier Private Equity Fund IV Limited Partnership, a Connecticut limited
partnership and majority stockholder of VK/AC (together with any successor
investment vehicle managed by Clayton, Dubilier & Rice, Inc., the "C&D Fund");
WHEREAS, immediately prior to the Spin-off, the Company
granted options to purchase an aggregate of approximately 48,359 shares of the
Class A common stock of the Company to those members of management of VK/AC and
its subsidiaries, including the Company and its subsidiaries, who, on the
effective date of the Spin-off, held options to purchase the common stock of
VK/AC;
WHEREAS, in connection with the Spin-off, the Board of
Directors of the Company has adopted the MCM Group, Inc. Stock Purchase Plan
(the "Stock Purchase Plan");
WHEREAS, following the Spin-off, the Company will issue up to
an aggregate of 18,200 shares of its Class C Common Stock, par value $.01 per
share (the "Common Stock"), to the Purchaser and to certain other purchasers who
are executives, senior officers or other key employees of the Company or one of
its direct or indirect subsidiaries, pursuant to the Stock Purchase Plan, this
Agreement and other substantially identical management stock subscription
agreements and will grant options to purchase up to 44,052 shares of Common
Stock to the Purchaser and such other executive officers and key employees
pursuant to the MCM Group, Inc. Stock Option Plan;
WHEREAS, the Purchaser (an executive, senior
officer or other key employee of the Company or one of its
<PAGE> 19
direct or indirect subsidiaries) desires to subscribe for and purchase, and the
Company desires to sell to the Purchaser, the aggregate number of shares of
Common Stock set forth on the signature page hereof (each a "Share" and,
collectively, the "Shares");
NOW, THEREFORE, to implement the foregoing and in
consideration of the mutual agreements contained herein, the parties hereto
hereby agree as follows:
1. Purchase and Sale of Common Stock.
(a) Purchase of Common Stock. Subject to all of the terms and
conditions of this Agreement, the Purchaser hereby subscribes for and shall
purchase, and the Company shall sell to the Purchaser, the Shares at a purchase
price of $100.00 per Share, at the Closing provided for in Section 2(a) hereof.
Notwithstanding anything in this Agreement to the contrary, the Company shall
have no obligation to sell any Common Stock to (i) any person who will not be an
employee of the Company or a direct or indirect subsidiary of the Company
immediately following the Closing at which such Common Stock is to be sold or
(ii) any person who is a resident of a jurisdiction in which the sale of Common
Stock to him would constitute a violation of the securities, "blue sky" or other
laws of such jurisdiction.
(b) Consideration. Subject to all of the terms and conditions
of this Agreement, the Purchaser shall deliver to the Company at the Closing
referred to in Section 2(a) hereof (i) immediately available funds in an amount
equal to 40% of the aggregate purchase price set forth on the signature page
hereof and (ii) a fully executed promissory note (the "Promissory Note")
substantially in the form attached hereto as Annex A, evidencing the full
recourse interest bearing loan by the Company to the Purchaser of a principal
amount equal to 60% of such aggregate purchase price.
2. Closing.
(a) Time and Place. Except as otherwise agreed by the Company
and the Purchaser, the closing (the "Closing") of the transaction contemplated
by this Agreement shall be held at the offices of Debevoise & Plimpton, 875
Third Avenue, New York, New York at 10:00 a.m. (New York time) on October 8,
1996.
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<PAGE> 20
(b) Delivery by the Company. At the Closing the Company shall
deliver to the Purchaser a stock certificate registered in such Purchaser's name
and representing the Shares, which certificate shall bear the legends set forth
in Section 3(b).
(c) Delivery by the Purchaser. At the Closing the Purchaser
shall deliver to the Company the consideration referred to in Section 1(b)
hereof.
3. Purchaser's Representations, Warranties and Covenants.
(a) Investment Intention. The Purchaser represents and
warrants that he is acquiring the Shares solely for his own account for
investment and not with a view to or for sale in connection with any
distribution thereof. The Purchaser agrees that he will not, directly or
indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of
any of the Shares (or solicit any offers to buy, purchase or otherwise acquire
or take a pledge of any Shares), except in compliance with the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder, and in
compliance with applicable state and foreign securities or "blue sky" laws. The
Purchaser further understands, acknowledges and agrees that none of the Shares
may be transferred, sold, pledged, hypothecated or otherwise disposed of (i)
unless the provisions of Sections 4 through 8 hereof, inclusive, shall have
been complied with or have expired, (ii) unless the provisions of the
Certificate of Incorporation have been complied with or have expired, (iii)
unless (A) such disposition is pursuant to an effective registration statement
under the Securities Act, (B) the Purchaser shall have delivered to the Company
an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company, to the effect that such disposition is exempt from
the provisions of Section 5 of the Securities Act or (C) a no-action letter from
the Commission, reasonably satisfactory to the Company, shall have been
obtained with respect to such disposition and (iv) unless such disposition is
pursuant to registration under any applicable state securities laws or an
exemption therefrom.
(b) Legends. The Purchaser acknowledges that the certificate
or certificates representing the Shares shall bear an appropriate legend, which
will include, without limitation, the following language:
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<PAGE> 21
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TRANSFER RESTRICTIONS, HOLDBACK AND OTHER PROVISIONS OF A
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, DATED AS OF OCTOBER
8, 1996, AND NEITHER THIS CERTIFICATE NOR THE SHARES
REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH MANAGEMENT
STOCK SUBSCRIPTION AGREEMENT, A COPY OF WHICH IS ON FILE WITH
THE SECRETARY OF THE COMPANY. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE ENTITLED TO CERTAIN OF THE BENEFITS OF AND ARE
BOUND BY THE OBLIGATIONS SET FORTH IN A REGISTRATION AND
PARTICIPATION AGREEMENT, DATED AS OF AUGUST 31, 1996, AND ANY
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS THERETO, AMONG THE
COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS (i) (A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE
COMPANY AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL
BE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
SUCH DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
SUCH ACT OR (C) A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION, REASONABLY SATISFACTORY TO COUNSEL FOR
THE COMPANY, SHALL HAVE BEEN OBTAINED WITH RESPECT TO SUCH
DISPOSITION AND (ii) SUCH DISPOSITION IS PURSUANT TO
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM."
(c) Securities Law Matters. The Purchaser acknowledges
receipt of advice from the Company that (i) the Shares have not been registered
under the Securities Act or any state or foreign securities or "blue sky" laws,
(ii) it is not anticipated that there will be any public market for the Shares,
(iii) the Shares must be held indefinitely and the Purchaser must continue to
bear the economic risk of the investment in the Shares unless the Shares are
subsequently registered under the Securities Act and such state or foreign laws
or an exemption from registration is available,
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<PAGE> 22
(iv) Rule 144 promulgated under the Securities Act ("Rule 144") is not presently
available with respect to sales of securities of the Company and the Company has
made no covenant to make Rule 144 available, (v) when and if the Shares may be
disposed of without registration in reliance upon Rule 144, such disposition can
generally be made only in limited amounts in accordance with the terms and
conditions of such Rule, (vi) the Company does not plan to file reports with the
Commission or make information concerning the Company publicly available, (vii)
if the exemption afforded by Rule 144 is not available, sales of the Shares may
be difficult to effect because of the absence of public information concerning
the Company, (viii) a restrictive legend in the form heretofore set forth shall
be placed on the certificates representing the Shares and (ix) a notation shall
be made in the appropriate records of the Company indicating that the Shares are
subject to restrictions on transfer set forth in this Agreement and, if the
Company should in the future engage the services of a stock transfer agent,
appropriate stop-transfer restrictions will be issued to such transfer agent
with respect to the Shares.
(d) Compliance with Rule 144. If any of the Shares are to be
disposed of in accordance with Rule 144, the Purchaser shall transmit to the
Company an executed copy of Form 144 (if required by Rule 144) no later than the
time such form is required to be transmitted to the Commission for filing and
such other documentation as the Company may reasonably require to assure
compliance with Rule 144 in connection with such disposition.
(e) Ability to Bear Risk. The Purchaser represents and
warrants that (i) the financial situation of the Purchaser is such that he can
afford to bear the economic risk of holding the Shares for an indefinite period
and (ii) he can afford to suffer the complete loss of his investment in the
Shares.
(f) Questionnaire. The Purchaser agrees to furnish such
documents and comply with such reasonable requests of the Company as may be
necessary to substantiate his status as a qualifying investor in connection
with the private offering of shares of Common Stock to the Purchaser and the
other purchasers to whom such shares are being sold in connection with the
Spin-off. The Purchaser represents and warrants that all information contained
in such documents and any other written materials concerning the status of the
Purchaser furnished by the Purchaser to the Company in connection with such
requests will be true, complete and
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<PAGE> 23
correct in all material respects.
(g) Access to Information. The Purchaser represents and
warrants that (i) he has carefully reviewed the materials furnished to him in
connection with the transaction contemplated hereby, (ii) he has been granted
the opportunity to ask questions of, and receive answers from, representatives
of the Company concerning the terms and conditions of the purchase of the Shares
and to obtain any additional information that he deems necessary to verify the
accuracy of the information contained in such materials and (iii) his knowledge
and experience in financial and business matters is such that he is capable of
evaluating the risks of the investment in the Shares.
(h) Registration; Restrictions on Sale upon Public Offering.
The Purchaser shall be entitled to the rights and subject to the obligations
created under the Registration and Participation Agreement, dated as of August
31, 1996, as the same may be amended from time to time, among the Company and
certain stockholders of the Company, to the extent provided therein. The
Purchaser agrees that, in the event that the Company files a registration
statement under the Securities Act with respect to an underwritten public
offering of any shares of its capital stock, the Purchaser will not effect any
public sale (including a sale under Rule 144) or distribution of any shares of
the Common Stock (other than as part of such underwritten public offering)
during the 20 days prior to and the 180 days after the effective date of such
registration statement.
(i) Section 83(b) Election. The Purchaser agrees that, within
20 days after the Closing, he shall give notice to the Company as to whether or
not he has made or will make an election pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, with respect to the Shares purchased
at such Closing, and acknowledges that he will be solely responsible for any and
all tax liabilities payable by him in connection with his receipt of the Shares
or attributable to his making or failing to make such an election.
4. Restrictions on Disposition of Shares. Neither the
Purchaser nor any of his heirs or representatives shall sell, assign, transfer,
pledge or otherwise directly or indirectly dispose of or encumber any of the
Shares to or with any other person, firm or corporation (including, with out
limitation, transfers to any other holder of the Company's capital stock,
dispositions by gift, by will, by a
6
<PAGE> 24
corporation as a distribution in liquidation and by operation of law other than
a transfer of Shares by operation of law to the estate of the Purchaser upon the
death of the Purchaser, provided that such estate shall be bound by all
provisions of this Agreement and the Certificate of Incorporation of the
Company) except as provided in Sections 5 through 8 hereof, inclusive and in
the transfer restrictions contained in the Certificate of Incorporation of the
Company. The restrictions contained in this Section 4 (but not the restrictions
contained in the Certificate of Incorporation which shall terminate only as
provided therein) shall terminate in the event that an underwritten public
offering of the Class A common stock of the Company led by one or more
underwriters at least one of which is of nationally recognized standing (a
"Public Offering") has been consummated and shall not apply to a sale as part
of a Public Offering or at any time thereafter.
5. Options of the Company and the C&D Fund Upon Proposed
Disposition.
(a) Rights of First Refusal. If the Purchaser desires to
accept an offer (which must be in writing and for cash, be irrevocable by its
terms for at least 60 days and be a bona fide offer as determined in good faith
by the Board of Directors of the Company (the "Board") or the Executive
Committee thereof) from any prospective purchaser to purchase all or any part of
the Shares at any time owned by him, he shall give notice in writing to the
Company and the C&D Fund (i) designating the number of Shares proposed to be
sold, (ii) naming the prospective purchaser of such Shares and (iii) specifying
the price (the "Offer Price") at and terms (the "Offer Terms") upon which he
desires to sell the same. During the 30-day period following receipt of such
notice by the Company and the C&D Fund (the "First Refusal Period"), the Company
shall have the right to purchase from the Purchaser all (but not less than all)
of the Shares specified in such notice, at the Offer Price and on the Offer
Terms. The Company hereby undertakes to use reasonable efforts to act as
promptly as practicable following receipt of such notice to determine whether it
shall elect to exercise such right. If the Company fails to exercise such rights
within the First Refusal Period, the C&D Fund shall have the right to purchase
all (but not less than all) of the Shares specified in such notice, at the Offer
Price and on the Offer Terms, at any time during the period beginning at the
earlier of (x) the end of the First Refusal Period and (y) the date of receipt
by the C&D Fund of written notice that the Company has elected not to exercise
7
<PAGE> 25
its rights under this Section 5(a) and ending 30 days thereafter (the "Second
Refusal Period"). The rights provided hereunder shall be exercised by written
notice to the Purchaser given at any time during the applicable period. If such
right is exercised, the Company or the C&D Fund, as the case may be, shall
deliver to the Purchaser a certified or bank check for the Offer Price, payable
to the order of the Purchaser, against delivery of certificates or other
instruments representing the Shares so purchased, appropriately endorsed by the
Purchaser. If such right shall not have been exercised prior to the expiration
of the Second Refusal Period, then at any time during the 30 days following the
expiration of the Second Refusal Period, the Purchaser may sell such Shares to
(but only to) the intended purchaser named in his notice to the Company and the
C&D Fund at the Offer Price and on the Offer Terms specified in such notice,
free of all restrictions or obligations imposed by, and free of any rights or
benefits set forth in, Sections 5 through 8, inclusive, of this Agreement,
provided that such intended purchaser shall have agreed in writing to make and
be bound by the representations, warranties and covenants set forth in Section 3
hereof, other than those set forth in Sections 3(g), the first sentence of 3(h)
and 3(i), pursuant to an instrument of assumption satisfactory in substance and
form to the Company. The right of the Purchaser to sell Shares set forth in this
Section 5(a), subject to the rights of first refusal set forth in this Section
5(a), shall be suspended during the Option Periods referred to in Section 6
hereof, but the provisions of Section 6 shall not otherwise restrict the
ability of the Purchaser to sell the Shares, whether before or after such
Option Periods, pursuant to the terms and subject to the restrictions set forth
in this Section 5(a). The rights of the Company and the C&D Fund under the
Certificate of Incorporation of the Company shall not be effected by the
provisions of this Section 5(b).
(b) Public Offering. In the event that a Public Offering has
been consummated, neither the Company nor the C&D Fund shall have any rights to
purchase the Shares from the Purchaser pursuant to this Section 5 and this
Section 5 shall not apply to a sale as part of a Public Offering or at any time
thereafter.
6. Options Effective on Termination of Employment or
Unforeseen Personal Hardship of the Purchaser.
(a) Termination of Employment. If the Purchaser's active
employment with the Company and any direct and
8
<PAGE> 26
indirect subsidiaries of the Company that employ the Purchaser is terminated
for any reason whatsoever the Company shall have an option to purchase all or a
portion of the Shares then held by the Purchaser (or, if his employment was
terminated by his death, his estate) and shall have 60 days from the date of the
Purchaser's termination (such 60-day period being hereinafter referred to as the
"First Option Period") during which to give notice in writing to the Purchaser
(or his estate) of its election to exercise or not to exercise such option, in
whole or in part. The Company hereby undertakes to use reasonable efforts to act
as promptly as practicable following such termination to make such election. If
the Company fails to give notice that it intends to exercise such option within
the First Option Period or the Company gives notice that it intends to exercise
such option with respect to only a portion of the Shares, the C&D Fund shall
have the right to purchase all or a portion of the Shares then held by the
Purchaser (or his estate) that will not be repurchased by the Company and shall
have until the expiration of the earlier of (x) 60 days following the end of the
First Option Period, or (y) 60 days from the date of receipt by the C&D Fund of
written notice that the Company does not intend to exercise such option or
intends to exercise such option with respect to only a portion of the Shares
(such 60-day period being hereinafter referred to as the "Second Option
Period"), to give notice in writing to the Purchaser (or his estate) of the C&D
Fund's exercise of its option, in whole or in part. If the options of the
Company and the C&D Fund to purchase the Shares pursuant to this subsection are
not exercised with respect to all of the Shares as provided herein (other than
as a result of Section 11 hereof), the Purchaser (or his estate) shall be
entitled to retain the Shares which could have been acquired on exercise
thereof, subject to all of the provisions of this Agreement (including without
limitation Section 5(a)). If the Company and the C&D Fund have failed to
exercise their respective options pursuant to this Section 6(a) with respect to
all of the Shares within the time periods specified herein, and if the
Purchaser's active employment with each of the Company and any direct and
indirect subsidiaries of the Company that employ the Purchaser is terminated (A)
by such employer or employers without Cause, (B) by the Purchaser by Retirement
at Normal Retirement Age, (C) by reason of the Permanent Disability or death of
the Purchaser, or (D) if, as of the effective date of such termination, the
Purchaser is employed by the Company under an effective Employment Agreement,
dated as of the date hereof (the "Employment Agreement"), among the Company or
any of its direct or indirect subsidiaries and
9
<PAGE> 27
the Purchaser, by the Purchaser for Good Reason (as such term is defined in the
Employment Agreement), then on notice from the Purchaser (or his estate) in
writing and delivered to the Company within 30 days following the end of the
Second Option Period, the Company shall purchase all (but not less than all) of
the Shares then held by the Purchaser (or his estate). All purchases pursuant to
this Section 6(a) by the Company or the C&D Fund shall be for a purchase price
and in the manner prescribed by Section 7 hereof.
(b) Unforeseen Personal Hardship. In the event that the
Purchaser, while in the employment of the Company or any direct or indirect
subsidiary of the Company, experiences Unforeseen Personal Hardship, the Board
will carefully consider any request by the Purchaser that the Company repurchase
the Purchaser's Shares at a price determined in accordance with Section 7
hereof, but the Company shall have no obligation to repurchase such Shares. The
Board shall consider such request with respect to Unforeseen Personal Hardship
as soon as practicable after receipt by the Company of a written request by the
Purchaser, such request to include sufficient details of the Purchaser's
Unforeseen Personal Hardship to permit the Board to review the request and the
circumstances in an informed manner.
(c) Certain Definitions. As used in this Agreement the
following terms shall have the following meanings:
(i) "Cause" shall mean (A) the willful failure by the
Purchaser to perform substantially his duties as an employee of the
Company or any Subsidiary (other than any such failure due to physical
or mental illness) after a demand for substantial performance is
delivered to the Purchaser by the executive to which the Purchaser
reports or by the Board, which notice identifies the manner in which
such executive or the Board, as the case may be, believes that the
Purchaser has not substantially performed his duties, (B) the
Purchaser's engaging in willful and serious misconduct that is or is
expected to be injurious to the Company or any Subsidiary, (C) the
Purchaser's having been convicted of, or entered a plea of guilty or
nolo contendere to, a crime that constitutes a felony, (D) the willful
and material breach by the Purchaser of any written covenant or
agreement with the Company or any Subsidiary, not to disclose any
information pertaining to the Company, any Subsidiary or any Affiliate
or not to compete or interfere with the Company, any Subsidiary
10
<PAGE> 28
or any Affiliate or (E) any violation by the Purchaser of any federal,
state or foreign securities laws; provided that in the event that the
Purchaser is employed by the Company or a Subsidiary under an effective
employment agreement on the date of determination and such employment
agreement shall contain a different definition of Cause, the definition
of Cause contained in such employment agreement shall be substituted
for the definition set forth above for all purposes hereunder.
(ii) "Retirement at Normal Retirement Age" shall mean retirement at
age 60 or later.
(iii) "Permanent Disability" shall mean a physical or mental
disability or infirmity that prevents the performance of a Purchaser's
employment-related duties lasting (or likely to last, based on
competent medical evidence presented to the Board) for a period of six
months or longer. The Board's reasoned and good faith judgment as to
Permanent Disability shall be final and shall be based on such
competent medical evidence as shall be presented to it by the Purchaser
or by any physician or group of physicians or other competent medical
expert employed by the Purchaser or the Company to advise the Board.
(iv) "Unforeseen Personal Hardship" shall mean financial hardship
arising from (x) extraordinary medical expenses or other expenses
directly related to illness or disability of the Purchaser, a member
of the Purchaser's immediate family or one of the Purchaser's parents
or (y) payments necessary or required to prevent the eviction of the
Purchaser from the Purchaser's principal residence or foreclosure on
the mortgage on that residence. The Board's reasoned and good faith
determination of Unforeseen Personal Hardship shall be binding on the
Company and the Purchaser.
(d) Notice of Termination. The Company shall give written notice of
any termination of the Purchaser's active employment with each of the Company
and any direct or indirect subsidiaries of the Company that employ the Purchaser
to the C&D Fund, except that if such termination (if other than as a result of
death) is by the Purchaser, the Purchaser shall give written notice of such
termination to the Company and the Company shall give written notice of such
termination to the C&D Fund.
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<PAGE> 29
(e) Public Offering. In the event that a Public Offering has
been consummated, none of the Company, the C&D Fund or the Purchaser shall have
any rights to purchase or sell the Shares, as the case may be, pursuant to this
Section 6 and this Section 6 shall not apply to a sale as part of a Public
Offering.
7. Determination of the Purchase Price; Manner of Payment.
(a) Purchase Price. For the purposes of any purchase of the
Shares pursuant to Section 6, and subject to Section 11(c), the purchase price
per Share to be paid to the Purchaser (or his estate) for each Share shall be a
net amount (such net amount, the "Purchase Price") equal to the excess of (i)
the fair market value (the "Fair Market Value") of such Share as of the
effective date of the termination of employment that gives rise to the right or
obligation to repurchase or, in the case of a repurchase as a result of
Unforeseen Personal Hardship, as of the date such Shares are repurchased (such
date of termination or repurchase, as applicable, the "Determination Date"),
over (ii) the principal balance and accrued interest outstanding under the
Promissory Note as of the closing date for such repurchase; provided that if the
Purchaser's employment is terminated by the Company or any of its direct or
indirect subsidiaries for Cause, the Purchase Price for such Share shall be the
lesser of (i) the Fair Market Value of such Share as of the effective date of
the termination of employment that gives rise to the right or obligation to
repurchase and (ii) the price at which the Purchaser purchased such Share from
the Company. Whenever determination of the Fair Market Value of such Shares is
required by this Agreement, such Fair Market Value shall be such amount as is
determined in good faith by the Board. In making a determination of Fair Market
Value, the Board shall give due consideration to such factors as it deems
appropriate, including, without limitation, the earnings and certain other
financial and operating information of the Company and its subsidiaries in
recent periods, the potential value of the Company and its Subsidiaries as a
whole, the future prospects of the Company and its subsidiaries and the
industries in which they compete, the history and management of the Company and
its subsidiaries, the general condition of the securities markets, the fair
market value of securities of companies engaged in businesses similar to those
of the Company and its subsidiaries and the Applicable Share Valuation (as
defined below). The determination of Fair Market Value will not give effect to
any restrictions
12
<PAGE> 30
on transfer of the Shares or the fact that such Shares would represent a
minority interest in the Company. For purposes of this Agreement, the term
"Applicable Share Valuation" shall mean the annual valuation of the Shares
performed by an independent valuation firm chosen by the Board as of the last
day of the last fiscal year of the Company ending prior to the Determination
Date, except that, in the case of a Determination Date occurring during the
fourth fiscal quarter of any fiscal year of the Company beginning with the
fourth quarter of the 1996 fiscal year of the Company, the term "Applicable
Share Valuation" shall mean the annual valuation of the Shares performed by an
independent valuation firm chosen by the Board as of the last day of such fourth
fiscal quarter. Such annual valuations shall be performed as promptly as
practicable following the end of each fiscal year of the Company, beginning with
the 1996 fiscal year of the Company. The Fair Market Value as deter mined in
good faith by the Board and in the absence of fraud shall be binding and
conclusive upon all parties hereto. If the Company at any time subdivides (by
any stock split, stock dividend or otherwise) the Common Stock into a greater
number of shares, or combines (by reverse stock split or otherwise) the Common
Stock into a smaller number of shares, the Purchase Price (including any minimum
or maximum Purchase Price specified herein or in effect as a result of a prior
adjustment) shall be appropriately adjusted to reflect such subdivision or
combination.
(b) Closing of Purchase; Payment of Purchase Price. Subject to
Section 11, the closing of a purchase pursuant to this Section 6 shall take
place at the principal office of the Company on the tenth business day following
whichever of the following is applicable: (i) the receipt by the Purchaser (or
his estate) of the notice of the C&D Fund or the Company, as the case may be, of
its exercise of its option to purchase pursuant to Section 6(a) or (ii) the
Company's receipt of notice by the Purchaser (or his estate) to sell Shares
pursuant to Section 6(a) or (iii) the Board's determination (which shall be
delivered to the Purchaser) that the Company is authorized to purchase Shares as
a result of Unforeseen Personal Hardship pursuant to Section 6(b). At the
closing, (i) subject to the proviso below, the Company shall pay to the
Purchaser (or his estate) an amount equal to the Purchase Price and (ii) the
Purchaser (or his estate) shall deliver to the Company such certificates or
other instruments representing the Shares so purchased, appropriately endorsed
by the Purchaser (or his estate), as the Company may reasonably require;
provided, however, that if the Determination Date occurs during the
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<PAGE> 31
first or last fiscal quarter of any fiscal year of the Company, the Company may
elect to pay the Purchase Price in two installments. In any such event, (i) at
the closing of the purchase of the Shares, the Company shall pay to the
Purchaser (or his estate) a net amount (the "First Installment Amount") equal to
80% of the Fair Market Value of the Shares, determined pursuant to Section 7(a)
hereof on the basis of the most recent available valuation of the Shares,
reduced by the principal balance and accrued interest then outstanding under the
Promissory Note, and (ii) no later than the tenth business day following receipt
by the Company of the Applicable Share Valuation, the Company shall pay an
additional amount to the Purchaser (or his estate) equal to the sum of (1) the
excess (the "Excess Payment"), if any, of (A) the Purchase Price for the Shares,
over (B) the First Installment Amount and (2) an amount calculated by
multiplying the Excess Payment by a percentage equal to the average annual cost
to the Company of its bank indebtedness obligations outstanding during the
period commencing on the closing date of the purchase of the Shares and ending
on the date of payment of such additional amount pursuant to this clause (ii)
or, if there are no such obligations outstanding, one percentage point greater
than the average annual prime rate charged during such period by Chase Bank or
such other nationally recognized bank designated by the Company.
(c) Application of the Purchase Price to Certain Loans. The
Purchaser agrees that the Company and the C&D Fund shall be entitled to apply
any amounts to be paid by the Company or the C&D Fund, as the case may be, to
repurchase Shares pursuant to Section 5 or 6 hereof to discharge any
indebtedness of the Purchaser to the Company or any of its direct or indirect
subsidiaries, including, without limitation, indebtedness of the Purchaser
incurred to purchase the Shares or indebtedness that is guaranteed by the
Company or any of its direct or indirect subsidiaries.
8. Take-Along Rights.
(a) Take-Along Notice. If the C&D Fund intends to effect a
sale of all of its shares of common stock of the Company to a third party (a
"100% Buyer") and elects to exercise its rights under this Section 8, the C&D
Fund shall deliver written notice (a "Take-Along Notice") to the Purchaser,
which notice shall (i) state (w) that the C&D Fund wishes to exercise its rights
under this Section 8 with respect to such transfer, (x) the name and address of
the 100% Buyer, (y) the per share amount and form of consideration the C&D Fund
proposes to receive for its shares of common stock of the Company and (z) drafts
of purchase and sale documentation setting forth the terms and conditions of
payment of such considera-
14
<PAGE> 32
tion and all other material terms and conditions of such transfer (the "Draft
Sale Agreement"), (ii) contain an offer (the "Take-Along Offer") by the 100%
Buyer to purchase from the Purchaser all of the Shares, on and subject to the
same price, terms and conditions offered to the C&D Fund and (iii) state the
anticipated time and place of the closing of such transfer (a "Section 8
Closing"), which (subject to such terms and conditions) shall occur not fewer
than five (5) days nor more than ninety (90) days after the date such Take-Along
Notice is delivered, provided that if such Section 8 Closing shall not occur
prior to the expiration of such 90-day period, the C&D Fund shall be entitled to
deliver another Take-Along Notice with respect to such Take-Along Offer.
(b) Conditions to Take-Along. Upon delivery of a Take-Along
Notice, the Purchaser shall have the obligation to transfer all of the Shares
pursuant to the Take-Along Offer, as such offer may be modified from time to
time, provided that the C&D Fund transfers all of its shares of common stock of
the Company to the 100% Buyer at the Section 8 Closing and that all shares of
common stock of the Company held by the C&D Fund are sold to the 100% Buyer at
the same price, and on the same terms and conditions. Within 10 days of receipt
of the Take-Along Notice, the Purchaser shall (i) deliver to the C&D Fund or an
affiliate thereof designated in the Take-Along Notice certificates representing
the Shares, duly endorsed for transfer or accompanied by duly executed stock
powers, and (ii) execute and deliver to the C&D Fund a power of attorney and a
letter of transmittal and custody agreement in favor, and in form and substance
reasonably satisfactory to, the C&D Fund appointing the C&D Fund or one or more
persons designated by the C&D Fund (the "Custodian") as the true and lawful
attorney-in-fact and custodian for the Purchaser, with full power of
substitution, and authorizing the Custodian to execute and deliver a purchase
and sale agreement substantially in the form of the Draft Sale Agreement and to
take such actions as the Custodian may deem necessary or appropriate to effect
the sale and transfer of the Shares to the 100% Buyer, upon receipt of the
purchase price therefor set forth in the Take-Along Notice at the Section 8
Closing, free and clear of all security interests, liens, claims, encumbrances,
charges, options, restrictions on transfer, proxies and voting and other
agreements of whatever nature, together with all other documents delivered with
such notice and required
15
<PAGE> 33
to be executed in connection with the sale thereof pursuant to the Take-Along
Offer. The Custodian shall hold the Shares and other documents in trust for the
Purchaser pending completion or abandonment of such sale. If, within 90 days
after the C&D Fund delivers the Take-Along Notice, the C&D Fund has not
completed the sale of all of the shares of common stock of the Company owned by
the C&D Fund and the Purchaser to the 100% Buyer and another Take-Along Notice
with respect to such Take-Along Offer has not been sent to the Purchaser, the
C&D Fund shall return to the Purchaser all certificates representing the Shares
and all other documents that the Purchaser delivered in connection with such
sale. The C&D Fund shall be permitted to send only two Take-Along Notices with
respect to any one Take-Along Offer. Promptly after the Section 8 Closing, the
C&D Fund shall give notice thereof to the Purchaser, shall remit to the
Purchaser the total consideration for the Shares sold pursuant thereto, and
shall furnish such other evidence of the completion and time of completion of
such sale and the terms thereof as may reasonably be requested by the Purchaser.
(c) Remedies. The Purchaser acknowledges that the C&D Fund
would be irreparably damaged in the event of a breach or a threatened breach by
the Purchaser of any of its obligations under this Section 8 and the Purchaser
agrees that, in the event of a breach or a threatened breach by the Purchaser of
any such obligation, the C&D Fund shall, in addition to any other rights and
remedies available to it in respect of such breach, be entitled to an injunction
from a court of competent jurisdiction (without any requirement to post bond)
granting it specific performance by the Purchaser of his obligations under this
Section 8. In the event that the C&D Fund shall file suit to enforce the
covenants contained in this Section 8 (or obtain any other remedy in respect of
any breach thereof), the prevailing party in the suit shall be entitled to
recover, in addition to all other damages to which it may be entitled, the costs
incurred by such party in conducting the suit, including reasonable attorneys'
fees and expenses. In the event that, following a breach or a threatened breach
by the Purchaser of the provisions of this Section 8, the C&D Fund does not
obtain an injunction granting it specific performance of the Purchaser's
obligations under this Section 8 in connection with any proposed sale prior to
the time the C&D Fund completes the sale of its shares of common stock of the
Company or the C&D Fund, in its sole discretion, abandons such sale, then the
Company shall have the option to purchase the Shares from the Purchaser at a
purchase price per Share
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<PAGE> 34
equal to the lesser of (i) the price per share at which the Purchaser purchased
the Shares from the Company pursuant to this Agreement and (ii) the price per
share offered in the applicable Take-Along Offer.
(d) Public Offering. In the event that a Public Offering has
been consummated, the provisions of this Section 8 shall terminate and cease to
have further effect.
9. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser that (a) the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the State of Delaware, (b) this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding obligation
of the Company enforce able against the Company in accordance with its terms,
and (c) the Shares, when issued, delivered and paid for in accordance with the
terms hereof, will be duly and validly issued, fully paid and nonassessable, and
free and clear of any liens or encumbrances other than those created pursuant to
this Agreement, or otherwise in connection with the transactions contemplated
hereby.
10. Covenants of the Company.
(a) Rule 144. The Company agrees that at all times after it
has filed a registration statement after the date hereof pursuant to the
requirements of the Securities Act or Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), relating to any class of equity
securities of the Company (other than (i) the registration of equity securities
of the Company and/or options in respect thereof to be offered primarily to
directors and members of management and employees of the Company, any of its
direct or indirect subsidiaries or any of their respective predecessors, and
senior executives of, or consultants to, corporations in which entities managed
or sponsored by Clayton, Dubilier & Rice, Inc. have made equity investments, or
(ii) the registration of equity securities and/or options in respect thereof
solely on Form S-4 or S-8 or any successor form), it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission thereunder (or, if the Company
is not required to file such reports, it will, upon the request of the
Purchaser, make publicly available such information as necessary to permit sales
pursuant to Rule 144 under the Securities Act), and will take such further
action as the Purchaser may
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<PAGE> 35
reasonably request, all to the extent required from time to time to enable the
Purchaser to sell Shares without registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144, as such Rule may be
amended from time to time, or (ii) any successor rule or regulation hereafter
adopted by the Commission.
(b) State Securities Laws. The Company agrees to use its best
efforts to comply with all state securities or "blue sky" laws applicable to the
sale of the Shares to the Purchaser, provided that the Company shall not be
obligated to qualify or register the Shares under any such law or to qualify as
a foreign corporation or file any consent to service of process under the laws
of any jurisdiction or subject itself to taxation as doing business in any such
jurisdiction.
11. Certain Restrictions on Repurchases.
(a) Financing Agreements, etc. Notwithstanding any other
provision of this Agreement, the Company shall not be permitted or obligated to
repurchase any Shares from the Purchaser if (i) such repurchase would result in
a violation of the terms or provisions of, or result in a default or an event of
default under any financing or security agreement or document entered into in
connection with the Spin-off or in connection with the operations of the Company
or its subsidiaries from time to time (such agreements and documents, as each
may be amended, modified or supplemented from time to time, are referred to
herein as the "Financing Agreements"), in each case as the same may be amended,
modified or supplemented from time to time, or (ii) such repurchase would
violate any of the terms or provisions of the Certificate of Incorporation of
the Company, or (iii) the Company has no funds legally available therefor under
the General Corporation Law of the State of Delaware.
(b) Delay of Repurchase. In the event that a repurchase by the
Company otherwise permitted or required under Section 6(a) is prevented solely
by the terms of Section 11(a), (i) such repurchase will be postponed and will
take place without the application of further conditions or impediments (other
than as set forth in Section 7 hereof or in this Section 11) at the first
opportunity thereafter when the Company has funds legally available therefor and
when such repurchase will not result in any default, event of default or
violation under any of the Financing Agreements or in a violation of any term or
provision of the Certificate of Incorporation of the Company and (ii) such
repur-
18
<PAGE> 36
chase obligation shall rank against other similar repurchase obligations with
respect to shares of Common Stock or options in respect thereof according to
priority in time of (A) the effective date of the termination of employment in
connection with any repurchase obligation arising pursuant to an exercise of the
option of the Company (x) under Section 6(a) of this Agreement or under the
comparable provision of any other applicable management stock subscription
agreement or (y) under any comparable provisions regarding the repurchase of
options of any applicable management stock option agreement, or (B) as to any
repurchase obligation arising pursuant to an exercise of any purchaser's right
to require a repurchase under Section 6(a) of this Agreement or the comparable
provisions of any other applicable management stock subscription agreement, the
date upon which the Company receives written notice of such exercise, provided
that any such repurchase obligations as to which a common date determines
priority under clause (A) or (B) above shall be of equal priority and shall
share pro rata in any repurchase payments made pursuant to clause (i) above and
provided, further, that any repurchase commitment arising from Permanent
Disability, death or Retirement at Normal Retirement Age or any repurchase
commitment made by the Board pursuant to Section 6(b) or the comparable
provisions of any other applicable management stock subscription agreement shall
have priority over any other repurchase obligation.
(c) Purchase Price Adjustment. In the event that a repurchase
of Shares from the Purchaser is delayed pursuant to this Section 11, the
purchase price per Share when the repurchase of such Shares eventually takes
place as contemplated by Section 11(b) shall be (i) if the repurchase is
pursuant to an exercise of the option of the Company under Section 6(a), the sum
of (A) the Purchase Price deter mined in accordance with Section 7 hereof at the
time that the repurchase of such Shares would have occurred but for the
operation of this Section 11, plus (B) an amount equal to interest on such
Purchase Price for the period from the date on which the completion of the
repurchase would have taken place but for the operation of this Section 11 to
the date on which such repurchase actually takes place (the "Delay Period") at a
rate equal to the weighted average cost of the Company's bank indebtedness
obligations outstanding during the Delay Period or, if there are no such
obligations outstanding, one percentage point greater than the average prime
rate charged during such period by Chase Bank or such other nationally
recognized bank designated by the Company, or (ii) if the repurchase is pursuant
to an exercise of the
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<PAGE> 37
Purchaser's right to require a repurchase under Section 6(a), the Fair Market
Value of such Shares (determined as set forth in Section 7(a)) on the date on
which such repurchase actually takes place.
12. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, the C&D Fund or the
Purchaser, as the case may be, at the following addresses or to such other
address as the Company, the C&D Fund or the Purchaser, as the case may be, shall
specify by notice to the others:
(i) if to the Company, to it at:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: General Counsel
(ii) if to the Purchaser, to the Purchaser at the address
set forth on the signature page hereof.
(iii) if to the C&D Fund, to:
The Clayton & Dubilier Private Equity
Fund IV Limited Partnership
270 Greenwich Avenue
Greenwich, Connecticut 06830
Attention: Clayton & Dubilier Associates
IV Limited Partnership,
Joseph L. Rice, III
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof. Copies of any notice or other communication given under this
Agreement shall also be given to:
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<PAGE> 38
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Attention: Alberto Cribiore
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
The C&D Fund also shall be given a copy of any notice or other communication
between the Purchaser and the Company under this Agreement at its address as set
forth above.
(b) Binding Effect; Benefits. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Except as provided in Sections 4 through 8,
inclusive, nothing in this Agreement, express or implied, is intended or shall
be construed to give any person other than the parties to this Agreement or
their respective successors or assigns any legal or equitable right, remedy or
claim under or in respect of any agreement or any provision contained herein.
(c) Waiver; Amendment.
(i) Waiver. Any party hereto may by written notice to the
other parties (A) extend the time for the performance of any of the
obligations or other actions of the other parties under this Agreement,
(B) waive compliance with any of the conditions or covenants of the
other parties contained in this Agreement and (C) waive or modify
performance of any of the obligations of the other parties under this
Agreement, provided that any waiver of the provisions of Sections 4
through 8, inclusive, must be consented to by the C&D Fund. Except as
provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representations,
warranties, covenants or agreements contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any preceding or succeeding
breach and no failure by a party to exercise
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<PAGE> 39
any right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a waiver of
such party's rights to exercise the same at any subsequent time or
times hereunder.
(ii) Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Purchaser and
the Company, provided that any amendment adversely affecting the rights
of the C&D Fund hereunder must be consented to by the C&D Fund. The
parties hereto acknowledge that the Company's consent to an amendment
or modification of this Agreement is subject to the terms and
provisions of the Financing Agreements.
(d) Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Purchaser without the prior written consent of
the other parties. The C&D Fund may assign from time to time all or any portion
of its rights under Sections 4 through 8, inclusive, to one or more persons or
other entities designated by it.
(e) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, REGARDLESS OF THE
LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICT OF LAWS.
(f) Section and Other Headings, etc. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
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<PAGE> 40
IN WITNESS WHEREOF, the Company and the Purchaser have
executed this Agreement as of the date first above written.
MCM GROUP, INC.
By: _____________________________________
Name:
Title:
THE PURCHASER:
Name
By: _____________________________________
Name:
Attorney-in-fact
Address of the Purchaser:
Address
Total Number of Shares of
Common Stock to be
Purchased: (Amount1) Shares
Aggregate Purchase Price: (Amount3)
23
<PAGE> 41
EXHIBIT B
[Form of Management Stock
Option Agreement]
18
<PAGE> 42
Exhibit B
MANAGEMENT STOCK OPTION AGREEMENT
MANAGEMENT STOCK OPTION AGREEMENT, dated as of October 8,
1996, between MCM Group, Inc., a Delaware corporation (the "Company"), and the
Grantee whose name appears on the signature page hereof (the "Grantee").
W I T N E S S E T H:
WHEREAS, on August 31, 1996, 100% of the outstanding Class A
common stock of the Company and 100% of the outstanding Class B common stock of
the Company was distributed to the stockholders of record of VK/AC Holding, Inc.
("VK/AC") on the record date for such distribution (such distribution, the
"Spin-off");
WHEREAS, immediately prior to the Spin-off, the Company
granted options to purchase an aggregate of approximately 48,359 shares of the
Class A common stock of the Company to those members of management of VK/AC and
its subsidiaries, including the Company and its subsidiaries, who, on the
effective date of the Spin-off, held options to purchase common stock of VK/AC;
WHEREAS, in connection with the Spin-off, the Board of
Directors of the Company has adopted the MCM Group, Inc. Stock Purchase Plan
(the "Stock Purchase Plan");
WHEREAS, on the date hereof, the Grantee and certain other
purchasers who are executives, senior officers or other key employees of the
Company or one of its direct or indirect subsidiaries have purchased an
aggregate of 18,200 shares of the Class C common stock of the Company, par value
$0.01 per share (the "Common Stock"), for a purchase price of $100.00 per
share, pursuant to the Stock Purchase Plan and separate management stock
subscription agreements between the Company and each such purchaser;
WHEREAS, in connection with the Spin-off, the Board of
Directors of the Company has adopted the MCM Group, Inc. Stock Option Plan (the
"Plan");
WHEREAS, pursuant to the terms of the Plan, the Board has
approved the grant to the Grantee of non-qualified stock options to purchase the
aggregate number of shares of Common Stock set forth under the heading "Initial
Value Options" on the signature page hereof, at an exercise price
<PAGE> 43
of $100 per share, and non-qualified options to purchase the aggregate number of
shares of Common Stock set forth under the heading "Premium Options" on the
signature page hereof, at an exercise price of $143.60 per share; and
WHEREAS, the Grantee and the Company desire to enter into an
agreement to evidence and confirm the grant of the options on the terms and
conditions set forth herein;
NOW, THEREFORE, to evidence the options so granted, and to set
forth its terms and conditions under the Plan, the Company and the Grantee
hereby agree as follows:
1. Definitions. Whenever used herein, the following terms
shall have the respective meanings set forth below:
(a) "Affiliate" means an entity controlling, controlled by or
under common control with the Company.
(b) "Alternative Option" has the meaning given in Section
9(c).
(c) "Applicable Portion" means, with respect to Performance
Options granted hereunder, the percentage obtained by dividing (i) the excess of
(x) the EBITDA actually achieved as of the Target Date (or other applicable date
of determination) over (y) the Minimum EBITDA Target by (ii) the excess of the
Maximum EBITDA Target over the Minimum EBITDA Target.
(d) "Board" means the Board of Directors of the Company.
(e) "C&D Fund" means The Clayton & Dubilier Private Equity
Fund IV Limited Partnership, a Connecticut limited partnership, and any
successor investment vehicle managed by Clayton, Dubilier & Rice, Inc.
(f) "Cause" means (i) the willful failure by the Grantee to
perform substantially his duties as an employee of the Company or any Subsidiary
(other than any such failure due to physical or mental illness) after a demand
for substantial performance is delivered to the Grantee by the executive to
which the Grantee reports or by the Board, which notice identifies the manner in
which such executive or the Board, as the case may be, believes that the Grantee
has not substantially performed his duties, (ii) the
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<PAGE> 44
Grantee's engaging in willful and serious misconduct that is or is expected to
be injurious to the Company or any Subsidiary, (iii) the Grantee's having been
convicted of, or entered a plea of guilty or nolo contendere to, a crime that
constitutes a felony, (iv) the willful and material breach by the Grantee of any
written covenant or agreement with the Company or any Subsidiary not to disclose
any information pertaining to the Company, any Subsidiary or any Affiliate or
not to compete or interfere with the Company, any Subsidiary or any Affiliate or
with respect to any take-along or similar covenants applicable to any Common
Stock of the Grantee or (v) any violation by the Grantee of any federal, state
or foreign securities laws; provided that in the event that the Participant is
employed by the Company or a Subsidiary under an effective employment agreement
on the date of determination and such employment agreement shall contain a
different definition of Cause, the definition of Cause contained in such
employment agreement shall be substituted for the definition set forth above for
all purposes hereunder.
(g) "Change of Control" means the first to occur after
the Grant Date of the following events:
(i) the acquisition by any person, entity or
"group" (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended), other than the Company, the
Subsidiaries, any employee benefit plan of the Company or the
Subsidiaries, or the C&D Fund, of 50% or more of the combined
voting power of the Company's then outstanding voting
securities;
(ii) the merger or consolidation of the Company, as
a result of which persons who were stockholders of the Company
immediately prior to such merger or consolidation, do not,
immediately thereafter, own, directly or indirectly more than
50% of the combined voting power entitled to vote generally in
the election of directors of the merged or consolidated
company;
(iii) the liquidation or dissolution of the Company;
and
(iv) the sale of all or substantially all of the
assets of the Company to one or more persons or entities that
are not, immediately prior to such sale, Affiliates.
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<PAGE> 45
(h) "Change in Control Price" means the price per share of
Common Stock paid in conjunction with any transaction resulting in a Change in
Control (as determined in good faith by the Board if any part of such price is
payable other than in cash).
(i) "Committee" means the Compensation Committee of the Board
(or such other committee of the Board which shall have jurisdiction over the
compensation of officers). If at any time no Committee shall be in office, the
Board shall perform the functions of the Committee.
(j) "Common Stock" means the Class C Common Stock, par value
$.01 per share, of the Company.
(k) "Company" means MCM Group, Inc., a Delaware corporation,
and any successor thereto.
(l) "EBITDA", for any period, shall mean the consolidated net
income of the Company and the Subsidiaries, determined prior to any reduction
for interest expense, taxes, depreciation or amortization.
(m) "Grant Date" means the date of this Agreement as of which
the Options are granted hereby.
(n) "Initial Value Options" means those Options granted
hereunder to purchase the number of Shares set forth under the heading "Initial
Value Options" on the signature page hereof, at an option exercise price equal
to $100.00 per share.
(o) "Involuntary Termination" means termination of the
Grantee's employment by the New Employer for any reason.
(p) "Maximum EBITDA Target" means, with respect to the
Performance Options granted hereunder, cumulative EBITDA of $25.8 million, which
shall be the cumulative EBITDA that the Company and the Subsidiaries must
achieve during the period commencing on the Grant Date and ending on the Target
Date for 100% of such Performance Options to become exercisable as of the Target
Date.
(q) "Minimum EBITDA Target" means, with respect to the
Performance Options granted hereunder, cumulative EBITDA of $22.2 million, which
shall be the minimum cumulative EBITDA that the Company and the Subsidiaries
must achieve during the period commencing on the Grant Date and
4
<PAGE> 46
ending on the Target Date for any portion of such Performance Options to become
exercisable as of the Target Date.
(r) "New Employer" means the Participant's employer, or the
parent or a subsidiary of such employer, immediately following a Change in
Control.
(s) "Option" means the right granted pursuant to Section 2
hereof to purchase one share of Common Stock at the price and on the terms and
conditions specified in this Agreement.
(t) "Permanent Disability" means a physical or mental
disability or infirmity that prevents the performance of the Grantee's
employment-related duties lasting (or likely to last, based on competent medical
evidence presented to the Board) for a period of six months or longer. The
Board's reasoned and good faith judgment as to Permanent Disability shall be
final and shall be based on such competent medical evidence as shall be
presented to it by the Grantee or by any physician or group of physicians or
other competent medical expert employed by the Grantee or the Company to advise
the Board.
(u) "Performance Option" means those Options granted hereunder
which become exercisable in accordance with the provisions of Section 3(b) based
upon the financial performance of the Company and the Subsidiaries.
(v) "Plan" means the MCM Group, Inc. Stock Option Plan, as the
same may be amended from time to time.
(w) "Premium Options" means Options granted hereunder to
purchase the number of Shares set forth under the heading "Premium Options" on
the signature page hereof, at an option exercise price of $143.60 per share.
(x) "Public Offering" means the first day as of which sales of
Class A common stock of the Company are made to the public in the United States
pursuant to an underwritten public offering of the Class A common stock of the
Company led by one or more underwriters, at least one of which is of nationally
recognized standing.
(y) "Retirement" means the Grantee's retirement at or after
age 60.
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<PAGE> 47
(z) "Service Options" means those Options granted hereunder
which become exercisable in accordance with the provisions of Section 3(a) based
upon the Grantee's completion of service with the Company and the Subsidiaries.
(aa) "Shares" means the shares of Common Stock
covered by the Options.
(bb) "Spin-off" means the distribution by VK/AC of 100% of the
outstanding Class A common stock of the Company and 100% of the outstanding
Class B common stock of the Company to the holders of record of the common stock
of VK/AC at the close of business on the record date for the distribution.
(cc) "Special Termination" means a termination of the
Grantee's active employment with the Company and the Subsidiaries that employ
the Grantee by reason of a termination by such employer Without Cause or a
termination due to death, Permanent Disability or Retirement or, in the event
that the Grantee is, at the time of such termination, party to an effective
employment agreement with the Company or any Subsidiary, dated as of the date
hereof, by the Grantee for "good reason," as defined in such employment
agreement.
(dd) "Subsidiary" means any corporation a majority of whose
outstanding voting securities is owned, directly or indirectly, by the Company.
(ee) "Target Date" means, with respect to Performance Options
granted hereunder, the third anniversary of the Grant Date.
2. Confirmation of Grant; Option Price. The Company hereby
evidences and confirms its grant to the Grantee, effective as of the date
hereof, of (a) the Initial Value Options, at an option exercise price of $100.00
per share, and (b) the Premium Options, at an option exercise price of $143.60
per share. The Options are not intended to be incentive stock options under the
U.S. Internal Revenue Code of 1986, as amended. This Agreement is subordinate
to, and the terms and conditions of the Options granted hereunder are subject
to, the terms and conditions of the Plan.
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<PAGE> 48
3. Exercisability.
(a) Service Options. Except as otherwise provided in this
Agreement, 50% of the Initial Value Options and 50% of the Premium Options (such
Initial Value Options and Premium Options, the "Service Options") shall become
available for exercise, subject to the provisions hereof, in 20% installments,
with the first installment becoming exercisable on the first anniversary of the
date of this Agreement and with an additional 20% becoming exercisable on each
of the second, third, fourth and fifth anniversaries of the date of this
Agreement, subject in each such case to the Grantee's continued employment with
the Company or a Subsidiary until such anniversary date.
(b) Performance Options. Except as otherwise provided in this
Agreement, the remaining 50% of the Initial Value Options and the remaining 50%
of the Premium Options (such remaining Initial Value Options and Premium
Options, the "Performance Options") shall become exercisable based on the
financial performance of the Company and the Subsidiaries during the period from
the Grant Date to the Target Date as follows. Except as otherwise provided in
this Agreement, the Applicable Portion of the Performance Options shall become
exercisable as of the Target Date, if and only if (i) the Company shall have
achieved at least the Minimum EBITDA Target as of such Target Date and (ii) the
Grantee shall have been continuously employed by the Company or one of the
Subsidiaries from the Grant Date until the Target Date; provided that, if the
Grantee's employment is sooner terminated by reason of a Special Termination,
then a proportionate share of the Applicable Portion of the Performance Options
(such proportionate share to be determined by multiplying (x) the Applicable
Portion, if any, determined as of the last day of the calendar quarter ending
prior to the date of the Special Termination for which the applicable financial
information is available, on the basis of the cumulative EBITDA achieved as of
such date, by (y) the product of (A) the number of Performance Options
multiplied by (B) a fraction, the numerator of which is equal to the number of
days in the period commencing on the Grant Date and ending on the date of the
Special Termination and the denominator of which is equal to 1,095) shall become
exercisable as of the date of such Special Termination. In the event of the
acceleration of the exercisability of any Performance Options by reason of a
Special Termination of the Grantee's employment prior to the Target Date,
one-half of such accelerated Performance Options shall be Initial
7
<PAGE> 49
Value Options and the remaining one-half of such accelerated Performance Options
shall be Premium Options.
Notwithstanding the foregoing provisions of this paragraph
(b), subject to the continuous employment of the Grantee with the Company or one
of the Subsidiaries, Performance Options shall become exercisable nine years
following the Grant Date, regardless of whether the EBITDA Target has been
achieved.
(c) Conditions. The Board may accelerate the exercisability of
any Option, all Options or any class of Options, at any time and from time to
time. Shares eligible for purchase may, subject to the provisions hereof,
thereafter be purchased, at any time and from time to time until the date one
day prior to the date on which the Options terminate, provided that any such
purchase shall be effected pursuant to and subject to the provisions contained
in the management stock subscription agreement related to such Shares. Any
Options held by the Grantee as of the date of the termination of his active
employment with the Company and the Subsidiaries that have not become
exercisable on or prior to the date of such termination in accordance with
Section 3(a) or 3(b) shall terminate and be cancelled immediately on such date.
4. Termination of Option.
(a) Normal Termination Date. Unless an earlier termination
date shall occur as specified in Section 4(b), the Options shall terminate on
the tenth anniversary of the date hereof (the "Normal Termination Date").
(b) Early Termination. If the Grantee's active employment with
the Company and the Subsidiaries that employ the Grantee is voluntarily or
involuntarily terminated for any reason whatsoever prior to the Normal
Termination Date, any Options that have not become exercisable on or before the
effective date of such termination of employment shall terminate on such
effective date. Any Options that have become exercisable on or before the
effective date of such termination of the Grantee's active employment shall,
subject to the provisions of Section 5(c), remain exercisable for whichever of
the following periods is applicable, and if not exercised within such period,
shall terminate upon the expiration of such period: (i) if the Grantee's active
employment is terminated by reason of a Special Termination, any Options held by
the Grantee and then exercisable shall remain exercisable solely until the
8
<PAGE> 50
first anniversary of the Grantee's termination of employment and (ii) if the
Grantee's active employment is terminated for any reason other than a Special
Termination or for Cause, any then exercisable Options held by such Grantee
shall remain exercisable for a period of sixty days after the earlier of (x) the
expiration of the Second Purchase Period (as defined in Section 5(c)(i)) and (y)
receipt by the Grantee of written notice that the C&D Fund does not intend to
exercise its right to purchase pursuant to Section 5(c)(i), provided that in no
event shall any Options be or remain exercisable on or after the Normal
Termination Date. Notwithstanding anything else contained in this Agreement, if
the Grantee's active employment with the Company and Subsidiaries that employ
the Grantee is terminated by any such employer for Cause, then all Options
(whether or not then exercisable) shall terminate and be cancelled immediately
upon such termination. Nothing in this Agreement shall be deemed to confer on
the Grantee any right to continue in the employ of the Company or any of the
Subsidiaries, or to interfere with or limit in any way the right of the Company
or any of the Subsidiaries to terminate such employment at any time.
5. Restrictions on Exercise; Non-Transferability of Option;
Repurchase of Option.
(a) Restrictions on Exercise. The Options may be exercised
only with respect to full shares of Common Stock. No fractional shares of Common
Stock shall be issued. Notwithstanding any other provision of this Agreement,
the Options may not be exercised in whole or in part, and no certificates
representing Shares shall be delivered, (i) unless all requisite approvals and
consents of any governmental authority of any kind having jurisdiction over the
exercise of options shall have been secured, (ii) unless the purchase of the
Shares upon the exercise of the Options shall be exempt from registration under
applicable U.S. federal and state securities laws, and applicable non-U.S.
securities laws, or the Shares shall have been registered under such laws, (iii)
unless all applicable U.S. federal, state and local and non-U.S. tax withholding
requirements shall have been satisfied and (iv) if such exercise would result in
a violation of the terms or provisions of or a default or an event of default
under any of the Financing Agreements (as such term is defined in Section 10).
The Company shall use commercially reasonable efforts to obtain the consents and
approvals referred to in clause (i) of the preceding sentence, to satisfy the
withholding requirements referred to in clause (iii) of the preceding sentence
and,
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<PAGE> 51
if applicable, to obtain the consent of the parties to the Financing Agreements
referred to in clause (iv) of the preceding sentence so as to permit the Options
to be exercised.
(b) Non-Transferability of Options. The Options may be
exercised only by the Grantee or by his estate. The Options are not assignable
or transferable, in whole or in part, and may not, directly or indirectly, be
offered, transferred, sold, pledged, assigned, alienated, hypothecated or
otherwise disposed of or encumbered (including without limitation by gift,
operation of law or otherwise) other than by will or by the laws of descent and
distribution to the estate of the Grantee upon his death, provided that the
deceased Grantee's beneficiary or the representative of his estate shall
acknowledge and agree in writing, in a form reasonably acceptable to the
Company, to be bound by the provisions of this Agreement and the Plan as if such
beneficiary or the estate were the Grantee.
(c) Repurchase of Option on Termination of Employment.
(i) Termination of Employment. If the Grantee's active
employment with the Company and any direct and indirect subsidiaries of
the Company that employ the Grantee is terminated for any reason, the
Company shall have an option to purchase all of those Options that have
become exercisable on or prior to the effective date of termination of
employment (the "Covered Options"), and shall have 60 days from the
date of the Grantee's termination (the "First Purchase Period") during
which to give notice in writing to the Grantee (or if his employment
was terminated by his death, his estate) of its election to exercise or
not to exercise such right to purchase all or any of the Covered
Options. The Company hereby undertakes to use reasonable efforts to act
as promptly as practicable following such termination to make such
election. If the Company fails to give notice that it intends to
exercise its right to purchase the Covered Options within the First
Purchase Period or the Company has given notice of its exercise of its
right to purchase only a portion of the Covered Options, the C&D Fund
shall have the right to purchase all or a portion of the Covered
Options that will not be purchased by the Company and shall have until
the expiration of the earlier of (x) 60 days following the end of the
First Purchase Period, or (y) 60 days from the date of receipt by the
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<PAGE> 52
C&D Fund of written notice that the Company does not intend to exercise
such right in full (the "Second Purchase Period"), to give notice in
writing to the Grantee (or his estate) of the C&D Fund's exercise of
its right to purchase all or any of the Covered Options. If the rights
to purchase the Covered Options of the Company and the C&D Fund granted
in this subsection are not exercised in full as provided herein, the
Grantee (or his estate) shall be entitled to retain the Covered Options
that will not be so repurchased, subject to all of the provisions of
this Agreement.
(ii) Purchase Price, etc. All purchases pursuant to this
Section 5(c) by the Company or the C&D Fund shall be for a purchase
price and in the manner prescribed by Sections 5(f), (g), and (h).
(d) Notice of Termination. The Company shall give written
notice of any termination of the Grantee's active employment with each of the
Company and any direct or indirect subsidiaries of the Company that employ the
Grantee to the C&D Fund, except that if such termination (if other than as a
result of death) is by the Grantee, the Grantee shall give written notice of
such termination to the Company and the Company shall give written notice of
such termination to the C&D Fund.
(e) Public Offering. In the event of a Public Offering, none
of the Company or the C&D Fund shall have any rights to purchase the Covered
Options pursuant to this Section 5, and this Section 5 shall not apply to a
sale as part of a Public Offering or at any time thereafter.
(f) Purchase Price. Subject to Section 10(c), the purchase
price to be paid to the Grantee (or his estate) for the Covered Option (the
"Purchase Price") shall be equal to the excess, if any, of (A) the fair market
value of the Shares which may be purchased upon exercise of the Covered Option
(the "Fair Market Value") as of the effective date of the termination of
employment that gives rise to the right or obligation to repurchase (such
effective date, the "Determination Date"), over (B) the aggregate exercise price
of the Covered Option. Whenever determination of the Fair Market Value of such
Shares is required by this Agreement, such Fair Market Value shall be such
amount as is determined in good faith by the Board. In making a determination of
Fair Market Value, the Board shall give due consideration to such factors as it
deems appropriate, including, without limitation, the earnings and certain other
financial and
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<PAGE> 53
operating information of the Company and the Subsidiaries in recent periods, the
potential value of the Company and the Subsidiaries as a whole, the future
prospects of the Company and the Subsidiaries and the industries in which they
compete, the history and management of the Company and the Subsidiaries, the
general condition of the securities markets, the fair market value of securities
of companies engaged in businesses similar to those of the Company and the
Subsidiaries and the Applicable Share Valuation, as defined below. The
determination of Fair Market Value will not give effect to any restrictions on
transfer of the Shares or the fact that such Shares would represent a minority
interest in the Company. For purposes of this Agreement, the term "Applicable
Share Valuation" shall mean the annual valuation of the Shares performed by an
independent valuation firm chosen by the Board as of the last day of the last
fiscal year of the Company ending prior to the Determination Date, except that,
in the case of a Determination Date occurring during the fourth fiscal quarter
of any fiscal year of the Company beginning with the fourth quarter of the 1996
fiscal year of the Company, the term "Applicable Share Valuation" shall mean the
annual valuation of the Shares performed by an independent valuation firm chosen
by the Board as of the last day of such fourth fiscal quarter. Such annual
valuations shall be performed as promptly as practicable following the end of
each fiscal year of the Company, beginning with the 1996 fiscal year of the
Company. The Fair Market Value as determined in good faith by the Board and in
the absence of fraud shall be binding and conclusive upon all parties hereto. If
the Company at any time subdivides (by any stock split, stock dividend or
otherwise) the Common Stock into a greater number of shares, or combines (by
reverse stock split or otherwise) the Common Stock into a smaller number of
shares, the Purchase Price shall be appropriately adjusted to reflect such
subdivision or combination.
(g) Closing of Purchase; Payment of Purchase Price. Subject to
Section 10, the closing of a purchase pursuant to this Section 5 shall take
place at the principal office of the Company on the tenth business day following
the receipt by the Grantee (or his estate) of the C&D Fund's or the Company's
notice of exercise of the right to purchase any of the Covered Options pursuant
to Section 5(c). At the closing, (i) subject to the proviso below, the Company,
shall pay the Purchase Price to the Grantee (or his estate) by delivery of a
check for the Purchase Price payable to the order of the Grantee (or his estate)
and (ii) the Grantee (or his estate) shall deliver to the Company such instru-
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<PAGE> 54
ments as the Company may reasonably request signed by the Grantee (or his
estate); provided, however, that if the Determination Date occurs during the
first or last fiscal quarter of any fiscal year of the Company, the Company may
defer the payment of a portion of the Purchase Price until the tenth business
day following receipt by the Company of the Applicable Share Valuation (such
tenth business day, the "Deferred Payment Date"). In the event of any such
deferral, (i) at the closing of the purchase of the Covered Option, the Company
shall pay to the Grantee (or his estate) an amount (the "First Installment
Amount") equal to 80% of the excess of (A) the Fair Market Value of the Shares
which may be purchased upon exercise of the Covered Option, determined pursuant
to Section 5(f) hereof on the basis of the most recent available valuation of
the Shares, over (B) the aggregate exercise price of the Covered Option, and
(ii) no later than the Deferred Payment Date, the Company shall pay an
additional amount to the Grantee (or his estate) equal to the excess, if any, of
(A) the sum of (1) the Purchase Price for the Covered Option and (2) an amount
calculated by multiplying the First Installment Amount by a percentage equal to
the average annual cost to the Company of its bank indebtedness obligations
outstanding during the period that payment of a portion of the Purchase Price is
delayed hereunder or, if there are no such obligations outstanding, one
percentage point greater than the average annual prime rate charged during such
period by Chase Bank or such other nationally recognized bank designated by the
Company, over (B) the First Installment Amount.
(h) Application of the Purchase Price to Certain Loans. The
Grantee agrees that the Company and the C&D Fund shall be entitled to apply any
amounts to be paid by the Company or the C&D Fund, as the case may be, to
repurchase the Covered Option pursuant to this Section 5 to discharge any
indebtedness of the Grantee to the Company or any of its direct or indirect
subsidiaries, or indebtedness that is guaranteed by the Company or any of its
subsidiaries, including, but not limited to, any indebtedness of the Grantee
incurred to purchase any shares of Common Stock.
(i) Withholding. Whenever Shares are to be issued pursuant to
the Option, the Company may require the recipient of the Shares to remit to the
Company an amount sufficient to satisfy any applicable U.S. federal, state and
local and non-U.S. tax withholding requirements. In the event any cash is paid
to the Grantee or his estate or beneficiary pursuant to this Section 5, the
Company shall have the right to withhold an amount from such payment sufficient
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<PAGE> 55
to satisfy any applicable U.S. federal, state and local and non-U.S. tax
withholding requirements. If shares of Common Stock are traded on a national
securities exchange or bid and ask prices for shares of Common Stock are quoted
on the NASDAQ National Market System ("NASDAQ") operated by the National
Association of Securities Dealers, Inc., the Company may, if requested by the
Grantee, withhold Shares to satisfy applicable withholding requirements, subject
to the provisions of the Plan and any rules adopted by the Board or the
Committee regarding compliance with applicable law, including, but not limited
to, Section 16(b) of the U.S. Securities Exchange Act of 1934, as amended (the
"Exchange Act").
6. Manner of Exercise. To the extent that the Options shall
have become and remain exercisable as provided in Section 3 and subject to such
reasonable administrative regulations as the Board or the Committee may have
adopted, such Options may be exercised, in whole or in part, by notice to the
Secretary of the Company in writing given 15 business days prior to the date on
which the Grantee will so exercise any of the Options (the "Exercise Date"),
specifying the number of Shares with respect to which the Options are being
exercised (the "Exercise Shares") and the Exercise Date, provided that if shares
of Common Stock are traded on a U.S. national securities exchange or bid and ask
prices for shares of Common Stock are quoted over NASDAQ, notice may be given
five business days before the Exercise Date. On or before the Exercise Date, the
Company and the Grantee shall enter into a management stock subscription
agreement (the "Exercise Management Stock Subscription Agreement") substantially
in the form attached to the Plan as Exhibit B, or in such other form as may be
agreed upon by the Company and the Grantee. In accordance with the Exercise
Management Stock Subscription Agreement, (a) on or before the Exercise Date, the
Grantee shall deliver to the Company full payment for the Exercise Shares in
United States dollars in cash, or cash equivalent satisfactory to the Company,
and in an amount equal to the aggregate option exercise price for the Exercise
Shares and (b) on the Exercise Date, the Company shall deliver to the Grantee a
certificate or certificates representing the Exercise Shares, registered in the
name of the Grantee. If shares of common stock of the Company are listed for
trading on a national securities exchange or bid and ask prices for shares of
common stock of the Company are quoted over NASDAQ, the Grantee may, in lieu of
cash, tender shares of common stock of the Company having a market price on the
Exercise Date equal to the aggregate option exercise price for the Exercise
Shares or may deliver a combination
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<PAGE> 56
of cash and shares of common stock of the Company having a market price equal to
the difference between such aggregate exercise price and the amount of such cash
as payment for the aggregate option exercise price for the Exercise Shares,
subject to such rules and regulations as may be adopted by the Board or the
Committee to provide for the compliance of such payment procedure with
applicable law, including Section 16(b) of the Exchange Act. The Company may
require the Grantee to furnish or execute such other documents as the Company
shall reasonably deem necessary (i) to evidence such exercise, (ii) to determine
whether registration is then required under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and (iii) to comply with or satisfy the
requirements of the Securities Act, applicable state or non-U.S. securities laws
or any other law.
7. Grantee's Representations, Warranties and Covenants.
(a) Investment Intention. The Grantee represents and warrants
that the Options have been, and any Exercise Shares will be, acquired by him
solely for his own account for investment and not with a view to or for sale in
connection with any distribution thereof. The Grantee agrees that he will not,
directly or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise
dispose of any of the Options or Exercise Shares (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of any of the Options or Exercise
Shares), except in compliance with the Securities Act and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder, and in compliance with applicable state and foreign securities or
"blue sky" laws. The Grantee further understands, acknowledges and agrees that
none of the Exercise Shares may be transferred, sold, pledged, hypothecated or
otherwise disposed of unless the provisions of the related Exercise Management
Stock Subscription Agreement and the Certificate of Incorporation of the
Company shall have been complied with or have expired.
(b) Legend. The Grantee acknowledges that any certificate
representing the Exercise Shares shall bear an appropriate legend, which will
include, without limitation, the following language:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TRANSFER RESTRICTIONS, HOLDBACK AND
OTHER PROVISIONS OF A MANAGEMENT STOCK
SUBSCRIPTION AGREEMENT, DATED AS OF OCTOBER 8,
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<PAGE> 57
1996, AND NEITHER THIS CERTIFICATE NOR THE SHARES REPRESENTED
BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH MANAGEMENT STOCK
SUBSCRIPTION AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE ENTITLED TO CERTAIN OF THE BENEFITS OF AND ARE
BOUND BY THE OBLIGATIONS SET FORTH IN A REGISTRATION AND
PARTICIPATION AGREEMENT, DATED AS OF AUGUST 31, 1996, AND ANY
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS THERETO, AMONG THE
COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS (i) (A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (B) THE HOLDER HERE OF SHALL HAVE DELIVERED TO THE
COMPANY AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL
BE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
SUCH DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
SUCH ACT OR (C) A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION, REASONABLY SATISFACTORY TO COUNSEL FOR
THE COMPANY, SHALL HAVE BEEN OBTAINED WITH RESPECT TO SUCH
DISPOSITION AND (ii) SUCH DISPOSITION IS PURSUANT TO
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM."
(c) Securities Law Matters. The Grantee acknowledges receipt
of advice from the Company that (i) the Exercise Shares will not be registered
under the Securities Act or any state or foreign securities or "blue sky" laws,
(ii) it is not anticipated that there will be any public market for the Exercise
Shares, (iii) the Exercise Shares must be held indefinitely and the Grantee must
continue to bear the economic risk of the investment in the Exercise Shares
unless the Exercise Shares are subsequently registered under the Securities Act
and such state or foreign laws or an exemption from registration is available,
(iv) Rule 144 under the Securities Act ("Rule 144") is not presently available
with respect to sales of securities of the Company and the Company has made no
covenant to make
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<PAGE> 58
Rule 144 available, (v) when and if the Exercise Shares may be disposed of
without registration in reliance upon Rule 144, such disposition can generally
be made only in limited amounts in accordance with the terms and conditions of
such Rule, (vi) the Company does not plan to file reports with the Commission or
make information concerning the Company publicly available, (vii) if the
exemption afforded by Rule 144 is not available, sales of the Exercise Shares
may be difficult to effect because of the absence of public information
concerning the Company, (viii) a restrictive legend in the form heretofore set
forth shall be placed on the certificates representing the Exercise Shares and
(ix) a notation shall be made in the appropriate records of the Company
indicating that the Exercise Shares are subject to restrictions on transfer set
forth in this Agreement and, if the Company should in the future engage the
services of a stock transfer agent, appropriate stop-transfer restrictions will
be issued to such transfer agent with respect to the Exercise Shares.
(d) Compliance with Rule 144. If any of the Exercise Shares
are to be disposed of in accordance with Rule 144 under the Securities Act, the
Grantee shall transmit to the Company an executed copy of Form 144 (if required
by Rule 144) no later than the time such form is required to be transmitted to
the Commission for filing and such other documentation as the Company may
reasonably require to assure compliance with Rule 144 in connection with such
disposition.
(e) Ability to Bear Risk. The Grantee covenants that he will
not exercise all or any portion of any of the Options prior to the registration
of the Shares under the Securities Act unless (i) the financial situation of the
Grantee is such that he can afford to bear the economic risk of holding the
Exercise Shares for an indefinite period and (ii) he can afford to suffer the
complete loss of his investment in the Exercise Shares.
(f) Registration; Restrictions on Transfer; Holdback upon
Public Offering. In respect of any Exercise Shares purchased upon exercise of
any of the Options, the Grantee shall be entitled to the rights and subject to
the obligations created under the Registration and Participation Agreement,
dated as of August 31, 1996, as the same may be amended from time to time, among
the Company and certain stockholders of the Company, to the extent set forth
therein. The Grantee shall also be subject to the restrictions on transfer
contained in the Exercise
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Management Stock Subscription Agreement. Further, the Grantee agrees that, in
the event that the Company files a registration statement under the Securities
Act with respect to an underwritten public offering of any shares of its capital
stock, the Grantee will not effect any public sale (including a sale under Rule
144) or distribution of any shares of Common Stock (other than as part of such
underwritten public offering) during the 20 days prior to and the 180 days after
the effective date of such registration statement.
(g) Section 83(b) Election. The Grantee agrees that, within 20
days after any Exercise Date, he shall give notice to the Company as to whether
or not he has made or will make an election pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, with respect to the Exercise Shares
purchased on such date, and acknowledges that he will be solely responsible for
any and all tax liabilities payable by him in connection with his receipt of
the Exercise Shares or attributable to his making or failing to make such an
election.
8. Representations and Warranties of the Company. The Company
represents and warrants to the Grantee that (a) the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the State of Delaware, (b) this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding obligation
of the Company enforce able against the Company in accordance with its terms,
and (c) the Exercise Shares, when issued, delivered and paid for, upon exercise
of any of the Options in accordance with the terms hereof and the Exercise
Management Stock Subscription Agreement, will be duly and validly issued, fully
paid and nonassessable, and free and clear of any liens or encumbrances other
than those created pursuant to this Agreement or otherwise in connection with
the transactions contemplated hereby.
9. Change in Control.
(a) Accelerated Exercisability and Payment. Unless the Board
shall otherwise determine in the manner set forth in Section 9(c), in the event
of a Change in Control, each Service Option (whether or not then exercisable)
and the Applicable Portion of the Performance Options, determined as provided in
Section 9(b) below, shall be cancelled in exchange for a payment in cash of an
amount equal to the excess, if any, of the Change in Control Price
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<PAGE> 60
over the aggregate exercise price for such Options. Such payment shall be made
within 30 days following the closing of the transaction constituting the Change
in Control. Subject to Section 9(c) below, all Performance Options then
outstanding, other than the Applicable Portion of such Performance Options,
shall be canceled and forfeited effective as of the closing of such transaction.
(b) Determination of Exercisable Performance Options. For
purposes of Section 9(a), the Applicable Portion of the Performance Options that
shall be canceled in exchange for the payment described in Section 9(a) shall be
determined on the basis of the cumulative EBITDA achieved during the period from
the Grant Date to the last day of the calendar quarter ending prior to the date
of the consummation of the transaction constituting the Change in Control for
which the applicable financial information is available.
(c) Alternative Options. Notwithstanding Sections 9(a)
and 9(b), no cancellation, acceleration of exercisability, vesting or cash
settlement or other payment shall occur with respect to any Option if the Board
reasonably determines in good faith, prior to the occurrence of a Change in
Control, that such Option shall be honored or assumed, or new rights substituted
therefor (such honored, assumed or substituted Option being hereinafter referred
to as an "Alternative Option") by the New Employer, provided that any such
Alternative Option must:
(i) provide the Grantee with rights and entitlements
substantially equivalent to or better than the
rights, terms and conditions applicable under such
Option, including, but not limited to, an identical
or better exercise and vesting schedule, and
identical or better timing and methods of payment;
(ii) have substantially equivalent economic value to such
Option (determined at the time of the Change in
Control); and
(iii) have terms and conditions which provide that in the
event that the Grantee suffers an Involuntary
Termination within two years following a Change in
Control:
(1) any conditions on the Grantee's rights
under, or any restrictions on transfer
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<PAGE> 61
or exercisability applicable to, each such
Alternative Option shall be waived or shall
lapse, as the case may be; or
(2) the Grantee shall have the right to
surrender such Alternative Option within 30
days following such termination in exchange
for a payment in cash equal to the excess of
the Fair Market Value of the common stock
subject to the Alternative Option over the
price, if any, that the Grantee would be
required to pay to exercise such Alternative
Option.
10. Certain Restrictions on Repurchases.
(a) Financing Agreements, etc. Notwithstanding any other
provision of this Agreement, the Company shall not be permitted to repurchase
any Covered Options from the Grantee if (i) such repurchase would result in a
violation of the terms or provisions of, or result in a default or an event of
default under, any financing or security agreement or document entered into in
connection with the Spin-off or the operations of the Company or the
Subsidiaries from time to time (such agreements and documents, as each may be
amended, modified or supplemented from time to time, are referred to herein as
the "Financing Agreements"), in each case as the same may be amended, modified
or supplemented from time to time, or (ii) such repurchase would violate any of
the terms or provisions of the Certificate of Incorporation of the Company, or
(iii) the Company has no funds legally available therefor under the General
Corporation Law of the State of Delaware.
(b) Delay of Repurchase. In the event that a repurchase
by the Company otherwise permitted or required under Section 5(c) is prevented
solely by the terms of Section 10(a), (i) such repurchase will be postponed and
will take place without the application of further conditions or impediments
(other than as set forth in Section 5 hereof or in this Section 10) at the first
opportunity thereafter when the Company has funds legally available therefor and
when such repurchase will not result in any default, event of default or
violation under any of the Financing Agreements or in a violation of any term or
provision of the Certificate of Incorporation of the Company and (ii) such
repurchase obligation shall rank against other similar repurchase obligations
with respect to shares of Common Stock or
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options in respect thereof according to priority in time of (A) the effective
date of the termination of employment in connection with any repurchase
obligation arising pursuant to an exercise of the option of the Company under
Section 5(c)(i) of the applicable management stock option agreements or under
the comparable provisions of any applicable management stock subscription
agreements, or (B) as to any repurchase obligation arising pursuant to an
exercise of any holder's right to require a repurchase under any applicable
management stock subscription agreement, the date upon which the Company
receives written notice of such exercise, provided that any such repurchase
obligations as to which a common date determines priority under clause (A) or
(B) above shall be of equal priority and shall share pro rata in any repurchase
payments made pursuant to clause (i) above and provided, further, that any
repurchase commitment with respect to shares of Common Stock arising from
Permanent Disability, death, Retirement or financial hardship pursuant to any
applicable management stock subscription agreement shall have priority over any
other repurchase obligation.
(c) Purchase Price Adjustment. In the event that a repurchase
of any Covered Options from the Grantee is delayed pursuant to this Section 10,
the purchase price for such Covered Options when the repurchase of such Covered
Options eventually takes place as contemplated by Section 10(b) shall be the
sum of (i) the Purchase Price of such Covered Option determined in accordance
with Section 5(f) at the time that the repurchase of such Option would have
occurred but for the operation of this Section 10, plus (ii) an amount equal to
interest on such Purchase Price for the period from the date on which the
completion of the repurchase would have taken place but for the operation of
this Section 10 to the date on which such repurchase actually takes place (the
"Delay Period") at a rate equal to the weighted average cost of the Company's
bank indebtedness obligations outstanding during the Delay Period or, if there
are no such obligations outstanding, one percentage point greater than the
average prime rate charged during such period by Chase Bank or such other
nationally recognized bank designated by the Company.
11. No Rights as Stockholder. The Grantee shall have no voting
or other rights as a stockholder of the Company with respect to any Shares
covered by the Options until the exercise of the Options and the issuance of a
certificate or certificates to him for such Shares. No adjustment shall be made
for dividends or other rights for
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<PAGE> 63
which the record date is prior to the issuance of such certificate or
certificates.
12. Capital Adjustments. The number and price of the Shares
covered by the Options shall be proportionately adjusted to reflect any stock
dividend, stock split or share combination of the Common Stock or any
recapitalization of the Company. Subject to any required action by the stock
holders of the Company, in any merger, consolidation, reorganization, exchange
of shares, liquidation or dissolution, the Options shall pertain to the
securities and other property, if any, that a holder of the number of shares of
Common Stock covered by the Options would have been entitled to receive in
connection with such event.
13. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, the C&D Fund or the
Grantee, as the case may be, at the following addresses or to such other address
as the Company, the C&D Fund or the Grantee, as the case may be, shall specify
by notice to the others:
(i) if to the Company, to it at:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: General Counsel
(ii) if to the Grantee, to the Grantee at the address set
forth on the signature page hereof.
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(iii) if to the C&D Fund, to:
The Clayton & Dubilier Private Equity
Fund IV Limited Partnership
270 Greenwich Avenue
Greenwich, Connecticut 06830
Attention: Clayton & Dubilier Associates
IV Limited Partnership,
Joseph L. Rice, III
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof. Copies of any notice or other communication given under this
Agreement shall also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Attention: Alberto Cribiore
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
The C&D Fund also shall be given a copy of any notice or other communication
between the Grantee and the Company under this Agreement at its address as set
forth above.
(b) Binding Effect; Benefits. This Agreement shall be
binding upon and inure to the benefit of the parties to this Agreement and
their respective successors and assigns. Except as provided in Section 5,
nothing in this Agreement, express or implied, is intended or shall be
construed to give any person other than the parties to this Agreement or their
respective successors or assigns any legal or equitable right, remedy or claim
under or in respect of any agreement or any provision contained herein.
(c) Waiver; Amendment.
(i) Waiver. Any party hereto may by written notice to the
other parties (A) extend the time for the
23
<PAGE> 65
performance of any of the obligations or other actions of the other
parties under this Agreement, (B) waive compliance with any of the
conditions or covenants of the other parties contained in this
Agreement and (C) waive or modify performance of any of the obligations
of the other parties under this Agreement, provided that any
waiver of the provisions of Section 5 must be consented to by the C&D
Fund. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained
herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach and no failure by a party to exercise
any right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a waiver of
such party's rights to exercise the same at any subsequent time or
times hereunder.
(ii) Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Grantee and
the Company, provided that any amendment adversely affecting the rights
of the C&D Fund hereunder must be consented to by the C&D Fund. The
parties hereto acknowledge that the Company's consent to an amendment
or modification of this Agreement is subject to the terms and
provisions of the Financing Agreements.
(d) Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Grantee without the prior written consent of
the other parties. The C&D Fund may assign from time to time all or any portion
of its rights under Section 5 to one or more persons or other entities
designated by it.
(e) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, REGARDLESS OF THE
LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICT OF LAWS.
(f) Section and Other Headings, etc. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or
24
<PAGE> 66
interpretation of this Agreement. In this Agreement all references to "dollars"
or "$" are to United States dollars.
(g) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
25
<PAGE> 67
IN WITNESS WHEREOF, the Company and the Grantee have executed
this Agreement as of the date first above written.
MCM GROUP, INC.
By: _________________________________
Name:
Title:
THE GRANTEE:
Name
By: _________________________________
Name:
Attorney-in-fact
Address of the Grantee:
Address
Initial Value Options Premium Options
Total Number of
Shares of Common
Stock for the
Purchase of Which
Options have Been
Granted: Amount 4 Shares
26
<PAGE> 68
ANNEX A
[Form of Promissory Note]
<PAGE> 69
(Name)
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned and its successors,
assigns, heirs and personal representatives ("Borrower"), hereby unconditionally
promises to pay to the order of McCarthy, Crisanti & Maffei, Inc., its
successors and assigns ("MCM") at the office of MCM, One Chase Manhattan Plaza,
New York, New York 10005, in lawful money of the United States and in
immediately available funds, the aggregate principal sum set forth on the
signature page hereof, as follows:
1. Repayment of Principal. On September 1, 2001, the entire
unpaid principal balance of this Note shall be due and payable, together with
all interest and other charges due hereunder, unless earlier due and payable by
reason of the acceleration of the maturity of this Note.
2. Interest. Borrower agrees to pay interest on this Note
("Note"), which interest payment shall be due and payable, quarterly in arrears
commencing January 1, 1997 and continuing on the first day of each and every
January, April, July and October thereafter while this Note is outstanding at a
rate per annum equal to seven percent (7%) (the "Interest Rate").
Interest at the Interest Rate shall be calculated by computing
a daily amount of interest for a hypothetical year of 360 days, then multiplying
such amount by the actual number of days elapsed in an interest calculation
period.
If any payment which is to be made hereunder is not paid when
due, such payment shall bear interest, payable on demand, at a rate per annum
equal to the Interest Rate plus 2 percent (2%), but not to exceed the maximum
amount permitted by law.
If the payment of principal or interest on this Note becomes
payable on a Saturday, Sunday or a day on which MCM is to be closed, then such
payment shall be extended to the next succeeding business day, and interest on
such payment shall be payable at the Interest Rate during such extension.
3. Use of Funds. Borrower covenants and agrees that the funds
advanced pursuant to this Note shall be used to finance Borrower's purchase of
shares of Class C common stock, par value $.01 per share (hereinafter referred
to as "Stock"), of MCM Group, Inc., a Delaware corporation
<PAGE> 70
(Name)
("MGI"), pursuant to that certain Management Stock Subscription Agreement dated
as of the date hereof between Borrower and MGI.
4. Voluntary Prepayments. This Note may be prepaid in whole or
in part at any time without premium or penalty, but with interest on the amount
being prepaid through the date of prepayment, with written notice to MCM
received one (1) business day prior to such prepayment specifying the amount of
prepayment. Partial prepayments of principal shall be in whole multiples of
$1,000.
5. Mandatory Prepayment in connection with Sale of Stock.
Borrower hereby covenants and agrees that if Borrower shall sell, transfer or
otherwise dispose of any shares of Stock (a "Stock Sale") to any person,
including, but not limited to, MGI or MCM, or to any of either of their
respective successors or assigns, then Borrower shall be obligated to,
immediately after Borrower's receipt of the proceeds of such Stock Sale, prepay
this Note by the amount equal to the proceeds of such Stock Sale (less any
necessary fees, commissions or expenses paid by Borrower in connection
therewith), which amount shall be automatically due and payable under this Note
on such date. Such prepayment(s) shall be without penalty, but with interest on
the amount required to be prepaid through the date of prepayment. Borrower
covenants and agrees to notify MCM immediately in writing if Borrower sells,
transfers or otherwise disposes of any shares of Stock to any person other than
MCM.
6. Mandatory Prepayment in connection with Termination Event.
In the event a "Termination Event" (as defined below) occurs, MCM may demand
prepayment in full of the obligations evidenced by this Note by written notice
to Borrower (an "Acceleration Notice"). If MCM sends an Acceleration Notice to
Borrower requiring prepayment as set forth above, Borrower shall be required to
prepay the outstanding principal balance of this Note in full, together with all
unpaid accrued interest and other charges, on (i) if the Termination Date occurs
prior to an underwritten public offering of the common stock of MGM led by one
or more underwriters, at least one of which is a nationally recognized standing,
the first day immediately following the expiration of the periods during which
MGI or the Clayton & Dubilier Private Equity Fund IV Limited Partnership may
repurchase any shares of Stock or, if applicable, the Borrower may require MGI
to repurchase the shares of stock or (ii) in all other events, the date which is
ten (10) days after the occurrence of the Termination Event. For purposes of
this Note, a "Termination Event" shall be deemed to have
2
<PAGE> 71
(Name)
occurred in the event that Borrower's employment with MCM is terminated for any
reason whatsoever.
7. Defaults. If any of the following events shall occur: (1)
default by Borrower in the payment of any of the obligations or liabilities of
Borrower to MCM hereunder; (2) Borrower's failure to make the mandatory
prepayment required under paragraph 5 of this Note in the event of a Stock Sale;
(3) Borrower's failure to make the mandatory prepayment required under paragraph
6 of this Note in the event of a Termination Event; or (4) the appointment of a
custodian, trustee, liquidator or receiver for or for any of the property of, or
an assignment for the benefit of creditors by, Borrower; then, at the option of
MCM, this Note and all other obligations of Borrower shall become due and
payable forthwith, upon declaration to that effect by MCM, without notice to
Borrower, anything contained herein or in any other document, instrument or
agreement to the contrary notwithstanding. This Note shall become immediately
and automatically due and payable, without presentment, demand, protest or
notice of any kind, upon the commencement by or against Borrower of a case or
proceeding under any bankruptcy, insolvency or other law relating to the relief
of debtors, the readjustment, composition or extension of indebtedness or
reorganization or liquidation.
8. Costs. Borrower agrees to pay on demand all reasonable
costs and expenses incurred by MCM incidental to or in any way relating to MCM's
collection of this Note, enforcement of the obligations of Borrower hereunder or
the administration, supervision, preservation or protection of MCM's rights in
connection herewith, including, but not limited to, reasonable attorneys' fees
and expenses.
9. WAIVER OF JURY TRIAL. BORROWER AND MCM HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF OR
IN ANY WAY CONNECTED WITH THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10. GOVERNING LAW. THE PROVISIONS OF THIS NOTE SHALL BE
CONSTRUED AND INTERPRETED AND ALL RIGHTS AND OBLIGATIONS HEREUNDER DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS.
11. Advice of Counsel. Borrower acknowledges that it has had
the opportunity to obtain the advice of counsel of its own choosing in entering
into this Note and the transactions contemplated hereby. Borrower is fully aware
of the contents of this Note and its legal effect and
3
<PAGE> 72
(Name)
is entering into this Note without threat, coercion, fraud or duress of any
kind. Borrower is not relying on any representation, statement, warranty of any
party regarding this Note or the transaction contemplated hereby.
12. Miscellaneous. Borrower hereby authorizes MCM to date this
Note as of the date of the making of the loan evidenced hereby and to complete
any blank space herein according to the terms upon which said loan was granted.
13. Counter-Claims, Set-Off. Borrower waives the right to
interpose any counterclaim or set-off of any kind in any litigation relating to
this Note or the transaction contemplated hereby.
14. Assignment. This Note shall be assignable in full or in
part by MCM without the consent of Borrower. No obligation or rights of Borrower
hereunder can be assigned or transferred without the prior written consent of
MCM.
15. No Waiver; Cumulative Remedies. No failure on the part of
MCM to exercise, and no delay in exercising, any right, remedy or power
hereunder shall operate as waiver thereof, nor shall any single or partial
exercise by MCM of any right, remedy or power hereunder preclude any other or
future exercises of any other right, remedy or power.
Each and every right, remedy and power hereby granted to MCM
or allowed it by law or other agreement shall be cumulative and not exclusive
the one of any other, and may be exercised by MCM from time to time.
16. Severability. Every provision of this Note is intended to
be severable; if any term or provision of this Note shall be invalid, illegal or
unenforceable for any reason whatsoever, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired.
17. Headings. The section headings in this Note are for
convenience only and are not intended to effect the construction of the
provisions of this Note.
4
<PAGE> 73
(Name)
18. ENTIRE AGREEMENT. THIS NOTE REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NOT
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Principal Amount of Loan: $______________
Social Security of Borrower: ___ __ ____
WITNESS BORROWER
By:__________________ _____________________________
Name (Name)
_____________________ _____________________________
Date Date
ADDRESS OF BORROWER
(Address)
5
<PAGE> 1
Exhibit 10.15
DATED 1996
--------------------------------------------
McCarthy, Cristani & Maffei (Europe) Limited (1)
- and -
Malcom Alan Cook (2)
-and-
MCM Group, Inc. (3)
--------------------------------------------
SERVICE AGREEMENT
as Chief Executive
--------------------------------------------
Lovell White Durrant
37 Avenue Pierre ler de Serbie
75008 Paris
PARIS/JC/DWT
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE NO
<S> <C>
1. APPOINTMENT AND TERM 1
2. DUTIES 2
3. REMUNERATION 3
4. PENSION AND INSURANCE BENEFITS 4
5. EXPENSES 4
6. MOTOR CAR 4
7. HOLIDAYS AND HOLIDAY PAY 4
8. SICKNESS/INCAPACITY 5
9. CONFIDENTIAL INFORMATION 6
10. RESTRICTIVE COVENANTS 6
11. TERMINATION ON THE HAPPENING OF CERTAIN EVENTS 8
12. OBLIGATIONS UPON TERMINATION OF EMPLOYMENT 9
13. OTHER TERMS AND CONDITIONS 10
14 STOCK PURCHASES AND OPTIONS 11
15. DEFINITIONS 12
16. MISCELLANEOUS 12
</TABLE>
<PAGE> 3
SERVICE AGREEMENT
THIS AGREEMENT made the day of 1996
BETWEEN:
(1) McCarthy, Cristani & Maffei (Europe) Limited (Registered Number
3094797) whose registered office is at 21 Holborn Viaduct, London
EC1A 2DY (the "Company"); and
(2) Malcom Alan Cook of 128 Bluehouse Lane, Limpsfield, Surrey RH8 OAR (the
"Executive"); and
(3) MCM Group, Inc., a company organised and existing under the laws of the
State of Delaware ("MCM").
WHEREAS:
(1) The Company wishes to employ the Executive and the Executive has agreed
to serve the Company on the terms and conditions set out in this
Agreement.
(2) MCM is the ultimate parent company of the Company.
IT IS AGREED:
PART I
1. APPOINTMENT AND TERM
The Company shall employ the Executive and the Executive shall serve
the Company as Chief Executive or in such other capacity as the Company
may reasonably require with effect from the continuation of his
previous employment with McCarthy, Cristani & Maffei, Incorporated
which began on 24th February 1986. Either the Executive or the Company
may terminate the employment at any time by giving to the other not
less than 3 calendar months' notice in writing. The Company reserves
the right to terminate the Executive's employment by payment in lieu of
notice.
<PAGE> 4
2. DUTIES
2.1 During his employment hereunder the Executive shall:
(a) perform the duties and exercise the powers and functions which
from time to time may reasonably be assigned to or vested in
him by the Board of Directors (the "Board") in relation to the
Company and any Associated Company (as herein defined) at such
place or places both within and outside the United Kingdom as
the Board shall determine;
(b) during working hours devote the whole of his time, attention
and ability to his duties hereunder and shall faithfully and
loyally serve the Company to the best of his ability and use
his utmost endeavours to promote its interests in all
respects;
(c) comply with all reasonable requests, instructions and
regulations given or made by the Board (or by any one
authorised by it) and promptly provide such explanations,
information and assistance as to his activities or the
business of the Company as the Board may reasonably require;
(d) comply with all group policies and compliance procedures
insofar as relevant to his duties hereunder. For this purpose
the "group" includes MCM and its Associated Companies as
defined in clause 14;
(e) not engage in any activities which would detract from the
proper performance of his duties hereunder, nor without the
prior written consent of the Board in any capacity including
as director, shareholder, principal, consultant, agent,
partner or employee of any other company, firm or person (save
as the holder for investment of securities which do not exceed
three percent (3%) in nominal value of the share capital or
stock of any class of any company quoted on a recognised stock
exchange) engage or be concerned or interested directly or
indirectly in any other trade, business or occupation
whatsoever.
2.2 Notwithstanding the provisions of clause 2.1 the Company shall:
(a) be entitled at any time to appoint another person or persons
to act jointly with the Executive;
(b) have the right to require the Executive at any time to carry
out such special projects or functions commensurate with his
abilities as the Company shall in its absolute discretion
determine.
2
<PAGE> 5
3. REMUNERATION
3.1 As remuneration for his services hereunder the Company shall pay to the
Executive a salary composed of two elements: (a) a base salary at the
rate of one hundred and fifteen thousand pounds per annum (which shall
be deemed to accrue from day to day) and (b) a bonus in respect of
revenues generated from sales of subscriptions to the services of the
Group (meaning MCM and its Associated Companies) as outlined in the
statement attached as Annex A hereto as amended from time to time
payable as to the base salary in (a) by equal monthly installments on
or about the 15th of each month and the bonus element in (b) quarterly
in arrears such salary being inclusive of any fees to which the
Executive may be entitled as a director of the Company or of any
Associated Company. The said salary shall be reviewed by the Board from
time to time and the rate thereof may be increased with effect from any
such review date. In addition, the Executive shall be entitled to
annual or other bonuses at the absolute discretion of the Company in
accordance with the Company's policy as communicated from time to time
to the Executive.
3.2 For the purposes of the Wages Act 1986 and otherwise the Executive
hereby consents to the deduction of any sums owing by him to the
Company in respect of monies advanced to him by the Company at any time
from his salary or any other payment due from the Company to the
Executive and the Executive hereby also agrees to make any payment to
the Company of any sums owed by him to the Company upon demand by the
Company at any time.
4. PENSION AND INSURANCE BENEFITS
4.1 The Executive shall be entitled to be a member of the MCM Group
Personal Pension Plan (the "Scheme"), particulars of which may be
obtained from the Company Secretary. The Executive's membership of the
Scheme shall be subject to the provisions thereof as amended from time
to time.
4.2 The Company shall provide the Executive with private medical insurance,
income protection in the event of long term disablement and life
assurance, particulars of which may be obtained from the Company
Secretary. The Company shall have the right to change its arrangements
for the provision of such benefits as it sees fit from time to time.
5. EXPENSES
The Company shall reimburse to the Executive all travelling, hotel,
entertainment and other expenses properly and reasonably incurred by
him in the performance of his duties hereunder and properly claimed and
vouched
3
<PAGE> 6
for in accordance with the Company's expense reporting procedure in
force from time to time.
6. MOTOR CAR
The Company shall not be obliged to provide the Executive with a motor
car. However, in lieu thereof the Company shall pay to the Executive as
additional salary, an allowance towards the cost and maintenance of a
motor car of (pound) 600 per month (to be paid at the same time as
salary). This shall terminate if the Executive shall cease to own or
lease a motor car suitable to his status or if the Executive ceases for
any reason to hold a valid driving licence.
7. HOLIDAYS AND HOLIDAY PAY
7.1 In addition to the normal Bank and public holidays the Executive shall
be entitled to 25 working days' paid holiday during each calendar year
to be taken at such time or times as may be agreed with the Board. The
Executive may not without the consent of the Board carry forward more
than one week in total any unused part of his holiday entitlement to a
subsequent calendar year.
7.2 For the calendar year during which the Executive's employment hereunder
commences or terminates he shall be entitled to such proportion of his
annual holiday entitlement as the period of his employment in each such
year bears to one calendar year. Upon termination of his employment for
whatever reason he shall if appropriate either be entitled to salary in
lieu of any outstanding holiday entitlement or be required to pay to
the Company any salary received in respect of holiday taken in excess
of his proportionate holiday entitlement, in either case adjusted to
take account of items falling within clause 3.2.
8. SICKNESS/INCAPACITY
8.1 If the Executive shall be prevented by illness, accident or other
incapacity from properly performing his duties hereunder he shall
report this fact forthwith to the Company Secretary's office and if he
is so prevented for more than seven consecutive days (including
weekends) he shall if required by the Company provide an appropriate
doctor's certificate.
8.2 If the Executive shall be absent from his duties hereunder owing to
illness, accident or other incapacity duly certified in accordance with
the provisions of clause 8.1 he shall be paid his full remuneration for
the first three months of such absence and thereafter subject to the
provisions of clause 11 such remuneration as the Board shall in its
discretion allow PROVIDED THAT there shall be deducted from such
remuneration any Statutory Sick Pay or any social
4
<PAGE> 7
security or other benefits payable to the Executive including any sums
recoverable from a third party and any sums payable to the Executive
under the permanent health insurance arrangement referred to in clause
4.2 above.
9. CONFIDENTIAL INFORMATION
The Executive shall not during his employment hereunder (save in the
proper course thereof) or at any time after its termination for any
reason whatsoever disclose to any person whatsoever or otherwise make
use of any confidential or secret information which he has or may have
acquired in the course of his employment concerning, but not limited
to, the business, affairs, finance, customers or trade connections of
the Company or any Associated Company or any of its or their suppliers,
agents, distributors or customers and shall use his best endeavours to
prevent the unauthorised publication or disclosure of any such
confidential or secret information.
10. RESTRICTIVE COVENANTS
10.1 Since the Executive will in the course of his employment hereunder have
dealings with customers and obtain knowledge of the trade secrets and
other confidential information in regard to the business of the Company
and its Associated Companies, the Executive hereby agrees and
undertakes with the Company for itself and as trustee for its
Associated Companies that he shall not without the prior written
consent of the Board (such consent to be withheld only so far as may be
reasonably necessary to protect the legitimate interests of the Company
or any Associated Company):
(a) during the period of his employment and for a period of 12
months after the termination for whatever reason of his
employment hereunder be engaged or interested (whether as a
director, shareholder, principal, consultant, agent, partner
or employee) in any business concern (of whatever kind) which
shall be in competition with the Company or with any
Associated Company in the provision of services of a kind with
which the Executive was concerned to a material extent during
the period of one year prior to the termination of his
employment with the Company;
(b) during the period of his employment and for a period of 12
months after the termination for whatever reason of his
employment hereunder either on his own behalf or on behalf of
any other person, firm or company in respect of any services
of a kind provided by the Company and/or any Associated
Company in respect of the provision of which the Executive may
have been engaged during his employment with the Company or
any Associated Company:
5
<PAGE> 8
(i) canvass, solicit or approach or cause to be
canvassed, solicited or approached for orders; or
(ii) directly or indirectly deal with any person, firm or
company who at the date of the termination of this
Agreement or within one year prior to such date is or
was a client or customer of the Company or any
Associated Company or was in the habit of dealing
under contract with the Company or any Associated
Company and with whom or which the Executive had
contact during the said period; and
(c) during the period of his employment and for a period of 12
months after the termination for whatever reason of his
employment hereunder either on his own behalf or on behalf of
any other person, firm or company directly or indirectly
solicit or entice or endeavour to solicit or entice away from
the Company or from any Associated Company any employee of
executive or managerial status engaged in its or their
business
Provided that (unless termination is by reason of the default of the
Executive entitling the Company to terminate this contract under clause
11(c) or (e) or if the Executive resigns) the provisions of this clause
shall only apply after the "Compensated Period" so long as the Company
continues to pay the Executive his base salary at the same level as at
the moment immediately prior to termination taking effect. The
"Compensated Period" means a period equal to the number of weeks by
reference to which any payment under Clause 12.2 is calculated
commencing with the date of termination of the Executive's employment
(or, in the event that the Executive is not required to work out any
notice period) from the time the Executive actually ceased working for
the Company.
10.2 Whilst each of the restrictions in clauses 10.1(a), 10.1(b) and 10.1(c)
are considered by the parties to be reasonable in all the circumstances
as at the date hereof it is hereby agreed and declared that if any one
or more of such restrictions shall be found by a court of competent
jurisdiction to be void as going beyond what is reasonable in all the
circumstances for the protection of the interests of the Company and/or
any Associated Company but would be valid if words were deleted
therefrom the said restrictions shall be deemed to apply with such
modifications as may be necessary to make them valid and effective and
any such modification shall not thereby affect the validity of any
other restriction contained herein.
6
<PAGE> 9
10.3 INJUNCTIVE RELIEF WITH RESPECT TO COVENANTS
The Executive acknowledges and agrees that the covenants and
obligations of the Executive contained in this clause relate to
special, unique and extraordinary matters and that a breach of any of
the terms of such covenants and obligations will cause the Company
damage for which damages may not be an adequate remedy. Therefore, the
Executive agrees that the Company shall be entitled to seek an
injunction, restraining order or such other relief as a court of
competent jurisdiction may deem necessary or appropriate to restrain
the Executive from committing any breach of the covenants and
obligations contained in this Clause 10. These injunctive remedies are
cumulative and in addition to any other rights and remedies the Company
may have.
11. TERMINATION ON THE HAPPENING OF CERTAIN EVENTS
The Company without prejudice to any remedy which it may have against
the Executive for the breach or non-performance of any of the
provisions of this Agreement may by notice in writing to the Executive
forthwith terminate this Agreement and the Executive's employment if
the Executive shall:
(a) become bankrupt or become the subject of an interim order
under the Insolvency Act 1986 or make any arrangement or
composition with his creditors; or
(b) become a patient as defined in the Mental Health Act 1983; or
(c) be convicted of any criminal offence (other than an offence
under road traffic legislation in the United Kingdom or
elsewhere unless a custodial sentence is imposed); or
(d) be prevented by illness or otherwise from performing his
duties hereunder for a consecutive period of six calendar
months or for an aggregate period of six calendar months in
any period of 12 calendar months; or
(e) be guilty of any serious misconduct, any conduct tending to
bring the Company or himself into disrepute, or any material
or persistent breach or non-observance of any of the
provisions of this Agreement or shall neglect, fail or refuse
without reasonable excuse to carry out duties properly
assigned to him hereunder.
7
<PAGE> 10
12. OBLIGATIONS UPON TERMINATION OF EMPLOYMENT
12.1 Upon the termination of his employment hereunder for whatever reason
the Executive shall:
(a) forthwith tender his resignation as a Director of the Company
and of any Associated Company without compensation. To secure
his obligation under this Agreement the Executive irrevocably
appoints the Company to be his attorney in his name and on his
behalf to sign any documents and do any things necessary to
give effect thereto, if the Executive shall fail to sign or do
the same himself;
(b) deliver up to the Company all vehicles, keys, credit cards,
correspondence, documents, specifications, reports, papers and
records (including any computer materials such as discs or
tapes) and all copies thereof and any other property (whether
or not similar to the foregoing or any of them) belonging to
the Company or any Associated Company which may be in his
possession or under his control, and (unless prevented by the
owner thereof) any such property belonging to others which may
be in his possession or under his control and which relates in
any way to the business or affairs of the Company or any
Associated Company or any supplier, agent, distributor or
customer of the Company or any Associated Company, and he
shall not without written consent of the Board retain any
copies thereof;
(c) if so requested send to the Company Secretary a signed
statement confirming that he has complied with clause 12(b);
and
(d) not at any time represent himself still to be connected with
the Company or any Associated Company.
12.2 On termination (otherwise than by virtue of default of the Executive
entitling the Company to terminate this contract under clause 11(c) or
(e) or in a case where the Executive resigns) the Executive shall be
entitled to six weeks' remuneration plus two weeks' remuneration for
each complete year of service with the Company or Associated Companies.
For this purpose "remuneration" means the base salary set out in Clause
3.1(a) based on the last complete calendar year. Any period of paid
notice actually given and not worked shall count towards any obligation
to make payment under this clause.
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<PAGE> 11
13. OTHER TERMS AND CONDITIONS
13.1 The provisions of the Company's standard terms and conditions of
employment shall apply to the Executive's employment hereunder except
so far as inconsistent herewith.
13.2 The following particulars are given in compliance with the requirements
of section 1 Employment Protection (Consolidation) Act 1978:
(a) the Executive's normal place of work is Mill House, Mill
Street, London SE1 but he may be required to work at any other
office or location in the UK as may be directed by the Board
from time to time;
(b) the Executive shall also be required to travel on the
Company's business at all reasonable times and in particular
shall be obliged to make himself available in other locations
in which the group (as defined in clause 2.1(d)) is present at
all reasonable times;
(c) the Executive's continuous employment began on 24th February
1986. No employment of the Executive with a previous employer
counts as part of the Executive's continuous employment with
the Company;
(d) the Executive's hours of work shall be the normal hours of
work of the Company which are from 9.00 am to 6.00 pm together
with such additional hours as may be necessary for the proper
discharge of his duties hereunder to the satisfaction of the
Board;
(e) any grievance or other dissatisfaction should in the first
instance be discussed with the Board;
(f) contracting-out certificate pursuant to the provisions of
Pension Schemes Act 1993 is in force in respect of the
Executive's employment hereunder; and
(g) save as otherwise herein provided there are no terms or
conditions of employment relating to hours of work or to
normal working hours or to entitlement to holiday (including
public holidays) or holiday pay or to incapacity for work due
to sickness or injury or to pensions or pension schemes.
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<PAGE> 12
PART II
14. STOCK PURCHASES AND OPTIONS
14.1 The Executive shall be given the opportunity to purchase up to 1,750
shares (the "Shares") of the Class C Common Stock of MCM, par value
US$.01 per share (the "Common Stock"), at a purchase price of US$100
per share, but in no event shall MCM be required to offer to sell or to
sell any Shares to the Executive at any time at which making such an
offer or selling any such Shares would violate any applicable
securities law. The terms and conditions of the Executive's purchase of
any Shares, including the right of first refusal of MCM with respect to
such Shares, the right of MCM to purchase such Shares from the
Executive under certain circumstances and the right of the Executive to
require MCM to purchase such Shares under certain circumstances, shall
be set forth in a separate Management Stock Subscription Agreement,
substantially in the form attached hereto as Annex B, to be entered
into by MCM and the Executive.
14.2 Upon the purchase of the Shares pursuant to Clause 14.1, the Executive
shall be granted non-qualified stock options to purchase additional
shares of the Common Stock, each such option to be granted pursuant to
the terms of the MCM Stock Option Plan (the "Stock Option Plan") and to
have a ten year term, as follows: (i) the Executive shall be granted
options to purchase up to an aggregate of 4,236 shares of Common Stock
(or, if less, a number of Shares purchased by the Executive pursuant to
Clause 14.1, multiplied by (y) 2.42) (the "Options"), (ii) one-half of
the Options shall be granted at an exercise price per share equal to
US$100 (the "Initial Value Options") and the remaining one-half of such
Options shall be granted at an exercise price of US$143.60 (the
"Premium Options"), (iii) one-half of the Initial Value Options and
one-half of the Premium Options shall generally become exercisable in
five equal annual installments on each of the first five anniversaries
of the date of grant and (iv) the remaining one-half of the Initial
Value Options and the remaining one-half of the Premium Options shall
generally become exercisable (A) as of third anniversary of the date of
grant, if and only if MCM and its subsidiaries shall have achieved the
maximum EBITDA target provided for under the terms of the Option
Agreement (as defined below), provided that if MCM and its subsidiaries
shall have achieved EBITDA as of such anniversary date greater than the
minimum EBITDA target specified in the Option Agreement but less than
the maximum EBITDA target so specified, a proportionate share of the
Performance Options shall become exercisable as of such date, or (B)
nine years following the date of grant, subject, in the case of (iii)
and (iv) above, to the Executive's continuous employment through the
applicable vesting date. The terms and conditions of the Options
(including those described therein) shall be set forth in the Stock
Option Plan and a separate Management Stock
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<PAGE> 13
Option Agreement substantially in the form attached hereto as Annex C,
to be entered into by the Executive and MCM (the "Option Agreement").
PART III
15. DEFINITION
In this Agreement an "Associated Company" means any company which for
the time being is:
(h) a holding company (as defined by s 736 Companies Act 1985) of
the Company; or
(i) any subsidiary (as defined by s 736 Companies Act 1985) of any
such holding company or of the Company; or
(j) a company over which the Company has control within the
meaning of s 840 Income and Corporation Taxes Act 1988.
16. MISCELLANEOUS
16.1 Part I of this Agreement constitutes the entire agreement between the
Company and the Executive and replaces all and any prior agreements relating to
the employment of the Executive with the Company or any Associated Company. This
Agreement may only be modified in writing signed by the Company and the
Executive.
16.2 Part I of this Agreement shall be governed by and construed in
accordance with the laws of England. Part II shall be governed by the
laws of the State of New York. The provisions of Part III shall be
deemed incorporated into each of Part I and Part II.
16.3 SEVERABILITY
In the event that any one or more of the provisions of this Agreement
shall be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected thereby.
16.4 NOTICES
Any notice or other communication required or permitted to be delivered
under this Agreement shall be (i) in writing, (ii) delivered
personally, by courier service or by registered mail, first-class
postage prepaid and return
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<PAGE> 14
receipt requested, (iii) deemed to have been received on the date of
delivery or (if sent by post) on the third business day after the
mailing thereof, and (iv) addressed to the intended recipient at the
address set out at the head of this Agreement (or such other address as
is notified for the purpose);
16.5 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and
the same instrument.
16.6 HEADINGS
The section and other headings contained in this Agreement are for the
convenience of the parties only and are not intended to be a part
hereof or to affect the meaning or interpretation hereof.
IN WITNESS whereof this deed has been duly executed and delivered the day and
year first before written.
Executed as a deed by )
McCarthy, Cristani and Maffei (Europe) Limited )
acting by )
________________________________
Director
________________________________
Director/Secretary
Signed as a deed by )
M.A. Cook )
in the presence of: )
________________________________
Witness's name and signature
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<PAGE> 15
________________________________
Witness's address
Executed as a deed by )
MCM Group, Inc. )
acting by )
________________________________
Authorised signatory
13
<PAGE> 16
Exhibit A
See Exhibit A to Exhibit 10.14
<PAGE> 17
Exhibit B
See Exhibit B to Exhibit 10.14.
<PAGE> 18
ANNEX A
Annex A filed as Annex A to Exhibit 10.14.
<PAGE> 19
Annex B
BONUS
Bonus is based on the achievement of annual budgeted revenue from the
Europe/Africa/Gulf (EAG) region.
BONUS CALCULATION
PERFORMANCE RANGE BONUS AWARD
----------------- -----------
120% or greater of objective 150% of year-end salary
115% to 119.9% of objective 135% of year-end salary
110% to 114.9% of objective 120% of year-end salary
105% to 109.9% of objective 110% of year-end salary
100% to 104.9% of objective 100% of year-end salary
90% to 99.9% of objective 90% of year-end salary
80% to 89.9% of objective 60% of year-end salary
70% to 79.9% of objective 30% of year-end salary
Below 70% 0% of year-end salary
PAYMENT
Bonus payments will be made on a quarterly basis based on the following
calculation;
1st quarter award 50% of earned amount
2nd quarter award 50% of earned amount plus balance of 1st quarter
3rd quarter award 50% of earned amount plus balance of 2nd quarter
4th quarter award earned amount plus balance of 3rd quarter
<PAGE> 1
EXHIBIT 10.16
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 31, 1996, among McCarthy,
Crisanti & Maffei, Inc., a New York corporation ("Employer"), MCM Group, Inc.,
a Delaware corporation ("Holding"), and Anthony Napolitano (the "Employee").
W I T N E S S E T H :
WHEREAS, on August 31, 1996, 100% of the outstanding shares of common
stock of Holding was distributed to the stockholders of record of VK/AC Holding,
Inc. on the record date for such distribution (such distribution, the
"Spin-off");
WHEREAS, in order to secure the continued services of the Employee
following the Spin-off, Employer desires to enter into an agreement embodying
the terms of such employment (the "Agreement"); and
WHEREAS, the Employee desires to accept such continued employment and
enter into such Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, Employer and the
Employee hereby agree as follows:
1. Agreement to Employ. Upon the terms and subject to the conditions of
this Agreement, Employer hereby employs the Employee and the Employee hereby
accepts employment by Employer.
2. Term; Position and Responsibilities.
(a) Term of Employment. Unless the Employee's employment shall sooner
terminate pursuant to Section 7, Employer shall employ the Employee for an
initial term commencing on the date hereof and ending on the third anniversary
thereof. Employment shall thereafter be deemed to be automatically extended,
upon the same terms and conditions, for successive periods of two years each,
unless either party, at least one year prior to the expiration of the initial
term or any extended term, shall give written notice to the other of its
intention not to renew such employment. The period during which Employee is
employed pursuant to this Agreement, including any extension thereof in
accordance with the preceding sentence, shall be referred to as the "Employment
Period".
<PAGE> 2
(b) Position and Responsibilities. During the term of the Employee's
employment hereunder, the Employee will serve as Senior Vice President of
Employer and the Employee will devote all of his skill, knowledge and working
time (except for (i) reasonable vacation time and absence for sickness or
similar disability and (ii) to the extent that it does not interfere with the
performance of the Employee's duties hereunder, (A) such reasonable time as may
be devoted to service on boards of directors and the fulfillment of civic
responsibilities, (B) reasonable time as may be necessary from time-to-time for
personal financial matters and (C) reasonable time as may be devoted to the
teaching of university courses and similar activities to enhance Employee's
professional reputation) to the conscientious performance of such duties. The
Employee represents that he is entering into this Agreement voluntarily and
that his employment hereunder and compliance by him with the terms and
conditions of this Agreement will not conflict with or result in the breach of
any agreement to which he is a party or by which he may be bound.
3. Base Salary. As compensation for the services to be performed by the
Employee hereunder, Employer will pay the Employee an annual base salary of
$123,000 during the Employment Period and, in the event that employment
hereunder is terminated by death, for one month thereafter. Employer will review
the Employee's base salary from time to time during the Employment Period and,
in the discretion of the Board of Directors of Employer ("Employer's Board"),
may increase such base salary from time to time based upon the performance of
the Employee, the financial condition of Employer, prevailing industry salary
scales and such other factors as Employer's Board shall consider relevant. (The
annual base salary payable to the Employee under this Section 3, as the same
may be increased from time to time, shall hereinafter be referred to as the
"Base Salary".) The Base Salary payable under this Section 3 shall be reduced to
the extent that the Employee elects to defer such Base Salary under the terms of
any deferred compensation or savings plan maintained or established by Employer.
Employer shall pay the Employee the Base Salary in semi-monthly installments, or
in such other installments as may be mutually agreed upon by Employer and the
Employee.
4. Incentive Compensation Arrangements.
(a) Incentive Compensation. During the Employment Period, the Employee
shall participate in Employer's incentive compensation programs for its
executive officers existing from time to time, including Employer's Special
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<PAGE> 3
Compensation Arrangements, a copy of which is attached hereto as Exhibit C,
existing from time to time.
(b) Opportunity to Purchase Shares. The Employee shall be given the
opportunity to purchase up to 1,750 shares (the "Shares") of the Class C Common
Stock of Holding, par value $.01 per share (the "Common Stock"), at a purchase
price of $100 per share, but in no event shall Holding be required to offer to
sell or to sell any Shares to the Employee at any time at which making such an
offer or selling any such Shares would violate any applicable securities law.
The terms and conditions of the Employee's purchase of any Shares, including the
right of first refusal of Holding with respect to such Shares, the right of
Holding to purchase such Shares from the Employee under certain circumstances
and the right of the Employee to require Holding to purchase such Shares under
certain circumstances, shall be set forth in a separate Management Stock
Subscription Agreement, substantially in the form attached hereto as Exhibit A,
to be entered into by Holding and the Employee.
(c) Options. Upon the purchase of the Shares pursuant to Section 4(b),
the Employee shall be granted non-qualified stock options to purchase additional
shares of the Common Stock, each such option to be granted pursuant to the terms
of the MCM Group, Inc. Stock Option Plan (the "Stock Option Plan") and to have a
ten year term, as follows: (i) Employee shall be granted options to purchase up
to an aggregate of 4,236 shares of Common Stock (or, if less, a number of shares
of Common Stock equal to the product of (x) the number of Shares purchased by
the Employee pursuant to Section 4(b), multiplied by (y) 2.42)(the Options"),
(ii) one-half of the Options shall be granted at an exercise price per share
equal to $100 (the "Initial Value Options") and the remaining one-half of such
Options shall be granted at an exercise price of $143.60 (the "Premium
Options"), (iii) one-half of the Initial Value Options and one-half of the
Premium Options shall generally become exercisable in five equal annual
installments on each of the first five anniversaries of the date of grant and
(iv) the remaining one-half of the Initial Value Options and the remaining
one-half of the Premium Options shall generally become exercisable (A) as of the
third anniversary of the date of grant, if and only if Holding and its
subsidiaries shall have achieved the maximum EBITDA target provided for under
the terms of the Option Agreement (as defined below), provided that if Holding
and its subsidiaries shall have achieved EBITDA as of such anniversary date
greater than the minimum EBITDA target specified in the Option Agreement but
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<PAGE> 4
less than the maximum EBITDA target so specified, a proportionate share of the
Performance Options shall become exercisable as of such date, or (B) nine years
following the date of grant, subject, in each such case under the following
clauses (iii) and (iv), to the Employee's continuous employment through the
applicable vesting date. The terms and conditions of the Options (including
those described herein) shall be set forth in the Stock Option Plan and a
separate Management Stock Option Agreement, substantially in the form attached
hereto as Exhibit B, to be entered into by the Employee and Holding (the "Option
Agreement").
5. Employee Benefits. During the term of the Employee's employment
hereunder, employee benefits, including life, medical, dental and disability
insurance, will be provided to the Employee in accordance with programs of
Employer then available to executive employees. The Employee shall also be
entitled to participate in all of Employer's profit sharing, pension,
retirement, deferred compensation and savings plans, as the same may be amended
and in effect from time to time, at levels and having interests commensurate
with the Employee's then current period of service, compensation and position.
6. Perquisites and Expenses.
(a) General. During the term of the Employee's employment hereunder,
the Employee shall be entitled to participate in any special benefit or
perquisite program generally available from time to time to executive officers
of Employer on the terms and conditions then prevailing under such program.
(b) Business Travel, Lodging, etc. Employer shall reimburse the
Employee for reasonable travel, lodging and meal expenses incurred by him in
connection with his performance of services hereunder upon submission of
evidence, satisfactory to Employer, of the incurrence and purpose of each such
expense.
(c) Vacation and Sick Days. The Employee shall be entitled to four
weeks of paid vacation per year, or such other longer period as Employer's Board
may determine to be appropriate, without, except as permitted in the discretion
of the chairman of Employer's Board, carry-over accumulation. The Employee shall
be entitled to continue to accumulate paid sick days in accordance with the
current policies of the Employer.
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<PAGE> 5
7. Termination of Employment.
(a) Termination Due to Death or Disability. In the event that the
Employee's employment hereunder terminates due to death or is terminated by
Employer due to the Employee's Disability (as defined below), no termination
benefits shall be payable to or in respect of the Employee except as provided in
Section 7(f)(ii). For purposes of this Agreement, "Disability" shall mean a
physical or mental disability that prevents the performance by the Employee of
his duties hereunder lasting for a continuous period of six months or longer.
The reasoned and good faith judgment of Employer's Board as to the Employee's
Disability shall be final and shall be based on such competent medical evidence
as shall be presented to it by the Employee or by any physician or group of
physicians or other competent medical experts employed by the Employee or
Employer to advise Employer's Board.
(b) Termination by Employer for Cause. The Employee's employment may be
terminated for "Cause" by Employer. "Cause" shall mean (i) the willful failure
of the Employee substantially to perform his duties hereunder (other than any
such failure due to Disability) for a period of three business days after a
written demand for substantial performance is delivered to the Employee by
Employer's Board, which written notice identifies the manner in which Employer's
Board believes that the Employee has not substantially performed his duties,
(ii) in the reasonable judgment of the Board, the Employee's engaging in willful
and serious misconduct that is injurious to Employer or any of its affiliates,
(iii) the Employee's conviction of, or entering a plea of nolo contendere to, a
crime that constitutes a felony, (iv) the violation by the Employee of any
federal or state securities law, other than an immaterial violation of a
procedural law, or (v) the willful and material breach by the Employee of any of
his material obligations hereunder, or the breach by the Employee of any written
covenant or agreement with Employer or any of its affiliates not to disclose any
information pertaining to Employer or any of its affiliates, not to compete or
interfere with Employer or any of its affiliates or with respect to any
take-along or similar covenants applicable to the Shares, Options or any other
common stock of Holding held by the Employee, including without limitation the
covenants set forth in Sections 8, 9, 10 and 11 hereof.
(c) Termination Without Cause. A termination "Without Cause" shall mean
a termination of employment by
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<PAGE> 6
Employer other than due to Disability as described in Section 7(a) or Cause as
defined in Section 7(b).
(d) Termination by the Employee. The Employee may terminate his
employment for "Good Reason". "Good Reason" shall mean a termination of
employment by the Employee within 30 days following (i) any assignment to the
Employee of any duties that are significantly different from, and result in a
substantial diminution of, the duties that he is to assume on the date hereof,
(ii) the failure of Employer to obtain the assumption of this Agreement by any
successor as contemplated by Section 14 or (iii) any reduction of the Employee's
Base Salary or incentive compensation opportunity from the levels set forth in
Sections 3 and 4(a) hereof, respectively.
(e) Notice of Termination. Any termination by Employer pursuant to
Section 7(a), 7(b) or 7(c), or by the Employee pursuant to Section 7(d), shall
be communicated by a written "Notice of Termination" addressed to the other
parties to this Agreement. A "Notice of Termination" shall mean a notice stating
that the Employee's employment hereunder has been or will be terminated,
indicating the specific termination provisions in this Agreement relied upon and
setting forth in reasonable detail the facts and circumstances claimed to
provide a basis for such termination of employment.
(f) Payments Upon Certain Terminations.
(i) In the event of a termination of the Employee's employment by
Employer Without Cause or a termination by the Employee of his employment
for Good Reason during the Employment Period, subject to Section 7(h),
Employer shall pay to the Employee (A) the sum of (1) his Base Salary, if
any, for the period from the Date of Termination and ending on the later of
(x) the last day of the Employment Period, determined without regard to this
Section 7, and (y) the first anniversary of the Date of Termination, and (2)
the excess of (I) the pro rata amount of incentive compensation for the
portion of the calendar year preceding the Employee's Date of Termination
(such portion, the "Proportionate Period"), that would have been payable to
the Employee if he had remained employed for the entire year and assuming
that all applicable targets had been met, over (II) the amount of incentive
compensation previously paid or, at the election of the Employee, deferred
for the Proportionate Period, less (B) any amount paid or to be paid to the
Employee under the terms of any
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<PAGE> 7
severance plan or program of Employer, if any, as in effect on the Date
of Termination, provided that Employer may, at any time, pay to the Employee
in a single lump sum an amount equal to (x) Employer's good faith
determination of the sum of the present values of the installments of the
Base Salary remaining to be paid to the Employee pursuant to clause (A)(1)
above, and the amount determined under clause (A)(2) above not paid at that
time, in each case as of the date of such lump sum payment, calculated using
a discount rate equal to the weighted average cost of Employer's bank
indebtedness obligations outstanding on the Date of Termination or, if there
are no such obligations outstanding, one percentage point greater than the
average prime rate charged on such date by Chase Bank or such other
nationally recognized bank designated by Employer, less (y) the amount
determined under clause (B) above. If the Employee's employment shall
terminate and he is entitled to receive salary continuation payments under
this Section 7(f)(i), (1) Employer shall continue to provide to the Employee
the welfare benefits (other than disability insurance) referred to in
Section 5 for the greater of (a) the remainder of the calendar year in which
the Date of Termination occurs, or (b) six months from the Date of
Termination and (2) if the Employee's employment shall terminate hereunder
pursuant to circumstances under which he is entitled to receive payments
under this Section 7(f)(i), and the Employer has not paid a lump sum to
Employee pursuant to the proviso to the first sentence of Section 7(f)(i),
the Employee shall have an affirmative duty to seek new employment which is
suitable to his skills and training, provided that the Employee's conduct in
satisfaction of such duty shall be consistent with Section 9, unless
Employer elects to waive its rights under Section 9. If the Employee obtains
new employment, any salary continuation payments to which the Employee may
be entitled pursuant to this Section 7(f)(i) shall be reduced or cancelled
to the extent that any salary or other cash compensation from such
employment is paid or payable to or on behalf of the Employee. Any benefits
payable to the Employee under any otherwise applicable plans, policies and
practices of Employer shall not be limited by this provision.
(ii) If, during the Employment Period, the Employee's employment shall
terminate upon his death, Disability or retirement on or after age 60, or if
the Employee shall terminate his employment without Good
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<PAGE> 8
Reason or if Employer shall terminate the Employee's employment for
Cause, subject to Section 7(h), Employer shall pay the Employee his full
Base Salary through the Date of Termination or, in the case of the
Employee's death, through one month following the Date of Termination, plus,
in the case of termination upon the Employee's death, Disability or
retirement on or after age 60, the excess of (x) the pro rata amount of
incentive compensation for the Proportionate Period preceding the Employee's
Date of Termination (exclusive of any time between the onset of a physical
or mental disability that prevents the performance by the Employee of his
duties hereunder and the resulting Date of Termination), that would have
been payable to the Employee if he had remained employed for the entire year
and assuming that all applicable targets had been met, over (y) the amount
of incentive compensation previously paid or, at the election of the
Employee, deferred for the Proportionate Period. Any benefits payable to or
in respect of the Employee under any otherwise applicable plans, policies
and practices of Employer shall not be limited by this provision.
(g) Date of Termination. As used in this Agreement, the term "Date of
Termination" shall mean (i) if the Employee's employment is terminated by his
death or retirement on or after age 60, the date of his death or retirement,
(ii) if the Employee's employment is terminated by the Employee without Good
Reason, the date of his termination, (iii) if the Employee's employment is
terminated by Employer for Cause, the date on which Notice of Termination is
given as contemplated by Section 7(e), and (iv) if the Employee's employment is
terminated by Employer Without Cause, due to the Employee's Disability or by the
Employee for Good Reason, 30 days after the date on which Notice of Termination
is given as contemplated by Section 7(e) or, if no such Notice is given, 30
days after the date of termination of employment.
(h) Resignation from Offices and Board Memberships. Effective as of any
Date of Termination under this Section 7 or otherwise as of the date of the
Employee's termination of employment with Employer, the Employee shall resign
from all (i) offices then held by him in Holding, Employer or any of their
respective subsidiaries and (ii) Board memberships then held by him on the
Boards of (x) Holding, Employer or any of their respective subsidiaries or (y)
any other organization with which he is affiliated by virtue of his position
with Holding, Employer or any of their respective subsidiaries. The Employee
shall execute
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<PAGE> 9
all documents and instruments and take all other actions reasonably requested by
Holding or Employer to effectuate such resignations. All payments due or to
become due to the Employee pursuant to this Agreement, including any such
payments pursuant to Section 7(f), and, to the fullest extent permitted by
applicable law, pursuant to any otherwise applicable plan, policy, program or
practice of Holding, Employer or any of their respective subsidiaries shall be
subject to such resignations by the Employee and the performance by Employee of
each of his obligations under this Section 7(h).
8. Unauthorized Disclosure. During and after the term of his
employment, the Employee shall not, without the written consent of the
Employer's Board or a person authorized thereby, disclose to any person (other
than an officer, other employee or director of Employer or its affiliates, or a
person to whom disclosure is reasonably necessary or appropriate in connection
with the performance by the Employee of his duties as an executive of Employer)
any confidential or proprietary information, knowledge or data that is not
theretofore publicly known and in the public domain obtained by him while in the
employ of Employer with respect to Employer or any of its subsidiaries or
affiliates or with respect to any products, improvements, customers, methods of
distribution, sales, prices, profits, costs, contracts, suppliers, business
prospects, business methods, techniques, research, trade secrets or know-how of
Employer or any of its subsidiaries or affiliates (collectively, "Proprietary
Information"), except as may be required by law or as may be required in
connection with any judicial or administrative proceedings or inquiry.
9. Non-Competition. During the period commencing on the date hereof and
ending on the later of (i) the greater of (x) twelve months and (y) the number
of months, if any, providing the basis for calculating any termination payment
to the Employee under Section 7(f)(i) and (ii) in the event that the Employee
had, but did not exercise, the contractual right to put to Holding for
repurchase securities of Holding, the expiration of any period following
termination of the Employee's employment during which the Employee is a
beneficial owner of securities of Holding (except any time during which a
repurchase by Employer, pursuant to a repurchase commitment permitted or
required under Section 6(a) of the Management Stock Subscription Agreement is
prevented solely by the terms of Section 11(a) of the Management Stock
Subscription Agreement), the Employee shall not engage directly or indirectly
in, become employed by, serve as an agent or consultant to,
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<PAGE> 10
or become a partner, principal or stockholder of any partnership, corporation
or other entity in connection with a business of such partnership, corporation
or other entity which competes with the financial information, financial
analysis or any other business of Holding, the Employer or any of their
respective subsidiaries in any geographical area in which Holding, Employer or
any of their respective subsidiaries is then engaged in such business.
10. Non-Solicitation of Employees. Except in connection with the
performance of his duties for Holding, Employer and their respective
subsidiaries during the period of the Employee's employment with Employer,
during the period of the Employee's employment and thereafter for three years
(the "Non-Solicitation Restriction Period") the Employee shall not, directly or
indirectly, for his own account or the account of any other person or entity
with which he shall become associated in any capacity, (a) solicit for
employment or employ any person who at the time of such solicitation for
employment is employed by or otherwise engaged to perform services for Holding,
Employer or any of their respective subsidiaries, regardless of whether such
employment is direct or through an entity with which such person is employed or
associated, or otherwise intentionally interfere with the relationship of
Holding, Employer or any of their respective subsidiaries with, any person or
entity who or which is at the time employed by or otherwise engaged to perform
services for Employer, including under this clause (a) any person who performs
services on behalf of Holding, Employer or any of their respective subsidiaries
as an independent agent or sales representative, or (b) induce any employee of
Holding, Employer or any of their respective subsidiaries to engage in any
activity which the Employee is prohibited from engaging in under Sections 9, 10
and 11 hereof or to terminate his employment with Holding, Employer or any of
their respective subsidiaries.
11. Non-Solicitation of Clients. Except in connection with the
performance of his duties for Holding, Employer and their respective
subsidiaries during the period of the Employee's employment with Employer,
during the Non-Solicitation Restriction Period, the Employee shall not solicit
or otherwise attempt to establish for himself or any other person, firm or
entity any business relationship with any person, firm or corporation which
during the twelve-month period preceding the date his employment terminates was
a customer, client or distributor of Holding, Employer or any of their
respective subsidiaries (an "Employer Client"), provided that nothing in this
Section 11 shall
10
<PAGE> 11
prohibit the Employee from (i) attempting to establish any business relationship
for the provision of services other than financial information or financial
analysis services or (ii) advertising or promoting his provision of services
generally to the investing public so long as such advertising does not include
direct written or oral solicitation of any Employer Clients.
12. Return of Documents. In the event of the termination of the
Employee's employment for any reason, the Employee will deliver to Employer all
non-personal documents and data of any nature pertaining to his work with
Employer, and he will not take with him any documents or data of any description
or any reproduction thereof, or any documents or data containing or pertaining
to any Proprietary Information.
13. Injunctive Relief with Respect to Covenants. The Employee
acknowledges and agrees that the covenants and obligations of the Employee with
respect to noncompetition, nonsolicitation, confidentiality and Employer
property relate to special, unique and extraordinary matter and that a violation
of any of the terms of such covenants and obligations will cause Employer
irreparable injury for which adequate remedies are not available at law.
Therefore, the Employee agrees that Employer shall be entitled to an injunction,
restraining order or such other equitable relief (without the requirement to
post bond) as a court of competent jurisdiction may deem necessary or
appropriate to restrain the Employee from committing any violation of the
covenants and obligations referred to in this Section 13. These injunctive
remedies are cumulative and in addition to any other rights and remedies
Employer may have at law or in equity.
14. Assumption of Agreement. Employer will require any successor (by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Employer, by agreement in form and substance
reasonably satisfactory to the Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Employer
would be required to perform it if no such succession had taken place. Failure
of Employer to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Employee to
compensation from Employer in the same amount and on the same terms as the
Employee would be entitled hereunder if Employer terminated his employment
Without Cause as contemplated by Section 7, except that for purposes of
11
<PAGE> 12
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
15. Entire Agreement. Except as otherwise expressly provided herein,
this Agreement (including the Exhibits hereto) constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof, and all
promises, representations, understandings, arrangements and prior agreements
relating to such subject matter (including those made to or with the Employee by
any other person or entity) are merged herein and superseded hereby.
16. Indemnification. Employer agrees that it shall indemnify and hold
harmless the Employee to the fullest extent permitted by Delaware law from and
against any and all liabilities, costs, claims and expenses including without
limitation all costs and expenses incurred in defense of litigation, including
attorneys' fees, arising out of the employment of the Employee hereunder, except
to the extent arising out of or based upon the gross negligence or willful
misconduct of the Employee. Costs and expenses incurred by the Employee in
defense of litigation, including attorneys' fees, shall be paid by Employer in
advance of the final disposition of such litigation upon receipt of an
undertaking by or on behalf of the Employee to repay such amount if it shall
ultimately be determined that the Employee is not entitled to be indemnified by
Employer under this Agreement.
17. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding on and inure to the
benefit of Employer and its successors and permitted assigns. This Agreement
shall also be binding on and inure to the benefit of the Employee and his heirs,
executors, administrators and legal representatives.
(b) Arbitration. Any dispute or controversy arising under or in
connection with this Agreement (except any dispute or controversy arising under
Section 8, 9, 10, 11 or 13 hereof) shall be resolved by binding arbitration. The
arbitration shall be held in the City of New York, New York and except to the
extent inconsistent with this Agreement, shall be conducted in accordance with
the Voluntary Labor Arbitration Rules of the American Arbitration Association
then in effect at the time of the arbitration, and otherwise in accordance with
principles which
12
<PAGE> 13
would be applied by a court of law or equity. The arbitrator shall be acceptable
to both Employer and the Employee. If the parties cannot agree on an acceptable
arbitrator, the dispute shall be heard by a panel of three arbitrators one
appointed by each of the parties and the third appointed by the other two
arbitrators. Any expense of arbitration shall be borne by the party who incurs
such expense and joint expenses shall be shared equally, provided that in the
event that the Employee prevails in any such arbitration on all disputes raised
by the Employee, Employer shall bear all expenses thereof, including those of
the Employee.
(c) Governing Law. This Agreement shall be governed by and constructed
in accordance with the laws of the State of New York.
(d) Taxes. Employer may withhold from any payments made under the
Agreement all federal, state, city or other applicable taxes as shall be
required pursuant to any law, governmental regulation or ruling.
(e) Amendments. No provisions of this Agreement may be modified, waived
or discharged unless such modification, waiver or discharge is approved by
Employer's Board or a person authorized thereby and is agreed to in writing by
the Employee and such officer as may be specifically designated by Employer's
Board. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No waiver of any provision of this Agreement shall be implied
from any course of dealing between or among the parties hereto or from any
failure by any party hereto to assert its rights hereunder on any occasion or
series of occasions.
(f) Severability. In the event that any one or more of the provisions
of this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected thereby.
(g) Notices. Any notice or other communication required or permitted to
be delivered under this Agreement shall be (i) in writing, (ii) delivered
personally, by courier service or by certified or registered mail, first-class
postage prepaid and return receipt requested,
13
<PAGE> 14
(iii) deemed to have been received on the date of delivery or on the third
business day after the mailing thereof, and (iv) addressed as follows (or to
such other address as the party entitled to notice shall hereafter designate in
accordance with the terms hereof):
(A) if to Employer, to it at:
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: General Counsel
(B) if to Holding, to it at:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
Attention: General Counsel
(C) if to the Employee, to him at the address listed on
the signature page hereof.
Copies of any notices or other communications given under this Agreement shall
also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue
New York, New York 10152
Attention: Mr. Alberto Cribiore
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
(h) Survival. Sections 7(h), 8, 9, 10, 11, 12, 13, 14, 16 and 17 and,
if the Employee's employment terminates in a manner giving rise to a payment
under Section 7(f), Section 7(f) shall survive the termination of the
employment of the Employee hereunder.
(i) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
14
<PAGE> 15
(j) Headings. The section and other headings contained in this
Agreement are for the convenience of the parties only and are not intended to be
a part hereof or to affect the meaning or interpretation hereof.
IN WITNESS WHEREOF, Employer and Holding have duly executed this
Agreement by their authorized representatives and the Employee has hereunto set
his hand, in each case effective as of the date first above written.
MCCARTHY, CRISANTI & MAFFEI, INC.
By:
-------------------------------
Name:
Title:
MCM GROUP, INC
By:
-------------------------------
Name:
Title:
ANTHONY NAPOLITANO
-------------------------------
Address: 220 East 87th Street
Apt. 1-C
New York, New York 10128
15
<PAGE> 16
Exhibit A
See Exhibit A to Exhibit 10.14
<PAGE> 17
Exhibit B
See Exhibit B to Exhibit 10.14.
<PAGE> 18
Exhibit C
MCM, INC.
SPECIAL COMPENSATION ARRANGEMENTS
PRODUCT MANAGERS
CORPORATEWATCH:
ANTHONY NAPOLITANO 3% - CORPORATEWATCH NET OPERATING
INCOME IF
ANNUALIZED NOI DOES NOT EXCEED 2.5
MILLION (BEFORE TAXES)
3.5% - CORPORATEWATCH NOI IF
ANNUALIZED NOI EQUALS OR EXCEEDS
2.5 MILLION (BEFORE TAXES)
<PAGE> 19
ANNEX A
Annex A filed as Annex A to Exhibit 10.14.
<PAGE> 1
Exhibit 10.17
DATED 1996
--------------------------------------------
McCarthy, Cristani & Maffei (Europe) Limited (1)
- and -
Laurette Freda Gell (2)
- and -
MCM Group, Inc. (3)
--------------------------------------------
SERVICE AGREEMENT
--------------------------------------------
as Service Director
Lovell White Durrant
37 Avenue Pierre ler de Serbie
75008 Paris
PARIS/JC/DWT
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE NO
<S> <C>
1. APPOINTMENT AND TERM 1
2. DUTIES 2
3. REMUNERATION 3
4. PENSION AND INSURANCE BENEFITS 3
5. EXPENSES 4
6. MOTOR CAR 4
7. HOLIDAYS AND HOLIDAY PAY 4
8. SICKNESS/INCAPACITY 5
9. CONFIDENTIAL INFORMATION 5
10. RESTRICTIVE COVENANTS 5
11. TERMINATION ON THE HAPPENING OF CERTAIN EVENTS 7
12. OBLIGATIONS UPON TERMINATION OF EMPLOYMENT 8
13. OTHER TERMS AND CONDITIONS 9
14. STOCK PURCHASES AND OPTIONS 10
15. DEFINITIONS 11
16. MISCELLANEOUS 11
</TABLE>
<PAGE> 3
SERVICE AGREEMENT
THIS AGREEMENT made the day of 1996
BETWEEN:
(1) McCarthy, Cristani & Maffei (Europe) Limited (Registered Number
3094797) whose registered office is at 21 Holborn Viaduct, London EC1A
2DY (the "Company"); and
(2) Laurette Freda Gell of 31, Culmstock Road, Clapham Common Westside,
London SW11 6LY (the "Executive"); and
(3) MCM Group, Inc., a company organised and existing under the laws of the
State of Delaware ("MCM").
WHEREAS:
(1) The Company wishes to employ the Executive and the Executive has agreed
to serve the Company on the terms and conditions set out in this
Agreement.
(2) MCM is the ultimate parent company of the Company.
IT IS AGREED:
PART I
1. APPOINTMENT AND TERM
The Company shall employ the Executive and the Executive shall serve
the Company as Service Director or in such other capacity as the
Company may reasonably require with effect from the continuation of his
previous employment with McCarthy, Cristani & Maffei, Incorporated
which began on 24th February 1986. Either the Executive or the Company
may terminate the employment at any time by giving to the other not
less than 3 calendar months' notice in writing. The Company reserves
the right to terminate the Executive's employment by payment in lieu of
notice.
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<PAGE> 4
2. DUTIES
2.1 During his employment hereunder the Executive shall:
(a) perform the duties and exercise the powers and functions which
from time to time may reasonably be assigned to or vested in
him by the Board of Directors (the "Board") in relation to the
Company and any Associated Company (as herein defined) at such
place or places both within and outside the United Kingdom as
the Board shall determine;
(b) during working hours devote the whole of his time, attention
and ability to his duties hereunder and shall faithfully and
loyally serve the Company to the best of his ability and use
his utmost endeavours to promote its interests in all
respects;
(c) comply with all reasonable requests, instructions and
regulations given or made by the Board (or by anyone
authorised by it) and promptly provide such explanations,
information and assistance as to his activities or the
business of the Company as the Board may reasonably require;
(d) comply with all group policies and compliance procedures
insofar as relevant to his duties hereunder. For this purpose
the "group" includes MCM and its Associated Companies as
defined in clause 14;
(e) not engage in any activities which would detract from the
proper performance of his duties hereunder, nor without the
prior written consent of the Board in any capacity including
as director, shareholder, principal, consultant, agent,
partner or employee of any other company, firm or person (save
as the holder for investment of securities which do not exceed
three per cent (3%) in nominal value of the share capital or
stock of any class of any company quoted on a recognised stock
exchange) engage or be concerned or interested directly or
indirectly in any other trade, business or occupation
whatsoever.
2.2 Notwithstanding the provisions of clause 2.1 the Company shall:
(a) be entitled at any time to appoint another person or persons
to act jointly with the Executive;
(b) have the right to require the Executive at any time to carry
out such special projects or functions commensurate with his
abilities as the Company shall in its absolute discretion
determine.
2
<PAGE> 5
3. REMUNERATION
3.1 As remuneration for his services hereunder the Company shall pay to the
Executive a salary composed of two elements: (a) a base salary at the
rate of ninety six thousand seven hundred and thirty pounds per annum
(which shall be deemed to accrue from day to day) and (b) a bonus in
respect of revenues generated from sales of subscriptions to the
services of the Group (meaning MCM and its Associated Companies) as
outlined in the statement attached as Annex A hereto as amended from
time to time payable as to the base salary in (a) by equal monthly
installments on or about the 15th of each month and the bonus element
in (b) quarterly in arrears such salary being inclusive of any fees to
which the Executive may be entitled as a director of the Company or of
any Associated Company. The said salary shall be reviewed by the Board
from time to time and the rate thereof may be increased with effect
from any such review date. In addition, the Executive shall be entitled
to annual or other bonuses at the absolute discretion of the Company in
accordance with the Company's policy as communicated from time to time
to the Executive.
3.2 For the purposes of the Wages Act 1986 and otherwise the Executive
hereby consents to the deduction of any sums owing by him to the
Company in respect of monies advanced to him by the Company at any time
from his salary or any other payment due from the Company to the
Executive and the Executive hereby also agrees to make any payment to
the Company of any sums owed by him to the Company upon demand by the
Company at any time.
4. PENSION AND INSURANCE BENEFITS
4.1 The Executive shall be entitled to be a member of the MCM Group
Personal Pension Plan (the "Scheme"), particulars of which may be
obtained from the Company Secretary. The Executive's membership of the
Scheme shall be subject to the provisions thereof as amended from time
to time.
4.2 The Company shall provide the Executive with private medical insurance,
income protection in the event of long term disablement and life
assurance, particulars of which may be obtained from the Company
Secretary. The Company shall have the right to change its arrangements
for the provision of such benefits as it sees fit from time to time.
5. EXPENSES
The Company shall reimburse to the Executive all travelling, hotel,
entertainment and other expenses properly and reasonably incurred by
him in the performance of his duties hereunder and properly claimed and
vouched
3
<PAGE> 6
for in accordance with the Company's expense reporting procedure in
force from time to time.
6. MOTOR CAR
The Company shall not be obliged to provide the Executive with a motor
car. However, in lieu thereof the Company shall pay to the Executive as
additional salary, an allowance towards the cost and maintenance of a
motor car of (pound) 600 per month (to be paid at the same time as
salary). This shall terminate if the Executive shall cease to own or
lease a motor car suitable to his status or if the Executive ceases for
any reason to hold a valid driving licence.
7. HOLIDAYS AND HOLIDAY PAY
7.1 In addition to the normal Bank and public holidays the Executive shall
be entitled to 25 working days' paid holiday during each calendar year
to be taken at such time or times as may be agreed with the Board. The
Executive may not without the consent of the Board carry forward more
than one week in total any unused part of his holiday entitlement to a
subsequent calendar year.
7.2 For the calendar year during which the Executive's employment hereunder
commences or terminates he shall be entitled to such proportion of his
annual holiday entitlement as the period of his employment in each such
year bears to one calendar year. Upon termination of his employment for
whatever reason he shall if appropriate either be entitled to salary in
lieu of any outstanding holiday entitlement or be required to pay to
the Company any salary received in respect of holiday taken in excess
of his proportionate holiday entitlement, in either case adjusted to
take account of items falling within clause 3.2.
8. SICKNESS/INCAPACITY
8.1 If the Executive shall be prevented by illness, accident or other
incapacity from properly performing his duties hereunder he shall
report this fact forthwith to the Company Secretary's office and if he
is so prevented for more than seven consecutive days (including
weekends) he shall if required by the Company provide an appropriate
doctor's certificate.
8.2 If the Executive shall be absent from his duties hereunder owing to
illness, accident or other incapacity duly certified in accordance with
the provisions of clause 8.1 he shall be paid his full remuneration for
the first three months of such absence and thereafter subject to the
provisions of clause 11 such remuneration as the Board shall in its
discretion allow PROVIDED THAT there shall be deducted from such
remuneration any Statutory Sick Pay or any social
4
<PAGE> 7
security or other benefits payable to the Executive including any sums
recoverable from a third party and any sums payable to the Executive
under the permanent health insurance arrangement referred to in clause
4.2 above.
9. CONFIDENTIAL INFORMATION
The Executive shall not during his employment hereunder (save in the
proper course thereof) or at any time after its termination for any
reason whatsoever disclose to any person whatsoever or otherwise make
use of any confidential or secret information which he has or may have
acquired in the course of his employment concerning, but not limited
to, the business, affairs, finance, customers or trade connections of
the Company or any Associated Company or any of its or their suppliers,
agents, distributors or customers and shall use his best endeavours to
prevent the unauthorised publication or disclosure of any such
confidential or secret information.
10. RESTRICTIVE COVENANTS
10.1 Since the Executive will in the course of his employment hereunder have
dealings with customers and obtain knowledge of the trade secrets and
other confidential information in regard to the business of the Company
and its Associated Companies, the Executive hereby agrees and
undertakes with the Company for itself and as trustee for its
Associated Companies that he shall not without the prior written
consent of the Board (such consent to be withheld only so far as may be
reasonably necessary to protect the legitimate interests of the Company
or any Associated Company):
(a) during the period of his employment and for a period of 12
months after the termination for whatever reason of his
employment hereunder be engaged or interested (whether as a
director, shareholder, principal, consultant, agent, partner
or employee) in any business concern (of whatever kind) which
shall be in competition with the Company or with any
Associated Company in the provision of services of a kind with
which the Executive was concerned to a material extent during
the period of one year prior to the termination of his
employment with the Company;
(b) during the period of his employment and for a period of 12
months after the termination for whatever reason of his
employment hereunder either on his own behalf or on behalf of
any other person, firm or company in respect of any services
of a kind provided by the Company and/or any Associated
Company in respect of the provision of which the Executive may
have been engaged during his employment with the Company or
any Associated Company:
5
<PAGE> 8
(i) canvass, solicit or approach or cause to be
canvassed, solicited or approached for orders; or
(ii) directly or indirectly deal with any person, firm or
company who at the date of the termination of this
Agreement or within one year prior to such date is or
was a client or customer of the Company or any
Associated Company or was in the habit of dealing
under contract with the Company or any Associated
Company and with whom or which the Executive had
contact during the said period; and
(c) during the period of his employment and for a period of 12
months after the termination for whatever reason of his
employment hereunder either on his own behalf or on behalf of
any other person, firm or company directly or indirectly
solicit or entice or endeavour to solicit or entice away from
the Company or from any Associated Company any employee of
executive or managerial status engaged in its or their
business
Provided that (unless termination is by reason of the default of the
Executive entitling the Company to terminate this contract under clause
11(c) or (e) or if the Executive resigns) the provisions of this clause
shall only apply after the "Compensated Period" so long as the Company
continues to pay the Executive his base salary at the same level as at
the moment immediately prior to termination taking effect. The
"Compensated Period" means a period equal to the number of weeks by
reference to which any payment under Clause 12.2 is calculated
commencing with the date of termination of the Executive's employment
(or, in the event that the Executive is not required to work out any
notice period) from the time the Executive actually ceased working for
the Company.
10.2 Whilst each of the restrictions in clauses 10.1(a), 10.1(b) and 10.1(c)
are considered by the parties to be reasonable in all the circumstances
as at the date hereof it is hereby agreed and declared that if any one
or more of such restrictions shall be found by a court of competent
jurisdiction to be void as going beyond what is reasonable in all the
circumstances for the protection of the interests of the Company and/or
any Associated Company but would be valid if words were deleted
therefrom the said restrictions shall be deemed to apply with such
modifications as may be necessary to make them valid and effective and
any such modification shall not thereby affect the validity of any
other restriction contained herein.
6
<PAGE> 9
10.3 INJUNCTIVE RELIEF WITH RESPECT TO COVENANTS
The Executive acknowledges and agrees that the covenants and
obligations of the Executive contained in this clause relate to
special, unique and extraordinary matters and that a breach of any of
the terms of such covenants and obligations will cause the Company
damage for which damages may not be an adequate remedy. Therefore, the
Executive agrees that the Company shall be entitled to seek an
injunction, restraining order or such other relief as a court of
competent jurisdiction may deem necessary or appropriate to restrain
the Executive from committing any breach of the covenants and
obligations contained in this Clause 10. These injunctive remedies are
cumulative and in addition to any other rights and remedies the Company
may have.
11. TERMINATION ON THE HAPPENING OF CERTAIN EVENTS
The Company without prejudice to any remedy which it may have against
the Executive for the breach or non-performance of any of the
provisions of this Agreement may by notice in writing to the Executive
forthwith terminate this Agreement and the Executive's employment if
the Executive shall:
(a) become bankrupt or become the subject of an interim order
under the Insolvency Act 1986 or make any arrangement or
composition with his creditors; or
(b) become a patient as defined in the Mental Health Act 1983; or
(c) be convicted of any criminal offence (other than an offence
under road traffic legislation in the United Kingdom or
elsewhere unless a custodial sentence is imposed); or
(d) be prevented by illness or otherwise from performing his
duties hereunder for a consecutive period of six calendar
months or for an aggregate period of six calendar months in
any period of 12 calendar months; or
(e) be guilty of any serious misconduct, any conduct tending to
bring the Company or himself into disrepute, or any material
or persistent breach or non-observance of any of the
provisions of this Agreement or shall neglect, fail or refuse
without reasonable excuse to carry out duties properly
assigned to him hereunder.
7
<PAGE> 10
12. OBLIGATIONS UPON TERMINATION OF EMPLOYMENT
12.1 Upon the termination of his employment hereunder for whatever reason
the Executive shall:
(a) forthwith tender his resignation as a Director of the Company
and of any Associated Company without compensation. To secure
his obligation under this Agreement the Executive irrevocably
appoints the Company to be his attorney in his name and on his
behalf to sign any documents and do any things necessary to
give effect thereto, if the Executive shall fail to sign or do
the same himself;
(b) deliver up to the Company all vehicles, keys, credit cards,
correspondence, documents, specifications, reports, papers and
records (including any computer materials such as discs or
tapes) and all copies thereof and any other property (whether
or not similar to the foregoing or any of them) belonging to
the Company or any Associated Company which may be in his
possession or under his control, and (unless prevented by the
owner thereof) any such property belonging to others which may
be in his possession or under his control and which relates in
any way to the business or affairs of the Company or any
Associated Company or any supplier, agent, distributor or
customer of the Company or any Associated Company, and he
shall not without written consent of the Board retain any
copies thereof;
(c) if so requested send to the Company Secretary a signed
statement confirming that he has complied with clause 12(b);
and
(d) not at any time represent himself still to be connected with
the Company or any Associated Company.
12.2 On termination (otherwise than by virtue of default of the Executive
entitling the Company to terminate this contract under clause 11(c) or
(e) or in a case where the Executive resigns) the Executive shall be
entitled to six weeks' remuneration plus two weeks' remuneration for
each complete year of service with the Company or Associated Companies.
For this purpose "remuneration" means the base salary set out in Clause
3.1(a) based on the last complete calendar year. Any period of paid
notice actually given and not worked shall count towards any obligation
to make payment under this clause.
8
<PAGE> 11
13. OTHER TERMS AND CONDITIONS
13.1 The provisions of the Company's standard terms and conditions of
employment shall apply to the Executive's employment hereunder except
so far as inconsistent herewith.
13.2 The following particulars are given in compliance with the requirements
of section 1 Employment Protection (Consolidation) Act 1978:
(a) the Executive's normal place of work is Mill House, Mill
Street, London SE1 but he may be required to work at any other
office or location in the UK as may be directed by the Board
from time to time;
(b) the Executive shall also be required to travel on the
Company's business at all reasonable times and in particular
shall be obliged to make himself available in other locations
in which the group (as defined in clause 2.1(d)) is present at
all reasonable times.
(c) the Executive's continuous employment began on 24th February
1986. No employment of the Executive with a previous employer
counts as part of the Executive's continuous employment with
the Company;
(d) the Executive's hours of work shall be the normal hours of
work of the Company which are from 9.00 am to 6.00 p.m.
together with such additional hours as may be necessary for
the proper discharge of his duties hereunder to the
satisfaction of the Board;
(e) any grievance or other dissatisfaction should in the first
instance be discussed with the Board;
(f) contracting-out certificate pursuant to the provisions of
Pension Schemes Act 1993 is in force in respect of the
Executive's employment hereunder; and
(g) save as otherwise herein provided there are no terms or
conditions of employment relating to hours of work or to
normal working hours or to entitlement to holiday (including
public holidays) or holiday pay or to incapacity for work due
to sickness or injury or to pensions or pension schemes.
9
<PAGE> 12
PART II
14. STOCK PURCHASES AND OPTIONS
14.1 The Executive shall be given the opportunity to purchase up to 1,750
shares (the "Shares") of the Class C Common Stock of MCM, par value
US$.01 per share (the "Common Stock"), at a purchase price of US$100
per share, but in no event shall MCM be required to offer to sell or to
sell any Shares to the Executive at any time at which making such an
offer or selling any such Shares would violate any applicable
securities law. The terms and conditions of the Executive's purchase of
any Shares, including the right of first refusal of MCM with respect to
such Shares, the right of MCM to purchase such Shares from the
Executive under certain circumstances and the right of the Executive to
require MCM to purchase such Shares under certain circumstances, shall
be set forth in a separate Management Stock Subscription Agreement,
substantially in the form attached hereto as Annex B, to be entered
into by MCM and the Executive.
14.2 Upon the purchase of the Shares pursuant to Clause 14.1, the Executive
shall be granted nonqualified stock options to purchase additional
shares of the Common Stock, each such option to be granted pursuant to
the terms of the MCM Stock Option Plan (the "Stock Option Plan") and to
have a ten year term, as follows: (i) the Executive shall be granted
options to purchase up to an aggregate of 4,236 shares of Common Stock
(or, if less, a number of Shares purchased by the Executive pursuant to
Clause 14.1, multiplied by (y) 2.42) (the "Options"), (ii) one-half of
the Options shall be granted at an exercise price per share equal to
US$100 (the "Initial Value Options") and the remaining one-half of such
Options shall be granted at an exercise price of US$143.60 (the
"Premium Options"), (iii) one-half of the Initial Value Options and
one-half of the Premium Options shall generally become exercisable in
five equal annual installments on each of the first five anniversaries
of the date of grant and (iv) the remaining one-half of the Initial
Value Options and the remaining one-half of the Premium Options shall
generally become exercisable (A) as of third anniversary of the date of
grant, if and only if MCM and its subsidiaries shall have achieved the
maximum EBITDA target provided for under the terms of the Option
Agreement (as defined below), provided that if MCM and its subsidiaries
shall have achieved EBITDA as of such anniversary date greater than the
minimum EBITDA target specified in the Option Agreement but less than
the maximum EBITDA target so specified, a proportionate share of the
Performance Options shall become exercisable as of such date, or (B)
nine years following the date of grant, subject, in the case of (iii)
and (iv) above, to the Executive's continuous employment through the
applicable vesting date. The terms and conditions of the Options
(including those described therein)
10
<PAGE> 13
shall be set forth in the Stock Option Plan and a separate Management
Stock Option Agreement substantially in the form attached hereto as
Annex C, to be entered into by the Executive and MCM (the "Option
Agreement").
PART III
15. DEFINITION
In this Agreement an "Associated Company" means any company which for
the time being is:
(h) a holding company (as defined by s 736 Companies Act 1985) of
the Company; or
(i) any subsidiary (as defined by s 736 Companies Act 1985) of any
such holding company or of the Company; or
(j) a company over which the Company has control within the
meaning of s 840 Income and Corporation Taxes Act 1988.
16. MISCELLANEOUS
16.1 Part I of this Agreement constitutes the entire agreement between the
Company and the Executive and replaces all and any prior agreements
relating to the employment of the Executive with the Company or any
Associated Company. This Agreement may only be modified in writing
signed by the Company and the Executive.
16.2 Part I of this Agreement shall be governed by and construed in
accordance with the laws of England. Part II shall be governed by the
laws of the State of New York. The provisions of Part III shall be
deemed incorporated into each of Part I and Part II.
16.3 SEVERABILITY
In the event that any one or more of the provisions of this Agreement
shall be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected thereby.
11
<PAGE> 14
16.4 NOTICES
Any notice or other communication required or permitted to be delivered
under this Agreement shall be (i) in writing, (ii) delivered
personally, by courier service or by registered mail, first-class
postage prepaid and return receipt requested, (iii) deemed to have been
received on the date of delivery or (if sent by post) on the third
business day after the mailing thereof, and (iv) addressed to the
intended recipient at the address set out at the head of this Agreement
(or such other address as is notified for the purpose);
16.5 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and
the same instrument.
16.6 HEADINGS
The section and other headings contained in this Agreement are for the
convenience of the parties only and are not intended to be a part
hereof or to affect the meaning or interpretation hereof.
IN WITNESS whereof this deed has been duly executed and delivered the day and
year first before written.
Executed as a deed by )
McCarthy, Cristani and Maffei (Europe) Limited )
acting by )
/s/ illegible
- -----------------------------
Director
/s/ illegible
- -----------------------------
Director/Secretary
Signed as a deed by )
L.F. Gell )
in the presence of: )
12
<PAGE> 15
/s/ Erica Francis Martin
- ---------------------------------------
Erica Francis Martin
Witness's name and signature
8 Stratton Ave, Enfield, Middx, ENZ 9AP
- ---------------------------------------
Witness's address
Executed as a deed by )
MCM Group, Inc. )
acting by )
/s/ illegible
- --------------------------------------
Authorised signatory
13
<PAGE> 16
Exhibit A
See Exhibit A to Exhibit 10.14
<PAGE> 17
Exhibit B
See Exhibit B to Exhibit 10.14.
<PAGE> 18
ANNEX A
Annex A filed as Annex A to Exhibit 10.14.
<PAGE> 19
Annex B
BONUS
Bonus is based on the achievement of annual budgeted revenue from the
Europe/Africa/Gulf (EAG) region.
BONUS CALCULATION
PERFORMANCE RANGE BONUS AWARD
----------------- -----------
120% or greater of objective 150% of year-end salary
115% to 119.9% of objective 135% of year-end salary
110% to 114.9% of objective 120% of year-end salary
105% to 109.9% of objective 110% of year-end salary
100% to 104.9% of objective 100% of year-end salary
90% to 99.9% of objective 90% of year-end salary
80% to 89.9% of objective 60% of year-end salary
70% to 79.9% of objective 30% of year-end salary
Below 70% 0% of year-end salary
PAYMENT
Bonus payments will be made on a quarterly basis based on the following
calculation;
1st quarter award 50% of earned amount
2nd quarter award 50% of earned amount plus balance of 1st quarter
3rd quarter award 50% of earned amount plus balance of 2nd quarter
4th quarter award earned amount plus balance of 3rd quarter
<PAGE> 1
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
Exhibit 10.18
TELERATE
OPTIONAL SERVICE DELIVERY
AGREEMENT
THIS AGREEMENT, dated as of January 1, 1992, between TELERATE
SYSTEMS INCORPORATED, a New York corporation with offices at One World Financial
Center, New York, New York 10281 ("Telerate"), and McCARTHY CRISANTI & MAFFEI,
INC., a New York corporation with offices at 71 Broadway, New York, New York
10006 ("Source").
INTRODUCTION
Telerate gathers from a multitude of sources prices, rates and
other data regarding the markets for, among other things, government securities,
equities, bonds, money market instruments, commodities and foreign currency, as
well as news, commentary and other information relevant to such markets, and
compiles such data and information in a dynamically updated computer database
(the "Information Base"). Telerate makes all or selected parts of the
Information Base available to subscribers to its several services (the "Telerate
Services"). Pursuant to an agreement with Source dated March 24, 1986, Telerate
has been making several of Source's financial information and advisory services
available to subscribers to the Telerate Services who also subscribe to Source's
services. Now, the parties wish to terminate their existing agreement and
replace it with the terms and conditions contained herein.
<PAGE> 2
1. Agency; Limited Exclusivity; New Source Services.
(a) Agency.
(i) Appointment. Source hereby appoints Telerate, and Telerate
hereby agrees to serve as, an agent of Source for the term set forth in Section
8 for the purpose of distributing the services listed and described in Exhibit A
(the "Source Services") worldwide to Telerate Subscribers, as defined below, who
also subscribe to the Source Services ("Source Subscribers"), all in accordance
with the terms and conditions hereof. "Telerate Subscribers" shall mean those
persons or entities authorized by Telerate to access all or part of the
information and services contained in the Telerate Services through which one or
more of the Source Services are made available. Notwithstanding the foregoing,
Source shall have the right to direct Telerate in writing to not deliver the
Source Services to any Telerate Subscriber that competes directly with Source in
the business of providing financial information and advisory services.
(ii) No Implied Duties. The parties agree that Telerate's
duties as agent of Source shall be limited to those expressly set forth in this
Agreement. Telerate shall not be deemed to be a fiduciary of Source and shall
not have any implied duties that might otherwise be imposed upon an agent of
Source.
(b) Limited Exclusivity.
(i) Scope. Except as otherwise provided in this clause (i) or
pursuant to the provisions of clause (ii) of this subsection (b), Source agrees
that during the term of this Agreement Source will not itself distribute, nor
permit any
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<PAGE> 3
other party to distribute, any Source Service or any other service substantially
similar to any Source Service anywhere in the world. Notwithstanding the
foregoing, Source may continue to permit the Financial Information Services
Division of Automatic Data Processing and Quotron Systems, Inc. to distribute
Money Watch and Corporate Watch pursuant to the agreements Source has with such
parties, but only through the end of the current terms thereof, which expire on
February 15, 1993 and December 15, 1993, respectively. If either such contract
is renewed or otherwise extended beyond its expiration date, Source shall be
deemed to have exercised its option under clause (ii) of this Section 1(b).
Notwithstanding any provision in this Agreement that may be to the contrary,
Source shall have the right to itself distribute the Source Services to markets
that Telerate and Source agree Telerate does not serve.
(ii) Source's Option. Source shall have the option,
exercisable by giving ninety (90) days prior written notice (the "Option
Notice") to Telerate at any time during the term of this Agreement, to itself
distribute or to permit a third party to distribute one or more of the Source
Services or services substantially similar thereto. Source, for whatever and any
reason and without any penalty, may revoke the Option Notice by sending written
notice of such revocation to Telerate at any time prior to the expiration of
forty-five (45) days after the date the Option Notice was given.
(c) New Source Services. Source hereby grants to Telerate an option to
distribute any electronically distributed information or advisory service
hereafter published by Source that is not listed in Exhibit A or that is not
substantially similar
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<PAGE> 4
to any service listed therein (a "New Source Service"). The terms and procedures
controlling this option are set forth in Exhibit B. If Telerate elects to
exercise its option under this subsection (c) with respect to a New Source
Service, such New Source Service shall fall within the definition of Source
Service under this Agreement, and the distribution of such New Source Service
shall be subject to the terms and conditions set forth in this Agreement.
2. Inputting; Accessibility; Display; Accuracy; Content Changes.
(a) Inputting and Use of Services.
(i) Generally. Source shall input the Source Services into the
Information Base by means of one or more of the standard Telerate Service
terminals and the ESIP lines listed in Exhibit C. Telerate shall provide
subscriptions to the "basic" portion of the Telerate Services through the
terminals listed in Exhibit C for no charge other than installation and
communications charges, certain specified printer and monitor charges, and
charges levied by parties other than Telerate. Telerate shall also provide one
subscription to the Telerate Digital Page Feed ("TDPF") on the terms described
herein and in Exhibit C. Telerate may deny Source access to any information
ordinarily distributed as part of the "basic" portion of the Telerate Services
if requested to do so by the provider of such information. Source may not access
"optional" services available through such Telerate Services without the written
approval of Telerate and/or the providers of such optional services. Except as
otherwise provided herein, Source's use of any of the Telerate Services shall
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<PAGE> 5
be subject to the terms and conditions of the then-current version of the
applicable Telerate Service Agreement.
(ii) Use of Other Party's Proprietary Services.
Notwithstanding any provision of clause (i) that may be to the contrary,
Telerate shall have the right to deny access to information generated by
Telerate or any of its affiliates; provided that Telerate may exercise such
right with respect to any news service generated by Telerate or any of its
affiliates only in circumstances where Source uses such service in a way that
competes with the sale of such service by Telerate or any of its affiliates.
Telerate shall have the right to access the Source Services; provided that
Source shall have the right to deny Telerate access to any Source Service in
circumstances where Telerate uses such service in a way that competes with the
sale of such service by Source or any of its affiliates. A party desiring to
exercise its right under this clause (ii) must notify the other party in writing
at least thirty (30) days prior to the desired termination date and state the
action by the other party that gave rise to the termination right. If the party
receiving notification ceases such action prior to the desired termination date,
the notifying party may not deny the other party access to its service on the
basis of such cured action. The rights specified in this clause (ii) shall be in
addition to, and not in limitation of, any other remedies the parties may have.
(b) Accessibility of Source Services. Source acknowledges that certain
of the Telerate Services, such as Telerate TeleTrac(R), do not afford access to
all information in the Information Base and that, as of the date hereof, not all
of the Source Services are
- 5 -
<PAGE> 6
available on all Telerate Services. Telerate will attempt to make the Source
Services available through the various Telerate Services whenever Telerate
determines it is commercially practical to do so. Distribution by Telerate of a
Source Service that is first made available through a Telerate Service after the
date hereof pursuant to the terms of this subsection (b) shall be subject to the
terms of this Agreement.
(c) Accuracy of Information. Source shall use commercially reasonable
efforts to (i) insure that the information in the Source Services is accurate,
complete and current, and (ii) correct inaccuracies, errors or defects in such
information promptly after discovery. Source shall monitor such information as
it is distributed through the Telerate Services and promptly shall inform
Telerate of any inaccuracies, errors or defects therein.
(d) Change in Nature. No substantial change in the nature of any Source
Service may be made without the prior written consent of Telerate, which consent
shall not be unreasonably withheld or delayed.
3. Promotion and Marketing.
(a) Efforts and Materials.
(i) Exclusive. Source and Telerate shall each exercise
commercially reasonable efforts to market and promote subscriptions to the
Source Services to be accessed through the Telerate Services. From time to time
during the term of this Agreement, but no less frequently than once a calendar
quarter, Telerate shall profile or otherwise promote the Source Services on the
Telerate Services or in promotional materials.
- 6 -
<PAGE> 7
(ii) Non-Exclusive. Notwithstanding the provisions of
subsection (i), if Source exercises its option under Section 1(b)(ii),
Telerate's sole obligations with respect to marketing and promoting
subscriptions to the Source Services shall be to make periodic announcements on
the Telerate Services about the Source Services and to list the Source Services
in Telerate's optional service brochures as optional services available through
the Telerate Services.
(iii) Materials. Neither party shall publish or distribute any
advertising or promotional material regarding the availability of the Source
Services through the Telerate Services without the prior written consent of the
other, which consent shall not be unreasonably withheld. If the receiving party
has not notified the sending party of its disapproval of sample materials within
twenty (20) days after its receipt thereof, such materials shall be deemed
approved. Materials substantially similar to materials approved on an earlier
occasion shall also be deemed approved. Materials being sent to the other party
for approval pursuant to this subsection (a) shall be directed to the person(s)
designated in Exhibit D hereto.
(b) Subscriber List. To facilitate Source's promotional efforts,
Telerate shall provide to Source on a quarterly basis the list of Telerate
Subscribers located in the United States and Canada. Each month Telerate shall
also provide Source with the list of those persons and entities located in the
United States and Canada who became new Telerate Subscribers during such month.
In addition, Telerate shall furnish to Source, from time to time, the list of
Telerate Subscribers located outside the United States and Canada promptly after
it receives at headquarters the
- 7 -
<PAGE> 8
information necessary to develop such list. And, so long as Source has not
exercised its option under Section 1(b)(ii), Telerate shall share with Source
information Telerate has with regard to renewal dates for subscriptions to the
Source Services. Source agrees to keep such lists and renewal information
strictly confidential and to use them solely to solicit subscriptions to the
Source Services to be accessed through the Telerate Services. Source agrees to
honor requests from Telerate Subscribers not to send unsolicited mail to them or
make unsolicited calls on them.
(c) Authorized Distributors. Source acknowledges that Telerate utilizes
authorized distributors, which may or may not be affiliated with Telerate, to
distribute the Telerate Services ("Authorized Distributors"). Source agrees to
allow the Source Services to be distributed by the Authorized Distributors
subject to the terms and conditions hereof (except where prohibited by law or
limited by local business practices), and Telerate agrees to use commercially
reasonable efforts to persuade the Authorized Distributors to distribute the
Source Services.
(d) Demonstration Periods. Source agrees that, if Telerate deems it
advisable for promotional or marketing purposes, Telerate may, subject to the
terms contained in the last sentence of Section 1(a)(i), make one or more of the
Source Services available free of charge to Telerate Subscribers for up to
thirty (30) days. The preceding provision shall not be deemed to increase
Telerate's obligations to market and promote subscriptions to the Source
Services set forth in subsection (a) of this Section 3.
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<PAGE> 9
4. Fees; Service Agreements.
(a) Billing; Fees. Source shall bill Source Subscribers in the United
States (Canada, Mexico, Central America and South America) (the "Americas
Region") on a regular basis for subscriptions to the Source Services. Telerate
shall bill Source Subscribers outside the Americas Region on a regular basis for
subscriptions to all Source Services. Fees for subscriptions to the Source
Services shall be determined by Source. Source agrees that it will make changes
in published subscription fees to the Source Services only once per year, which
shall be effective anywhere other than Japan on January 1 and in Japan on April
1, and will give Telerate no less than one hundred twenty (120) days' prior
written notice of any such change. If Source exercises its option under Section
1(b)(ii), Source agrees that it will not charge Source Subscribers any more
money for their subscriptions to the Source Services than it will charge any
subscribers to the Source Services or services substantially similar thereto
that receive such services by means other than through Telerate. The parties
agree that the billing party may terminate distribution of the Source Services
to Source Subscribers that are severely in arrears in paying their subscription
fees. Source Subscribers shall be deemed severely in arrears for purposes hereof
when they become six months behind in payments.
(b) Telerate Service Agreements. In those jurisdictions where Telerate
or an Authorized Distributor is billing Source Subscribers for their use of the
Source Services, Telerate or the applicable Authorized Distributor shall provide
the applicable Telerate Service Agreement to each New Source Subscriber (as
defined
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<PAGE> 10
below) and shall not grant any New Source Subscriber access to any Source
Service (except on a trial basis) until it has obtained an executed copy of the
applicable Telerate Service Agreement from such subscriber. For purposes of this
Agreement, the term "New Source Subscriber" shall mean a person or entity who
becomes, with respect to the Telerate Service through which such person or
entity accesses one or more of the Source Services, a new Telerate Subscriber
after the date of execution of this Agreement. Telerate Service Agreements
provided to New Source Subscribers shall disclaim, for the benefit of optional
service providers including Source (as well as for Telerate), all liability for
errors or omissions contained in the applicable Telerate Service. Copies of
representative Telerate Service Agreements currently being used are available
upon request Telerate shall provide Source with a copy of material amendments to
previously requested Telerate Service Agreements within ten (10) days after such
amendments are implemented. Source shall not make any statement regarding any
Telerate Service that is contradictory or inconsistent with the then-current
version of the applicable Telerate Service Agreement.
(c) Source's Service Agreement. In jurisdictions in which Source is
billing Source Subscribers for their use of the Source Services, Source may
provide the Source Services via a written or oral service Agreement. A copy of
the Service Agreement that Source initially will use in jurisdictions where it
will bill Source Subscribers for their use of the Source Services is attached as
Exhibit E.
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<PAGE> 11
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
5. Division of Charges.
(a) Telerate's Fee.
(i) Exclusive. Except as provided in clause (ii) below or in
subsection (b) of this Section 5, Telerate shall be entitled to a ************
********** of the amounts received from Source Subscribers (excluding all sales
or other similar taxes) by Source and by Telerate (or by Authorized
Distributors) in respect of subscriptions to the Source Services ("Subscription
Receipts"). All fees due Authorized Distributors in respect of their
distribution of the Source Services shall be paid out of Telerate's fee.
(ii) Non-Exclusive. If Source exercises its option under
Section 1(b)(ii) with respect to any one or more of the Source Services (and has
not revoked such notice pursuant to the terms of such section), Telerate shall
be entitled to, in lieu of the payments prescribed in clause (i), ********** of
the Subscription Receipts relating to all Source Services. Telerate agrees to
entertain proposals by Source to exercise its option under Section 1(b)(ii) with
respect to less than all Source Services and to increase Telerate's share of
Subscriber Receipts pursuant to this clause (ii) only with respect to those
Source Services as to which Source desires to exercise such option. Source
acknowledges that Telerate shall be under no obligation to accept any such
proposal. Any increase in Telerate's share of Subscriber Receipts pursuant to
Source's exercise of its option under this clause (ii) shall be effective as of
the end of the notice period for the Option Notice.
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<PAGE> 12
(iii) Adjustments. Each party acknowledges that they each make
initial calculations and payments of amounts due the other based on the amounts
they bill to Source Subscribers in respect of the Source Services, and
accordingly there may be post-payment adjustments to amounts remitted to the
other pursuant to this Section 5 to reflect (A) amounts the billing party billed
in error or credits it gave in the ordinary course of business to Source
Subscribers, and (B) amounts the billing party was unable to collect from Source
Subscribers.
(b) Sales Commission and Fee.
(i) Sales Commission. For each subscription to a Source
Service sold to a Telerate Subscriber by a salesperson working for Telerate or
an Authorized Distributor outside the Americas Region, Source shall pay to
Telerate an amount equal to the first month's fee charged to the Source
Subscriber ("Sales Commission"). The payment of the Sales Commission shall be in
lieu of any amounts that otherwise would be payable under subsection (a) of this
Section 5 for the first month of such subscription. The preceding provision
shall not be deemed to increase Telerate's obligations to market and promote
subscriptions to the Source Services set forth in Section 3(a).
(ii) Subscription Charge Increase Fee. If Source increases the
fee to subscribe to any of the Source Services in Japan (the "Japan Charges"),
Source shall pay to Telerate in respect of such increase a fee (the
"Subscription Charge Increase Fee") equal to the amount of one month's increase
in Japan Charges. The fee due
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<PAGE> 13
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
under this clause (ii) shall be in addition to, and not in lieu of, all other
fees due under this Agreement.
(c) Payment. Within sixty (60) days after the end of each calendar
quarter falling fully or partially within the term of this Agreement, each party
shall deliver to the other a report showing the Subscription Receipts for such
quarter, the fee due Telerate in respect thereof and the Sales Commissions and
Subscription Charge Increase Fees due Telerate and the amounts due Source,
together with a check payable to the other party for the ***********. All
payments shall be made in U.S. Dollars.
(d) Records. Each party shall maintain complete and accurate books and
records (collectively, the "Records") with respect to all amounts it billed to
Source Subscribers in respect of subscriptions to the Source Services and any
adjustments thereto made pursuant to subsection (a) of this Section 5 and all
Sales Commissions and all Subscription Charge Increase Fees due from Source.
Each party shall have the right upon at least thirty (30) days' prior written
notice to inspect the Records of the other during normal business hours no more
frequently than twice per year. All information gained by the inspecting party
from such inspection will be kept in strict confidence and will be used solely
for the purpose of verifying the accuracy of the computation of the amounts due
hereunder.
6. Copyright.
Source represents and warrants to Telerate that Source or its licensors
own the Source Services and the copyrights thereto, and that Source has the
right to authorize
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<PAGE> 14
Telerate to distribute the Source Services under this Agreement. Telerate agrees
it is not acquiring under this Agreement any proprietary interest in the Source
Services and agrees not to challenge the claim of Source or its licensors to the
ownership of the Source Services and the copyrights thereto. Telerate agrees to
implement reasonable measures requested by Source to make the copyright claim of
Source or its licensors known to Source Subscribers and to assist Source, at
Source's expense, in Source's defense or prosecution of any copyright
infringement claim.
7. Indemnification.
(a) By Source. In the event any claim is brought by any third party
against Telerate that relates to, arises out of or is based upon the Source
Services or the failure of Source to comply with any law, rule or regulation
(including, without limitation, the Investment Advisers Act of 1940 or the
Commodity Exchange Act), Telerate shall promptly notify Source, and Source shall
defend such claim at Source's expense and under Source's control. Source shall
indemnify and hold harmless Telerate against any judgment, liability, loss, cost
or damage (including litigation costs and reasonable attorneys' fees) arising
from or related to such claim whether or not such claim is successful. Telerate
shall have the right, at its expense, to participate in the defense of such
claim through counsel of its own choosing; provided, however, that Source shall
not be required to pay any settlement amount that it has not approved in
advance.
(b) By Telerate. In the event any claim is brought by any third party
against Source that relates to, arises out of or is based upon any error, delay
or other
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<PAGE> 15
event caused by Telerate in transmitting the Source Services, Source shall
promptly notify Telerate, and Telerate shall defend such claim at Telerate's
expense and under Telerate's control. Telerate shall indemnify and hold harmless
Source against any judgment, liability, loss, cost or damage (including
litigation costs and reasonable attorneys' fees) arising from or related to such
claim, whether or not such claim is successful. Source shall have the right, at
its expense, to participate in the defense of such claim through counsel of its
own choosing; provided, however, that Telerate shall not be required to pay any
settlement amount that it has not approved in advance.
8. Term; Termination.
(a) Term. The initial term of this Agreement shall commence as of the
date hereof and shall terminate on December 31, 1996 (the "Initial Term"). The
term of this Agreement shall automatically be extended for one or more periods
of two years (a "Renewal Term"), unless either party sends to the other written
notice of its election not to renew at least ninety (90) days prior to the end
of the Initial Term, or any Renewal Term, as the case may be. The term of this
Agreement shall also be extended in the event Telerate exercises its option
under subsection (e) of this Section 8.
(b) Default. If either party shall default in the performance of or
compliance with any provision contained in this Agreement and such default shall
not have been cured within thirty (30) days after written notice thereof shall
have been given to the appropriate party, the party giving such notice may then
give
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<PAGE> 16
further written notice to such other party terminating this Agreement, in which
event this Agreement and any other rights granted hereunder shall terminate on
the date specified in such further notice.
(c) Change in Control. If there occurs during the term hereof any
change in the control of either party, as defined below, then the other party
may terminate this Agreement upon at least twenty (20) days' prior written
notice to the other. A change in the control of a party shall be deemed to have
occurred upon a change in the possession of the ultimate power to, directly or
indirectly, direct or cause the direction of the management or the policies of
such party, whether through the ownership of voting securities, by contract or
otherwise.
(d) Insolvency. In the event that either party hereto shall be adjudged
insolvent or bankrupt, or upon the institution of any proceedings by it seeking
relief, reorganization or arrangement under any laws relating to insolvency, or
if an involuntary petition in bankruptcy is filed against such party and said
petition is not discharged within sixty (60) days after such filing, or upon any
assignment for the benefit of its creditors, or upon the appointment of a
receiver, liquidator or trustee of any of its assets, or upon the liquidation,
dissolution or winding up of its business (an "Event of Bankruptcy"), then the
party involved in any such Event of Bankruptcy shall immediately give notice
thereof to the other party, and the other party at its option may terminate this
Agreement upon written notice.
(e) Telerate's Option to Extend Term. If Source exercises its right to
not renew the Agreement pursuant to subsection (a) of this Section 8, Telerate
shall have
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<PAGE> 17
the option, exercisable by giving written notice to Source only during the
forty-five (45) day period following Telerate's receipt of Source's notice given
pursuant to such subsection (a), to extend the term of this Agreement for one
year (the "Option Year"). During the Option Year, Source shall have the right to
itself distribute, or to permit a third party to distribute, one or more of the
Source Services. Regardless of whether Source exercises such right, for the
Option Year Telerate shall be entitled to a fee determined in accordance with
Section 5(a)(i).
9. Miscellaneous.
(a) Notices. All notices hereunder shall be in writing and shall be
delivered in person, or sent by overnight courier service, to the address of the
party set forth below, or to such other addresses as may be stipulated in
writing by the parties pursuant hereto. Unless otherwise provided, notice shall
be effective on the date it is officially recorded as delivered.
(i) If to Telerate, to:
Telerate Systems Incorporated
200 Liberty Street
New York, NY 10281
Attention: President
with a copy to:
Telerate Systems Incorporated
200 Liberty Street
New York, NY 10281
Attention: Legal Department
- 17 -
<PAGE> 18
(ii) If to Source, to:
McCarthy Crisanti & Maffei, Inc.
71 Broadway
New York, NY 10006
Attention: President
with a copy to:
Van Kampen Merritt Holdings Corp.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: General Counsel
(b) Amendment; Assignment. This Agreement may not be amended except by
written instrument executed by Source and Telerate. Neither party may assign
this Agreement to any third party, other than an affiliate, without the prior
written consent of the other. Any assignment of this Agreement to an affiliate
shall not relieve the assigning party of any of its obligations or liabilities
under this Agreement.
(c) Survival of Certain Provisions. Notwithstanding the termination of
this Agreement, those provisions of this Agreement that by their nature are
intended to survive such termination shall survive, including without
limitation, the provisions of Sections 7 and 9.
(d) Consequential Damages. Except pursuant to Section 7, neither party
shall be liable for any consequential, indirect, incidental or special damages,
even if advised of the possibility of such damages.
- 18 -
<PAGE> 19
(e) Force Majeure. Performance by either party under this Agreement
shall be subject to and shall be excused to the extent that it shall be rendered
impossible by any event, condition or occurrence beyond the reasonable control
of such party.
(f) Entire Agreement. This Agreement contains the entire understanding
of the parties on the subject hereof and terminates and supersedes all previous
verbal and written agreements on such subject including without limitation the
Agreement dated March 24, 1986 between the parties.
(g) Relationship of the Parties. This Agreement does not and shall not
be deemed to constitute a partnership or joint venture between the parties and
neither party nor any of its directors, officers, employees or agents shall, by
virtue of the performance of their obligations under this Agreement, be deemed
to be an employee of the other.
(h) "Affiliate" Defined. For purposes of this Agreement, the term
"affiliate" and its derivatives shall mean, with respect to any individual or
entity, any other individual or entity directly or indirectly, through one or
more intermediaries, controlling, controlled by, or under common control with
such individual or entity. The term "control" and its derivatives, as used in
the immediately preceding sentence, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of an entity, whether through the ownership of voting securities, by
contract or otherwise.
- 19 -
<PAGE> 20
(i) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to the
choice of law principles thereof.
IN WITNESS WHEREOF, the undersigned parties have duly executed this
Agreement as of the 11th day of February, 1992, to be effective as of the date
first above written.
McCARTHY CRISANTI & MAFFEI, INC. TELERATE SYSTEMS INCORPORATED
By: /s/ Lindely B. Richert By: /s/ William R. Clabby
------------------------------ ------------------------------
Name: LINDLEY B. RICHERT Name: WILLIAM R. CLABBY
Title: PRESIDENT Title: SENIOR VICE PRESIDENT
- 20 -
<PAGE> 21
Index to Exhibits
<TABLE>
<CAPTION>
Name Description
---- -----------
<S> <C> <C>
A Description of Source Services
B Telerate's Option to Distribute New Source Services
C "Non-Chargeable" Telerate Equipment and Services
D Contacts for Approval of Promotional Materials
E Source's Service Agreement
</TABLE>
<PAGE> 22
Exhibit A
Source Services
<TABLE>
<CAPTION>
Name Description
---- -----------
<S> <C>
CurrencyWatch A foreign exchange market forecasting and
(Index Page 23300) analysis system combining live 24 hour
fundamental and technical analysis presented
as both commentary and live technical
trading pages, together with comprehensive
live EMS analysis.
YieldWatch Addresses European and Asia Pacific fixed
(Index Page 7870) income bond and futures markets. Information
is presented as live commentary, technical trading
blotters and spread analysis, together with
regional market briefings.
MoneyWatch Provides 24 hour fundamental and technical
(Index Page 7900) analysis of US Treasury, Agency and money
market securities. The service combines live
commentary and technical trading analysis with
detailed forecasts and analysis of the US economy.
CorporateWatch Principally provides rapid and comprehensive
(Index Page 7850-1) information on corporate securities, private
placements, equities and mortgage and
derivative product new issues.
</TABLE>
<PAGE> 23
Exhibit B
Telerate's Option to Distribute New Source Services
If, at any time during the term of this Agreement, Source desires to
electronically distribute, by itself or through a third party, a New Source
Service, as defined in Section 1(c), Source shall give a written notice to
Telerate that describes (i) the nature of such New Source Service and (ii)
whether Source desires to grant Telerate exclusive or non-exclusive distribution
rights with respect to such New Source Service. Whenever Source gives such
written notice, Telerate shall notify Source in writing, within twenty-one (21)
days following delivery of such written notice, whether it has the technical
capability to deliver the New Source Service under the then-current Telerate
delivery systems. If Telerate notifies Source that it has such capability,
Telerate shall have the option, exercisable by giving written notice to Source
within forty-five (45) days following the delivery of Source's notice, to agree
to distribute such New Source Service under the terms and conditions of this
Agreement (including the modifications set forth in this Exhibit B). If Telerate
fails to notify Source that it has the technical capability to deliver the New
Source Service under then-current Telerate delivery systems, then, subject to
the terms of the following paragraph, Source may distribute such New Source
Service and such distribution shall not be deemed an exercise of Source's option
under Section 1(b)(ii).
If Telerate fails to advise Source within such twenty-one (21) day
period that it has the capability to deliver the New Source Service under the
then-current Telerate delivery systems or if Telerate fails to exercise its
option within such forty-five (45) day period, and if distribution of such New
Source Service does not commence within the ninety (90) day period following the
expiration of such twenty-one (21) or forty-five (45) day period (whichever is
applicable), proposals by Source to electronically distribute such New Source
Service shall again become subject to the provisions of this Agreement.
<PAGE> 24
Exhibit C
"Non-Chargeable" Telerate Equipment and Services
See Attached
In addition to the Equipment and Services described in the
attachment to this Exhibit C, Telerate shall provide to Source one subscription
to the Telerate Digital Page Feed (current capacity for 32 workstations) on the
terms set forth below:
1. Telerate will charge Source a fee of $650 per month for such
subscription. This fee does not include communications charges (currently $350
per month), which Source shall pay. Telerate shall have the right to raise the
communications charge to Source in the same amount it increases such charge to
other TDPF customers and at the same time it imposes such increases on them.
2. Source will be responsible for paying all applicable optional
service and exchange fees.
3. Source agrees to comply with all terms of the TDPF subscriber
agreement other than those modified by the terms of this Agreement (including
this Exhibit C).
4. Telerate has the right to review these terms during the first six
months after the TDPF line is installed at Source's premises to ensure that
Telerate's applicable costs are covered. If Telerate finds that its applicable
costs are not being covered, it has the right to so notify Source in writing
within thirty (30) days after the end of such six (6) month period. If Source
receives such a notice, it agrees to reopen discussions with Telerate on this
point, although Telerate agrees that Source shall have no obligation to accept
any other arrangement.
<PAGE> 25
Attachment to
Exhibit C
<TABLE>
<CAPTION>
Account No. ID No. Comments
----------- ------ --------
<S> <C> <C> <C>
331689 37-029-06 Standard System
331689 37-029-05 Standard System
334086 09-122-00 ESIP
338763 30-246-00 ESIP
330562 37-029-04 Standard System - Charge
for 23" monitor
335862 37-029-03 Standard System - Charge
for printer
338763 08-124-00 ESIP
330562 22-64-11 Standard System
</TABLE>
Two additional ESIP lines will be provided.
<PAGE> 26
Exhibit D
Contacts for Approval of Promotional Materials
For Telerate:
Mr. James Ambrosio
Telerate Systems Incorporated
Harborside Financial Center
600 Plaza Two
Jersey City, NJ 07311-3992
Telephone #201-309-4007
Facsimile #201-860-4181
For Source:
Mr. Jay Miller
McCarthy Crisanti & Maffei, Inc.
71 Broadway
New York, NY 10006
Telephone #212-509-5800
Facsimile #212-509-7389
Either party may change its designated "contact" person by giving written notice
to the other.
<PAGE> 27
Exhibit E
Source's Service Agreement
See Attached
<PAGE> 28
ATTACHMENT TO
EXHIBIT E
McCarthy, Crisanti & Maffei Inc. (MCM)
Subscription for Electronic Information and Research Services
This Subscription Agreement (the "Agreement") made this ____ day of __________,
19__ (the "Effective Date") by and between McCarthy, Crisanti & Maffei Inc.
(hereinafter "MCM"), a New York corporation having offices at 71 Broadway, New
York, New York, 10006 and ________________________ (hereinafter "customer").
1. Services
Customer subscribes to, and MCM agrees to provide, the services
("Services") set out on the attached Supplement(s), Number(s) _____________ upon
the terms and conditions set out below.
2. Terms of Subscription; Fee
The subscription term for each Service shall be set forth on the
relevant Supplement(s). The term of this Agreement shall be from the "Effective
Date" until the expiration of the last expiring subscription. For the Services
provided by MCM, Customer agrees to pay MCM the subscription fee indicated. Fees
charged upon the renewal of any subscription shall be those set forth on MCM's
then current price lists. All subscription fees shall be paid in advance at the
commencement of the subscription term. Customer shall also pay in addition to
any subscription fee, any tax, however characterized, arising out of this
subscription other than net income taxes on MCM.
3. Renewal
Each Service, and term thereof, shall automatically continue for a term
equal in length to the original term, unless either party gives the other, not
less than sixty (60) days written notice prior to the end of the term of that
Service. Any new term shall be governed by the terms and conditions of this
Agreement, except for price, which shall be determined from MCM's then current
price list.
4. Information Provided
Services are for the sole use of Customer. Customer will not (without
MCM's prior written consent) duplicate or reproduce (except for use by its own
employees at the above location) any information including (but not limited to)
reports, data, ratings, documentation made known, sent or otherwise transmitted
by MCM under this Agreement or any Service. But, Customer may publish, without
such consent, such analyses and reports of the Services in amounts which in the
aggregate are totally insignificant relative to that portion of the report,
rating or documentation
<PAGE> 29
containing the information, and so long as no fee is charged for such analyses
and reports. Customer acknowledges that all such matter is and shall remain the
sole property of MCM, and that MCM is the sole owner of all copyright and other
Commercial property rights therein. The obligations of Customer under this
Paragraph 4 shall survive termination of this Subscription Agreement for any
reason and shall be enforceable by injunctive or other equitable relief. If
Customer makes any permitted use of any information described in this Paragraph,
Customer shall credit MCM as the source of such information.
5. Termination for Non Payment of Fees, Insolvency or Violation of
Paragraph 4
Customer's failure to pay any fee or installment thereof, within thirty
(30) days after the date set for such payment or Customer's violation of
paragraph 4 therein, shall entitle MCM, in addition to its other remedies at law
or in equity, to terminate all or any Service(s) and/or this Agreement. If
Customer becomes insolvent, has a receiver appointed over all or any of its
assets, or enters into any form of liquidation this Agreement will terminate
automatically, without prejudice to MCM's right to claim for payments which have
become due and payable at the time of termination.
6. Exclusion of Warranties and Liability
MCM MAKES NO REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED WITH
RESPECT TO THE SERVICES, INCLUDING (BUT NOT LIMITED TO) THE IMPLIED WARRANTIES
OF FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY. MCM shall not be liable
to Customer, for any loss or damage claimed to have resulted from MCM's supply
or customer's use of the Services, except for direct loss or damage resulting
from MCM's gross negligence or willful default. MCM shall not be liable for (1)
indirect, consequential or incidental damages arising from any Subscription,
including any claim related to timeliness of deliveries of Services or the
quality or accuracy of information upon which a Service is based, (2) any claim
that arose more than (1) year prior to the institution of suit therefor, or (3)
any claim arising from causes beyond MCM's reasonable control. MCM's maximum
liability for any and all causes shall, in the aggregate, not exceed the amount
paid by Customer for the Services during the initial term of this Agreement.
7. Assignment
MCM shall not assign this Agreement without the prior written consent
of Customer. Customer shall not assign this Agreement without the prior written
consent of MCM.
<PAGE> 30
8. Force Majeur
MCM excludes liability for any direct or consequential loss or damage
to Customer which results from interruption or loss of the Services due to acts
and events beyond MCM's control.
9. Disclosure
Pursuant to the provisions of the Investment Advisers Act of 1940, MCM
offers to supply Customer with Part II of the Form ADV upon written request of
Customer.
10. Miscellaneous
This Agreement and Supplement(s) hereto constitute the entire and final
written expression of all terms and said agreement. No modification or
amendments shall be made or effective unless they are writing and signed by the
parties. The Agreement and Supplement(s) shall be governed by the laws of the
State of New York.
IN WITNESS WHEREOF, the parties or their duly authorized representative
have hereunto set their hands on the day and year first above written.
McCARTHY, CRISANTI & MAFFEI, INC.
By:_________________________________
Title:_______________________________
Date:_______________________________
CUSTOMER
By:_________________________________
Title:_______________________________
Date:_______________________________
<PAGE> 31
Number _________
Term ___________
Supplement to
McCarthy, Crisanti & Maffei, Inc.
Subscription for Electronic Information and Research Services
This Supplement between McCarthy, Crisanti & Maffei, Inc. (MCM) and the Customer
(as set forth on the Subscription for Electronic Information and Research
Services) represent those Services subscribed to by the Customer and to be
provided by MCM, subject to the terms and conditions set forth in the
Subscription Agreement.
Dated___________________
<TABLE>
<CAPTION>
Services Annual Fee
-------- ----------
<S> <C> <C>
</TABLE>
Total:
Additional Locations/Departments:_____________________________________________
______________________________________________________________________________
______________________________________________________________________________
McCARTHY, CRISANTI & MAFFEI, INC.
By:_________________________________
Title:_______________________________
Date:_______________________________
CUSTOMER______________________________
By:_________________________________
Title:_______________________________
Date:_______________________________
<PAGE> 1
Exhibit 10.19
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.
November 11, 1996
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza
New York, New York 10005
Attention: President
Gentlemen:
Reference is made to the Agreement dated as of January 1, 1992 (the
"Agreement") between Dow Jones Telerate, Inc. (formerly known as Telerate
Systems Incorporated) ("DJT") and McCarthy, Crisanti & Maffei, Inc. ("MCM").
Capitalized terms used in this letter agreement and not otherwise defined shall
have the meanings ascribed to them in the Agreement.
A. ACKNOWLEDGMENT OF NON-EXCLUSIVITY. The parties hereby formally
acknowledge that on July 1, 1993, MCM notified DJT of its exercising of its
option under clause (ii) of Section 1(b) of the Agreement to have the Source
Services distributed by itself or by other information vendors and on or about
October 1, 1993, MCM commenced distributing the Source Services through
information vendors other than Telerate, on those terms set forth in Section (b)
(ii) of the Agreement.
B. AMENDMENT OF AGREEMENT. Effective as of April 1, 1996, the Agreement is
hereby amended as follows:
1. TERM. The Initial Term of the Agreement shall terminate on December
31, 2001 and not on December 31, 1996 as provided in the Agreement.
2. TELERATE'S FEE. Section 5 of the Agreement is hereby deleted in its
entirety and amended to read as follows:
<PAGE> 2
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.
"5. DIVISION OF CHARGES.
(a) TELERATE'S FEE.
(i) NORMAL CALCULATION. Subject to clause (ii) of this Section 5(a),
Telerate shall be entitled to a fee equal to: (A) with respect to the 1996
Partial Year (as defined below), ******************* of the first *********** of
Subscription Receipts (as defined below) and ************************* of
Subscription Receipts in excess of $17.25 million; and (B) with respect to
calendar year 1997 and each calendar year thereafter, ******************* of the
first *********** in Subscription Receipts in such year and ********************
of Subscription Receipts in excess of *********** in such year, less, in each
case, the amount of any Sales Commissions payable under clause (i) of
Section 5(b).
(ii) ALTERNATIVE CALCULATION. Notwithstanding anything to the contrary
contained herein, in the event that with respect to the 1996 Partial Year, the
1997 calendar year or the 1998 calendar year, Source's Annual Growth Rate on
Telerate (as defined below) in such year is less than Source's Total Annual
Growth Rate (as defined below) in such year, then, in lieu of the fee determined
under clause (i), Telerate shall be entitled to the fee determined under this
clause (ii). For the avoidance of doubt, it is expressly understood that no
alternate calculation shall apply with respect to 1999 or any year thereafter.
Pursuant to this clause (ii), Telerate shall be entitled to a fee equal to the
amount determined under clause (A), (B) or (C) below, as applicable, less, in
each case, the amount of any Sales Commission payable under clause (i) of
Section 5(b).
(A) 1996. With respect to the 1996 Partial Year: *********************
******************************** Subscription Receipts, plus (2) the product of
(x) the excess of actual Subscription Receipts in the 1996 Partial Year over
************** ************ (y) Annual Growth Ratio A (as defined below)
multiplied by (z) ******** (3) the product of (x) the excess of actual
Subscription Receipts in the 1996 Partial Year ******************* multiplied by
(y) Annual Growth Ratio B (as defined below) multiplied by *******.
(B) 1997. With respect to calendar year 1997: ***********************
******************************************** Receipts, plus (2)
**************************** ********************* Deemed Receipts (as defined
below) ********************** plus (3) the product of (x) the excess of 1997
actual Subscription Receipts over 1996 Deemed Receipts multiplied by (y) Annual
Growth Ratio A multiplied by (z) ************* the
-2-
<PAGE> 3
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.
product of (x) the excess of 1997 actual Subscription Receipts over 1996 Deemed
Receipts multiplied by (y) Annual Growth Ratio B multiplied by (z) ***.
(C) 1998. With respect to calendar year 1998: ***********************
********************** Receipts, plus (2) *************************************
actual Subscription ********************************** (3) the product of (x)
the excess of 1998 actual Subscription Receipts over 1997 actual Subscription
Receipts multiplied by (y) Annual Growth Ratio A multiplied by ******** plus
(4) the product of (x) the excess of 1998 actual Subscription Receipts over
1997 actual Subscription Receipts multiplied by (y) Annual Growth Ratio B
multiplied by (2)*******.
(iii) DEFINITIONS.
(A) ANNUAL GROWTH RATIO A in respect of a particular year means (1)
Source's Annual Revenue Growth on Telerate in such year divided by (2) Source's
Total Annual Growth Rate in such year.
(B) ANNUAL GROWTH RATIO B in respect of a particular year means (1)
Source's Total Annual Growth Rate in such year minus Source's Annual Growth Rate
on Telerate in such year divided by (2) Source's Total Annual Growth Rate in
such year.
C) 1996 DEEMED RECEIPTS means the actual Subscription Receipts on
Telerate for the partial year 1996 increased by 33 1/3%.
(D) 1996 PARTIAL YEAR means the period from April 1, 1996 through
December 31, 1996.
(E) SOURCE'S ANNUAL GROWTH RATE ON TELERATE for a particular year
means the percentage by which Subscriber Receipts for such year exceed
Subscriber Receipts for the immediately preceding year, provided that Source's
Annual Growth Rate on Telerate for 1997 means the percentage by which
Subscription Receipts for 1997 exceed 1996 Deemed Receipts.
(F) SOURCE'S TOTAL ANNUAL GROWTH RATE for a particular year means the
percentage by which the amounts paid by subscribers to the Source Services in
such year exceed the amounts paid by subscribers to the Source Services in the
immediately preceding year. To avoid confusion, for purposes of this definition,
the Source Services referred to shall be those as defined in the Agreement and
actually offered through Telerate and shall not include any other service
offered by Source
-3-
<PAGE> 4
which is subject to the option set forth in Section 1(c) of
the Agreement and which other service Telerate has not exercised its option to
distribute.
(G) SUBSCRIPTION RECEIPTS in respect of a specified year means the
amounts received from Source Subscribers on Telerate in respect of subscriptions
to the Source Services in respect of such year.
(iv) ADJUSTMENTS. Each party acknowledges that they each make initial
calculations and payments of amounts due the other based on the amounts they
bill to Source Subscribers in respect of the Source Services, and accordingly
there may be post-payment adjustments to amounts remitted to the other pursuant
to this Section 5 to reflect (A) amounts the billing party billed in error or
credits it gave in the ordinary course of business to Source Subscribers, and
(B) amounts the billing party was unable to collect from Source Subscribers. In
addition, the parties agree to cooperate with each other to make, on a quarterly
basis, any post-payment adjustments necessary as a result of the applicability
of clause (i) in lieu of clause (ii) or, vice versa, of Section 5(a).
(v) REPORTS BY SOURCE. By January 31 of each of 1997, 1998 and 1999,
Source shall provide to Telerate a report from its outside auditors certifying
Source's Total Annual Growth Rate in respect of the 1996 Partial Year, the 1997
calendar year and the 1998 calendar year, respectively.
(b) SALES COMMISSION AND FEE.
(i) SALES COMMISSION. For each subscription to a Source Service sold
to a Telerate Subscriber by a salesperson working for Telerate outside
Telerate's "Americas Region" or an Authorized Distributor outside Telerate's
Americas Region, Source shall pay to Telerate an amount equal to the first
month's fee charged to the Source Subscriber ("Sales Commission"). The preceding
provision shall not be deemed to increase Telerate's obligations to market and
promote subscriptions to the Source Services set forth in Section 3(a).
(ii) SUBSCRIPTION CHARGE INCREASE FEE. If Source increases the fee to
subscribe to any of the Source Services in Japan (the "Japan Charges"), Source
shall pay to Telerate in respect of such increase a fee (the "Subscription
Charge Increase Fee") equal to the amount of one month's increase in Japan
Charges. The fee due under this clause (ii) shall be in addition to, and not in
lieu of, all other fees due under this Agreement.
(c) PAYMENT. Within sixty (60) days after the end of each calendar
quarter falling fully or partially within the term of this Agreement, each party
shall deliver to the other a report showing the Subscription Receipts for such
quarter, the fee due Telerate in respect thereof and the Sales Commissions and
Subscription
-4-
<PAGE> 5
Charge Increase Fees due Telerate and the amounts due Source, together with a
check payable to the other party for the net amount. All payments shall be made
in U.S. Dollars.
(d) RECORDS. Each party shall maintain complete and accurate books and
records (collectively, the "Records") with respect to all amounts it billed to
Source Subscribers in respect of subscriptions to the Source Services and any
adjustments thereto made pursuant to subsection (a) of this Section 5 and all
Sales Commissions and all Subscription Charge Increase Fees due from Source.
Each party shall have the right upon at least thirty (30) days' prior written
notice to inspect the Records of the other during normal business hours no more
frequently than twice per year. All information gained by the inspecting party
from such inspection will be kept in strict confidence and will be used solely
for the purpose of verifying the accuracy of the computation of the amounts due
hereunder.
(e) FEES TO DISTRIBUTORS. All fees due Authorized Distributors in
respect of their distribution of the Source Services shall be paid by Telerate
out of its fee."
3. PROMOTION AND MARKETING.
(a) Section 3(a) of the Agreement is hereby deleted in its entirety
and amended to read as follows:
"(a) EFFORTS AND MATERIALS.
(i) EFFORTS. Source and Telerate shall each exercise commercially
reasonable efforts to market and promote subscriptions to the Source Services to
be accessed through the Telerate Services.
(ii) MATERIALS. Neither party shall publish or distribute any
advertising or promotional material regarding the availability of the Source
Services through the Telerate Services without the prior written consent of the
other, which consent shall not be unreasonably withheld. If the receiving party
has not notified the sending party of its disapproval of sample materials within
twenty (20) days after its receipt thereof, such materials shall be deemed
approved. Materials substantially similar to materials approved on an earlier
occasion shall also be deemed approved. Materials being sent to the other party
for approval pursuant to this subsection (a) shall be directed to the person(s)
designated in Exhibit D hereto.
(b) SUBSCRIBER LIST. To facilitate Source's promotional efforts,
Telerate shall provide to Source on a quarterly basis the list of Telerate
Subscribers located in the United States and Canada. Each month Telerate shall
also provide Source with the list of those persons and entities located in the
United States and
-5-
<PAGE> 6
Canada who became new Telerate Subscribers during such month. In addition,
Telerate shall furnish to Source, from time to time, the list of Telerate
Subscribers located outside the United States and Canada promptly after it
receives at headquarters the information necessary to develop such list.
Further, Telerate shall share with Source information Telerate has with regard
to renewal dates for subscriptions to the Source Services, as well as such other
reports that Telerate typically and customarily provides to other optional
service providers, including, but not limited to, Telerate's Page Popularity
Statistics Report. Source agrees to keep such lists and renewal information
strictly confidential and to use them solely to solicit subscriptions to the
Source Services to be accessed through the Telerate Services. Source agrees to
honor requests from Telerate Subscribers not to send unsolicited mail to them or
make unsolicited calls on them.
(c) AUTHORIZED DISTRIBUTORS. Source acknowledges that Telerate
utilizes authorized distributors, which may or may not be affiliated with
Telerate, to distribute the Telerate Services ("Authorized Distributors").
Source agrees to allow the Source Services to be distributed by the Authorized
Distributors subject to the terms and conditions hereof (except where prohibited
by law or limited by local business practices), and Telerate agrees to use
commercially reasonable efforts to persuade the Authorized Distributors to
distribute the Source Services.
(d) DEMONSTRATION PERIODS. Source agrees that, if Telerate deems
it advisable for promotional or marketing purposes, Telerate may, subject to the
terms contained in the last sentence of Section 1(a)(i), make one or more of the
Source Services available free of charge to individual Telerate Subscribers for
up to sixty (60) days. The preceding provision shall not be deemed to increase
Telerate's obligations to market and promote subscriptions to the Source
Services set forth in subsection (a) of this Section 3."
4. NO FIDUCIARIES. The following is hereby added to the end of Section
1(a) (ii) of the Agreement:
"Source shall not be deemed to be a fiduciary of Telerate."
5. EXHIBITS A, D AND E. Exhibits A, D and E to the Agreement are
hereby amended and restated, in each case as attached to this letter agreement.
6. EQUIPMENT UPGRADE. In addition to the "non-chargeable" Telerate
services, as well as the other services set forth on Exhibit C, which equipment
and services shall continue to be provided to Source by Telerate on the same
conditions set forth therein, Telerate shall upgrade the Telerate terminals
currently installed in Source's offices (the "Current Terminals") as follows:
-6-
<PAGE> 7
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.
(i) Telerate green screens and Matrix terminals will be upgraded to
Telerate Workstations; Teletrac terminals will be upgraded to Tradestation
terminals. All such upgraded terminals are referred to as "Upgraded Terminals".
In addition, Telerate shall furnish Source with *** additional Telerate
terminals ("Free Terminals") (either Telerate Workstation terminals or Telerate
Tradestation terminals, as Source elects), with such Free Terminals to be
installed in such of Source's offices as Source elects. Telerate shall not
charge Source for the performance of such upgrades or for the installation of
the Free Terminals. If Source later requests a relocation of any of such
terminals, it will bear the charges for such relocation. During the term of this
Agreement, except as provided below Telerate shall furnish (a) the Free
Terminals to Source without charge and (b) the Upgraded Terminals to Source for
the same monthly charges that Source is currently paying for the Current
Terminals. If Source wishes to subscribe to additional Telerate services,
Telerate will provide such services to Source at a 50% discount from Telerate's
standard list prices. Except as otherwise provided herein, Source's use of the
Telerate Services shall be subject to the terms and conditions of the
then-current version of the applicable Telerate Service Agreement.
7. EFFECT OF AMENDMENT. Except as expressly amended hereby, the
Agreement shall remain in full force and effect.
Please sign below to indicate your agreement to the foregoing.
Very truly yours,
DOW JONES TELERATE, INC.
By: /s/ J. B. CHILDS
--------------------------------------
Name: J. B. Childs
Title: COO
ACCEPTED AND AGREED:
MCCARTHY, CRISANTI & MAFFEI, INC.
By: /s/ D. NIXON
--------------------------------
Name: D. Nixon
Title: President and CEO
-7-
<PAGE> 8
Exhibit A
SOURCE SERVICES
---------------
Currency Watch Provides fundamental and technical analysis of
global currency markets.
YieldWatch Provides fundamental and technical analysis of
European and Asia Pacific fixed income bond and
futures markets.
MoneyWatch Provides fundamental and technical analysis of U.S.
Treasury, Agency and money markets.
CorporateWatch Provides information on corporate securities,
private placements, equities and mortgage and
derivative product new issues.
FX OptionWatch Provides fundamental and technical analysis of
global currency options markets.
TradeWatch Provides trading strategies on fixed income,
currency and other financial markets.
-8-
<PAGE> 9
Exhibit D
Contacts For Approval Of Promotional Materials
----------------------------------------------
For Telerate:
Dow Jones Telerate, Inc.
Harborside Financial Center
600 Plaza Two
Jersey City, New Jersey 07311-3992
Telephone: (201) 938-4656
Facsimile: (201) 938-4655
Attention: James Ambrosio
For Source:
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, Suite 3700
New York, New York 10005
Telephone: (212) 509-5800
Facsimile: (212) 908-4346
Attention: Director of U.S. Marketing
Either party may change its designated "contact" person by giving written notice
to the other.
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<PAGE> 10
Exhibit E
Source's Service Agreement
--------------------------
See attached.
-10-
<PAGE> 11
MCCARTHY, CRISANTI & MAFFEI, INC. ("MCM")
SUBSCRIPTION FOR ELECTRONIC INFORMATION SERVICES
This Subscription Agreement (the "Agreement") made as of the _____ day of
________, 19___, (the "Effective Date") by end between McCarthy, Crisanti &
Maffei, Inc. (hereinafter "MCM"), a New York corporation having offices at One
Chase Manhattan Plaza, New York, New York 10005, and _________________________,
a _________________________________________ having offices at
_______________________________ (hereinafter "Customer").
1. SERVICES
Customer subscribes to, and MCM agrees to provide, the services set out on the
attached Supplement(s), Number(s) __________ (each, a "Service," and
collectively, "Services") upon the terms and conditions set forth below.
2. TERM OF SUBSCRIPTION; FEE
The initial subscription term for each Service shall be as set forth on
Supplement (the "Initial Term") attached hereto and made part hereof. For the
Service(s) provided by MCM, Customer agrees to pay MCM the subscription fees
indicated on the relevant Supplement. Fees charged upon the renewal of any
subscription shall be those set forth on MCM's then current price lists. All
subscription fees shall be paid quarterly in advance on the commencement of the
subscription term and thereafter on the first business day of each succeeding
calendar quarter.
3. RENEWAL
The subscription term for each Service may be renewed for a term equal in length
to the Initial Term upon written agreement of the parties not less than thirty
(30) days' prior to the end of the initial or any renewal term for that Service.
Any renewal term shall be governed by the terms and conditions of this
Agreement, except for price, which shall be determined from MCM's then current
price list.
4. USE OF INFORMATION
Services are for the sole use of Customer. Customer will not, without MCM's
prior written consent, cause or permit the Service(s) or any information
including, without limitation, reports, analyses, data, or documentation made
known, sent or otherwise transmitted by MCM under this Agreement or any Service
in whole or in part to be stored, modified, duplicated, reproduced or
retransmitted in any form either to third
-11-
<PAGE> 12
parties or to affiliated companies or branch offices of the Customer except as
otherwise permitted herein. If Customer makes any such use of any information
for which MCM has given its prior written approval; (i) Customer shall credit
MCM as the source of such information; (ii) the information used shall not
constitute, individually or in the aggregate, a substantial portion of any
Service; (iii) Customer shall impose no additional fee or charge on any third
party for such use: (iv) no such use shall occur less than thirty (30) minutes
after the receipt of the information from MCM; and (v) Customer shall defend,
indemnify, and hold harmless MCM, its affiliates and and their respective
officers, directors, employees, agents, contractors and subcontractors from and
against any cost, loss, damage, liability or expense (including attorneys' fees)
arising from such use. Customer expressly acknowledges that the Service(s) and
all information pertaining thereto or contained therein are and shall remain
proprietary to MCM, and that MCM is the sole owner of all copyright and other
commercial property rights therein. Customer agrees not to create any derivative
works (including data bases) based on the Service(s) or the information
contained therein. Customer will not use or permit the use of the information
contained in the Service(s) for any illegal purpose. MCM reserves to itself
complete editorial freedom in the form and content of the Service(s) and may
alter the same from time to time.
Customer agrees to provide to MCM within thirty (30) days after the end of each
calendar quarter user information which includes, but shall not be limited to, a
report in the average number of users of the Service(s), collectively and broken
out for each Service, and such other user-type information that MCM may
reasonably request. MCM shall have the right upon at least thirty (30) days'
prior written notice to inspect the records of Subscriber during normal business
hours no more frequently than twice per year. All information gained by MCM from
such inspection will be kept in strict confidence and will be used solely for
the purpose of verifying the number of users for the Service(s), the use by
customer of information pursuant to the provisions of this Paragraph 4, and the
accuracy of the aforementioned reports.
5. TERMINATION
(a) In addition to any other remedy available at law or in equity, MCM may
terminate this Agreement immediately, in whole or in part, without further
obligation to Customer in the event of:
(i) any breach by the Customer of Paragraph 4 or a breach of the
Customer's obligation to pay the subscription fee as specified in this Agreement
and Supplement(s) hereto;
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<PAGE> 13
(ii) any other breach of this Agreement by the Customer which cannot
be remedied or is not remedied within thirty (30) days of the Customer being
requested to do so;
(iii) any merger, consolidation, acquisition, or the sale, lease or
other transfer of all or substantially all of the assets or shares of stock of
the Customer, or any other change in the control or ownership of the Customer;
(iv) the Customer's making an assignment for the benefit of its
creditors or filing a voluntary petition under any bankruptcy or insolvency law,
under the reorganization or arrangement provisions of the United States
Bankruptcy Code, or under the provisions of any law of like import;
(v) the filing of an involuntary petition against the Customer under
any bankruptcy or insolvency law, under the reorganization or arrangement
provisions of the United States Bankruptcy Code, or under any law of like
import, which involuntary petition is not removed or otherwise discussed within
sixty (60) days of the filing thereof; or
(vi) the appointment of a trustee or receiver for the Customer or its
property.
(b) Where the operation or delivery of the Service(s) or any part thereof
is dependent upon an agreement between MCM and a third party and such agreement
has expired or is terminated or suspended in whole or in part for any reason and
MCM is unable to enter into another equivalent agreement upon reasonable terms,
MCM may immediately terminate this Agreement or the relevant part thereof, and
upon termination MCM's only obligation to the Customer will be to refund the
proportionate part of the subscription fee already paid for the portion of the
Service(s) not received by virtue of said termination.
(c) Without limitation of any other remedy available at law or in equity,
the Customer and MCM hereby agree that upon the Customers (i) breach of this
Agreement, or (ii) terminating this Agreement (except as permitted hereunder),
MCM will be entitled to retain all prepaid subscription fees and recover from
the Customer all future subscription fees payable for the then current term for
each service.
(d) Customer agrees, in the event of a breach by it of any of its
obligations under this Agreement, MCM may seek temporary or permanent injunctive
relief without the necessity of proving actual damages or the posting of a bond,
as well as other equitable relief, it being acknowledged that legal remedies are
inadequate.
-13-
<PAGE> 14
6. DISCLAIMER OF WARRANTIES AND LIABILITY
MCM AND ITS AFFILIATES MAKE NO REPRESENTATION OR WARRANTY, EITHER EXPRESS OR
IMPLIED, WITH RESPECT TO THE SERVICE(S), INCLUDING, WITHOUT LIMITATION THE
IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY, AND
EACH SPECIFICALLY DISCLAIMS ANY SUCH WARRANTY, MCM AND ITS AFFILIATES EACH
SPECIFICALLY DISCLAIM ANY KNOWLEDGE OF ANY PURPOSE FOR WHICH THE SERVICE(S)
SHALL BE USED BY CUSTOMER. MATERIAL SUPPLIED BY MCM IN THE SERVICE(S)
CONSTITUTES OPINION AND NOT FACT. Such material supplied in the Service(s) is
based upon information obtained by MCM from a number of sources and MCM may be
unable to verity the accuracy of that information. Accordingly, neither MCM nor
its affiliates shall be liable to Customer for: (1) any faults in the delivery,
transmission or content of the Service(s), or for contingencies beyond their
control in producing, supplying, or compiling, transpositioning or delivering
the Service(s); (2) any errors, omissions, or inaccuracies In the information or
analyses contained in the Service(s) or delays or interruptions in delivery of a
Service for any reason; (3) any decision made or action taken by Customer in
reliance upon the information or analyses contained in the Service(s); (4) loss
of business revenues, lost profits, or any indirect, consequential, special or
incidental damages arising from any subscription, including any claims related
to the timeliness of deliveries of the Service(s) or the quality or accuracy of
information upon which a Service is based, whether in contract, tort or
otherwise, even if advised of the possibility of such damages; (5) any claim
that arose more than one (1) year prior to the institution of suit therefor; or
(6) any claim arising from causes beyond MCM's reasonable control including, but
not limited to, Customers selection and use of its own computer hardware system.
CUSTOMER AGREES THAT MCM'S MAXIMUM LIABILITY FOR ANY AND ALL CAUSES SHALL NOT
EXCEED, IN THE AGGREGATE, THE AMOUNT PAID BY CUSTOMER FOR THE SERVICE(S) DURING
THE INITIAL TERM OF THIS AGREEMENT. FEDERAL AND STATE SECURITIES LAWS UNPOSE
LIABILITIES UNDER CERTAIN CIRCUMSTANCES ON PERSONS WHO ACT IN GOOD FAITH, AND
THIS AGREEMENT DOES NOT WAIVE OR LIMIT CUSTOMER'S RIGHTS UNDER THOSE LAWS.
7. ASSIGNMENT
Neither Party shall "assign" this Agreement within the meaning of the Investment
Advisers Act of 1940 without the prior written consent of the other.
-14-
<PAGE> 15
8. TAXES
Customer agrees to pay all sales, use, excise taxes and penalties (except for
taxes based on MCM's net income) with respect to the Service(s). Where required
by law, Customer shall file all personal property tax returns and pay personal
property taxes and assessment fees relating to the Service(s).
9. FORCE MAJEURE
Neither MCM nor Customer shall be responsible for delays or failures in
performance resulting from acts beyond the control of such party. Such acts
shall include but not be limited to acts of God, strikes, lockouts, riots, acts
of war, epidemics, governmental regulations imposed after the fact, fire,
communication line failures, power failures, earthquakes or other disasters.
10. DISCLOSURE
Pursuant to the provisions of the Investment Advisers Act of 1940, MCM offers to
supply Customer with Part II of MCM's Form ADV upon written request of Customer.
11. GENERAL
(a) In the event that any court having competent jurisdiction shall
determine that one or more of the provisions contained in this Agreement shall
be unenforceable in any respect, then such provision shall be deemed limited and
restricted to the extent that such court shall deem it to be enforceable, and so
limited or restricted shall remain in full force and effect. In the event that
any such provision or provisions shall be deemed wholly unenforceable, the
remaining provisions shall remain in full force and effect.
(b) This Agreement and any and all Supplements annexed hereto represent the
entire agreement of the parties. There are no other oral or written collateral
representations, agreements, or understandings. In the event that the Customer
issues a purchase order or other instrument related to the Service(s), it is
understood and agreed that such document is for the Customer's internal purposes
only and will in no way supersede, modify, add to or delete any of the terms and
conditions of this Agreement.
(c) All notices given hereunder will be in writing, delivered personally or
mailed by registered or certified mail, return receipt requested, postage
prepaid to the parties at the address specified in this Agreement unless either
party gives notice in
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<PAGE> 16
writing of a change of such address in the manner provided herein for giving
notice. All notices will be deemed given when delivered personally, or if
mailed, five (5) days alter the date of mailing.
(d) This Agreement will be deemed to have been executed and delivered in
the State of New York and it will be governed by and construed in accordance
with the laws of New York without regard to the choice of law provisions
thereof. The parties hereby consent to the jurisdiction of the courts of the
State of New York for the purpose of any action or proceeding brought by either
of them on or in connection with this Agreement or any alleged breach thereof.
(e) This Agreement will be binding upon and inure to the benefit of the
parties hereto, their respective heirs, personal representatives, successors and
assigns.
(f) This Agreement may not be amended, modified or superseded, nor may any
of its terms or conditions be waived unless expressly agreed to in writing by
both parties. The failure of either party at any time or times to require full
performance of any provision hereof will in no manner affect the right of such
party at a later time to enforce the same.
(g) The Customer hereby waives personal service of any and all process upon
the Customer and consents that service of process may be made by certified or
registered mail at the Customer's address set forth herein.
(h) If the Customer is a corporation, the Customer hereby warrants and
represents that; (i) Customer has the corporate power to enter into this
Agreement and to carry out its obligations hereunder, (ii) the persons executing
this Agreement on behalf of the Customer have been duly authorized to execute
this Agreement for and on behalf of the Customer; and (iii) this Agreement
constitutes the valid and binding obligation of the Customer enforceable in
accordance with its terms.
(i) The provisions of Sections 4 and 6 hereof, and any and all disclaimers
and indemnities contained herein or in any Supplements annexed hereto, will
survive the termination of this Agreement for any cause whatsoever.
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<PAGE> 17
IN WITNESS WHEREOF, the parties or their duly authorized representative have
hereunto set their hands as of the day and year first above written.
MCCARTHY, CRISANTI & MAFFEI, INC.
By:
Title:
-----------------------------------------
Date:
CUSTOMER:
By:
--------------------------------------------
Title:
-----------------------------------------
Date:
Number:
---------------------
Term:
-----------------------
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<PAGE> 18
SUPPLEMENT TO
MCCARTHY, CRISANTI & MAFFEI, INC.
SUBSCRIPTION FOR ELECTRONIC INFORMATION SERVICES
This Supplement between McCarthy, Crisanti & Maffei, Inc. (MCM) and the Customer
(as set forth on the Subscription for Electronic Information Services)
represents those Services subscribed to by the Customer and to be provided by
MCM, subject to the terms and conditions set forth in the Subscription
Agreement.
Dated
Services Fee [Monthly] [Quarterly]
- -------- -------------------------
Total:
Additional Locations/Departments:
MCCARTHY, CRISANTI & MAFFEI, INC.
By:
--------------------------------------------
Title:
-----------------------------------------
Date:
------------------------------------------
CUSTOMER:
By:
--------------------------------------------
Title:
-----------------------------------------
Date:
------------------------------------------
-18-
<PAGE> 1
Exhibit 10.20
TELERATE
OPTIONAL SERVICE DELIVERY
AGREEMENT
THIS AGREEMENT, dated as of May 1, 1991, between TELERATE
SYSTEMS INCORPORATED, a New York corporation with offices at One World Financial
Center, 200 Liberty Street, New York, New York 10281 ("Telerate"), and FINTREND
S.A., a French corporation with offices at 52, avenue des Champs-Elysees, 75008,
Paris, France ("Source").
INTRODUCTION
Telerate gathers from a multitude of sources prices, rates and
other data regarding the markets for among other things, government securities,
equities, bonds, money market instruments, commodities and foreign currency, as
well as news, commentary and other information relevant to such markets, and
compiles such data and information in a dynamically updated computer database
(the "Information Base"). Telerate makes all or selected parts of the
Information Base available to subscribers to its several services (the "Telerate
Services"). Pursuant to an agreement dated May 1, 1986, Telerate has been making
Source's information service available to subscribers to the Telerate Services
who subscribe to such service. Now, the parties wish to terminate their existing
arrangement and replace it with the terms and conditions contained herein.
<PAGE> 2
1. Agency; Limited Exclusivity; New Source Services.
(a) Agency.
(i) Appointment. Source hereby appoints Telerate, and Telerate
hereby agrees to serve as, an agent of Source for the term set forth in Section
8 for the purpose of distributing the service described in Exhibit A (the
"Source Service") worldwide to Telerate Subscribers, as defined below, who also
subscribe to the Source Service ("Source Subscribers"), all in accordance with
the terms and conditions hereof. "Telerate Subscribers" shall mean those persons
or entities authorized by Telerate to access all or part of the information and
services contained in the Telerate Services through which the Source Service is
made available. Notwithstanding the foregoing, Source shall have the right to
direct Telerate in writing to not deliver the Source Service to any Telerate
Subscriber that competes directly with Source in its business of providing
financial information and/or advisory services.
(ii) No Implied Duties. The parties agree that Telerate's
duties as agent of Source shall be limited to those expressly set forth in this
Agreement. Telerate shall not be deemed to be a fiduciary of Source and shall
not have any implied duties that might otherwise be imposed upon an agent of
Source.
(b) Limited Exclusivity. Except as otherwise provided in this
subsection (b), Source agrees that during the term of this Agreement, Source
will not itself electronically distribute, nor authorize any other party to
electronically distribute, the Source Service or any other service substantially
similar to the Source Service. Notwithstanding the foregoing, (i) Source shall
have the right to distribute the Source
- 2 -
<PAGE> 3
Service through facsimile transmission; (ii) Source shall have the right, in
accordance with the terms and procedures set forth in Exhibit B, to distribute
the Source Service through technology not offered by Telerate ("Other
Technology"); and (iii) on or about May 1, 1993 Source and Telerate shall
commence a discussion of the results of Telerate's distribution of the Source
Service during the first two years of the term of this Agreement. Source shall
have the option between the commencement of such discussions and July 1, 1993 to
convert Telerate's right to distribute the Source Service into a non-exclusive
right with the adjustment to the fee set forth in Section 5(a)(ii) hereto for
the duration of the term of this Agreement effective on the date that Telerate
receives notice of Source's election to so convert the right to distribute the
Source Service. If Source has not notified Telerate of its exercise of such
option by July 1, 1993, Telerate's right of exclusive distribution shall
continue for the remainder of the term of this Agreement.
(c) New Source Services. Source hereby grants to Telerate a right of
first negotiation concerning the right to distribute any electronically
distributed information or advisory service (other than the Source Service)
hereafter published by Source (a "New Source Service"). The terms and procedures
controlling this right of first negotiation are set forth in Exhibit C. The
terms and conditions relating to the distribution by Telerate of a New Source
Service shall be set forth in a separate agreement between the parties.
- 3 -
<PAGE> 4
2. Inputting; Equipment; Accessibility; Display; Accuracy; Content Changes.
(a) Inputting the Source Service and Equipment. Source shall input the
Source Service into the Information Base by means of the standard Telerate
Service terminals listed in Exhibit D or such other method as the parties may
agree upon in writing. Telerate will not unreasonably withhold agreement to use
of such other method. Exhibit D also sets forth the terminals and other Telerate
equipment and services provided to Source, and the charges, if any, due Telerate
for the use thereof. If Source requires additional terminals, such additional
terminals will be provided at Telerate's standard charges, including
installation and communications charges and charges levied by parties other than
Telerate. Telerate reserves the right to deny Source access to any information
distributed through the Telerate Services. Except as may otherwise be provided
herein, Source's use of any of the Telerate Services shall be subject to the
terms and conditions of the then-current version of the applicable Telerate
Service Agreement.
(b) Accessibility of Source Service. Source acknowledges that certain
of the Telerate Services, such as TeleTrac(R), do not afford access to all
information in the Information Base. Telerate shall have the right, but not the
obligation, to make the Source Service available through one or more of these
various Telerate Services. If Telerate elects to initiate distribution of the
Source Service through such a Telerate Service after the date hereof pursuant to
the terms of this subsection (b), such distribution shall be subject to the
terms of this Agreement. Telerate shall
- 4 -
<PAGE> 5
not, unless otherwise permitted by the terms of this Agreement, remove the
Source Service from the "Basic Telerate" component of the Telerate Services.
(c) Accuracy of Information. Source shall use commercially reasonable
efforts to (i) insure that the information in the Source Service is accurate,
complete and current, and correct inaccuracies, errors or defects in such
information promptly after discover. Source shall monitor such information as it
is distributed through the Telerate Services and promptly shall inform Telerate
of any inaccuracies, errors or defects therein.
(d) Change in Nature. No substantial change in the nature or structure
of the Source Service may be made without the prior written consent of Telerate,
which consent shall not be unreasonably withheld.
3. Promotion and Marketing.
(a) Efforts and Materials.
(i) Efforts. Source and Telerate shall each exercise
commercially reasonable efforts (which for Telerate shall not be less than
diligent efforts) to market and promote subscriptions to the Source Service to
be accessed through the Telerate Services. As part of such sales efforts, Source
shall have the right to organize sales contests within the Telerate sales force
provided that the regional managers for the appropriate geographical areas have
approved such sales contests.
(ii) Materials. Neither party shall publish or distribute any
advertising or promotional material regarding the availability of the Source
Service through the Telerate Services without the prior written consent of the
other, which consent
- 5 -
<PAGE> 6
shall not be unreasonably withheld. If the receiving party has not notified the
sending party of its disapproval of sample materials within twenty (20) days
after its receipt thereof, such materials shall be deemed approved. Materials
substantially similar to materials approved on an earlier occasion shall also be
deemed approved. Materials being sent to the other party for approval pursuant
to this clause (ii) shall be directed to the person(s) designated in Exhibit E
hereto.
(b) Subscriber List. To facilitate Source's promotional efforts,
Telerate shall use its best efforts to obtain from Authorized Distributors (as
hereinafter defined) and promptly provide to Source when so available to
Telerate lists of Telerate Subscribers on a world-wide basis. Each month
Telerate shall provide Source with a list of adds/deletes for the Telerate
Subscribers located in the United States. Source agrees to keep such lists
strictly confidential and to use such lists solely to solicit subscriptions to
the Source Service to be accessed through the Telerate Services. Source agrees
to honor request from Telerate Subscribers not to send unsolicited mail to them
or, provided Telerate has informed Source of Telerate Subscribers' requests in
connection therewith, to make unsolicited calls on them.
(c) Authorized Distributors. Source acknowledges that Telerate utilizes
authorized distributors, which may or may not be affiliated with Telerate, to
distribute the Telerate Services ("Authorized Distributors"). Source agrees to
allow the Source Service to be distributed by the Authorized Distributors.
- 6 -
<PAGE> 7
(d) Demonstration Periods. Source agrees that, if Telerate deems it
advisable for promotional or marketing purposes, Telerate may make the Source
Service available free of charge to Telerate Subscribers for up to sixty (60)
days.
(e) Personnel. Telerate will inform Source of any change in the
personnel of its Exchange and Optional Services Group and will use reasonable
efforts to inform Source of changes in Telerate sales and support staff that
would have an impact on Telerate's distribution of the Source Service.
4. Fees; Service Agreements.
(a) Billings; Fees. Telerate or Authorized Distributor shall bill
Source Subscribers no less frequently than on a calendar quarter basis for
subscriptions to the Source Service. Fees for subscriptions to the Source
Service shall be determined from time to time by Source. Source agrees that it
will make changes in subscription fees to the Source Service only once per year,
which shall be effective anywhere other than Japan on January 1 and in Japan on
April 1, and will give Telerate no less than one hundred twenty (120) days'
prior written notice of any such change. In the event Telerate's right to
distribute the Source Service pursuant to this Agreement is converted into a
non-exclusive right in accordance with Section 1(b) hereof, Source agrees that
it will not change Source Subscribers any more money for their subscriptions to
the Source Service than it will charge any subscribers to the Source Service or
services substantially similar thereto that receive such services by means other
than through Telerate.
- 7 -
<PAGE> 8
(b) Telerate Service Agreements. Telerate or certain Authorized
Distributors shall provide the applicable Telerate Service Agreement or
Authorized Distributor Service Agreement to each Telerate Subscriber prior to or
at the time that such Telerate Subscriber desires to become a Source Subscriber.
Service Agreements provided to Source Subscribers shall disclaim, for the
benefit of optional service providers including Source (as well as for
Telerate), all liability for errors or omissions contained in the applicable
Telerate Service. Copies of representative Telerate Services Agreements
currently being used are available upon request. Source shall not make any
statement regarding Telerate Service that is contradictory or inconsistent with
the then-current version of the applicable Telerate or Authorized Distributor
Service Agreement.
(c) Source Service Agreement. Source shall have the right to provide
its own Service Agreement (the "Source Service Agreement") to each Source
Subscriber. Source will not use the Source Service Agreement until Telerate has
approved the form of such Source Service Agreement, which approval will not be
unreasonably withheld. Telerate will not make any statement regarding the Source
Service that is contradictory or inconsistent with the Source Service Agreement
or the then-current version of the applicable Telerate or Authorized Distributor
Service Agreement.
5. Division of Charges.
(a) Telerate's Fee.
(i) Calculation. Except as provided in subsection (b) of this
Section 5, Telerate shall be entitled to a fee equal to thirty-five percent
(35%) of the
- 8 -
<PAGE> 9
"Net Subscription Charges" (as defined below) billed for each contract year to
Source Subscribers. All fees due Authorized Distributors in respect of their
distribution of the Source Service shall be paid by Telerate. The term "Net
Subscription Charges" shall mean amounts billed to Source Subscribers (excluding
all sales or other similar taxes) by Telerate (or by Authorized Distributors) in
respect of subscriptions to the Source Service less any adjustments permitted by
clause (iii).
(ii) The fee due Telerate shall be equal to fifty percent
(50%) of the Net Subscription Charges if Source exercises its right to convert
Telerate's right to distribute __________ Service to a non-exclusive right as
provided for by Section ___ of this Agreement. Such adjustment, if made, shall
not affect the provisions of Section 5(b) hereof.
(iii) Adjustments. Source agrees to allow Telerate to adjust
the Net Subscription Charges based on its billings for any billing period to
reflect amounts deemed uncollectible __________ it billed in error or credits it
gave in the ordinary course of business to Source Subscribers.
(b) Sales Commission. For each new subscription to the Source Service
sold to a Telerate Subscriber by a salesperson working for Telerate or an
Authorized Distributor, Source shall pay to Telerate an amount equal to the
first month's fee charged to the Source Subscriber ("Sales Commission"). The
payment of the Sales Commission shall be in lieu of any amounts that otherwise
would be payable under subsection (a) of this Section 5 for the first month of
such subscription. For purposes of this Section 5(b), a renewal of an existing
subscription to the Source Service shall
- 9 -
<PAGE> 10
not be a "new" subscription. The preceding provision shall not be deemed to
increase Telerate's obligations to market and promote subscriptions to the
Source Service set forth in Section 3(a).
(c) Payment. Within 30 days after the end of each month, Telerate shall
deliver to Source a report showing the Net Subscription Charges for such month,
the amounts due Source in respect thereof and the Sales Commissions due
Telerate, together with a check payable to Source for the net amount. Telerate
shall pay Source in U.S. Dollars except for payments attributable to French,
German, and Swiss Source Subscribers which payments will be made in their
respective local currencies.
(d) Records. Telerate shall maintain complete and accurate books and
records (collectively, the "Records") with respect to all amounts it billed to
Source Subscribers in respect of subscriptions to the Source Service and any
adjustments thereto made pursuant to subsection (a) of this Section 5 and all
Sales Commissions due from Source. Source and its representatives and auditors
shall have the right upon at least thirty (30) days' prior written notice to
inspect the Records during normal business hours no more frequently than twice
per year. All information gained by Source and its representatives and auditors
from such inspection will be kept in strict confidence and will be used solely
for the purpose of verifying the accuracy of the computation of the amounts due
hereunder. Source agrees to cause its representatives and auditors to execute a
confidentiality agreement with Telerate prior to their inspection of the
Records.
- 10 -
<PAGE> 11
6. Copyright.
Source represents and warrants to Telerate that Source or its licensors
own the Source Service and the copyright thereto, and that Source has the right
to authorize Telerate to distribute the Source Service under this Agreement.
Telerate agrees it is not acquiring under this Agreement any proprietary
interest in the Source Service and agrees not to challenge the claim of Source
or its licensors to the ownership of the Source Service and the copyright
thereto. Telerate agrees to implement reasonable measures requested by Source to
make the copyright claim of Source or its licensors known to Source Subscribers
and to assist Source (at Source's expense) in the defense or prosecution of any
copyright claims.
7. Indemnification.
(a) By Source. In the event any claim is brought by any third party
against Telerate that relates to, arises out of or is based upon the Source
Service or the failure of Source to comply with any law, rule or regulation
(including, without limitation, the Investment Advisers Act of 1940 or the
Commodity Exchange Act), Telerate shall promptly notify Source, and Source shall
defend such claim at Source's expense and under Source's control. Source shall
indemnify and hold harmless Telerate against any judgment, liability, loss, cost
or damage (including litigation costs and reasonable attorneys' fees) arising
from or related to such claim whether or not such claim is successful provided
that the foregoing indemnification shall not apply to any claim arising from
Telerate's negligence or misconduct. Telerate shall have the right, at its
expense, to participate in the defense of such claim through counsel of its own
- 11 -
<PAGE> 12
choosing; provided, however, that Source shall not be required to pay any
settlement amount that it has not approved in advance.
(b) By Telerate. In the event any claim is brought by any third party
against Source that relates to, arises out of or is based upon any error caused
by Telerate in transmitting the Source Service, Source shall promptly notify
Telerate, and Telerate shall defend such claim at Telerate's expense and under
Telerate's control. Telerate shall indemnify and hold harmless Source against
any judgment, liability, loss, cost or damage (including litigation costs and
reasonable attorneys' fees) arising from or related to such claim, whether or
not such claim is successful provided that the foregoing indemnification shall
not apply to any claim arising from Source's negligence or misconduct. Source
shall have the right, at its expense, to participate in the defense of such
claim through counsel of its own choosing; provided, however, that Telerate
shall not be required to pay any settlement amount that it has not approved in
advance.
8. Term; Termination.
(a) Term. The initial term of this Agreement shall commence as of the
date hereof and shall terminate on the fifth anniversary hereof (the "Initial
Term"). The term of this Agreement shall automatically be extended for one or
more periods of two years (a "Renewal Term), unless either party sends to the
other a notice of its election not to renew at least one hundred eighty (180)
days prior to the end of the Initial Term, or any Renewal Term, as the case may
be.
- 12 -
<PAGE> 13
(b) Default. If either party shall default in the performance of or
compliance with any provision contained in the Agreement and such default shall
not have been cured within thirty (30) days after written notice thereof shall
have been given to the appropriate party, the party giving such notice may then
give further written notice to such other party terminating this Agreement, in
which event this Agreement and any other rights granted hereunder shall
terminate on the date specified in such further notice.
(c) Change in Control. If there occurs during the term hereof any
change in the control of either party, as defined below, then the other party
may terminate this Agreement upon at least thirty (30) days' prior written
notice to the other. A change in the control of a party shall be deemed to have
occurred upon a change in the possession of the ultimate power to, directly or
indirectly, direct or cause the direction of the management or the policies of
such party, whether through the ownership of voting securities, by contract or
otherwise. Notwithstanding the above, Source shall only be deemed to have
undergone a change in control if the party having such ultimate power is a
competitor of Telerate.
(d) Insolvency. In the event that either party hereto shall be adjudged
insolvent or bankrupt, or upon the institution of any proceedings by it seeking
relief, reorganization or arrangement under any laws relating to insolvency, or
if an involuntary petition in bankruptcy is filed against such party and said
petition is not discharged within sixty (60) days after such filing, or upon any
assignment for the benefit of its creditors, or upon the appointment of a
receiver, liquidator or
- 13 -
<PAGE> 14
trustee of any of its assets, or upon the liquidation, dissolution or winding up
of its business (an "Event of Bankruptcy"), then the party involved in any such
Event of Bankruptcy shall immediately give notice thereof to the other party,
and the other party at its option may terminate this Agreement upon written
notice.
9. Miscellaneous.
(a) Notices. All notices hereunder shall be in writing and shall be
delivered in person, sent by overnight courier service, or sent by facsimile
transmission, to the address of the party set forth below, or to such other
addresses as may be stipulated in writing by the parties pursuant hereto. Unless
otherwise provided, notice shall be effective on the date it is officially
recorded as delivered.
(i) If to Telerate, to:
Telerate Systems Incorporated
200 Liberty Street
New York, NY 10281
Attention: President
with a copy to:
Telerate Systems Incorporated
200 Liberty Street
New York, NY 10281
Attention: Legal Department
(ii) If to Source, to:
Fintrend S.A.
52, avenue des Champs-Elysees, 75008
Paris, France
Attention: Chief Executive
- 14 -
<PAGE> 15
(b) Amendment; Assignment. This Agreement may not be amended except by
written instrument executed by Source and Telerate. Neither party may assign
this Agreement to any third party, other than an affiliate, without the prior
written amount of the other. Any assignment of this Agreement to an affiliate
shall not relieve the assigning party of any of its obligations or liabilities
under this Agreement.
(c) Survival of Certain Provisions. Notwithstanding the termination of
this Agreement, those provisions of this Agreement that by their nature are
intended to survive such termination shall survive, including without
limitation, the provisions of Sections 7 and 9.
(d) Consequential Damages. Except pursuant to Section 7, neither party
shall be liable for any consequential, indirect, incidental or special damages,
even if advised of the possibility of such damages.
(e) Force Majeure. Performance by either party under this Agreement
shall be subject to and shall be excused to the extent that it shall be rendered
impossible by any event, condition or occurrence beyond the reasonable control
of such party.
(f) Entire Agreement. This Agreement contains the entire understanding
of the parties on the subject hereof and terminates and supersedes all previous
verbal and written agreements on such subject, including without limitation, the
agreement dated May 1, 1986 between the parties.
(g) Relationship of the Parties. This Agreement does not and shall not
be deemed to constitute a partnership or joint venture between the parties and
neither
- 15 -
<PAGE> 16
party nor any of its directors, officers, employees or agents shall, by virtue
of the performance of their obligations under this Agreement, be deemed to be an
employee of the other.
(h) "Affiliate" Defined. For purposes of this Agreement, the term
"affiliate" and its derivatives shall mean, with respect to any individual or
entity, any other individual or entity directly or indirectly, through one or
more intermediaries, controlling, controlled by, or under common control with
such individual or entity. The term "control" and its derivatives, as used in
the immediately preceding sentence, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of any entity, whether through the ownership of voting securities, by
contract otherwise.
(i) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to the
choice of law principles thereof.
IN WITNESS WHEREOF, the undersigned parties have duly executed
this Agreement as of the 23rd day of July 1991, to be effective as of the date
first above written.
FINTREND S.A. TELERATE SYSTEMS INCORPORATED
By: /s/ Riccardo Tutino By: /s/ William R. Clabby
------------------------ --------------------------
Riccardo Tutino William R. Clabby
Managing Director Vice President
<PAGE> 17
Index to Exhibits
Name Description
- ---- -----------
A Description of Source Service
B Telerate's Right to Distribute the Source Service through
Other Technology
C Telerate's Right of First Negotiation to Distribute New Source
Services
D Equipment and Services
E Contacts for Approval of Promotional Materials
- 17 -
<PAGE> 18
Exhibit A
Description of Source Service
The Source Service consists of information on technical analysis of
currencies, cross-rates, United States economic indicators and commentary. The
Source Service will be updated periodically each day.
<PAGE> 19
Exhibit B
Telerate's Right to Distribute the Source
Service through Other Technology
If, at any time during the term of this Agreement, Source itself
desires to distribute the Source Service through Other Technology, Source shall
give a written notice to Telerate that describes the nature and details of such
Other Technology. Whenever Source gives such notice, Telerate shall have the
right to distribute the Source Service _________ on the same terms as contained
in __________ not notify Source of its intention to distribute the Source
Service through such Other Technology ___________ receipt of the notice referred
to above, Source shall be free to itself distribute the Source Service through
the Other Technology.
<PAGE> 20
Exhibit C
Telerate's Right of First Negotiation
to Distribute New Source Services
If, at any time during the term of this Agreement, Source desires to
electronically distribute a New Source Service, as defined in Section 1(c),
Source shall give a written notice to Telerate that describes (i) the nature of
such New Source Service, and (ii) the terms upon which Source would be willing
to retain Telerate to perform such services. __________ notice, Telerate shall
have the right to __________ distribution of such New Source Service with
Source. If Telerate and Source do not reach agreement on distribution of such
New Source Service within ninety (90) days of receipt of the notice referred to
above, Source shall be free to offer the New Source Service to third parties
provided that any agreement to distribute the New Source Service by a third
party shall be on the same terms as offered to Telerate in the notice or terms
more favorable to Source.
<PAGE> 21
Exhibit D
Equipment and Services
<TABLE>
<CAPTION>
Europe/Gulf Charges*
----------- --------
<S> <C>
1 TDPF 13,000
20 Workstations 33,200
5 Standard Systems 16,300
17 Slave Screens ______
10 Additional Systems ______
10 Keyboard Interface 250
2 Standard Systems 0
Communication Charges ______
1 TeleTrac Terminal 8,800
2 Add'l TeleTrac Terminals 9,320
Communication Charges 650
1 TeleTrac Terminal 3,800
Communication Charges 900
</TABLE>
<TABLE>
<CAPTION>
Americas
--------
<S> <C>
2 Standard __________ with
Printer and Basic Telerate Plus 0
</TABLE>
- ---------------
* All charges are monthly and __________.
<PAGE> 22
Exhibit E
Contacts for Approval of Promotional Materials
For Telerate:
Stacey Halio
Telerate Systems Incorporated
Harborside Financial Center
600 Plaza Two
Jersey City, NJ _____-3992
Telephone #201-309-4660
Facsimile #201-333-9091
For Source:
Riccardo Tutino
Fintrend S.A.
52, avenue des Champs-Elysees
75008, Paris, France
Telephone #__________
Facsimile #331-__________
Either party may change its designated "contact" person by giving written notice
to the other.
<PAGE> 1
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
Exhibit 10.21
OPTIONAL SERVICE DELIVERY AGREEMENT
THIS AGREEMENT, dated as of July 1, 1993 between REUTERS LIMITED, a
U.K. registered corporation with offices at 85 Fleet Street, London EC 4AJ
("Reuters"), and MCCARTHY, CRISANTI & MAFFEI, INC., a New York corporation with
offices at 71 Broadway, New York, New York 10006 ("Source").
WHEREAS, Reuters operates an information service known as the Reuters
Real-Time Information Service (the "Reuters Service"); and
WHEREAS, Reuters has obtained the right to use certain communications
companies' facilities in operating the Reuters Service; and
WHEREAS, Source publishes the services listed and described in Exhibit
A to this Agreement (the "Source Services"); and
WHEREAS, Source currently distributes all or some of the Source
Services via Telerate Systems Incorporated and Quotron; and
WHEREAS, Source desires to provide the Source Services through the
Reuters Service to current and potential subscribers of Reuters as well as via
direct feed to third parties.
NOW THEREFORE the parties, in consideration of the premises and mutual
covenants contained herein, agree as follows:
1. DISTRIBUTOR; NON-EXCLUSIVITY; NEW SOURCE SERVICES.
(a) DISTRIBUTOR.
(i) APPOINTMENT. Source hereby appoints Reuters, and Reuters
hereby agrees to serve as, a non-exclusive distributor of Source for the term
set forth in Section 10 for the limited purpose of marketing and distributing
the Source Services worldwide to Reuters Subscribers, as defined below, who also
subscribe to the Source Services ("Source Subscribers"), all in accordance with
the terms and conditions hereof. "Subscribers" shall mean those persons or
entities authorized by Reuters, subject to the terms and conditions hereof, to
access all or part of the information and services via the Reuters Service
through which one or more of the Source Services are made available.
Notwithstanding the foregoing, Reuters shall not deliver the Source Services to
those persons set forth in Exhibit B, as such exhibit is modified from time to
time, with any modifications being implemented by Reuters as soon as possible,
but in no event later than thirty (30) days from the giving notice.
(ii) NO IMPLIED DUTIES. The parties agree that Reuters'
duties as distributor of Source shall be limited to those expressly set forth in
this Agreement.
<PAGE> 2
Reuters shall not be deemed to be a fiduciary of Source and shall not have any
implied duties that might otherwise be imposed upon a distributor of Source.
(b) NON-EXCLUSIVITY. The parties acknowledge and agree that the
appointment of Reuters as distributor of Source for the purpose of distributing
the Source Services shall be on a non-exclusive basis. Source retains the right
to distribute itself or permit other third parties to distribute one or more of
the Source Services.
(c) NEW SOURCE SERVICES. Source hereby grants to Reuters an option to
distribute any electronically distributed information service hereafter
developed by Source that is not listed in Exhibit A or that is not substantially
similar to any service listed therein (a "New Source Service"). If Reuters
elects to exercise its option under this subsection (c) with respect to a New
Source Service by giving Source written notice within twenty-one (21) days of
receipt of notice from Source of said New Source Service, such New Source
Service shall fall within the definition of Source Service under this Agreement,
and the distribution of such New Source Service shall be subject to the terms
and conditions set forth in this Agreement.
2. INPUTTING; DIRECT FEED; ACCESSIBILITY; DISPLAY; ACCURACY.
(a) INPUTTING AND USE OF SERVICES.
(i) GENERALLY. Source shall input the Source Services into the
Reuters Service by means of the Reuters equipment and/or services as set forth
in Exhibit C, as modified from time to time. Upon the execution of this
Agreement, Reuters shall order, install and provide Source with equipment and
access to the appropriate Reuters services to view and input the Source
Services, at those locations set out in Exhibit C. Any such equipment, Reuters
service access or local communication cost will be at no cost to Source. From
time to time during the term of this Agreement and any extensions thereof,
Source may request that Reuters consent to provide additional equipment and
upgrades to existing equipment to Source locations at no cost to Source, for the
purpose of delivering the Source Services pursuant to this Agreement, which
consent shall not be unreasonably withheld or delayed. Source shall be solely
responsible for any applicable Exchange fees, cabling or other modifications
necessary within its location. Reuters shall also provide to Source, at no cost
to Source, one subscription to the Reuters Data Feed on the terms described
herein and in Exhibit C. Reuters shall provide at no charge to Source access to
those services provided by Reuters which are in the same service category as
those relevant services provided by Source.
(ii) DIRECT FEED AGREEMENT. Reuters acknowledges that Source
anticipates providing the Source Services on a direct feed basis to certain of
Source's Subscribers. Together with the execution of this Agreement, Reuters and
Source
-2-
<PAGE> 3
agree to enter into a separate agreement, a copy of which is attached hereto as
Exhibit D pursuant to which Reuters will provide Source with a direct feed to
such of Source's Subscribers who are not then current Reuters customers, as
Source from time to time designates. In such event, Source Subscriber shall
enter into a separate agreement with Reuters pursuant to which Reuters will
provide to Source Subscriber a direct feed line at Reuters' customary
communication charge for such line and installation. In addition, Reuters agrees
to consider requests made by Source to provide Source with a direct feed line to
Source's Subscribers who are then current Reuters customers on a case by case
basis.
(iii) USE OF SOURCE'S PROPRIETARY SERVICES. Notwithstanding
any provision of subsection (i) that may be to the contrary, Reuters, subject to
the prior written consent of Source, shall have the right to access the Source
Services; provided that Source shall have the right to deny Reuters access to
any Source Service in circumstances where Reuters uses such service in a way
that competes with the sale of such service by Source or any of its affiliates.
Prior to exercising its right under this subsection (iii) Source agrees to
notify Reuters in writing at least thirty (30) days prior to the desired
termination date and state the action by Reuters that gave rise to the
termination right. If Reuters ceases such action prior to the desired
termination date, Source may not deny access to the Source Services on the basis
of such cured action. The rights specified in this subsection (iii) shall be in
addition to, and not in limitation of, any other remedies the parties may have.
(b) ACCESSIBILITY OF SOURCE SERVICES. Reuters will attempt to make
the Source Services available through the Reuters Service and any other services
Reuters, or its agents, prepare, operate or transmit financial data whenever
Reuters determines it is commercially practical to do so. Source understands
that Reuters Service(s) and delivery of the Reuters Service may change at any
time and agrees Reuters may make the Source Services available to any such
modified Reuters Service(s) or delivery of the Reuters Service.
(c) ACCURACY OF INFORMATION. Source shall use commercially reasonable
efforts to (i) insure that the information in the Source Services is accurate,
and (ii) correct inaccuracies, errors or defects in such information promptly
after discovery. Source shall monitor such information as it is distributed
through the Reuters Services and promptly correct any inaccuracies, errors or
defects therein.
(d) DISCLAIMER. Each Source Service shall be preceded by Source's
standard disclaimer language, as amended from time to time, a copy of which is
attached hereto as Exhibit E.
-3-
<PAGE> 4
3. PROMOTION AND MARKETING.
(a) EFFORTS AND MATERIALS.
(i) MARKETING. Source and Reuters shall exercise commercially
reasonable efforts to market and promote subscriptions to the Source Services to
be accessed through the Reuters Service.
(ii) MATERIALS. Neither party shall publish or distribute any
advertising or promotional material regarding the availability of the Source
Services through the Reuters Service without the prior written consent of the
other, which consent shall not be unreasonably withheld. Materials being sent to
the other party for approval pursuant to this subsection (a) shall be directed
to the person(s) designated in Exhibit F hereto.
(b) SUBSCRIBER LIST. To facilitate Source's promotional efforts,
Reuters shall provide to Source the following information and reports: (i) upon
written request of Source, such requests not to exceed twice annually the list
of Reuters Subscribers located in the United States and the list of those
persons and entities located in the United States who became the new Reuters
Subscribers during such semi-annual period; (ii) upon request of Source,
information Reuters has with regard to renewal dates for subscriptions to the
Source Services and (iii) on a monthly basis, access reports which shall, among
other things, set forth those persons taking the Source Services on a trial
basis. Reuters represents and warrants to the best of its knowledge that all
reports shall be accurate and complete and correctly reflect the number of
subscriptions and those having access to the Source Services.
(c) AUTHORIZED DISTRIBUTORS. Source acknowledges that Reuters
utilizes authorized distributors, which may or may not be affiliated with
Reuters, to distribute the Reuters Services ("Authorized Distributors"). Source
agrees to allow the Source Services to be distributed by the Authorized
Distributors subject to the terms and conditions hereof (except where prohibited
by law or limited by local business practices), and Reuters agrees to use
commercially reasonable efforts to persuade the Authorized Distributors to
distribute the Source Services. As between Reuters and Source, Reuters shall be
solely responsible for all acts of the Authorized Distributors.
(d) DEMONSTRATION PERIODS; TRADE SHOWS. Reuters agrees to promote and
market the Source Services, subject to the terms contained in the last sentence
of Section 1(a)(i), by making one or more of the Source Services available free
of charge to Reuters Subscribers for up to thirty (30) days upon the request of
Source or Reuters. Reuters shall provide to Source written confirmation weekly
with delivery of Source Services to Reuters Subscribers on a trial basis; said
confirmations to be provided on a weekly basis for U.S. subscribers and no less
often than monthly for
-4-
<PAGE> 5
non-U.S. Subscribers. The preceding provision shall not be deemed to increase
Reuters' obligations to market and promote subscriptions to the Source Services
set forth in subsection (a) of this Section 3. In addition, Reuters agrees to
provide one terminal at no cost to Source for trade show exhibits in which both
Reuters and Source participates, such exhibits will not exceed twelve (12) per
calendar year. Source will provide Reuters sixty (60) days prior written notice
of the date of said trade shows. Source acknowledges it will be responsible for
all costs other than the supply of the Reuters terminal.
4. FEES; SERVICE AGREEMENT.
(a) BILLING; FEES. Source shall bill Source Subscribers in the United
States on a regular basis for subscriptions to the Source Services. Reuters
shall bill Source Subscribers outside the United States, in accordance with
Reuters' usual billing practices. Fees for subscriptions to the Source Services
shall be determined by Source in its respective geographic regions in its sole
discretion. Source agrees that it will make changes in published subscription
fees to the Source Services only once per year, which shall, except as set forth
below, be effective anywhere other than Japan on January 1 and in Japan on April
1, and will give Reuters no less than one hundred twenty (120) days' prior
written notice of any such change. Reuters covenants that it will inform all
Source Subscribers in jurisdictions for which Reuters bills for Source Services
of the new fees and shall implement the new fee schedule at the times provided
for herein. Source agrees that it will not charge Source Subscribers any more
money for their subscriptions to the Source Services than it or any other
distributor or vendor will charge any subscribers to the Source Services or
services substantially similar thereto that receive such services by means other
than through Reuters. The parties agree that Source may require Reuters to
terminate distribution of the Source Services to Source Subscribers that are
severely in arrears in paying their subscription fees. Source Subscribers shall
be deemed severely in arrears for purposes hereof when they become six months
behind in payments. The parties agree that the party responsible for billing
shall comply with all applicable Country, State and local laws and regulations,
including, but not limited to taxing laws and regulations.
(b) REUTERS SERVICE AGREEMENTS. In those jurisdictions where Reuters
is billing Source subscribers for their use of the Source Services, Reuters
shall provide the applicable Reuters Principal Agreement and/or Optional Data
Addendum, or the local equivalent (collectively, the "Reuters Agreement") to
each subscriber to the Source Services and shall not grant any subscriber access
to any Source Service (except on a trial basis) until it has obtained an
executed copy of the applicable Reuters Agreement from such subscriber. Reuters
agrees that it will not consent to a request by a Source Subscriber who seeks to
store, modify, reproduce in any form, redesseminate, recirculate or republish in
any form the Source Services without the prior written consent of Source, which
consent shall be at Source's sole discretion.
-5-
<PAGE> 6
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
Copies of the representative Reuters Agreements currently being used are
attached as Exhibit G. Reuters shall provide Source with a copy of material
amendments to the Optional Data Addendum within ninety (90) days after such
amendments are implemented and agrees to advise Source of any material
amendments to the Reuters Principal Agreement which adversely affect Source
within ninety (90) days after such amendments are implemented. Source shall not
make any statement regarding any Reuters Service that is contradictory or
inconsistent with the then-current version of the applicable Reuters Agreement.
Reuters agrees to allow Source's marketing representatives to use and present to
potential and existing subscribers the Reuters Optional Data Addendum or the
local equivalent and to require Reuters' marketing and sales representatives and
those of its Authorized Distributors to coordinate all marketing and sales
efforts with Source's marketing representatives and cooperate with Source's
marketing representatives in presenting to potential and existing subscribers
the Source Services. Source acknowledges that Reuters global subscribers may
cancel Reuters services at any time on ninety (90) days notice and accepts that
such cancellations may include Source Services.
(c) SOURCE'S SERVICE AGREEMENT. In jurisdictions in which Source is
billing Source Subscribers for their use of the Source Services, Source may
provide the Source Services via a written or oral service Agreement. A copy of
the written Service Agreement that Source initially will use in jurisdictions
where it will bill Source Subscribers for their use of the Source Services and a
copy of Source's price lists currently in effect are attached as Exhibit H.
5. FEES/PAYMENT
(a) REUTERS FEE. **************************************************
*******************************************************************************
*******************************************************************************
(b) PAYMENT. Within sixty (60) days after the end of each calendar
quarter for the term of this Agreement, Reuters shall deliver to Source a report
which report Reuters represents and warrants to the best of its knowledge will
show all of the subscription receipts for such quarter, and the amounts due
Source, together with a check payable to Source for the amount of said
subscription receipts. All payments shall be made in U.S. Dollars. Reuters will
calculate the amount due by taking the local currency units billed and convert
to U.S. dollars, the result of which will equal the Reuters "book rate" for that
month. The book rate is determined from the World Value of the Pound table as
published in the Financial Times on (usually) the first Tuesday of each month.
These figures are rounded up or down to two decimal points.
(c) ADJUSTMENTS. Source acknowledges that Reuters may make initial
calculations and payments of amounts due to Source based on amounts billed to
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<PAGE> 7
Source Subscribers in respect of Source Services, and accordingly there may be
post payment adjustments to amounts remitted by Reuters to Source pursuant to
subsection 5(b) hereof to reflect (i) amounts Reuters billed in error for
credits Reuters gave in the ordinary course of business to Source Subscribers,
and (ii) amounts Reuters was unable to collect from Source Subscribers.
(d) RECORDS. Reuters shall maintain complete and accurate books and
records (collectively, the "Records") with respect to all amounts it billed to
Source subscribers in respect of subscriptions to the Source Services. Source
shall, at its expense, have the right upon at least thirty (30) days' prior
written notice to inspect the Records of Reuters during normal business hours no
more frequently than twice per year. All information gained by Source from such
inspection will be kept in strict confidence and will be used solely for the
purpose of verifying the accuracy of the computation of the amounts due
hereunder.
6. COPYRIGHT. Source represents and warrants to Reuters that Source or
contributors to the Source Services to the best of its and their knowledge own
the Source Services and the copyrights thereto, and that Source has the right to
authorize Reuters to distribute the Source Services under this Agreement.
Reuters agrees it is not acquiring under this Agreement any proprietary interest
in the Source Services and agrees not to challenge the claim of Source or its
contributors to the ownership of the Source Services and the measures requested
by Source to make the copyright claim of Source or its contributors known to
Source Subscribers and to assist Source, at Source's expense, in Source's
defense or prosecution of any copyright infringement claim.
7. MAINTENANCE AND CIRCUMSTANCES BEYOND PARTIES' CONTROL. Subject to the
provisions set forth in Section 8, neither Reuters nor Source will be deemed in
default or liable hereunder if, as a result of any cause or circumstance beyond
such party's reasonable control or any repair work or routine maintenance, there
occurs a delay in or failure or interruption of (i) service to any Source
Subscriber, or (ii) transmission of the Source Services. So long as any such
failure continues, the party responsible for such service or transmission will
use its reasonable best efforts to eliminate such conditions and will keep the
other party fully informed at all times concerning the matters causing such
delay or default and the prospects for their termination.
8. INDEMNIFICATION.
(a) BY SOURCE. In the event any claim is brought by third party
against Reuters that relates to, arises out of or is based upon Source Services
or the failure of Source to comply with any law, rule or regulation, Reuters
shall promptly notify Source, and Source shall defend such claim at Source's
expense and under Source's control. Source shall indemnify and hold harmless
Reuters against any judgment, liability, loss, cost or damage (including
litigation costs and reasonable attorneys'
-7-
<PAGE> 8
fees) arising from or related to such claim whether or not such claim is
successful. Reuters shall have the right, at its expense, to participate in the
defense of such claim through counsel of its own choosing; provided, however,
that Source shall not be required to pay any settlement amount that it has not
approved in advance.
(b) BY REUTERS. In the event any claim is brought by any third party
against Source that relates to, arises out of or is based upon any error, delay
or other event caused by Reuters or its Authorized Distributors in transmitting
the Source Services, Source shall promptly notify Reuters, and Reuters shall
defend such claim at Reuters' control. Reuters shall indemnify and hold harmless
Source against any judgment, liability, loss, cost or damage (including
litigation costs and reasonable attorneys' fees) arising from or related to such
claim, whether or not such claim is successful. Source shall have the right, at
its expense, to participate in the defense of such claim through counsel of its
own choosing; provided, however, that Reuters shall not be required to pay any
settlement amount that it has not approved in advance.
9. REPRESENTATIONS AND WARRANTIES OF THE PARTIES.
Each party hereby represents, covenants and warrants to the other as
follows:
(i) It has full power and authority (including full corporate power
and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of such party,
enforceable in accordance with its terms and conditions.
(ii) That the parties will comply with all codes, regulations and
laws applicable to the provision of direct feed lines under
this Agreement, and has obtained or will obtain all necessary
permits, licenses and other authorizations necessary for its
performance of services under this Agreement.
10. CONFIDENTIALITY.
(a) The parties agree that certain material and information which has
or will come into the possession or knowledge of each in connection with this
Agreement or the performance hereof; e.g., proprietary business information
(including, without limitation, the names and addresses of subscribers,
information providers and suppliers), consists of confidential and proprietary
data, whose disclosure to or use by third parties will be damaging. In addition,
the parties may reasonably designate, by notice in writing delivered to the
other party, other information as being confidential or a trade secret.
-8-
<PAGE> 9
(b) All such proprietary or confidential information of Reuters or
Source shall be kept secret by the Source or Reuters, as the case may be, to the
degree it keeps secret its own confidential or proprietary information. Such
information belonging to either party shall no be disclosed by the other party
to its employees except on a need-to-know basis or to agents or contractors of
such other party, but may be disclosed by such other party to state or federal
agencies, authorities or courts upon their order or request provided prompt
notice of such order or request is given by such other party to the party to
which such information belongs, if such notice is legally permitted.
(c) No information that would otherwise be proprietary or
confidential for the purposes of this Agreement pursuant to subsections (a) or
(b) above shall be subject to the restrictions on disclosure imposed by this
section in the event and to the extent that (i) such information is in, or
becomes part of, the public domain otherwise than through the fault of the party
to which such information does not belong, (ii) such information was known to
such party prior to the execution of this Agreement, or (iii) such information
was revealed to such party by a third party.
11. TERM; TERMINATION.
(a) TERM. The initial term of this Agreement shall commence
ninety-one (91) days subsequent to notice given by Source to Telerate Systems
Incorporated ("Telerate") pursuant to that certain agreement dated as of January
1, 1992, between Source and Telerate (the "Telerate Agreement") (the
"Commencement Date") and shall terminate at the end of the third year (the
"Initial Term"). Notwithstanding the foregoing, Source may terminate this
Agreement prior to its Commencement Date in the event Source, in its sole
discretion, retracts its notice to Telerate under the Telerate Agreement. Source
agrees any such termination prior to the Commencement Date shall apply to other
network vendors (other than Telerate and Quotron) Source has entered into
agreements prior to the Commencement Date for the distribution of Source
Services. The term of this Agreement shall automatically be extended for one or
more periods of three years (a "Renewal Term"), unless either party sends to the
other written notice of its election not to renew at least ninety (90) days
prior to the end of the Initial Term, as the case may be.
(b) DEFAULT. If either party shall default in the performance of or
compliance with any provision contained in this Agreement including, but not
limited to, any breach of a representation or warranty, and such default shall
not have been cured within thirty (30) days after written notice thereof shall
have been given to the appropriate party, the party giving such notice may then
give further written notice to such other party terminating this Agreement, in
which even this Agreement and any other rights granted hereunder shall terminate
on the date specified in such further notice.
-9-
<PAGE> 10
(c) INSOLVENCY. In the event that either party hereto shall be
adjudged insolvent or bankrupt, or upon the institution of any proceedings by it
seeking relief, reorganization or arrangement under any laws relating to
insolvency, or if an involuntary petition in bankruptcy is filed against such
party and said petition is not discharged within sixty (60) days after such
filing, or upon any assignment for the benefit of its creditors, or upon the
appointment of a receiver, liquidator or trustee of any of its assets, or upon
the liquidation, dissolution or winding up of its business (an "Event of
Bankruptcy"), then the party involved in any such Event of Bankruptcy shall
immediately give notice thereof to the other party, and the other party at its
option may terminate this Agreement upon written notice.
(d) PRINCIPAL DEPARTURE. Source agrees Reuters shall have the option,
to terminate this Agreement during the Initial Term hereof in the event Lindley
B. Richert is no longer employed by Source or Source's affiliates and such
departure directly results in a "substantial decline in the quality and market
acceptance" of the Source Services or any New Source Service. Said option to
terminate shall be exercisable at the end of one hundred and twenty (120) days
after the date of delivery of notice to Reuters that Lindley B. Richert is no
longer employed by Source or Source's affiliates. For purposes of this
provision, the parties agree that a "substantial decline in the quality and
market acceptance" of Source Services or any New Source Service shall be deemed
to have occurred, if and only if, gross revenues from all Source Services and
any New Source Service distributed pursuant to this Agreement decline within
said one hundred and twenty day period by more than twenty-five (25%) percent.
In the event Reuters exercises its option to terminate the Agreement pursuant to
this provision, then the Agreement shall terminate ninety (90) days from the
date notice is given in accordance with Section 13(a) hereof.
12. DISTRIBUTOR PARITY. Source agrees to provide the Source Services and
New Source Services on at least as favorable terms as those provided in
agreements between Source and, where applicable, any other third party network
vendor who competes directly with Reuters, with the exception of any agreements
existing prior to June 1, 1993. Source further agrees to use its best efforts to
provide the Source Services and New Source Services in a manner which is equal
to or better than said services as provided to any third party network vendor
who competes directly with Reuters world-wide, specifically with respect to
content, editorial impartiality and timeliness of updating of said services.
13. MISCELLANEOUS.
(a) NOTICES. All notices hereunder shall be in writing and shall be
delivered in person, or sent by overnight courier service, to the address of the
party set forth below, or to such other addresses as may be stipulated in
writing by the parties pursuant hereto. Unless otherwise provided, notice shall
be effective on the date it is officially recorded as delivered.
-10-
<PAGE> 11
(i) If to Reuters, to:
Reuters Limited
85 Fleet Street
London EC4P 4AJ
Attention: General Counsel
(ii) If to Source, to:
McCarthy, Crisanti & Maffei, Inc.
71 Broadway
New York, NY 10006
Attention: President
with a copy to:
The Van Kampen Merritt Companies, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: General Counsel
(b) AMENDMENT; ASSIGNMENT. This Agreement may not be amended except
by written instrument executed by Source and Reuters. Neither party may assign
this Agreement to any third party, other than an affiliate, without the prior
written consent of the other. Any assignment of this Agreement to an affiliate
shall not relieve the assigning party of any of its obligations or liabilities
under this Agreement.
(c) SURVIVAL OF CERTAIN PROVISIONS. Notwithstanding the termination
of this Agreement, those provisions of this Agreement that by their nature are
intended to survive such termination shall survive, including without
limitation, the provisions of Section 8, 9, 10 and 11.
(d) CONSEQUENTIAL DAMAGES. Except pursuant to Section 8, neither
party shall be liable for any consequential, indirect, incidental or special
damages, even if advised of the possibility of such damages.
(e) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties on the subject hereof and terminates and supersedes
all previous verbal and written agreements on such subject.
(f) RELATIONSHIP OF THE PARTIES. The parties agree that Reuters will
act as an independent contractor in the performance of its duties under this
Agreement. This Agreement does not and shall not be deemed to constitute a
partnership or joint
-11-
<PAGE> 12
venture between the parties and neither party nor any of its directors,
officers, employees or agents shall, by virtue of the performance of their
obligations under this Agreement, be deemed to be an employee of the other.
(g) "AFFILIATE" DEFINED. For purposes of this Agreement, the term
"affiliate" and its derivatives shall mean, with respect to any individual or
entity directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with such individual or entity. The term
"control" and its derivatives, as used in the immediately preceding sentence,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of an entity, whether through the
ownership of voting securities, by contract or otherwise.
(h) SEVERABILITY. In the event any provision of this Agreement or
application hereof to any party or in any circumstances shall be determined to
be invalid, unlawful, or unenforceable to any extent, the remainder of this
Agreement, and the application of any provision to parties or circumstances
other than those as to which it is determined to be unlawful, invalid or
unenforceable, shall not be affected thereby, and each remaining provision of
this Agreement shall continue to be valid and may be enforced to the fullest
extent permitted by law.
(i) NON-WAIVER. No delay or failure by either party in exercising any
right under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right.
(j) CAPTIONS. The captions used herein are for convenience only, and
constitute no part of this Agreement.
(k) GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the choice of law principles thereof.
IN WITNESS WHEREOF, the undersigned parties have duly executed this
Agreement as of the 1st day of July, 1993, to be effective as set forth in
Section 11(a) hereof.
MCCARTHY, CRISANTI & MAFFEI, REUTERS LIMITED
INC.
By: /s/ Lindley B. Richert By: /s/ Stephen C. Meadows
--------------------------------- --------------------------------
Name: LINDLEY B. RICHERT Name: STEPHEN C. MEADOWS
Title: PRESIDENT Title: International Marketing
Manager, Specialist Data
Services
-12-
<PAGE> 13
Exhibit A
<TABLE>
<CAPTION>
Name Source Services
- ---- ---------------
Description
-----------
<S> <C>
CorporateWatch- Principally provides rapid and comprehensive
information on corporate securities, private
placements, equities and mortgage and derivative
product new issues.
CurrencyWatch- A foreign exchange market forecasting and analysis
system combining live 24 hour fundamental and
technical analysis presented as both commentary and
live technical trading pages, together with
comprehensive live EMS analysis.
MoneyWatch- Provides 24 hour fundamental and technical analysis
of US Treasury, Agency and money market securities.
The service combines live commentary and technical
trading analysis with detailed forecasts and analysis
of the US economy.
YieldWatch- Addresses European and Asia Pacific government
bonds/financial futures markets including the U.S.
T-bond. Information is presented as live commentary,
technical trading blotters and spread analysis,
together with regional market briefings.
</TABLE>
- - Denotes a registered trademark of McCarthy, Crisanti & Maffei, Inc.
<PAGE> 14
Exhibit B
The following subscribers should be RESTRICTED from access to the
Source Services pursuant to Section 1(a)(i) of the Agreement:
Munifacts/American Banker Thomson Financial Networks
Trepp & Company Alert/OASYS
Money Market Services AutEx
Ried, Thunberg CDA Investment Technologies
Elliot Wave International CORIS
Data Resources Inc. FIRST CALL
Wrightson & Co. Forex Watch
Evans Economics Forex Chartist
Froehlich Technical System
Griggs & Santow Investext
Dunn & Bradstreet Securities Data Co.
Predex Wunsch Auction Systems
Cates Asset Backed Securities Group
Bank Valuation Securities Information Center
Chronometrics
Capital Techniques Technical Data (All Services)
Telerate Corporate Market Service Valornform
Eurobond Service I.F.R. JapanWatch
I.F.R. Vigil
R.A. Froehlich I.F.R. CorporateEye
Business Week I.F.R. LanAm
Market Data Corporation I.F.R. Int'l. Financing Review
Market News Service Atlas
Vigil BondData
Muller Data MoneyData
Pensions & Investment Age ILX
Money Line Corporation Bond World
Standard & Poor's Moody's
Dow Jones News Service McGraw Hill
Duff & Phelps FX 24
Olson Group Gannett
Investment Dealers Digest Fitch
(I.D.D. Information Services) Sheshunoff
Securities Data Corp. Capital Management
<PAGE> 15
RS Investments Prechter's Elliot Wave International
MRL Publishing Johnson Smick International
Capital Management IPO Financial
MBSIS Commscan
J.J. Kenny & Company AMG Data Services
MortgageData MortgageData
Bloomberg IDEA
Knight Ridder Dalcomp Inc.
O'Connor, Paul & Phillips Maria Ramirez Capital Consultants
Telekurs SDC Publishing
Stone, McCarthy Institutional Investor Euromoneys
Indepth Data
In addition to the above list, only Authorized Distributors should be allowed
access when exhibiting at conferences.
<PAGE> 16
Exhibit C
REUTERS EQUIPMENT AND SERVICES
I. Pursuant to the terms and conditions of Section 2(a)(i) of the
Agreement, the equipment to be provided by Reuters to Source at
Source's various locations set forth below (and such other Source
locations as from time to time agreed to by Source and Reuters) shall
include the following:
New York -
- 1 Selectfeed and associated communications, solely for the
purpose of Source development.
- 1 primary electronic means of delivering Source's information
to Reuters in a timely and reliable manner to include but not
limited to two IDN Links with the necessary equipment and
leased lines with dial back-up at Source primary site as well
as at disaster recovery site to be designated by Source.
- 2 Reuters Terminals and associated communications, with
editing capabilities, to be used as back-up for the primary
contribution mechanism.
- 3 Slave display devices.
London -
- 1 Reuters Terminal and associated Communications, with editing
capabilities, to be used as back-up for the primary
contribution mechanism.
- 1 Slave display device.
Tokyo -
- 1 Reuters Terminal and associated Communications, with editing
capabilities, to be used as back-up for the primary
contribution mechanism.
- 1 Slave display device.
Singapore -
- 1 Reuters Terminal and associated Communications, with editing
capabilities, to be used as back-up for the primary
contribution mechanism.
- 1 Slave display device.
Paris -
- 1 Reuters Terminal and associated Communications, with editing
capabilities, to be used as back-up for the primary
contribution mechanism.
- 1 Slave display device.
<PAGE> 17
II. Reuters agrees to determine by no later than August 1, 1993, whether it
can supply bandwidth on the Reuters network for the purpose of linking
each of Source's overseas offices to the New York Central Contributing
facility. Source agrees to pay Reuters reasonable costs to supply such
bandwidth.
<PAGE> 18
Exhibit D
DIRECT FEED AGREEMENT
<PAGE> 19
DIRECT FEED DELIVERY AGREEMENT
THIS AGREEMENT, dated as of , 1993 between REUTERS LIMITED, a
corporation organized under U.K. law, with offices at 85 Fleet Street, London,
EC 4AJ ("Reuters") and MCCARTHY, CRISANTI & MAFFEI, INC., a New York Corporation
with offices at 71 Broadway, New York, New York, 10006 ("Source").
WHEREAS, Source publishes the services listed and described in Exhibit A to this
Agreement (the "Source Services"); and
WHEREAS, Reuters and Source have entered into an Optional Service Delivery
Agreement dated as of the date hereof; and
WHEREAS, Source desires to make all of the Source Services available to select
subscribers to the Source Services ("Source Subscribers") via direct feed line;
and
WHEREAS, Reuters is willing to provide Source Subscribers with a direct feed
line to deliver the Source Services directly to certain Source Subscribers.
NOW THEREFORE, the parties in consideration of the premises and mutual covenants
contained herein agree as follows:
1. PROVISION OF DIRECT FEED LINE.
(i) NON-REUTERS CUSTOMERS. Upon prior written notice to Reuters,
Reuters agrees to provide to Source Subscribers, who are not
then-current customers of Reuters, a direct feed line for the
direct delivery of Source Services to Source Subscribers.
Reuters shall enter into a separate agreement with Source
Subscriber for the provision of the direct feed line. A copy
of Reuters Principal Service Agreement is attached as Exhibit
B. Reuters agrees that a Source Subscriber obtaining a direct
feed line pursuant to this subsection, shall incur Reuters'
customary installation and monthly communication charges.
(ii) REUTERS SUBSCRIBERS. Reuters agrees to consider requests made
by Source, on a case by case basis, to provide to Source
Subscribers who are then-current customers of Reuters, a
direct feed line for the purpose of providing access to Source
in order to enable direct delivery of Source Services to
Source Subscribers.
2. INSTALLATION. Reuters agrees that within thirty (30) days of receipt by
it of notice from Source, that it will initiate the order process for the
installation by third parties of a direct feed line to those Source Subscribers
as set forth in Section 1 hereof. Reuters further agrees to provide to Source
information relating to the systems configuration of each Source Subscriber for
whom Reuters provides a direct
<PAGE> 20
feed line pursuant to this Agreement. The direct feed line will be capable of
carrying all of the Source Services including any New Source Services. Reuters
acknowledges and agrees that the direct feed lines provided to Source
Subscribers meet the technical requirements as set forth in Reuters' published
documentation for installation and maintenance of its direct feed lines as well
as convey the Source Services in a manner and with a functionality at a level as
is generally made available to its own customers. Reuters shall maintain,
support and repair the direct feed lines provided pursuant to this Agreement in
a timely and competent manner and at a level that meets Reuters' support,
maintenance and repair services to its customers generally.
3. BILLING. Reuters shall bill Source Subscriber directly for customary
installation and communication line charges including, but not limited to, all
applicable taxes for the direct feed line. Source acknowledges that in the event
that a direct feed line is provided to a then-existing Reuters customer or, in
the further event that a direct feed line is provided to a non-Reuters customer
who subsequently subscribes to additional Reuters services, that the Reuters
communication charges may change. Reuters shall be responsible for payment of
all taxes. In addition, Source shall bill Source Subscribers for fees relating
to the Source Services in the United States, and Reuters shall bill Source
Subscribers outside the United States, in accordance with Reuters' usual billing
practices.
4. INDEMNIFICATION.
(a) BY SOURCE. In the vent any claim is brought by third party
against Reuters that relates to, arises out of or is based upon the Source
Services or the failure of Source to comply with any law, rule or regulation,
Reuters shall promptly notify Source, and Source shall defend such claim at
Source's expense and under Source's control. Source shall indemnify and hold
harmless Reuters against any judgment, liability, loss, cost or damage
(including litigation costs and reasonable attorneys' fees) arising from or
related to such claim whether or not such claim is successful. Reuters shall
have the right, at its expense, to participate in the defense of such claim
through counsel of its own choosing; provided, however, that Source shall not be
required to pay any settlement amount that it has not approved in advance.
(b) BY REUTERS. In the event any claim is brought by any third party
against Source that relates to, arises out of or is based upon any error, delay,
interruption or other event caused by Reuters or its Authorized Distributors in
installing, supporting, maintaining or repairing the direct line feed or in
transmitting the Source Services, Source shall promptly notify Reuters, and
Reuters shall defend such claim at Reuters' expense and under Reuters' control.
Reuters shall indemnify and hold harmless Source against any judgment,
liability, loss, cost or damage (including litigation costs and reasonable
attorneys' fees) arising from or related to such claim, whether or not such
claim is successful. Source shall have the right, at its expense, to participate
in the defense of such claim through counsel of its own
<PAGE> 21
choosing; provided, however, that Reuters shall not be required to pay any
settlement amount that it has not approved in advance.
5. TERM; TERMINATION;
(a) TERM. The initial term of this Agreement shall commence
ninety-one (91) days subsequent to notice given by Source to Telerate Systems
Incorporated ("Telerate") pursuant to that certain agreement dated as of January
1, 1992, between Source and Telerate (the "Telerate Agreement") (the
"Commencement Date") and shall terminate at the end of the third year (the
"Initial Term"). Notwithstanding the foregoing, Source may terminate this
Agreement prior to its Commencement Date in the event Source, in its sole
discretion, retracts its notice to Telerate under the Telerate Agreement. The
term of this Agreement shall automatically be extended for one or more periods
of three years (a "Renewal Term"), unless either party sends to the other
written notice of its election not to renew at least ninety (90) days prior to
the end of the Initial Term, or any Renewal Term, as the case may be.
(b) DEFAULT. If either party shall default in the performance of or
compliance with any provision contained in this Agreement including, but not
limited to, any breach of a representation or warranty, and such default shall
not have been cured within thirty (30) days after written notice thereof shall
have been given to the appropriate party, the party giving such notice may then
give further written notice to such other party terminating this Agreement, in
which event this Agreement and any other rights granted hereunder shall
terminate on the date specified in such further notice.
(c) INSOLVENCY. In the event that either party hereto shall be
adjudged insolvent or bankrupt, or upon the institution of any proceedings by it
seeking relief, reorganization or arrangement under any laws relating to
insolvency, or if an involuntary petition in bankruptcy is filed against such
party and said petition is not discharged within sixty (60) days after such
filing, or upon any assignment for the benefit of its creditors, or upon the
appointment of a receiver, liquidator or trustee of any of its assets, or upon
the liquidation, dissolution or winding up of its business (an "Event of
Bankruptcy"), then the party involved in any such Event of Bankruptcy shall
immediately give notice thereof to the other party, and the other party at its
option may terminate this Agreement upon written notice.
(d) EFFECT OF TERMINATION. In the event of a termination of this
Agreement for any reason, Reuters shall continue to support, maintain and repair
direct feed lines installed for Source Subscribers before the effective date of
any such termination provided that such Source Subscriber continues to pay
Reuters the agreed upon communications line change.
6. INCORPORATION BY REFERENCE. The parties hereto agree that the
following sections of the Optional Service Delivery Agreement, a copy of which
is attached hereto and made part hereof as Exhibit C are incorporated by
reference: 4(b) (second
<PAGE> 22
sentence only), 5, 9, 10, 13(a), (b), (d) (the reference in Section 13(d) to
Section 8 is hereby changed to Section 4), (e), (f), (g), (h), (i), (j) and (k).
7. SURVIVAL. All covenants, obligations, representations, warranties,
indemnities and agreements contained in this Agreement shall survive the
execution and delivery of the Agreement and of any and all documents or
instruments delivered in connection herewith. Neither Source nor Reuters has
made any representation or warranty to the other in connection with the
transaction contemplated herein except as contained in this Agreement and any
other instrument, agreement or writing provided for or contemplated by this
Agreement.
8. DEFINITIONS. Terms not otherwise defined herein shall have the
meanings ascribed to them in the Optional Service Delivery Agreement.
IN WITNESS WHEREOF, the undersigned parties have duly executed this
Agreement as of the day of , 1993, to be effective as set forth in
Section 5 hereof.
MCCARTHY, CRISANTI & MAFFEI, REUTERS LIMITED
INC.
By:__________________________________ By:__________________________________
Name: LINDLEY B. RICHERT Name:________________________________
Title: PRESIDENT Title:_______________________________
<PAGE> 23
Exhibit E
SOURCE DISCLAIMER
MCM
71 BROADWAY, 11TH FLOOR
NEW YORK, NEW YORK 10006
COPYRIGHT 1993, MCCARTHY, CRISANTI & MAFFEI, INC. ("MCM"). ALL RIGHTS RESERVED.
MCM OBTAINS INFORMATION FOR ITS ANALYSES FROM SOURCES WHICH IT CONSIDERS
RELIABLE, BUT DOES NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF ITS ANALYSES OR
ANY INFORMATION CONTAINED THEREIN. MCM AND ITS AFFILIATES MAKE NO REPRESENTATION
OR WARRANTY, EITHER EXPRESSED OR IMPLIED, WITH RESPECT TO THE INFORMATION OR
ANALYSES SUPPLIED TO CLIENT, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES
OF FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY, AND EACH SPECIFICALLY
DISCLAIMS ANY SUCH WARRANTY. IN NO EVENT SHALL MCM OR ITS AFFILIATES BE LIABLE
TO CLIENT FOR ANY DECISION MADE OR ACTION TAKEN BY CLIENT IN RELIANCE UPON THE
INFORMATION OR ANALYSES CONTAINED HEREIN, FOR DELAYS OR INTERRUPTIONS IN
DELIVERY FOR ANY REASON, OR FOR LOSS OF BUSINESS REVENUES, LOST PROFITS, OR ANY
INDIRECT, CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES, WHETHER IN CONTRACT,
TORT OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS
MATERIAL IS INTENDED SOLELY FOR THE PRIVATE USE OF MCM'S CLIENTS, AND ANY
UNAUTHORIZED USE, DUPLICATION OR DISCLOSURE IS PROHIBITED. THIS MATERIAL IS NOT
A COMPREHENSIVE EVALUATION OF THE INDUSTRY, THE COMPANIES OR THE SECURITIES
MENTIONED, AND DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION OF AN OFFER OR A
RECOMMENDATION TO BUY OR SELL SECURITIES. ALL EXPRESSIONS OF OPINION ARE SUBJECT
TO CHANGE WITHOUT NOTICE. NAIC DESIGNATIONS ARE NOT CREDIT RATINGS. REUTERS HAS
NOT CONTRIBUTED ANY INFORMATION TO THESE PAGES.
<PAGE> 24
Exhibit F
CONTACTS FOR APPROVAL OF PROMOTIONAL MATERIALS
For Reuters: Kathy Colloton
Reuters America Inc.
1700 Broadway - 2nd Floor
New York, NY 10019
Telephone: 212-603-3738
Facsimile: 212-603-3810
For Source: Mr. Jay Miller
McCarthy, Crisanti & Maffei, Inc.
71 Broadway
New York, NY 10006
Telephone: 212-509-5800
Facsimile: 212-509-7389
Either party may change its designated "contact" person by giving written notice
to the other.
<PAGE> 25
Exhibit G
REUTERS PRINCIPAL SERVICE AGREEMENTS AND OPTIONAL DATA ADDENDUM
See Attached
<PAGE> 26
[UNABLE TO READ ATTACHMENT]
<PAGE> 27
Exhibit H
SOURCE'S SERVICE AGREEMENT AND WORLDWIDE PRICE LISTS
See Attached
<PAGE> 28
McCarthy, Crisanti & Maffei, Inc. ("MCM")
Subscription for Electronic Information and Research Services
This Subscription Agreement (the "Agreement") made this day of
, 19 , (the "Effective Date") by and between McCarthy, Crisanti &
Maffei, Inc. (hereinafter "MCM"), a New York corporation having offices at 71
Broadway, New York, New York, 10006 and , a
(hereinafter "Customer").
1. Services
Customer subscribes to, and MCM agrees to provide, the services set out
on the attached Supplement(s), Number(s) each, a "Service" (and
collectively, "Services") upon the terms and conditions set out below.
2. Term of Subscription; Fee
The initial subscription term for each Service shall be as set forth on
Supplement (the "Initial Term") attached hereto and made part hereof. For the
Services provided by MCM, Customer agrees to pay MCM the subscription fees
indicated on the relevant Supplement. Fees charged upon the renewal of any
subscription shall be those set forth on MCM's then current price lists. All
subscription fees shall b paid [monthly] [quarterly] in advance on the
commencement of the subscription term and thereafter on the first calendar
[month] [quarter]. Customer shall also pay in addition to any subscription fee,
any tax, however characterized, arising out of this subscription other than
taxes based on the net income of MCM.
3. Renewal
The subscription term for each Service shall be automatically renewed
for a term equal in length to the Initial Term unless either party give the
other not less than sixty (60) days written notice of its intention not to renew
a particular Service prior to the end of the initial or any renewal of that
Service. Further, any renewal term shall be governed by the terms and conditions
of this Agreement, except for price, which shall be determined from MCM's then
current price list.
4. Use of Information
Services are for the sole use of Customer. Customer will not, without
MCM's prior written consent, cause or permit the Services or any information
including, without limitation reports, analyses, data, ratings, documentation
made known, sent or otherwise transmitted by MCM under this Agreement or any
Service in whole or in part to be stored, modified, duplicated, reproduced or
retransmitted in any form either to third parties or to affiliated companies or
branch offices of the Customer except as otherwise permitted herein. If Customer
makes use of any information for
<PAGE> 29
which MCM has given its prior written approval, Customer shall credit MCM as the
source of such information. Customer acknowledges that all such materials are
and shall remain, the sole property of MCM, and that MCM is the sole owner of
all copyright and other commercial property rights therein. Customer agrees not
to create any derivative works (including data bases) based on the Service(s) or
the information contained therein. Customer will not use or permit the use of
the information contained in the Service for any illegal purpose. MCM reserves
to itself complete editorial freedom in the form and content of the Service(s)
and may alter the same from time to time.
5. Termination
(a) In addition to any other remedy available at law or in equity,
MCM may terminate this Agreement immediately, in whole or in part, without
further obligation to Customer in the event of:
(i) any breach by the Customer of Paragraph 4 or a breach of the
Customer's obligation to pay the subscription fee as specified
in this Agreement and Supplement(s) hereto;
(ii) any other breach of this Agreement by the Customer which
cannot be remedied or is not remedied within thirty (30) days
of the Customer being requested to do so;
(iii) any merger, consolidation, acquisition, or the sale, lease or
other transfer of all or substantially all of the assets or
shares of stock of the Customer, or any other change in the
control or ownership of the Customer;
(iv) the Customer's making an assignment for the benefit of its
creditors or filing a voluntary petition under any bankruptcy
or insolvency law, under the reorganization or arrangement
provisions of the United States Bankruptcy Code, or under the
provisions of any law of like import;
(v) the filing of an involuntary petition against the Customer
under any bankruptcy or insolvency law, under the
reorganization or arrangement provisions of the United States
Bankruptcy Code, or under any law of like import; or
(vi) the appointment of a trustee or receiver for the Customer or
its property.
(b) Where the operation or delivery of the Service(s) or any part
thereof is dependent upon an agreement between MCM and a third party and such
agreement has expired or is terminated or suspended in whole or in part for any
reason, and MCM is unable to enter into another equivalent agreement upon
reasonable terms. MCM may immediately terminate this Agreement or the relevant
part thereof, and
<PAGE> 30
upon termination MCM's only obligation to the Customer will be to refund the
proportionate part of the subscription fee already paid for the portion of the
Service(s) not received by virtue of said termination.
(c) Without limitation of any other remedy at law or in equity,
the Customer and MCM hereby agree that upon the Customer's (i) breach of this
Agreement, or (ii) terminating this Agreement (except as permitted hereunder),
MCM will be entitled to recover from the Customer all subscription fees due and
payable at the time of termination.
(d) Customer agrees, in the event of a breach by it of any of its
obligations under this Agreement, MCM may seek temporary or permanent injunctive
relief, without the necessity of proving actual damages or the posting of a
bond, as well as other equitable relief.
6. Disclaimer of Warranties and Liability
(a) MCM AND ITS AFFILIATES MAKE NO REPRESENTATION OR WARRANTY,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES,
INCLUDING, WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY, AND EACH
SPECIFICALLY DISCLAIMS ANY SUCH WARRANTY. MCM AND ITS
AFFILIATES EACH SPECIFICALLY DISCLAIM ANY KNOWLEDGE OF ANY
PURPOSE FOR WHICH THE SERVICES SHALL BE SUED BY CUSTOMER.
MATERIAL SUPPLIED BY MCM IN THE SERVICES CONSTITUTES OPINION
AND NOT FACT. Such material supplied in the Services is based
upon information obtained by MCM from a number of sources and
MCM may be unable to verify the accuracy of that information.
Accordingly, neither MCM nor its affiliates shall be liable to
customer for: (1) Any faults in the delivery, transmission or
content of the Services, or for contingencies beyond their
control, in producing, supplying, or compiling,
transpositioning or delivering the Services; (2) Any errors,
omissions or inaccuracies in the information or analyses
contained in the Services or delays or interruptions in
delivery of a Service for any reason; (3) Any decision made or
action taken by Customer in reliance upon the information or
analyses contained in the Services; (4) Loss of business
revenues, lost profits or any indirect, consequential, special
or incidental damages arising from any subscription, including
any claims related to the timeliness off deliveries of the
Services or the quality or accuracy of information upon which
a Service is based, whether in contract, tort or otherwise,
even if advised of the possibility of such damages; (5) Any
claim that arose more than one (1) year prior to the
institution of suit therefor; or (6) Any claim arising from
causes beyond MCM's reasonable control including, but not
limited to, Customers selection and use of its own computer
hardware
<PAGE> 31
system. CUSTOMER AGREES THAT MCM'S MAXIMUM LIABILITY FOR ANY
AND ALL CAUSES SHALL NOT EXCEED, IN THE AGGREGATE, THE AMOUNT
PAID BY CUSTOMER FOR THE SERVICES DURING THE FIRST INITIAL
TERM OF THIS AGREEMENT TO EXPIRE.
(b) Customer will indemnify and hold MCM and its affiliates and
its and their employees, agents, contractors and
subcontractors harmless from and against any loss, cost or
damage (including reasonable attorneys fees) in connection
with any claim or action which may be brought by any third
party, arising out of:
(i) any faults, interruptions or delays in the delivery of the
Services to Customer or in the placing of inhibits (if
applicable), or for any inaccuracies, errors or omissions in
the information contained in the Services as supplied or
contributed by the Customer, however such faults,
interruptions, delays, inaccuracies, errors or omissions
arise;
(ii) the furnishing, performance, maintenance, or use of, or
inability to use the Service and any other materials furnished
to Customer by or on behalf of MCM notwithstanding that MCM
has been advised of the possibility that such loss, or damage
may or will arise.
7. Assignments
Neither party shall assign this Agreement without the prior written
consent of the other.
8. Securities Laws
Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall be deemed to limit any responsibility or liability MCM may have
under applicable securities laws.
9. Force Majeure
Neither MCM nor Customer shall be responsible for delays or failures in
performance resulting from acts beyond the control of such party. Such acts
shall include but not be limited to acts of God, strikes, lockouts, riots, acts
of war, epidemics, governmental regulations superimposed after the fact, fire,
communication line failures, power failures, earthquakes, or other disasters.
10. Disclosure
Pursuant to the provisions of the Investment Advisers Act of 1940, MCM
offers to supply Customer with Part II of the Form ADV upon written request of
Customer.
<PAGE> 32
11. Severability
In the event that any court having competent jurisdiction shall
determine that one or more of the provisions contained in this Agreement shall
be unenforceable in any respect, then such provision shall be deemed limited and
restricted to the extent that such court shall deem it to be enforceable, and so
limited or restricted shall remain in full force and effect. In the event that
any such provision or provisions shall be deemed wholly unenforceable, the
remaining provisions shall remain in full force and effect.
12. General
(a) This Agreement and any and all Supplement annexed hereto
represent the entire agreement of the parties. There are no
other oral or written collateral representations, agreements
or understandings. In the event that the Customer issues a
purchase order or other instrument related to the Service(s),
it is understood and agreed that such document is for the
Customer's internal purposes only and will in no way
supersede, modify, add to or delete any of the terms and
conditions of this Agreement.
(b) All notices given hereunder will be in writing, delivered
personally or mailed by registered or certified mail, return
receipt requested, postage prepaid to the parties at the
address specified in this Agreement unless either party gives
notice in writing of a change of such address in the manner
provided herein for giving notice. All notices will be deemed
given when delivered personally, or if mailed, five (5) days
after the date of mailing.
(c) This Agreement will be deemed to have been executed and
delivered in the State of New York and it will be governed by
and construed in accordance with the laws of New York. The
parties hereby consent to the jurisdiction of the courts of
the State of New York for the purpose of any action or
proceeding brought by either of them on or in connection with
this Agreement or any alleged breach thereof.
(d) This Agreement will be binding upon and inure to the benefit
of the parties hereto, their respective heirs, personal
representatives, successors and assigns.
(e) This Agreement may not be amended, modified or superseded, nor
may any of its terms or conditions be waived unless expressly
agreed to in writing by both parties. The failure of either
party at any time or times to require full performance of any
provision hereof will in no manner affect the right of such
party at a later time to enforce the same.
<PAGE> 33
(f) The section headings of the several clauses and paragraphs of
this Agreement are inserted for convenience of reference only
and will not affect the meaning or interpretation of this
Agreement.
(g) The Customer hereby waives personal service of any and all
process upon the Customer and consents that services of
process may be made by certified or registered mail at the
Customer's address set forth herein.
(h) If the customer is a corporation, the Customer has the
corporate power to enter into this Agreement and to carry out
its obligations hereunder. The persons executing this
Agreement on behalf of the Customer hereby represent and
warrant that they have been duly authorized to execute this
Agreement for and on behalf of the Customer. This Agreement
constitutes the valid and binding obligation of the Customer
and is enforceable in accordance with its terms.
(i) The provisions of Section 4 hereof, and any and all
disclaimers and indemnities contained herein or in any
Supplements annexed hereto will survive the termination of
this Agreement.
IN WITNESS WHEREOF, the parties or their duly authorized representative
have hereunto set their hands of the day and year first above written.
MCCARTHY, CRISANTI & MAFFEI, INC.
By:______________________________________
Title:___________________________________
Date:____________________________________
CUSTOMER:
By:______________________________________
Title:___________________________________
Date:____________________________________
<PAGE> 34
Number __________
Term __________
Supplement to
McCarthy, Crisanti & Maffei, Inc.
Subscription for Electronic Information and Research Services
This Supplement between McCarthy, Crisanti & Maffei, Inc. (MCM) and the Customer
(as set forth on the Subscription for Electronic Information and Research
Services) represent those Services subscribed to by the Customer and to be
provided by MCM, subject to the terms and conditions set forth in the
Subscription Agreement.
Dated ____________________
Services Fee [Monthly] [Quarterly]
Total:
Additional Locations/Departments:
MCCARTHY, CRISANTI & MAFFEI, INC.
By:______________________________________
Title:___________________________________
Date:____________________________________
CUSTOMER
By:______________________________________
Title:___________________________________
Date:____________________________________
<PAGE> 35
MCM ELECTRONIC INFORMATION SERVICES
AMERICAS REGION PRICING (US $)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
** CORPORATEWATCH(R) $ 450/montH
CURRENCYWATCH(R) $ 300/montH
MONEYWATCH(R) $ 250/month
YIELDWATCH(R) $ 200/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
** CORPORATEWATCH(R) $3000/montH
CURRENCYWATCH(R) $1750/montH
MONEYWATCH(R) $1500/month
YIELDWATCH(R) $1000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
** Includes MCM's Private Placement "Market Talk."
(1993)
<PAGE> 36
MCM ELECTRONIC INFORMATION SERVICES
PRICING FOR JAPAN (JPY Y)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH Y55,000/month
CURRENCYWATCH Y40,000/month
MONEYWATCH Y40,000/month
YIELDWATCH Y40,000/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH Y250,000/month
CURRENCYWATCH Y250,000/month
MONEYWATCH Y250,000/month
YIELDWATCH Y250,000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 37
MCM ELECTRONIC INFORMATION SERVICES
UNITED KINGDOM PRICING (US $)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $ 375/month
CURRENCYWATCH $ 275/month
MONEYWATCH $ 275/month
YIELDWATCH $ 275/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $1875/month
CURRENCYWATCH $1500/month
MONEYWATCH $1500/month
YIELDWATCH $1500/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 38
MCM ELECTRONIC INFORMATION SERVICES
ASIA PACIFIC REGION PRICING (EXCLUDING JAPAN) (US $)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $ 325/month
CURRENCYWATCH $ 250/month
MONEYWATCH $ 230/month
YIELDWATCH $ 230/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $1000/month
CURRENCYWATCH $ 900/month
MONEYWATCH $ 800/month
YIELDWATCH $ 800/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 39
MCM ELECTRONIC INFORMATION SERVICES
PRICING FOR AUSTRALIA (AUD A$)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH A$ 425/month
CURRENCYWATCH A$ 300/month
MONEYWATCH A$ 300/month
YIELDWATCH A$ 300/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH A$ 1300/month
CURRENCYWATCH A$ 680/month
MONEYWATCH A$ 780/month
YIELDWATCH A$ 680/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 40
MCM ELECTRONIC INFORMATION SERVICES
CONTINENTAL EUROPE/GULF REGION PRICING (US $)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $ 375/month
CURRENCYWATCH $ 275/month
MONEYWATCH $ 275/month
YIELDWATCH $ 275/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $1875/month
CURRENCYWATCH $1500/month
MONEYWATCH $1500/month
YIELDWATCH $1500/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 41
MCM ELECTRONIC INFORMATION SERVICES
GERMANY/AUSTRIA (DM)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 450/month
CURRENCYWATCH 450/month
MONEYWATCH 450/month
YIELDWATCH 450/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 1800/month
CURRENCYWATCH 1800/month
MONEYWATCH 1800/month
YIELDWATCH 1800/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 42
MCM ELECTRONIC INFORMATION SERVICES
SWITZERLAND (SFR)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 500/month
CURRENCYWATCH 500/month
MONEYWATCH 500/month
YIELDWATCH 500/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 2000/month
CURRENCYWATCH 2000/month
MONEYWATCH 2000/month
YIELDWATCH 2000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 43
MCM ELECTRONIC INFORMATION SERVICES
DENMARK (DKK)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 2400/month
CURRENCYWATCH 1600/month
MONEYWATCH 1600/month
YIELDWATCH 1600/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 11900/month
CURRENCYWATCH 9500/month
MONEYWATCH 9500/month
YIELDWATCH 9500/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 44
MCM ELECTRONIC INFORMATION SERVICES
FINLAND (FIM)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 1025/month
CURRENCYWATCH 1025/month
MONEYWATCH 1025/month
YIELDWATCH 1025/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 6200/month
CURRENCYWATCH 6200/month
MONEYWATCH 6200/month
YIELDWATCH 6200/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 45
MCM ELECTRONIC INFORMATION SERVICES
NORWAY (NOK)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 1600/month
CURRENCYWATCH 1600/month
MONEYWATCH 1600/month
YIELDWATCH 1600/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 9500/month
CURRENCYWATCH 9500/month
MONEYWATCH 9500/month
YIELDWATCH 9500/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 46
MCM ELECTRONIC INFORMATION SERVICES
SWEDEN (SEK)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 1600/month
CURRENCYWATCH 1600/month
MONEYWATCH 1600/month
YIELDWATCH 1600/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 9450/month
CURRENCYWATCH 9450/month
MONEYWATCH 9450/month
YIELDWATCH 9450/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 47
MCM ELECTRONIC INFORMATION SERVICES
SPAIN (PTA)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 30,000/month
CURRENCYWATCH 30,000/month
MONEYWATCH 30,000/month
YIELDWATCH 30,000/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 135,000/month
CURRENCYWATCH 135,000/month
MONEYWATCH 135,000/month
YIELDWATCH 135,000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 48
MCM ELECTRONIC INFORMATION SERVICES
ITALY (ITL)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 325,000/month
CURRENCYWATCH 325,000/month
MONEYWATCH 325,000/month
YIELDWATCH 325,000/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 1,500,000/month
CURRENCYWATCH 1,500,000/month
MONEYWATCH 1,500,000/month
YIELDWATCH 1,500,000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 49
MCM ELECTRONIC INFORMATION SERVICES
FRANCE (FRF)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 2,200/month
CURRENCYWATCH 2,200/month
MONEYWATCH 2,200/month
YIELDWATCH 2,200/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 8,000/month
CURRENCYWATCH 8,000/month
MONEYWATCH 8,000/month
YIELDWATCH 8,000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 1
Exhibit 10.22
DIRECT FEED DELIVERY AGREEMENT
THIS AGREEMENT, dated as of July 1, 1993 between REUTERS LIMITED, a corporation
organized under U.K. law, with offices at 85 Fleet Street, London, EC 4AJ
("Reuters") and MCCARTHY, CRISANTI & MAFFEI, INC., a New York Corporation with
offices at 71 Broadway, New York, New York, 10006 ("Source").
WHEREAS, Source publishes the services listed and described in Exhibit A to this
Agreement (the "Source Services"); and
WHEREAS, Reuters and Source have entered into an Optional Service Delivery
Agreement dated as of the date hereof; and
WHEREAS, Source desires to make all of the Source Services available to select
subscribers to the Source Services ("Source Subscribers") via direct feed line;
and
WHEREAS, Reuters is willing to provide Source Subscribers with a direct feed
line to deliver the Source Services directly to certain Source Subscribers.
NOW THEREFORE, the parties in consideration of the premises and mutual covenants
contained herein agree as follows:
<PAGE> 2
1. Provision of Direct Feed Line.
(i) Non-Reuters Customers. Upon prior written notice to Reuters,
Reuters agrees to provide to Source Subscribers, who are not
then-current customers of Reuters, a direct feed line for the
direct delivery of Source Services to Source Subscribers.
Reuters shall enter into a separate agreement with Source
Subscriber for the provision of the direct feed line. A copy
of Reuters Principal Service Agreement is attached as Exhibit
B. Reuters agrees that a Source Subscriber obtaining a direct
feed line pursuant to this subsection, shall incur Reuters'
customary installation and monthly communication charges.
(ii) Reuters Subscribers. Reuters agrees to consider requests made
by Source, on a case by case basis, to provide to Source
Subscribers who are then-current customers of Reuters, a
direct feed line for the purpose of providing access to Source
in order to enable direct delivery of Source Services to
Source Subscribers.
2. Installation. Reuters agrees that within thirty (30) days of receipt by it of
notice from Source, that it will initiate the order process for the installation
by third parties of a direct feed line to those Source Subscribers as set forth
in Section 1 hereof. Reuters further agrees to provide to Source information
relating to the systems configuration of each Source Subscriber for whom Reuters
provides a direct feed line pursuant to this Agreement. The direct feed line
will be capable of carrying all of the Source Services including any New Source
Services. Reuters acknowledges and agrees that the direct feed lines provided to
source Subscribers meet the technical
<PAGE> 3
requirements as set forth in Reuters' published documentation for installation
and maintenance of its direct feed lines as well as convey the Source Services
in a manner and with a functionality at a level as is generally made available
to its own customers. Reuters shall maintain, support and repair the direct feed
lines provided pursuant to this Agreement in a timely and competent manner and
at a level that meets Reuters' support, maintenance and repair services to its
customers generally.
3. Billing. Reuters shall bill Source Subscriber directly for customary
installation and communication line charges including, but not limited to, all
applicable taxes for the direct feed line. Source acknowledges that in the event
that a direct feed line is provided to a then-existing Reuters customer or, in
the further event that a direct feed line is provided to a non-Reuters customer
who subsequently subscribes to additional Reuters services, that the Reuters
communication charges may change. Reuters shall be responsible for payment of
all taxes. In addition, Source shall bill Source Subscribers for fees relating
to the Source Services in the United States, and Reuters shall bill Source
Subscribers outside the United States, in accordance with Reuters' usual billing
practices.
4. Indemnification.
(a) By Source. In the event any claim is brought by third party against
Reuters that relates to, arises out of or is based upon the Source Services or
the failure of Source to comply with any law, rule or regulation, Reuters shall
promptly notify Source, and Source shall defend such claim at Source's expense
and under
<PAGE> 4
Source's control. Source shall indemnify and hold harmless Reuters against any
judgment, liability, loss, cost or damage (including litigation costs and
reasonable attorneys' fees) arising from or related to such claim whether or not
such claim is successful. Reuters shall have the right, at its expense, to
participate in the defense of such claim through counsel of its own choosing;
provided, however, that Source shall not be required to pay any settlement
amount that it has not approved in advance.
(b) By Reuters. In the event any claim is brought by any third party
against Source that relates to, arises out of or is based upon any error, delay,
interruption or other event caused by Reuters or its Authorized Distributors in
installing, supporting, maintaining or repairing the direct line feed or in
transmitting the Source Services, Source shall promptly notify Reuters, and
Reuters shall defend such claim at Reuters' expense and under Reuters' control.
Reuters shall indemnify and hold harmless Source against any judgment,
liability, loss, cost or damage (including litigation costs and reasonable
attorneys' fees) arising from or related to such claim, whether or not such
claim is successful. Source shall have the right, at its expense, to participate
in the defense of such claim through counsel of its own choosing; provided,
however, that Reuters shall not be required to pay any settlement amount that it
has not approved in advance.
5. Term; Termination.
(a) Term. The initial term of this Agreement shall commence ninety-one
(91) days subsequent to notice given by Source to Telerate Systems Incorporated
<PAGE> 5
("Telerate") pursuant to that certain agreement dated as of January 1, 1992,
between Source and Telerate (the "Telerate Agreement") (the "Commencement Date")
and shall terminate at the end of the third year (the "Initial Term").
Notwithstanding the foregoing, Source may terminate this Agreement prior to its
Commencement Date in the event Source, in its sole discretion, retracts its
notice to Telerate under the Telerate Agreement. The term of this Agreement
shall automatically be extended for one or more periods of three years (a
"Renewal Term"), unless either party sends to the other written notice of its
election not to renew at least ninety (90) days prior to the end of the Initial
Term, or any Renewal Term, as the case may be.
(b) Default. If either party shall default in the performance of or
compliance with any provision contained in this Agreement including, but not
limited to, any breach of a representation or warranty, and such default shall
not have been cured within thirty (30) days after written notice thereof shall
have been given to the appropriate party, the party giving such notice may then
give further written notice to such other party terminating this Agreement, in
which event this Agreement and any other rights granted hereunder shall
terminate on the date specified in such further notice.
(c) Insolvency. In the event the either party hereto shall be adjudged
insolvent or bankrupt, or upon the institution of any proceedings by it seeking
relief, reorganization or arrangement under any laws relating to insolvency, or
if an involuntary petition in bankruptcy is filed against such party and said
petition is not
<PAGE> 6
discharged within sixty (60) days after such filing, or upon any assignment for
the benefit of its creditors, or upon the appointment of a receiver, liquidator
or trustee of any of its assets, or upon the liquidation, dissolution or winding
up of its business (an "Event of Bankruptcy"), then the party involved in any
such Event of Bankruptcy shall immediately given notice thereof to the other
party, and the other party at its option may terminate this Agreement upon
written notice.
(d) Effect of Termination. In the event of a termination of this
Agreement for any reason, Reuters shall continue to support, maintain and repair
direct feed lines installed for Source Subscribers before the effective date of
any such termination provided that such Source Subscriber continues to pay to
Reuters the agreed upon communications line change.
6. Incorporation By Reference. The parties hereto agree that the following
sections of the Optional Service Delivery Agreement, a copy of which is attached
hereto and made part hereof as Exhibit C are incorporated by reference: 4(b)
(second sentence only), 5, 9, 10, 13(a), (b), (d) (the reference in Section
13(d) to Section 8 is hereby changed to Section 4), (e), (f), (g), (h), (i), (j)
and (k).
7. Survival. All covenants, obligations, representations, warranties,
indemnities and agreements contained in this Agreement shall survive the
execution and delivery of the Agreement and of any and all documents or
instruments delivered in connection herewith. Neither Source nor Reuters has
made any representation or
<PAGE> 7
warranty to the other in connection with the transaction contemplated herein
except as contained in this Agreement and any other instrument, agreement or
writing provided for or contemplated by this Agreement.
8. Definitions. Terms not otherwise defined herein shall have the
meanings ascribed to them in the Optional Service Delivery Agreement.
IN WITNESS WHEREOF, the undersigned parties have duly executed this
Agreement as of the 1st day of July, 1993, to be effective as set forth in
Section 5 hereof.
MCCARTHY, CRISANTI & MAFFEI, INC. REUTERS LIMITED
By: /s/ Lindley B. Richert By: /s/ Stephen C. Meadows
----------------------------- -------------------------------------
Name: LINDLEY B. RICHERT Name: STEPHEN C. MEADOWS
Title: PRESIDENT Title: Internationl Marketing Manager
Specialist Data Services
<PAGE> 8
EXHIBIT A
Source Services
---------------
Name Description
- ---- -----------
CorporateWatch(R) Principally provides rapid and
comprehensive information on
corporate securities, private
placements, equities and mortgage
and derivative product new issues.
CurrencyWatch(R) A foreign exchange market
forecasting and analysis system
combining live 24 hour fundamental
and technical analysis presented as
both commentary and live technical
trading pages, together with
comprehensive live EMS analysis.
MoneyWatch(R) Provides 24 hour fundamental and
technical analysis of US Treasury,
Agency and money market securities.
The service combines live commentary
and technical trading analysis with
detailed forecasts and analysis of
the US economy.
YieldWatch(R) Addresses European and Asia Pacific
government bonds/financial futures
markets including the U.S. T-bond.
Information is presented as live
commentary, technical trading
blotters and spread analysis,
together with regional market
briefings.
(R) Donotes a registered trademark of McCarthy, Crisanti & Maffei, Inc.
<PAGE> 1
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
Exhibit 10.23
AMENDMENT
This Amendment dated as of October 31, 1995 (the "Effective Date") to
that certain Optional Service Delivery Agreement (the "OSD Agreement") dated as
of July 1993 between Reuters Limited, a U.K. registered corporation with offices
at 85 Fleet Street, London EC4P 4AJ, United Kingdom ("Reuters"), and McCarthy,
Crisanti & Maffei, Inc., a New York corporation with offices at One Chase
Manhattan Plaza, New York, New York 10005 ("Source"), and that Direct Feed
Delivery Agreement (the "DFD Agreement") dated as of July 1, 1993 between
Reuters and Source.
W I T N E S S E T H:
WHEREAS, pursuant to the OSD Agreement, Source may distribute its
Source Services via the Reuters Subscribers (capitalized terms used without
definition herein having the definitions ascribe to such terms in the OSD
Agreement or the DFD Agreement, as appropriate);
WHEREAS, pursuant to the DFD Agreement, Source may distribute its
Source Services to select Source Subscribers via a direct feed line provided by
Reuters;
WHEREAS, the parties desire to make certain changes to both the OSD
Agreement and the DFD Agreement, to amend the fees payable under the OSD
Agreement, the terms of both agreements, and certain other provisions as set
forth herein; and
WHEREAS, the parties had previously agreed to the terms and conditions
set forth herein, but due to circumstances beyond either party's control, this
Amendment has heretofore remained unexecuted.
NOW THEREFORE, the parties hereby agree as follows:
SECTION 1. AMENDMENTS TO OSD AGREEMENT.
(a) Section 5 of the OSD Agreement is hereby amended in its entirety as
follows:
"5. Fees/Payment
(a) Reuters Fee. In this Section 5(a), all references to Source
Services and New Source Services exclude such services accessed via direct feed
and all references to amounts billed to Source Subscribers are exclusive of all
sales or other similar taxes. From the first day of the month next following the
date of execution of this Amendment by Reuters (said date hereinafter referred
to as the "Execution Date") to and including December 31, 1997, Reuters shall be
entitled to a fee equal to ****** ******* ***** of all
1
<PAGE> 2
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
"post Execution Date amounts" billed to Source Subscribers for Source Services
distributed through the Reuters Service. For purposes of this Agreement, "post
Execute Date amounts" shall mean amounts billed to Source Subscribers who become
Source Subscribers on or after the Execution Date and amounts billed to Source
Subscribers who are Source Subscribers prior to the Execution Date and which are
over and above the amounts billed to those Source Subscribers prior to the
Execution Date for the Source Services distributed through the Reuters Service.
The fee due Reuters (the "Reuters Source Revenue") shall be calculated by FIRST
taking all amounts billed to Source Subscribers for Source Services distributed
through the Reuters Service for the relevant calendar month; SECOND subtracting
from said amount all amounts billed in that calendar month to Source Subscribers
who were Source Subscribers prior to the Execution Date at the billing rate in
effect as of the Execution Date and THIRD multiplying the result by *********.
Commencing January 1, 1998 and thereafter, Reuters shall be entitled to a fee
equal ********** of all amounts billed to Source Subscribers during the
relevant calendar month for the Source Services distributed through the
Reuters Services.
In addition, Reuters shall be entitled to a fee during the term of this
Agreement equal to ********** of all amounts billed to Source Subscribers in
respect of any subscription to any New Source Service.
(b) The Reuters Source Revenue and any revenues due to Reuters from any
other New Source are together known as the "Reuters Revenues."
(c) Payment.
(i) As soon as possible after the end of each calendar
month for the term of this Agreement (and any
calendar month following the termination of this
Agreement in which subscription revenues are received
by either party upon which amounts are due to the
other pursuant to this Section 5), but in any event
within forty-five (45) days thereof, each party shall
deliver to the other a report which report the
respective party represents and warrants to the best
of its knowledge will show all of the subscription
revenues billed by it in those areas for which it is
responsible for billing for such month (the
"Subscription Revenues") and the amounts due to
Source or to Reuters, thereon, as the case may be.
Reuters, together with its report, shall deliver to
Source, one check payable to Source at its New York
offices for the Subscription Revenues less the
Reuters Revenues in U.S. Dollars as hereinafter set
forth and one wire transfer to Source's designated
bank account in Japan for the Subscription Revenues
less the Reuters Revenues in Japanese yen as
hereinafter set forth. Source, together with its
report, shall deliver to Reuters one check payable to
Reuters, addressed to Reuters to the
2
<PAGE> 3
attention of the Specialist Data Administrator at the
address set forth above, for the Reuters Revenues in
those areas which Source is responsible for billing.
(ii) All payments shall be made in U.S. Dollars except, as
noted above, payments to be made by Reuters to Source
with respect to subscription revenues collected by
Reuters and which are received in Japanese yen shall
be made in Japanese yen. All amounts due with respect
to subscriptions outside the United States (except
those payable in Japanese yen) shall be calculated by
taking the local currency units billed and converting
to U.S. Dollars, the result of which will equal the
"book rate" for that month. The book rate is
determined from the World Value of the Pound table as
published in the Financial Times on (usually) the
first Tuesday of each month. These figures are
rounded up or down to two decimal points.
(d) Adjustments. Each party acknowledges that they may make
initial calculations and payments of amounts due to the other
based on amounts billed to Source Subscribers in respect of
Source Services, and accordingly there may be post payment
adjustments to amounts remitted to the other pursuant to this
Section 5 to reflect (i) amounts the billing party billed in
error or credits it gave in the ordinary course of business to
Source Subscribers, and (ii) amounts the billing party was
unable to collect from Source Subscribers.
(e) Records. Each party shall maintain complete and accurate books
and records (collectively, the "Records") with respect to all
amounts it billed to Source Subscribers in respect of
subscriptions to the Source Services and any adjustments
thereto made pursuant to Subsection (d) of this Section 5.
Each party shall, at its expense, have the right upon at least
thirty (30) days' prior written notice to inspect the Records
of the other during normal working hours. All information
gained by the inspecting party from such inspection will be
kept in strict confidence and will be used solely for the
purpose of verifying the accuracy of the computation of the
amounts due hereunder.
(f) Offsets. Notwithstanding any provision of this Agreement to
the contrary, neither party shall have the right to offset
from the amounts payable by it pursuant to this Section 5 any
amounts which may be due or owed to such party from the other
as a result of this Section 5, any other section of this
Agreement or of the Direct Feed Delivery Agreement (the "DFD
Agreement") dated as of July 1, 1993 between the parties, or
any claim arising out of such other party's performance or
non-performance of its duties and obligations under this
Agreement or the DFD Agreement.
3
<PAGE> 4
(g) Sales Commission and Fee. Reuters shall not be entitled to any
fee or commission for subscriptions to a Source Service sold
to a Reuters subscriber by a salesperson working for Reuters
unless Source, on a region-by-region basis, deems the payment
of a fee or commission appropriate. If deemed appropriate, the
amount of commission and the mechanics for payment of any such
commission shall be as determined by Source's and Reuters'
respective regional offices on a case-by-case basis.
(c) Section 9 of the OSD Agreement is hereby amended in its entirety as
follows:
"9. Representations and Warranties of the Parties. Each party hereby represents,
covenants and warrants to the other as follows:
(a) It has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and
to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of such
party, enforceable in accordance with its terms and
conditions.
(b) That the parties will comply with all codes, regulations and
laws applicable to the performance of its duties and
obligations set forth herein, including but not limited to the
provision of direct feed lines under this Agreement, and has
obtained or will obtain all necessary permits, licenses and
other authorization necessary for its performance of services
under this Agreement.
(d) Section 11(a) of the OSD Agreement is hereby amended in its entirety as
follows:
"(a) Term. The initial term of this Agreement shall commence ninety-one
(91) days subsequent to notice given by Source to Telerate Systems Incorporated
("Telerate") pursuant to that certain agreement dated as of January 1, 1992
between Source and Telerate (the "Telerate Agreement") (the "Commencement Date")
and shall terminate on December 31, 2000 (the "Initial Term"). The term of this
Agreement shall automatically be extended for one or more periods of three years
(the "Renewal Term"), unless either party sends to the other written notice of
its election not to renew at least ninety (90) days prior to the end of the
Initial Term, or any Renewal Term, as the case may be."
(e) Section 11(d) of the OSD Agreement is hereby deleted in its entirety.
(f) Section 12 of the OSD Agreement is hereby amended in its entirety as
follows:
"12. Distributor Parity: Source agrees to provide the Source Services
on such basis that they shall, in all material respects when supplied to
Reuters, be as complete
4
<PAGE> 5
and current as the Source Services distributed via other network vendors with
whom Source has a then current agreement."
(g) Section 13(a)(i) and (ii) of the OSD Agreement are hereby amended in
its entirety as follows:
"(i) If to Reuters to:
Reuters Limited
85 Fleet Street
London EC4P 4AJ
Attention: General Counsel
with a copy to:
The Executive Vice President of Marketing Reuters America
40 E. 52nd Street
17th Floor
New York, NY 10022
USA
(ii) If to Source to:
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza
37th Floor
New York, NY 10005
Attn: President
with a copy to:
J. Christopher Jackson
General Counsel
c/o Hansberger Global Investors, Inc.
515 East Las Olas Blvd., Suite 1300
Fort Lauderdale, FL 33301."
(h) Section 13(c) of the OSD Agreement is hereby amended in its entirety as
follows:
"(c) Survival of Certain Provisions. Notwithstanding the termination of
this Agreement, those provisions of this Agreement that by their nature are
intended to survive such termination shall survive, including without
limitation, the provisions of Sections 5(c), 8, 9, 10 and 11.
5
<PAGE> 6
(i) Exhibits C and G to the OSD Agreement is hereby amended in its entirety
by replacing same with Exhibits C and G attached to this Agreement.
SECTION 2. AMENDMENTS TO DFD AGREEMENT
(a) Section 5(a) of the DFD Agreement is hereby amended in its entirety as
follows:
"(a) Term. The initial term of this Agreement shall commence ninety-one
(91) days subsequent to notice given by Source to Telerate Systems Incorporated
("Telerate") pursuant to that certain agreement dated as of January 1, 1992,
between Source and Telerate (the "Telerate Agreement") (the "Commencement Date")
and shall terminate on December 31, 2000 (the "Initial Term"). The term of this
Agreement shall automatically be extended for one or more periods of three years
(a "Renewal Term") unless either party sends to the other written notice of
election not to renew at least ninety (90) days prior to the end of the Initial
Term, or any Renewal Term, as the case may be."
(b) Section 6 of the DFD Agreement shall be read to incorporate the
sections of the OSD Agreement referenced therein as amended by this
Agreement.
(c) Section 7 of the DFD Agreement is hereby amended in its entirety as
follows:
"7. Survival. Notwithstanding the termination of this Agreement, those
provisions of this Agreement that by their nature are intended to survive such
termination and shall survive, including without limitation the provisions of
Sections 4 and 5 of this Agreement and Sections 5(c), 9 and 10 of the Optional
Service Delivery Agreement incorporated by reference pursuant to Section 6 of
this Agreement."
SECTION 3. NO OTHER MODIFICATION, Except as as set forth in Sections 1 and 2
hereof, the OSD Agreement and the DFD Agreement shall remain in full force and
effect without amendment, modification waiver. Execution and delivery hereof by
the parties hereto shall not preclude the exercise by such parties of any rights
under the OSD Agreement or the DFD Agreement (as amended by Sections 1 and 2
hereof).
SECTION 4. GOVERNING LAW. This Amendment shall be governed by, and construed
in accordance with, the internal laws of the State of New York, U.S.A.
IN WITNESS WHEREOF, the undersigned parties have executed this Amendment as of
the date set forth below, and, except as otherwise set forth herein, the terms
and conditions of this Amendment are deemed effective as of the Effective Date.
6
<PAGE> 7
McCARTHY, CRISANTI & MAFFEI, REUTERS LIMITED, an UK registered
INC., a New York corporation company
By: /s/ David D. Nixon By: /s/ Norman O. Clarke
---------------------------- --------------------------------
David D. Nixon Name: Norman O. Clarke
Title: Date: 9 July 1997
The "Execution Date" is July 9, 1997
7
<PAGE> 8
Exhibit A
Source Services
CurrencyWatch Provides fundamental
and technical
analysis of global
currency markets.
YieldWatch Provides fundamental
and technical
analysis of European
and Asia Pacific
fixed income bond and
futures markets.
MoneyWatch Provides fundamental
and technical
analysis of US
Treasury, Agency and
money markets.
CorporateWatch Provides information
on corporate
securities, private
placements, equities
and mortgage and
derivative product
new issues.
FX OptionWatch Provides fundamental
and technical
analysis of global
currency options
markets.
TradeWatch Provides trading
strategies on fixed
income, currency and
other financial
markets.
KinriWatch Provides fundamental
and technical
analysis of Japanese
government bond and
money markets in
Japanese.
8
<PAGE> 9
Exhibit B
The following subscribers should be restricted from access to the Source
Services pursuant to Section 1(a)(i) of the Agreement:
Munifacts/American Banker Telekurs
Money Market Services Int'l. Stone, McCarthy
Ried, Thunberg Indepth Data
Elliot Wave International Thomson Financial Service
Data Resources Inc. AutEx
Wrightson & Co. CDA Investment Technologies
Evans Economics CORIS
Froehlich FIRST CALL
Griggs & Santow Investext
Dunn & Bradstreet GovPx
Predex Data Broadcasting Corp.
Cates Technical Data (All Services)
Bank Valuation PC Trader
Chronometrics I.F.R. Vigil
Capital Techniques Charter Media Inc.
Dow Jones Markets BradyNet
Market Data Corporation Int'l. Financing Review
Market News Service ILX
Muller Data Bond World
Money Line Corporation Moody's
Standard & Poor's McGraw Hill
Dow Jones News Service Sheshunoff
Duff & Phelps Primark Corp.
Olson Group IPO Financial
Investment Dealers Digest Commscan
(I.D.D. Information Services) AMG Data Services
Securities Data Corp. IDEA
RS Investments Dalcomp Inc.
MRL Publishing Maria Ramirez Capital Consultants
Capital Management Sciences SDC Publishing
J.J. Kenney & Company Institutional Investor
9
<PAGE> 10
Bloomberg Internet Securities
Bridge Decision Economics
In addition to the above list, only Authorized Distributors should be allowed
access when exhibiting at conferences.
10
<PAGE> 11
Exhibit C
Reuters Equipment and Services
------------------------------
Pursuant to the terms and conditions of Section 2(a)(1) of the Agreement, the
equipment to be provided by Reuters to Source at Source's various locations set
forth below (and such other Source locations as from time to time agreed to by
Source and Reuters) shall include the following:
<TABLE>
<CAPTION>
TOKYO QUANTITY ADDITIONAL FUNCTIONALITY
- ----- -------- ------------------------
<S> <C> <C>
RT Power Plus Data Network 2 With editing capabilities, to
be used as back-up for the
primary contribution
mechanism.
Reuters Terminal Data Network 1
RT Slave Screen 2
Marketlink Simulator Equipment Kit PC 1
Treasury 2000 Location Service 1
Treasury News 2000 Location Service 1
Treasury 2000 Data Access 3
Futures 2000 Data Access 2
Treasury News 2000 Data Access 3
Exclusive Line 2
NEW YORK QUANTITY
- -------- --------
IDN Network Access Fee 1
News IDN Network Access Fee 1
Communication Charge 1
Printer Access 2
Screen Printer 1
Slave Screen 3
Treasury News 2
</TABLE>
11
<PAGE> 12
<TABLE>
<S> <C> <C>
Reuters Terminal Treasury 2000 2 With editing capabilities, to
be used as back-up for the
primary contribution
mechanism.
Excel Access 1
Reuters Terminal Hardware 2
</TABLE>
1 SelectfeedPlus and associated communications solely for the purpose of Source
development.
1 primary electronic means of delivering Source's information to Reuters in a
timely and reliable manner to include but not limited to two IDN links with the
necessary equipment and leased lines with dial-up at Source primary site as well
as a disaster recovery site to be designated by Source.
12
<PAGE> 1
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
Exhibit 10.24
OPTIONAL SERVICE DELIVERY
AGREEMENT
THIS AGREEMENT, dated as of July 1, 1993 between KNIGHT-RIDDER
FINANCIAL, INC., a Delaware Corporation with offices at 75 Wall Street, 23rd
Floor, New York, New York 10005 ("KRF"), and McCARTHY, CRISANTI & MAFFEI, INC.,
a New York corporation with offices at 71 Broadway, New York, New York 10006
("Source").
WHEREAS, KRF prepares, operates and transmits financial data to
subscribers by means of on-line computer terminals ("NETWORK"); and
WHEREAS, KRF markets and sells information and services under various
names, trademarks and servicemarks, including, but not limited to: MoneyCenter,
MoneyCenter for Windows, TradeCenter, Digital Data Feed, Digital Page Server,
Commodity Center and Profit Center (the "KRF Services"); and
WHEREAS, Source publishes the services listed and described in Exhibit
A to this Agreement (the "Source Services"); and
WHEREAS, Sources currently distributes all or some of the Source
Services via Telerate Systems Incorporated and Quotron; and
WHEREAS, Source desires to provide the Source Services through the
NETWORK to current and potential subscribers of KRF as well as via direct feed
to third parties.
NOW, THEREFORE the parties, in consideration of the premises and mutual
covenants contained herein, agree as follows:
<PAGE> 2
1.Distributor; Non-Exclusivity; New Source Services.
(a) Distributor.
(i) Appointment. Source hereby appoints KRF, and KRF hereby
agrees to serve as, a non-exclusive distributor of Source for the term as set
forth in Section 10 for the limited purpose of marketing and distributing the
Source Services worldwide to KRF Subscribers, as defined below, who also
subscribe to the Source Services ("Source Subscribers"), all in accordance with
the terms and conditions hereof. "Subscribers" shall mean those persons or
entities authorized by KRF subject to the terms and conditions hereof, to access
all or part of the information and services via NETWORK contained in the KRF
Services through which one or more of the Source Services are made available.
Notwithstanding the foregoing, KRF shall not deliver the Source Services to
those persons set forth in Exhibit B, as such exhibit is modified from time to
time, with any modifications being implemented by KRF as soon as possible, but
in no event later than thirty (30) days from the giving of notice.
(ii) No Implied Duties. The parties agree that KRF's duties as
distributor of Source shall be limited to those expressly set forth in this
Agreement. KRF shall not be deemed to be a fiduciary of Source and shall not
have any implied duties that might otherwise be imposed upon a distributor of
Source.
(b) Non-Exclusivity. The parties acknowledge and agree that the
appointment of KRF as distributor of Source for the purpose of distributing the
Source Services shall be on a non-exclusive basis. Source retains the right to
2
<PAGE> 3
distribute itself or permit other third parties to distribute one or more of the
Source Services or services substantially similar thereto.
(c) New Source Services. Source hereby grants to KRF an option to
distribute any electronically distributed information service hereafter
developed by Source that is not listed in Exhibit A or that is not substantially
similar to any service listed therein (a "New Source Service"). If KRF elects to
exercise its option under this subsection (c) with respect to a New Source
Service by giving Source written notice within twenty-one (21) days of receipt
of notice from Source of said New Source Service, such New Source Service shall
fall within the definition of Source Service under this Agreement, and the
distribution of such New Source Service shall be subject to the terms and
conditions set forth in this Agreement.
2. Inputting; Direct Feed; Accessibility; Display; Accuracy.
(a) Inputting and Use of Services.
(i) Generally. Source shall input the Source Services into the
NETWORK by means of a KRF protocol as set forth in Exhibit C. KRF shall provide
Source with subscriptions to the "basic" portion of the KRF Services through the
terminals listed in Exhibit C for no charge. In addition, KRF, upon the
execution of this Agreement, will order and install at each Source U.S. and
foreign location (including, but not by way of limitation, New York, London,
Tokyo, Singapore and Fintrend S.A.'s location in Paris) any and all of the
necessary equipment including, but not by way of limitation, the equipment as
set forth on Exhibit C required by Source to deliver the Source Services
pursuant to this Agreement at no cost to Source.
3
<PAGE> 4
KRF agrees to provide such additional equipment and upgrades to existing
equipment to Source locations from time to time during the terms of this
Agreement and any extensions thereof, requested by Source for the purpose of
delivering the Source Services pursuant to this Agreement at no cost to Source.
Source shall be responsible for any costs associated with cabling or other
modifications necessary within its locations. Source shall be responsible for
all local communications costs between Source and KRF locations except in
London, New York and Tokyo as set forth in Exhibit C. KRF shall also provide one
subscription to the KRDF Data Feed on the terms described herein and in Exhibit
C. Source may access at no cost all of the basic services information provided
by KRF, including, but not limited to that information available through KRF
Services and the "optional" services available through such KRF Services with
the written approval of KRF and/or the providers of such optional services. Any
Exchange fees or optional services fees are the responsibility of Source.
(ii) Direct Feed Agreement. KRF acknowledges that Source
anticipates providing the Source Services on a direct fees basis to certain of
Source's subscribers. Together with the execution of this Agreement, KRF and
Source agree to enter into a separate agreement, a copy of which is attached
hereto as Exhibit D, pursuant to which KRF will provide Source with a direct
feed to any of Source's subscribers, as Source form time to time designates. In
such event, Source Subscriber shall enter into a separate agreement with KRF
pursuant to which KRF will provide Source Subscribers a direct feed line. KRF
shall bill Source Subscribers who are not
4
<PAGE> 5
then-current KRF customers, no more than one hundred and twenty five percent
(125%) of KRF's fully allocated communication costs for providing a direct feed
line to Source Subscribers (the "Direct Feed Communication Charge").
(iii) Use of Source's Proprietary Services. Notwithstanding
any provision of subsection (i) that may be to the contrary, KRF, subject to the
prior written consent of Source, shall have the right to access the Source
Services; provided that Source shall have the right to deny KRF access to any
Source Service in circumstances where KRF uses such service in a way that
competes with the sale of such service by Source or any of its affiliates. Prior
to exercising its right under this subsection (iii) Source agrees to notify KRF
in writing at least thirty (30) days prior to the desired termination date and
state the action by KRF that gave rise to the termination right. If KRF ceases
such action prior to the desired termination date, Source may not deny access to
the Source Services on the basis of such cured action. The rights specified in
this subsection (iii) shall be in addition to, and not in limitation of, any
other remedies the parties may have.
(b) Accessibility of Source Services. KRF will attempt to make the
Source Services available through the various KRF Services whenever KRF
determines it is commercially practical to do so. Distribution by KRF of a
Source Service that is first made available through a KRF Service after the date
hereof pursuant to the terms of this subscription (b) shall be subject to the
terms of this Agreement.
(c) Accuracy of Information. Source shall use commercially reasonable
efforts to (i) insure that the information in the Source Services is accurate,
and
5
<PAGE> 6
(ii) correct inaccuracies, errors or defects in such information promptly after
discovery. Source shall monitor such information as it is distributed through
the KRF Services and promptly correct any inaccuracies, errors or defects
therein.
3. Promotion and Marketing.
(a) Efforts and Materials.
(i) Marketing. Source and KRF shall exercise commercially
reasonable efforts to market and promote subscriptions to the Source Services to
be accessed through the NETWORK. From time to time during the term of this
Agreement, but no less frequently than once a calendar quarter, KRF shall
profile or otherwise promote the Source Services on the NETWORK or in
promotional materials.
(ii) Materials. Neither party shall publish or distribute any
advertising or promotional materials regarding the availability of the Source
Services through the NETWORK without the prior written consent of the other,
which consent shall not be unreasonably withheld. Materials being sent to the
other party for approval pursuant to this subsection (a) shall be directed to
the person(s) designated in Exhibit E hereto.
(b) Subscriber List. To facilitate Source's promotional efforts, KRF
shall provide to Source the following information and reports: (i) on a monthly
basis the list of KRF Subscribers located in the United States; (ii) on a
monthly basis, the list of those persons and entities located in the United
States who became new KRF Subscribers during such month; (iii) from time to
time, but not less frequently than
6
<PAGE> 7
quarterly, the list of new and existing KRF Subscribers located outside the
United States promptly after it receives at headquarters the information
necessary to develop such list; (iv) upon request of MCM, information KRF has
with regard to renewal dates for subscriptions to the Source Services and (v) on
a monthly basis, access reports which shall, among other things, set forth those
persons taking the Source Services on a trial basis. KRF represents and warrants
that all reports shall be accurate and complete and correctly reflect the number
of subscriptions and those having access to the Source Services.
(c) Authorized Distributors. Source acknowledges that KRF utilizes
authorized distributors, which may or may not be affiliated with KRF, to
distribute the KRF Services ("Authorized Distributors"). Source agrees to allow
the Source Services to be distributed by the Authorized Distributors subject to
the terms and conditions hereof (except where prohibited by law or limited by
local business practices), and KRF agrees to use commercially reasonable efforts
to persuade the Authorized Distributors to distribute the Source Services. As
between KRF and Source, KRF will use all commercially reasonable means of
controlling the Authorized Distributors with regard to the distribution of the
Source Services.
(d) Demonstration Periods; Trade Shows. KRF agrees to promote and
market the Source Services, subject to the terms contained in the last sentence
of Section 1(a)(i), by making one or more of the Source Services available free
of charge to KRF Subscribers for up to thirty (30) days upon the request of
Source. The preceding provision shall not be deemed to increase KRF's
obligations to market and
7
<PAGE> 8
promote subscriptions to the Source Services set forth in subsection (a) of this
Section 3. In addition, KRF agrees to provide terminals at no cost to Source for
up to twelve (12) trade show exhibits annually in which Source participates.
Source will provide KRF sixty (60) days prior notice of the date of said trade
shows.
4. Fees; Service Agreement.
(a) Billing; Fees. Source shall bill Source Subscribers in the United
States on a regular basis for subscriptions to the Source Services. KRF shall
bill Source Subscribers outside the United States, on a regular basis for
subscriptions to all Source Services. Fees for subscriptions to the Source
Services shall be determined by Source in its respective geographic regions in
its sole discretion. Source agrees that it will make changes in published
subscription fees to the Source Services only once per year, which shall, except
as set forth below, be effective anywhere other than Japan on January 1 and in
Japan on April 1, and will give KRF no less than one hundred twenty (120) days'
prior written notice of any such change. Notwithstanding the foregoing, all new
Source Subscribers who become Source Subscribers within said one hundred twenty
(120) day pre-effective period, shall be charged the new subscription fees. KRF
covenants that it will inform all Source Subscribers of the new fees and shall
implement the new fee schedule at the times provided for herein. Source agrees
that it will not charge a Source Subscriber any more money for its subscription
to the Source Services delivered pursuant to this Agreement than it will charge
said Source Subscriber for the Source Services received by other third party
vendors. The parties agree that Source may require KRF to terminate distribution
of
8
<PAGE> 9
the Source Services to Source Subscribers that are severely in arrears in paying
their subscription fees. Source Subscribers shall be deemed severely in arrears
for purposes hereof when they become six months behind in payments. The parties
agree that the party responsible for billing shall comply with all applicable
Country, State and local laws and regulations, including, but not limited to the
taxing laws and regulations.
(b) KRF Service Agreements. In those jurisdictions where KRF is billing
Source Subscribers for their use of the Source Services, KRF shall provide the
applicable KRF Service Agreement to each subscriber to the Source Services and
shall not grant any subscriber access to any Source Service (except on a trial
basis) until it has obtained an executed copy of the applicable KRF Service
Agreement from such subscriber. KRF Service Agreements provided to Source
Subscribers shall contain a representation and warranty that the Source
Subscriber is an institutional investor, financial institution, broker or dealer
or similar institution and shall further provide that Source Subscribers shall
not store, modify, reproduce in any form, redisseminate, republish, re-present
or re-distribute Source Services without the prior written consent of Source
which consent shall be at Source's sole discretion and shall contain such other
provisions as reasonably requested by Source. Copies of representative KRF
Service Agreements currently being used are attached as Exhibit F. KRF shall
provide Source with a copy of material amendments to said KRF Service Agreements
within ten (10) days after such amendments are implemented. Source shall not
make any statement regarding any KRF Service that is contradictory or
inconsistent with
9
<PAGE> 10
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
the then-current version of the applicable KRF Service Agreement. KRF agrees to
allow Source's marketing representatives to use and present to potential and
existing subscribers the KRF Service Agreement and to require KRF's marketing
and sale representatives and those of its Authorized Distributors to coordinate
all marketing and sales efforts with Source's marketing representatives and
cooperate with Source's marketing representatives in presenting to potential and
existing subscribers the Source Services.
(c) Source's Service Agreement. In jurisdictions in which Source is
billing Source Subscribers for their use of the Source Services, Source may
provide the Source Services via a written or oral service Agreement. A copy of
the written Service Agreement that Source initially will use in jurisdictions
where it will bill Source Subscribers for their use of the Source Services and a
copy of Source's price lists currently in effect are attached as Exhibit G.
Source will notify KRF in writing or by facsimile of all new Source Subscribers
in jurisdictions in which Source is billing Source Subscribers.
5. Charges/Fees.
(a) KRF Fee. ********************************************************
******************************************************************************
****************************************************************************.
(b) Sales Commission and Fee. KRF and its Authorized Distributors shall
not be entitled to any fee or commission for subscriptions to a Source Service
sold to a KRF Subscriber by a salesperson working for KRF or an Authorized
Distributor
10
<PAGE> 11
outside the Americas Region unless Source deems the payment of a fee or
commission appropriate.
(c) Payment. Within sixty (60) days after the end of each calendar
quarter falling fully or partially within the terms of this Agreement, KRF shall
deliver to Source a report showing the Subscription receipts for such quarter,
and the amounts due Source, and, except as set forth in the following sentence,
a check payable to Source for the gross amount of said subscription receipts.
For those KRF Subscribers which KRF bills for Source Services outside the United
States, KRF will remit payment within thirty (30) days of receipt of payment
from said KRF Subscribers. All payments made hereunder shall be made in U.S.
Dollars.
(d) Adjustments. Source acknowledges that KRF may make initial
calculations and payments of amounts due Source based on amounts billed to
Source Subscribers in respect of Source Services, and accordingly there may be
post payment adjustments to amounts remitted by KRF to Source pursuant to
subsection 5(c) hereof to reflect (i) amounts KRF billed in error for credits
KRF gave in the ordinary course of business to Source Subscribers, and (ii)
amounts KRF was unable to collect from Source Subscribers.
(e) Records. KRF shall maintain complete and accurate books and records
(collectively, the "Records") with respect to all amounts it billed to Source
Subscribers in respect of subscriptions to the Source Services. Source shall
have the right upon at least thirty (30) days' prior written notice to inspect
the Records of KRF during normal business hours no more frequently than twice
per year. All information
11
<PAGE> 12
gained by Source from such inspection will be kept in strict confidence and will
be used solely for the purpose of verifying the accuracy of the commutation of
the amounts due hereunder.
6. Copyright.
Source represents and warrants to KRF that Source or its licensors to
the best of its and their knowledge own the Source Services and the copyrights
thereto, and that Source has the right to authorize KRF to distribute the Source
Services under this Agreement. KRF agrees it is not acquiring under this
Agreement any proprietary interest in the Source Services and agrees not to
challenge the claim of Source or its licensors to the ownership of the Source
Services and the measures requested by Source to make the copyright claim of
Source or its licensors known to Source Subscribers and to assist Source, at
Source's expense, in Source's defense or prosecution of any copyright
infringement claim.
7. Maintenance and Circumstances Beyond Parties' Control.
Subject to the provisions set forth in Section 8, neither KRF nor
Source will be deemed in default or liable hereunder if, as a result of any
cause or circumstances beyond such party's reasonable control or any repair work
or routine maintenance, there occurs a delay in or failure or interruption of
(i) service to any Source Subscriber, or (ii) transmission of the Source
Services. So long as any such failure continues, the party responsible for such
service or transmission will use its reasonable best efforts to eliminate such
conditions and will keep the other party
12
<PAGE> 13
fully informed at all times concerning the matters causing such delay or default
and the prospects for their termination.
8. Indemnification.
(a) By Source. In the event any claim is brought by a third party
against KRF that relates to, arises out of or based upon the Source Services or
the failure of Source to comply with any law, rule or regulation, KRF shall
promptly notify Source, and Source shall defend such claim at Source's expense
and under Source's control. Source shall indemnify and hold harmless KRF against
any judgment, liability, loss, cost or damage (including litigation costs and
reasonable attorneys' fees) arising from or related to such claim whether or not
such claim is successful. KRF shall have the right, at its expense, to
participate in the defense of such claim through counsel of its own choosing;
provided, however, that Source shall not be required to pay any settlement
amount that it has not approved in advance.
(b) By KRF. In the event any claim is brought by any third party
against Source that relates to, arises out of or is based upon any error, delay,
interruption or other event cause by KRF or its Authorized Distributors in
transmitting the Source Services, Source shall promptly notify KRF, and KRF
shall defend such claim at KRF's expense and under KRF's control. KRF shall
indemnify and hold harmless Source against any judgment, liability, loss, cost
or damage (including litigation costs and reasonable attorneys' fees) arising
from or related to such claim, whether or not such claim is successful. Source
shall have the right, at its expense, to participate in the defense of such
claim through counsel of its own choosing; provided, however,
13
<PAGE> 14
that KRF shall not be required to pay any settlement amount that it has not
approved in advance.
9. Representations and Warranties of the Parties.
Each party hereby represents, covenants and warrants to the other as
follows:
(i) It has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and
to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of such
party, enforceable in accordance with its terms and
conditions.
(ii) That the parties will comply with all codes, regulations and
laws applicable to the provision of the services under this
Agreement, and has obtained or will obtain all necessary
permits, licenses and other authorizations necessary for its
performance of services under this Agreement.
10. Confidentiality.
(a) The following materials and information and all copies thereof of
whatever nature are designated as "confidential" and are the proprietary
information and trade secrets of KRF:
(i) the computer software possessed by KRF and all
source documents relating to such computer software;
(ii) proprietary business information of KRF
(including, without limitation, the names and addresses of Subscribers,
information
14
<PAGE> 15
providers and suppliers), and business information that KRF does not
generally make available to the public;
(iii) the methods, means, personnel, equipment and
software by and with which KRF provides the NETWORK; and
(iv) any other information that KRF reasonably
designates, by notice in writing delivered to Source, as being
confidential or a trade secret.
(b) The following materials and information and all copies thereof of
whatever nature are designated as "confidential" and are the proprietary
information and trade secrets of Source:
(i) proprietary business information of Source, and
business information that Source does not generally make available to
the public; and
(ii) any other information that Source reasonably
designates, by notice in writing delivered to KRF, as being
confidential or a trade secret.
(c) All such proprietary or confidential information of KRF or Source
shall be kept secret by the Source or KRF, as the case may be, to the degree it
keeps secret its own confidential or proprietary information. Such information
belonging to either party shall not be disclosed by the other party to its
employees except on a need-to-know basis or to agents or contractors of such
other party, but may be disclosed by such other party to state or federal
agencies, authorities or courts upon their order or request provided prompt
notice of such order or request is given by such other party to the party to
which such information belongs, if such notice is legally permitted. Upon
termination of this Agreement, all copies of such
15
<PAGE> 16
information shall be returned to the party to which such information belongs and
no copies thereof shall remain in the possession, custody or control of such
other party.
(d) No information that would otherwise be proprietary or confidential
for the purposes of this Agreement pursuant to subsections (a) or (b) above
shall be subject to the restrictions on disclosure imposed by this section in
the vent and to the extent that (i) such information is in, or becomes part of,
the public domain otherwise than through the fault of the party to which such
information does not belong, (ii) such information was known to such party prior
to the execution of this Agreement, or (ii) such information was revealed to
such party by a third party.
11. Term; Termination.
(a) Term. The initial term of this Agreement shall commence ninety-one
(91) days subsequent to notice given by Source to Telerate Systems Incorporated
("Telerate") of Source's intent to distribute the Source Services through other
network vendors pursuant to that certain agreement dated as of January 1, 1992,
between Source and Telerate (the "Telerate Agreement") and shall terminate at
the end of the seventh year (the "Initial Term"). Notwithstanding the foregoing,
Source may terminate this Agreement prior to its commencement date in the event
Source, in its sole discretion, retracts said notice to Telerate under the
Telerate Agreement. Furthermore, this Agreement shall terminate on September 30,
1993, in the event that Source has not provided notice to Telerate of its intent
to distribute the Source Services through other network vendors on or before
September 30, 1993. The term of this Agreement shall automatically be extended
for one or more periods of one
16
<PAGE> 17
year (a "Renewal Term"), unless either party sends to the other written notice
of its election not to renew at least ninety (90) days prior to the end of the
initial Term, or any Renewal Term, as the case may be.
(b) Default. If either party shall default in the performance of or
compliance with any provision contained in this Agreement and such default shall
not have been cured within thirty (30) days after written notice thereof shall
have been given to the appropriate party, the party giving such notice may then
give further written notice to such other party terminating this Agreement, in
which event this Agreement and any other rights granted hereunder shall
terminate on the date specified in such further notice. The parties agree that
any breach of a representation or warranty contained in this Agreement shall
result in its immediate termination. KRF agrees, in the vent of a breach by it
of any of its obligations under this Agreement, Source may seek temporary or
permanent injunctive relief, without the necessity of proving actual damages or
the posting of a bond, as well as other equitable relief, and will be entitled
to commence an action for any such relief in any court of competent
jurisdiction.
(c) Insolvency. In the event that either party hereto shall be adjudged
insolvent or bankrupt, or upon the institution of any proceedings by it seeking
relief, reorganization or arrangement under any laws relating to insolvency, or
if an involuntary petition in bankruptcy is filed against such party and said
petition is not discharged within sixty (60) days after such filing, or upon any
assignment for the benefit of its creditors, or upon the appointment of a
receiver, liquidator or trustee of
17
<PAGE> 18
any of its assets, or upon the liquidation, dissolution or winding up of its
business (an "Event of Bankruptcy"), then the party involved in any such Event
of Bankruptcy shall immediately give notice thereof to the other party, and the
other party at its option may terminate this Agreement upon written notice.
12. Miscellaneous.
(a) Notices. All notices hereunder (except as provided for in Section
4(c) hereof) shall be in writing and shall be delivered in person, or sent by
overnight courier service, to the address of the party set forth below, or to
such other addresses as may be stipulated in writing by the parties pursuant
hereto. Unless otherwise provided, notice shall be effective on the date it is
officially recorded as delivered.
(i) If to KRF, to:
Knight-Ridder Financial Inc.
75 Wall Street, 23rd Floor
New York, New York 10005
Attention: President
with a copy to:
Knight-Ridder Inc.
One Herald Plaza
Miami, Florida 38132-1693
Ms. Christina Mendoza, Associate General Counsel
(ii) If to Source, to:
McCarthy, Crisanti & Maffei, Inc.
71 Broadway
New York, NY 10005
Attention: President
with a copy to:
The Van Kampen Merritt Companies, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: General Counsel
18
<PAGE> 19
(b) Amendment; Assignment. This Agreement may not be amended except by
written instrument executed by Source and KRF. Neither party may assign this
Agreement to any third party, other than an affiliate, without the prior written
consent of the other. Any assignment of this Agreement to an affiliate shall not
relieve the assigning party of any of its obligations or liabilities under this
Agreement.
(c) Survival of Certain Provisions. Notwithstanding the termination of
this Agreement, those provisions of this Agreement that by their nature are
intended to survive such termination shall survive, including without
limitation, the provisions of Sections 8, 9, 10 and 11.
(d) Consequential Damages. Except pursuant to Section 8, neither party
shall be liable for any consequential, indirect, incidental or special damages,
even if advised of the possibility of such damages.
(e) Entire Agreement. This Agreement contains the entire understanding
of the parties on the subject hereof and terminates and supersedes all previous
verbal and written agreements on such subject.
(f) Relationship of the Parties. The parties agree that KRF will act as
an independent contractor in the performance of its duties under this Agreement.
This Agreement does not and shall not be deemed to constitute a partnership or
joint venture between the parties and neither party nor any of its directors,
officers, employees or agents shall, by virtue of the performance of their
obligations under this Agreement, be deemed to be an employee of the other. KRF
has no authority to
19
<PAGE> 20
make any representations on behalf of or to bind Source in connection with the
provision of Source Services in the course of performing any of its obligations
under this Agreement or otherwise.
(g) "Affiliate" Defined. For purposes of this Agreement, the term
"affiliate" and its derivatives shall mean, with respect to any individual or
entity directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with such individual or entity. The term
"control" and its derivatives, as used in the immediately preceding sentence,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of any entity, whether through the
ownership of voting securities, by contact or otherwise.
(h) Severability. In the event any provision of this Agreement or
application hereof to any party or in any circumstances shall be determined to
be invalid, unlawful, or unenforceable to any extent, the remainder of this
Agreement, and the application of any provision to parties or circumstances
other than those as to which it is determined to be unlawful, invalid or
unenforceable, shall not be affected thereby, and each remaining provision of
this Agreement shall continue to be valid and may be enforced to the fullest
extent permitted by law.
(i) Non-Waiver. No delay or failure by either party in exercising any
right under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right.
20
<PAGE> 21
(j) Captions. The captions used herein are for convenience only, and
constitute no part of this Agreement.
(k) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to the
choice of law principles thereof.
IN WITNESS WHEREOF, the undersigned parties have duly executed this
Agreement as of the 1st day of July, 1993, to be effective as set forth in
Section 11(a) hereof.
McCARTHY, CRISANTI & MAFFEI, INC. KNIGHT-RIDDER FINANCIAL, INC.
By: /s/ Lindley B. Richert By: /s/ Paul T. Tucker
----------------------------- -------------------------------
Name: LINDLEY B. RICHERT Name: DR. PAUL T. TUCKER
Title: PRESIDENT Title: PRESIDENT
21
<PAGE> 22
Exhibit A
Source Services
<TABLE>
<CAPTION>
Name Description
- ---- -----------
<S> <C>
CorporateWatch* Principally provides rapid and
comprehensive information on corporate
securities, private placements, equities
and mortgage and derivative product new
issues.
CurrencyWatch* A foreign exchange market forecasting
and analysis system combining live 24
hour fundamental and technical analysis
presented as both commentary and live
technical trading pages, together with
comprehensive live EMS analysis.
MoneyWatch* Provides 24 hour fundamental and
technical analysis of US Treasury,
Agency and money market securities. The
service combines live commentary and
technical trading analysis with detailed
forecasts and analysis of the US
economy.
YieldWatch* Addresses European and Asia Pacific
government bonds/financial futures
markets including the U.S. T-bond.
Information is presented as live
commentary, technical trading blotters
and spread analysis, together with
regional market briefings.
</TABLE>
*Denotes a registered trademark of McCarthy, Crisanti & Maffei, Inc.
<PAGE> 23
Exhibit B
The following subscribers should be restricted from access to the Source
Services pursuant to Section 1(a)(i) of the Agreement:
<TABLE>
<CAPTION>
<S> <C>
Munifacts/American Banker Thomson Financial Networks
Trepp & Company Alert/OASYS
Money Market Services AutEx
Ried, Thunberg CDA Investment Technologies
Elliot Wave International CORIS
Data Resources Inc. FIRST-CALL
Wrightson & Co. Forex Watch
Evans Economics Forex Chartist
Froehlich Technical SystemGriggs & Santow
Investext
Dunn & Bradstreet Securities Data Co.
Predex Wunsch Auction Systems
Cates Asset Backed Securities Group
Bank Valuation Securities Information Center
Chronometrics Software Division
Capital Techniques Technical Data (All Services)
Telerate Corporate Market Service Valornform
Eurobond Service I.F.R. JapanWatch
Elders Applied Research I.F.R. Vigil
R.A. Froehlich I.F.R. CorporateEye
Business Week I.F.R. LanAm
Market Data Corporation I.F.R. Int'l. Financing Review
Market News Service Atlas
Vigil Bond Data
Muller Data MoneyData
Pensions & Investment Age ILX
Money Line Corporation Bond World
Standard & Poor's Moody's
Dow Jones News Service MGraw Hill
Duff & Phelps FX 24
Olson Group Gannett
Investment Dealers Digest Fitch
(I.D.D. Information Services) Sheshunoff
Securities Data Corp. Capital Management
RS Investments Prechter's Elliot Wave International
MRL Publishing Johnson Smick International
Capital Management IPO Financial
MBSIS Commscan
J.J. Kenney & Company AMG Data Services
Mortgage Data MortgageData
Bloomberg IDEA
O'Connor, Paul & Phillips Dalcomp Inc.
Telekurs Maria Ramirez Capital Consultants
Stone, McCarthy SDC Publishing
Institutional Investor Euromoneys
</TABLE>
In addition to the above list, only Authorized Distributors should be allowed
access when exhibiting at conferences.
<PAGE> 24
Exhibit C
"Non-Chargeable" KRF Equipment and Services
I. Equipment to be supplied by KRF to Source for use by Source at Source's
locations including but not limited to:
(i) One KRDF data feed at Source's site in New York.
(ii) Money Center for Windows, one server and five slaves (one each
product and one for MIS) in New York.
(iii) Money Center for Windows, one server and one slave at each
overseas site and disaster recovery site.
(iv) One "Market Maker" (DES) terminal in each Source site.
II. Electronic means of delivering Source's information to KRF in a timely
and reliable manner to include but not limited to two KRFI lines with
the necessary equipment and leased lines with dial back-up at Source's
primary site as well as at disaster recovery site.
III. Facilities for linkage between Source's New York office and each of
Source's overseas offices located in a city that make up KRF's backbone
network; namely, Kansas City, New York, Chicago, London, Singapore,
Tokyo, Hong Kong and Sydney. Source is responsible for local
communications costs between Source locations and KRF locations except
in New York, London and Tokyo where KRF will assume responsibility for
these costs. Source is not responsible for any costs related to KRF's
backbone network.
<PAGE> 25
Exhibit D
Direct Feed Delivery Agreement
<PAGE> 26
DIRECT FEED DELIVERY AGREEMENT
THIS AGREEMENT, dated as of __________________, 1993 between KNIGHT RIDDER
FINANCIAL, INC., a _____________ Corporation with offices at 75 Wall Street,
23rd Floor, New York, New York 10005 ("KRF") and McCARTHY, CRISANTI & MAFFEI,
INC., a New York Corporation with offices at 71 Broadway, New York, New York
10006 ("Source").
WHEREAS, Source publishes the services listed and described in Exhibit A to this
Agreement (the "Source Services"); and
WHEREAS, KRF and Source have entered into an Optional Service Delivery Agreement
dated as of the date hereof ("Optional Service Delivery Agreement"); and
WHEREAS, Source desires to make the Source Services available to subscriber to
the Source Services ("Source Subscribers") via direct feed line; and
WHEREAS, KRF is willing to provide Source Subscribers with a direct feed line to
deliver the Source Services directly to certain Source Subscribers.
NOW THEREFORE, the parties in consideration of the premises and mutual covenants
contained herein agree as follows:
1. Provision of Direct Feed Line.
Upon prior written notice to KRF, KRF agrees to provide to Source
Subscribers, a direct feed line for the direct delivery of Source
Services to Source Subscribers. KRF shall enter into a separate
agreement with Source Subscriber for the provision of the direct feed
line. A copy of KRF standard direct feed line agreement is attached as
Exhibit B. Further, with respect to non-U.S. Source Subscribers, KRF
agrees to enter into a separate KRF Service Agreement in the form of
Exhibit F to, and which complies with the terms and conditions set
forth in, Section 4(b) of the Optional Service Delivery
<PAGE> 27
Agreement with said non-U.S. Source Subscriber pursuant to which KRF
agrees to provide the Source Services. KRF shall bill Source
Subscribers who are not then-current KRF customers, obtaining a direct
feed line pursuant to this section, a fee equal to no more than one
hundred twenty-five percent (125%) of KRF's fully allocated
communication costs for providing a direct feed line to Source
Subscribers (the "Direct Feed Communication Charge").
2. Installation. KRF agrees that within thirty (30) days or as quickly as
reasonably possible, subject to communication or installation delays not under
KRF's control, of receipt by it of notice from Source that it will install a
direct feed line to those Source Subscribers as set forth in Section 1 hereof.
KRF further agrees to provide to Source information relating to systems
configuration of each Source Subscriber for whom KRF provides a direct feed line
pursuant to this Agreement.
3. Representations and Warranties of KRF. KRF hereby represents, covenants and
warrants to Source as follows:
(i) That KRF is a corporation duly organized, validly
existing and in good standing under the laws of
Delaware.
(ii) That KRF has full power and authority (including full
corporate power and authority) to execute and deliver
this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and
legally binding obligation of KRF, enforceable in
accordance with its terms and conditions.
(iii) That the direct feed line that KRF shall place with a
Source Subscriber pursuant to the terms of this
Agreement shall operate at a standard level in order
to convey the Source Services at a
-2-
<PAGE> 28
level comparable to the delivery of Source Services
delivered pursuant to the Optional Service Delivery
Agreement.
(iv) The direct feed line installed by KRF will be capable
of carrying all of the Source Services including any
New Source Services.
(v) That KRF will comply with all codes, regulations and
laws applicable to the provision of direct feed lines
under this Agreement, and has obtained or will obtain
all necessary permits, licenses and other
authorizations necessary for its performance of
services under this Agreement.
(vi) That the direct feed lines provided to Source
Subscribers shall meet the technical requirements as
set forth in KRF's published documentation for
installation and maintenance of its direct feed lines
as well as convey the Source Services in a manner and
with a functionality at a level as is generally made
available to its own customers.
(vii) That KRF shall support, maintain and repair direct
feed lines installed pursuant to this Agreement in a
timely, competent and workmanlike manner and at a
level that meets KRF's support, maintenance and
repair services to its customers generally.
(viii) KRF agrees that it will not consent to a request by a
Source Subscriber who seeks to store, modify,
reproduce in any form, redisseminate, recirculate or
republish in any form the Source Services without the
prior written consent of Source, which consent shall
be at Source's sole discretion.
-3-
<PAGE> 29
4. Billing. KRF shall bill Source Subscriber who is not a then-current KRF
customer, the Direct Feed Communication Charge. Source acknowledges
that in the event that a direct feed line is provided to a
then-existing KRF customer or, in the further event that a direct feed
line is provided to a non-KRF customer who subsequently subscribes to
additional KRF services, that the KRF communication charges may
increase as agreed to between KRF and Source Subscriber. Source
Subscriber shall be responsible for payment of all taxes (except for
taxes based on KRF's net income), and KRF shall be responsible for
collecting, remitting and otherwise complying with all applicable
Country, State and local taxing laws and regulations. In addition,
Source shall bill Source Subscribers for fees relating to the Source
Services in the United States, and KRF shall bill Source Subscribers
outside the United States, in accordance with KRF's usual billing
practices and KRF shall not be entitled to any portion of such fees.
5. Indemnification.
(a) By Source. In the event any claim is brought by third party
against KRF that relates to, arises out of or is based upon
the Source Services or the failure of Source to comply with
any law, rule or regulation, KRF shall promptly notify Source,
and Source shall defend such claim at Source's expense and
under Source's control. Source shall indemnify and hold
harmless KRF against any judgment, liability, loss, cost or
damage (including litigation costs and reasonable attorneys'
fees) arising from or related to such claim whether or not
such claim is successful. KRF shall have the right, at its
expense, to participate in the defense of such claim through
counsel of its own choosing; provided, however, that Source
shall not be required to pay any settlement amount that it has
not approved in advance.
-4-
<PAGE> 30
(b) By KRF. In the event any claim is brought by any third party
against Source that relates to, arises out of or is based upon
any error, delay, interruption or other event caused by KRF,
its agents or its Authorized Distributors in installing,
supporting, maintaining or repairing the direct feed line or
in transmitting the Source Services, Source shall promptly
notify KRF, and KRF shall defend such claim at KRF's expense
and under KRF's control. KRF shall indemnify and hold harmless
Source against any judgment, liability, loss, cost or damage
(including litigation costs and reasonable attorneys' fees)
arising from or related to such claim, whether or not such
claim is successful. Source shall have the right, at its
expense, to participate in the defense of such claim through
counsel of its own choosing; provided, however, that KRF shall
not be required to pay any settlement amount that it has not
approved in advance.
6. Term; Termination.
(a) Term. The initial term of this Agreement shall commence
ninety-one (91) days subsequent to notice given by Source to
Telerate Systems Incorporated ("Telerate") pursuant to that
certain agreement dated as of January 1, 1992, between Source
and Telerate (the "Telerate Agreement") (the "Commencement
Date") and shall terminate at the end of the seventh year (the
"Initial Term"). Notwithstanding the foregoing, Source may
terminate this Agreement prior to its Commencement Date in the
event Source, in its sole discretion, retracts its notice to
Telerate under the Telerate Agreement. The term of this
Agreement shall automatically be extended for one or more
periods of one year (a "Renewal Term"), unless either party
sends to the other written notice of its election not to renew
at least ninety (90) days prior to the end of the Initial
Term, or any Renewal Term, as the case may be.
-5-
<PAGE> 31
(b) Default. If either party shall default in the performance of
or compliance with any provision contained in this Agreement
including, but not limited to, any breach of a representation
or warranty, and such default shall not have been cured within
thirty (30) days after written notice thereof shall have been
given to the appropriate party, the party giving such notice
may then give further written notice to such other party
terminating this Agreement, in which event this Agreement and
any other rights granted hereunder shall terminate on the date
specified in such further notice.
(c) Insolvency. In the event that either party hereto shall be
adjudged insolvent or bankrupt, or upon the institution of any
proceedings by it seeking relief, reorganization or
arrangement under any laws relating to insolvency, or if an
involuntary petition in bankruptcy is filed against such party
and said petition is not discharged within sixty (60) days
after such filing, or upon any assignment for the benefit of
its creditors, or upon the appointment of a receiver,
liquidator or trustee of any of its assets, or upon the
liquidation, dissolution or winding up of its business (an
"Event of Bankruptcy"), then the party involved in any such
Event of Bankruptcy shall immediately give notice thereof to
the other party, and the other party at its option may
terminate this Agreement upon written notice.
(d) Effect of Termination. In the event of a termination of this
Agreement for any reason, KRF shall continue to support,
maintain and repair direct feed lines installed for Source
Subscribers before the effective date of any such termination
provided that such Source Subscriber continues to pay to KRF
the agreed upon Direct Feed Communications Charge.
-6-
<PAGE> 32
7. Incorporation By Reference. The parties hereto agree that the following
sections of the Optional Service Delivery Agreement, a copy of which is
attached hereto and made part hereof as Exhibit C, are incorporate by
reference: 4(b), 5, 10, 12(a), (b), (d) (the reference in Section 12(d)
to Section 8 is hereby changed to Section 5), (e), (f), (g), (h), (i),
(j) and (k).
8. Survival. All covenants, obligations, representations, warranties,
indemnities and agreements contained in this Agreement shall survive
the execution and delivery of the Agreement and of any and all
documents or instruments delivered in connection herewith. Neither
Source nor KRF has made any representation or warranty to the other in
connection with the transaction contemplated herein except as contained
in this Agreement and any other instrument, agreement or writing
provided for or contemplated by this Agreement.
9. Definitions. Terms not otherwise defined herein shall have the meanings
ascribed to them in the Optional Service Delivery Agreement.
IN WITNESS WHEREOF, the undersigned parties have duly executed this
Agreement as of the ___________ day of _____________, 1993, to be effective as
set forth in Section 6 hereof.
McCARTHY, CRISANTI & MAFFEI, INC. KNIGHT-RIDDER FINANCIAL, INC.
By:______________________________ By:________________________________
Name: LINDLEY B. RICHERT Name: DR. PAUL T. TUCKER
Title: PRESIDENT Title: PRESIDENT
-7-
<PAGE> 33
Exhibit E
Contacts for Approval of Promotional Materials
For KRF:
Managing Director
Knight-Ridder Financial/Americas
75 Wall Street
New York, NY 10005
Telephone: 212-504-7606
Facsimile: 212-809-1458
For Source:
Mr. Jay Miller
McCarthy, Crisanti & Maffei, Inc.
71 Broadway
New York, NY 10006
Telephone: 212-509-5800
Facsimile: 212-509-7389
Either party may change its designated "contact" person by giving written notice
to the other.
<PAGE> 34
Exhibit F
Knight-Ridder Financial, Inc. Service Agreements
See Attached
<PAGE> 35
STANDARD TERMS AND CONDITIONS
1. BILLING. Subscriber shall pay all sales, use, privilege, excise, property and
other taxes, assessments or governmental charges, however, designated, now or
hereafter imposed with respect to any item or payment described in the
Subscription Schedule, which amounts will be added to Subscriber's invoice. Any
taxes, assessments or governmental charges in connection with installation
charges or security charges will be added to Subscriber's invoice for the first
month. Company will bill Subscriber monthly in advance and Subscriber agrees to
pay such invoice upon receipt. Charges for any fractional month will be
prorated. All payments not received by the 25th day of the month to which they
apply shall be subject to a late payment charge from such date until paid at a
rate equal to the lesser of the maximum rate permitted under applicable law or
18% per annum. The Company may increase the monthly fees if at any time any of
the following occurs: (I) the Company's cost of providing the Service (as
defined below) is increased because of (A) higher charges to the Company from
common carriers or others providing transmission facilities, (B) loss of other
customers sharing the cost of transmitting to Subscriber's location or (C) lower
cost transmission facilities no longer being available to the Company, (II)
exchanges and third party providers supplying information or data to the Company
increase their charges or (III) any sales, use, privilege, excise, property or
other taxes, assessments or governmental charges, however designated, are
imposed or increased.
2. SERVICE. The Company shall supply to Subscriber, at the installation address
set forth herein, the Basic Services and Optional Services listed in Sections A
and B (collectively the "Service") for the respective monthly fees set forth in
Sections A and B, subject to all the terms and conditions of this Agreement.
3. EQUIPMENT. The machines, hardware and other supplemental equipment listed in
Section C is required at Subscriber's location for Subscriber to receive the
Service from the Company. Any equipment provided by the Company ("Company
Equipment") and any equipment provided by Subscriber ("Subscriber Equipment") is
collectively referred to herein as the "Equipment". Any Equipment malfunctions
shall not entitle Subscriber to any abatement or reduction of the monthly fees
hereunder.
(a) Company Equipment. The Company hereby provides to Subscriber, for the
monthly fee set forth in Section C(1), the Company Equipment listed in Section
C(1). All Company Equipment shall remain items of personal property owned by the
Company, notwithstanding any attachment to other equipment, structures or real
property, and Subscriber shall not permit any liens or encumbrances against the
Company Equipment. Subscriber shall not make or permit any change, alternation,
addition, modification or connection to the Company Equipment, nor shall
Subscriber remove any Company Equipment from the place of original installation
by the Company. Upon expiration or termination of this Agreement for any reason,
Subscriber shall promptly make the Company Equipment available for return to the
Company in its original condition, ordinary wear and tear excepted. Subscriber
shall use the Company Equipment solely and exclusively in connection with the
Service and shall be responsible for and shall reimburse the Company for all
loss of or damage to the Company Equipment.
(b) Subscriber Equipment. Subscriber shall provide any Subscriber Equipment
listed in Section C(2). All Equipment owned by Subscriber must be approved by
and be compatible with the Company's specifications at all times during the term
of this Agreement.
(c) Supplies. Subscriber shall provide, at Subscriber's expense, all
necessary paper, ribbons and other supplies of standard grade for operation of
the Equipment.
4. SOFTWARE.
(a) License. "Software" means any computer software and documentation for
such software provided by the Company to enable Subscriber to receive and
display the Service. In consideration of the monthly fees paid to Company by
Subscriber, hereunder the Company hereby grants Subscriber a nontransferable,
nonexclusive license (the "License") to use the Software for so long as this
Agreement is in effect, subject to the terms and conditions set forth herein,
including without limitation the restrictions contained in Paragraph 8. The
Software is licensed "as is" and "with all faults." The Company will deliver to
Subscriber and install one copy of the Software. The Software shall be used
solely and exclusively in connection with the Service.
(b) No copies or Sublicense. Subscriber shall not copy, modify, sublicense
or otherwise transfer the Software or any part thereof, except for use on the
Equipment and for archive or emergency backup purposes, and Subscriber shall
maintain appropriate records of the number and location of all such permitted
copies and shall make such copies and records available to the Company upon
request. Subscriber shall take all reasonable precautions to safeguard the
Software and to prevent any copies or disclosures thereof in violation of this
Agreement and to prevent any unauthorized access thereto.
(c) Title, Termination, Return. All right, title and interest in and to the
Software and all parts and any copies thereof are and shall remain the sole and
exclusive property of the Company. The License shall terminate, and all copies
of the Software shall be immediately returned to the Company, upon written
request by the Company or upon expiration or termination of this Agreement for
any reason.
5. INSTALLATION.
(a) Installation Site. Subscriber shall prepare, provide and maintain the
site where the Equipment will be located and where the Service will be received
(the "Installation Site"), in a manner that complies with the Company's and
Equipment manufacturer's specifications, and the Company shall not be required
to install any Equipment or Software or provide any Service or Maintenance (as
defined herein) unless all Equipment and the Installation Site comply with the
Company's specifications and are approved by the Company. Subscriber is
responsible for obtaining all local permits.
(b) Site Preparation and Maintenance. Subscriber shall be responsible for
and shall bear all costs of, Installation Site preparation and maintenance,
including without limitation adequate space, furniture, electrical power,
circuits, power outlets, temperature and house telephone circuits. Further,
Subscriber shall be responsible for the installation of any necessary cable
required to complete installation of the Equipment, including without limitation
running cable through or securing cable to walls, conduit, baseboards or any
other portion of the Installation Site. Cable installation must be completed
prior to any installation of Equipment. All necessary cable will be provided by
the Company at Subscriber's expense. Subscriber shall be solely responsible for
obtaining any permission or consents required by landlords or other parties for
the installation of Equipment including without limitation running cable and
installing satellite receiving equipment and the Service. Subscriber shall
maintain the Installation Site as a suitable Installation Site throughout the
term of this Agreement.
(c) Installation. After a suitable Installation Site is available, the
Company shall install or cause to be installed any Company Equipment and any
Software. The Company shall have no duty to repair any holes or cuts in any
surfaces upon removal of any Equipment.
(d) Backup. If required by the Company, Subscriber shall install, pay for
and maintain a backup data line to be used in the event the data line to the
Equipment is subject to interruption, noise or any other problems not permitting
the Equipment or Software to function properly, in the Company's opinion.
(e) Installation Date. Installation shall be deemed to have occurred on the
earlier of the date on which either (i) the Company or its designee determines
that the Company Equipment and any Software have been placed in good working
order and the Service is available to Subscriber or (ii) the Company Equipment
has been delivered and the Service is available but Subscriber has failed to
provide a suitable Installation Site. The Company will notify Subscriber when
the Company Equipment and any Software and the Service is available to
Subscriber.
6. MAINTENANCE. In order to protect the quality and integrity of the Company's
systems and the Service, Subscriber agrees that during the term of this
Agreement the Company shall exclusively provide or
<PAGE> 36
cause to be provided the service and maintenance as described herein
("Maintenance") for all Company Equipment and any Software installed pursuant to
this Agreement.
(a) Company Equipment. The Company shall make all necessary adjustments and
repairs to keep the Company Equipment in good operating condition during regular
business hours (8:00 a.m. to 5:00 p.m. Monday through Friday, excluding holidays
observed by the Company) and in accordance with the Company's specifications
then in effect. The Company's representatives shall have full access to the
Company Equipment in order to effect the necessary adjustments and repairs. The
Company shall determine preventive maintenance service required for the Company
Equipment. All remedial maintenance service shall be provided during regular
business hours within a reasonable time after Subscriber notifies the Company in
accordance with the Company's reporting procedures that the Company Equipment is
inoperative. Subscriber shall provide adequate storage space for spare parts and
test equipment and adequate work space, heat, light, ventilation, electric
current and outlets for use by the Company's maintenance representatives. All
spare parts, test and maintenance equipment, tools and documentation shall
remain the Company's property and may be removed by the Company at any time.
Parts removed from Company Equipment shall be the Company's property. Subscriber
shall not move or relocate, or permit to be moved or relocated, any Company
Equipment without the Company's prior written consent. Maintenance service does
not include any of the following: (i) providing supplies or equipment, (ii)
maintenance of accessories, attachments, machines or other devices not used in
connection with receipt of the Service, (iii) performing service connected with
the relocation of reinstallation of the Company Equipment or (iv) adding or
removing accessories, attachments and other devices. Any maintenance that, in
the opinion of the Company, results from other than normal operation of the
Company Equipment, including without limitation Subscriber's fault or misuse of
the Company Equipment or Subscriber's failure to provide the necessary
facilities or specified operating supplies or to meet the Company's
specifications, shall be invoiced to Subscriber as an additional charge. This
maintenance agreement is contingent upon proper use of the Company Equipment and
does not cover Company Equipment modified without the Company's approval or
subjected to unusual physical or electrical stress, or on which the original
identification marks have been removed or altered. The Company shall not be
responsible to Subscriber for loss of use of the Company Equipment or for any
other liabilities arising from alterations, additions, adjustments or repairs
made to the Company Equipment by other than authorized representatives of the
Company.
(b) Other Equipment. All Subscriber Equipment shall be maintained and serviced
by Subscriber at Subscriber's cost in order to keep it in good operating
condition and in compliance with the Company's specifications then in effect for
use in connection with receiving the Service. The Company shall have no duty to
perform any maintenance or repairs on Subscriber Equipment, but any maintenance
or repairs by the Company on Subscriber Equipment Equipment in order to make
Subscriber Equipment comply with the Company's specifications shall be invoiced
to Subscriber at the Company's standard time and material charges.
(c) Software. The Company shall use reasonable efforts to correct any
programming error in the Software significantly affecting use of the Software or
to replace the Software. Such correction or replacement shall be accomplished
promptly after Subscriber has identified and notified the Company of any such
error in accordance with the Company's reporting procedures. This Software
maintenance agreement shall not entitle Subscriber to receive any enhancements
or improvements developed for the Software. Further, any modifications in the
Software required as a result of Subscriber requesting a change in the Service
provided hereunder shall be performed by the Company at Subscriber's expense.
Subscriber agrees to provide the Company with data dumps, as requested, and with
sufficient support and test time on Subscriber's computer system to duplicate
the problem and to verify that the problem is with the Software and that the
problem has been corrected. Corrections for difficulties or defects traceable to
Subscriber's errors, modification of the Software by Subscriber or Subscriber
systems changes shall be invoiced to Subscriber at the Company's standard time
and material charges.
7. SECURITY DEPOSIT. As security for any Company Equipment, any Software and the
performance of Subscriber's duties and obligations hereunder, Subscriber shall
pay to the Company a security deposit in the amount set forth in Section F,
which amount must be paid in full prior to any installation of Equipment. If all
Company Equipment and Software has been returned to the Company as herein
required and Subscriber is not then in breach or default of any of its duties
and obligations under this Agreement, then the security deposit shall be
returned to Subscriber within 30 days after the expiration or termination of
this Agreement: otherwise, the Company may withhold all or any part of the
security deposit to the extent of its actual damages. The security deposit does
not constitute liquidated damages. The Company shall not be required to
segregate the security deposit from its own funds.
8. USE LIMITATIONS; CONFIDENTIALITY.
(a) Use Limitations. Subscriber shall use the Service, any Company
Equipment and any Software solely and exclusively for its own internal business
purposes. Without limiting the generality of the foregoing, Subscriber shall not
directly or indirectly sell, lease, redistribute, retransmit, broadcast,
download or otherwise provide or disseminate the Service or the Software or any
part of either of them or any information or data included therein, in any form
or by any means (including without limitation by making hard copies or by
electronic transfer) to any other person or entity (including without limitation
Subscribers' customers). Further, Subscriber shall not download the Service, any
Software or any part of either of them to Subscriber's or any third party's
facilities or network with Subscriber's or any third party's facilities to
enable any sharing of the Service, any Software or any part of either of them.
(b) Confidentiality. Subscriber acknowledges that the Service, any Software
and any information and data included therein (except for any information and
data distributed publicly without charge) and the form, format, mode or method
of compilation, configuration, presentation or expression thereof are the
_____________ and proprietary property information and data of the Company (the
"Confidential Property"). Subscriber shall receive and maintain the Confidential
Property as a confidential disclosure and shall not disclose the Confidential
Property or any part thereof to any other person or entity (except employees of
Subscriber with a need to know and employees of the Company) or use or permit of
use of the Confidential Property or any part thereof except as herein expressly
permitted at any time during the Initial Term and any renewal term
______________ for a period of three years after the expiration or termination
of this Agreement except as follows ___________ with the Company's prior written
consent in each ______________ of disclosure or ______________ if Subscriber is
required by law to disclose the __________________ Property but only after
notice to the Company and only to the extent required.
(c) Copyright. To the fullest extent permitted or available under
applicable _____ the Company hereby asserts and claims and Subscriber hereby
recognizes and acknowledges, copyright protection for the Service, any Software
and any ______ thereof including without limitation the form, format, mode or
method of compilation, configuration, presentation or expression thereof and of
any information or data included therein.
(d) Further Protection. In addition to Subscriber's other obligations in
this Paragraph 8, Subscriber shall prohibit any violation or breach of the terms
and conditions of this Paragraph 8 by its employees, agents and other persons or
___________ within Subscriber's control.
9. EXCHANGES AND THIRD PARTY PROVIDERS. Subscriber shall from time to time
execute such applications or agreements as may be required by, and ______
observe all restrictions and requirements imposed by any securities or
commodities exchange or third party provider with respect to any quotations,
market information or other information or data provided by such exchanges or
third party providers.
10. EXPRESS WARRANTIES; WARRANTIES LIMITED.
(a) Express Warranties. The Company warrants to Subscriber that the Company
(i) has the right to provide the Service and any quotations, market information
or other information or data furnished hereunder to Subscriber, (ii) has good
title to any Company Equipment
<PAGE> 37
and any Software and (iii) will perform or cause to be performed any
installation of Company Equipment or Software and any Maintenance in a
workmanlike manner.
(b) Warranties Limited. EXCEPT AS EXPRESSLY SET FORTH IN PARAGRAPH 10(a),
(I) NEITHER THE COMPANY NOR ANY EXCHANGE OR OTHER THIRD PARTY PROVIDER OF
INFORMATION OR DATA ("Information Providers") OR SOFTWARE LICENSORS MAKES ANY
WARRANTY, REPRESENTATION OR GUARANTY AS TO THE SEQUENCE, ACCURACY, TIMELINESS OR
COMPLETENESS OF THE SERVICE OR ANY QUOTATIONS, MARKET INFORMATION OR OTHER
INFORMATION OR DATA FURNISHED HEREUNDER OR THAT ANY SUCH INFORMATION OR DATA
DISSEMINATED MAY BE RELIED UPON FOR TRADING PURPOSES (SUBSCRIBER SHALL
INDEPENDENTLY DETERMINE MARKET PRICES FOR TRADING PURPOSES THROUGH ITS OWN
CUSTOMARY TRADING CHANNELS), (II) THE COMPANY MAKES NO WARRANTY, REPRESENTATION
OR GUARANTY EITHER FOR ITSELF OR FOR ANY THIRD PARTY VENDORS OR MANUFACTURERS,
AS TO ANY EQUIPMENT (INCLUDING ANY COMPANY EQUIPMENT OR SUBSCRIBER EQUIPMENT);
(III) THE COMPANY MAKES NO WARRANTY, REPRESENTATION OR GUARANTY THAT ANY
SOFTWARE WILL MEET SUBSCRIBER'S REQUIREMENTS OR THAT OPERATION OF ANY SOFTWARE
WILL BE UNINTERRUPTED OR ERROR FREE OR THAT ANY DEFECTS CAN BE CORRECTED AND THE
COMPANY MAKES NO WARRANTY, REPRESENTATION OR GUARANTY, EITHER FOR ITSELF OR FOR
ANY THIRD PARTY PROVIDER OF MAINTENANCE, AS TO ANY MAINTENANCE, FURTHER, EXCEPT
AS OTHERWISE EXPRESSLY SET FORTH IN PARAGRAPH 10(a), ANY AND ALL WARRANTIES,
REPRESENTATIONS AND GUARANTIES, EXPRESS OR IMPLIED, ARE HEREBY DISCLAIMED WITH
RESPECT TO THE SERVICE, THE EQUIPMENT (INCLUDING ANY COMPANY EQUIPMENT AND
SUBSCRIBER EQUIPMENT), ANY SOFTWARE AND ANY MAINTENANCE, INCLUDING WITHOUT
LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
WHICH ARE HEREBY EXPRESSLY DISCLAIMED. No employee, salesperson, vendor or other
agent or purported agent of the Company is authorized to make any warranties,
representations or guaranties to the contrary of the foregoing, and any such
proported warranties, representations or guaranties shall not be relied upon as
having been given by or on behalf of the Company.
11. LIABILITIES LIMITED.
(a) Sole Remedies. Except as permitted by Paragraph 11(b), Subscriber's
sole and exclusive remedies against the Company, any Information Provider or any
other third party provider of equipment, software or services for the Company __
with respect to the Service and any quotations, market information and any other
information and data and any errors, inaccuracy, omissions or delay therein or
thereof, shall be limited to issuing corrected information as soon as reasonably
practicable following the Company's receipt of written notice of such problem
from Subscriber in accordance with the Company's reporting procedures, (ii) with
respect to the Equipment, shall be limited to providing Maintenance in
accordance with Paragraph 6(a), and (iii) with respect to any Software, shall be
limited to providing Maintenance in accordance with Paragraph 6(c) and using
reasonable efforts to correct any interruptions, errors or other problems with
the software.
(b) Damages Limited. If the Company fails to provide the remedies in
Paragraph 11(a) or if the Company otherwise fails to perform its duties and
obligations under this Agreement and Subscriber can establish that as a direct
result thereof Subscriber has incurred any damages, liabilities, losses, fees,
costs or expenses, then the Company's liability to Subscriber for actual damages
for any cause whatsoever regardless of the form of action, whether in contract,
tort including negligence, strict liability or otherwise, shall not exceed in
the aggregate the lesser of (i) one month's total monthly fees as set forth in
Section 1, or as then in effect or (ii) $1,000 FURTHER, IN NO EVENT SHALL THE
COMPANY, ANY INFORMATION PROVIDER OR ANY OTHER THIRD PARTY PROVIDER OF
EQUIPMENT, SOFTWARE OR SERVICES FOR THE COMPANY BE LIABLE FOR ANY LOSS OF PROFIT
OR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES SUSTAINED OR INCURRED IN CONNECTION WITH THE SERVICE, THE EQUIPMENT, ANY
SOFTWARE AND ANY MAINTENANCE PROVIDED OR PERFORMED OR TO BE PROVIDED OR
PERFORMED UNDER THIS AGREEMENT OR OTHERWISE ARISING UNDER THIS AGREEMENT,
REGARDLESS OF THE FORM OF THE ACTION AND WHETHER SUCH DAMAGES WERE FORESEEN OR
UNFORESEEN AND EVEN IF THE COMPANY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
(c) Commercial Transactions. The parties acknowledge that this Agreement
has been entered into as a commercial transaction and, further, that since any
proof of actual damages to Subscriber would be very difficult, imprecise and
inaccurate, the foregoing remedies and limitations on damages constitute fair,
reasonable and adequate remedies and limitations of any damages for any losses
that may be incurred by Subscriber.
12. INDEMNITY; SURVIVAL. Subscriber hereby indemnifies and agrees to defend and
hold harmless the Company, any Information Provider and any other third party
provider of equipment software or services for the Company from and against any
and all demands, claims, actions, proceedings, damages, liabilities, losses,
fees, costs or expenses "including without limitation reasonable attorneys fees
and the costs of any investigation) directly or indirectly arising from or in
any way connected with (i) use of or reliance on the Service, any Software or
any quotations, market information or other information or data supplied or to
be supplied to Subscriber under this Agreement (ii) any breach of or default
under the terms or conditions of this Agreement by Subscriber, (iii) the use or
possession of any Equipment by Subscriber or any third parties, (iv) any removal
of Company Equipment by the Company as permitted by this Agreement and (v) any
negligence, gross negligence or willful misconduct by or on behalf of Subscriber
or its employees or agents. Paragraphs 8, 10, 11 and 12 shall survive
termination of this Agreement for any reason.
13. AUTOMATIC RENEWAL. UNLESS EITHER PARTY GIVES THE OTHER PARTY WRITTEN NOTICE
OF TERMINATION AT LEAST 30 DAYS PRIOR TO THE EXPIRATION OF THE INITIAL TERM OR
ANY RENEWAL TERM THAN UPON EXPIRATION OF THE THEN EFFECTIVE TERM THIS AGREEMENT
SHALL AUTOMATICALLY RENEW FOR AN ADDITIONAL SUCCESSIVE TERM OF 12 MONTHS. In
addition to the changes permitted at any time by Paragraph 1, the Company may
modify or change the terms and conditions of this Agreement (including without
limitation any monthly fees) at any time after the initial term of this
Agreement by giving Subscriber at least 60 days notice of such modifications or
changes; provided, however if Subscriber does not agree to any such change,
Subscriber may terminate this Agreement by giving written
notice to the Company 30 days prior to the effective date of the change and this
Agreement shall terminate on such effective date unless the change is withdrawn
by the Company.
14. DEFAULT; TERMINATION. The occurrence of any of the following shall
constitute a default by Subscriber under this Agreement (i) Subscriber's failure
to pay any sum of money due hereunder, (ii) Subscriber's failure to fully
perform any of its other duties and obligation under this Agreement within 7
days after notice thereof is given by the Company, (iii) if Subscriber shall
become insolvent, commit any act of bankruptcy or become the subject of any
proceeding under bankruptcy or other similar laws for the protection of
creditors or (iv) any substantial part of Subscriber's assets becomes subject to
any levy, seizure, assignment or sale for the benefit of or by any creditor or
government agency. Upon the occurrences of any of the foregoing defaults by
Subscriber, the Company shall, in addition to all other rights available under
applicable law, have the right (then or any time thereafter during the
continuance of such default), at its sole option, to do all or any of the
following upon giving notice to Subscriber: (1) immediately terminate this
Agreement and as duties and obligation of the Company hereunder, (2) declare all
amounts due and thereafter to become due under this Agreement to be immediately
due and payable in full, (3) discontinue all Service to Subscriber and any
Maintenance, (4) take possession of or remove any Company Equipment and any
Software (and all copies thereof), wherever situated, and for such purpose to
enter upon premises without liability, (5) disconnect all power and data lines
and (6) sell, dispose of, hold, use or lease any or all of the Company Equipment
and any Software Subscriber shall pay and reimburse the Company for any and all
fees, costs and expenses (including without limitation reasonable attorney's
fees) incurred in connection with exercising any of the foregoing rights and the
collection of all amounts due hereunder.
<PAGE> 38
15. MISCELLANEOUS.
(a) Assignment. Neither this Agreement nor any rights or duties hereunder
may be assigned, delegated, subleased or otherwise transferred by Subscriber.
This Agreement shall be binding upon and inure to the benefit of the parties and
respective successors and permitted assigns.
(b) Notice. Except for notices given because of Subscriber's failure to pay
any sum of money due hereunder (which notice may be oral) all notices or other
communications required to be given hereunder shall be in writing and shall be
mailed by first class mail or by telefacsimile or overnight delivery service or
personally delivered to the Company at its address set forth on page 1 and to
Subscriber at the billing address set forth on page 1, or to such other address
as may be hereafter designated by one party to the other in writing. Unless
otherwise provided herein, all notices shall be effective the earlier of three
days from the date of mailing or upon receipt.
(c) Severability. If any one or more of the provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason, then the
validity, legality or enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by applicable
law, the parties waive any provisions of law that renders any provision of this
Agreement invalid, illegal or unenforceable in any respect.
(d) Force Majeure. Due performance of any duty or obligation hereunder by
the Company shall be excused if prevented by acts of God, third party providers
of information, data or services, public enemy, fire or other casualty, labor
dispute or any other circumstance beyond the Company's reasonable control.
(e) Waiver or Consent. Any failure by either of the parties to comply with
any obligation, covenant, condition or agreement contained herein may be waived
in writing by the party entitled to the benefits thereat, but such waiver or
failure to insist on strict compliance with such obligation, covenant, condition
or agreement shall not operate as a waiver of or estoppel with respect to any
subsequent or other failure. Any consents to be effective must be in writing and
signed by an authorized representative of the party granting such consent.
(f) Remedies Cumulative. Unless otherwise provided herein, all remedies
contained herein are cumulative and are in addition to all other rights and
remedies available under this Agreement, by law, in equity or by statute.
(g) Amendments. This Agreement may be amended only by a written instrument
signed by authorized representatives of each of the parties. This Agreement
constitutes the entire understanding of the parties with respect of the subject
matter hereof and supersedes and replaces all prior writings or oral
negotiations or other understandings with respect thereto.
(h) Headings, References. All headings of this Agreement are solely for
convenience of references and shall not affect its interpretation. References to
"Sections" shall be references to the Subscription Schedule on page 1 of this
Agreement and references to "Paragraphs" shall be references to these Standard
Terms and Conditions.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Kansas, without regard to its
principles of conflicts of laws.
<PAGE> 39
Exhibit G
Source's Service Agreement and Worldwide Price Lists
See Attached
<PAGE> 40
McCarthy, Crisanti & Maffei, Inc. ("MCM")
Subscription for Electronic Information Services
This Subscription Agreement (the "Agreement") made this _______ day of
_______________, 19___, (the "Effective Date") by and between McCarthy, Crisanti
& Maffei, Inc. (hereinafter ("MCM"), a New York corporation having offices at 71
Broadway, New York, New York, 10006 and _______________, a _______________
(hereinafter "Customer").
1. Services
Customer subscribes to, and MCM agrees to provide, the services set out
on the attached Supplement(s), Number(s) _______________ each, a "Service," (and
collectively, "Services") upon the terms and conditions set out below.
2. Term of Subscription; Fee
The initial subscription term for each Service shall be as set forth on
Supplement (the "Initial Term") attached hereto and made part hereof. For the
Services provided by MCM, Customer agrees to pay MCM the subscription fees
indicated on the relevant Supplement. Fees charged upon the renewal of any
subscription shall be those set forth on MCM's then current price lists. All
subscription fees shall be paid (monthly) [quarterly] in advance on the
commencement of the subscription term and thereafter on the first calendar
[month] [quarter]. Customer shall also pay in addition to any subscription fee,
any tax, however characterized, arising out of this subscription other than
taxes based on the net income of MCM.
3. Renewal
The subscription term for each Service shall be automatically renewed
for a term equal in length to the Initial Term unless either party gives the
other not less than sixty (60) days written notice of its intention not to renew
a particular Service prior to the end of the initial or any renewal of that
Service. Further, any renewal term shall be governed by the terms and conditions
of this Agreement, except for price, which shall be determined from MCM's then
current price list.
4. Use of Information
Services are for the sole use of Customer. Customer will not, without
MCM's prior written consent, cause or permit the Services or any information
including, without limitation reports, analyses, data, documentation made known,
sent or otherwise transmitted by MCM under this Agreement or any Service in
whole or in
2
<PAGE> 41
part to be stored, modified, duplicated, reproduced or retransmitted in any form
either to third parties or to affiliated companies or branch offices of the
Customer except as otherwise permitted herein. If Customer makes use of any
information for which MCM has given its prior written approval, Customer shall
credit MCM as the source of such information. Customer acknowledges that all
such materials are and shall remain, the sole property of MCM, and that MCM is
the sole owner of all copyright and other commercial property rights therein.
Customer agrees not to create any derivative works (including data bases) based
on the Service(s) or the information contained therein. Customer will not use or
permit the use of the information contained in the Service for any illegal
purpose. MCM reserves to itself complete editorial freedom in the form and
content of the Service(s) and may alter the same from time to time.
5. Termination
(a) In addition to any other remedy available at law or in equity,
MCM may terminate this Agreement immediately, in whole or in
part, without further obligation to Customer in the event of:
(i) any breach by the Customer of Paragraph 4 or a breach
of the Customer's obligation to pay the subscription
fee as specified in this Agreement and Supplement(s)
hereto;
(ii) any other breach of this Agreement by the Customer
which cannot be remedied or is not remedied within
thirty (30) days of the Customer being requested to
do so;
(iii) any merger, consolidation, acquisition, or the sale,
lease or other transfer of all or substantially all
of the assets or shares of sock of the Customer, or
any other change in the control or ownership of the
Customer;
(iv) the Customer's making an assignment for the benefit
of its creditors or filing a voluntary petition under
any bankruptcy or insolvency law, under the
reorganization or arrangement provisions of the
United States Bankruptcy Code, or under the
provisions of any law of like import;
(v) the filing of an involuntary petition against the
Customer under any bankruptcy or insolvency law,
under the reorganization or arrangement provisions of
the United States Bankruptcy Code, or under any law
of like import; or
3
<PAGE> 42
\ (vi) the appointment of a trustee or receiver for the
Customer or its property.
(b) Where the operation or delivery of the Service(s) or any part
thereof is dependent upon an agreement between MCM and a third
party and such agreement has expired or is terminated or
suspended in whole or in part for any reason, and MCM is
unable to enter into another equivalent agreement upon
reasonable terms. MCM may immediately terminate this Agreement
or the relevant part thereof, and upon termination MCM's only
obligation to the Customer will be to refund the proportionate
part of the subscription fee already paid for the portion of
the Service(s) not received by virtue of said termination.
(c) Without limitation of any other remedy available at law or in
equity, the Customer and MCM hereby agree that upon the
Customer's (i) breach of this Agreement, or (ii) terminating
this Agreement (except as permitted hereunder), MCM will be
entitled to recover from the Customer all subscription fees
due and payable at the time of termination.
(d) Customer agrees, in the event of a breach by it of any of its
obligations under this Agreement, MCM may seek temporary or
permanent injunctive relief, without the necessity of proving
actual damages or the posting of a bond, as well as other
equitable relief.
6. Disclaimer of Warranties and Liability
(a) MCM AND ITS AFFILIATES MAKE NO REPRESENTATION OR WARRANTY,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES,
INCLUDING, WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY, AND EACH
SPECIFICALLY DISCLAIMS ANY SUCH WARRANTY. MCM AND ITS
AFFILIATES EACH SPECIFICALLY DISCLAIM ANY KNOWLEDGE OF ANY
PURPOSE FOR WHICH THE SERVICES SHALL BE USED BY CUSTOMER.
MATERIAL SUPPLIED BY MCM IN THE SERVICES CONSTITUTES OPINION
AND NOT FACT. Such material supplied in the Services is based
upon information obtained by MCM from a number of sources and
MCM may be unable to verify the accuracy of that information.
Accordingly, neither MCM nor its affiliates shall be liable to
Customer for: (1) any faults in the delivery, transmission or
content of the Services, or for contingencies beyond their
control, in producing, supplying, or compiling,
transpositioning or delivering the Services; (2) any errors,
omissions, or inaccuracies in the information or analyses
4
<PAGE> 43
contained in the Services or delays or interruptions in
delivery of a Service for any reason: (3) any decision made or
action taken by Customer in reliance upon the information or
analyses contained in the Services; (4) loss of business
revenues, loss profits, or any indirect, consequential,
special or incidental damages arising from any subscription,
including any claims related to the timeliness of deliveries
of the Services or the quality or accuracy of information upon
which a Service is based, whether in contract, tort or
otherwise, even if advised of the possibility of such damages;
(5) any claim that arose more than one (1) year prior to the
institution of suit therefor; or (6) any claim arising from
causes beyond MCM's reasonable control including, but not
limited to, Customers selection and use of its own computer
hardware system. CUSTOMER AGREES THAT MCM'S MAXIMUM LIABILITY
FOR ANY AND ALL CAUSES SHALL NOT EXCEED, IN THE AGGREGATE, THE
AMOUNT PAID BY CUSTOMER FOR THE SERVICES DURING THE FIRST
INITIAL TERM OF THIS AGREEMENT TO EXPIRE.
(b) Customer will indemnify and hold MCM and its affiliates and
its and their employees, agents, contractors and
subcontractors harmless from and against any loss, cost or
damage (including reasonable attorneys fees) in connection
with any claim or action which may be brought by any third
party, arising out of:
(i) any faults, interruptions or delays in the delivery
of the Services to Customer or in the placing of
inhibits (if applicable), or for any inaccuracies,
errors or omissions in the information contained in
the Services as supplied or contributed by the
Customer, however such faults, interruptions, delays,
inaccuracies, errors or omissions arise;
(ii) the furnishing, performance, maintenance, or use of,
or inability to use the Service and any other
materials furnished to Customer by or on behalf of
MCM notwithstanding that MCM has been advised of the
possibility that such loss, or damage may or will
arise.
7. Assignment
Neither party shall assign this Agreement without the prior written
consent of the other.
5
<PAGE> 44
8. Securities Laws
Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall be deemed to limit any responsibility or liability MCM may have
under applicable securities laws.
9. Force Majeure
Neither MCM nor Customer shall be responsible for delays or failures in
performance resulting from acts beyond the control of such party. Such acts
shall include but not be limited to acts of God, strikes, lockouts, riots, acts
of war, epidemics, governmental regulations superimposed after the fact, fire,
communication line failures, power failures, earthquakes or other disasters.
10. Disclosure
Pursuant to the provisions of the Investment Advisers Act of 1940, MCM
offers to supply Customer with Part II of the Form ADV upon written request of
Customer.
11. Severability
In the event that any court having competent jurisdiction shall
determine that one or more of the provisions contained in this Agreement shall
be unenforceable in any respect, then such provision shall be deemed limited and
restricted to the extent that such court shall deem it to be enforceable, and so
limited or restricted shall remain in full force and effect. In the event that
such provision or provisions shall be deemed wholly unenforceable, the remaining
provisions shall remain in full force and effect.
12. General
(a) This Agreement and any and all Supplements annexed hereto
represent the entire agreement of the parties. There are no
other oral or written collateral representations, agreements,
or understandings. In the event that the Customer issues a
purchase order or other instrument related to the Service(s),
it is understood and agreed that such document is for the
Customer's internal purposes only and will in no way
supersede, modify, add to or delete any of the terms and
conditions of this Agreement.
(b) All notices given hereunder will be in writing, delivered
personally or mailed by registered or certified mail, return
receipt requested, postage prepaid to the parties at the
address specified in this Agreement unless
6
<PAGE> 45
either party gives notice in writing of a change of such
address in the manner provided herein for giving notice. All
notices will be deemed given when delivered personally, or if
mailed, five (5) days after the date of mailing.
(c) This Agreement will be deemed to have been executed and
delivered in the State of New York and it will be governed by
and construed in accordance with the laws of New York. The
parties hereby consent to the jurisdiction of the courts of
the State of New York for the purpose of any action or
proceeding brought by either of them on or in connection with
this Agreement or any alleged breach thereof.
(d) This Agreement will be binding upon and inure to the benefit
of the parties hereto, their respective heirs, personal
representatives, successors and assigns.
(e) This Agreement may not be amended, modified or superseded, nor
may any of its terms or conditions be waived unless expressly
agreed to in writing by both parties. The failure of either
party at any time or times to require full performance of any
provision hereof will in no manner affect the right of such
party at a later time to enforce the same.
(f) The section headings of the several clauses and paragraphs of
this Agreement are inserted for convenience of reference only
and will not affect the meaning or interpretation of this
Agreement.
(g) The Customer hereby waives personal service of any and all
process upon the Customer and consents that service of process
may be made by certified or registered mail at the Customer's
address set forth herein.
(h) If the Customer is a corporation, the Customer has the
corporate power to enter into this Agreement and to carry out
its obligations hereunder. The persons executing this
Agreement on behalf of the Customer hereby represent and
warrant that they have been duly authorized to execute this
Agreement for and on behalf of the Customer. This Agreement
constitutes the valid and binding obligation of the Customer
and is enforceable in accordance with its terms.
(i) The provisions of Section 4 hereof, and any and all
disclaimers and indemnities contained herein or in any
Supplements annexed hereto will survive the termination of
this Agreement.
7
<PAGE> 46
IN WITNESS WHEREOF, the parties or their duly authorized representative
have hereunto set their hands on the day and year first above written.
McCARTHY, CRISANTI & MAFFEI, INC.
By:__________________________________________
Title:_______________________________________
Date:________________________________________
CUSTOMER:
By:__________________________________________
Title:_______________________________________
Date:________________________________________
8
<PAGE> 47
Number_______________
Term__________________
Supplement to
McCarthy, Crisanti & Maffei, Inc.
Subscription for Electronic Information Services
This Supplement between McCarthy, Crisanti & Maffei, Inc. (MCM) and the Customer
(as set forth on the Subscription for Electronic Information Services) represent
those Services subscribed to by the Customer and to be provided by MCM, subject
to the terms and conditions set forth in the Subscription Agreement.
Dated _______________________
Services Fee [Monthly] [Quarterly]
Total:
Additional Locations/Departments:
McCARTHY, CRISANTI & MAFFEI, INC.
By:____________________________________________
Title:_________________________________________
Date:__________________________________________
CUSTOMER:
By:____________________________________________
Title:_________________________________________
Date:__________________________________________
<PAGE> 48
MCM ELECTRONIC INFORMATION SERVICES
GERMANY/AUSTRIA (DM)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 450/month
CURRENCYWATCH 450/month
MONEYWATCH 450/month
YIELDWATCH 450/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 1800/month
CURRENCYWATCH 1800/month
MONEYWATCH 1800/month
YIELDWATCH 1800/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 49
MCM ELECTRONIC INFORMATION SERVICES
SWITZERLAND (SFR)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 500/month
CURRENCYWATCH 500/month
MONEYWATCH 500/month
YIELDWATCH 500/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 2000/month
CURRENCYWATCH 2000/month
MONEYWATCH 2000/month
YIELDWATCH 2000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 50
MCM ELECTRONIC INFORMATION SERVICES
DENMARK (DKK)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 2400/month
CURRENCYWATCH 1600/month
MONEYWATCH 1600/month
YIELDWATCH 1600/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 11900/month
CURRENCYWATCH 9500/month
MONEYWATCH 9500/month
YIELDWATCH 9500/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 51
MCM ELECTRONIC INFORMATION SERVICES
FINLAND (FIM)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 1025/month
CURRENCYWATCH 1025/month
MONEYWATCH 1025/month
YIELDWATCH 1025/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 6200/month
CURRENCYWATCH 6200/month
MONEYWATCH 6200/month
YIELDWATCH 6200/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 52
MCM ELECTRONIC INFORMATION SERVICES
NORWAY (NOK)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 1600/month
CURRENCYWATCH 1600/month
MONEYWATCH 1600/month
YIELDWATCH 1600/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 9500/month
CURRENCYWATCH 9500/month
MONEYWATCH 9500/month
YIELDWATCH 9500/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 53
MCM ELECTRONIC INFORMATION SERVICES
SWEDEN (SEK)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 1600/month
CURRENCYWATCH 1600/month
MONEYWATCH 1600/month
YIELDWATCH 1600/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 9450/month
CURRENCYWATCH 9450/month
MONEYWATCH 9450/month
YIELDWATCH 9450/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 54
MCM ELECTRONIC INFORMATION SERVICES
SPAIN (PTA)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 30,000/month
CURRENCYWATCH 30,000/month
MONEYWATCH 30,000/month
YIELDWATCH 30,000/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 135,000/month
CURRENCYWATCH 135,000/month
MONEYWATCH 135,000/month
YIELDWATCH 135,000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 55
MCM ELECTRONIC INFORMATION SERVICES
ITALY (ITL)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 325,000/month
CURRENCYWATCH 325,000/month
MONEYWATCH 325,000/month
YIELDWATCH 325,000/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 1,500,000/month
CURRENCYWATCH 1,500,000/month
MONEYWATCH 1,500,000/month
YIELDWATCH 1,500,000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 56
MCM ELECTRONIC INFORMATION SERVICES
FRANCE (FRF)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 2,200/month
CURRENCYWATCH 2,200/month
MONEYWATCH 2,200/month
YIELDWATCH 2,200/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH 8,000/month
CURRENCYWATCH 8,000/month
MONEYWATCH 8,000/month
YIELDWATCH 8,000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 57
MCM ELECTRONIC INFORMATION SERVICES
PRICING FOR AUSTRALIA (AUD A$)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH A$ 425/month
CURRENCYWATCH A$ 300/month
MONEYWATCH A$ 300/month
YIELDWATCH A$ 300/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH A$ 1300/month
CURRENCYWATCH A$ 680/month
MONEYWATCH A$ 780/month
YIELDWATCH A$ 680/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 58
MCM ELECTRONIC INFORMATION SERVICES
CONTINENTAL EUROPE/GULF REGION PRICING (US $)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $ 375/month
CURRENCYWATCH $ 275/month
MONEYWATCH $ 275/month
YIELDWATCH $ 275/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $1875/month
CURRENCYWATCH $1500/month
MONEYWATCH $1500/month
YIELDWATCH $1500/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 59
MCM ELECTRONIC INFORMATION SERVICES
AMERICAS REGION PRICING (US $)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
** CORPORATEWATCH(R) $ 450/montH
CURRENCYWATCH(R) $ 300/montH
MONEYWATCH(R) $ 250/month
YIELDWATCH(R) $ 200/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
** CORPORATEWATCH(R) $3000/montH
CURRENCYWATCH(R) $1750/montH
MONEYWATCH(R) $1500/month
YIELDWATCH(R) $1000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
** Includes MCM's Private Placement "Market Talk."
(1993)
<PAGE> 60
MCM ELECTRONIC INFORMATION SERVICES
PRICING FOR JAPAN (JPY Y)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH Y55,000/month
CURRENCYWATCH Y40,000/month
MONEYWATCH Y40,000/month
YIELDWATCH Y40,000/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH Y250,000/month
CURRENCYWATCH Y250,000/month
MONEYWATCH Y250,000/month
YIELDWATCH Y250,000/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 61
MCM ELECTRONIC INFORMATION SERVICES
UNITED KINGDOM PRICING (US $)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $ 375/month
CURRENCYWATCH $ 275/month
MONEYWATCH $ 275/month
YIELDWATCH $ 275/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $1875/month
CURRENCYWATCH $1500/month
MONEYWATCH $1500/month
YIELDWATCH $1500/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 62
MCM ELECTRONIC INFORMATION SERVICES
ASIA PACIFIC REGION PRICING (EXCLUDING JAPAN) (US $)
STANDARD SCREEN FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $ 325/month
CURRENCYWATCH $ 250/month
MONEYWATCH $ 230/month
YIELDWATCH $ 230/month
</TABLE>
- -------------------------------------------------------------------------------
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
<TABLE>
<CAPTION>
<S> <C>
CORPORATEWATCH $1000/month
CURRENCYWATCH $ 900/month
MONEYWATCH $ 800/month
YIELDWATCH $ 800/month
</TABLE>
Discounts may apply when customer uses multiple services.
* Site fees may vary based on system configuration or actual user counts.
(1993)
<PAGE> 63
INSTRUCTIONS: Please sign, initial and return all copies.
IMPORTANT: Please read Standard Terms and Conditions on pages 2 and 3.
KNIGHT-RIDDER BUSINESS ACCOUNT NO.________________________
INFORMATION SERVICES New //
Renewal //
- -------------------------------------------------------------------------------
SERVICES AGREEMENT
- -------------------------------------------------------------------------------
Check applicable division:
// KNIGHT-RIDDER FINANCIAL IN
75 Wall Street
New York, New York 10006
Telephone: (212)269-1110
// COMMODITY NEWS SERVICES
Post Office Box 6053
Leawood, KS 66206
Telephone: (913)642-7373
Subscriber______________________________________________________________
Installation Address_____________________________________________________
City__________________________________________State_______Zip___________
User/Contact Name__________________________________Phone#____________
Communications/Contact Name_______________________Phone#____________
Billing Address_________________________________________________________
City___________________________________________State_______Zip__________
Contact Name________________________________________Phone#____________
- -------------------------------------------------------------------------------
THIS AGREEMENT (the "Agreement") is by and between Commodity News Services,
Inc., acting through its division(s) designated above (the "Company"), and the
customer designated above ("Subscriber").
SUBSCRIPTION SCHEDULE
The Company agrees to provide the Basic Services, Optional Services and
Equipment set forth below to Subscriber on the terms and conditions set forth in
this Agreement.
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION A. BASIC SERVICES
Quantity Description Monthly Fee
- ------------------------------ $----------
- ------------------------------ $----------
- ------------------------------ $----------
- ------------------------------ $----------
- ------------------------------ $----------
- ------------------------------ $----------
TOTAL BASIC SERVICES FEE...........................................$__________
SECTION B. OPTIONAL SERVICES
Quantity Description Monthly Fee
- ------------------------------ $----------
- ------------------------------ $----------
- ------------------------------ $----------
- ------------------------------ $----------
- ------------------------------ $----------
- ------------------------------ $----------
TOTAL OPTIONAL SERVICES FEE........................................$__________
SECTION C. EQUIPMENT
Quantity Equipment Monthly Fee
// Provided by the Company
- ------------------------------ $----------
- ------------------------------ $----------
- ------------------------------ $----------
- ------------------------------ $----------
- ------------------------------ $----------
TOTAL EQUIPMENT FEES................................................$__________
// Provided by the Subscriber
SECTION D. ESTIMATED EXCHANGE FEES
Exchange Monthly Fee
Chicago Board of Trade...............................................$_________
Chicago Mercantile Exchange..........................................$_________
Commodity Exchange Center, Inc.......................................$_________
Kansas City Board of Trade...........................................$_________
London Futures and Options Exchange..................................$_________
London Int'l Financial Futures Exchange..............................$_________
London Metal Exchange................................................$_________
Minneapolis Grain Exchange...........................................$_________
__________________________...........................................$_________
__________________________...........................................$_________
__________________________...........................................$_________
TOTAL ESTIMATED EXCHANGE FEES
BILLED BY COMPANY....................................................$_________
Billed directly by Exchange: American Stock Exchange,
Canadian Exchange Group Data, NASDAQ, New York
Stock Exchange, OPRA _______________________________
</TABLE>
<PAGE> 64
SECTION E. MONTHLY LINE CHARGES.....................................$__________
SECTION F. INSTALLATION/SECURITY DEPOSIT CHARGES
Subscriber shall pay the following one-time
standard installation charge and security
deposit charge concurrently with Subscriber's
signing of this
Agreement.
Standard Installation Charge.........................................$__________
Security Deposit.....................................................$__________
TOTAL INSTALLATION/SECURITY
DEPOSIT CHARGES......................................................$__________
SECTION G. TOTAL MONTHLY FEES/INITIAL CHARGES
(1) Total Monthly Fees
Section A. Basic Services.....................................$__________
Section B. Optional Services..................................$__________
Section C. (1) Equipment Provided By
Company..........................................$__________
Section D. Exchange Fees Billed By
Company.........................................$__________
Section E. Line Charges.......................................$__________
TOTAL MONTHLY FEES...................................................$__________
(2) Total Initial Charges
Section F. Installation/Security Deposit......................$__________
SECTION H. TERM OF AGREEMENT
The Initial term (the "Initial Term") of
this Agreement shall commence on the date
accepted by the Company and shall continue
for the number of months set forth below
after the installation date, subject to earlier
termination by the Company or automatic renewal
(as provided in Paragraphs 13 & 14 of the
Standard Terms and
Conditions).
NUMBER OF MONTHS.....................................................____ Months
SECTION I. REMOVAL CHARGE
Subscriber shall pay the Company the following removal
charge upon expiration or termination of this Agreement
for any reason.
REMOVAL CHARGE.......................................................$__________
SECTION J. ADDENDA
Check the applicable box below if any of the
following Addenda are applicable to this Agreement.
// Redistribution Addendum
// Multiple Location Addendum
SECTION K. ADDITIONAL TERMS
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
The undersigned acknowledge and agree that, in addition to the Subscription
Schedule above, THIS AGREEMENT INCLUDES THE STANDARD TERMS AND CONDITIONS SET
FORTH ON PAGES 2 AND 3 ATTACHED, ALL OF WHICH ARE APPLICABLE TO THIS AGREEMENT
AND BY THIS REFERENCE ARE INCORPORATED HEREIN AND MADE A PART HEREOF.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed below
by their respective authorized representatives, and this Agreement shall be
effective as of the date of, and shall be binding on the parties only upon,
acceptance on behalf of the Company.
Commodity News Services, Inc.
By:___________________________________________________
Name:_____________________________________________
Title: ______________Date of Acceptance__________
______________________________________________________
(Name of Subscriber)
By:___________________________________________________
Name:_____________________________________________
Title: ________________________Date:______________
(Initials of Subscriber's authorized representative
acknowledging receipt and review of the Standard
Terms and Conditions
<PAGE> 1
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
Exhibit 10.25
OPTIONAL SERVICE DELIVERY
AGREEMENT
THIS AGREEMENT, dated as of August 18, 1993 between BLOOMBERG L.P., a
Delaware limited partnership with offices at 499 Park Avenue, New York, New York
10022 ("Bloomberg"), and McCARTHY, CRISANTI & MAFFEI, INC., a New York
corporation with offices at 71 Broadway, New York, New York 10006 ("Source").
WHEREAS, Bloomberg owns and distributes a world-wide electronic
network by means of on-line computer terminals ("THE BLOOMBERG")* consisting of
software, data and equipment for the electronic delivery of financial market
information and analytic services (the "Bloomberg Services"); and
WHEREAS, Source publishes the services listed and described in
Exhibit A to this Agreement (the "Source Services"); and
WHEREAS, Source currently distributes all or some of the Source
Services via Telerate Systems Incorporated and Quotron; and
WHEREAS, Source desires to provide the Source Services through THE
BLOOMBERG to current and potential subscribers of Bloomberg.
NOW, THEREFORE, the parties, in consideration of the premises and
mutual covenants contained herein, agree as follows:
- ------------------
* BLOOMBERG, THE BLOOMBERG, Bloomberg L.P., and BLOOMBERG FINANCIAL
MARKETS are trademarks, trade names and service marks of
Bloomberg L.P., a Delaware limited partnership.
<PAGE> 2
1. Distributor; Non-Exclusivity; New Source Services.
(a) Distributor.
(i) Appointment. Source hereby appoints Bloomberg, and
Bloomberg hereby agrees to serve as, a non-exclusive distributor of Source for
the term set forth in Section 10 for the limited purpose of marketing and
distributing the Source Services worldwide to Bloomberg Subscribers, as defined
below, who also subscribe to the Source Services ("Source Subscribers"), all in
accordance with the terms and conditions hereof. "Subscribers" shall mean those
persons or entities authorized by Source subject to the terms and conditions
hereof, to access all or part of the information and services via THE BLOOMBERG
through which one or more of the Source Services are made available.
Notwithstanding the foregoing, Bloomberg shall not deliver the Source Services
to those persons set forth in Exhibit B, as such exhibit is modified from time
to time, with any modifications being implemented by Bloomberg as soon as
possible, but in no event later than thirty (30) days from the giving of notice.
Source agrees it will authorize the release of the Source Services to a
Subscriber via THE BLOOMBERG if it has authorized the release of such services
to such Source Subscriber via another third party vendor.
(ii) No Implied Duties. The parties agree that Bloomberg's
duties as distributor of Source shall be limited to those expressly set forth in
this Agreement. Bloomberg shall not be deemed to be a fiduciary of Source and
shall not have any implied duties that might otherwise be imposed upon a
distributor of Source.
(b) Non-Exclusivity. The parties acknowledge and agree that the
appointment of Bloomberg as distributor of Source for the
purpose of distributing the Source Services shall be on a
non-exclusive basis. Source retains the right to distribute
itself or permit other third parties to distribute one or
more of the Source Services or services substantially
-2-
<PAGE> 3
similar thereto. Source represents that the Source Services
available for distribution via THE BLOOMBERG will include,
at a minimum, all Source Services distributed by Source via
other third party network vendors (with the exception of
the Fintrend service produced by Fintrend S.A.).
(c) New Source Services. Bloomberg grants to Source the option
to distribute any electronically distributed information
service hereafter developed by Source that is not listed in
Exhibit A (a "New Source Service"). If Source elects to
exercise its option under this subsection (c) with respect
to a New Source Service, such New Source Service shall fall
within the definition of Source Service under this
Agreement, and the distribution of such New Source Service
shall be subject to the terms and conditions set forth in
this Agreement. Notwithstanding the foregoing, Source
agrees to distribute via THE BLOOMBERG any New Source
Service distributed via any other electronic delivery
system.
2. Inputting; Accessibility; Display; Accuracy.
(a) Inputting and Use of Services.
(i) Generally. Source shall input the Source Services into
THE BLOOMBERG by means of a Bloomberg protocol as set forth in Exhibit C.
Bloomberg and Source shall mutually agree on the format of display of the Source
Services. Bloomberg shall provide Source with subscriptions to the "basic"
portion of the Bloomberg Services through the terminals listed in Exhibit C for
no charge which will also be used by Source to authorize the release and
termination of Source Services to Source Subscribers. Source agrees to execute
the standard form of the Bloomberg agreement relating to such terminals, as
modified per the terms and conditions of this Agreement. In addition, Bloomberg,
upon the execution of this
-3-
<PAGE> 4
Agreement, will order and install at each Source US and foreign location
(including, but not by way of limitation, New York, London, Tokyo, Singapore and
Fintrend S.A.'s location in Paris) any and all of the necessary equipment
including, but not by way of limitation, the equipment as set forth on Exhibit C
required by Source to deliver the Source Services pursuant to this Agreement at
no cost to Source. Bloomberg agrees to provide such additional equipment and
upgrades to existing equipment to Source locations from time to time during the
term of this Agreement and any extensions thereof, requested by Source for the
purpose of delivering the Source Services pursuant to this Agreement at no cost
to Source. Source shall be responsible for any costs associated with cabling or
other modifications necessary within its locations. Source may access at no
charge all of the Bloomberg Services generated by Bloomberg and all "optional"
services distributed by Bloomberg, at whatever price is agreed to between Source
and such "optional service" providers, with written approval by the providers of
such optional services. Bloomberg will transmit with Source Services any
copyright notices, legends or disclaimers it receives with such Source Services
from Source.
(ii) Use of Source's Proprietary Services. Notwithstanding
any provision of subsection (i) that may be to the contrary, Bloomberg, subject
to the prior written consent of Source, shall have the right to access the
Source Services; provided that Source shall have the right to deny Bloomberg
access to any Source Service in circumstances where Bloomberg uses such service
in a way that competes with the sale of such service by Source or any of its
affiliates. Bloomberg shall not use Source Services or information provided
therein with or as part of Bloomberg's own products and services. The rights
specified in this subsection (ii) shall be in addition to, and not in limitation
of, any other remedies the parties may have.
(b) Accessibility of Source Services. Bloomberg will attempt to
make the Source Services available through the various
Bloomberg networks, other than THE BLOOMBERG, whenever
Bloomberg determines it is
-4-
<PAGE> 5
commercially practical to do so. Distribution by Bloomberg
of a Source Service that is first made available through a
network (in addition to THE BLOOMBERG) after the date
hereof pursuant to the terms of this subsection (b) shall
be subject to the terms of this Agreement.
(c) Accuracy of Information. Source shall use commercially
reasonable efforts to (i) insure that the information in
the Source Services is accurate, and (ii) correct
inaccuracies, errors or defects in such information
promptly after discovery. Source shall monitor such
information as it is distributed through THE BLOOMBERG and
promptly correct any inaccuracies, errors or defects
therein.
3. Promotion and Marketing.
(a) Efforts and Materials.
(i) Marketing. Source and Bloomberg shall exercise
commercially reasonable efforts to market and promote subscriptions to the
Source Services to be accessed through THE BLOOMBERG. From time to time during
the term of this Agreement, but no less frequently than once a calendar quarter,
Bloomberg shall profile or otherwise promote the Source Services on THE
BLOOMBERG or in promotional materials.
(ii) Materials. Neither party shall publish or distribute
any advertising or promotional material regarding the availability of the Source
Services through THE BLOOMBERG without the prior written consent of the other,
which consent shall not be unreasonably withheld. Materials being sent to the
other party for approval pursuant to this subsection (a) shall be directed to
the person(s) designated in Exhibit D hereto.
-5-
<PAGE> 6
(b) Subscriber List. To facilitate Source's promotional
efforts, Bloomberg shall provide to Source access at any
time to the following information VIA THE BLOOMBERG: (i)
the complete list of Bloomberg Subscribers globally; and
(ii) on a weekly basis, all new installations during the
previous week. In addition, Bloomberg will provide Source
quarterly with a physical printout of all customers
authorized for Source Services. Bloomberg represents and
warrants that all reports shall be accurate and complete in
all material respects and correctly reflect the number of
subscriptions and those having access to the Source
Services.
(c) Demonstration Periods; Trade Shows. Bloomberg agrees to
promote and market the Source Services, subject to the
terms contained in the last sentence of Section 1(a)(i), by
making one or more of the Source Services available free of
charge to Bloomberg Subscribers for up to thirty (30) days
upon the request of Source. The preceding provision shall
not be deemed to increase Bloomberg's obligations to market
and promote subscriptions to the Source Services set forth
in subsection (a) of this Section 3. In addition, Bloomberg
agrees to provide terminals at no cost to Source for up to
twelve (12) trade show exhibits annually in which Source
participates; provided, however, that Source shall bear
shipping, installation and communications costs. Source
will provide Bloomberg thirty (30) days' prior notice of
the date of said trade shows.
4. Fees; Service Agreement.
(a) Billing; Fees. Source shall bill Source Subscribers in the
United States on a regular basis for subscriptions to the
Source Services. At Source's request, a representative of
Source will be trained to use the Bloomberg terminal to
entitle Source Subscribers to view the Source Services and
Bloomberg shall bill Source Subscribers outside the United
States, on a
-6-
<PAGE> 7
regular basis for subscriptions to all Source Services.
Fees for subscriptions to the Source Services shall be
determined by Source in its respective geographic regions
in its sole discretion. Source agrees that it will make
changes in published subscription fees to the Source
Services only once per year, which shall, except as set
forth below, be effective anywhere other than Japan on
January 1 and in Japan on April 1, and will give Bloomberg
no less than one hundred twenty (120) days' prior written
notice of any such change. Notwithstanding the foregoing,
all new Source Subscribers who become Source Subscribers
within said one hundred twenty (120) day pre-effective
period, shall be charged the new subscription fees.
Bloomberg covenants that it will inform all Source
Subscribers by way of notices on THE BLOOMBERG of the new
fees and shall implement the new fee schedule at the times
provided for herein. Source agrees that it will not charge
a Source Subscriber any more money for its subscription to
the Source Services delivered pursuant to this Agreement
than it will charge said Source Subscriber for the Source
Services received by other third party vendors. The parties
agree that Source may require Bloomberg to terminate
distribution of the Source Services to Source Subscribers
that are severely in arrears in paying their subscription
fees; provided, however, Source agrees to indemnify
Bloomberg from damages sustained solely related to such
termination. Source Subscribers shall be deemed severely in
arrears for purposes hereof when they become six months
behind in payments. The parties agree that the party
responsible for billing shall comply with all applicable
Country, State and local laws and regulations, including
but not limited to all taxing laws and regulations.
(b) Bloomberg Service Agreements. In those jurisdictions where
Bloomberg is billing Source Subscribers for their use of
the Source Services,
-7-
<PAGE> 8
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
Bloomberg shall provide the applicable Bloomberg Service
Agreement to each subscriber to the Source Services and
shall not grant any subscriber access to any Source Service
(except on a trial basis) until it has obtained an executed
copy of the applicable Bloomberg Service Agreement from
such subscriber. Bloomberg agrees that it will not consent
to a request by a Source Subscriber who seeks to store,
modify, reproduce in any form, redisseminate, recirculate
or republish in any form the Source Services without the
prior written consent of Source, which consent shall be at
Source's sole discretion. Copies of representative
Bloomberg Service Agreements currently being used are
attached as Exhibit E. Bloomberg shall provide Source with
a copy of material amendments to said Bloomberg Service
Agreements within ten (10) days after such amendments are
implemented. Source shall not make any statement regarding
any Bloomberg Service that is contradictory or inconsistent
with the then-current version of the applicable Bloomberg
Service Agreement.
(c) Source's Service Agreement. In jurisdictions in which
Source is billing Source Subscribers for their use of the
Source Services, Source may provide the Source Services via
a written or oral Service Agreement. A copy of the written
Service Agreement that Source initially will use in
jurisdictions where it will bill Source Subscribers for
their use of the Source Services and a copy of Source's
price lists currently in effect are attached as Exhibit F.
5. Charges/Fees.
(a) Bloomberg Fee. *******************************************
**********************************************************
*********************************************************.
-8-
<PAGE> 9
(b) Sales Commission and Fee. Bloomberg and its authorized
distributors shall not be entitled to any fee or commission
for subscriptions to a Source Service sold to a Bloomberg
Subscriber by a salesperson working for Bloomberg or an
Authorized Distributor outside the United States unless
Source deems the payment of a fee or commission
appropriate.
(c) Billing. No later than the twentieth of each month,
Bloomberg will present Source with a list of all Source
Subscribers to be billed for that month, and the amount to
be billed. Source will review the list and notify Bloomberg
of any discrepancies within five (5) business days. By the
end of each month, Bloomberg will pay Source the amount
listed on the report. If Source notifies Bloomberg of any
adjustments, Bloomberg will make such adjustments on the
following month's payment. Source understands that
Bloomberg invoices customers every three months in arrears.
Furthermore, Source understands that Bloomberg does not
invoice based on usage. Bloomberg only invoices in monthly
increments.
Bloomberg reserves the right to take a credit on future payments to
Source, if, after Bloomberg has made reasonable efforts to collect payment on
charges for Source Services, Bloomberg has not received payment. Bloomberg may,
at its discretion, credit the subscribers' invoice and deduct the amount of the
invoice from a future payment to Source.
Bloomberg will bear responsibility for charging sales, usage, or
Value Added Tax, whichever is appropriate, and remitting the tax to the
appropriate taxing authorities.
(d) Records. Bloomberg shall maintain complete and accurate
books and records (collectively, the "Records") with
respect to all amounts it billed
-9-
<PAGE> 10
to Source Subscribers in respect of subscriptions to the
Source Services. Source shall have the right upon at least
thirty (30) days' prior written notice to inspect the
Records of Bloomberg during normal business hours no more
frequently than twice per year. All information gained by
Source from such inspection will be kept in strict
confidence and will be used solely for the purpose of
verifying the accuracy of the computation of the amounts
due hereunder.
6. Copyright.
Source represents and warrants to Bloomberg that Source or its
licensors to the best of its and their knowledge own the Source Services and the
copyrights thereto, and that Source has the right to authorize Bloomberg to
distribute the Source Services under this Agreement. Bloomberg agrees it is not
acquiring under this Agreement any proprietary interest in the Source Services
and agrees not to challenge the claim of Source or its licensors to the
ownership of the Source Services and the measures requested by Source to make
the copyright claim of Source or its licensors known to Source Subscribers and
to assist Source, at Source's expense, in Source's defense or prosecution of any
copyright infringement claim.
7. Maintenance and Circumstances Beyond Parties' Control. Subject to the
provisions set forth in Section 8, neither Bloomberg nor Source will be deemed
in default or liable hereunder if, as a result of any cause or circumstance
beyond such party's reasonable control or any repair work or routine
maintenance, there occurs a delay in or failure or interruption of (i) service
to any Source Subscriber, or (ii) transmission of the Source Services. So long
as any such failure continues, the party responsible for such service or
transmission will use its reasonable best efforts to eliminate such conditions
and will keep the other party fully informed at all times concerning the matters
causing such delay or default and the prospects for their termination.
-10-
<PAGE> 11
8. Indemnification.
(a) By Source. In the event any claim is brought by a third
party against Bloomberg that relates to, arises out of or
is based upon the Source Services or the failure of Source
to comply with any law, rule or regulation, Bloomberg shall
promptly notify Source, and Source shall defend such claim
at Source's expense and under Source's control. Source
shall indemnify and hold harmless Bloomberg against any
judgment, liability, loss, cost or damage (including
litigation costs and reasonable attorneys' fees) arising
from or related to such claim whether or not such claim is
successful. Bloomberg shall have the right, at its expense,
to participate in the defense of such claim through counsel
of its own choosing; provided, however, that Source shall
not be required to pay any settlement amount that it has
not approved in advance.
(b) By Bloomberg. In the event any claim is brought by any
third party against Source that relates to, arises out of
or is based upon any error, delay, interruption or other
event caused by Bloomberg or its Authorized Distributors in
transmitting the Source Services, Source shall promptly
notify Bloomberg, and Bloomberg shall defend such claim at
Bloomberg's expense and under Bloomberg's control.
Bloomberg shall indemnify and hold harmless Source against
any judgment, liability, loss, cost or damage (including
litigation costs and reasonable attorneys' fees) arising
from or related to such claim, whether or not such claim is
successful. Source shall have the right, at its expense, to
participate in the defense of such claim through counsel of
its own choosing; provided, however, that Bloomberg shall
not be required to pay any settlement amount that it has
not approved in advance.
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<PAGE> 12
9. Representations and Warranties of the Parties. Each party hereby
represents, covenants and warrants to the other as follows:
(a) it has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement
and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of
such party, enforceable in accordance with its terms and
conditions.
(b) That the parties will comply with all codes, regulations
and laws applicable to the provision of the services under
this Agreement, and has obtained or will obtain all
necessary permits, licenses and other authorizations
necessary for its performance of services under this
Agreement.
10. Confidentiality.
(a) The following materials and information and all copies
thereof of whatever nature are designated as "confidential"
and are the proprietary information and trade secrets of
Bloomberg:
(i) the computer software and database possessed by
Bloomberg and all source documents relating to such computer software and
database; provided, however, Source may use the data and analytics within the
Bloomberg terminal to perform analyses relevant to information included in the
Source Services. Source agrees that wherever Bloomberg proprietary data is
referenced directly that Bloomberg will be sourced accordingly.
(ii) proprietary business information of Bloomberg
(including, without limitation, the names and addresses of Subscribers,
information providers
-12-
<PAGE> 13
and suppliers), and business information that Bloomberg does not generally make
available to the public;
(iii) the methods, means, personnel, equipment and software
by and with which Bloomberg provides THE BLOOMBERG; and
(iv) any other information that Bloomberg reasonably
designates, by notice in writing delivered to Source, as being confidential or a
trade secret.
(b) The following materials and information and all copies
thereof of whatever nature are designated as "confidential"
and are the proprietary information and trade secrets of
Source:
(i) proprietary business information of Source, and
business information that Source does not generally make available to the
public; and
(ii) any other information that Source reasonably
designates, by notice in writing delivered to Bloomberg, as being confidential
or a trade secret.
(c) All such proprietary or confidential information of
Bloomberg or Source shall be kept secret by the Source or
Bloomberg, as the case may be, to the degree it keeps
secret its own confidential or proprietary information.
Such information belonging to either party shall not be
disclosed by the other party to its employees except on a
need-to-know basis or to agents or contractors of such
other party, but may be disclosed by such other party to
state or federal agencies, authorities or courts upon their
order or request provided prompt notice of such order or
request is given by such other party to the party to which
such information belongs, if such notice is legally
permitted. Upon termination of this Agreement, all copies
of such information shall be
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<PAGE> 14
returned to the party to which such information belongs and
no copies thereof shall remain in the possession, custody
or control of such other party.
(d) No information that would otherwise be proprietary or
confidential for the purposes of this Agreement pursuant to
Subsections (a) or (b) above shall be subject to the
restrictions on disclosure imposed by this Section in the
event and to the extent that (i) such information is in, or
becomes part of, the public domain otherwise than through
the fault of the party to which such information does not
belong, (ii) such information was known to such party prior
to the execution of this Agreement, or (iii) such
information was revealed to such party by a third party.
11. Term; Termination.
(a) Term. The initial term of this Agreement shall commence on
the date first above written and shall terminate at the end
of the fifth year (the "Initial Term"). Notwithstanding the
foregoing, the parties agree that actual delivery of the
Source Services to Source Subscribers shall not commence
until on or after October 1, 1993. The term of this
Agreement shall automatically be extended for one or more
periods of two years (a "Renewal Term"), unless either
party sends to the other written notice of its election not
to renew at least ninety (90) days prior to the end of the
Initial Term, or any Renewal Term, as the case may be.
(b) Default. If either party shall default in the performance
of or compliance with any provision contained in this
Agreement including, but not limited to, any breach of a
representation or warranty, and such default shall not have
been cured within thirty (30) days after written notice
thereof shall have been given to the appropriate party, the
party
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<PAGE> 15
giving such notice may then give further written notice to
such other party terminating this Agreement, in which event
this Agreement and any other rights granted hereunder shall
terminate on the date specified in such further notice.
Each party agrees, in the event of a breach by it of any of
its obligations under this Agreement, the non-breaching
party may seek temporary or permanent injunctive relief,
without the necessity of proving actual damages or the
posting of a bond, as well as other equitable relief, and
will be entitled to commence an action for any such relief
in any court of competent jurisdiction.
(c) Insolvency. In the event that either party hereto shall be
adjudged insolvent or bankrupt, or upon the institution of
any proceedings by it seeking relief, reorganization or
arrangement under any laws relating to insolvency, or if an
involuntary petition in bankruptcy is filed against such
party and said petition is not discharged within sixty (60)
days after such filing, or upon any assignment for the
benefit of its creditors, or upon the appointment of a
receiver, liquidator or trustee of any of its assets, or
upon the liquidation, dissolution or winding up of its
business (an "Event of Bankruptcy"), then the party
involved in any such Event of Bankruptcy shall immediately
give notice thereof to the other party, and the other party
at its option may terminate this Agreement upon written
notice.
12. Miscellaneous.
(a) Notices. All notices hereunder (except as provided for in
Section 4(c) hereof) shall be in writing and shall be
delivered in person, or sent by overnight courier service,
to the address of the party set forth below, or to such
other addresses as may be stipulated in writing by the
parties
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<PAGE> 16
pursuant hereto. Unless otherwise provided, notice shall be
effective on the date it is officially recorded as
delivered.
(i) If to Bloomberg, to:
Bloomberg L.P.
499 Park Avenue
New York, New York 10022
Attention: Michael R. Bloomberg
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Richard K. DeScherer, Esq.
(ii) If to Source, to:
McCarthy, Crisanti & Maffei, Inc.
71 Broadway
New York, New York 10006
Attention: President
with a copy to:
The Van Kampen Merritt Companies, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Attention: General Counsel
(b) Amendment; Assignment. This Agreement may not be amended
except by written instrument executed by Source and
Bloomberg. Neither
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<PAGE> 17
party may assign this Agreement to any third party, other
than an affiliate, without the prior written consent of the
other. Any assignment of this Agreement to an affiliate
shall not relieve the assigning party of any of its
obligations or liabilities under this Agreement.
(c) Survival of Certain Provisions. Notwithstanding the
termination of this Agreement, those provisions of this
Agreement that by their nature are intended to survive such
termination shall survive, including without limitation,
the provisions of Section 8, 9, 10 and 11.
(d) Consequential Damages. Except pursuant to Section 8,
neither party shall be liable for any consequential,
indirect, incidental or special damages, even if advised of
the possibility of such damages.
(e) Entire Agreement. This Agreement contains the entire
understanding of the parties on the subject hereof and
terminates and supersedes all previous verbal and written
agreements on such subject.
(f) Relationship of the Parties. The parties agree that
Bloomberg will act as an independent contractor in the
performance of its duties under this Agreement. This
Agreement does not and shall not be deemed to constitute a
partnership or joint venture between the parties and
neither party nor any of its directors, officers, employees
or agents shall, by virtue of the performance of their
obligations under this Agreement, be deemed to be an
employee of the other.
(g) "Affiliate" Defined. For purposes of this Agreement, the
term "affiliate" and its derivatives shall mean, with
respect to any individual or entity directly or indirectly,
through one or more intermediaries, controlling, controlled
by, or under common control with such individual or entity.
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<PAGE> 18
The term "control" and its derivatives, as used in the
immediately preceding sentence, means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management or policies of an entity,
whether through the ownership of voting securities, by
contract or otherwise.
(h) Severability. In the event any provision of this Agreement
or application hereof to any party or in any circumstances
shall be determined to be invalid, unlawful, or
unenforceable to any extent, the remainder of this
Agreement, and the application of any provision to parties
or circumstances other than those as to which it is
determined to be unlawful, invalid or unenforceable, shall
not be affected thereby, and each remaining provision of
this Agreement shall continue to be valid and may be
enforced to the fullest extent permitted by law.
(i) Non-Waiver. No delay or failure by either party in
exercising any right under this Agreement, and no partial
or single exercise of that right, shall constitute a waiver
of that or any other right.
(j) Captions. The captions used herein are for convenience
only, and constitute no part of this Agreement.
(k) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New
York, without regard to the choice of law principles
thereof.
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<PAGE> 19
IN WITNESS WHEREOF, the undersigned parties have duly executed this
Agreement as of the 18th day of August, 1993, to be effective as set forth
in Section 11(a) hereof.
McCARTHY, CRISANTI & MAFFEI, INC. BLOOMBERG L.P.
By: Bloomberg Inc.,
General Partner
By: /s/ Lindley B. Richert By: /s/ Michael R. Bloomberg
------------------------------ Name:
Name: LINDLEY B. RICHERT Title:
Title: PRESIDENT
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<PAGE> 20
Exhibit A
Source Services
<TABLE>
<CAPTION>
Name Description
- ---- -----------
<S> <C>
CorporateWatch* Principally provides rapid and
comprehensive information on corporate
securities, private placements, equities
and mortgage and derivative product new
issues.
CurrencyWatch* A foreign exchange market forecasting
and analysis system combining live 24
hour fundamental and technical analysis
presented as both commentary and live
technical trading pages, together with
comprehensive live EMS analysis.
MoneyWatch* Provides 24 hour fundamental and
technical analysis of US Treasury,
Agency and money market securities. The
service combines live commentary and
technical trading analysis with detailed
forecasts and analysis of the US
economy.
YieldWatch* Addresses European and Asia Pacific
government bonds/financial futures
markets including the U.S. T-bond.
Information is presented as live
commentary, technical trading blotters
and spread analysis, together with
regional market briefings.
</TABLE>
*Denotes a registered trademark of McCarthy, Crisanti & Maffei, Inc.
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<PAGE> 21
Exhibit B
The following subscribers should be restricted from access to the Source
Services pursuant to Section 1(a)(i) of the Agreement:
<TABLE>
<CAPTION>
<S> <C>
Munifacts/American Banker Alert/OASYS
Trepp & Company AutEx
Money Market Services CDA Investment Technologies
Ried, Thunberg CORIS
Elliot Wave International FIRST-CALL
Data Resources Inc. Forex Watch
Wrightson & Co. Forex Chartist
Evans Economics Technical System
Froehlich Investext
Griggs & Santow Securities Data Co.
Dunn & Bradstreet Wunsch Auction Systems
Predex Asset Backed Securities Group
Cates Securities Information Center
Bank Valuation Software Division
Chronometrics Technical Data (All Services)
Capital Techniques Valornform
Telerate Corporate Market Service I.F.R. JapanWatch
Eurobond Service I.F.R. Vigil
Elders Applied Research I.F.R. CorporateEye
R.A. Froehlich I.F.R. LanAm
Business Week I.F.R. Int'l. Financing Review
Market Data Corporation Atlas
Market News Service Bond Data
Vigil MoneyData
Muller Data ILX
Pensions & Investment Age Bond World
Money Line Corporation Moody's
Standard & Poor's MGraw Hill
Dow Jones News Service FX 24
Duff & Phelps Gannett
Olson Group Fitch
Investment Dealers Digest Sheshunoff
(I.D.D. Information Services) Capital Management
Securities Data Corp. Prechter's Elliot Wave International
RS Investments Johnson Smick International
MRL Publishing IPO Financial
Capital Management Commscan
MBSIS AMG Data Services
J.J. Kenney & Company MortgageData
MortgageData IDEA
O'Connor, Paul & Phillips Dalcomp Inc.
Telekurs Maria Ramirez Capital Consultants
Stone, McCarthy SDC Publishing
Institutional Investor Euromoneys
Thomson Financial Networks
</TABLE>
In addition to the above list, only Authorized Distributors should be allowed
access when exhibiting at conferences.
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<PAGE> 22
Exhibit C
"Non-Chargeable" Bloomberg Equipment and Services
1. Equipment for using of Bloomberg and Source data at Source sites
including but not limited to:
(i) Five Bloomberg terminals in New York with Editing
capabilities;
(ii) One Bloomberg terminal at each overseas site.
Bloomberg shall establish and operate a system capable of properly receiving the
Source Services and distributing the Source Services to Subscribers. This will
include the necessary equipment at Source's New York site with leased and back
up lines to Source's New York site to provide the ability for the Source system
to update Bloomberg automatically.
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<PAGE> 23
Exhibit D
Contacts for Approval of Promotional Materials
For Bloomberg: Mr. Lou Eccleston
Bloomberg L.P.
499 Park Avenue
New York, NY 10022
Telephone: 212-318-2272
Facsimile: 212-318-2080
For Source: Mr. Jay Miller
McCarthy, Crisanti & Maffei, Inc.
71 Broadway
New York, NY 10006
Telephone: 212-509-5800
Facsimile: 212-509-7389
Either party may change its designated "contact" person by giving written notice
to the other.
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<PAGE> 24
Exhibit E
Bloomberg L.P. Service Agreements
See Attached
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<PAGE> 25
BLOOMBERG SCHEDULE OF SERVICES
Lessor: BLOOMBERG L.P.
Lessee:
Department:
Equipment Address:
- ------------------------------------
- ------------------------------------
- ------------------------------------
(City) (State) (Zip)
Contacts:
(User Name & Telephone No.)
Customer Account No.:
Order Order
Number: Date:
Billing Address:
- ---------------------------------------------
- ---------------------------------------------
- ---------------------------------------------
(City) (State) (Zip)
(Billing Name & Telephone No.)
Lessor and Lessee are parties to a BLOOMBERG AGREEMENT, Number
(the "Agreement") which sets forth the terms and conditions under which Lessor
provides to Lessee the Services described therein.
(Additional terms on reverse side)
<TABLE>
<CAPTION>
Type of Non-Recurring
Equipment Monthly Recurring Commencement Charge (Per
Ordered Quantity Charge (Per Unit) Date of Term Unit)
------- -------- ----------------- ------------ -----
<S> <C> <C> <C> <C>
Total $____________ Total $_________
Tax** $____________ Tax** $__________
Tax Rate**:____% Month*$__________ One-Time$______
Quarter*$_________
</TABLE>
* This total does not include monthly fees for real-time exchange and third
party information services. If a customer selects these, Bloomberg L.P. will
submit the appropriate applications for such services, a current price list, and
bill accordingly.
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<PAGE> 26
1. INSTALLATION OF TERMINAL(S)
Pursuant to the Agreement, Lessee has requested Lessor to install
BLOOMBERG terminals at the stated equipment address (as noted on the
reverse side). Lessee understands that if Lessee changes the number
of terminals leased, the then existing per terminal charge for the
new number of terminals would apply. Billing is quarterly in advance
- including all applicable taxes.
2. TERM
The initial Term (as defined in the Agreement) is from the first day
Services are provided to the second anniversary of that date. The
Term for any Additional Terminals shall commence on the first day
Services are provided in respect of the Additional Terminals. The fee
commences the day following actual installation.
3. BLOOMBERG II: SHARED CONTROLLER; TRAVELER
MAINTENANCE/INSURANCE
In the event that this Schedule provides, or may from time to time
provide:
(i) for one or more "Bloomberg II" screens, the Lessee agrees
not to separate, unbolt, move, modify, interface or
otherwise disconnect any one or both of the double
"Bloomberg II" screens, or use any one or both of the
screens in a manner inconsistent with the terms of this
Agreement, without Lessor's prior written consent.
Unauthorized access or use is unlawful and Lessor shall
have all recourse and rights to set forth in the Agreement.
The lease term for the "Bloomberg II" shall be the same as
that of the specific BLOOMBERG to which it is attached. The
Lessee's fee applicable to the double screen shall commence
on the date following actual installation; and
(ii) for a fee for Services calculated on the basis of a shared
Controller, then at such time as the Controller is no
longer shared, the fee for Services shall be increased to
the prevailing rate for Services provided on an unshared
basis; and
(iii) for Traveler maintenance, Lessor's sole obligation shall be
limited to repairing, at its facility, any failure of The
Traveler. Notwithstanding the foregoing, Lessor shall not
be responsible for repairing failures resulting from
intentional or negligent acts. There shall be no
maintenance performed on The Traveler other than by Lessor
or its agent or any addition to, removal from or
modification of The Traveler. Lessor and its agents'
maximum liability under this maintenance provision and
Lessee's sole remedy regardless of the form of action
taken, whether in tort or contract, shall not exceed the
refund of the
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<PAGE> 27
maintenance charges billed to Lessee. Maintenance includes
$250 deductible loss/theft insurance policy.
4. RESEARCH REPORT
Lessee acknowledges that the following applies to all research
reports issued by third-party information sources (the "Sources"):
The data is copywritten by the Source(s) and may be approved for
publication in the United Kingdom. The information herein is obtained
from various sources deemed reliable; but the Source(s) do not
guarantee the accuracy or completeness of the information. Additional
information is available. Neither the information nor any opinion
expressed constitutes an offer to buy or sell any securities or
options or futures contracts. The Source(s) may trade for its own
account as specialist, odd-lot dealers, market maker, block
positioner and/or arbitrageur in any securities or options of the
issuer(s). The Source(s), its affiliates, directors, officers,
employees and employee benefit programs may have a long or short
position in any securities or options of the issuer(s).
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<PAGE> 28
AGREEMENT NUMBER: ___________
BLOOMBERG L.P.
499 PARK AVENUE
NEW YORK, NY 10022
TELEPHONE: (212) 960-7000
FACSIMILE: (212) 960-____
BLOOMBERG AGREEMENT
LESSOR: BLOOMBERG L.P.
LESSEE:_____________________________ Account No.:____________
(Company Name)
Lessor agrees to provide to Lessee the equipment and services described and
referred to in paragraph 1 of this Agreement, and Lessee subscribes to such
services in accordance with this Agreement.
1. License and Lease. The services provided hereunder (the "Services")
shall consist of a nonexclusive and nontransferable license and lease to use THE
BLOOMBERG software, data and equipment (the "Equipment") described in the
Bloomberg Schedule of Services annexed hereto, as the same may be amended from
time to time (the "Schedule"), in accordance with normal BLOOMBERG operating
schedules and procedures. During the Term (as defined below), Lessee may request
Lessor to install one or more additional BLOOMBERG terminals ("Additional
Terminals") in accordance with this Agreement, in which event the parties hereto
shall execute a revised Schedule reflecting all of the Equipment then provided
hereunder.
2. Term.
(a) This Agreement shall be effective from the date it is accepted by
Lessor and shall remain in full force and effect thereafter for the period set
forth in the Schedule (the "Term"), unless earlier terminated, as follows: (i)
Lessee shall have the right to terminate this Agreement at any time upon not
less than 60 days' prior written notice to Lessor and upon payment of the
charges set forth in paragraph 3 of this Agreement; and (ii) Lessor shall have
the right to terminate this Agreement at any time immediately upon written
notice to Lessee in the event of a breach by Lessee of any of the provisions of
this Agreement.
(b) The Term shall be automatically renewed for successive two-year
periods unless Lessee or Lessor elects not to renew by giving not less than 60
days' prior notice to the other. If this Agreement is so renewed for any
additional period beyond the initial Term, the charges payable pursuant to
paragraph 3(a) hereof for such renewal period shall be calculated at the
prevailing rates then offered by Lessor, and the Schedule shall be considered to
be amended accordingly.
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<PAGE> 29
3. Charges.
(a) Lessee agrees to pay Lessor the amount indicated on the Schedule,
together with (i) any applicable taxes for the Services, (ii) any levies or fees
imposed or charged by exchanges or other information services or sources
displayed through THE BLOOMBERG at Lessee's request and (iii) any charges shall
be computed from the day following actual installation of the Equipment, and
shall be invoiced periodically as specified in the Schedule.
(b) Lessee shall be responsible for and shall pay for all costs of
electrical and communications services and for all electrical and common carrier
equipment installation charges incurred in connection with the Services. Lessee
shall obtain all necessary authorizations from exchanges and other information
vendors and shall pay for each third-party information service assessed by
Lessor and selected by Lessee for display through THE BLOOMBERG. The total
monthly charge does not include monthly fees for "real-time" exchange and third
party information services. If Lessee selects any of these services, Lessor will
submit the appropriate applications for such services, a price list, and bill
accordingly. Lessee agrees to file all personal property tax returns and pay any
taxes, assessments, fees or penalties in respect of the Services and/or the
Equipment which may be Lessee's legal responsibility to pay.
(c) In the event this Agreement is terminated by Lessee pursuant to
paragraph 2(a)(i) hereof or by Lessor pursuant to paragraph 2(a)(ii) hereof,
Lessee shall be liable for all amounts payable pursuant to paragraphs 3(a) and
3(b) hereof through the date of termination plus a removal charge in the amount
equal to 50% of the charges calculated in accordance with the Schedule for the
balance of the Term.
4. Distribution of Lessee Data.
(a) Lessee shall not distribute data to other users (the "Users") of
THE BLOOMBERG by means of the Equipment without the prior consent of Lessor. In
the event that Lessee desires to engage in such distribution, Lessee shall make
a request to Lessor. Such request shall specifically identify the data proposed
to be distributed (the "Data"), the fee, if any, to be charged to Users for
delivery of the Data, and the Users to whom the Data is proposed to be
distributed. The request also shall state that the representations and
warranties of Lessee set forth in paragraphs (b) and (c) of this paragraph 4 are
true and correct as of the date of the request. Following receipt of such
request, Lessor shall notify Lessee whether or not, in Lessor's sole discretion,
the Data, in whole or in part, shall be distributed by means of THE BLOOMBERG,
subject always to Lessor's right, in its sole discretion, to discontinue such
distribution. THE PROCEDURE SET FORTH IN THIS PARAGRAPH 4(a) IS THE ONLY
PROCEDURE BY WHICH LESSEE MAY DISTRIBUTE DATA TO USERS BY MEANS OF THE
BLOOMBERG. ANY DISTRIBUTION NOT APPROVED HEREUNDER IS UNAUTHORIZED AND SHALL
CONSTITUTE A BREACH OF THIS AGREEMENT.
(b) Subject to the terms and conditions of this Agreement, Lessee
hereby grants to Lessor, the Lessor hereby accepts, a nonexclusive, world-wide
license to market and deliver the Data to Users electronically by means of THE
BLOOMBERG.
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<PAGE> 30
In the event that the Data includes prices, or that Lessee otherwise puts prices
onto THE BLOOMBERG, Lessee hereby grants to Lessor, and Lessor hereby accepts, a
nonexclusive, world-wide license to use such prices in the development of
Lessor's generic prices. Lessee represents that it has all such rights in, and
licenses to, the information contained in the Data as may be required in order
to permit it to grant to Lessor the license granted hereby and to transmit to
Lessor and Users the Data.
(c) Lessee represents and warrants to Lessor the following: (i) all
Data to be delivered by Lessee by means of THE BLOOMBERG will include, at a
minimum, all financial market information and other such data delivered by
Lessee to its clients by other "third-party" electronic distribution systems;
(ii) Lessee ________________ right, title and interest in and to all information
contained in the Data furnished by Lessee pursuant hereto, owns the copyright
and all ____________, trade names and other proprietary rights tin and to all
Data and all such information and has full power, right and authority to obtain,
____________ distribute the Data to Lessor and Users; and (iii) when supplied by
Lessee to Lessor, the Data and information contained therein shall ___ and
complete and as current as similar information distributed by the Lessee to
other "third-party" electronic distribution systems.
(d) Lessee agrees to make ___ the Data to Lessor for transmission to
Users by THE BLOOMBERG no later than the time that the Data is made available to
any other "third party" electronic distribution system.
(e) Lessee agrees that it will authorize the release of the Data to a
User via THE BLOOMBERG if it has authorized the release of the Data to such User
via any other "third party" electronic distribution system.
(f) Lessee shall use its best efforts to (i) keep the Data current,
accurate and complete, (ii) notify Lessor promptly of any errors or omissions,
and (iii) correct any such errors or omissions promptly.
(g) The Data will be delivered to Users at no costs to Lessors. Each
User shall pay (i) to Lessor the monthly rental charge such User is required to
pay with respect to THE BLOOMBERG and (ii) any fees imposed by Lessee for access
to the Data. Lessee agrees that the fees charged to Users for access to the Data
via THE BLOOMBERG will be no greater than the fees charged to Users for access
to the Data via other "third-party" electronic distribution systems, net of any
(i) rebates paid by Lessee to the operators of the "third-party" electronic
distribution systems (the "Operators"), or (ii) sums charged by the Operators to
Users but not remitted to Lessee.
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<PAGE> 31
SAMPLE
Warranties and Limitations of Liabilities
(a) LESSOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE
ATTAINED BY THE LESSEE OR OTHERS FROM THE USE OF THE SERVICES OR THE DATA OR THE
EQUIPMENT BY WHICH THE SERVICES OR THE DATA ARE PROVIDED, AND THERE ARE NO
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE. ___or, its suppliers, and its third party agents shall have no
responsibility or liability, contingent or otherwise, for any injury or damages,
whether caused by the negligence of Lessor, its employees, subcontractors,
agents, equipment vendors or otherwise, arising in connection with the Services
rendered under this Agreement, the use or transmission of the Data pursuant to
this Agreement or use of the Equipment and shall not be liable for any profits
losses, punitive, incidental or consequential damages or any claim against
Lessee by any other party. The information and data contained in Services are
derived from sources deemed reliable, but Lessor and its suppliers do not
guarantee the correctness or completeness of any programs ____ or other
information furnished in connection with the Services. Lessor shall not be
responsible for or have any liability for any injuries or damages caused by the
Equipment or the Data or by delays or interruptions of the Services or the Data,
from whatever cause, and shall not be liable for damages ___ing from the use or
presence of the Equipment on Lessee's premises. Lessee is solely responsible for
the accuracy and adequacy of the Data and the _____ and information used by it
and the resultant output thereof. Lessor shall have no liability or
responsibility for the security or maintenance of any _____ input by Lessee.
Lessor shall have no liability or responsibility for any errors, omissions,
delays or inaccuracies in the Data, nor for any damages _____by Lessee or any
others resulting from disseminating the Data through THE BLOOMBERG. Lessee shall
indemnify Lessor and hold it harmless ______ at Lessee's expense defend against
any loss, claim, demand or expense (including reasonable attorney's fees)
arising in connection with the _____. To the extent permitted by law, it is
agreed that the liability of Lessor hereunder for damages, regardless of the
form of the action, shall not ______ the fees payable by Lessee for the Services
for a period of six months, and that this shall be Lessee's exclusive remedy. No
party shall be liable to the other for any default resulting from force majeure,
which shall be deemed to include any circumstances beyond the reasonable control
of the party or parties affected. No action, regardless of form, arising out of
or pertaining to any of the Services or the Equipment may be brought by Lessee
more than one (1) year after the cause of action has accrued.
(b) Notwithstanding any limitations contained in paragraph 5(a) to
the contrary, Lessor agrees to indemnify Lessee and hold it harmless and at
Lessor's expense defend Lessee against any claim that the programs, data,
information and other items provided by Lessor hereunder (other than ____ Data)
infringe any copyright, trademark or other contractual, statutory or common law
rights; provided that (i) Lessee promptly notifies Lessor in writing of the
claim, (ii) Lessor shall have sole control of the settlement and defense of any
action to which this indemnity relates, (iii) Lessee cooperates in every
reasonable way to facilitate such defense, and
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<PAGE> 32
(iv) if Lessee becomes aware of any suspected infringement by a third party of
any proprietary _____ of Lessor, Lessee shall promptly notify Lessor of such
activities.
Remedies. In the event of a breach or threatened breach of any of the
provisions of this Agreement by Lessee or any of its employees, ______ or
affiliates, Lessor shall be entitled to injunctive relief to enforce the
provisions hereof, but nothing herein shall preclude Lessor from _____ any
action or other remedy for any breach or threatened breach of this Agreement,
all of which shall be cumulative. In the event Lessor fails in any such action,
Lessor shall be entitled to recover from Lessee all reasonable costs, expenses
and attorneys' fees incurred in connection therewith.
Parties. Lessee recognizes that Lessor, its partners, suppliers and
their respective affiliates, each have rights with respect to THE BLOOMBERG,
including the software, data, information and other items provided by Lessor by
reason of Lessee's use of THE BLOOMBERG. Lessee acknowledges and agrees that the
provisions of paragraphs 5 and 6 of this Agreement shall be for the benefit of
Lessor, its partners, suppliers, and their respective affiliates, successors and
assigns and that the term "Lessor" as used in such paragraphs includes Lessor,
its partners, suppliers and their respective affiliates.
Access. Lessee agrees to provide both a "dedicated" line and a "dial
back-up" line at its expense, permanently connected and dedicated to the
equipment. The sole purpose of the "dial" line shall be to provide
communications "backup" for the Services. Lessor is not responsible for the
reliability continued availability of the telephone lines and communications
equipment, other than communications equipment supplied by Lessor, used by
Lessee in accessing the Services. However, Lessor shall attempt to resolve any
communication line problems with respect to the accessibility of the ________.
9. Restrictions on Use.
(a) The Services and the Equipment are solely and exclusively for the
use of Lessee and may not be used in any manner inconsistent with the provisions
of this Agreement. Lessee acknowledges that the Services and the Equipment were
developed, compiled, prepared, revised, selected and arranged by Lessor and
others (including certain information sources) through the application of
methods and standards of judgment developed and applied through the expenditure
of substantial time, effort and money and constitute value industrial property
and trade secrets of Lessor and such others. Lessee agrees to protect the
proprietary rights of Lessor and all others having rights in the Services and
the Equipment during and after the Term of this Agreement. Lessee shall honor
and comply with all written requests made by Lessor or its suppliers to protect
their and others' contractual, statutory and common law rights in the Services
and the Equipment with the same degree of care used to protect its own
proprietary rights. Lessee agrees to notify Lessor in writing promptly upon
becoming aware of any unauthorized access or use by any party or of any claim
that the Services or the Equipment infringe upon any copyright, trademark, or
other contractual, statutory or common law rights.
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<PAGE> 33
(b) Lessee shall not access the Services through any medium or
equipment which Lessor has not authorized in writing, nor may any medium or
equipment by which the Services are provided be moved, modified or interfaced
with any other equipment without Lessor's prior written consent. Services
expressly provided by Lessor for operation on Lessee's own equipment shall be
furnished without warranty as to compatibility, fitness or performance with such
equipment, and Lessee shall bear all cost and responsibility for such equipment.
Unauthorized access or use is unlawful and Lessor and its suppliers shall have
all rights provided by law to prevent such access or use and to collect damages
in such event. Lessee agrees to notify Lessor in writing promptly upon becoming
aware of any unauthorized access or use. Lessee shall not recompile, decompile,
disassemble, reverse engineer, or make or distribute any other form of or any
derivative work from, the Services and/or the Equipment.
(c) The analysis and _____ included in the Services may not be
recirculated, redistributed or published by Lessee except for internal purposes
without the prior written ___________Lessor and, where necessary, with certain
sources of the information included in the Services.
(d) Lessee shall not _____ _______ trademarks, trade names, or
service marks in any manner which creates the impression that such names and
markers belong to or are __________ and Lessee acknowledges that it has no
ownership rights in and to any of these names and marks.
(e) Lessee shall not _____ any portion of The Associated Press or
Press Association, Inc. information or other information included in the
Services in any permanent form ______ files, computer readable files or any
other medium, or off-print all or any portion of such information from the
screen display provided by Lessor.
10. Facilities. Commencement of this Services is contingent on the availability
of the hardware, communications equipment and facilities to Lessor's
specifications. Lessee shall install or have installed on Lessee's premises and
at Lessee's expense all cables, wires, and electrical and communications
connections specified by Lessor and shall not make use of any cables, wires,
devices or equipment in connection with the Services not approved in writing by
Lessor.
11. Return of Equipment and Software. Upon termination of this Agreement for any
reason whatsoever, Lessor shall have the right to remove the Equipment and
software by which the Services are provided at Lessee's expense.
12. Access to Property. Any person or persons designated by Lessor shall have
access to the Equipment at all reasonable times for the purposes of
installation, inspection, maintenance, repair and removal. Lessee acknowledges
and understands that Lessor may monitor, solely for operational reasons,
Lessee's general use of the Services. Lessee shall at all reasonable times
permit Lessor to have access to the location where the Services are provided for
the purposes of ascertaining the use made of the Services.
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<PAGE> 34
13. Maintenance. Lessor, to the best of its ability, shall maintain and keep the
Equipment in good working order and condition so that it will perform its
functions satisfactorily. Lessee shall be responsible for the safekeeping of the
Equipment from the time its is received on Lessee's premises and shall take
reasonable steps to prevent abuse to the Equipment. Lessee shall be responsible
for all physical loss, theft, or damage to any equipment used to deliver the
Services to Lessee and shall pay Lessor the full replacement cost of the
Equipment as liquidated damages unless such loss, theft, or damage is due
entirely to the fault or negligence of Lessor. Neither Lessor nor its suppliers
or third party agents shall be responsible or liable, contingently or otherwise,
for any personal injury or property damage arising out of the installation,
maintenance, use or removal of the Services and/or the Equipment.
_________________________________________________________________[ILLEGIBLE]
otherwise, for any personal injury or property damage arising out of the
installation, maintenance, use or removal of the Services and/or the Equipment.
14. Additional Services. Lessee may request that Lessor add additional elements
to the Services, which shall be contingent upon availability of software, data
and Equipment and of communication lines and facilities on Lessee's premises
that my be required in connection with the addition of such elements. Such
additions or modifications shall be priced at the then current prices offered by
Lessor.
15. Relocation. On reasonable prior written notice, which shall in no event be
less than 60 days, and at Lessee's expense, Lessor will relocate all or any part
of the Equipment. Scheduling of such relocation shall be contingent on
availability of communication lines, facilities and labor. Lessee acknowledges
that interruptions of Services might result from such relocation and that the
provisions in paragraph __ hereof apply to any such interruption.
16. Assignment. Lessee shall have the right to assign this Agreement or the
rights hereunder only with the consent of Lessor which, in the case of an
assignment by Lessee to any of its affiliates that are in substantially the same
business as Lessee, shall not be unreasonably withheld.
17. Schedules and Attachments. The schedule(s) are a part of this Agreement and
are incorporated herein by this reference.
18. Complete Agreement; Modifications or Waivers. This Agreement, together with
the Schedule(s) is the complete and exclusive statement of the agreements
between the parties with respect to the subject matter hereof and supersedes any
oral or written communications or representations or agreements relating
thereto. No changes, modifications or waivers regarding this Agreement shall be
binding unless in writing and signed by the parties hereto.
19. Validity. Lessor and Lessee intend this Agreement to be a valid legal
instrument, and no provision of this Agreement which shall be deemed
unenforceable shall in any way invalidate any other provisions of this
Agreement, all of which remain in full force and effect. The headings in this
Agreement are intended for convenience or reference and shall not affect its
interpretation.
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20. Governing Law. This Agreement is made and entered into in the State of New
York and shall be governed by and construed in accordance with the laws of the
State of New York. The parties hereto, their successors and assigns, consent to
the jurisdiction of the courts of the State of New York with respect to any
legal proceedings that may result from a dispute as to the interpretation or
breach of any of the terms and conditions of this Agreement.
Agreed to by:
- ------------------------------------------------------------
Company Name (Please type or print)
- ------------------------------------------------------------
Signature (Duly authorized officer, partner or proprietor)
- ------------------------------------------------------------
Name (Please type or print)
- ------------------------------------------------------------
Title (Please type or print)
- ------------------------------------------------------------
Date
Agreed to by:
BLOOMBERG L.P.
By: BLOOMBERG INC.,
GENERAL PARTNER
By:
- ------------------------------------------------------------
Authorized Signatory
- ------------------------------------------------------------
Date
BLOOMBERG, THE BLOOMBERG, THE BLOOMBERG Traveler, Bloomberg L.P., BLOOMBERG
FINANCIAL MARKETS, BLOOMBERG COMMODITIES and BLOOMBERG BUSINESS NEWS are
trademarks, trade names and service marks of Bloomberg L.P., a Delaware limited
partnership.
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EXHIBIT F
Source's Service Agreement and Worldwide Price Lists
See Attached
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McCarthy, Crisanti & Maffei, Inc. ("MCM")
Subscription for Electronic Information Services
This Subscription Agreement (the "Agreement") made this ______ day of
___________, 19__, (the "Effective Date") by and between McCarthy, Crisanti &
Maffei, Inc. (hereinafter "MCM") a New York corporation having offices at 71
Broadway, New York, New York, 10006 and __________________, a
____________________ (hereinafter "Customer").
1. Services
Customer subscribes to, and MCM agrees to provide, the services set
out on the attached Supplement(s), Number(s) _____________ each, a "Service,"
(and collectively, "Services") upon the terms and conditions set out below.
2. Term of Subscription; Fee
The initial subscription term for each Service shall be as set forth
on Supplement (the "Initial Term") attached hereto and made part hereof. For the
Services provided by MCM, Customer agrees to pay MCM the subscription fees
indicated on the relevant Supplement. Fees charged upon the renewal of any
subscription shall be those set forth on MCM's then current price lists. All
subscription fees shall be paid quarterly in advance on the commencement of the
subscription term and thereafter on the first calendar quarter. Customer shall
also pay in addition to any subscription fee, any tax, however characterized,
arising out of this subscription other than taxes based on the net income of
MCM.
3. Renewal
The subscription term for each Service shall be automatically renewed
for a term equal in length to the Initial Term unless either party gives the
other not less than sixty (60) days written notice of its intention not to renew
a particular Service prior to the end of the initial or any renewal of that
Service. Further, any renewal term shall be governed by the terms and conditions
of this Agreement, except for price, which shall be determined from MCM's then
current price list.
4. Use of Information
Services are for the sole use of Customer. Customer will not, without
MCM's prior written consent, cause or permit the Services or any information
including, without limitation reports, analyses, data, documentation made known,
sent or otherwise transmitted by MCM under this Agreement or any Service in
whole or in part to be stored, modified, duplicated, reproduced or retransmitted
in any form either to third parties or to affiliated companies or branch offices
of the Customer except as otherwise permitted herein. If Customer makes use of
any information for which MCM has given its prior written approval, Customer
shall credit MCM as the source of such information. Customer acknowledges that
all such materials are and shall remain, the sole property of MCM, and that MCM
is the sole owner of all copyright and other commercial property rights therein.
Customer agrees not to
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create any derivative works (including data bases) based on the Service(s) or
the information contained therein. Customer will not use or permit the use of
the information contained in the Service for any illegal purpose. MCM reserves
to itself complete editorial freedom in the form and content of the Service(s)
and may alter the same from time to time.
Customer agrees that within thirty (30) days after the end of each calendar
quarter to provide to MCM user information which includes, but shall not be
limited to a report in the average number of users of the Services, collectively
and broken out for each Service, and such other user-type information that MCM
may reasonably request. MCM shall have the right upon at least thirty (30) days'
prior written notice to inspect the records of Subscriber during normal business
hours no more frequently than twice per year. All information gained by MCM from
such inspection will be kept in strict confidence and will be used solely for
the purpose of verifying the number of users for the Services and the accuracy
of the aforementioned reports.
5. Termination
(a) In addition to any other remedy available at law or in equity,
MCM may terminate this Agreement immediately, in whole or in part, without
further obligation to Customers in the event of:
(i) any breach by the Customer of Paragraph 4 or a
breach of the Customer's obligation to pay the
subscription fee as specified in this Agreement and
Supplement(s) hereto;
(ii) any other breach of this Agreement by the Customer
which cannot be remedied or is not remedied within
thirty (30) days of the Customer being requested to
do so;
(iii) any merger, consolidation, acquisition, or the sale,
lease or other transfer of all or substantially all
of the assets or shares of stock of the Customer, or
any other change in the control or ownership of the
Customer;
(iv) the Customer's making an assignment for the benefit
of its creditors or filing a voluntary petition
under any bankruptcy or insolvency law, under the
reorganization or arrangement provisions of the
United States Bankruptcy Code, or under the
provisions of any law of like import;
(v) the filing of an involuntary petition against the
Customer under any bankruptcy or insolvency law,
under the reorganization or arrangement provisions
of the United States Bankruptcy Code, or under any
law of like import; or
(vi) the appointment of a trustee or receiver for the
Customer or its property
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(b) Where the operation or delivery of the Service(s) or any part
thereof is dependent upon an agreement between MCM and a third party and such
agreement has expired or is terminated or suspended in whole or in part for any
reason and MCM is unable to enter into another equivalent agreement upon
reasonable terms. MCM may immediately terminate this Agreement or the relevant
part thereof, and upon termination MCM's only obligation to the Customer will be
to refund the proportionate part of the subscription fee already paid for the
portion of the Service(s) not received by virtue of said termination.
(c) Without limitation of any other remedy available at law or in
equity, the Customer and MCM hereby agree that upon the Customer's (i) breach of
this Agreement, or (ii) terminating this Agreement (except as permitted
hereunder), MCM will be entitled to recover from the Customer all subscription
fees due and payable at the time of termination.
(d) Customer agrees, in the event of a breach by it of any of its
obligations under this Agreement, MCM may seek temporary or permanent injunctive
relief, without the necessity of proving actual damages or the posting of a
bond, as well as other equitable relief.
6. Disclaimer of Warranties and Liability
(a) MCM AND ITS AFFILIATES MAKE NO REPRESENTATION OR WARRANTY,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES,
INCLUDING, WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY, AND
EACH SPECIFICALLY DISCLAIMS ANY SUCH WARRANTY. MCM AND ITS
AFFILIATES EACH SPECIFICALLY DISCLAIM ANY KNOWLEDGE OF ANY
PURPOSE FOR WHICH THE SERVICES SHALL BE USED BY CUSTOMER.
MATERIAL SUPPLIED BY MCM IN THE SERVICES CONSTITUTES
OPINION AND NOT FACT. Such material supplied in the
Services is based upon information obtained by MCM from a
number of sources and MCM may be unable to verify the
accuracy of that information. Accordingly, neither MCM nor
its affiliates shall be liable to Customer for: (1) any
faults in the delivery, transmission or content of the
Services, of for contingencies beyond their control, in
producing, supplying, or compiling, transpositioning or
delivering the Services; (2) any errors, omissions, or
inaccuracies in the information or analyses contained in
the Services or delays or interruptions in delivery of a
Service for any reason; (3) any decision made or action
taken by Customer in reliance upon the information or
analyses contained in the Services; (4) loss of business
revenues, lost profits, or any indirect, consequential,
special or incidental damages arising from any
subscription, including any claims related to the
timeliness of deliveries of the Services or the quality or
accuracy of information upon which a Service is based,
whether in contract, tort or otherwise, even if advised of
the possibility of such damages; (5) any claim that arose
more than one (1) year prior to the institution of suit
therefor; or (6) any claim
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<PAGE> 40
arising from causes beyond MCM's reasonable control
including, but not limited to, Customers selection and use
of its own computer hardware system. CUSTOMER AGREES THAT
MCM'S MAXIMUM LIABILITY FOR ANY AND ALL CAUSES SHALL NOT
EXCEED, IN THE AGGREGATE, THE AMOUNT PAID BY CUSTOMER FOR
THE SERVICES DURING THE FIRST INITIAL TERM OF THIS
AGREEMENT TO EXPIRE.
(b) Customer will indemnify and hold MCM and its affiliates and
its and their employees, agents, contractors and
subcontractors harmless from and against any loss, cost or
damage (including reasonable attorneys' fees) in connection
with any claim or action which may be brought by any third
party, arising out of:
(i) any faults, interruptions or delays in the
delivery of the Services to Customer or in the
placing of inhibits (if applicable), or for any
inaccuracies, errors or omissions in the
information contained in the Services as supplied
or contributed by the Customer, however such
faults, interruptions, delays, inaccuracies,
errors or omissions arise;
(ii) the furnishing, performance, maintenance, or use
of, or inability to use the Service and any other
materials furnished to Customer by or on behalf
of MCM notwithstanding that MCM has been advised
of the possibility that such loss, or damage may
or will arise.
7. Assignment
Neither party shall assign this Agreement without the prior written
consent of the other.
8. Securities Laws
Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall be deemed to limit any responsibility or liability MCM may
have under applicable securities laws.
9. Force Majeure
Neither MCM nor Customer shall be responsible for delays or failures
in performance resulting from acts beyond the control of such party. Such acts
shall include but not be limited to acts of God, strikes, lockouts, riots, acts
of war, epidemics, governmental regulations superimposed after the fact, fire,
communication line failures, power failures, earthquakes or other disasters.
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<PAGE> 41
10. Disclosure
Pursuant to the provisions of the Investment Advisers Act of 1940,
MCM offers to supply Customer with Part II of the Form ADV upon written request
of Customer.
11. Severability
In the event that any court having competent jurisdiction shall
determine that one or more of the provisions contained in this Agreement shall
be unenforceable in any respect, then such provision shall be deemed limited and
restricted to the extent that such court shall deem it to be enforceable, and so
limited or restricted shall remain in full force and effect. In the event that
any such provision or provisions shall be deemed wholly unenforceable, the
remaining provisions shall remain in full force and effect.
12. General
(a) This Agreement and any and all Supplements annexed hereto
represent the entire agreement of the parties. There are no other oral or
written collateral representations, agreements, or understandings. In the event
that the Customer issues a purchase order or other instrument related to the
Service(s), it is understood and agreed that such document is for the Customer's
internal purposes only and will in no way supersede, modify, add to or delete
any of the terms and conditions of this Agreement.
(b) All notices given hereunder will be in writing, delivered
personally or mailed by registered or certified mail, return receipt requested,
postage prepaid to the parties at the address specified in this Agreement unless
either party gives notice in writing of a change of such address in the manner
provided herein for giving notice. All notices will be deemed given when
delivered personally, or if mailed, five (5) days after the date of mailing.
(c) This Agreement will be deemed to have been executed and delivered
in the State of New York and it will be governed by and construed in accordance
with the laws of New York. The parties hereby consent to the jurisdiction of the
courts of the State of New York for the purpose of any action or proceeding
brought by either of them on or in connection with this Agreement or any alleged
breach thereof.
(d) This Agreement will be binding upon and inure to the benefit of
the parties hereto, their respective heirs, personal representatives, successors
and assigns.
(e) This Agreement may not be amended, modified or superseded, nor
may any of its terms or conditions be waived unless expressly agreed to in
writing by both parties. The failure of either party at any time or times to
require full performance of any provision hereof will in no manner affect the
right of such party at a later time to enforce the same.
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<PAGE> 42
(f) The section headings of the several clauses and paragraphs of
this Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement.
(g) The Customer hereby waives personal service of any and all
process upon the Customer and consents that service of process may be made by
certified or registered mail at the Customer's address set forth herein.
(h) If the customer is a corporation, the Customer has the corporate
power to enter into this Agreement and to carry out its obligations hereunder.
The persons executing this Agreement on behalf of the Customer hereby represent
and warrant that they have been duly authorized to execute this Agreement for
and on behalf of the Customer. This Agreement constitutes the valid and binding
obligation of the Customer and is enforceable in accordance with its terms.
(i) The provisions of Section 4 hereof, and any and all disclaimers
and indemnities contained herein or in any Supplements annexed hereto will
survive the termination of this Agreement.
IN WITNESS WHEREOF, the parties or their duly authorized
representative have hereunto set their hands on the day and year first above
written.
MCCARTHY, CRISANTI & MAFFEI, INC.
By:
Title:
Date:
CUSTOMER:
By:
Title:
Date:
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<PAGE> 43
Number
Term
Supplement to
McCarthy, Crisanti & Maffei, Inc.
Subscription for Electronic Information Services
This Supplement between McCarthy, Crisanti, & Maffei, Inc. (MCM) and the
Customer (as set forth on the Subscription for Electronic Information Services)
represent those Services subscribed to by the Customer and to be provided by
MCM, subject to the terms and conditions set forth in the Subscription
Agreement.
Dated
Services Fee [Monthly] [Quarterly]
Total:
Additional Locations/Departments:
MCCARTHY, CRISANTI & MAFFEI, INC.
By:
Title:
Date:
CUSTOMER
By:
Title:
Date:
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<PAGE> 44
MCM ELECTRONIC INFORMATION SERVICES
AMERICAS REGION PRICING (US $)
STANDARD SCREEN FEES
** CORPORATEWATCHCr. $450/month
CURRENCYWATCHCr. $300/month
MONEYWATCHCr. $250/month
YIELDWATCHCr. $200/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
MINIMUM SITE FEES
** CORPORATEWATCHCr. $3000/month
CURRENCYWATCHCr. $1750/month
MONEYWATCHCr. $1500/month
YIELDWATCHCr. $1000/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
** Includes MCM's Private Placement "Market Talk".
(1993)
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<PAGE> 45
MCM ELECTRONIC INFORMATION SERVICES
PRICING FOR JAPAN (JPY (Yen))
STANDARD SCREEN FEES
CORPORATEWATCH (Yen)55,000/month
CURRENCYWATCH (Yen)40,000/month
MONEYWATCH (Yen)40,000/month
YIELDWATCH (Yen)40,000/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH (Yen)250,000/month
CURRENCYWATCH (Yen)250,000/month
MONEYWATCH (Yen)250,000/month
YIELDWATCH (Yen)250,000/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 46
MCM ELECTRONIC INFORMATION SERVICES
UNITED KINGDOM PRICING (US $)
STANDARD SCREEN FEES
CORPORATEWATCH $375/month
CURRENCYWATCH $275/month
MONEYWATCH $275/month
YIELDWATCH $275/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH $1875/month
CURRENCYWATCH $1500/month
MONEYWATCH $1500/month
YIELDWATCH $1500/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 47
MCM ELECTRONIC INFORMATION SERVICES
ASIA PACIFIC REGION PRICING (excluding Japan)(US $)
STANDARD SCREEN FEES
CORPORATEWATCH $325/month
CURRENCYWATCH $250/month
MONEYWATCH $230/month
YIELDWATCH $230/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH $1,000/month
CURRENCYWATCH $ 900/month
MONEYWATCH $ 800/month
YIELDWATCH $ 800/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 48
MCM ELECTRONIC INFORMATION SERVICES
PRICING FOR AUSTRALIA (AUD A$)
STANDARD SCREEN FEES
CORPORATEWATCH A$425/month
CURRENCYWATCH A$300/month
MONEYWATCH A$300/month
YIELDWATCH A$300/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH A$1,300/month
CURRENCYWATCH A$ 680/month
MONEYWATCH A$ 780/month
YIELDWATCH A$ 680/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 49
MCM ELECTRONIC INFORMATION SERVICES
CONTINENTAL EUROPE/GULF REGION PRICING (US $)
STANDARD SCREEN FEES
CORPORATEWATCH $375/month
CURRENCYWATCH $275/month
MONEYWATCH $275/month
YIELDWATCH $275/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH $1,875/month
CURRENCYWATCH $1,500/month
MONEYWATCH $1,500/month
YIELDWATCH $1,500/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 50
MCM ELECTRONIC INFORMATION SERVICES
GERMANY/AUSTRIA (DM)
STANDARD SCREEN FEES
CORPORATEWATCH 450/month
CURRENCYWATCH 450/month
MONEYWATCH 450/month
YIELDWATCH 450/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH $1,800/month
CURRENCYWATCH $1,800/month
MONEYWATCH $1,800/month
YIELDWATCH $1,800/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 51
MCM ELECTRONIC INFORMATION SERVICES
SWITZERLAND (SFR)
STANDARD SCREEN FEES
CORPORATEWATCH 500/month
CURRENCYWATCH 500/month
MONEYWATCH 500/month
YIELDWATCH 5000/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH 2,000/month
CURRENCYWATCH 2,000/month
MONEYWATCH 2,000/month
YIELDWATCH 2,000/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 52
MCM ELECTRONIC INFORMATION SERVICES
DENMARK (DKK)
STANDARD SCREEN FEES
CORPORATEWATCH 2,400/month
CURRENCYWATCH 1,600/month
MONEYWATCH 1,600/month
YIELDWATCH 1,600/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH 11,900/month
CURRENCYWATCH 9,500/month
MONEYWATCH 9,500/month
YIELDWATCH 9,500/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 53
MCM ELECTRONIC INFORMATION SERVICES
FINLAND (FIM)
STANDARD SCREEN FEES
CORPORATEWATCH 1025/month
CURRENCYWATCH 1025/month
MONEYWATCH 1025/month
YIELDWATCH 1025/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH 6200/month
CURRENCYWATCH 6200/month
MONEYWATCH 6200/month
YIELDWATCH 6200/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 54
MCM ELECTRONIC INFORMATION SERVICES
NORWAY (NOK)
STANDARD SCREEN FEES
CORPORATEWATCH $1600/month
CURRENCYWATCH $1600/month
MONEYWATCH $1600/month
YIELDWATCH $1600/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH 9500/month
CURRENCYWATCH 9500/month
MONEYWATCH 9500/month
YIELDWATCH 9500/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 55
MCM ELECTRONIC INFORMATION SERVICES
SWEDEN (SEK)
STANDARD SCREEN FEES
CORPORATEWATCH 1600/month
CURRENCYWATCH 1600/month
MONEYWATCH 1600/month
YIELDWATCH 1600/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH 9450/month
CURRENCYWATCH 9450/month
MONEYWATCH 9450/month
YIELDWATCH 9450/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 56
MCM ELECTRONIC INFORMATION SERVICES
SPAIN (PTA)
STANDARD SCREEN FEES
CORPORATEWATCH 30,000/month
CURRENCYWATCH 30,000/month
MONEYWATCH 30,000/month
YIELDWATCH 30,000/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH 135,000/month
CURRENCYWATCH 135,000/month
MONEYWATCH 135,000/month
YIELDWATCH 135,000/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 57
MCM ELECTRONIC INFORMATION SERVICES
ITALY (ITL)
STANDARD SCREEN FEES
CORPORATEWATCH 325,000/month
CURRENCYWATCH 325,000/month
MONEYWATCH 325,000/month
YIELDWATCH 325,000/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH 1,500,000/month
CURRENCYWATCH 1,500,000/month
MONEYWATCH 1,500,000/month
YIELDWATCH 1,500,000/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 58
MCM ELECTRONIC INFORMATION SERVICES
FRANCE (FRF)
STANDARD SCREEN FEES
CORPORATEWATCH 2,200/month
CURRENCYWATCH 2,200/month
MONEYWATCH 2,200/month
YIELDWATCH 2,200/month
MCM SWITCHING SYSTEM AND
DIGITAL FEED PRICING
* MINIMUM SITE FEES
CORPORATEWATCH 8,000/month
CURRENCYWATCH 8,000/month
MONEYWATCH 8,000/month
YIELDWATCH 8,000/month
Discounts may apply when customer uses multiples services.
* Site fees may vary based on system configuration or actual user
counts.
(1993)
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<PAGE> 1
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
EXHIBIT 10.26
OPTIONAL SERVICE DELIVERY
AGREEMENT
THIS AGREEMENT, dated as of 2/28/95, 1995 between MVIS CORPORATION, d/b/a Market
Vision, a Delaware Corporation with offices at 40 Rector Street, New York, New
York 10006 ("MARKET VISION"), and McCARTHY, CRISANTI & MAFFEI, INC., a New York
corporation with offices at One Chase Manhattan Plaza, 37th Floor, New York, New
York 10005 ("Source").
WHEREAS, MARKET VISION prepares, operates and transmits financial data to
subscribers by means of a data feed and software necessary to receive
electronically distributed information services ("NETWORK"); and
WHEREAS, MARKET VISION markets and sells information and services under
various names, trademarks and servicemarks, including, but not limited to:
"MARKET VISION"; and
WHEREAS, Source publishes certain electronic information services including
those services listed and described in Exhibit A to this Agreement (the "Source
Services"); and
WHEREAS, Source currently distributes all or some of the Source Services via
other network vendors; and
WHEREAS, Source desires to provide the Source Services through the NETWORK to
current and potential subscribers of MARKET VISION as well as via direct feed to
third parties.
NOW THEREFORE the parties, in consideration of the premises and mutual covenants
contained herein, agree as follows:
1. Distributor; Non-Exclusivity; Additional Source Services.
(a) Distributor - Appointment. Source hereby appoints MARKET VISION and MARKET
VISION hereby agrees to serve as, a non-exclusive distributor of Source for the
term set forth in Section 11 for the limited purpose of marketing and
distributing the Source Services worldwide to MARKET VISION Subscribers, as
defined below, who also subscribe to the Source Services ("Source Subscribers"),
all in accordance with the terms and conditions hereof. "Subscribers" shall mean
those persons or entities authorized by MARKET VISION subject to the terms and
conditions hereof, to access all or part of the Source Services. Notwithstanding
the foregoing, MARKET VISION shall not deliver the Source Services to those
persons set forth in Exhibit B, as such exhibit is modified from time to time,
with any modifications being implemented by MARKET VISION as soon as possible,
but in no event later than thirty (30) days from the giving of written notice.
<PAGE> 2
(b) Non-Exclusivity. The parties acknowledge and agree that the appointment of
MARKET VISION as distributor of Source for the purpose of distributing the
Source Services shall be on a non-exclusive basis. Source retains the right to
distribute itself or permit other third parties to distribute one or more of the
Source Services or services substantially similar thereto.
(c) Additional Source Services. In the event that the parties agree that MARKET
VISION may distribute other existing services of Source or any electronically
distributed information service hereafter developed by Source that are not
listed in Exhibit A or that are not substantially similar to any service listed
therein (an "Additional Source Service"), then such Additional Source Service
shall fall within the definition of Source Service under this Agreement, and the
distribution of such Additional Source Service shall be subject to the terms and
conditions set forth in this Agreement.
2. Inputting; Direct Feed; Accessibility; Display; Accuracy.
(a) Inputting and Use of Services.
(i) Generally. Source shall input the Source Services into the NETWORK by means
of a MARKET VISION protocol as set forth in Exhibit C. MARKET VISION shall
provide Source with subscriptions and software necessary to receive the Source
Services for no charge. MARKET VISION agrees to provide such additional software
and upgrades to existing software to Source from time to time during the term of
this Agreement and any extensions thereof, that are necessary for the Source to
receive the Source Services pursuant to this Agreement at no cost to Source.
Source shall be responsible for any costs associated with cabling or other
modifications necessary within its locations. Source shall be responsible for
all local communications costs between Source and MARKET VISION locations.
(ii) Direct Feed Agreement. MARKET VISION acknowledges that Source anticipates
providing the Source Services and its other Electronic Information Services on a
direct feed basis to certain of Source's subscribers. Together with the
execution of this Agreement, MARKET VISION and Source agree to enter into a
separate agreement, a copy of which is attached hereto as Exhibit D, pursuant to
which MARKET VISION will provide Source with a direct feed to any of Source's
subscribers, as Source from time to time designate whether or not said
subscribers are then current MARKET VISION customers. In such event, Source
Subscriber shall enter into a separate agreement with MARKET VISION pursuant to
which MARKET VISION will provide Source Subscribers a direct feed line.
(iii) Use of Source's Proprietary Services. Notwithstanding any provision of
subsection (i) that may be to the contrary, MARKET VISION subject to the prior
written consent of Source, shall have the right to access the Source Services;
provided
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<PAGE> 3
that Source shall have the right to deny MARKET VISION access to any Source
Service in circumstances where MARKET VISION uses such service in an way that
competes with the sale of such service by Source or any of its affiliates. Prior
to exercising its right under this subsection (iii) Source agrees to notify
MARKET VISION in writing at least thirty (30) days prior to the desired
termination date and state the action by MARKET VISION that gave rise to the
termination right. If MARKET VISION ceases such action prior to the desired
terminate date, Source may not deny access to the Source Services on the basis
of such cured action. The rights specified in this subsection (iii) shall be in
addition to, and not in limitation of, any other remedies the parties may have.
(b) Accessibility of Source Services. MARKET VISION will attempt to make Source
Services available to its subscribers whenever MARKET VISION determines it is
commercially practical to do so. Distribution by MARKET VISION of a Source
Service that is first made available through the Network after the date hereof
pursuant to the terms of this subsection (b) shall be subject to the terms of
this Agreement.
(c) Accuracy of Information. Source shall use commercially reasonable efforts to
(i) insure that the information in the Source Services is accurate, (ii) correct
inaccuracies, errors or defects in such information promptly after discovery,
and (iii) insure that the information in the Source Services is provided on a
timely basis. Source shall monitor such information as it is distributed through
the Network and promptly correct any inaccuracies, errors or defects therein.
3. Promotion and Marketing.
(a) Efforts and Materials.
(i) Marketing. Source and MARKET VISION shall exercise commercially reasonable
efforts to market and promote subscriptions to the Source Services to be
accessed through the NETWORK. From time to time during the term of this
Agreement, but no less frequently than once a calendar quarter, MARKET VISION
shall profile or otherwise promote the Source Services on the NETWORK or in
MARKET VISION promotional materials.
(ii) Materials. Neither party shall publish or distribute any advertising or
promotional material regarding the availability of the Source Services through
the NETWORK without the prior written consent of the other, which consent shall
not be unreasonably withheld. If the receiving party has not notified the
sending party within twenty (20) days after its receipt thereof, such materials
shall be deemed approved. Materials being sent to the other party for approval
pursuant to this subsection (a)(ii) shall be directed to the person(s)
designated in Exhibit E hereto.
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<PAGE> 4
(b) Subscriber List. To facilitate Source's promotional efforts, MARKET VISION
shall provide to Source the following information and reports: (i) on a monthly
basis the list of MARKET VISION Subscribers located in the United States, if not
prohibited by any contract or agreement with any Subscriber, (ii) on a monthly
basis, the list of those persons and entities located in the United States who
became new MARKET VISION Subscribers during such month, if not prohibited by any
contract or agreement with any Subscriber, (iii) from time to time, but not less
frequently than quarterly, the list of new and existing MARKET VISION
Subscribers located outside the United States promptly after it receives at
headquarters the information necessary to develop such list, if not prohibited
by any contract or agreement with any Subscriber, (iv) upon request of Source,
information MARKET VISION has with regard to renewal dates for subscriptions to
the Source Services, and (v) on a monthly basis, access reports which shall,
among other things, set forth those persons taking the Source Services and
indicating which of those are being provided on a trail basis. MARKET VISION
represents and warrants that all reports shall be accurate and complete and
correctly reflect the number of subscriptions and those having access to the
Source Services.
(c) Demonstration Periods; Trade Shows. MARKET VISION agrees to promote and
market the Source Services, subject to the terms contained in the last sentence
of Section 1(a), by making one or more of the Source Services available free of
charge to MARKET VISION subscribers for up to thirty (30) days upon the request
of Source. The preceding provision shall not be deemed to increase MARKET
VISION's obligations to market and promote subscriptions to the Source Services
set forth in subsection (a)(i) of this Section 3. In addition, MARKET VISION
agrees to promote the Source Services at any trade show exhibits at which MARKET
VISION is a participant.
4. Fees; Service Agreement.
(a) Billing; Fees. Source shall bill Source Subscribers in the United States on
a regular basis for subscriptions to the Source Services. MARKET VISION shall
bill Source Subscribers outside the United States, on a regular basis for
subscriptions to all Source Services. Fees for subscriptions to the Source
Services shall be determined by Source in its respective geographic regions in
its sole discretion and shall be in addition to any fees charged to MARKET
VISION Subscribers by MARKET VISION. Source agrees that it will make changes in
published subscription fees to the Source Services only once per year, which
shall, except as set froth below, be effective anywhere other than Japan on
January 1 and in Japan on April 1, and will give MARKET VISION no less than one
hundred twenty (120) days' prior written notice of any such change.
Notwithstanding the foregoing, all new Source Subscribers who became Source
Subscribers within said one hundred twenty (120) day pre-effective period, shall
be charged the new subscription fees. MARKET VISION covenants that it will
inform all Source Subscribers of the new fees and shall implement the new fee
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<PAGE> 5
schedule at the times provided for herein. Source agrees that it will not charge
a Source Subscriber any more money for its subscription to the Source Services
delivered pursuant to this Agreement than it will charge said Source Subscriber
for the Source Services received by other third party vendors. The parties agree
that Source may require MARKET VISION to terminate distribution of the Source
Services to Source Subscribers that are severely in arrears in paying their
subscription fees. Source Subscribers shall be deemed severely in arrears for
purposes hereof when they become six months behind in payments. The parties
agree that the party responsible for billing shall comply with all applicable
County, State and local laws and regulations, including, but not limited to the
taxing laws and regulations. With respect to accounts billed by MARKET VISION,
MARKET VISION shall use its best efforts to collect fees due to Source for the
Source Services.
(b) MARKET VISION Service Agreements. In those jurisdictions where MARKET VISION
is billing Source Subscribers for their use of the Source Services, MARKET
VISION shall provide the applicable MARKET VISION Service Agreement to each
subscriber to the Source Services and shall not grant any subscriber access to
any Source Service (except on a trial basis) until it has obtained an executed
copy of the applicable MARKET VISION Service Agreement from such subscriber.
MARKET VISION Service Agreement provided to Source Subscribers shall contain a
representation and warranty that the Source Subscribers an institutional
investor (including high net worth individuals), financial institution, broker
or dealer or similar institution and shall further provide that Source
Subscribers shall not modify, reproduce in any form, redesseminate, republish,
re-present or re-distribute Source Services without the prior written consent of
Source which consent shall be at Source's sole discretion and shall contain such
other provisions as reasonably requested by Source. Copies of representative
MARKET VISION Service Agreements currently being used are attached as Exhibit F.
MARKET VISION shall provide Source with a copy of material amendments to said
MARKET VISION Service Agreements within ten (10) days after such amendments are
implemented. Source shall not make any statement regarding any MARKET VISION
Service that is contradictory or inconsistent with the then-current version of
the applicable MARKET VISION Service Agreement. MARKET VISION agrees to allow
Source's marketing representatives to use and present to potential and existing
subscribers the MARKET VISION Service Agreement and to require MARKET VISION's
marketing and sales representatives to coordinate all marketing and sales
efforts with Source's marketing representatives and cooperate with Source's
marketing representatives in presenting to potential and existing subscribers
the Source Services.
(c) Source's Service Agreement. In jurisdictions in which Source is billing
Source Subscribers for their use of the Source Services, Source may provide the
Source Services via a written or oral service Agreement. A copy of Source's
written Service Agreement to be used in jurisdictions where Source will bill
Source Subscribers for their use of the Source Services and a copy of Source's
price lists currently in effect
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<PAGE> 6
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
are attached as Exhibit G. Source will notify MARKET VISION in writing or by
facsimile of all new Source Subscribers in jurisdictions in which Source is
billing Source Subscribers.
5. Charges/Fees
(a) MARKET VISION's Fee. ******************************************************
*******************************************************************************
******************************************************************************.
(b) Sales Commission and Fee. MARKET VISION shall not be entitled to any fee or
commission for subscriptions to a Source Service sold to a MARKET VISION
Subscriber by a salesperson working for MARKET VISION unless Source deems the
payment of a fee or commission appropriate.
(c) Payment. Within sixty (60) days after the end of each calendar quarter
falling fully or partially within the term of this Agreement, MARKET VISION
shall deliver to Source a report showing the Subscription receipts for such
quarter, and the amounts due Source, and, except as set forth in the following
sentence, a check payable to Source for the gross amount of said subscription
receipts. For those MARKET VISION Subscribers which MARKET VISION bills for
Source Services outside the United States, MARKET VISION will remit payment
within thirty (30) days of receipt of payment from said MARKET VISION
Subscriber. All payments made hereunder shall be made in U.S. Dollars. If MARKET
VISION is required by applicable law to pay or withhold any taxes for the
subscription fees collected on behalf of Source, MARKET VISION shall be entitled
to deduct and withhold income or excise taxes or other taxes, withholdings or
governmental charges ("Taxes") from any subscription fees collected. In the
event that MARKET VISION withholds Taxes from amounts payable to Source
hereunder, it shall remit to Source the subscription receipts net of any Taxes
and shall provide a statement setting forth the amount of Taxes withheld, the
applicable rate and other information which may be reasonably requested relating
to the Taxes.
(d) Adjustments. Source acknowledges that MARKET VISION may make initial
calculations and payments of amounts due Source based on amounts billed to
Source Subscribers in respect of Source Services, and accordingly there may be
post payment adjustments to amounts remitted by MARKET VISION to Source pursuant
to subsection 5(c) hereof to reflect (i) amounts MARKET VISION billed in error
for credits MARKET VISION gave in the ordinary course of business to Source
Subscribers, and (ii) amounts MARKET VISION was unable to collect from Source
Subscribers.
(e) Records. MARKET VISION shall maintain complete and accurate books and
records (collectively, the "Records") with respect to all amounts it billed to
Source Subscribers in respect of subscriptions to the Source Services. Source
shall have the
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right upon at least thirty (30) days' prior written notice to inspect such
Records during normal business hours no more frequently than twice per year. All
information gained by Source from such inspection will be kept in strict
confidence and will be used solely for the purpose of verifying the accuracy of
the computation of the amounts due hereunder.
6. Copyright.
Source represents and warrants to MARKET VISION that Source or its licensors to
the best of its and their knowledge own the Source Services and the copyrights
thereto, and that Source has the right to authorize MARKET VISION to distribute
the Source Services under this Agreement. MARKET VISION agrees it is not
acquiring under this Agreement any proprietary interest in the Source Services
and agrees not to challenge the claim of Source or its licensors to the
ownership of the Source Services and the measures requested by Source to make
the copyright claim of Source or its licensors known to Source Subscribers and
to assist Source, at Source's expense, in Source's defense or prosecution of any
copyright infringement claim.
7. Maintenance and Circumstances Beyond Parties' Control. Subject to the
provisions set forth in Section 8, neither MARKET VISION nor Source will be
deemed in default or liable hereunder if, as a result of any cause or
circumstance beyond such party's reasonable control or any repair work or
routine maintenance, there occurs a delay in or failure or interruption of (i)
service to any Source Subscriber, or (ii) transmission of the Source Services.
So long as any such failure continues, the party responsible for such service or
transmission will use its reasonable best efforts to eliminate such conditions
and will keep the other party fully informed at all times concerning the matters
causing such delay or default and the prospects for their termination.
8. Indemnification.
(a) By Source. In the event any claim is brought by third party against MARKET
VISION that relates to, arises out of or is based upon the Source Services, the
failure of Source to comply with any law, rule or regulation, or the permanent
disconnection of the Source Services by Source to any Source Subscriber, MARKET
VISION shall promptly notify Source, and Source shall defend such claim at
Source's expense and under Source's control. Source shall indemnify and hold
harmless MARKET VISION against any judgment, liability, loss, cost or damage
(including litigation costs and reasonable attorney's fees) arising from or
related to such claim whether or not such claim is successful. MARKET VISION
shall have the right, at is expense, to participate in the defense of such claim
through counsel of its own choosing; provided, however, that Source shall not be
required to pay any settlement amount that is has not approved in advance.
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<PAGE> 8
(b) By MARKET VISION. In the event any claim is brought by any third party
against Source that relates to, arises out of or is based upon any error, delay,
interruption or other event caused by MARKET VISION or its employees in
transmitting the Source Services, Source shall promptly notify MARKET VISION,
and MARKET VISION shall defend such claim at MARKET VISION's expense and under
MARKET VISION's control. MARKET VISION shall indemnify and hold harmless Source
against any judgment, liability, loss, cost or damage (including litigation
costs and reasonable attorneys' fees) arising from or related to such claim,
whether or not such claim is successful. Source shall have the right, at its
expenses, to participate in the defense of such claim through counsel of its own
choosing; provided, however, that MARKET VISION shall not be required to pay any
settlement amount that is has not approved in advance.
9. Representations and Warranties of the Parties. Each party represents,
covenants and warrants to the other as follows:
(i) It has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of such party, enforceable in accordance with its terms and conditions.
(ii) That the parties will comply with all codes, regulations and laws
applicable to the provision of the services under this Agreement, and has
obtained or will obtain all necessary permits, licenses and other authorizations
necessary for its performance of services under this Agreement.
(iii) That the execution, delivery and performance of this Agreement
and the transactions contemplated hereby do not conflict with or violate in any
material respect; (a) a party's charter or by-laws; (b) any contract or
agreement to which it is a party; (c) any order, decree or judgment of any court
or government authority; and (d) any federal or New York State statute, rule or
regulation.
10. Confidentiality.
(a) The following materials and information and all copies thereof of whatever
nature are designated as "confidential" and are the proprietary information and
trade secrets of MARKET VISION.
(i) the computer software possessed by MARKET VISION and all source
documents relating to such computer software;
(ii) proprietary business information of MARKET VISION (including, without
limitation, the names and addresses of Subscribers, information providers and
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<PAGE> 9
suppliers), and business information that MARKET VISION does not generally make
available to the public;
(iii) the methods, means, personnel, equipment and software by and with which
MARKET VISION provides the NETWORK; and
(iv) any other information that MARKET VISION reasonable designates, by notice
in writing delivered to Source, as being confidential or a trade secret.
(b) The following materials and information and all copies thereof of whatever
nature are designated as "confidential" and are the proprietary information and
trade secrets of Source:
(i) proprietary business information of Source, (including, without limitation,
the names and addresses of Source Subscribers, information providers and
suppliers), and business information that Source does not generally make
available to the public; and
(ii) any other information that Source reasonably designates, by notice in
writing delivered to MARKET VISION as being confidential or a trade secret.
(c) All such proprietary or confidential information of MARKET VISION or Source
shall be kept secret by the Source or MARKET VISION, as the case may be, to the
degree it keeps secret its own confidential or proprietary information. Such
information belonging to either party shall not be disclosed by the other party
to its employees except on a need-to-know basis or to agents or contractors of
such other party, but may be disclosed by such other party to state or federal
agencies, authorities or courts upon their order or request provided prompt
notice of such order or requests is given by such other party to the party to
which such information belongs, if such notice is legally permitted. Upon
termination of this Agreement, all copies of such information shall be returned
to the party to which such information belongs and no copies thereof shall
remain in the possession, custody or control or such other party.
(d) No information that would otherwise be proprietary or confidential for the
purposes of this Agreement pursuant to subsections (a) or (b) above shall be
subject to the restrictions on disclosure imposed by this section in the event
and to the extent that (i) such information is in, or becomes part of, the
public domain otherwise than through the fault of the party to which such
information does not belong, (ii) such information was known to such party prior
to the execution of this Agreement, or (iii) such information was revealed to
such party by a third party.
11. Term; Termination.
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(a) Term. The initial term of this Agreement shall commence as of the date first
above written and shall terminate at the end of the seventh year (the "Initial
Term"). The term of this Agreement shall automatically be extended for one or
more periods of one year (a "Renewal Term"), unless either party send to the
other written notice of is election not to renew at least ninety (90) days prior
to the end of the Initial Term, or any Renewal Term, as the case may be.
(b) Default. If either party shall default in the performance of or compliance
with any provision contained in this Agreement and such default shall not have
been cured within thirty (30) days after written notice thereof shall have been
given to the appropriate party, the party giving such notice may then give
further written notice to such other party terminating this Agreement, in which
event this Agreement and any other rights granted hereunder shall terminate on
the date specified in such further notice. The parties agree that any breach of
a representation or warranty contained in this Agreement shall result in its
immediate termination. MARKET VISION and Source each agree, in the event of a
breach by either party of any of their respective obligations under this
Agreement, such other party may seek temporary or permanent injunctive relief,
without the necessity of proving actual damages or the posting of a bond, as
well as other equitable relief, and will be entitled to commence an action for
any such relief in any court of competent jurisdiction.
(c) Insolvency. In the event that either party hereto shall be abjudged
insolvent or bankrupt, or upon the institution of any proceedings by its seeking
relief, reorganization or arrangement under any laws relating to insolvency, or
if an involuntary petition in bankruptcy is filed against such party and said
petition is not discharged within sixty (60) days after such filing, or upon any
assignment for the benefit of its creditors, or upon the appointment of a
receiver, liquidator or trustee of any of its assets, or upon the liquidation,
dissolution or winding up of its business (an "Event of Bankruptcy"), then the
party involved in any such Event of Bankruptcy shall immediately give notice
thereof to the other party, and the other party at its option may terminate this
Agreement upon written notice.
12. Miscellaneous.
(a) Notices. All notices hereunder (except as provided for in Section 4(c)
hereof) shall be in writing and shall be delivered in person, or sent by
overnight courier service, to the address of the party set forth below, or to
such other addresses as may be stipulated in writing by the parties pursuant
hereto. Unless otherwise provided, notice shall be effective on the date it is
officially recorded as delivered.
(i) If to MARKET VISION to:
MVIS Corporation
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40 Rector Street
New York, New York 10006
Attention: William Adiletta, President
(ii) If to Source, to:
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, NY 10005
Attention: President
with a copy to:
Van Kampen American Capital, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: General Counsel
(b) Amendment; Assignment. This Agreement may not be amended except by written
instrument executed by Source and MARKET VISION. Neither party may assign this
Agreement to any third party, other than an affiliate, without the prior written
consent of the other. Any assignment of this Agreement to an affiliate shall not
relieve the assigning party of any of its obligations or liabilities under this
Agreement.
(c) Survival of Certain Provisions. Notwithstanding the termination of this
Agreement, those provisions of this Agreement that by their nature are intended
to survive such termination shall survive, including without limitation, the
provisions of Sections 8, 9 and 10.
(d) Consequential Damages. Except pursuant to Section 8, neither party shall be
liable for any consequential, indirect, incidental or special damages, even if
advised of the possibility of such damages. In no event shall either party or
any affiliates, directors, officers, managers, agents or employees be liable to
the other or to any customers thereof, under any theory of liability for
punitive or exemplary damages arising from or related to this Agreement.
(e) Entire Agreement. This Agreement contains the entire understanding of the
parties on the subject hereof and terminates and supersedes all previous verbal
and written agreements on such subject.
(f) Relationship of the Parties. The parties agree that MARKET VISION will act
as an independent contractor in the performance of its duties under this
Agreement. This Agreement does not and shall not be deemed to constitute a
partnership or joint
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venture between the parties and neither party nor any of its directors,
officers, employees or agents shall, by virtue between the parties and neither
party nor any of its directors, officers, employees or agents shall, by virtue
of the performance of their obligations under this Agreement, be deemed to be an
employee of the other. MARKET VISION has no authority to make any
representations on behalf of or to bind Source in connection with the provision
of Source Services in the course of performing any of its obligations under this
Agreement or otherwise. Source has no authority to make any representations on
behalf of or to bind MARKET VISION in connection with the provisions of Source
Services relating to this Agreement.
(g) "Affiliate" Defined. For purposes of this Agreement, the term "affiliate"
and its derivatives shall mean, with respect to any individual or entity or
directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with such individual or entity. The term
"control" and its derivatives, as used in the immediately preceding sentence,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of an entity, whether through the
ownership of voting securities, by contract or otherwise.
(h) Severability. In the event any provision of this Agreement or application
hereof to any party or in any circumstances shall be determined to be invalid,
unlawful, or unenforceable to any extent, the remainder of this Agreement, and
the application of any provision to parties or circumstances other than those as
to which it is determined to be unlawful, invalid or unenforceable, shall be
affected thereby, and each remaining provision of this Agreement shall continue
to be valid and may be enforced to the fullest extent permitted by law.
(i) Non-Waiver. No delay or failure by either party in exercising any right
under this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right.
(j) Captions. The captions used herein are for convenience only, and constitute
no part of this Agreement.
(k) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the choice
of law principles thereof.
IN WITNESS WHEREOF, the undersigned parties have duly executed this Agreement as
of the date set forth above.
McCARTHY, CRISANTI & MAFFEI, INC.
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By: /s/ Lindley B. Richert
Name: Lindley B. Richert
Title: President
MVIS CORPORATION
By: /s/ William Adiletta
Name: William Adiletta
Title: President
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Exhibit A
Source Services
<TABLE>
<CAPTION>
<S> <C>
Name Description
- ---- -----------
CorporateWatch(R) Principally provides rapid
and comprehensive
information on corporate
securities, private
placements, equities and
mortgage and derivative
product new issues.
MoneyWatch(R) Provides 24 hour fundamental and
technical analysis of US Treasury,
Agency and money market securities.
The service combines live commentary
and technical trading analysis with
detailed forecasts and analysis of the
US economy.
</TABLE>
(R) Denotes a registered trademark of McCarthy, Crisanti & Maffei, Inc.
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Exhibit B
The following subscribers should be restricted from access to the Source
Services pursuant to Section 1(a)(i) of the Agreement:
<TABLE>
<CAPTION>
<S> <C>
Alert/OASYS Money Market Services Investment Dealers Digest
AMG Data Services IPO Financial
Asset Backed Securities Group J.J. Kenney & Company
Atlas Johnson Smick International
AutEx Liberty Brokerage Inc.
Bank Valuation Loan Pricing Corp.
BondData Maria Ramirez Capital Consultants
Bondware Market Data Corporation
BondWeek Market News Service
Business Week MBSIS
Capital Management McGraw Hill
Capital Techniques Money Line Corporation
Cates Money Market Services (MMS)
CDA Investment Technologies MoneyData
Chronometrics Moody's
Commscan MortgageData
CORIS MRL Publishing
Corporate Financial Weekly Muller Data
Corporate Service Municipal Markets Data
Dalcomp Inc. Munifacts/American Banker
Data Resources Inc. Newsware/Newswatch
Dow Jones Capital Markets Report North American Economist
Dow Jones News Services O'Connor, Paul & Phillips
Duff & Phelps Olson Group
Dunn & Bradstreet Optima Futures
Elders Applies Research Pegasus Econometrics
Electronic Joint Ventures (EJV) Pensions & Investments Age
Elliot Wave International Pit Info Corp.
Equidesk Prechter's Elliot Wave Int'l
Eurobond Service Predex
Euromoney Princeton Economics
Evans Economics Public Securities Assoc. (PSA)
Fin Mark Research R.A. Froehlich
First Call Ried, Thunberg
Fitch RS Investments
Foreign Exchange Analytics (FXA) SDC Publishing
Forex Chartist Securities Data Company
Forex Watch Securities Industry Assoc. (SIA)
Froelich Technical Dimensions Securities Information Center
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
<S> <C>
Fund Data Sheshunoff
FX 24 Software Division
FXO Stone, McCarthy
Global Market Information Technical System
Gov pix Technical Data (All Services)
Griggs & Santow Telekurs
High Frequency Economics Ltd. Telerate Corporate Market Service
I.F.R. CorporateEye Thomas A. Fleming
I.F.R. (Intl. Financing Review) Thomson Financial Networks
I.F.R. Japan Watch Thomson Research
I.F.R. LatAm Trepp & Company
IDEA Valorinform
ILX Vigil
Indepth Data Wrightson & Co.
Institutional Investor Magazine Wunsch Auction Systems
Investext
</TABLE>
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<PAGE> 17
Exhibit C
"Non-Chargeable" MARKET VISION Equipment and Services
I. Equipment to be supplied by MARKET VISION to Source for use by Source at
Source's locations including but not limited to:
One MARKET VISION data feed and software necessary to receive Source
Services at Source's site in New York.
II. Electronic means of delivering Source's information to MARKET VISION in a
timely and reliable manner to include but not limited to sufficient MARKET
VISION data lines with the necessary software with dial back-up at Source's
primary site as well as at disaster recovery site.
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Exhibit D
Direct Feed Delivery Agreement
18
<PAGE> 1
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
EXHIBIT 10.27
OPTIONAL SERVICE DELIVERY
AGREEMENT
THIS AGREEMENT, dated as of April 1, 1996 between ADP Financial Information
Services, Inc., a Delaware corporation with offices at 909 3rd Avenue, Suite
808, New York, New York 10022 ("ADP"), and McCARTHY, CRISANTI & MAFFEI, INC., a
Delaware corporation with offices at One Chase Manhattan Plaza, 37th Floor, New
York, New York 10005 ("Source").
WHEREAS, ADP prepares, operates and transmits financial data to subscribers by
means of a data feed and software necessary to receive electronically
distributed information services (the "Network"); and
WHEREAS, Source publishes certain electronic information services including
those services listed and described in Exhibit A to this Agreement (the "Source
Services"); and
WHEREAS, Source currently distributes all or some of the Source Services via
other network vendors; and
WHEREAS, Source desires to provide the Source Services through the Network to
current and potential subscribers of ADP as well as via direct feed to third
parties.
NOW THEREFORE, the parties, in consideration of the premises and mutual
covenants contained herein, agree as follows:
1. Distributor; Non-Exclusivity; Additional Source Services.
a. Distributor - Appointment. Source hereby appoints ADP, and ADP hereby agrees
to serve as, a non-exclusive distributor of Source for the term set forth in
Section 11 for the limited purpose of marketing and distributing the Source
Services worldwide to ADP Subscribers, as defined below, who thereafter
subscribe to the Source Services ("Source Subscribers"), all in accordance with
the terms and conditions hereof. "Subscribers" shall mean those persons or
entities authorized by ADP subject to the terms and conditions hereof, to access
all or part of the Source Services. Notwithstanding the foregoing, ADP shall not
deliver the Source Services to those persons set forth in Exhibit B, as such
exhibit is modified from time to time by Source, with any modifications being
implemented by ADP as soon as possible, but in no event later than thirty (30)
days from the giving of written notice by Source.
b. Non-Exclusivity. The parties acknowledge and agree that the appointment of
ADP as distributor of Source for the purpose of distributing the Source Services
shall be on a non-exclusive basis. Source retains the right to distribute itself
or permit
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other third parties to distribute one or more of the Source Services or services
substantially similar thereto.
c. Additional Source Services. In the event that the parties agree that ADP may
distribute other existing services of Source or any electronically distributed
information service hereafter developed by Source that are not listed in Exhibit
A or that are not substantially similar to any service listed therein (an
"Additional Source Service"), then such Additional Source Service shall fall
within the definition of Source Service under this Agreement, and the
distribution of such Additional Source Service shall be subject to the terms and
conditions set forth in this Agreement.
2. Inputting; Direct Feed; Accessibility; Display; Accuracy.
a. Inputting and Use of Services.
i. Generally. Source shall input the Source Services into the Network by means
of the ADP equipment and/or services as set forth in Exhibit C. ADP shall
provide Source with subscriptions and software necessary to receive the Source
Services for no charge. ADP agrees to provide such additional software and
upgrades to existing software to Source from time to time during the term of
this Agreement and any extensions thereof, that are necessary for Source to
receive the Source Services pursuant to this Agreement at no cost to Source.
Source shall be responsible for any costs associated with cabling or other
modifications necessary within its locations. Source shall be responsible for
all local communication costs between Source and ADP locations. ADP shall
provide at no charge to Source access to those services produced by ADP and not
originated by any third party which are in the same service category as those
relevant services produced by Source; provided that ADP shall have the right to
deny Source access to any ADP service in circumstances where Source used such
service in a way that competes with the sale of such service by ADP or any of
its affiliates. ADP will transmit with Source Services any copyright notices,
legends or disclaimers it receives with such Source Services from Source.
ii. Direct Feed Agreement. ADP acknowledges that Source anticipates providing
the Source Services on a direct feed basis to certain of Source's subscribers.
Together with the execution of this Agreement, ADP and Source agree to enter
into a separate agreement, a copy of which is attached hereto as Exhibit D,
pursuant to which ADP will provide Source with a direct feed to any of Source's
subscribers as Source from time to time designates whether or not said
subscribers are then current ADP customers. In such event, Source Subscribers
shall enter into a separate agreement with ADP pursuant to which ADP will
provide Source Subscribers a direct feed line.
iii. Use of Source's Proprietary Services. Notwithstanding any provision of
subsection (i) that may be to the contrary, ADP subject to the prior written
consent of Source, shall have the right to access the Source Services for any
purpose; provided
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<PAGE> 3
that Source shall have the right to deny ADP access to any Source Service in
circumstances where ADP uses such service in a way that competes with the sale
of such service by Source or any of its affiliates. Prior to exercising its
right under this subsection (ii) Source agrees to notify ADP in writing at least
thirty (30) days prior to the desired denial of access date and state the action
by ADP that gave rise to the denial right. If ADP ceases such action prior to
the desired denial date, Source may not deny access to the Source Services on
the basis of such cured action. The rights specified in this subsection (iii)
shall be in addition to, and not in limitation of, any other remedies the
parties may have.
b. Accessibility of Source Services. ADP will make the Source Services available
through its FS Partner, Power Partner, and Market Data Feed products. ADP may,
at its discretion, make the Source Services available through any other ADP
products or networks. Distribution by ADP of a Source Service that is first made
available through a product or network (in addition to the Network) after the
date hereof pursuant to the terms of this subsection (b) shall be subject to the
terms of this Agreement.
c. Accuracy of Information. Source shall use commercially reasonable efforts to
(i) insure that the information in the Source Services is accurate, (ii) correct
inaccuracies, errors or defects in such information promptly after discovery,
and (iii) insure that the information in the Source Services is provided on a
timely basis. Source shall monitor such information as it is distributed through
the Network of any other network of ADP and promptly correct any inaccuracies,
errors or defects therein.
3. Promotion and Marketing.
a. Efforts and Materials.
i. Marketing. Source and ADP shall exercise commercially reasonable efforts to
market and promote subscriptions to the Source Services to be accessed through
the Network to at least the same extent as ADP markets and promotes the services
of any and all third parties. ADP agrees to require ADP's marketing and sales
representatives to reasonably coordinate marketing and sales efforts with
Source's marketing representatives and cooperate with Source's marketing
representatives in presenting to potential and existing subscribes the Source
Services.
ii. Materials. Neither party shall publish or distribute any advertising or
promotional material regarding the availability of the Source Services through
the Network without the prior written consent of the other, which consent shall
not be unreasonably withheld. If the receiving party has not notified the
sending party within twenty (20) days after its receipt thereof, such materials
shall be deemed
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<PAGE> 4
approved. Materials being sent to the other party for approval pursuant to this
subsection (a)(ii) shall be directed to the person(s) designated in Exhibit E
hereto.
b. Subscriber's List. To facilitate Source's promotional efforts, ADP shall
provide to Source the following information and reports: (i) on a monthly basis
the list of ADP subscribers located in the United States, if not prohibited by
any contract or agreement with any subscriber, (ii) on a monthly basis, the list
of those persons and entities located in the United States who became new ADP
subscribers during such month, if not prohibited by any contract or agreement
with any subscriber, (iii) from time to time, but not less frequently than
quarterly, the list of new and existing ADP subscribers located outside the
United States promptly after it receives the information necessary to develop
such list, if not prohibited by any contract or agreement with any subscriber,
(iv) upon request of Source, information ADP has with regard to renewal dates
for subscriptions to the Source Services, and (v) on a monthly basis, access
reports which shall, among other things, set forth those persons taking the
Source Services and indicating which of those are being provided on a trial
basis. ADP represents and warrants that all reports shall be accurate and
complete and correctly reflect the number of subscriptions and those having
access to the Source Services.
c. Demonstration Periods; Trade Shows. ADP agrees to promote and market the
Source Services, subject to the terms contained in the last sentence of Section
1(a), by making one or more of the Source Services available free of charge to
ADP Subscribers for up to thirty (30) days upon the request of or with the prior
written consent of Source. The preceding provision shall not be deemed to
increase ADP's obligations to market and promote subscriptions to the Source
Services set forth in subsection (a)(i) of this Section 3. In addition, ADP
agrees to promote the Source Services at any trade show exhibits at which ADP is
a participant.
4. Fees; Service Agreement.
a. Billing; Fees. Source shall bill Source Subscribers in the United States on a
regular basis for subscriptions to the Source Services. ADP shall bill Source
Subscribers outside the United States on a regular basis for subscriptions to
the Source Services. Fees for subscriptions to the Source Services shall be
determined by Source in its respective geographic regions in its sole discretion
and shall be in addition to any fees charged to ADP Subscribers by ADP. Source
agrees that it will make changes in published subscription fees to the Source
Services only once per year, which shall, except as set forth below, be
effective anywhere other than Japan on January 1 and in Japan on April 1, and
will give ADP no less than one hundred twenty (120) days' prior written notice
of any such change. Notwithstanding the foregoing, all new Source Subscribers
who become Source Subscribers within said one hundred twenty (120) days
pre-effective period shall be charged the new subscription fees. ADP covenants
that it will inform all Source Subscribers of the
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<PAGE> 5
new fees and shall implement the new fee schedule at the times provided for
herein. Source agrees that it will not charge a Source Subscriber any more money
for its subscription to the Source Services delivered pursuant to this Agreement
than it will charge said Source Subscriber for the Source Services received by
other third party vendors. The parties agree that Source may require ADP to
terminate distribution of the Source Services to Source Subscribers that are
severely in arrears in paying their subscription fees. Source Subscribers shall
be deemed severely in arrears for purposes hereof when they become six months
behind in payments. The parties agree that the party responsible for billing
shall comply with all applicable Country, State and local laws and regulations,
including, but not limited to the taxing laws and regulations. With respect to
accounts outside the United States billed by ADP, ADP shall use its best efforts
to collect fees due to Source for the Source Services.
b. ADP Service Agreements. In those jurisdictions where ADP is billing Source
Subscribers for their use of the Source Services, ADP shall provide the service
agreement attached hereto as Exhibit F, as such may be amended from time to time
(the "ADP Service Agreement") to each subscriber to the Source Services and
shall not and is not obligated to grant any subscriber access to any Source
Service (except on a trial basis) until it has obtained an executed copy of the
applicable ADP Service Agreement from such subscriber. ADP Service Agreements
provided to Source Subscribers shall provide that Source Subscribers shall not
modify, reproduce in any form, redisseminate, republish, re-present or
re-distribute Source Services without the prior written consent of Source which
consent shall be at Source's sole discretion and shall contain such other
provisions as reasonably requested by Source. Copies of representative ADP
Service Agreements currently being used are attached as Exhibit F. ADP shall
provide Source with a copy of material amendments to the standard ADP Service
Agreement and any amendments to individual ADP Service Agreements which affect
the Source Services within ten (10) days after such amendments are implemented.
Source shall not make any statement regarding any ADP Service that is
contradictory or inconsistent with the then-current version of the applicable
ADP Service Agreement.
c. Source's Service Agreement. In jurisdictions in which Source is billing
Source Subscribers for their use of the Source Services, Source may provide the
Source Services via a written or oral service Agreements; provided however, that
ADP shall have no obligation to provide the Source Services to any subscriber
who has not executed a copy of the applicable ADP Service Agreement. A copy of
Source's written Service Agreement to be used in jurisdictions where Source will
bill Source Subscribers for their use of the Source Services and a copy of
Source's price lists currently in effect are attached as Exhibit G. Source will
notify ADP in writing or by facsimile of all new Source Subscribers in
jurisdictions which Source is billing Source Subscribers.
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<PAGE> 6
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
5. Charges/Fees.
a. ADP's Fee.******************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
b. Sales Commission and Fee. ADP shall not be entitled to any fee or
commission for subscriptions to a Source Service sold to an ADP Subscriber by a
salesperson working for ADP unless Source deems the payment of a fee or
commission appropriate.
c. Payment. Within forty-five (45) days after the end of each calendar quarter
falling fully or partially within the term of this Agreement, each party shall
deliver to the other a report which report the delivering party represents and
warrants to the best of its knowledge will show all Subscription Receipts for
such quarter, the fee due ADP in respect thereof and the amounts due Source,
together with a check payable to the other party for the net amount. All
payments made hereunder shall be made in U.S. Dollars. If ADP is required by
applicable law to pay or withhold any taxes for Subscription Receipts collected
on behalf of Source, ADP shall be entitled to deduct and withhold income or
excise taxes or other taxes, withholdings or governmental charges ("Taxes") from
any Subscription Receipts collected. In the event that ADP withholds Taxes from
amounts payable to source hereunder, it shall remit to Source the Subscription
Receipts net of any Taxes and shall provide a statement setting forth the amount
of Taxes withheld, the applicable rate and other information which may be
reasonably requested relating to the Taxes.
d. Adjustments. Each party acknowledges that they may make initial calculations
and payments of amounts due to the other based on amounts billed to Source
Subscribers in respect of Source Services, and accordingly there may be post
payment adjustments to amounts remitted to the other pursuant to subsection 5(c)
hereof to reflect (i) amounts the billing party billed in error or credits it
gave in the ordinary course of business to Source Subscribers and (ii) amounts
the billing party was unable to collect from Source Subscribers (as to which the
billing party shall be entitled to a refund for fees thereon remitted to the
other).
e. Records. Each party shall maintain complete and accurate books and records
(collectively, the "Records") with respect to all amounts it billed to Source
Subscribers in respect of subscriptions to the Source Services and any
adjustments thereto made pursuant to subsection 5(d) hereof. Each party shall
have the right upon at least sixty (60) days' prior written notice to inspect
the Records of the other during normal business hours no more frequently than
once per year. All information gained by the inspecting party from such
inspection will be kept in strict confidence and will be used solely for the
purpose of verifying the accuracy of the computation of the amounts due
hereunder.
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6. Copyright.
Source represents and warrants to ADP that Source or its licensors own the
Source Services and the copyrights thereto, and that Source has the right to
authorize ADP to distribute the Source Services under this Agreement. In the
event of any claim by a third party which challenges Source's ownership of the
Source Services or right to authorize ADP to distribute the Source Services,
Source shall have the right to terminate this Agreement immediately upon written
notice to ADP. ADP agrees it is not acquiring under this Agreement any
proprietary interest in the Source Services and agrees not to challenge the
claim of Source or its licensors to the ownership of the Source Services and the
measures requested by Source to make the copyright claim of Source or its
licensors known to Source Subscribers and to provide reasonable assistance to
Source, at Source's expense, in Source's defense or prosecution of any copyright
infringement claim.
7. Maintenance and Circumstances Beyond Parties' Control. Subject to the
provisions set forth in Section 8, neither ADP nor Source will be deemed in
default or liable hereunder if, as a result of any cause or circumstance beyond
such party's reasonable control or any repair work or routine maintenance, there
occurs a delay in or failure or interruption of (i) service to any Source
Subscriber, or (ii) transmission of the Source Services. So long as any such
failure continues, the party responsible for such service or transmission will
use its highest reasonable efforts to eliminate such conditions and will keep
the other party fully informed at all times concerning the matters causing such
delay or default and the prospects of their termination.
8. Indemnification.
a. By Source. In the event any claim is brought by any third party against ADP
that relates to, arises out of or is based upon the Source Services, the failure
of Source to comply with any law, rule or regulation, or the permanent
disconnection of the Source Services by Source to any Source Subscriber, ADP
shall promptly notify Source, and Source shall defend such claim at Source's
expense and under Source's control. Source shall indemnify and hold harmless ADP
against any judgment, liability, loss, cost or damage (including litigation
costs and reasonable attorneys' fees) arising from or related to such claim
whether or not such claim is successful. ADP shall have the right, at its
expense, to participate in the defense of such claim through counsel of its own
choosing; provided, however, that Source shall not be required to pay any
settlement amount that it has not approved in advance.
b. By ADP. In the event any claim is brought by any third party against Source
that relates to, arises out of or is based upon any error, delay, interruption
or other event caused by ADP or its employees in transmitting the Source
Services, Source shall promptly notify ADP, and ADP shall defend such claim at
ADP's expense and under ADP's control. ADP shall indemnify and hold harmless
Source against any
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<PAGE> 8
judgment, liability, loss, cost or damage (including litigation costs and
reasonable attorneys' fees) arising from or related to such claim, whether or
not such claim is successful. Source shall have the right, at its expense, to
participate in the defense of such claim through counsel of its own choosing;
provided, however, that ADP shall not be required to pay any settlement amount
that it has not approved in advance.
c. Damages. The parties hereby acknowledge and agree that any judgment,
liability, loss, cost or damage for which a party seeks indemnification pursuant
to this Section 8 shall be deemed a direct damage of such party, and shall in no
event be deemed by either party as a consequential, indirect, incidental or
special damage for purposes of Section 12(d).
9. Representations and Warranties of the Parties. Each party hereby
represents, covenants and warrants to the other as follows:
i. It has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of such party, enforceable against it in accordance with its terms and
conditions.
ii. That the parties will comply with all codes, regulations and laws
applicable to the provision of the services under this Agreement, and has
obtained or will obtain all necessary permits, licenses and other authorizations
necessary for its performance of services under this Agreement.
iii. That the execution, delivery and performance of this Agreement and
the transactions contemplated hereby do not conflict with or violate in any
material respect: (a) a party's charter or by-laws; (b) any contract or
agreement to which it is a party; (c) any order, decree or judgment of any court
or government authority; and (d) any federal or New York State statute, rule or
regulation.
10. Confidentiality.
a. The parties agree that certain material and information which has or will
come into the possession or knowledge of each in connection with this Agreement
or the performance hereof; e.g., proprietary business information (including,
without limitation, the names and addresses of subscribers, information
providers and suppliers), consists of confidential and proprietary data, whose
disclosure to or use by third parties will be damaging. In addition, the parties
may reasonably designate, by notice in writing delivered to the other party,
other information as being confidential or a trade secret.
b. All such proprietary or confidential information of ADP or Source shall be
kept confidential by Source or ADP, as the case may be, to the degree it keeps
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confidential its own confidential or proprietary information. Such information
belonging to either party shall not be disclosed by the other party to its
employees except on a need-to-know basis or to agents or contractors of such
other party, but may be disclosed by such other party to state or federal
agencies, authorities or courts upon their order or request provided prompt
notice of such order or request is given by such other party to the party to
which such information belongs if such notice is legally permitted. Upon
termination of this Agreement, all copies of such information shall be returned
to the party to which such information belongs and no copies thereof shall
remain in the possession, custody or control of such other party.
c. No information that would otherwise be proprietary or confidential for the
purposes of this Agreement pursuant to subsections (a) or (b) above shall be
subject to the restrictions on disclosure imposed by this section in the event
and to the extent that (i) such information is in, or becomes part of, the
public domain otherwise than through the fault of the party to which such
information does not belong, (ii) such information was known to such party prior
to the execution of this Agreement, or (iii) such information was revealed to
such party by a third party.
11. Term; Termination.
a. Term. The initial term of this Agreement shall commence as of the date first
above written and shall terminate on January 1, 2000 (the "Initial Term"),
unless sooner terminated pursuant to Section 6. The term of this Agreement shall
automatically be extended for one or more periods of five years (a "Renewal
Term"), unless sooner terminated pursuant to Section 6 or unless either party
sends to the other written notice of its election not to renew at least ninety
(90) days prior to the end of the Initial Term, or any Renewal Term, as the case
may be.
b. Default. If either party shall default in the performance of or compliance
with any provision contained in this Agreement and such default shall not have
been cured within thirty (30) days after written notice hereof shall have been
given to the appropriate party, the party giving such notice may then give
further written notice to such other party terminating this Agreement, in which
event this Agreement and any other rights granted hereunder shall terminate on
the date specified in such further notice. The parties agree that any breach of
a representation or warranty contained in this Agreement shall result in its
immediate termination. ADP and Source each agree, in the event of a breach by
either party of any of their respective obligations under this Agreement, such
other party may seek temporary or permanent injunctive relief, as well as other
equitable relief, and will be entitled to commence an action for any such relief
in any court of competent jurisdiction.
c. Insolvency. In the event that either party hereto shall be adjudged insolvent
or bankrupt, or upon the institution of any proceedings by it seeking relief,
reorganization or arrangement under any laws relating to insolvency, or if an
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involuntary petition in bankruptcy is filed against such party and said petition
is not discharged within sixty (60) days after such filing, or upon any
assignment for the benefit of its creditors, or upon the appointment of a
receiver, liquidator or trustee of any of its assets, or upon the liquidation,
dissolution or winding up of its business (an "Event of Bankruptcy"), then the
party involved in any such Event of Bankruptcy shall immediately give notice
thereof to the other party, and the other party at its option may terminate this
Agreement upon written notice.
12. Miscellaneous.
a. Notices. All notices hereunder (except as provided for in Section 4(c)
hereof) shall be in writing and shall be delivered in person, or sent by
overnight courier service, to the address of the party set forth below, or to
such other addresses as may be stipulated in writing by the parties pursuant
hereto. Unless otherwise provided, notice shall be effective on the date it is
actually delivered to the address listed.
i. If to ADP, to:
ADP Financial Information Services, Inc.
2 Journal Square Plaza
Jersey City, New Jersey 07306
Attention: Robert J. Casale, President
ii. If to Source, to:
McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, NY 10005
Attention: President
with a copy to:
Van Kampen American Capital, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: General Counsel
b. Amendment; Assignment. This Agreement may not be amended except by written
instrument executed by Source and ADP. Neither party may assign this Agreement
to any third party, other than an affiliate, without the prior written consent
of the other. Any assignment of this Agreement to an affiliate shall not relieve
the assigning party of any of its obligations or liabilities under this
Agreement.
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c. Survival of Certain Provisions. Notwithstanding the termination of this
Agreement, those provisions of this Agreement that by their nature are intended
to survive such termination shall survive, including without limitation, the
provisions of Sections 8, 9 and 10.
d. Consequential Damages. Neither party shall be liable for any consequential,
indirect, incidental or special damages, even if advised of the possibility of
such damages. In no event shall either party or any affiliates, directors,
officers, managers, agents or employees be liable to the other or to any
customers thereof, under any theory of liability for punitive or exemplary
damages arising from or related to this Agreement.
e. Entire Agreement. This Agreement contains the entire understanding of the
parties on the subject hereof and terminates and supersedes all previous verbal
and written agreements on such subject.
f. Relationship of the Parties. The parties agree that ADP will act as an
independent contractor in the performance of its duties under this Agreement.
This Agreement does not and shall not be deemed to constitute a partnership or
joint venture between the parties and neither party nor any of its directors,
officers, employees or agents shall, by virtue of the performance of their
obligations under this Agreement, be deemed to be an employee of the other. ADP
has no authority to make any representations on behalf of or to bind Source in
connection with the provision of Source Services in the course of performing any
of its obligations under this Agreement or otherwise. Source has no authority to
make any representations on behalf of or to bind ADP in connection with the
provisions of Source Services relating to this Agreement.
g. "Affiliate" Defined. For purposes of this Agreement, the term "affiliate" and
its derivatives shall mean, with respect to any individual or entity, any
individual or entity directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with such individual or
entity. The term "control" and its derivatives, as used in the immediately
preceding sentence, means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of an entity,
whether through the ownership of voting securities, by contract or otherwise.
h. Severability. In the event any provision of this Agreement or application
hereof to any party or in any circumstances shall be determined to be invalid,
unlawful or unenforceable to any extent, the remainder of this Agreement, and
the application of any provision to parties or circumstances other than those as
to which it is determined to be unlawful, invalid or unenforceable, shall not be
affected thereby, and each remaining provision of this Agreement shall continue
to be valid and may be enforced to the fullest extent permitted by law.
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i. Non-Waiver. No delay or failure by either party in exercising any right under
this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right.
j. Captions. The captions used herein are for convenience only, and constitute
no part of this Agreement.
k. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the choice
of law principles thereof.
IN WITNESS WHEREOF, the undersigned parties have duly executed this Agreement as
of the date set forth above.
McCARTHY, CRISANTI & MAFFEI, Inc.
By: /s/ David D. Dixon
----------------------------
Name: David D. Dixon
Title: President
ADP FINANCIAL INFORMATION SERVICES, INC.
By: /s/ Frederick J. Koczwara
----------------------------
Name: Frederick J. Koczwara
Title: Senior Vice President
Date: 3-1-96
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Exhibit A
Source Services
<TABLE>
<CAPTION>
<S> <C>
Name Description
- ---- -----------
CorporateWatch(R) Principally provides
rapid and
comprehensive
information on
corporate securities,
private placements,
equities and mortgage
and derivative
product new issues.
MoneyWatch(R) Provides 24 hour fundamental and
technical analysis of US Treasury,
Agency and money market securities.
The service combines live commentary
and technical trading analysis with
detailed forecasts and analysis of the US
economy.
CurrencyWatch(R) A foreign exchange
market forecasting
and analysis system
combining live 24
hour fundamental and
technical analysis
presented as both
commentary and live
technical trading
pages, together with
comprehensive live
EMS analysis.
YieldWatch(R) Addresses European and Asia Pacific
government bonds/financial futures
markets including the U.S. T-bond.
Information is presented as live
commentary, technical trading blotters
and spread analysis, together with
regional market briefings.
</TABLE>
(R) Denotes a registered trademark of McCarthy, Crisanti & Maffei, Inc.
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Exhibit B
The following subscribers should be restricted from access to the Source
Services pursuant to Section 1(a)(i) of the Agreement:
<TABLE>
<CAPTION>
<S> <C>
Alert/OASYS Money Market Services Investment Dealers Digest
AMG Data Services IPO Financial
Asset Backed Securities Group J.J. Kenney & Company
Atlas Johnson Smick International
AutEx Liberty Brokerage Inc.
Bank Valuation Loan Pricing Corp.
BondData Maria Ramirez Capital Consultants
Bondware Market Data Corporation
BondWeek Market News Service
Business Week MBSIS
Capital Management McGraw Hill
Capital Techniques Money Line Corporation
Cates Money Market Services (MMS)
CDA Investment Technologies MoneyData
Chronometrics Moody's
Commscan MortgageData
CORIS MRL Publishing
Corporate Financial Weekly Muller Data
Corporate Service Municipal Markets Data
Dalcomp Inc. Munifacts/American Banker
Data Resources Inc. Newsware/Newswatch
Dow Jones Capital Markets Report North American Economist
Dow Jones News Services O'Connor, Paul & Phillips
Duff & Phelps Olson Group
Dunn & Bradstreet Optima Futures
Elders Applied Research Pegasus Econometrics
Electronic Joint Venture (EJV) Pensions & Investments Age
Elliot Wave International Pit Info Corp.
Equidesk Prechter's Elliot Wave Int'l
Eurobond Service Predex
Euromoney Princeton Economics
Evans Economics Public Securities Assoc. (PSA)
</TABLE>
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<PAGE> 15
<TABLE>
<CAPTION>
<S> <C>
Fin Mark Research R.A. Froehlich
First Call Ried, Thunberg
Fitch RS Investments
Foreign Exchange Analytics (FXA) SDC Publishing
Forex Chartist Securities Data Company
Forex Watch Securities Industry Assoc. (SIA)
Froelich Technical Dimensions Securities Information Center
Fund Data Sheshunoff
FX 24 Software Division
FXO Standard & Poors
Gannett Stone, McCarthy
Global Market Information Technical System
Gov pix Technical Data (All Services)
Griggs & Santow Telekurs
High Frequency Economics Ltd. Telerate Corporate Market Service
I.F.R. CorporateEye Thomas A. Fleming
I.F.R. (Int'l. Financing Review) Thomson Financial Networks
I.F.R. Japan Watch Thomson Research
I.F.R. LatAm Trepp & Company
IDEA Valorinform
ILX Vigil
Indepth Data Wrightson & Co.
Institutional Investor Magazine Wunsch Auction Systems
Investext
</TABLE>
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Exhibit C
"Non-Chargeable" ADP Equipment and Services
I. Equipment to be supplied by ADP to Source for use by Source at Source's
locations including but not limited to:
One ADP data feed and software necessary to receive Source Services at
Source's site in New York.
II. Electronic means of delivering Source's Information to ADP in a timely and
reliable manner to include but not limited to two ADP data lines with the
necessary software, equipment and leased lines with dial back-up at Source's
primary site as well as at disaster recovery site.
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Exhibit D
Direct Feed Delivery Agreement
See Attached
17
<PAGE> 1
EXHIBIT 10.28
April 10, 1997
ADP Financial Information Services, Inc.
2 Journal Square Plaza
Jersey City, New Jersey 07306
Attention: President
Gentlemen:
Reference is made to the Optional Service Delivery Agreement dated as of 1st
April, 1996 (the "Agreement") by and between ADP Financial Information Services,
Inc. ("ADP") and McCarthy, Crisanti & Maffei, Inc. ("MCM" or "Source" as the
case may be). Capitalized terms used in this letter agreement and not otherwise
defined, shall have the meanings ascribed to them in the Agreement. Now
therefore the parties, in consideration of the premises and mutual covenants
contained herein, the legal sufficiency of which is hereby acknowledged, agree
as follows:
A. Amendment of Agreement. Effective as of and from 1st January, 1997, the
Agreement is hereby amended as follows:
1. ADP's Fee. Section 5 of the Agreement is hereby deleted in its
entirety and amended to read as follows:
"5. Charges/Fees
(a) ADP's Fee. Subject to the provisions set forth in
subsection (f) hereof, ADP shall not be entitled to
any portion of the fees charged by Source for the
Source Services. It being agreed that Source shall
retain the entire subscriber subscription fee for the
term of this Agreement and any extensions thereof.
(b) Sales Commission and Fee. ADP shall not be
entitled to any fee or commission for subscriptions
to a Source Service sold to an ADP Subscriber by a
salesperson working for ADP unless Source deems the
payment of a fee or commission appropriate.
(c) Payment. Within sixty (60) days after the end of
each calendar quarter falling fully or partially
within the term of this Agreement, ADP shall deliver
to Source a report showing the subscription receipts
for such quarter, and the amounts due Source, and,
except as set forth in the following sentence, a
check payable to Source for the gross amount of said
subscription receipts. For
1
<PAGE> 2
those ADP Subscribers which ADP bills for Source
Services outside the United States. ADP will remit
payment within thirty (30) days of receipt of payment
from said ADP Subscriber. All payments made hereunder
shall be made in U.S. dollars. If ADP is required by
applicable law to pay or withhold any taxes for the
subscription fees collected on behalf of Source, ADP
shall be entitled to deduct and withhold income or
excise taxes or other taxes, withholdings or
governmental charges ("Taxes") from any subscription
fees collected. In the event that ADP withholds Taxes
from amounts payable to Source hereunder, it shall
remit to Source the subscription receipts net of any
Taxes and shall provide a statement setting forth the
amount of Taxes withheld, the applicable rate and
other information which may be reasonably requested
relating to the Taxes.
(d) Adjustments. Source acknowledges that ADP may
make initial calculations and payments of amounts due
Source based on amounts billed to Source Subscribers
in respect of Source Services, and accordingly there
may be post payment adjustments to amounts remitted
by ADP to Source pursuant to subsection 5(c) hereof
to reflect (i) amounts, billed in error for credits
ADP gave in the ordinary course of business to Source
Subscribers, and (ii) amounts ADP was unable to
collect from Source Subscribers.
(e) Records. ADP shall maintain complete and accurate
books and records (collectively, the "Records") with
respect to all amounts it billed to Source
Subscribers in respect of subscriptions to the Source
Services. Source shall have the right upon at least
sixty (60) days' prior written notice to inspect such
Records during normal business hours no more
frequently than once per year. All information gained
by Source from such inspection will be kept in strict
confidence and will be used solely for the purpose of
verifying the accuracy of the computation of the
amounts due hereunder.
(f) "Notwithstanding the foregoing, and subject
to the provisions set forth below, if after
the date of this amendment and during the
remainder of the Initial Term hereof Source
enters into an agreement, amendment,
addendum, supplement or similar arrangement
(collectively, an "Amendment") with Reuters
Limited ("Reuters") pursuant to which Source
agrees to pay to Reuters a percentage fee
based upon the amounts received from Source
Subscribers (excluding all sales or other
similar taxes) by Source and Reuters in
respect of subscriptions to the Source
Services distributed by Reuters, then Source
will promptly notify ADP thereof, and the
terms
2
<PAGE> 3
of an such Amendment insofar as they relate
to the fee to be paid to Reuters shall
become part of this Agreement on the date
such terms became available to Reuters, this
Agreement being deemed to be so amended as
of such date. Source represents and warrants
to ADP in connection with the execution of
this amendment that, excluding Dow Jones
Telerate, Source has not entered into an
agreement or an amendment of an existing
agreement with another optional service
delivery provider carrying the equivalent
Source Services which provided for the
payment of a greater percentage of amounts
received from Source Subscribers than that
percentage of amounts received from Source
Subscribers set forth in Subsection 5(a) of
the original Agreement. Source shall, upon
ADP's request given from time to time during
the term of this Agreement, but in no event
more than once a year, cause its President
to certify to ADP, within 90 days after
receiving such request, whether or not
Source is in compliance with its obligations
under this subsection 5(f)."
2. Effect of Amendment. Except as expressly amended hereby, the
Agreement shall remain in full force and effect.
Please sign below to indicate your agreement to the foregoing.
Very truly yours,
McCarthy, Crisanti & Maffei, Inc.
By: /s/ David D. Nixon
--------------------------------
David D. Nixon
President
ACCEPTED AND AGREED:
ADP FINANCIAL INFORMATION
SERVICES, INC.
By: /s/ Robert J. Casale
--------------------------
Robert J. Casale
President
3
<PAGE> 1
Exhibit 10.29
(Translation)
AGREEMENT TO SUPPLY INFORMATION
AGREEMENT is made and entered into by and between MCM Asia Pacific Co.,
Ltd. ("MCM") and Kabushiki Kaisha Quick ("KKQ"), with regard to the supply by
MCM to KKQ of certain service handled by MCM and the sale and distribution by
KKQ of such service, as follows:
ARTICLE 1 (Supply of information)
1. MCM shall provide KKQ with the financial information service
described in Schedule I attached hereto which MCM handles as its own service
(the "MCM Service") through an input device provided in Paragraph 3 of this
Article which KKQ furnishes to MCM.
2. MCM shall feed the MCM Service into the input device provided in
Paragraph 3 of this Article which KKQ has furnished to MCM from 8:00 a.m.
through 5:00 p.m. every day except Saturdays, Sundays, legal holidays and those
days on which the Tokyo Stock Exchange is closed; provided, however, that if any
news of material importance such as the announcement of an economic indicator
breaks, MCM shall make an exception and supply the same to KKQ even outside the
above hours.
3. KKQ shall furnish to MCM without charge an input device required
by MCM to input the MCM Service as well as personal circuit and other
appurtenant facilities, upgrades, related equipment, supplies, basic information
service, etc.
4. KKQ shall bear costs incurred for the installation and removal
of
<PAGE> 2
the input device referred to in the preceding Paragraph; provided, however, that
this provision shall not apply if the input device is installed or removed to
meet MCM's own needs.
ARTICLE 2 (License of right to distribute and sell)
1. MCM shall grant to KKQ a non-exclusive right to distribute,
sell, and license the use of, the MCM Service to those clients of KKQ ("KKQ"
includes its affiliates; hereinafter the same) in the Asia Pacific Area as more
fully described in Schedule II attached hereto to whom KKQ has given permission
to purchase the MCM Service.
2. Notwithstanding the preceding Paragraph, KKQ shall not
distribute nor sell nor license the use of the MCM Service to those clients
listed in Schedule III attached hereto as of the effective date of this
Agreement as well as those clients whom MCM will add to the list from time to
time during the term of this Agreement.
ARTICLE 3 (Standard rates, fee, shares, payment and sales records)
1. MCM shall suggest the amounts of money specified in Schedule IV
attached hereto (the "Standards Rates") as data for KKQ to determine the amount
to be charged by it to its clients for the MCM Service; provided, however, that
the Standard Rates shall serve only as reference for the determination of the
amount of payment for the MCM Service supplied by KKQ to its clients, and they
shall in no way restrict the right of KKQ and its clients to determine the
amount of such payment between them.
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<PAGE> 3
2. KKQ shall make a report to MCM in such form as agreed upon
between them which sets forth the list of KKQ's clients who use the MCM Service
as at the end of each month and the amounts charged by KKQ to such clients for
the MCM Service (the "Fee"), such report to be made no later than the end of the
next following month.
3. Within ten (10) days following receipt of KKQ's report, MCM
shall bill KKQ for the amount denominated in yen which represents MCM's share
computed on the basis of the Fee and the Shares specified in Schedule V attached
hereto; provided, however, that the Shares may be adjusted by agreement of MCM
and KKQ at the time of renewal of this Agreement and at no other time, and the
rate of conversion of a foreign currency into the yen shall be as provided in
Schedule V attached hereto.
4. KKQ shall pay the amount billed by MCM by paying the same
into the bank account designated by MCM which is identified in Schedule VI
attached hereto no later than the end of the second month following the month
the bill is dated.
5. If KKQ fails to make when due the payment provided in the
preceding Paragraph for causes attributable to KKQ, KKQ shall pay MCM overdue
interest computed at the rate of 14% per annum for the number of days of delay
in payment on the amount overdue until payment is made in full.
ARTICLE 4 (Restrictions on use of information)
1. Without the prior written consent of MCM, KKQ may not use all
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<PAGE> 4
or any part of the MCM Service in any services other than those which KKQ itself
provides as authorized under this Agreement.
2. KKQ agrees that its clients shall not save, alter,
copy/reproduce, resend nor circulate the contents of the MCM Service; provided,
however, that this provision shall not apply to a hard copy of computer output
made by KKQ's clients for their own use.
ARTICLE 5 (Indemnity/exoneration from liability)
1. Except as otherwise specifically provided in this Agreement,
no warranty, express or implied, including legal and contractual warranty shall
apply to the MCM Service in respect of accuracy of its information and
otherwise; provided, however, that if any error or mistake is found in the
contents of the MCM Service, MCM shall make correction as soon as and to the
extent possible.
2. MCM shall not be liable for the indemnification of any lost
profit, consequential damage, damage arising from special circumstances, damage
caused by loss of data, etc. which are sustained by any client of KKQ nor shall
MCM be liable for injunctive relief sought or a claim for damages filed by a
third party against any client of KKQ in respect of intangibles. Should a
lawsuit or any other claim be brought against MCM by a client of KKQ or a third
party, KKQ shall indemnify MCM for any and all damage, loss and expenses
incurred by MCM; provided, however, that if such lawsuit or claim is brought
solely by reason of a fault of MCM, MCM shall assume liability therefor to the
extent of the amount provided in Paragraph 3 below.
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<PAGE> 5
3. In all cases where a client of KKQ claims from MCM damages
arising from causes attributable to MCM, MCM shall be liable only for ordinary
and direct damage actually incurred by such client of KKQ and then only for
returning to such client of KKQ an amount which does not exceed the amount of
payment for the MCM Service received by KKQ from such client in accordance with
KKQ's agreement with such client.
ARTICLE 6 (Sales assistance by KKQ)
1. At its own request and at the request of MCM, KKQ may
distribute to its prospective clients and license them to use the MCM Service
free of charge for a period not exceeding one (1) month.
2. KKQ shall furnish to MCM those materials and information
which KKQ uses for the promotion of the MCM Service upon such terms and
conditions as prescribed by KKQ.
ARTICLE 7 (Use of MCM trademarks)
KKQ may use the trade name and trademarks of MCM in advertising
materials, signboards, etc. in selling the MCM Service, in which event KKQ shall
obtain the consent of MCM in advance and shall receive instructions from MCM
with regard to the manner of use of such trade name and trademarks.
ARTICLE 8 (Secrecy)
1. Each party hereto shall keep secret and confidential all
business information of the other party which it has acquired under this
Agreement and shall not disclose the same to any third party.
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<PAGE> 6
2. Each party hereto shall use all information disclosed to it
by the other party only for purposes of its business operations under this
Agreement and shall return the same to the other party immediately upon
termination of this Agreement.
3. The obligations of MCM and KKQ under this Article shall
continue in force during the term of this Agreement as well as for a period of
five (5) years following termination of this Agreement.
ARTICLE 9 (Termination for cause)
1. If either party hereto has breached any of the terms or
conditions of this Agreement, the other party shall give the breaching party
written notice of the breach and if 30 days have elapsed from the date of such
notice without the breaching party curing the breach specified in the notice,
the non-breaching party may terminate this Agreement forthwith.
2. If a party hereto is subjected to seizure, provisional
seizure, provisional disposition or commencement of public auction and the party
is not released therefrom within 60 days or if petition or application is filed
by or against a party hereto for its bankruptcy, composition with creditors or
corporate reorganization proceedings or if a party hereto is subjected to
process against taxpayer for taxes in arrears or if its transactions with banks
or similar institutions have been suspended by way of sanction against its
dishonor of notes/checks or if the financial position of a party hereto is found
to have otherwise substantially deteriorated, the other party may terminate this
Agreement forthwith by giving the
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<PAGE> 7
first-mentioned party written notice of termination. Termination of this
Agreement pursuant to the foregoing provision shall in no way preclude the
terminating party from claiming damages in accordance with the provisions of
Article 10 hereof.
ARTICLE 10 (Compensation for damage)
Each party hereto shall have the right to claim from the other
party damages caused by the latter's default of its obligations under this
Agreement subject, however, to the limitations provided in this Agreement.
ARTICLE 11 (Term)
The term of this Agreement shall be one (1) year from July 1, 1995
to June 30, 1996; provided, however, that unless either party hereto gives the
other party notice of its intention to the contrary not later than three (3)
months prior to the expiration of the term hereof, this Agreement shall be
renewed for an additional period of one (1) year upon the same terms and
conditions, and the same shall apply to all subsequent renewals hereof.
ARTICLE 12 (Non-assignment)
Neither party hereto shall assign to any third party this
Agreement or any of its rights and obligations hereunder, except with the prior
written approval of the other party.
ARTICLE 13 (Competent court)
With regard to any lawsuit arising in connection with this
Agreement, the Tokyo District Court shall be the court of first instance having
exclusive jurisdiction.
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<PAGE> 8
ARTICLE 14 (Matters not provided)
Matters not provided herein or any doubt arising in connection
with the interpretation of any of the terms of this Agreement shall be
determined or settled amicably through consultation of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
agreement in duplicate, each party retaining one original.
Dated: July 1, 1995
MCM Asia Pacific Co., Ltd.
5-5, Hitotsubashi 2-chome
Chiyoda-ku, Tokyo
Daniel Harris
Representative Director
Kabushiki Kaisha Quick
6-1, Ohtemachi 1-chome
Chiyoda-ku, Tokyo
Mitsuhisa Yoshino
Director
and General Manager,
Information Department
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<PAGE> 9
SCHEDULE I
FINANCIAL INFORMATION SERVICE
1. Name of the Service: MCM KinriWatch
2. Contents of the Service:
(1) Fundamental Analysis Market Comment
Analysis, preview and overview of Money
Market
Money Market Calendar
(2) Technical Analysis Technical Chart Analysis
(3) Yield Curve Analysis Spread Analysis
(4) Glossary
(5) Various information and commentary relating to the above mentioned
analysis
The contents of the service mentioned above might be changed by written notice
from MCM to KKQ and approval by KKQ.
-9-
<PAGE> 10
SCHEDULE II
DISTRIBUTION AREA
Japan, South Korea, the People's Republic of China, Taiwan, Hong Kong,
Philippines, Indonesia, Thailand, Malaysia, Singapore, Australia and New
Zealand. Other nations in Asia Pacific region shall be included by prior notice
from KKQ to MCM and approval by MCM.
-10-
<PAGE> 11
SCHEDULE III
CLIENTS NOT TO BE DISTRIBUTED, SOLD NOR LICENSED THE USE OF THE MCM SERVICE
Bland Meisler Theoretical Spot Bunkerfuels
Bloomberg LP Capital Techniques
Elliot Wave International Evans Economics, Inc.
Dow Jones Telerate Limited Dow Jones News Services
Griggs & Santow Knight-Ridder Financial
Maria Ramirez Capital Consultants Market Data Corp.
Market News Network MGI Network
MMS International Prisma
Public Securities Association RA Froehlich Technical Dimensions
Reuters Japan Ltd. Reuters Ltd.
R.H. Wrightson & Associates Ried, Thumberg & Co.
Rudolf Wolfe Sigma Base Capital Corp.
Thomson Corporation Japan Ltd. Thomson Financial Services Ltd.
(All Division) (All Division & Location)
Nihon Keizal Shimbun FISCO
Kyodo News Service
All the offices, branches, subsidiaries and companies related to the above
listed companies shall be included in this list.
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<PAGE> 12
SCHEDULE IV
STANDARD RATES
(Monthly Fee)
a) Asia Pacific nations except Hong Kong
1. Standalone system Yen 40,000 per terminal
2. Video Switching system
Dedicated Connection Yen 40,000 per port
Shared Connection Yen 20,000 per WS
View Connection Yen 4,000 per WS
<TABLE>
<CAPTION>
3. Page Feed System
<S> <C>
1 ws Yen 80,000
2~5 ws Yen 160,000
6~10 ws Yen 268,000
11~20 ws Yen 400,000
21~50 ws Yen 660,000
51~100 ws Yen 1,000,000
101 ws~ Yen (1,000,000+4,000X (x-100))
</TABLE>
<TABLE>
<CAPTION>
b) Hong Kong
<S> <C>
Standalone System HK$2,850 per terminal
</TABLE>
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<PAGE> 13
SCHEDULE V
SHARES
MCM: 80%
KKQ: 20%
Yen exchange rate: Bank of Tokyo's mid-rate for customers on the last business
day of the month.
KKQ will report the exchange rate on the monthly report to MCM.
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<PAGE> 14
SCHEDULE VI
PAYMENT
Payment of the fee is to be made into the following bank account
Sakura Bank Tokyo Main Office
Savings Account # 6418830
Account Name: MCM Asia Pacific Co., Ltd.
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<PAGE> 1
Exhibit 10.30
SERVICE AGREEMENT
AGREEMENT made as of this first day of June, 1993 by and between
McCarthy, Crisanti & Maffei, Inc. ("MCM"), a New York corporation, and Key
Information Systems, Inc. ("KIS"), a New York corporation.
WHEREAS, KIS is in the business of developing, manufacturing, and
maintaining computer software products, and providing management and other
consulting services; and
WHEREAS, MCM desires to retain KIS to manage MCM's data center, to
provide consulting services, to maintain certain software products licensed to
MCM by KIS and other software providers, and to provide other services with
respect to MCM's computer system;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and conditions contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:
1. SERVICES. Subject to the terms and conditions hereinafter set forth,
KIS will furnish MCM the services set forth on Exhibit A hereto
(collectively the "Services"), at the level set forth on Exhibit B
hereto.
Additional services which are substantial and materially different from
the Services may be ordered by MCM under this Agreement at any time by
written work order approved in advance by MCM substantially in the form
attached hereto as Exhibit C. Such additional services will be provided
upon the terms and conditions set forth in this Agreement and in the
work order therefor.
The parties acknowledge that all Services to be provided to MCM by KIS
shall also, at MCM's request, be provided to MCM's subsidiaries at no
additional charge; provided, however, that the provision of Services to
MCM's subsidiaries shall in no event expand the scope of the Services
as set forth on Exhibit A or increase the personnel resources to be
provided by KIS pursuant to Section 4.
2. TERM OF AGREEMENT. This Agreement shall commence as of the date
hereinbefore written. Subject to the provisions relating to termination
contained herein, this Agreement shall have an initial term of two (2)
years (the "Initial Term") and shall continue in full force and effect
after the Initial Term until terminated by either party pursuant to
Sections 6 or 19 hereof.
<PAGE> 2
3. CHARGES FOR SERVICES TO BE PAID BY THE CUSTOMER.
(a) For the Services furnished by KIS under this Agreement, MCM
shall pay KIS the charges enumerated in Exhibit D attached
hereto, in accordance with the terms set forth therein. After
the Initial Term, these charges shall be increased from time
to time by mutual written agreement of the parties; provided,
however, that in no event shall the charges to be paid by MCM
hereunder at any time exceed those then being paid to KIS by
any other customer for substantially similar services without
MCM's prior written consent (such consent not to be
unreasonably withheld).
(b) There shall be added to the charges for the Services hereunder
amounts equal to any sales, use, personal property, or excise
taxes, however designated, levied or based on such charges or
on this Agreement, paid or payable by KIS in respect to the
Services, exclusive however of taxes based on the net income
of KIS or any employee or contractor of KIS.
4. PERSONNEL. To perform its Services hereunder, KIS shall make available
to MCM, at no additional charge to MCM, the personnel resources set
forth on Exhibit E. Additional time and/or additional KIS personnel
will be provided by KIS at MCM's request pursuant to a work order as
described in Section 1, at KIS' standard rates set forth on Exhibit E
as amended from time to time by mutual written agreement of the
parties.
The parties acknowledge and agree that the Services to be provided by
Joseph Khan, President of KIS, pursuant to and in accordance with the
terms of this Agreement, are special, unique, and of extraordinary
character, and that KIS may not substitute other KIS personnel for Mr.
Khan without the prior written consent of MCM. KIS agrees that Mr. Khan
shall be available to MCM for the provision of Services no less than
thirty hours per week, excluding absences of two weeks per year for
illness and four weeks per year for vacation.
MCM acknowledges that, for acceptable performance of Services by KIS
pursuant to this Agreement, it shall be necessary for MCM to employ no
less than one full-time computer operator/programmer.
5. TERMINAL AND COMMON CARRIER EQUIPMENT. The parties acknowledge and
agree that the computer equipment and hardware located at MCM's offices
and utilized by KIS in its performance of Services, including without
limitation the equipment set forth on Exhibit F-1 attached hereto, as
amended from time to time by written notice form MCM to KIS, is and
shall remain, except as otherwise specified in writing by MCM, the
exclusive property of MCM; provided, however, that the equipment set
forth on Exhibit F-2 attached hereto,
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<PAGE> 3
as amended from time to time by written notice from KIS to MCM, is and
shall remain the exclusive property of KIS and KIS shall adequately
label or otherwise identify to third parties its ownership rights in
such equipment. Neither party shall remove the other's property in
whole or in part from MCM's premises without the prior written consent
of the owner thereof.
6. LIMITATION OF LIABILITY. In the event that either party is unable to
perform any of its obligations under this Agreement as a result of
natural disasters, strikes, lockouts, riots, acts of war, epidemics,
fire, power failures, actions or decrees of any court or administrative
or governmental body or communications line failure not the fault of
the affected party (hereinafter referred to as a "Force Majeure
Event"), the party who has been so affected immediately shall give
notice to the other party and shall do everything reasonably possible
to resume performance. Upon receipt of such notice, this Agreement,
including without limitation MCM's obligation to pay charges to KIS
pursuant to Section 3, shall promptly be suspended. If the period of
non-performance exceeds thirty (30) days from the receipt of notice of
the Force Majeure Event, the party whose ability to perform has not
been so affected may, by giving written notice, immediately terminate
this Agreement.
IN NO EVENT SHALL EITHER PARTY BE RESPONSIBLE TO THE OTHER OR TO ANY
THIRD PARTY UNDER THIS AGREEMENT FOR ANY LOSS OF PROFITS OR ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, (EXCEPT FOR CLAIMS FOR
WHICH MCM IS INDEMNIFIED BY KIS PURSUANT TO SECTION 8(F)), EVEN IF
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT
THIS LIMITATION SHALL NOT APPLY WITH RESPECT TO ANY INTENTIONAL AND
MALICIOUS BREACH OF THIS AGREEMENT BY EITHER PARTY.
7. CONFIDENTIALITY AND PROPRIETARY RIGHTS. The parties agree that the
software programs, source codes and related documentation furnished by
KIS to MCM in connection with the Services, including any
modifications, enhancements, or updates thereto are, and shall remain,
the sole property of KIS; provided, however, that (a) any programs or
enhancements or modifications thereto or related documentation created
pursuant to separate work orders as described in Section 1 which are
designed in such work orders as MCM - proprietary shall be and remain
works-for-hire which are the sole property of MCM and KIS shall have no
proprietary rights therein, including without limitation the right to
market such programs, enhancements or modifications; and (b) KIS agrees
to execute any and all assignments and/or other instruments and assign
any and all applications, and do all things with MCM may deem necessary
or appropriate in order to apply for, obtain, maintain, enforce and
defend copyrights or other forms of protection, or in order to assign
and convey or otherwise make available to MCM the sole and exclusive
right, title and
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<PAGE> 4
interest in and to said programs, documentation, enhancements or
modifications (including without limitation the source code therefor).
No right to print or copy, in whole or in part, any KIS proprietary
materials is granted hereunder except as provided in the Software
License Agreement of even date herewith between MCM and KIS (the
"Software License Agreement") or as otherwise provided in writing by
KIS. MCM and KIS each agree to take the highest reasonable precautions
to protect the other's proprietary programs or other information to
which MCM or KIS, as the case may be, may gain access as a result of
the Services provided under this Agreement. MCM and KIS each agree to
hold all of the other's customer lists, data, business methods and
information, programs and software, and trade secrets to which MCM or
KIS as the case may be, may gain access as a result of the Services
provided under this Agreement in strictest confidence, not to use or
disclose such information to anyone without the explicit written
permission of the other, and to take the highest reasonable precautions
to protect the security and confidentiality of such information. All
proprietary materials or information provided by MCM to KIS or by KIS
to MCM, or copies thereof, shall be returned to the party providing
same within thirty (30) days after the expiration or termination of
this Agreement except as provided in the Software License Agreement.
Notwithstanding anything contained herein to the contrary, the parties
acknowledge that (a) KIS has no ownership rights in computer programs
developed by or on behalf of the MCM by parties other than KIS to
interface with KIS software, which computer programs shall remain the
exclusive property of MCM; (b) the covenants of each party hereunder to
maintain the confidentiality of the other's proprietary information
shall extend, as to any item of information, for seven (7) years from
the date of the receiving party's receipt of such item of information;
and (c) the covenants of each party hereunder to maintain the
confidentiality of the other's proprietary information shall not extend
to information previously available to such party from another source
or which becomes available on a non-confidential basis from another
source or information which such party is required by law to disclose.
KIS shall require each employee of KIS to execute a confidentiality
agreement in the form attached hereto as Exhibit G.
The parties acknowledge that the entities set forth on Exhibit H
attached hereto are direct competitors of KIS and that any disclosure
by MCM of KIS' confidential information to such entities in violation
of Section 7 may cause immediate, substantial and irreparable harm to
KIS.
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<PAGE> 5
8. WARRANTIES. KIS hereby warrants and covenants as follows:
(a) That KIS has complied and will comply with all codes,
regulations and laws applicable to its performance of Services
under this Agreement, and has obtained or will obtain all
necessary permits, licenses and other authorizations necessary
for its performance of Services under this Agreement.
(b) That all Services KIS performs under this Agreement will be
performed in a timely, competent and workmanlike manner by
individuals of appropriate training and experience, and that
all work will meet or exceed industry standards.
(c) That KIS is and shall remain, throughout the term of this
Agreement, a corporation duly organized, validly existing and
in good standing under the laws of the State of New York.
(d) That KIS has full power and authority (including full
corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation
of KIS, enforceable in accordance with its terms and
conditions.
(e) That the Services will meet the requirements set forth in
Exhibit B.
(f) That KIS shall at all times maintain workmen's compensation,
property and liability insurance as described on Exhibit I.
(g) That KIS (i) currently has a net worth (under generally
accepted accounting principles) of not less than twenty-five
thousand dollars ($25,000.00); (ii) will at no time have a net
worth (under generally accepted accounting principles) of less
than twenty-five thousand dollars ($25,000.00); (iii) shall
achieve a net worth (under generally accepted accounting
principles) of not less than thirty thousand dollars
($30,000.00) within one year of the effective date of this
Agreement; (iv) shall maintain at all times thereafter a net
worth (under generally accepted accounting principles) of not
less than thirty-thousand dollars ($30,000.00); and (v) shall
notify MCM in writing immediately of any non-compliance by KIS
with the covenants set forth in this subsection 8(g).
(h) That KIS' performance of Services, including without
limitation the creation of works-for-hire pursuant to Section
7, will not infringe or misappropriate a patent, trademark,
copyright, trade secret or other
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intellectual property right of a third party; and that KIS
shall (i) indemnify, defend and hold harmless MCM, its
officers, directors, employees, affiliates, agents, successors
and assigns (including without limitation the payment of all
reasonable attorneys' fees and expenses) from and against any
claim asserted or suit or proceeding alleging same; and (ii)
in the event any performance of Services is held to constitute
an infringement or misappropriation, use its best efforts to
either procure for MCM the right to continue using the
infringing item under the terms set forth in this Agreement or
replace or modify said item so that it becomes non-infringing
and not a misappropriation, provided that such replacement or
modified item has the same functional capabilities and
performance characteristics as the replaced or modified item.
The remedies set forth in this subsection and in Section 6
state the entire liability and obligation of KIS with respect
to a breach of the warranty set forth in this subsection 8(h).
9. EXPENSES. MCM shall reimburse KIS for appropriate and reasonable
out-of-pocket expenses incurred by KIS in the performance of Services;
provided, however that KIS shall not incur expenses in excess of five
hundred dollars ($500) during any one month period without the prior
written approval of MCM.
10. CONSTRUCTION. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
choice of law rules thereof.
11. ASSIGNMENT. Neither party may assign its rights and obligations under
this Agreement without the prior written consent of the other, except
that either party may assign its rights and obligations (except as
otherwise provided in Section 4) under this Agreement to any successor
to the business of such party by purchase, merger, reorganization,
assignment, or otherwise.
12. WAIVER OF BREACH. The failure of either party to require the
performance of any term of this Agreement or the waiver of either party
of any breach hereunder shall not prevent a subsequent enforcement of
such term nor be deemed a waiver of any subsequent breach.
13. RELATIONSHIP OF THE PARTIES. The parties understand and agree that all
of the Services performed hereunder by KIS shall be as an independent
contractor and not as an employee or agent of MCM. KIS shall have no
authority whatsoever to bind MCM on any agreement or obligation and
agrees that neither KIS nor any employee of KIS shall hold itself or
himself out as an employee or agent of MCM.
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14. SCOPE OF AGREEMENT. This Agreement, together with the Software License
Agreement, the Option Agreement between KIS and MCM of even date
herewith (the "Option Agreement") and the Escrow Agreement, constitutes
the entire agreement between the parties with respect to the subject
matter hereof, and no representation, condition, understanding or
agreement of any kind shall be binding on the parties unless
incorporated herein or therein. This Agreement may not be modified
except by a written agreement signed by authorized representatives of
both parties.
15. SEVERABILITY. In the event that any provision of this Agreement or
application hereof to any party or in any circumstances shall be
determined to be invalid, unlawful, or unenforceable to any extent, the
remainder of this Agreement, and the application of any provision to
parties or circumstances other than those as to which it is determined
to be unlawful, invalid or unenforceable, shall not be affected
thereby, and each remaining provision of this Agreement shall continue
to be valid and may be enforced to the fullest extent permitted by law.
16. SUBCONTRACTING. KIS will not subcontract or permit anyone other than
KIS personnel to perform any of the work, services, or other
performance required of KIS under this Agreement without the prior
written consent of MCM, such consent not to be unreasonably withheld.
Without limiting the foregoing, KIS agrees that, prior to engaging any
subcontractor or third party service provider hereunder, it shall
require such subcontractor or provider to execute and deliver to MCM a
confidentiality agreement in the form attached hereto as Exhibit G.
17. NON-COMPETE. MCM acknowledges and agrees that KIS may provide services
substantially similar or identical to the Services to be provided to
MCM hereunder to other customers and consents to KIS servicing such
other customers insofar as such servicing does not result in a breach
of this Agreement; provided, however, that (a) KIS shall not utilize
any of the equipment set forth on Exhibit F-1, and shall not utilize,
to any material extent or in any manner which interferes with MCM's use
thereof, any additional property of MCM in providing services to other
customers; and (b) KIS shall not, during the term of this Agreement and
for a period of one (1) year after the termination of this Agreement
for any reason whatsoever; (i) enter into or engage in any business
directly competitive with that currently carried on by MCM or provide
services to customers reasonable believed by MCM to be in direct
competition with MCM (such customers to be specified in a writing to be
delivered by MCM to KIS prior to MCM's execution and delivery of this
Agreement, with quarterly updates by MCM thereto) with respect to any
business conducted by MCM during the term of this Agreement, without
the prior written consent of MCM; or (ii) employ any employee of MCM
who was
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an employee during the term of this Agreement. In addition to and not
in limitation of the foregoing, the parties agree that, during the term
of this Agreement and for a period of one (1) year after the
termination of this Agreement for any reason whatsoever; (a) MCM shall
not enter into or engage in any business directly competitive with that
currently carried on by KIS; and (b) MCM will not employee Jaweed Syed,
Calvin Wang, or any employee of KIS who was an employee during the term
of this Agreement.
18. EXECUTION. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one agreement.
19. TERMINATION. (a) Notwithstanding any provision of this Agreement to the
contrary, this Agreement may be terminated by either party at any time
after its Initial Term by ninety (90) days prior written notice (which
notice may be given ninety (90) days prior to the end of the Initial
Term or any time thereafter) to the other. The obligations of the
parties set forth in Sections 5, 7, 8, 17, and 25 shall survive the
termination or expiration of this Agreement for any reason. This
Agreement may be terminated pursuant to this Section 19 as to
accounting software maintenance without terminating the remaining
Services, in which event the charges to be paid by MCM for Services
under this Agreement shall be correspondingly reduced and this
Agreement shall continue in full force and effect as to all Services
which are note terminated; provided, however, that this Agreement shall
not be deemed to have been "terminated" for purposes of Section 20 and
21 hereof or for any other purposes of this Agreement (except as
otherwise set forth in Section 22) unless it is terminated as to all of
the Services.
(b) Either party may terminate this Agreement at any time: (i) if the
other party materially breaches or is in default of any material
obligation hereunder which is not cured within thirty (30) days after
receipt of written notice of such default from the non-defaulting
party; or (ii) immediately upon written notice to the other, if such
other party becomes insolvent or is failing to pay its debts as and
when they become due, makes a general assignment for the benefit of
creditors, suffers or permits the appointment of a receiver for its
business or assets, becomes subject to any proceeding under any
bankruptcy or insolvency law (not commenced by the party seeking to
terminate) whether domestic or foreign, or has wound up or liquidated,
voluntarily or otherwise; provided, however, that any involuntary
bankruptcy shall not be grounds for termination if dismissed within
thirty (30) days. MCM may terminate this agreement immediately upon
written notice to KIS if Joseph Khan has become permanently disabled or
deceased or is no longer associated with KIS (or any permitted
successor or assignee) as an employee or agent thereof.
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KIS agrees to make available to MCM, by work order as described in
Sections 1 and 4, reasonable services necessary for an orderly
transition up to the effective date of termination, and at double the
rates set forth in Exhibit E after the effective date of termination,
of this Agreement for any reason, including but not limited to
providing all files and intermediate materials in the format described
by MCM, and all supplies and other properties of MCM.
20. SEVERANCE FEE. If this Agreement is terminated by MCM without cause
pursuant to Section 19(a) prior to December 31, 1996, MCM shall pay
KIS, on the effective date of such termination, a severance fee equal
to two times the base (without regard to work orders) monthly charges
being paid to KIS pursuant to Section 3 immediately prior to said
effective date.
21. TERMINATION FEE. If this Agreement is terminated by either party for
any reason whatsoever prior to December 31, 1996, MCM shall pay to KIS,
on the effective date of such termination, a termination fee in an
amount equal to $1,505 multiplied by the number of months and portions
of months between said effective date and December 31, 1996; provided,
however, that the total termination fee payable by MCM hereunder shall
be reduced by $3,010 in the event that a severance fee is paid by MCM
to KIS pursuant to Section 20.
22. WORKSPACE. During and only during the term of this Agreement, as
described herein, MCM shall use reasonable efforts to make available to
KIS for KIS' performance of Services pursuant to this Agreement, and
for KIS' performance of services to other KIS customers, reasonable
office space designated by MCM not to exceed two thousand (2,000)
square feet and not to be less than one thousand (1,000) square feet,
together with access to the common areas pertaining thereto,
(collectively the "Premises") in MCM's then-current offices; provided,
however, that the amount of space to be provided by MCM hereunder shall
decrease in proportion to any decrease in the six of KIS' total work
force as of the date of this Agreement. KIS shall comply with the
following covenants and obligations with respect to its use of the
Premises: (a) KIS shall use the Premises for purposes other than the
performance of Services to MCM only if all Services required by this
Agreement are being performed in accordance with the terms and
conditions of this Agreement; (b) KIS shall use the Premises only for
the operation of a computer services business; (c) KIS shall make no
use of the Premises which prohibits or interferes with MCM's operation
of its business or with KIS' performance of Services to MCM; (d) KIS
shall occupy and use the Premises only as directed by MCM and in
compliance with such of MCM's covenants and obligations under MCM's
lease with respect to the Premises as KIS shall from time to time
receive notice of in writing; (e) MCM shall have no liability to KIS,
any KIS employee, or any third party on the Premises as a result of or
in connection with KIS' use of the Premises, except to the extent that
such liability may not, as a matter of law, be
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waived; (f) MCM shall cause the Premises to be furnished, maintained
and serviced at a level comparable to that for MCM's office space in
general, but shall provide no additional furnishings, maintenance or
services with respect to the Premises; (g) KIS shall indemnify, defend
and hold harmless MCM, its officers, directors, employees, affiliates,
agents, successors and assigns from and against any and all damages,
losses, claims and expenses (including without limitation reasonable
attorney's fees and expenses) incurred by any of such parties as a
result of, arising out of or in any way relating to KIS' use of the
Premises, except to the extent that so indemnifying, defending or
holding harmless would violate applicable law; (h) KIS shall allow MCM
such access to the Premises at all times as may be reserved by MCM's
landlord or as MCM may require to preserve, protect, maintain, repair,
services and inspect the Premises, and shall not install any lock on
any door to or in the Premises without furnishing MCM with a key
thereto; (i) MCM shall have the right to change the location of the
Premises within MCM's offices at any time and from time to time, in its
reasonable discretion; (j) KIS shall surrender the Premises when
required to do so hereunder in the same order and condition, reasonable
wear and tear excepted, as existed at the time of KIS' occupancy
thereof, (k) KIS shall at all times maintain property and liability
insurance as described on Exhibit I with respect to the Premises and
shall not seek to recover against MCM on account of any damage caused
to KIS or to any of KIS' property by reason of casualty or risk
coverable under an all-risk property insurance policy even if the same
arises out of MCM's negligence; (l) KIS shall not allow any person
other than its own employees or agents, consultants or contractors
providing services to MCM to use or occupy the Premises and shall not
make any alternations, installations or additions in or to the Premises
without MCM's consent. KIS' indemnity obligation, but not MCM's
obligation to make the Premises available, shall survive the
termination of this Agreement for any cause whatsoever.
For purposes of this Section 22, this Agreement shall be deemed to have
been "terminated" if it is terminated as to any of the Services other
than accounting software maintenance.
If MCM determines, in its sole discretion, that it is no longer in
MCM's best interest to procure or to continue to provide space of KIS
as set forth in this Section 22, MCM may discontinue providing any
space to KIS on sixty (60) days prior written notice to KIS and KIS'
sole recourse in such event shall be that it may, at its option,
require an amendment to Exhibit B to this Agreement, and, except as set
forth below, failure of the parties to reach any agreement on such
amendment shall be deemed a termination without cause by MCM pursuant
to Section 19(a) (except that such termination may occur prior to the
end of the Initial Term).
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Notwithstanding the foregoing, in the event that KIS refuses to provide
information or execute any instrument required by MCM's landlord as a
condition to providing or continuing to provide the Premises or any
portion thereof to KIS, MCM shall have not further obligation to
provide the Premises or such portion thereof to KIS and KIS' sole
recourse in such event shall be that it may, at its option, require an
amendment to Exhibit B to this Agreement, and failure of the parties to
reach an agreement on such amendment shall be deemed a termination with
cause by MCM pursuant to Section 19(b)(ii).
23. DEVELOPMENT OF SOFTWARE. The parties acknowledge that KIS is currently
developing or may in the future develop software ("Developmental
Software") (a) separate and apart from the products licensed to MCM
pursuant to the License Agreement or any software provided to MCM as
part of the Services and (b) separate and apart from any products
currently licensed or provided by KIS to other customers of KIS or
subsequently commissioned by other customers of KIS or which KIS is
obligated as of the date of this Agreement by contract to provide. KIS
hereby agrees that KIS will provide a proposal offering to MCM the
opportunity to purchase, license and/or to participate in the
commercialization of any such Developmental Software prior to KIS'
offering a similar opportunity to so purchase, license and/or
participate in the commercialization of such Developmental Software to
an unaffiliated third party. Upon deliver of KIS' proposal to MCM, MCM
shall thereafter have thirty (30) days in which to notify KIS in
writing of MCM's acceptance of the proposal or of MCM's desire to
negotiate with KIS to purchase, license or participate in the
commercialization of the Developmental Software which is the subject to
such proposal. If MCM wishes to negotiate, it will have an additional
thirty (30) days, during which the parties will negotiate in good faith
to execute a contract enabling the venture to proceed. If (a) MCM does
not accept the property within the initial thirty (30) day period, (b)
MCM notifies KIS in writing that it does not wish to accept the
proposal, or (c) the parties commence negotiations but have not
executed a contract within the additional thirty (30) day deadline, KIS
shall have no further obligation to MCM under this Section 23 with
respect to the Developmental Software contained in the proposal,
including multiple similar offers to so purchase, license and/or
participate in the commercialization of the same Developmental
Software, to multiple unaffiliated third parties. Nothing in this
Section 23 shall in any way be construed to obligate KIS to offer to
MCM an exclusive right to purchase, license and/or participate in the
commercialization of any Developmental Software.
Notwithstanding any provision contained in this Agreement to the
contrary, MCM shall have no right to terminate this Agreement pursuant
to Section 19(b)(i) solely as a result of KIS' breach of its
obligations pursuant to this
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Section 23; however, that such inability to terminate the Agreement
shall in no event be deemed a waiver of any additional rights or
remedies in law or in equity which MCM may have for a breach of KIS'
obligations pursuant to this Section 23. MCM's remedy for KIS' breach
of this Section 23 shall be that KIS shall be obliged to make to MCM a
reasonably equivalent offer to that which was made to the third party,
or if more than one, equivalent to the third party offer identified by
MCM.
24. NOTICES. Any notice, request demand or other communication provided for
or permitted hereunder shall be in writing and may be personally
delivered, or sent by certified mail return receipt requested, or by
overnight courier, to the following address:
to KIS: Key Information Systems, Inc.
3217 Quinian Street
Yorktown Heights, NY 10598
Attention: Joseph Khan, President
Fax Number: (914) 245-5388
To MCM: McCarthy, Crisanti & Maffei, Inc.
71 Broadway
New York, New York 10006
Attention: Lindley Richert, President
Fax Number: (212) 509-7389
or such other address as a party may give the other parties by written
notice as provided herein. Any notice, request, demand or other
communication shall be deemed to have been given when received.
25. USAGE. In all references herein to any parties, persons, entities, or
corporations, the use of any particular gender or the plural or
singular number is intended to include the appropriate gender or number
as the text of the foregoing instrument may require.
26. REMEDIES. Each party acknowledges and agrees that monetary damages may
not be a sufficient remedy for any breach of this Agreement by the
other and that, in addition to all other remedies, specific performance
and injunctive or other equitable relief shall be available to the
non-defaulting part as a remedy for any such breach.
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27. NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their
respective successors and permitted assigns.
28. ADVERTISING. Neither party shall use the name or any trademark or
tradename of the other for any purpose, including publicity and
advertising, except as required by law or with the prior written
consent of such other party, which consent shall not be unreasonably
withheld or delayed.
IN WITNESS WHEREOF, KIS and MCM have caused this Agreement to be executed as of
the date and year first above written.
KEY INFORMATION SYSTEMS, INC., McCARTHY, CRISANTI & MAFFEI, INC.,
a New York Corporation a New York corporation
By: /s/ Joseph M. Khan By: /s/ Lindley B. Richert
------------------------------ -----------------------------
Name: Joseph M. Khan Name: Lindley B. Richert
Title: President Title: President
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EXHIBIT A
SERVICES TO BE PROVIDED BY KIS
I. OPERATIONS
KIS shall manage the day-to-day operation of MCM's data center from
6:00 p.m. Sunday to 6:00 p.m. Friday, New York time, including without
limitation:
- Resolving communication problems with carriers of MCM
electronically delivered information and advisory services,
including without limitation TELERATE, ADP, QUOTRON,
KNIGHTRIDDER, REUTERS and COMMERCE DEPT
- Backups-Monthly, weekly, daily; and maintenance thereof in a
secure, off-site facility
- Monthly reorganization of the document and other large data
libraries
- Maintaining hardware inventory and maintenance lists
- Maintaining software inventory and licensing agreements
- Maintaining data-storage medium inventory (disk & tape packs)
- Managing the maintenance of PC software and hardware
- Creating, regularly testing and maintaining a disaster
recovery plan
- Maintaining the automatic processes set forth on Schedule A-1
- Maintaining system and operations documentation
- Establishing and maintaining hardware connections
- Supervising MCM's in-house data processing and center support
staff, and providing coverage during illness or absences of
any staff members.
In addition, KIS shall (a) manage the acquisition, sifting, maintenance
(by third parties), and installation of MCM's data processing hardware
and expendable media, including without limitation the equipment set
forth on Exhibit F-1; (b) provide a help desk from 8:00 a.m. to 5:00
p.m. New York time on business days to assist users with ad hoc
requests relating to MCM's computer hardware, including without
limitation the Wang system and PC's, and to other technical
requirements; and (c) provide on-site support between the hours of 6:00
p.m. Sunday and 6:00 p.m. Friday, New York time, and telephone support
twenty-four hours per day on business days.
II. CONSULTING
KIS shall (a) interpret MCM's needs into data processing requirements,
and shall provide the programming and technical resources needed for
this development effort; (b) develop specifications for interfacing
with information providers such as Telerate and Knight-Ridder and for
performing other related functions; (c) assist MCM in planning,
designing and implementing projects to the specifications of the users
of MCM products; (d) render technical advice
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relating to computer equipment; and (e) negotiate and review
maintenance contracts, subject to final approval by MCM, verify
non-maintenance billings and otherwise interface with all
computer-related vendors and suppliers that have dealings with MCM,
including without limitation Wang, CDC, Telerate, Quotron, DEC, ADP and
AT&T.
III. SOFTWARE MAINTENANCE
KIS shall provide MCM the following maintenance services as to all
"Products" licensed to MCM pursuant to the Software License Agreement
of even date herewith between MCM and KIS (the "Software License
Agreement");
(a) KIS will supply to MCM updated Product(s) and the user
documentation therefor, and will supply to the Escrow Agent
pursuant to an Escrow Agreement by and among KIS, MCM, and the
Escrow Agent (the "Escrow Agreement") one copy, in magnetic
media, of the source code therefor (and, in printed form, the
applicable system documentation pertaining thereto) thirty
(30) days after any material revision or update, and in any
event no less frequently than once every six (6) months, to
operate with all KIS-approved current versions of the
operating system on which the Product(s) is being operated,
and will notify MCM in writing ninety (90) days prior to
removals of a version of a Product from current status. At the
end of the ninety (90) day period, KIS shall have no
maintenance responsibilities for Products no longer current
and replaced with updated Product(s).
(b) KIS will supply reasonable on site and telephone assistance to
MCM to aid MCM in its use of the Product(s).
(c) KIS will exert its best efforts to correct a programming error
in any Product within a reasonable time, provided that MCM
notifies KIS of the error in person, by telephone or by mail
and provides sufficient information to identify the problem.
Such information shall include without limitation error and
diagnostic messages, operator console information, data file
dumps, and other written explanation and documentation of the
problem.
IV. SOFTWARE CONVERSION
At MCM's option, to be exercised by written work order from MCM to KIS,
KIS will convert its KISNET-C and KISNET-D Software Systems to operate
on the VAX or Sun platform. If MCM exercises this option, the systems
as converted shall become part of the "Products" licensed to MCM
pursuant to the Software License Agreement and KIS will supply updates
to said Products
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to MCM as available and will supply to the Escrow Agent pursuant to the
Escrow Agreement one copy, in magnetic media, of the source code
therefor no less frequently than once every three (3) months during the
conversion process and thirty (30) days after the date of each material
update, and in any event no less frequently than once every six (6)
months thereafter.
V. DISASTER RECOVERY PLAN
KIS shall cooperate with and assist MCM in the development and
implementation, at MCM's expense and within three (3) months following
MCM's relocation to new office space, of a disaster recovery plan
acceptable to MCM which provides for back-up recovery system located
outside of New York City for all critical hardware, software, and data
utilized by MCM in conducting its day-to-day operations.
All of the above services shall be performed in accordance with the standards
set forth on Exhibit B.
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SCHEDULE A-1
AUTOMATIC PROCESSES
- - European Monetary System (EMS) page (23305) updated every 4 to 5
minutes - Midnight until Noon New York Time
- - YieldWatch (YW) page (7876) updated every 5 to 10 minutes - 3:00 a.m.
until 10:30 a.m. New York Time (upon request)
- - Automatic scrolling of page 7901-7905 via page 23289
- - MoneyWatch (MW) + page 7911
- - CurrencyWatch (KW) Scrolling Page 23290-23291
- - YW Scrolling Page 7871; 7873-7874
- - KW: Read and store page 23301
- - Capture and store MoneyWatch commentary
- - MW + auto update of page 9658
- - Closing price update of page 7876
- - Building page 5 from historic data daily
- - Continuous update of Telerate pages (Cache file) for Wang users,
particularly pages 5, 17520, 4046, and 4002
- - Telerate Digital Page Feed (TDPF) under installation
- - Knight-Ridder Datafeed (under testing)
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EXHIBIT B
LEVEL OF SERVICE REQUIREMENTS
McCarthy, Crisanti & Maffei, Inc. ("MCM")
and Key Information Systems, Inc. ("KIS")
I. PURPOSE
These Level of Services Requirements establish the performance targets,
measurement criteria, and correction process in support of the MCM
requirements for the performance of the Products as well as the Data
Center and user support contractually provided by KIS. Any additional
requirements must be renegotiated.
II. LEVEL OF SERVICE CHANGE PROCEDURE
Should any significant, unexpected change(s) in capacity or workload
requirements occur, actions will be initiated to renegotiate all or
part of this document. Additionally, for significant and unique system
enhancements requested by MCM, a formal work order explanation and
approval process will be imposed.
III. PERFORMANCE TARGETS
The targets specified in these Level of Service Requirements represent
the support levels needed to meet the requirements of the MCM's
business. Meeting these requirements is the responsibility of KIS (but
can only be fully met with active participation from the user
community).
IV. PERFORMANCE MONITORING/REPORTING
- Performance results will be reported monthly in writing by KIS
to the President of MCM.
- Performance will be discussed at a review meeting held by MCM
and investigation and correction, when necessary, will be
addressed by the responsible organization. These meetings will
occur at least quarterly.
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V. AVAILABILITY
- Within the personnel limitations set forth below, KIS will use
its best efforts keep the system available twenty-four
hours/day, seven days/week.
- Availability refers to the scheduled availability of all
functionality provided by KIS personnel and Products and is
the total time the system is available for access and use by
customers.
- Response time will not exceed durations reasonably acceptable
to MCM for all functionality provided by KISNET 2000 and
system support provided by KIS.
- For situations where the system will be down due to planned
events (eg. auto gens, PMs, scheduled power outages,
software/hardware upgrades, etc.), MCM must approve and MCM's
customers must be notified of such shutdown at least two
business days in advance. This will take place via written
notification to MCM and its users and written approval by MCM.
- KIS is responsible to ensure that all data is regularly and
frequently (minimally - daily) backed up and that recovery
data is safely secured at an offsite location bi-weekly.
VI. SUPPLIER LEVEL OF SERVICE - DETAIL REQUIREMENTS
COMPUTER OPERATIONS SUPPORT
- Operator(s) will be on-site as specified in Section 4 of this
Service Agreement.
- Telephone support will be available from 6:00 p.m. Sunday, New
York time to 6:00 p.m. Friday, New York time and a phone list
published and maintained by KIS for all users. For holiday
coverage the MCM International holiday schedule will be
adhered to as it relates to outages, system availability and
operator coverage. If schedule changes are required by the
customer, they must be processed through the President of MCM
to the President of KIS.
- Notification to customer of batch processing problems will be
performed in a timely manner.
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- Hardware and software problems will be reported by users to
the Help Desk for prompt resolution and notification.
DATA NETWORK SUPPORT
- KIS Data Network will provide end-to-end problem diagnostics
and determination. KIS will be responsible for procurement and
project management of data communications equipment
installation. Additionally, KIS is responsible for network
design, optimization, network management, and supply/demand
forecasting and planning as well as vendor management. KIS
will assist with problem resolution of DTE (data terminal
equipment, ie. CRTs, printers, etc.) and will assist with
problem diagnosis and procurement of cable installation.
CUSTOMER SUPPORT CENTER
- The KIS Help Desk provides a single point of contact for
hardware and telecommunications problems. There may be
problems reported to the Help Desk that are application in
nature. If this is the case, the Help Desk personnel will
refer the call to the appropriate system support personnel and
report periodic status to the user until the problem report is
closed.
- All users will be notified in the event of system
unavailability via telephone broadcast.
TECHNICAL SUPPORT
- Software
Select, procure, configure, QA, install, maintain and support
all software including operating systems, utilities and data
base software selected for use in the Wang, PC, and, at MCM's
option, any new environment for which the software is
converted.
- Software Updates
Make software changes to supported software as required due to
software or hardware changes or for performance reasons. This
applies to software repairs and new software releases. The
target will be 15 ays after receiving the request for
implementation of non-critical software upgrades and 5 days
for software that solves production bugs.
-20-
<PAGE> 21
- System Access Control
Select, implement and support any and all tools required for
system access and security control for Data Processing.
-21-
<PAGE> 22
EXHIBIT C
McCarthy, Crisanti & Maffei, Inc. ("MCM")/Key Information Systems ("KIS")
MCM/KIS
SYSTEM WORK ORDER
Work Order Name: _______________________________________________________________
User(s): _______________________________________________________________________
Work for hire (MCM Proprietary):
[ ] Yes [ ] No
WORK ORDER DESCRIPTION
Priority: [ ] Low [ ] Medium [ ] High Due By ______________
Date
Work Order Description: ________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________ _________________
Requested By Date
Work Order Estimates: Work Order Number ____________
<TABLE>
<CAPTION>
HOURS PERSONNEL COSTS OTHER COSTS TOTAL COST KIS PERSONNEL INVOLVED
- ----- --------------- ----------- ---------- ----------------------
<S> <C> <C> <C> <C>
_____ _______________ ___________ __________ _______________________
_______________________
_______________________
_______________________________________ _______________________________
Proposed Start Date Proposed Completion Date
</TABLE>
Impact to Other Activities _____________________________________________________
Dependencies ___________________________________________________________________
All work to be performed pursuant to and in accordance with the Service
Agreement dated as of ____________ by and between MCM and KIS
Submitted by: __________________________________ Date:____________
President, Key Information Systems
-22-
<PAGE> 23
WORK ORDER APPROVAL SIGNOFF
Approved for Development: __________________ ___________
Requestor Date
__________________ ___________
President, MCM Date
Accepted and Approved for Payment: __________________ ___________
Requestor Date
__________________ ___________
President of MCM Date
-23-
<PAGE> 24
EXHIBIT D
FEE SCHEDULE
<TABLE>
<CAPTION>
SERVICE SEMI-MONTHLY FEE
- ------- ----------------
<S> <C>
Management $2,000
Operations/Shift Technicians $5,750
Consulting $5,752
Software Maintenance KISNET-C $1,876
KISNET-D $300 plus $32 per workstation*
Accounting Software $500
TOTAL $16,690*
</TABLE>
*Assumes 16 workstation for KISNET D. Fee will vary based on the number of
workstations.
<TABLE>
<CAPTION>
ONE-TIME FEES
- -------------
<S> <C>
Conversion of KISNET-C to alternate platform $150,000**
Conversion of KISNET-D to alternate platform $120,000**
</TABLE>
**Maximum fee, estimated on the basis of project man-hours. Fee may be lower.
These fees shall be due and payable on a semi-monthly basis, and shall be paid
on the fifteenth and last day of each month. If any such day is not a business
day, payment shall be made on the next consecutive business day.
-24-
<PAGE> 25
EXHIBIT E
Personnel Resources
<TABLE>
<CAPTION>
FUNCTION AVAILABILITY CHARGE FOR ADDITIONAL HOURS
- -------- ------------ ---------------------------
<S> <C> <C>
Joseph Khan,
Senior Manager/Director 30 hours/week $125/hour
1 Telecommunications/
PC Specialist 30 hours/week $55/hour
1 Night Operator/Programmer 5 work days/week* $40/hour
1 Senior Operator 30 hours/week $40/hour
</TABLE>
*A "work day" shall consist of seven and one-half (7 1/2) hours (not including
lunch) within a twenty-four (24) consecutive hour period.
Optional Personnel
<TABLE>
<CAPTION>
FUNCTION HOURLY CHARGE
- -------- -------------
<S> <C>
Senior Consultant $100/hour
Senior Programmer/Analyst $75/hour
Staff Consultant $75/hour
Programmer/Analyst $55/hour
Shift Technician $30/hour
</TABLE>
-25-
<PAGE> 26
EXHIBIT F-1
Schedule of MCM Hardware
<TABLE>
<CAPTION>
TYPE/DESCRIPTION QUANTITY
- ---------------- --------
<S> <C>
WANG
- ----
CPU VS 100 2
Disk Drives 8
Wang Workstation (incl. PCs with LOC CARDS) 20
Printers (Laser) 4
Printers (Band) 2
PCS
- ---
Single User PC 15
Laster Printers (shared between 20 PCs) 2
Printer Sharing device/Network 2
3RD PARTY
- ---------
Telerate ESIP lines (out) 6
with 6 dial backup lines
TDPF 1
Telerate Input line (in) 1
Telerate Controllers 8
Quotron (out) 1
Quotron (in) 2
Bloomberg (Being Installed) 2
FAX--Hasler Boxes 1
FAX--(Xerox & Cannon) 2
FAX BOX 2
Hayes Modem 3
(For Commerce Dept. Data for MW)
Remote - Connection 3
Knight-Ridder (Outbound) 2
Knight-Ridder (Inbound) 1
Knight-Ridder Money Center 5
Knight-Rider Profit Center 2
AT & T - NY-TEL
- ---------------
Leased lines 8
Dial-up lines 15
</TABLE>
-26-
<PAGE> 27
EXHIBIT F-2
Schedule of KIS Hardware
<TABLE>
<CAPTION>
QTY ITEM
<S> <C>
EQUIPMENT
- ---------
1 486/33 w/8MB RAM SYS. with monitor and keyboard
1 386/SX w/8MB RAN SYS. with monitor and keyboard
1 386/SX w/8MB RAM SYS. with keyboard and monitor
1 386/DX w/8MB RAM SYS. with keyboard and monitor
1 486/33 w/ 16MB RAM with Novell Network and Server with monitor and
keyboard
1 NEC Laserjet Printer model 95
1 Wang VS 5000 system 53T50v-8B M50, 8MB 146MB, Tape
1 Wang VS 65 system 2MB with data storage cabinet 147MB Fixed and 75
MB removable
1 WP Scanjet IIP
DISK PACKS
- ----------
14 Disk Packs-75 megabytes
10 Disk Packs-288 megabytes removable
FURNITURE
- ---------
1 Mahogany Desk
1 Mahogany table
3 Chairs
3 Swivel chairs (green leather)
1 Mahogany credenza
KIS Telephones
KIS business records & supplies
1 Refrigerator
1 Small microwave
1 Water heating device
Tools
</TABLE>
-27-
<PAGE> 28
EXHIBIT G
CONFIDENTIALITY AGREEMENT
WHEREAS, the undersigned, ,
("Provider"), is being engaged by Key Information Systems, Inc. ("KIS") to
perform certain services for McCarthy, Crisanti & Maffei, Inc. ("MCM"), and
WHEREAS, Provider may, in the course of performing services for MCM,
gain access to certain Confidential Information (as hereinafter defined) of MCM,
which information constitutes a valuable business property right of MCM;
NOW, THEREFORE, Provider hereby covenants to MCM and KIS as follows:
1. Provider agrees that it will hold all of MCM's customer lists, data,
business methods and information, programs and software, and trade
secrets (collectively the "Confidential Information") to which Provider
may gain access as a result of performing services to MCM in strictest
confidence, that it will neither use nor disclose the Confidential
Information to anyone without the explicit written permission of MCM,
and that it will take precautions commensurate with the highest
reasonable standards of industrial security to protect the security and
confidentiality of the Confidential Information.
2. All Confidential Information provided by MCM or by KIS to Provider, or
copies thereof, shall be returned to the party providing same within
thirty (30) days after the completion of services to MCM by Provider,
or sooner if requested or if no longer required for the performance of
Provider's services.
3. Provider acknowledges that monetary damages would not be a sufficient
remedy for any breach of this agreement and that, in addition to all
other remedies, specific performance and injunctive or other equitable
relief shall be available to MCM or KIS as a remedy for any such
breach.
4. This agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to the choice of law
rules thereof.
______________________________________
Date: _________________________ By: __________________________________
Its: _________________________________
-28-
<PAGE> 29
EXHIBIT H
SCHEDULE OF KIS COMPETITORS
The following companies are KIS' direct competitors (locations are supplied as
an aid in identifying the companies only, treatment of each entity spans all of
its locations):
FD CONSULTING NEW YORK, NY
RAID SOFTWARE FORT LEE, NJ
SOFTWARE MATTERS UNITED KINGDOM
DEC SYBIO [COMPONENT OF DIGITAL EQUIPMENT CORP.]
SDS TROY UNITED KINGDOM
MICROGNOSIS DANBURY, CT
UNILINK NEW YORK, NY
-29-
<PAGE> 1
Exhibit 10.31
AMENDMENT
This Amendment dated as of July 1, 1995 (the "Amendment Effective
Date") to that certain Service Agreement (the "Service Agreement") dated as of
June 1, 193 by and between McCarthy, Crisanti & Maffei, Inc. ("MCM"), a New York
corporation, and Key information Systems, Inc. ("KIS"), a New York corporation.
W I T N E S S E T H:
WHEREAS, pursuant to the Service Agreement, KIS provides certain
Services (capitalized terms used without definition herein having the
definitions ascribed to such terms in the Service Agreement) to MCM with respect
to MCM's computer system and systems operations; and
WHEREAS, MCM and KIS have entered into certain other agreements;
specifically, a Software License Agreement dated as of June 1, 1993, an Escrow
Agreement with The Bank of New York dated as of___________, 1994, and an Option
Agreement dated as of June 1, 1993 (collectively, the "License Related
Agreements"); with respect to MCM's licensing of KIS' "KISNET 2000" software;
and
WHEREAS, the parties desire to make certain changes to the Service
Agreement to amend the fees payable and the service requirements thereunder, the
term thereof, and certain other provisions as set forth herein;
NOW, THEREFORE, the parties hereby agree as follows:
Section 1. Amendments to Service Agreement.
(a) Exhibit A to the Service Agreement (including without limitation Schedule
A-1 thereto) is hereby amended in its entirety by replacing same with Exhibit A
attached to this Amendment.
(b) Exhibit B to the Service Agreement is hereby amended in its entirety by
replacing same with Exhibit B attached to this Amendment.
(c) Section 2 of the Service Agreement is hereby amended by replacing the words
"two (2) years" in the second sentence thereof with "forty-three (43) months."
(d) Section 3(a) of the Service Agreement is hereby amended by inserting the
words "after the Amendment Effective Date" immediately after the words "under
this Agreement" in the first sentence thereof.
(e) Exhibit D to the Service Agreement is hereby amended in its entirety by
replacing same with Exhibit D to this Amendment.
<PAGE> 2
(f) Section 4 of the Service Agreement is hereby amended by: (1) inserting the
words ", which personnel resources KIS represents were sufficient to furnish the
Services at the level set forth on Exhibit B as such Services were being
performed by KIS through June of 1995" immediately after the words "on Exhibit
E" in the first sentence of the first paragraph thereof; and (2) deleting the
words "no less than" in the second sentence of the second paragraph thereof.
(g) Exhibit E to the Service Agreement is hereby amended in its entirety by
replacing same with Exhibit E to this Amendment.
(h) Exhibit F-1 to the Service Agreement is hereby amended in its entirety by
replacing same with Exhibit F-1 to this Amendment.
(i) Exhibit F-2 to the Service Agreement is hereby amended in its entirety by
replacing same with Exhibit F-2 to this Amendment.
(j) Section 8(e) of the Service Agreement is hereby amended by inserting the
words "; provided, however, that, except in the case of a breach by KIS of its
representation under Section 4 of this Agreement, KIS shall not be obligated to
provide personnel resources in addition to those set forth in Exhibit E unless
the provisions of Section 4 are met" immediately after the words "Exhibit B."
(k) KIS shall have no further obligation to MCM under Section 23 of the Service
Agreement as of the Amendment Effective Date.
(l) Section 24 of the Service Agreement is hereby amended in its entirety as
follows:
"24. Notices. Any notice, request, demand or other communication provided
for or permitted hereunder shall be in writing and may be personally
delivered, or sent by certified mail return receipt requested, or by
overnight courier, to the following address:
To KIS: Key Information Systems, Inc.
3217 Quinlan Street
Yorktown Heights, NY 10598
Attention: Joseph Khan, President
Fax Number: (914) 245-5388
-2-
<PAGE> 3
To MCM: McCarthy, Crisanti & Maffel, Inc.
One Chase Manhattan Plaza
37th Floor
New York, NY 10005
Attention: President
Fax Number: (212) 908-4345
with a copy to: Van Kampen American Capital, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: General Counsel
or such other address as a party may give the other party by written
notice as provided herein. Any notice, request, demand, or other
communication shall be deemed to have been given when received."
Section 2. No Other Modifications. Except as set forth in Section 1 hereof, the
Service Agreement shall remain in full force and effect without amendment,
modification or waiver. Execution and delivery hereof by the parties hereto
shall not preclude the exercise by such parties of any rights under the Service
Agreement (except as amended by Section 1 hereof), under the License Related
Agreements, or under any other agreements to which the parties are subject or by
which the parties or their respective properties are bound.
Section 3. Governing Law. This Amendment shall be governed by, and construed
in accordance with, the internal laws of the State of New York, U.S.A.
IN WITNESS WHEREOF, the undersigned parties have executed this Amendment as of
the Amendment Effective Date.
KEY INFORMATION SYSTEMS, INC. McCARTHY, CRISANTI & MAFFEI, INC.
a New York Corporation a New York corporation
By: /s/ Joseph M. Khan By: /s/ David D. Nixon
------------------------- -----------------------------
Name: Joseph M. Khan Name: David D. Nixon
Title: President Title: President
-3-
<PAGE> 4
EXHIBIT A
SERVICES TO BE PROVIDED BY KIS
I. OPERATIONS
A. KIS shall manage the day-to-day operation of MCM's data processing system and
data center, including without limitation:
- Establishing and maintaining hardware connections - Monitoring
all air conditioning units and systems
- Monitoring Lelbert UPS and interfacing with Leibert
- Monitoring fire detection equipment
- Coordinating with telephone service providers and interfacing
with building security for telephone room access
- Maintaining and configuring switches
- Maintaining and configuring patch panels and cables in
computer room
- Maintaining all mod tap boxes
- Maintaining all modem cabinets
- Maintaining and installing telephone systems, including all
lease lines circuits with dial back-ups where provided and all
dial up lines
- Maintaining, installing, and relocating telephone system
wiring to destination points
- Monthly reorganization of the document and other large data
libraries
- Maintaining the automatic page updating processes
- Supervising MCM's in-house data processing and center support
staff. and providing coverage during illness or absences of
any staff members
In addition, KIS shall (a) provide a help desk from 8:00 a.m. to 5:00
p.m New York time on business days to assist users with ad hoc requests
relating to MCM's computer hardware, including without limitation the
Wang system and PC's, and to other technical requirements; and (b)
provide on-site and telephone support between the hours of 2:00 p.m.
Sunday and 6:00 p.m. Friday, New York time.
B. KIS shall manage and Support MCM's data processing equipment, including
without limitation:
- Managing the acquisition, siting, maintenance (by third
parties), and installation of MCM's data processing hardware
and expendable media, including without limitation the
equipment set forth on Exhibit F-I
- Maintaining and updating hardware inventory and maintenance
records
- Maintaining and updating software inventory and licensing
agreements
-4-
<PAGE> 5
- Maintaining and updating data-storage medium inventory (disks
and tape packs)
- Managing the maintenance and updating of PC software and
hardware
C. KIS shall support the user community for MCM's products, including with
limitation:
- Creating, regularly testing, maintaining and updating a
disaster recovery plan (on site)
- Maintaining and updating systems and operations
- Maintaining and updating systems and operations documentation
- Maintaining and updating documentation of computer room layout
and connectivity
- Backups - monthly, weekly, daily and maintenance thereof in a
secure off-site facility
- Supporting the Delrina/Washington DC project
- Modifying, maintaining and updating Parallax
- Maintaining and updating all MUX connections
D. KIS shall manage and support multivendor services, including without
limitation:
- Maintaining, supporting and updating timely and reliable
electronic transmissions to and/or from all carriers of MCM
electronically delivered information and advisory services,
including without limitation Bloomberg, Dow Jones Telerate,
Reuters (large and small screen), Knight-Ridder, Quotron, ADP,
Commerce Dept. Market Vision and PR Newswire simultaneously.
- Maintaining, supporting and updating transmissions to and/or
from facsimile transmission vendors, including without
limitation Parallax
- Interfacing with all vendors
- Resolving communication problems with all vendors
- Supporting and maintaining all outbound feeds
- Management of all market data and digital data feeds (inbound)
II. CONSULTING
KIS shall (a) interpret MCM's needs into data processing requirements,
and shall provide the programming and technical resources needed for
this development effort; (b) develop specifications for interfacing
with information providers such as Telerate, Reuters and Knight-Ridder
and for performing other related functions; (c) assist MCM in planning,
designing and implementing projects to the specifications of the users
of MCM products; (d) render technical advice relating to computer
equipment; and (e) negotiate
-5-
<PAGE> 6
and review maintenance contracts, subject to final approval by MCM,
verify non-maintenance billings and otherwise interface with all
computer related vendors and suppliers that have dealings with MOM,
including without limitation Wang, CDC, Telerate, Quotron, DEC, ADP,
AT&T, NYNEX, Leibert, Reuters, Bloomberg, Market Vision, Knight-Ridder,
Microsoft and Parallax.
III. SOFTWARE MAINTENANCE
A. KIS shall provide MCM the following maintenance services as to all
"Products" licensed to MCM pursuant to the Software License Agreement
dated as of June 1, 1993 between MCM and KIS (the "Software License
Agreement");
(a) KIS will supply to MCM updated Product(s) and the user
documentation therefor, and will supply to the Escrow Agent
pursuant to an Escrow Agreement by and among KIS, MCM, and the
Escrow Agent (the "Escrow Agreement") one copy in magnetic
media, of the source code therefor (and, in printed form, the
applicable system documentation pertaining thereto) thirty
(30) days after any material revision or update, and in any
event no less frequently than once every six (6) months, to
operate with all KIS-approved current versions of the
operating system on which the Product(s) is being operated,
and will notify MCM in writing ninety (90) days prior to
removal of a version of a Product from current status. At the
end of the ninety (90) day period, KIS shall have no
maintenance responsibilities for Products no longer current
and replaced with updated Product(s).
(b) KIS, consistent with the provisions contained in Exhibit B
will supply reasonable on site and telephone assistance to MCM
to aid MCM in its use of the Product(s).
(c) KIS will exert its best efforts to correct a programming error
in any Product within a reasonable time, provided that MCM
notifies KIS of the error in person, by telephone or by mail
and provides sufficient information to identify the problem.
Such information shall include, without limitation, error and
diagnostic messages, operator console information, data file
dumps, and other written explanation and documentation of the
problem.
B. KIS shall maintain, update and support all application software used by
MCM in the conduct of its business, including without limitation:
- Multivendor software on mainframe computer
- Installation and support of KIS and other vendor software
- Hardware set up
- User training
-6-
<PAGE> 7
- LAN administration
- All documentation guides and manuals
- Migration of existing software and hardware to alternative
mainframes or systems and maintenance/updating of migration
software for use on PC's, upon the prior written approval of
MCM.
All of the above services shall be performed in accordance with the standards
set forth on Exhibit B.
-7-
<PAGE> 8
EXHIBIT B
LEVEL OF SERVICE REQUIREMENTS
McCarthy, Crisanti & Maffei, Inc. ("MCM")
and Key Information Systems, Inc. ("KIS")
I. PURPOSE
These Level of Service Requirements establish the measurement criteria
and correction process in support of the MCM requirements for the
performance of the Products as well as the Data Center and user support
contractually provided by KIS. Any additional requirements must be
renegotiated.
II. LEVEL OF SERVICE CHANGE PROCEDURE
Should any significant, unexpected change(s) in capacity or workload
requirements occur, actions will be initiated to renegotiate all or
part of this document. Additionally, for significant and unique system
enhancements requested by MCM, a formal work order explanation and
approval process will be imposed.
III. PERFORMANCE MONITORING/REPORTING
- Performance will be discussed at a review meeting held by MCM
and investigation and correction, when necessary, will be
addressed by the responsible organization. These meetings will
occur at least quarterly.
- Performance results will be reported monthly in writing by KIS
to the President of MCM, on a form substantially in the form
of attachment B-1 as agreed to by MCM and KIS.
IV. AVAILABILITY
- KIS will staff to support system from 2:00 p.m. Sunday to 6:00
p.m. Friday, New York time.
- Availability refers to the scheduled availability of all
functionality provided currently as of the date of this
Amendment by KIS personnel and Products and is the total time
the system is available for access and use by customers.
- Response time will not exceed durations reasonably acceptable
to MCM for functionality provided by KISNET 2000 and system
support provide by KIS.
- For situations where the system will be down due to planned
events (e.g. auto gens, PMs, scheduled power outages,
software/hardware upgrades, etc.), MCM must approve and MCM's
customers must be
-8-
<PAGE> 9
notified of such shutdown at least two business days in
advance. This will take place via notification to the
President of MCM and its users and approval by MCM.
- KIS is responsible to ensure that all data is regularly and
frequently (minimally - daily) backed-up and that recovery
data is safely secured at an off-site location bi-weekly.
V. SUPPLIER LEVEL OF SERVICE DETAIL REQUIREMENTS
COMPUTER OPERATIONS SUPPORT
- Operator(s) will be on-site.
- Telephone support will be available from 2:00 p.m.
Sunday, New York time to 6:00 p.m. Friday, New York
time and a phone list published and maintained by KIS
for all users. For holiday coverage the MCM
international holiday schedule will be adhered to as
it relates to outages, system availability and
operator coverage. If schedule changes are required
by the customer they must be processed through the
President of MCM to the President of KIS.
- Hardware and software problems will be reported by
users to the Help Desk for prompt resolution and
notification.
DATA NETWORK SUPPORT
- KIS Data Network will provide end-to-end problem diagnostics
and determination. KIS will be responsible for procurement and
project management of data communications equipment
installation. Additionally, KIS is responsible for network
design, optimization, network management, and supply/demand
forecasting and planning as well as vendor management. KIS
will assist with problem resolution of DTE (data terminal
equipment, i.e. CRTs, printers, etc.) and will assist with
problem diagnosis and procurement of cable installation.
CUSTOMER SUPPORT CENTER
- The KIS Help Desk provides a single point of contact for
hardware and telecommunications problems. There may be
problems reported to the Help Desk that are application in
nature. If this is the case, the Help Desk personnel will
refer the call to the appropriate system support personnel and
report periodic status to the user until the problem report is
closed.
- All users will be notified in the event of system
unavailability via telephone broadcast.
-9-
<PAGE> 10
TECHNICAL SUPPORT
- Software
Select, procure, configure, QA, install, maintain and support all
software including operating systems, utilities and data base software
selected for use in the Wang, PC, and, at MCM's option, any new
environment for which the software is converted.
- Software Updates
Make software changes to supported software as required due to software
or hardware changes or for performance reasons. This applies to
software repairs and new software releases.
- System Access and Control
Select, implement and support any and all tools required for system
access and security control for Data Processing.
-10-
<PAGE> 11
Exhibit B-1
KIS-MCM
Monthly Technology Status Reports (Sample)
[Date]
<TABLE>
<CAPTION>
System Uptime Current
Target 9% Month % YTD % Comments
- --------- ------- ----- --------
<S> <C> <C> <C>
System A 100 98.6
System B 98 99.55 Experienced a disk controller error on 6/7/95.
The system was down for 3 hours for repair
System C 99 98.77
System D 97 96.55
</TABLE>
<TABLE>
<CAPTION>
System Uptime Current
Target 98% Month % YTD % Comments
- ---------- ------- ----- --------
<S> <C> <C> <C>
London Link 100 98.6
Tokyo Link 98 99.55 Experienced a problem with the Knight Ridder line
on 6/19/95. Line was unusable for 8 hours.
Reuters Contribution Lines 100 98.77
Bloomberg Contribution Lines 100 96.55
Knight Ridder Contribution Lines 100 97.5
Telerate Contribution Lines 100 93
</TABLE>
<TABLE>
<CAPTION>
Transmission Volume by Vendor Transmission Volume by Product
----------------------------- ------------------------------
<S> <C> <C> <C>
Bloomberg 1,000,000 Corporate Watch 1,000,000
Knight Ridder 1,000,000 Currency Watch 3,000,000
Telerate 1,000,000 Yield Watch 500,000
Reuters (Large) 1,000,000 Money Watch 1,500,000
Reuters (Small) 2,000,000 Total 6,000,000
Total 6,000,000
</TABLE>
Average Queue Wait .5 Minutes
Maximum Queue Wait Time: 11.7 Minutes
Minimum Queue Wait Time: .3 Minutes
-11-
<PAGE> 12
Development - Bug Fixes
New Enhancements 10 New Bugs Reports 3
# Enhancements Completed 3 # of Bugs Fixed 3
# Enhancements Dropped 0 #of Bugs Dropped 0
# Enhancements Carried Over 7 # of Bugs Carried Over 1
Total Enhancements Outstanding 14 Total Bug Fixes Outstanding 1
-12-
<PAGE> 13
Exhibit C
<PAGE> 14
EXHIBIT D
FEE SCHEDULE
<TABLE>
<CAPTION>
Month Semi-Monthly Fee
----- ----------------
<S> <C>
July, 1995 $26,377.50
August, 1995 28,252.50
September, 1995 28,252.50
October, 1995 28,252.50
November, 1995 28,252.50
December, 1995 28,252.50
January, 1996 31,065.00
February, 1996 31,065.00
March, 1996 31,065.00
April, 1996 51,065.00
May, 1996 51,065.00
June, 1996 51,065.00
July, 1996 34,502.50
August, 1996 34,502.50
September, 1996 34,502.50
October, 1996 34,502.50
November, 1996 34,502.50
December, 1996 34,502.50
and every month
thereafter
</TABLE>
These fees shall be due and payable on a semi-monthly basis, and shall be paid
on the fifteenth and last day of each month. If any such day is not a business
day, payment shall be made on the next consecutive business day.
-13-
<PAGE> 15
EXHIBIT E
<TABLE>
<CAPTION>
Charge for
Additional
Function Availability Hours
-------- ------------ -----
<S> <C> <C>
Operations Manager 40 hours/week $100/hour
3 Shift Technicians 40 hours/week $55/hour
Night Shift Technician/Programmer 40 hours/week $60/hour
LAN Administrator 20 hours/week $55/hour
PC Hardware & Software Support Technician 20 hours/week $55/hour
PC Support 30 hours/week $45/hour
Telecommunication & Software Specialist 16 hours/week $100/hour
Senior Programmer 16 hours/week $75/hour
Manager/Director (Joe Khan) 30 hours/week $125/hour
</TABLE>
-14-
<PAGE> 16
EXHIBIT F-1
Schedule of MCM Hardware
Location
3765[1] System "A" WANG VS 7150 with 8MB of Main memory.
<TABLE>
<CAPTION>
Type Description Quantity
---- ----------- --------
<S> <C> <C> <C>
na 23V97 Extended Serial IOC 2
na 23V96 Multiline TC IOP 2
na 23V98-4 Very Large Disk IOC 1
3765[2] 2268V4A 454MB Switchable Fixed Disk Drive 2
3765[2] 2268V4 454MB Fixed Disk Drive 1
3765[2] 2268V3 314MB Fixed Disk Drive 1
3765[2] 2265V2A 288MB Switchable Removable Disk Drive 1
na 2238V1 Streamer Cartridge Tape Drive 1
3763 5573 600LPM Band Printer 1
3711 LPS8 8PPM Laser Printer 1
3853 LDP8 8 PPM Laser Printer 1
</TABLE>
3765[3] System "B" WANG VS 5460 with 16MB of Main memory.
<TABLE>
<CAPTION>
Type Description Quantity
---- ----------- --------
<S> <C> <C> <C>
na 50V67 Serial IOC 1
na 50V96 Multi-port TC IOC 4
na 50V56B 802.3 LAN TC IOC 1
na 2269V5 326MB Fixed SCSI Disk Drive 1
na 2269V6 650MB Fixed SCSI Disk Drive 2
na 2238V3 9 Track Cartridge Tape Drive 1
3754 LPS8 8PPM Laser Printer 1
3756 LPS8 8PPM Laser Printer 1
3763 5573 600LPM Band Printer 1
na 220-0670 24 Port Serial Pad 1
na RS232-DCC 2 Port TC RS232 Module 16
</TABLE>
3765[3] System "C" WANG VS 5460 with 16MB of Main memory.
<TABLE>
<CAPTION>
Type Description Quantity
---- ----------- --------
<S> <C> <C> <C>
na 50V67 Serial IOC 1
na 50V96 Multi-port TC IOC 4
na 50V56B 802.3 LAN TC IOC 1
</TABLE>
-15-
<PAGE> 17
<TABLE>
<CAPTION>
Type Description Quantity
---- ----------- --------
<S> <C> <C> <C>
na 2269V5 326MB Fixed SCSI Disk Drive 1
na 2269V6 650MB Fixed SCSI Disk Drive 2
na 2238V3 9 Track Cartridge Tape Drive 1
na RS232-DCC 2 Port TC RS232 Module 16
</TABLE>
3765[3] System "D" WANG VS 5460 with 16MB of Main Memory
<TABLE>
<CAPTION>
Type Description Quantity
---- ----------- --------
<S> <C> <C> <C>
na 50V67 Serial IOC 1
na 50V96 Multi-port TC IOC 4
na 50V56B 802.3 LAN TC IOC 1
na 2269V5 326MB Fixed SCSI Disk Drive 3
na 2238V3 9 Track Cartridge Tape Drive 1
na RS232-DCC 2 Port TC RS232 Module 16
</TABLE>
3765[3] System "E" WANG VS 6230 with 32MB of Main memory.
<TABLE>
<CAPTION>
Type Description Quantity
---- ----------- --------
<S> <C> <C> <C>
na 50V67 Serial IOC 1
na 50V96 Multi-port TC IOC 4
na 50V56B 802.3 LAN TC IOC 1
na 2269V5 326MB Fixed SCSI Disk Drive 3
na 2238V3 9 Track Cartridge Tape Drive 1
na 220-0670 24 Port Serial Pad 1
na RS232-DCC 2 Port TC RS232 Module 16
</TABLE>
-16-
<PAGE> 18
Exhibit F-1 (Continued)
ADDITIONAL MCM HARDWARE
<TABLE>
<CAPTION>
Date Description Net Cost
<S> <C> <C>
January 19, 1993 Sybase for LAN Server (sixteen user license) $6,000.00
5 Sybase Open Client @ 300.00 each $1,500.00
January 19, 1993 Intel CPU 486/33 W/256K Cache
3.5" Floppy Drive
5.25" Floppy Drive
Novell Netware V3.11
16MB Memory
200MB Hard Drive
Ten User License
Serial #: Monitor M920402984
System CS 20034 $6,000.00
Feb. 12, 1993 One Jetlan/P, 10 base2 $550.00
Feb. 22, 1993 For Marketing (laptop, not within KIS control)
One Acer Notebook 386SX/25 with 2MB RAM
and Acer Fax/modem
Serial Number M029206 $1,890.00
March 9, 1993 For MoneyWatch
One Okidata OL400 Laser Printer
Serial @212C2105223 $800.00
April 13, 1993 One PC for CurrencyWatch in NY & two for
MIS Bullpen
3 386/33 Intel CPU W/4MB SIMM Memory
each
3 3.5" 1.44MB Floppy Drives
3 5.25" 1.2MB Floppy Drives
3 120 MB Hard Drives
3 AcerView Monitors
3 Graphic Cards W/512K
3 Acer Keyboards
3 Agiler Basic Mouse
3 MS DOS 5.0
Serial #CSIO438; CS10440
Total @ 1,645.00 each $4,935.00
</TABLE>
-17-
<PAGE> 19
<TABLE>
<S> <C> <C>
May 11, 1993 One Toshiba 35" color TV with stand
Model #CX35C60 Serial #89644453 $1,677.88
May 17, 1993 One Presenter Plus Scan Converter [For
conversion of 35" color TV to 35" color
monitor used for microcomputer training
classes] $395.00
June 2, 1993 For Corporate Watch
-------------------
One Jetlan/P, 10 Base 2, Finished Product $550.00
August 25, 1993 For DEC ALPHA machine
---------------------
One RZ26-VA disk drive w/1 GByte disk
space [1000MB] $2,195.00
September 28, For V. Consentino & Bullpen
---------------------------
1993 Two 486/33 Intel CPU w/4MB SIMM
Memory each and
Two 3.5" 1.44MB Floppy Drives;
Two 5.25" 1.2 MB Floppy Drives;
Two 120 IDE Hard disks;
Two SVGA Monitors;
Two keyboards; serial mouse;
MS DOS 6.0 & MS Window 3.1
S/N #000753 & 000754
Total @ 1885.00 each $3,770.00
September 28, For CurrencyWatch
1993 One 486/33 Intel CPU w/4MB SIMM Memory
and
3.5" 1.44MB Floppy Drive;
5.25" 1.2 MB Floppy Drive;
120 IDE Hard disk;
SVGA Monitor;
Local Bus; keyboard; serial mouse
MS DOS 6.0 & MS Window 3.1
Serial Number CS10738 $1,980.00
October 27, 1993 One Wang VS5000 model 5540 with 8MB
memory;
326MB internal hard drive; 160MB tape drive; 8 TC
IOP ports; 4/2110 terminal ports; Serial
#T34477 $8,500.00
</TABLE>
-18-
<PAGE> 20
<TABLE>
<S> <C> <C>
October 27, 1993 326MB External Drive; 8 TC IOP Ports & 32
Serial Ports for Wang VS5000 model 5540 now
used as System C $3,500.00
February 1, 1994 For Admin.
----------
One 486/SX-33 w/4MB RAM and 250MB HDD; 1.2MB FDD
5.25"; 1.44MB FDD 3.5"; IDE/10 2S.IP.IG; 14" SVGA
monitor w/1MB card .28D.P.; 101 enhanced keyboard; 3
button mouse and Mini-Tower case w/200 watt.
SN#15929123@1500 $1,500.00
February 16, 1994 For CW
------
One 486/SX-33 w/4MB RAM and 250MB HDD; 1.2MB FDD
5.25"; 1.44MB FDD 3.5"; IDE/10 2S.IP.IG; 14" SVGA
monitor w/1MB card .28D.P.; 101 enhanced keyboard; 3
button mouse and Mini-Tower case w/200 watt.
SN#15811014@1500 $1,500.85
March 1, 1994 To upgrade SYSTEM C
-------------------
One MU-60-16 5340-8 to 5460-16 $1,531.00
March 1, 1994 For use with Database development and
-------------------------------------
Migration;
---------
Two 486/SX-33 each with 4MB RAM and 250 MB HDD;
1.2MB FDD 5.25"; 1.44MB FDD 3.5"; IDE/10 2S.IP.IG;
14" SVGA monitor w/1MB card .28D.P.; 101 enhanced
keyboard; 3 button mouse and Mini-Tower case w/200
watt.
SN#18610025 & [email protected] each $3,000.00
March 28, 1994 For SYSTEM C & Migration
------------------------
One 50v98 DISK CONTROLLER $995.00
Four 4MB SIMMS Memory S/N
08914024@158/each $632.00
April 1, 1994 SYSTEM E Back-up/Duplicate of System B
--------------------------------------
One Wang VS5000 model 5660 with 16MB Memory; 326 MB
internal hard drive; 160 MB tape drive; & 8 TC IOP
ports;
Serial Number Z16377 $8,500.00
</TABLE>
-19-
<PAGE> 21
<TABLE>
<S> <C> <C>
April 1, 1994 SYSTEM E Back-up/Duplicate of System B
--------------------------------------
326 External Drive; 8 TC IOP Ports;
4/2110 terminal ports & 32 Serial Ports for Wang VS 5000 model
5660 now used as System E.
Serial Number Z16377 $5,000.00
May 23, 1994 One 486SX/33 with 8MB SIMMS memory; 250MB hard drive; 5.25" &
3.5" floppy drives; video card; SVGA monitor; 101 enhanced
keyboard; mini case & 3 button mouse.
Serial #58919044 $1,500.00
June 1, 1994 SYSTEM A - replaces current System A (VS100)
--------------------------------------------
Wang VS7150 with 8MB Memory;
2 - 454 MB switchable fixed disk drives;
2 - 454 fixed disk drives;
1 - streamer cartridge tape drive; extended serial IOC; 2 -
multiline TC IOP &
1 very large disk IOC
Serial Number 50316R $7,800.00
15 - 4420 workstations to replace the old ones $600.00
June 1, 1994 SYSTEM B - replaces current System B (VS100) Hardware:
-----------------------------------------------------
Wang VS5460 with 16MB main memory;
1 - 288MB switchable removable disk drive;
2 - 650 fixed SCSI disk drives; 1 - 326MB fixed SCSI disk
drive;
1 - 9 track cartridge tape drive; ESMD disk IOC; 3 - multiport
TC IOP;
1 24 port serial pad; 7 - 4 port TC pad;
1 - 802.3 LAN TC IOC & 1 serial IOC
Serial Number G23615 $14,000.00
Software:
VS Operating System License - VS5460 $4,000.00
</TABLE>
-20-
<PAGE> 22
<TABLE>
<S> <C> <C>
June 1, 1994 SYSTEM C - replaces current System C which is now backup for
-------------------------------------------------------------
System C Hardware:
-----------------
Wang VS5460 with 16MB main memory;
2 - 650 fixed SCSI disk drives; 1 - 326 MB fixed SCSI disk
drive;
1 - 9 track cartridge tape drive; ESMD disk IOC;
3 - multiport TC IOP;
1 - 24 port serial pad; 4 port TC pad;
1 - 802.3 LAN TC IOC & 1 serial IOC
Serial Number G23094 $14,000.00
Software:
VS Operating System License - VS5460 $4,000.00
June 1, 1994 For MCM Network - to replace current Jetlan at new office
---------------------------------------------------------
3 Intel NetportExpress XL Print servers $449/each $1,347.00
June 21, 1994 For MCM Network - Backup server with identical configuration
-------------------------------------------------------------
as MCM server
486/33 EISA, 256Kcache with:
16MB SIMM memory; 3.5" & 5.25" floppy drives;
1 gigabyte hard drive (1000MB) SCSI; graphic card;
4MB SIMM for Cache controller; keyboard and SVGA monitor
Serial number CI1001281 $3,993.00
To upgrade memory on current MCM server:
---------------------------------------
1 gigabyte hard drive SCSI $875.00
July 11, 1994 For Marketing
-------------
One 486SX/33 with 4MB SIMMS memory; 250MB hard drive; 5.25" &
3.5" floppy drives video card; SVGA monitor;
101 enhanced keyboard; mini tower case & 3 button mouse.
Serial #68915064 $1,500.00
</TABLE>
-21-
<PAGE> 23
<TABLE>
<S> <C> <C>
July 11, 1994 For CurrencyWatch
-----------------
One 486SX/33 with 4MB SIMMS memory
250MB hard drive; 5.25" & 3.5" floppy drives; video
card; SVGA monitor; 101 enhanced keyboard; mini
tower case & 3 button mouse
Serial #8916064 $1,500.00
August 1, 1994 For - MoneyWatch
----------------
One 486SX/33 with 4MB SIMMS memory; 250MB hard drive; 5.25" &
3.5" floppy drives; video card; SVGA monitor; 101 enhanced
keyboard; mini tower case & 3 button mouse
Serial #CSI001394 $1,500.00
August 1, 1994 For Administration
------------------
One 486SX/33 with 4MB SIMMS memory; 250MB hard drive; 5.25" &
3.5" floppy drives; video card; SVGA monitor; 101 enhanced
keyboard; mini tower case & 3 button mouse
Serial #CSI001395 $1,500.00
August 9, 1994 For Marketing (laptop not within KIS' control)
-------------
One Kennitec Notebook 486SX/33 with 260MB hard drive, fax
modem, 8MB RAM
Serial #E111FA06713 $1,950.00
September 1, 1994 For Administration
------------------
One HP Laserjet 4 Plus Printer
Serial #C2037A $1,550.00
For attaching HP Laserjet to network
------------------------------------
One Netport Express XL print server $449.00
September 12, 1994 For Marketing
-------------
One Hewlett Packard Scanjet 2P $500.00
Omnipage Direct NFR software $95.00
Wordscan software $170.00
September 20, 1994 To accommodate two new Reuters' lines
-------------------------------------
Two 50V96 - 8 port data comm controller @ 1,175/each $2,350.00
8 RS232 - DCCU module for 50V96 boards @$80/each $640.00
</TABLE>
-22-
<PAGE> 24
<TABLE>
<S> <C> <C>
October 17, 1994 For MCM Network
---------------
Increase memory for primary and backup network servers
Increase from 1MB to 32MB SIMM each @$800/each $1,600.00
November 1, 1994 For Marketing
-------------
One HP Laserjet 4Plus Printer - serial #USFB063052 $1,550.00
One HP Deskjet 1200C Color Printer - serial #USC4803603 $1,600.00
November 22, 1994 For Marketing
-------------
One 486SX/33 with 4MB SIMMS memory;
345MB hard drive; 3.5" floppy drives; video cards; SVGA
monitor; 101 enhanced keyboard; mini tower case & 3 button
mouse
Serial #CSI001867 $1,400.00
December 6, 1994 System B & E
------------
Two 8 Port Boards as per attached Work Order $3,000.00
March 1, 1995 For MoneyWatch
--------------
One Intel Pentium P5/66MHZ with 16MB SIMMS memory; 545MB hard
drive; 3.5" floppy drive; video card; 17" SVGA monitor; 101
enhanced keyboard; mini tower case & MS DPI mouse
Serial #M950220-3 $2,300.00
March 1, 1995 For Migration
-------------
Two 486DX/66 with 8MB SIMM memory; 340MB hard drives; 3.5"
floppy drives; video card; SVGA monitors; 101 enhanced
keyboards; mini tower cases & 3 button mouse
Serial #M950220-1 & M950220-2 $3,000.00
March 1, 1995 For MoneyWatch
--------------
One 486DX/66 with 8MB SIMM memory; 340MB hard drive; 3.5"
floppy drives; video card; SVGA monitor; 101 enhanced
keyboard; mini tower case & 3 button mouse
Serial #M950216-5 $1,500.00
</TABLE>
-23-
<PAGE> 25
<TABLE>
<S> <C> <C>
March 8, 1995 For Migration - for use in the bullpen
--------------------------------------
Two 486DX/66 with 8MB SIMM memory; 340MB hard drives; 3.5"
floppy drives; video card; SVGA monitor; 101 enhanced
keyboard; mini tower case & 3 button mouse
Serial #M950220-6 $1,500.00
March 27, 1995 For MoneyWatch
--------------
One 484DX/66 with 8MB SIMM memory; 340MB hard drive; 3.5"
floppy drives; video card; SVGA monitor; enhanced keyboard &
MS DPI mouse
Serial #M950307-7 $1,500.00
March 27, 1995 For CurrencyWatch
-----------------
One Intel Pentium P5/66MHZ with 16MB SIMM memory; 545MB hard
drive; 3.5" floppy drive; video card; 17" SVGA monitor;
enhanced keyboard & MS DPI mouse
Serial #M950220-4 $2,300.00
May 23, 1995 One CSI Pentium P5/75 Color Notebook with 8MB RAM; 1.44MB
floppy drive; 32bit Vesa local bus; PCMIA type II and III
interface; battery pack; Internal Fax Modem
Serial #M5400023366 $3,775.00
Docking Station $575.00
May 23, 1995 For CorporateWatch
------------------
One Intel Pentium P5/75MHZ with 8MB SIMM memory; 540MB hard
drive; 3.5" floppy drive; video card; 17" SVGA monitor; MS DPI
mouse & ATI Ultra plus PCI 1MB
Serial #M950511-9 $2,300.00
May 23, 1995 For CorporateWatch
------------------
One Intel Pentium P5/75MHZ with 8MB SIMM memory; 540MB hard
drive; 3.5" floppy drive; video card; 17" SVGA monitor; MS DPI
mouse & ATI Ultra plus PCI 1MB
Serial #M950511-8 $2,300.00
June 21, 1995 Upgrade of VS5000 to VS6000
---------------------------
Model #UJ-6230D 6230-32. 128 workstat $32,000.00
</TABLE>
-24-
<PAGE> 26
<TABLE>
<S> <C> <C>
June 21, 1995 For MCM Boston
--------------
One Intel Pentium P5/90MHZ with 16MB SIMM memory; 1 Gigabyte
hard drive; 3.5" floppy drive; video card; 17" SVGA monitor;
Internal fax modem w/software; MS DPI mouse; ATI Ultra plus
PCI 1MB
CD ROM and speakers
Serial #M950531-15 $3,300.00
June 21, 1995 Hardware needed for Bybem B to accommodate all the users of
------------------------------------------------------------
System A
2 Model 50V-APA24-6 - 24 ports panel (pancake) @$500/ea $1,000.00
June 21, 1995 For Migration $1,336.05
-------------
1 Master Console s/n A8390278
4 20' AT/VGA Cable Kit @ $140/ea $560.00
4 20' CBL Kit SRL MS @ $60/ea $240.00
1 Remote System Kit for Master Console s/n F13B0096 $850.00
1 50' CBL Kit for RML SRL MS $65.00
August 4, 1995 For system E for new upgrade
----------------------------
One 5DV96 board $4,000.00
September 1, 1995 Hardware Upgrade & installation
-------------------------------
2 50V68 SCSI controller
2 SCSI chain cable and terminator
3 2279V3 523 MB SCSI disk drives
1 2279V4 1.06 GB SCSI disk drive
4 sets of 3-1/2" disk mounting hardwares
2 50V97W UISIO controller
2 32 port external W ACS units
4 50' 50 pins cables
4 8 ports EAPA's
4 sets of power cables & terminators
8 Baluns $19,500.00
September 11, 1995 For Migration
-------------
2 Bare bone systems with 486DX/66 CPU's; Floppy drives, 540 MB
hard drives; local bus; 8MB memory @$950/ea $1,900.00
</TABLE>
-25-
<PAGE> 27
<TABLE>
<S> <C> <C>
September 26, 1995 DEC RAID System
---------------
2 RAID Array 211 controller @ 1,200/ea $2,400.00
1 Deskside 7Bay pwr digital KB $800.00
4 1.05GB SCSI Disk mounted @700/ea $2,800.00
3 Storage drive 3.5 carrier @160/ea $480.00
November 27, 1995 For upgrading the attached PC's
-------------------------------
6 486DX CPU @600/ea $3,600.00
20 1MB Simm Memory chip @$45/ea $900.00
1 420MB IDE hard drive $175.00
December 4, 1995 Upgrade of VS5000 to VS6000
---------------------------
Model #UJ-7230-32, 128 workstation
Serial #20313905 $32,000.00
December 12, 1995 For Marketing
-------------
One CSI Pentium P5/75 Color Notebook with 8MB Ram; 1.44 MB
floppy drive; 32 Vesa local bus; PCMIA type II and III
interface; battery pack; internal fax modem
Serial #D541NT00600 $3,775.00
Docking Station $575.00
</TABLE>
-26-
<PAGE> 28
EXHIBIT F-2
Schedule of KIS Hardware
System "K" WANG VS 5460 with 8MB of Main memory.
<TABLE>
<CAPTION>
Location Type Description Quantity
-------- ---- ----------- --------
<S> <C> <C> <C>
na 50V67 Serial IOC 1
na 50V96 Multi-port TC IOP 3
na 50V58B 802.3 LAN TC IOC 1
na 2269V5 326MB Fixed SCSI Disk Drive 3
na 2238V3 9 Track Cartridge Tape Drive 1
na 2529V 6400bpi Cartridge Tape Drive 1
na RS232-DCC 2 Port TC RS232 Module 12
</TABLE>
System "F" WANG VS 5460 with 16MB of Main memory.
<TABLE>
<CAPTION>
Location Type Description Quantity
- -------- ---- ----------- --------
<S> <C> <C> <C>
na 50V67 Serial 10C 1
na 50V96 Multi-port TC IOC 3
na 50V56B 802.3 LAN TC IOC 1
na 50V98-4 ESMD Disk Controller 1
na 2269V5 326MB Fixed SCSI Disk Drive 3
na 2238V3 9 Track Cartridge Tape Drive 1
na RS232 2 Port TC RS232 Module 12
</TABLE>
System "L" WANG VS 5460 with 16MB of Main memory. (5 slot)
<TABLE>
<CAPTION>
Location Type Description Quantity
- -------- ---- ----------- --------
<S> <C> <C> <C>
na 50V67 Serial IOC 1
na 50V96 Multi-port TC IOC 1
na 50V56B 802.3 LAN TC IOC 1
na 2269V5 326MB Fixed SCSI Disk Drive 2
na 2238V3 9 Track Cartridge Tape Drive 1
na RS232-DCC 2 Port TC R232 Module 4
</TABLE>
Note
These systems are owned and maintained by KIS but may be used for testing,
development and back-up for MCM at KIS' discretion.
-27-
<PAGE> 29
Key Information Systems, Inc.
PC Equipment, Office Equipment and Furniture
<TABLE>
<CAPTION>
Type/Description Qty Misc.
PC Equipment
<S> <C> <C>
Pentium 90 with 32MB RAM 1 Internet Server
Pentium 90 with 16MB RAM 1
Pentium 75 with 8MB RAM 1
486DX/33MHz with 16MB RAM 1
486DX/33MHz with 32MB RAM 1 Novell Netware Server
486DX/33MHz with 4 MB RAM 1
486DX/33MHz with 8MB RAM 2
486DX2/66MHz with 16MB RAM 1
486DX2/66MHz with 8MB RAM 3
486SX/33MHz with 4MB RAM 4
486SX/33MHz with 8MB RAM 1
386DX/25MHz with 8MB RAM 1
386SX/20MHz with 4MB RAM 1
386SX/25MHz with 4MB RAM 1
Total 20
Furniture
Mahogany desk 1
Mahogany table 1
Chairs 4
Mahogany swivel chair burgundy leath 2
</TABLE>
-28-
<PAGE> 30
<TABLE>
<S> <C>
Mahogany guest chair burgundy leath 2
Mahogany credenza 1
Typewriter 1
Answering machine 1
Fax machine 1
Copier 1
Refrigerator 1
Microwave 1
Water heating device 1
Tools and tapes
</TABLE>
-29-
<PAGE> 1
VIA HAND DELIVERY
- -----------------
August 16, 1996
Joseph M. Khan, President
Key Information Systems, Inc.
One Chase Plaza, 37th Floor
New York, NY 10005
RE: Amendment to Services Agreement
Dear Joe:
This letter will confirm our agreement to extend the current term of the Service
Agreement by and between McCarthy, Crisanti & Maffel, Inc. ("MCM") and Key
Information Systems, Inc. ("KIS") dated as of June 1, 1993, which agreement was
previously amended as of July 1, 1995 (the "Amendment") (said agreement, as
amended by the Amendment, being hereinafter referred to as the "Service
Agreement"), for an additional twelve (12) months to and including December 31,
1997. Concurrently with the extension of the term, MCM has agreed to increase
the total fees paid for the Services by seven and one-half (7 1/2%) percent.
(Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Service Agreement.)
In light of the above, the Service Agreement will be further amended by
replacing the words "forty-three (43) months" in the second sentence of Section
2 thereof with "fifty-five (55) months" and by replacing the fee schedule set
forth in Exhibit D there of with the attached amended Exhibit D.
Except as set forth above, the Service Agreement shall remain in full force and
effect without amendment, modification or waiver. As we set forth in the
Amendment, the execution and delivery of this letter amendment shall not
preclude the exercise by either party or any rights under the Service Agreement
(except as amended hereby), under the License Related Agreements, or under any
other agreements to which MCM and KIS are subject or by which their respective
properties are bound.
If you agree with the above and revised Exhibit D, please acknowledge below and
return the original to me.
Sincerely,
McCarthy, Crisanti & Maffel, Inc.
By: /s/ David D. Nixon
-----------------------------------
David D. Nixon
President
Acknowledged and Agreed to:
Key Information Systems, Inc.
By: /s/ Joseph M. Khan
-----------------------------------
Joseph M. Khan
President
Date: August 16, 1996
<PAGE> 2
EXHIBIT D
FEE SCHEDULE
Month Semi-monthly Fee
- ----- ----------------
August 1996 $34,502.50
September 1996 $34,502.50
October 1996 $34,502.50
November 1996 $34,502.50
December 1996 $34,502.50
January 1997 $34,502.50
February 1997 $34,502.50
March 1997 $34,502.50
April 1997 $34,502.50
May 1997 $34,502.50
June 1997 $34,502.50
July 1997 $39,677.88
August 1997 $39,677.88
September 1997 $39,677.88
October 1997 $39,677.88
November 1997 $39,677.88
December 1997 $39,677.88
These fees shall be due and payable on a semi-monthly basis, and shall be paid
on the fifteenth and last day of each month. If any such days is not a business
day, payment shall be made on the next consecutive business day.
/s/ Joseph M. Khan
8/16/96
/s/ David D. Nixon
<PAGE> 1
Exhibit 10.33
SOFTWARE LICENSE AGREEMENT
This Agreement is made as of this first day of June, 1993, by and between Key
Information Systems, Inc. (hereinafter referred to as "KIS"), a New York
corporation and McCarthy, Crisanti & Maffei, Inc. (hereinafter referred to as
"Licensee"), a New York corporation.
WHEREAS, KIS is the developer, manufacturer and worldwide supplier of
proprietary software products; and
WHEREAS, KIS desires to grant to Licensee and Licensee desires to obtain from
KIS a perpetual license to use the software products described below, all upon
the terms and conditions herein set forth;
NOW THEREFORE, in consideration of eighty-eight thousand, eight hundred dollars
($88,800.00) paid in hand to KIS and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
1. GRANT OF LICENSE. KIS hereby grants to Licensee a perpetual, non-exclusive,
and royalty-free worldwide license to use (on any computer utilizing the
operating system for which the Product (as hereinafter defined) was intended but
not on other operating systems), edit, compile, copy, modify, and merge the
software programs described on the attached Schedule A (said programs being
hereinafter referred to individually as a "Product" and collectively as
"Products") subject to the terms and conditions herein set forth. For the
purposes of this Agreement the word "Product(s)" shall mean KIS' computer
program(s) in machine executable form and the manuals and other user
documentation related thereto (together with any updates, modifications, or
corrections to or source code for any of the foregoing made subject to this
Agreement pursuant to Sections 4 or 5 hereof). KIS has previously delivered to
Licensee a copy of the aforesaid computer program(s) in machine executable form
and hereby agrees to deliver to Licensee manuals and other user documentation
(including without limitation operator documentation) therefor no later than
March 31, 1994. Licensee acknowledges that by virtue of this Agreement, Licensee
acquires only a license in the Product(s) and does not acquire any rights of
ownership in the Product(s) except that Licensee shall own and shall have the
right to possess, use, compile, copy, modify and merge, all in accordance with
this Agreement, and retain the copies of the Products delivered by KIS. This
Agreement and the license granted pursuant hereto may not be assigned,
sublicensed, or otherwise transferred by Licensee without prior written consent
from KIS, except to a successor to the business of Licensee through purchase,
merger, reorganization, assignment or otherwise, and the Products may be used,
edited, compiled, copied, modified and merged only for the operation of
Licensee's (or any permitted
1
<PAGE> 2
successor's or assign's) business and the business of Licensee's subsidiaries
and may not be marketed by Licensee.
This grant of license shall not include any third party product which may be
required as an enabling technology to run KIS software, acquisition of such
product(s) to be the sole responsibility of Licensee.
2. TERM. This Agreement shall be effective as of the date hereinbefore set
forth, and shall remain in force permanently.
3. TAXES AND DUTIES. All local personal property, sales, use, excise taxes
and/or any taxes in lieu thereof by any government, governmental agency or
entity with respect to the Product(s) or its use, the license of the Product(s)
or this Agreement itself, except taxes based on the net income of KIS, are the
responsibility of the Licensee.
4. UPDATES. KIS agrees that the machine executable code and related user
documentation for all updates, modifications, and corrections to the Product(s),
or conversions of the Product(s) to new operative platforms, supplied to
Licensee in connection with the performance of "Services" under a Service
Agreement of even date herewith between KIS and Licensee (the "Service
Agreement"), insofar as the proprietary rights in and to such materials are
owned by KIS and not by Licensee pursuant to the terms and conditions of the
Service Agreement, shall become part of the Products licensed to Licensee under
this Agreement and shall thereafter be included in the definition of Products
for all purposes of this Agreement.
5. SOURCE CODE. The parties agree to execute and deliver to a third party
escrow agent reasonably acceptable to the parties (the "Escrow Agent"), within
thirty (30) days of their execution of this Agreement, an Escrow Agreement
substantially in the form of Exhibit A attached hereto (the "Escrow Agreement")
for the release of the source code for the Product(s) and applicable system
documentation pertaining thereto (together, the "Source Code") upon the terms
and conditions set forth in Section 2 of the Escrow Agreement.
Any copy of the Source Code released to Licensee by the Escrow Agent or for any
cause under the Escrow Agreement shall become part of Products licensed to
Licensee under this Agreement and shall thereafter be included in the definition
of Products for all purposes of this Agreement; provided, however, that such
Source Code may only be used by Licensee to maintain the Product(s) at its or
their then-current level of functionality (unless Licensee exercises its option
to purchase an additional license to the Source Code pursuant to the Option
Agreement between Licensee and KIS of even date herewith (the "Option
Agreement")).
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6. CONFIDENTIALITY. Licensee acknowledges that the Products constitute
proprietary information and trade secrets which are the property of KIS.
Licensee shall exercise reasonable precautions for the protection of trade
secrets and proprietary information to insure that KIS trade secrets and
proprietary information are not disclosed to third parties except to affiliates
or service providers of Licensee requiring access to such information in the
performance of services for Licensee.
7. PATENTS AND COPYRIGHTS. KIS agrees to indemnify, defend and hold harmless
Licensee, its officers, directors, employees, affiliates, agents, control
persons, persons, successors and assigns (collectively, the "Indemnified
Party"), from and against any claim asserted or suit or proceeding alleging that
all or any part of the product(s) infringes or misappropriates a patent,
trademark, copyright, trade secret or other intellectual property right of a
third party. The Indemnified Party will give KIS prompt written notice of, and
at KIS' sole expense, full and complete authority, information and assistance in
the defense of, such claim, suit or proceeding; provided that (a) no such claim,
suit or proceeding in which the Indemnified Party is named as a party may be
settled by KIS without the Indemnified Party's prior written consent; and (b)
KIS' selection of counsel must be reasonably satisfactory to the Indemnified
Party.
In addition, KIS shall, in the event any part of the Product(s) is held to
constitute an infringement or misappropriation, use its best efforts to either
procure for Licensee the right to continue using that item under the terms set
forth in this Agreement, or replace or modify that item so that it becomes
non-infringing and not a misappropriation, provided that such replacement or
modified item has the same functional capabilities and performance
characteristics as the replaced or modified item.
The foregoing two paragraphs state the entire liability and obligation of KIS
with respect to infringement or misappropriation of any patent, trademark,
copyright, trade secret or other intellectual property right by all or any part
of the Product(s).
Notwithstanding the foregoing, KIS shall not be liable for any claim of patent,
trademark, or copyright infringement to the extent that such claim is based on
the use or combination of the Product(s) with any other software not supplied to
Licensee by KIS, Licensee's modification of the Product(s), or Licensee's use of
other than the latest available release of the Product(s) supplied to Licensee
by KIS.
8. WARRANTIES. KIS hereby represents and warrants:
(a) That it owns, free and clear of all liens, claims, and encumbrances
which would interfere with or affect the license granted to Licensee hereby, the
proprietary rights in and has the right to license (including without limitation
the license granted
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<PAGE> 4
to Licensee hereby) and distribute any Product or other software programs which
it markets.
(b) That Schedule A represents a complete and accurate listing of all
KIS software utilized by Licensee in the conduct of its business as of the date
of this Agreement.
(c) That when the Product(s) is delivered and installed it (they) will
operate on the computer(s) and operating system(s) as specified on Schedule A in
accordance with the specifications set forth on Schedule B attached hereto.
(d) That to KIS' knowledge and belief, no Product contains or will
contain any virus or any timer, clock, counter or other limiting design or
routine which causes it to become erased, inoperable, or otherwise incapable of
being used in the manner for which it is designed and licensed, whether
triggered by a certain number of uses or copies, a lapse of a certain period of
time, or the occurrence or lapse of any similar trigger factor including its
installation on or removal to a central processing unit with a different serial
number, model number, or other identification different from that on the central
processing unit at Licensee's premises, and that any such timers, clocks,
counters or other limiting designs or routines which are discovered will be
immediately removed or remedied at KIS' expense.
(e) That KIS is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York.
(f) That KIS has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of KIS, enforceable in accordance with its terms and conditions.
(g) That the documentation for the Product(s) to be delivered to
Licensee pursuant to Section 1 shall contain an accurate and complete
description of the programs included in the Product(s) and an accurate and
complete explanation of the use thereof, and will be sufficient to allow
Licensee to conduct the day-to-day operation of said programs and such
documentation shall meet or exceed in quality and completeness the standard in
the industry for documentation of similar software programs intended for very
limited distribution.
LICENSEE HEREBY EXPRESSLY AGREES AND ACKNOWLEDGES THAT THE FOREGOING WARRANTIES,
TOGETHER WITH THE WARRANTIES SET FORTH IN THE SERVICE AGREEMENT, THE ESCROW
AGREEMENT, AND THE OPTION AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES
EXPRESSED OR IMPLIED INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE AND ARE
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THE ONLY WARRANTIES MADE BY KIS IN CONNECTION WITH THE PRODUCT(S) AND THE
INSTALLATION ASSISTANCE, IF ANY, RENDERED BY KIS.
Licensee agrees that no affirmation, representation or warranty by any
agent, employee, or representative of KIS with respect to the Product(s) shall
bind KIS or be enforceable by Licensee unless it is specifically included within
this Agreement, the Service Agreement, the Escrow Agreement or the Option
Agreement.
9. LIMITATION OF LIABILITY. LICENSEE AND KIS AGREE THAT NEITHER LICENSEE
NOR KISS SHALL BE LIABLE FOR ANY LOST PROFITS, SPECIAL, CONSEQUENTIAL, OR
INCIDENTAL DAMAGES FOR BREACH OF THIS AGREEMENT (EXCEPT FOR CLAIMS FOR WHICH
LICENSEE IS INDEMNIFIED BY KIS PURSUANT TO SECTION 7) EVEN IF ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THIS LIMITATION SHALL NOT
APPLY WITH RESPECT TO ANY INTENTIONAL AND MALICIOUS BREACH OF THIS AGREEMENT BY
EITHER PARTY.
10. SEVERABILITY. In the event that any provision of this Agreement or
application hereof to any party or in any circumstances shall be determined to
be invalid, unlawful, or unenforceable to any extent, the remainder of this
Agreement, and the application of any provision to parties or circumstances
other than those as to which it is determined to be unlawful, invalid or
enforceable, shall not be affected thereby, and each remaining provision of this
Agreement shall continue to be valid and may be enforced to the fullest extent
permitted by law.
11. CONSTRUCTION. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the choice
of law rules thereof.
12. NOTICES. Any notice, request demand or other communication provided
for or permitted hereunder shall be in writing and may be personally delivered,
or sent by certified mail return receipt requested, or by overnight courier, to
the following address:
To KIS: Key Information Systems, Inc.
3217 Quinlan Street
Yorktown Heights, NY 10598
Attention: Joseph Khan, President
Fax Number: (914) 245-5388
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To MCM: McCarthy, Crisanti & Maffei, Inc.
71 Broadway
New York, New York 10006
Attention: Lindley Richert, President
Fax Number: (212) 509-7389
or such other address as a party may give the other parties by written notice as
provided herein. Any notice, request, demand or other communication shall be
deemed to have been given when received.
13. GENERAL. (a) This Agreement, together with the Service Agreement, the
Option Agreement, and the Escrow Agreement, contains the entire contract between
the parties, and supersedes all previous communications, representations, or
agreements whether written or oral, with respect to the subject matter hereof
and thereof, and the parties represent to each other that they have not relied
on any such communication.
(b) This Agreement may not be waived, altered or modified
except by written agreement signed by both of the parties.
(c) In all references herein to any parties, persons,
entities, or corporations, the use of any particular gender or the plural or
singular number is intended to include the appropriate gender or number as the
text of the foregoing instrument may require.
(d) This Agreement shall be binding upon and inure to the
benefit of the parties and their permitted successors and assigns.
14. EXECUTION. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one agreement.
15. SURVIVAL. This Agreement shall survive the transfer of any proprietary
rights in the Product(s) to any third party and, prior to any such transfer, KIS
agrees to notify said third party of this Agreement and obtain from such party a
written consent to the license granted hereby. Any transfer of a proprietary
right in the Product(s) in violation of this Section 15 shall be null and void
ab initio.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
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<PAGE> 7
KEY INFORMATION SYSTEMS, INC, MCCARTHY, CRISANTI & MAFFEI,
a New York corporation INC., a New York Corporation
By: /s/ Joseph M. Khan By: /s/ Lindley B. Richert
------------------------------ -----------------------------
Authorized Signature Authorized Signature
Name: Joseph M. Khan Name: Lindley B. Richert
Title: President Title: President
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<PAGE> 8
SCHEDULE A
PRODUCT SCHEDULE
KISNET-2000, a product architecture which spans multiple processing platforms
and incorporates:
KISNET-C, which denotes the software system(s) developed to support and
facilitate the contribution of data to information vendors; with
outbound option for Telerate, Knight-Ridder, ADP & Quotron and others
(as added), and input options for
Wang Word Processing Document
SIMTEL local and remote,
SIMTEL Express, & MCM Data Base
MENU-SCRIPT, FILE-SCRIPT, SELF-SCRIPT,
HELP-SCRIPT, FAX-SCRIPT (FOR
HASLER BOX ONLY), DOCU-MATE (and others, as added)
KISNET-D, which denotes the software system(s) developed to receive and
display information derived from a variety of sources, including
without limitation Telerate, Knight-Ridder, PR-Newswire, and other
sources.
(hereinafter, together with any additional, successor or substitute
programs performing essentially similar functions, the "Product(s)"),
for the Wang-VS operating system or any other operating system for
which the programs are adapted.
<PAGE> 9
SCHEDULE B
PRODUCT OPERATION SPECIFICATIONS
KISNET-C [Contribution/Outbound].
KISNET-C is the multi-vendor contribution system used by MCM to update
many information vendors from one centralized platform. Whenever a page is
updated on the central platform using KISNET-C, the KISNET-C system transmits
the updated text to as many of the following as appropriate performing a number
of format conversions automatically. Terminal editing capabilities simulate the
capabilities of a Telerate terminal for most functions.
Vendors:
Telerate
Knight-Ridder
Direct Feeds via Knight-Ridder
Quotron
ADP
FAX
Reuters (IDN)
Others (as added)
KISNET-D [Distribution/inbound].
KISNET-D automatically processes information feeds from multiple
vendors and resolves them to a set of data structures. The feeds include:
TDPF (Telerate)
KRDF (Knight Ridder)
PR NEWS WIRE
Others (As added)
KISNET-D organizes headlines from multiple sources into one
chronologically ordered display. The analyst can select a story to view from one
common screen without regard to the origin of the story.
KISNET-D simulates most of the functionality of a Telerate or
Knight-Ridder terminal (or others, as added). As authorized user can alternate
among his choice of vendor terminal simulations (currently Telerate & Knight
Ridder). He can view any authorized page from either service when in the
simulation mode for that service on KISNET-D. It is also possible to retrieve
Telerate pages (or others, as added) programmatically on demand and store them
in a data base.
<PAGE> 10
KISNET-D also provides a single-key link to KISNET-C thereby providing the users
the ability to edit and transmit their pages.
<PAGE> 11
Exhibit A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Escrow Agreement") dated as of ,
1993 by and among Key Information Systems, Inc. ("KIS"), McCarthy, Crisanti &
Maffei, Inc. ("MCM"), and (the "Escrow Agent").
WHEREAS, MCM has entered into a Software License Agreement with KIS dated as of
June 1, 1993 (the "Software License Agreement") whereby MCM has licensed from
KIS certain computer software described in Schedule A attached hereto (the
"Software");
WHEREAS, KIS desires not to disclose the source code (such source code, together
with the applicable system documentation therefor (which system documentation
shall include, without limitation, such system documentation as is reasonably
available to KIS at the time of the initial deposit of the Source Code pursuant
to Section 1 of this Agreement) and all updates, modifications or corrections to
any of the foregoing, is hereinafter collectively referred to as the "Source
Code") for the Software;
WHEREAS, KIS agrees with MCM that upon certain events MCM shall be able to
obtain the Source Code, and KIS agrees to deliver the Source Code to the Escrow
Agent;
NOW THEREFORE, in consideration of the agreements herein contained, KIS, MCM and
the Escrow Agent agree as follows:
1. DEPOSIT OF SOURCE CODE
Within thirty (30) days of the date of this Agreement, KIS agrees to
deliver to the Escrow Agent, and the Escrow Agent agrees to accept from
KIS, one good working order copy of the Source Code. Within thirty (30)
days after any material revision or update to the Software and in any
event no less frequently than once every six (6) months after the
initial Source Code deposit, KIS agrees to deliver to the Escrow Agent,
and Escrow Agent agrees to accept from KIS, an updated copy of the
Source Code including all modifications or corrections to the Source
Code created by KIS in the performance of services for MCM pursuant to
a Service Agreement between MCM and KIS dated as of June 1, 1993 (the
"Service Agreement"). All deliveries of Source Code to the Escrow Agent
shall be made in the form of magnetic media (except that system
documentation shall be in printed form), in a format mutually (and
reasonably) agreed to by MCM and KIS. KIS will provide the Escrow Agent
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and MCM an inventory listing of the Source Code upon each deposit of an
item with the Escrow Agent. The Escrow Agent will acknowledge to KIS
and MCM receipt of the items listed on such inventory and shall, upon
each such deposit, return to KIS all copies of the Source Code
superseded by such deposit except the two most recent copies preceding
the copy deposited. The Source Code held by the Escrow Agent shall
remain the exclusive property of KIS, and the Escrow Agent shall not
use the Source Code or disclose the same to any third party except as
specifically provided for herein; provided, however, that, subject to
the rights reserved for KIS in the Software License Agreement, and
except for superseded copies of the Source Code returned to KIS
pursuant to this Section 1, all right, title and interest in and to any
copies of the Source Code delivered to the Escrow Agent pursuant to
this Agreement shall pass to and vest in the Escrow Agent for the
purposes described herein upon delivery and shall pass to and vest in
MCM immediately and automatically upon delivery thereof to MCM pursuant
to Section 2 without the need for any further action, instrument or
payment. The Escrow Agent will hold the Source Code in safekeeping
unless and until it is authorized to release the Source Code pursuant
to Section 2 hereof.
2. RELEASE OF SOURCE CODE
2.1 MCM may, by written notice (the "Claim Notice") to the Escrow
Agent, assert that it is entitled to receive a copy of the
Source Code because one of the following events shall have
occurred: (a) KIS or any successor or assign permitted by the
Service Agreement is unable, unwilling or unavailable to
provide support and maintenance services for the Software
under substantially similar terms and conditions as those with
respect to Software maintenance (but without regard to other
Services) set forth in the Service Agreement (except for
increases in the fee payable for maintenance services pursuant
to Schedule D of the Service Agreement commensurate with
increases in the consumer price index during the relevant time
period); (b) KIS (or any permitted successor or assign then
providing Services under the Service Agreement) has become
insolvent, has made a general assignment for the benefit of
creditors, has suffered or permitted the appointment of a
receiver for its business or assets, has become the subject of
any bankruptcy or insolvency proceeding (not commenced by MCM)
which has not been dismissed or stayed within thirty (30) days
of the commencement of such proceeding, or has wound up or
liquidated; or (c) MCM has terminated the Service Agreement
pursuant to Section 19(b)(i) thereof. The Claim Notice shall
specify which of the foregoing events the License asserts has
occurred to entitle the Licensee to receive the Source Code.
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2.2 No later than three (3) business days after receipt by the
Escrow Agent of a Claim Notice, the Escrow Agent shall give
notice thereof and deliver a copy of such Claim Notice to KIS.
KIS shall have seven (7) days after its receipt of the copy of
a Claim Notice to give notice to Escrow Agent that KIS
disputes the accuracy of the Claim Notice. In the event KIS
does not give notice within said seven (7) day period to the
Escrow Agent that it disputes the accuracy of the Claim
Notice, the Escrow Agent shall promptly deliver a copy of all
of the Source Code then held by it to MCM. However, in the
event KIS does give notice to the Escrow Agreement within said
seven (7) day time period that it does dispute the accuracy of
the Claim Notice, the Escrow Agent shall immediately notify
MCM of such fact and MCM and KIS shall attempt in good faith
to agree upon their respective rights to the Source Code. If
MCM and KIS do so agree, a memorandum setting forth such
agreement shall be prepared and signed by both MCM and KIS and
delivered to the Escrow Agent. The Escrow Agent shall be
entitled to rely on any such memorandum and distribute the
Source Code in accordance with the terms thereof. If no such
agreement can be reached within five (5) business days after
delivery of such written objection, either MCM or KIS may
demand arbitration of the matter; in such event, MCM and KIS
shall each select one disinterested arbitrator from a list
submitted by the American Arbitration Association and the two
selected shall select a third arbitrator from the list. All
arbitration hearings shall be conducted in New York, New York
and the arbitration panel shall provide the parties with a
detailed written statement of the panel's findings of fact and
conclusions of law respecting its award. The arbitration award
shall be binding and conclusive upon MCM and KIS and the
Escrow Agent shall be entitled to act in accordance with such
decision. Any such arbitration shall be under the then current
Commercial Arbitration Rules of the American Arbitration
Association. The arbitrators shall be instructed that time is
of the essence, and shall agree to use their best efforts to
make a decision within twenty (20) days of their appointment.
The parties agree to expedite the arbitration by making all
relevant evidence and statements of position promptly. Any
unreasonable delay in presenting evidence or arguments of a
party will justify the arbitrators in proceeding without such
evidence and arguments. Each party to an arbitration shall pay
its own expenses. The fee of the arbitrator and the
administrative fee of the American Arbitration Association
shall be paid one-half (1/2) by each of MCM and KIS.
2.3 The Escrow Agent shall deliver the Source Code to KIS or MCM
at any time upon the joint written instructions of KIS and
MCM.
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2.4 Upon the delivery by the Escrow Agent of the Source Code to
KIS or to MCM in accordance herewith, the Escrow Agent shall
be discharged of all responsibility for any further action
hereunder and the obligations of the Escrow Agent created
hereby shall terminate.
3. PAYMENT TO ESCROW AGENT
The Escrow Agent shall receive from MCM a fee in the amount agreed to
from time to time by the Escrow Agent and MCM and reimbursement of all
reasonable out-of-pocket expenses incurred by Escrow Agent in the
performance of its duties hereunder. MCM shall provide KIS with
duplicate copies of all invoices received by MCM from the Escrow Agent.
4. WARRANTIES
KIS hereby represents and warrants:
(a) That it owns all proprietary rights in the Source Code and has
the right to deposit it with the Escrow Agent, free and clear
of all liens, claims and encumbrances which would interfere
with or affect any rights granted by KIS in the copies of the
Source Code to be deposited with Escrow Agent or released to
MCM hereunder.
(b) That the Source Code deposited with the Escrow Agent pursuant
to this Agreement conforms to the updated object code provided
to MCM pursuant to the Service Agreement.
(c) That the Source Code is operational, and does not contain
computer instructions or code intended to impede, interfere
with or limit the day-to-day operation and maintenance of the
Software by a third-party computer programmer.
(d) That all system documentation delivered to the Escrow Agent as
part of the Source Code following the conversion of the Source
Code for its operation on the VAX or Sun platform shall meet
or exceed in quality and completeness the standard in the
industry for system documentation of similar software programs
intended for very limited distribution.
The warranties set forth herein shall survive the termination of this
Escrow Agreement for any reason whatsoever.
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5. TERMINATION
This Escrow Agreement shall terminate on the delivery of the Source
Code in accordance with Section 2 hereof. The Escrow Agent may
terminate this Escrow Agreement by sixty (60) days' written notice to
KIS and MCM, and upon the effective date of any such termination shall
deliver the Source Code only to a successor Escrow Agent designated by
MCM and consented to by KIS, such consent to not be unreasonably
withheld or delayed, or as otherwise jointly directed in writing by MCM
and KIS.
6. LIMITATION ON ESCROW AGENT'S RESPONSIBILITY AND LIABILITY
6.1 The Escrow Agent shall not examine or inspect the Source Code.
The Escrow Agent's obligation for safekeeping shall be limited
to providing the same degree of care for the Source Code as it
maintains for its valuable information and property and that
of its customers stored in the form of magnetic media at the
same location. However, KIS and MCM agree and acknowledge that
the Escrow Agent shall not be responsible for any loss or
damage to the Source Code due to changes in atmospheric
conditions (including, but not limited to, failure of the air
condition system), unless such changes are proximately caused
by the gross negligence or willful misconduct of the Escrow
Agent.
6.2 The Escrow Agent shall be protected, in connection with the
carrying out of its duties hereunder, in acting upon any
written notice, request, waiver, consent, receipt or other
paper or document delivered to the Escrow Agent.
6.3 In no event shall the Escrow Agent be liable for any act or
failure to act under the provisions of this Escrow Agreement
except when its acts are the result of its gross negligence or
malfeasance. The Escrow Agent shall have no duties except
those which are expressly set forth herein, and it shall not
be bound by any waiver, modification, amendment, termination,
or rescission of this Escrow Agreement unless in writing
signed by KIS and MCM and if the Escrow Agent's duties are
affected, unless it shall have given its prior written consent
thereto.
6.4 KIS and MCM hereby jointly and severally indemnify the Escrow
Agent against any loss, liability, cost, expense, or damage
(other than any caused by the gross negligence or willful
misconduct of the Escrow Agent), including reasonable costs of
litigation and counsel fees, arising from and in connection
with the performance of its duties under this Agreement.
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6.5 The Escrow Agent acts hereunder as depository only, and is not
responsible or liable in any manner for the sufficiency,
correctness, genuineness or validity of any instrument
delivered to it hereunder, or with respect to the form or
execution of the same.
6.6 The Escrow Agent may consult with legal counsel in the event
of any dispute or question as to the construction of any of
the provisions hereof or its duties hereunder, and it shall
incur no liability and shall be fully protected in acting in
accordance with the opinion and instructions of such counsel;
provided, however, that such counsel shall not have a conflict
of interest by virtue of representing MCM or KIS or their
respective officers, shareholders, employees, agents, assigns
or successors in interest in any form.
6.7 In the event of any disagreement between KIS and MCM or any
other person resulting in adverse claims and demands being
made in connection with or for any papers, money or property
involved herein, or affected hereby, the Escrow Agent shall be
entitled to refuse to comply with any demand or claim, as long
as such disagreement shall continue, and in so refusing to
make any delivery or other disposition of any money, papers or
property involved or affected hereby, the Escrow Agent shall
not be or become liable to KIS or MCM or any other person for
its refusal to comply with such conflicting or adverse demands
and the Escrow Agent shall be entitled to refuse and refrain
to act until:
(a) The rights of the adverse claimants shall have been
settled by final order, decree or judgment of the
arbitrators provided in Section 2.2 above, or shall
have been fully adjudicated in a court assuming and
having jurisdiction of the parties in such
disagreement, or
(b) All differences shall have been adjusted by agreement
and the Escrow Agent shall have been notified thereof
in writing, signed by all parties interested.
7. VERIFICATION OF SOURCE CODE
To verify the authenticity of any copy of the Source Code deposited
with the Escrow Agent pursuant to Section 1, MCM or an independent
third party selected by MCM and reasonably satisfactory to KIS may be
present, at MCM's option, during the creation and delivery to the
Escrow Agent of any or all copies of the Source Code to be deposited
with the Escrow Agent pursuant to Section 1 and may verify the copying
procedures and results to its reasonable satisfaction at such time;
provided, however, that, to enable MCM to exercise
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its option pursuant to this Section 7, KIS agrees to notify MCM no less
than three (3) business days in advance of KIS' intent to create a copy
of the Source Code for deposit with the Escrow Agent.
8. NOTICES
Any notice, request demand or other communication provided for or
permitted hereunder shall be in writing and may be personally
delivered, or sent by certified mail return receipt requested, or by
overnight courier, to the following address:
To KIS: Key Information Systems, Inc.
3217 Quinlan Street
Yorktown Heights, NY 10598
Attention: Joseph Khan, President
Fax Number: (914) 245-5388
To Escrow Agent:
Fax Number:
To MCM: McCarthy, Crisanti & Maffei, Inc.
71 Broadway
New York, New York 10006
Attention: Lindley Richert, President
Fax Number: (212) 509-7389
or such other address as a party may give the other parties by written
notice as provided herein. Any notice, request, demand or other
communication shall be deemed to have been given when received.
9. SEVERABILITY
In the event that any provision of this Agreement or application hereof
to any party or in any circumstances shall be determined to be invalid,
unlawful, or unenforceable to any extent, the remainder of this
Agreement, and the application of any provision to parties or
circumstances other than those as to which it is determined to be
unlawful, invalid or enforceable, shall not be affected thereby, and
each remaining provision of this Agreement shall
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continue to be valid and may be enforced to the fullest extent
permitted by law.
10. CONSTRUCTION
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to the choice of law
rules thereof.
11. ASSIGNMENT
This Agreement may not be assigned or otherwise transferred by either
KIS or MCM without the prior written consent of the other; except that
either party may assign its rights and obligations under this Agreement
to any permitted assignee which succeeds to said party's right and
obligations under the Service Agreement and the Software License
Agreement in accordance with the terms thereof.
12. GENERAL
(a) This Agreement, together with the Software License Agreement, the
Service Agreement, and the Option Agreement, contains the entire
contract between the parties, and supersedes all previous
communications, representations, or agreements whether written or oral,
with respect to the subject matter hereof and thereof, and the parties
represent to each other that they have not relied on any such
communication.
(b) In all references herein to any parties, persons, entitles, or
corporations, the use of any particular gender or the plural or
singular number is intended to include the appropriate gender or number
as the text of the foregoing instrument may require.
(c) This Agreement shall be binding upon and inure to the benefit of
the parties and their permitted successors and assigns.
13. EXECUTION
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one
agreement.
8
<PAGE> 19
IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be executed
by their fully authorized representatives as of the day and year first above
written.
KEY INFORMATION SYSTEMS, INC.
By:_________________________________
Its:________________________________
MCCARTHY, CRISANTI & MAFFEI, INC.
By:_________________________________
Its:________________________________
____________________________________
By:_________________________________
Its:________________________________
9
<PAGE> 1
Exhibit 10.34
OPTION AGREEMENT
This Agreement is made as of this first day of June, 1993 by and between Key
Information Systems, Inc. ("KIS"), a New York Corporation, and McCarthy,
Crisanti & Maffei, Inc. ("MCM"), a New York corporation.
WHEREAS, KIS has entered into a Software License Agreement with MCM of even date
herewith (the "Software License Agreement") granting MCM a non-exclusive,
perpetual and worldwide license to use, compile, copy, modify, and merge the
software programs described on the attached Schedule A together with any
updates, modifications, or corrections thereto (collectively, the "Products");
and
WHEREAS, KIS has agreed to enter into an Escrow Agreement with MCM and a third
party escrow agent (the "Escrow Agent") in the form attached hereto as Exhibit A
(the "Escrow Agreement") providing for the delivery by KIS to the Escrow Agent
of a copy of the source code for each of the Products, together with the
applicable system documentation therefor, both as updated from time to time
(collectively referred to as the "Source Code"); and
WHEREAS, KIS desires to grant to MCM an option to purchase a non-exclusive,
perpetual and worldwide license to make derivative works from the Source Code
upon the occurrence of certain events;
NOW THEREFORE, in consideration of MCM's entry into a Service Agreement with KIS
dated as of June 1, 1993 (the "Service Agreement") and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, KIS
hereby agrees as follows:
1. OPTION.
KIS hereby grants to MCM an option (the "Option") to purchase a perpetual,
non-exclusive and royalty-free world-wide license to use (on any computer or
operating system), edit, compile, copy, modify, merge and make or have made
derivative works from the Source Code. The Option shall be exercisable at any
time during the term of the Service Agreement and shall be exercisable for a
period of thirty days after delivery of the Source Code to MCM by the Escrow
Agent pursuant to Section 2 of the Escrow Agreement. MCM may exercise the Option
by giving written notice of its exercise to KIS during the period of time in
which the Option may be exercised. Within ten (10) days after such notice has
been given, a closing shall be held at which MCM shall make payment to KIS as
provided below in cash, by certified or cashier's check, or by wire transfer of
funds, and KIS shall deliver to MCM written acknowledgement of MCM's license to
make derivative works from the Source Code in a form reasonably satisfactory to
MCM and, if the Option is exercised during the term of the Service Agreement, a
then-current copy of the Source Code.
<PAGE> 2
2. OPTION PRICE.
The price to be paid for the Source Code pursuant to the Option (the "Option
Price") will be seven hundred and fifty thousand dollars ($750,000.00);
provided, however, that the Option Price will be reduced to six hundred thousand
dollars ($600,000.00) in the event that the Option is exercised within sixty
(60) days following the death or permanent disability of Joseph Khan. Sixty
percent (60%) of the Option Price shall be payable at the closing described in
Section 1, and the remaining forty percent (40%) shall be payable, without
interest, at such time as MCM has verified to its reasonable satisfaction, which
verification may include, at MCM's option and expense, examination of the Source
Code by a third party consultant, that the Source Code: (a) operates on the
computer(s) and operating system(s) as specified in Schedule A in accordance
with the specifications set forth on Schedule B attached hereto; (b) contains no
virus and no timer, clock, counter or other limiting design or routine which
causes it to become erased, inoperable, or otherwise incapable of being used in
the manner for which it is designed and licensed, whether triggered by a certain
number of uses or copies, a lapse of certain period of time, or the occurrence
or lapse of any similar trigger factor including its installation on or removal
to a central processing unit with a different serial number, model number, or
other identification different from that or the central processing unit at
Licensee's premises; (c) is free and clear of all liens, claims and encumbrances
which would interfere with or affect the license purchased; (d) conforms to the
updated object code provided to MCM pursuant to the Service Agreement; (e) does
not contain, in any material quantity, computer instructions or code intended to
impede, interfere with or limit the day-to-day operations and maintenance of the
Products by a third-party computer programmer; and (f) includes system
documentation which, following the conversion of the Source Code for its
operation on the VAX or Sun platform, meets or exceeds in quality and
completeness the standard in the industry for system documentation of similar
software programs intended for very limited distribution. MCM shall conduct the
verification process with all reasonable dispatch after its receipt of the
Source Code pursuant to this Agreement and shall complete the verification
process within sixty (60) days after payment of the first installment. Upon
verification to MCM's reasonable satisfaction that the Source Code satisfies the
conditions set forth in this paragraph, MCM shall pay the second installment of
the Option Price to KIS in such manner and at such time as KIS shall direct;
provided, however, that except as otherwise set forth in this Section 2, the
second installment of the Option Price shall be paid to KIS no less than four
(4) nor more than twelve (12) months following payment of the first installment.
In the event that MCM's verification process indicates that the Source Code
fails to satisfy the conditions set forth in the preceding paragraph, MCM shall
notify KIS in writing of the specific non-conformity(ies) of the Source Code
within ten (10) business days of MCM's discovery of same, and KIS shall
thereafter have a sixty (60) day period in which to attempt, at KIS' expense, to
remedy the non-conformity(ies) described in the notice. If KIS is unable to
remedy the non-conformity(ies) to MCM's reasonable satisfaction during such
period, MCM may, at its option (i) retain the
<PAGE> 3
Source Code in its then-current condition without further obligation to pay the
second installment of the Option Price to KIS; or (ii) return to KIS all copies
of the Source Code delivered to MCM hereunder (but not under the Escrow
Agreement) and receive a full refund of eighty percent (80%) of the first
installment of the Option Price paid by MCM.
Notwithstanding anything herein contained to the contrary, MCM may at its
option, pay the second installment of the Option Price prior to its completion
of the aforesaid verification process if MCM determines, in its sole discretion,
that such payment is necessary to assure or perfect MCM's interest in the Source
Code.
3. CONFIDENTIALITY.
MCM shall cause any third party consultant retained by MCM pursuant to Section 2
to execute and deliver to KIS a confidentiality agreement in the form attached
hereto as Exhibit B.
4. CONSTRUCTION.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without regard to the choice of law rules thereof.
5. GENERAL.
(a) This Agreement, together with the Service Agreement, the Software
License Agreement, and the Escrow Agreement, contains the entire contract
between the parties, and supersedes all previous communications,
representations, or agreements whether written or oral, with respect to the
subject matter hereof and thereof, and the parties represent to each other that
they have not relied on any such communication.
(b) This Agreement may not be waived, altered or modified except by
written agreement signed by both of the parties.
(c) This Agreement shall be binding upon and inure to the benefit of
the parties and their permitted successors and assigns. MCM may assign its
rights under this Agreement, and any license purchased hereunder, to any
permitted assignee which succeeds to MCM's rights and obligations under the
Service Agreement and the Software License Agreement in accordance with the
terms thereof.
(d) This Agreement, and the exercise or non-exercise of the Option
granted hereby by MCM, shall in no event limit or diminish the license granted
to MCM pursuant to the License Agreement.
<PAGE> 4
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first above written.
KEY INFORMATION SYSTEMS, INC. McCARTHY, CRISANTI & MAFFEI, INC.,
a New York Corporation a New York Corporation
By: /s/ Joseph M. Khan By: /s/ Lindley B. Richert
------------------------------ -----------------------------
Authorized Signature Authorized Signature
Name: Joseph M. Khan Name: Lindley B. Richert
Title: President Title: President
<PAGE> 5
EXHIBIT B
CONFIDENTIALITY AGREEMENT
WHEREAS, the undersigned,
("Provider"), is being engaged by McCarthy, Crisanti & Maffei, Inc. ("MCM"), to
perform certain services for MCM; and
WHEREAS, Provider may, in the course of performing services for MCM, gain
access to certain Confidential Information (as hereinafter defined) of Key
Information Systems, Inc. ("KIS"), which information constitutes a valuable
business property right of KIS;
NOW, THEREFORE, Provider hereby covenants to MCM and KIS as follows:
1. Provider agrees that it will hold all of KIS's customer lists, data,
business methods and information, programs and software, and trade
secrets (collectively the "Confidential Information") to which Provider
may gain access as a result of performing services to MCM in strictest
confidence, that it will neither use nor disclose the Confidential
Information to anyone other than MCM without the explicit written
permission of KIS, and that it will take precautions commensurate with
the highest reasonable standards of industrial security to protect the
security and confidentiality of the Confidential Information.
2. All Confidential Information provided by MCM or by KIS to Provider, or
copies thereof, shall be returned to MCM within thirty (30) days after
the completion of services to MCM by Provider, or sooner if requested
or if no longer required for the performance of Provider's services.
3. Provider acknowledges that monetary damages would not be a sufficient
remedy for any breach of this agreement and that, in addition to all
other remedies, specific performance and injunctive or other equitable
relief shall be available to MCM or KIS as a remedy for any such
breach.
4. This agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to the choice of law
rules thereof.
________________________________
Date: _______________________ By:________________________________
Its:_______________________________
<PAGE> 1
EXHIBIT 10.35
LEASE
between
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
"Landlord"
and
MCCARTHY, CRISTANI & MAFFEI, INC.
"Tenant"
As of December 7, 1993
<PAGE> 2
Lease
TABLE OF CONTENTS
ARTICLE 1 Premises, Term and Fixed Rent...............................-1-
ARTICLE 2 Use of Premises.............................................-3-
ARTICLE 3 Escalations.................................................-5-
ARTICLE 4 Delivery of Premises; Landlord's Work......................-18-
ARTICLE 5 Subordination..............................................-19-
ARTICLE 6 Quiet Enjoyment............................................-23-
ARTICLE 7 Assignment, Subletting and Mortgaging......................-23-
ARTICLE 8 Compliance with Laws.......................................-43-
ARTICLE 9 Insurance..................................................-46-
ARTICLE 10 Rules and Regulations......................................-49-
ARTICLE 11 Alterations................................................-49-
ARTICLE 12 Tenant's Improvements and Tenant's Property................-56-
ARTICLE 13 Repairs and Maintenance....................................-58-
ARTICLE 14 Electric Energy............................................-60-
ARTICLE 15 Landlord's Services........................................-66-
ARTICLE 16 Access and Name of Building................................-70-
ARTICLE 17 Notice of Occurrences......................................-73-
ARTICLE 18 Non-Liability and Indemnification..........................-73-
ARTICLE 19 Damage or Destruction......................................-75-
ARTICLE 20 Eminent Domain.............................................-81-
-ii-
<PAGE> 3
ARTICLE 21 Surrender..................................................-82-
ARTICLE 22 Conditions of Limitation...................................-82-
ARTICLE 23 Reentry by Landlord........................................-85-
ARTICLE 24 Damages....................................................-86-
ARTICLE 25 Affirmative Waivers........................................-88-
ARTICLE 26 No Waivers.................................................-89-
ARTICLE 27 Curing Tenant's Defaults...................................-89-
ARTICLE 28 Broker.....................................................-89-
ARTICLE 29 Notices....................................................-90-
ARTICLE 30 Estoppel Certificates......................................-91-
ARTICLE 31 Definitions................................................-91-
ARTICLE 32 No Representations by Landlord.............................-95-
ARTICLE 33 Tenant's Termination Rights................................-96-
ARTICLE 34 Holdover...................................................-96-
ARTICLE 35 Miscellaneous Provisions and Definitions...................-97-
ARTICLE 36 Landlord's Contribution...................................-101-
ARTICLE 37 Option Space..............................................-103-
ARTICLE 38 Preferential Right to Lease...............................-108-
ARTICLE 39 Untenantability...........................................-115-
ARTICLE 40 Arbitration...............................................-115-
ARTICLE 41 Effective Date of Lease...................................-117-
-iii-
<PAGE> 4
SCHEDULES AND EXHIBITS
Schedule A Fixed Rent
Schedule B Certificate of Occupancy
Schedule C Landlord's Work
Schedule D Contractors Approved For Initial Alterations
Schedule E HVAC Specifications
Exhibit A Land
Exhibit B Floor Plan of Premises
Exhibit C Rules and Regulations
Exhibit D Alteration Rules and Regulations
Exhibit E Cleaning Specifications
Exhibit F-l Form of Non-Disturbance Agreement for Underlying Leases
Exhibit F-2 Form of Non-Disturbance Agreement for Mortgages
Exhibit G Primary Landlord Conduit Areas
Exhibit H Passenger Elevator Bank D
-iv-
<PAGE> 5
LEASE, dated as of December 7, 1993, between THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), incorporated under the laws of the United States of
America, having an office at 4 Chase MetroTech Center, 17th Floor, Brooklyn, New
York 11245, Attention: Vice President (herein called "LANDLORD") and McCARTHY,
CRISTANI & MAFFEl, INC., a New York corporation, having an office at 1 Parkview
Plaza, Oakbrook Terrace, Illinois 60181 (herein called "TENANT").
W I T N E S S E T H:
ARTICLE 1
Premises, Term and Fixed Rent
1.01. Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, upon and subject to the terms, covenants, provisions and conditions of
this lease, the premises described in Section 1.02, which premises are located
in the building known as One Chase Manhattan Plaza in the City, County and State
of New York (herein called the "BUILDING"), which Building is located on the
land described in Exhibit A attached hereto and made a part hereof (herein
called the "LAND").
1.02. The premises leased to Tenant hereunder (herein called the
"PREMISES") consist of those portions of the thirty-seventh (37th) floor of the
Building that are shown hatched on the floor plan attached hereto as Exhibit B.
1.03. The term of this lease (a) shall commence on the date hereof (the
"COMMENCEMENT DATE"), and (b) shall end at 11:59 p.m. on November 30, 2009 (such
date being herein called the "EXPIRATION DATE"), or on such earlier date upon
which the term of this lease shall expire or be cancelled or terminated pursuant
to any of the conditions or covenants of this lease or pursuant to law.
1.04. The rents shall be and consist of (1) fixed rent (herein called
"FIXED RENT"), which shall be payable for the Premises at the per annum rates
therefor set forth on Schedule A annexed hereto, and which, subject to the
provisions of Section 1.05 below, shall be payable commencing on the
Commencement Date and thereafter in equal monthly installments in advance on the
first day of each and every calendar month during the term of this lease (except
that Tenant shall pay, upon the execution and delivery of this lease by Tenant,
the sum of Seventy Six Thousand Four Hundred Nine and 66/100 ($76,409.66)
Dollars, to be applied against the first full monthly installment of Fixed
Rent), and (2) additional rent (herein called "ADDITIONAL CHARGES") consisting
of Tax Payments (as hereinafter defined), Operating Payments (as hereinafter
defined) and all other sums of money as shall become due from and payable by
Tenant to Landlord hereunder; all to be paid in lawful money of the United
States to Landlord at its office, or such other place, or to Landlord's agent
and at such other place, as Landlord shall designate by written notice to
Tenant.
<PAGE> 6
1.05. The "RENT COMMENCEMENT DATE" shall be December 1, 1994.
Notwithstanding anything to the contrary contained in Section 1.04 above, (i)
there shall be a complete abatement of Fixed Rent for the period commencing on
the Commencement Date and ending on the day preceding the Rent Commencement
Date, both days inclusive, and (ii) Fixed Rent for the month in which the Rent
Commencement Date occurs shall be a pro-rated amount, determined on a per diem
basis, and shall be payable on the Rent Commencement Date.
1.06. Tenant covenants and agrees to pay Fixed Rent and Additional Charges
as follows: Tenant shall pay Fixed Rent and Recurring Additional Charges (as
hereinafter defined) without notice or demand therefor. Tenant shall pay all
other Additional Charges at such time or times as may be provided for herein,
or, if no due date is specified, within thirty (30) days of notice or demand
therefor. Tenant shall pay Fixed Rent and all Additional Charges without any
abatement, deduction or setoff for any reason whatsoever, except as may be
expressly provided in this lease. Unless otherwise instructed by Landlord, Fixed
Rent and Recurring Additional Charges shall be paid by wire transfer of
immediately available federal funds to Landlord or its designee, to such
account(s) as may be designated in written directions delivered by Landlord to
Tenant from time to time, and in the absence of any such instructions, in the
same manner as hereinafter provided for other Additional Charges. All other
Additional Charges shall be paid by good and sufficient check (subject to
collection) drawn on a bank which is a member of the Federal Reserve system or a
successor thereto. As used herein, the term "RECURRING ADDITIONAL CHARGES" shall
mean (i) those Additional Charges payable periodically by Tenant in accordance
with the provisions of Section 3.02(b) hereof and (ii) those Additional Charges
payable monthly by Tenant in accordance with the provisions of Section 3.03(b)
hereof.
1.08. No payment by Tenant or receipt or acceptance by Landlord of a
lesser amount than the correct Fixed Rent or Additional Charges shall be deemed
to be other than a payment on account, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment be deemed an accord
and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance or pursue any other remedy
in this lease or at law provided.
1.09. If any of the Fixed Rent or Additional Charges payable under the
terms and provisions of this lease shall be or become uncollectible, reduced or
required to be refunded because of any legal rent restrictions enacted by a
governmental authority, Tenant (without any additional expense to Tenant, other
than expense which is de minimis or which Landlord has agreed to pay) shall
enter into such agreement(s) and take such other steps as Landlord may request
and as may be legally permissible to permit Landlord to collect the maximum
rents which from time to time during the continuance of such legal rent
restriction may be legally
-2-
<PAGE> 7
permissible (but not in excess of the amounts nor earlier than the due dates
reserved therefor under this lease). Upon the termination of such legal rent
restriction, (a) the Fixed Rent and/or Additional Charges shall become and
thereafter be payable in accordance with the amounts reserved herein for the
periods following such termination, and (b) Tenant shall pay to Landlord within
thirty (30) days after being billed, to the maximum extent legally permissible,
an amount equal to (i) the Fixed Rent and/or Additional Charges which would have
been paid pursuant to this lease but for such legal rent restriction less (ii)
the rents paid by Tenant during the period such legal rent restriction was in
effect. The rights and obligations set forth in this Section 1.09 shall survive
the expiration or termination of this lease for a period of three (3) years
following such expiration or termination.
1.10. Additional Charges shall be deemed to be rent and Tenant's failure
to pay Additional Charges shall be considered a failure to pay rent hereunder
and Landlord shall be entitled to all rights and remedies provided herein or by
law in connection therewith.
ARTICLE 2
Use of Premises
2.01. Tenant shall have the right to use and occupy the Premises only as
follows: (I) primarily, for general and executive office use, and, to the extent
incidental to such general and executive office use, for computer and data
processing, photocopying, kitchenette (including microwave and dishwasher),
pantry and vending machine areas (the uses described in this clause (i) being
herein called the "PRIMARY USE"); and (ii) secondarily, for (x) printing, and
(y) other uses incidental to the Primary Use which are consistent with a
first-class office building (the uses described in this clause (ii) being herein
called the "SECONDARY USES").
2.02. (a) Landlord, throughout the term of this lease, shall maintain in
effect a Certificate of Occupancy for the Building (either temporary or
permanent) which, subject to the completion by Tenant of its Initial Alterations
(as such term is defined in Article 11 hereof) in accordance with this lease,
will (I) permit the use of the Premises by Tenant for the Primary Use at
occupancy levels, for each portion thereof, which are not less than the
occupancy levels therefor set forth in the Certificate of Occupancy for the
Building which is attached hereto as Schedule B (herein called the "ATTACHED
CERTIFICATE OF OCCUPANCY"), and (II) permit the floors of the Premises to be
loaded with a load at least equal to the permitted floor load set forth on the
Attached Certificate of Occupancy; provided, however that Landlord shall have no
liability for a breach of the foregoing if such breach results from any act or
omission of Tenant or any Tenant Party (as hereinafter defined), which act or
omission violates any provision of this lease. Landlord makes no representation
that
-3-
<PAGE> 8
the Attached Certificate of Occupancy is currently the existing Certificate of
Occupancy which is actually in effect for the Building.
(b) If any governmental license or permit (other than a Certificate
of Occupancy for the Building permitting the Premises to be used for the Primary
Use at the occupancy levels and with the floor loads referred to in Section
2.02(a) above) shall be required for the proper and lawful conduct of business
in the Premises or any part thereof and if the failure to have such license or
permit would affect the Real Property, Landlord or any occupant of the Building,
then Tenant, at its expense, shall duly procure and thereafter maintain such
license or permit and, upon request, deliver a copy thereof to Landlord.
Additionally, if Tenant shall desire to use the Premises, or any portion
thereof, for a use other than the Primary Use at the occupancy levels and with
the floor loads referred to in Section 2.02(a) above) and such use shall require
a modification or amendment of the then existing Certificate of Occupancy for
the Building, then, prior to so using the Premises or such portion thereof,
Tenant, at its expense, shall procure any such required modification or
amendment. The foregoing provisions are not intended to be deemed Landlord's
consent to any Alterations or to a use of the Premises not otherwise permitted
hereunder. Landlord shall execute (and provide any readily accessible
information known by Landlord for) any applications and similar documents
reasonably required in connection with obtaining any licenses or permits or any
amendments or modifications of any Certificate of Occupancy for the Building
required by the foregoing provisions of this Section 2.02(b), provided that such
documents are in proper form. Tenant hereby agrees that it shall (i) reimburse
Landlord all Landlord's out-of-pocket expenses incurred in connection with
Tenant's obtaining of any such license, permit, amendment or modification
(including without limitation those incurred in connection with Landlord's
execution of any applications and similar documents, or its provision of
information, as provided in the preceding sentence), and (ii) indemnify and hold
harmless Landlord against any and all liabilities which Landlord may incur by
reason of its execution of any applications and similar documents, or its
provision of information, as provided in the preceding sentence; provided,
however, that neither such reimbursement nor such indemnity shall include any
such expenses or liabilities to the extent that (A) the same would be, or would
have been, discharged, satisfied or avoided by Landlord's performance of its
obligations under this lease (including without limitation its obligations under
Articles 8 and 13 hereof), or (B) the same arises out of any inaccuracy in any
information provided by Landlord.
(c) In connection with the initial Alterations, Landlord, promptly
after its approval of such Initial Alterations in accordance with the provisions
of Article 11 hereof, shall deliver to Tenant a Form ACP-5 executed by
Landlord's hygienist with respect to Premises. In connection with any
Alterations made subsequent to the Initial Alterations, Landlord, reasonably
promptly after a request therefor and its approval of such Alterations in
accordance with the provisions of
-4-
<PAGE> 9
Article 11, shall deliver to Tenant, with respect to each portion of the
Premises in respect of which such Alterations shall be performed, a Form ACP-5
executed by Landlord's hygienist and/or any other form or documentation which
evidences or confirms the absence of asbestos from such portion(s) of the
Premises, provided that (i) such other form or documentation is then required by
any governmental agency as a condition to the performance of such Alterations,
and (ii) the matters evidenced or confirmed by such other form or documentation
are not greater in scope then the matters evidenced or confirmed by the initial
Form ACP-5 delivered by Landlord with respect to such portion(s) of the
Premises. In no event shall the provisions of this Section 2.02(c) require
Landlord to perform any work in the Premises or otherwise.
2.03. Tenant shall not at any time use or occupy the Premises or the
Building, or suffer or permit anyone to use or occupy the Premises, in any
manner, or do anything in the Premises or the Building, or suffer or permit
anything to be done in, brought into or kept on the Premises, which (a) violates
the Certificate of Occupancy for the Building (except to the extent such
violation is attributable to Landlord's failure to comply with its obligations
under Section 2.02), (b) impairs the proper and economic maintenance, operation
and repair of the Building and/or its equipment, facilities or systems (except
to the extent that such impairment arises out of the use of the Premises for the
Primary Use), (c) constitutes a nuisance, public or private, (d) makes
unobtainable from reputable insurance companies authorized to do business in New
York State all risk property insurance, or liability, elevator, boiler or other
insurance at standard rates, or (e) discharges objectionable fumes, vapors or
odors into the Building's flues or vents or otherwise, except to the extent such
fumes, vapors or odors are discharged into flues or vents designed for such
purposes and which Tenant, pursuant to the terms of this lease, is permitted to
use.
2.04. Tenant shall not use, or suffer or permit anyone to use, the
Premises or any part thereof, by or for (i) an agency, department or bureau of
the United States Government, (ii) any state or municipality within the United
States or any foreign government, or any political subdivision of any of them,
(iii) an employment or travel agency (other than an executive search firm and
other than an employment or travel agency primarily serving Tenant's employees),
(iv) any charitable or religious organization or union (it being agreed that
this clause shall not prohibit such an organization from using discrete portions
of the Premises on a short-term basis and for discrete purposes, provided that
Tenant receives no consideration therefor), (v) a school or classroom (it being
agreed that this clause shall not prohibit Tenant from occasionally, temporarily
or permanently using conference rooms or other areas of the Premises for
training purposes and lectures in connection with and incidental to Tenant's
business, it being understood that all such uses shall be considered secondary
Uses and, accordingly, that Tenant shall be responsible for obtaining any
permits or licenses required in connection therewith), (vi) medical or
psychiatric offices (it being agreed that this clause shall not prohibit Tenant
from employing
-5-
<PAGE> 10
doctors and/or nurses at the Premises for Tenant's employees), (vii) conduct of
an auction (other than in the ordinary course of Tenant's business), (viii)
gambling activities, (ix) the conduct of obscene, pornographic or similarly
disreputable activities, (x) an automated teller machine or similar facility,
(xi) a restaurant and/or bar and/or the sale of confectionery and/or soda and/or
beverages and/or sandwiches and/or ice cream and/or baked goods (the foregoing
shall not prohibit the use of portions of the Premises for kitchenette, pantry
and vending machine areas in accordance with Section 2.01(i) above), (xii) the
business of photographic reproductions and/or offset printing (except that
Tenant may use portions of the Premises for photographic reproductions and/or
offset printing in connection with, either directly or indirectly, its own
business and/or activities), (xiii) the retail offices or the retail activities
of a bank, trust company, safe deposit business, savings and loan association,
or a loan company, (xiv) the sale of traveler's checks or foreign exchange, or
(xv) a retail stock or securities brokerage office or for retail stock or
securities brokerage purposes. For purposes of this Section 2.04, the term
"RETAIL" shall refer to a business whose primary patronage are customers
visiting its offices in person.
ARTICLE 3
Escalations
3.01. The terms defined below shall for the purposes of this lease have the
meanings herein specified:
(a) "OPERATING STATEMENT" shall mean, with respect to any Operating
Year, a document containing (i) a reasonably itemized statement of Operating
Expenses for such Operating Year prepared by an independent certified public
accountant, and (ii) with respect to any Operating Year after the Base Operating
Year, a statement, in reasonable detail, of the Operating Payment payable by
Tenant for such Operating Year.
(b) "TAX STATEMENT" shall mean a document setting forth, in
reasonable detail, the Tax Payment payable by Tenant for a specified Tax Year
pursuant to this Article 3.
(c) "OPERATING EXPENSES" shall mean, without duplication, all
expenses paid or incurred by, or on behalf of, Landlord in respect of the
repair, replacement, maintenance, operation and/or security of the Real Property
(as hereinafter defined), determined on an accrual basis, including, without
limitation, the following:
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(A) salaries, wages, medical, surgical, insurance (including,
without limitation, group life and disability insurance), union and general
welfare benefits, pension payments, severance payments, sick day payments and
other fringe benefits of, and payroll taxes, worker's compensation, uniforms and
similar related expenses (whether direct or indirect) for, employees engaged in
such repair, replacement, maintenance, operation and/or security (all of the
foregoing being herein called "LABOR COSTS"); provided, however, that if any
such employees are not engaged exclusively in such repair, replacement,
maintenance, operation and/or security, then the Labor Costs of or for such
employees shall be included in Operating Expenses on a pro-rated basis, based
upon the proportion of such employees' total work time that is spent engaged in
such repair, replacement, maintenance, operation and/or security;
(B) the cost of fuel, gas, steam, electricity, heat,
ventilation, air-conditioning and chilled or condenser water, water, sewer and
other utilities, together with any taxes and surcharges on, and fees paid to
third parties in connection with the calculation and billing of, such utilities;
(C) the cost of painting and/or decorating all areas of the
Real Property, excluding, however, any leasable areas of the Building (the
phrase "LEASABLE AREAS" of the Building shall, at any time, mean all areas of
the Building that are then leased or available for lease to tenants, whether or
not the same are then being marketed, and shall include any space occupied or
held for occupancy by Landlord or any Affiliate of Landlord, other than as
Building Offices (as hereinafter defined));
(D) the cost of casualty, liability, fidelity, rent and all
other insurance regarding the Real Property and the repair, replacement,
maintenance, operation and/or security thereof, to the extent the such types of
insurance are customarily carried in respect of Similar Buildings (as defined in
Article 31 hereof);
(E) the cost of all supplies, tools, materials and equipment,
whether by purchase or rental, used in the repair, replacement, maintenance,
operation and/or security of the Real Property, and any sales and other taxes
thereon;
(F) (i) the fair market rental value of any Building office or
other premises in the Real Property utilized by employees and/or contractors
engaged in the repair, replacement, maintenance, operation and/or security of
the Real Property (collectively, "BUILDING OFFICES") (but Operating Expenses
shall include such fair market rental value only to the extent that the
aggregate area of such Building Offices do not exceed the lesser of 750 rentable
square feet or the size of such Building Offices during the Base Operating
Years), and (ii) all office expenses, such as telephone, utility, stationery and
similar expenses incurred in connection with all Building Offices;
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(G) the cost of cleaning, janitorial and security services,
including, without limitation, glass cleaning, snow and ice removal and garbage
and waste collection and/or disposal;
(H) the cost of maintaining all existing interior and exterior
landscaping, but excluding the initial cost of any additional landscaping;
(I) the cost of alterations, additions, improvements,
replacements and repairs made with respect to the Real Property and of tools and
equipment acquired for use in the operation, maintenance or repair of the Real
Property; provided, however, that (i) no Capital Costs (as hereinafter defined)
incurred in or prior to either of the Base Operating Years shall be included in
Operating Expenses for the year of incurrence or any subsequent year, and (ii)
Capital Costs incurred subsequent to both Base Operating Years shall be included
in Operating Expenses only:
(1) if, and to the extent that, the alteration,
addition, improvement, replacement, repair, equipment or tool in question
(a) is required to be made by a Subsequent Legal Requirement (as
hereinafter defined) (it being agreed that an alteration, addition,
improvement, replacement, repair, equipment or tool shall not be deemed
required to be made by a Subsequent Legal Requirement to the extent that
such alteration, addition, improvement, replacement, repair, equipment or
tool is also required to be made by an Existing Legal Requirement (as
hereinafter defined)), and (b) if made to any leasable area of the
Building, would not, if such leasable areas were demised by this lease, be
the responsibility of Tenant under Article 8 hereof; and, in such event,
for each month during the useful life of the alteration, addition,
improvement, replacement, repair, equipment or tool in question there
shall be included in Operating Expenses an amount equal to the combined
constant monthly principal and interest payment which would be payable on
a loan (i) having an original principal amount equal to the Capital Costs
of such alteration, addition, improvement, replacement, repair, equipment
or tool, (ii) bearing interest at the Capital Cost Rate (as hereinafter
defined) applicable to such Capital Costs, and (iii) providing for a
combined constant monthly payment of principal and interest sufficient to
fully-liquidate such loan over a period of time equal in length to the
length of such useful life (except, that (x) if such useful life shall not
commence on the first day of a month, then the amount so included in the
month in which such useful life shall commence shall be computed on a
prorata basis, and (y) if such useful life shall not end on the last day
of a month, then the amount so included in the month in which such useful
life shall end shall be computed on a prorata basis); or
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(2) if the alteration, addition, improvement,
replacement, repair, equipment or tool in question is such that, at the
time made, Landlord reasonably estimates that the same will result in an
avoidance of or savings in Operating Expenses over the useful life of such
alteration, addition, improvement, replacement, repair, equipment or tool;
and, in such event, there shall be included in Operating Expenses for each
month during the useful life of such alteration, addition, improvement,
replacement, repair, equipment or tool an amount equal to the combined
constant monthly principal and interest payment which would be payable on
a loan (i) having an original principal amount equal to the Capital Costs
of such alteration, addition, improvement, replacement, repair, equipment
or tool, (ii) bearing interest at the Capital Cost Rate (as hereinafter
defined) applicable to such Capital Costs, and (iii) providing for a
combined constant monthly payment of principal and interest sufficient to
fully liquidate such loan over a period of time equal in length to the
length of such useful life (except, that (x) if such useful life shall not
commence on the first day of a month, then the amount so included in the
month in which such useful life shall commence shall be computed on a
prorata basis, and (y) if such useful life shall not end on the last day
of a month, then the amount so included in the month in which such useful
life shall end shall be computed on a prorata basis); provided, however,
that the aggregate amount which is included in Operating Expenses for any
Operating Year under this Section 3.01(c)(I)(2) with respect to any such
alteration, addition, improvement, replacement, repair, equipment or tool,
shall not exceed an amount equal to Landlord's reasonable estimate of the
Operating Expenses avoided or saved for such Operating Year as a result of
such alteration, addition, improvement, replacement, repair, equipment or
tool;
it being agreed that, as used herein, (A) the term "CAPITAL COSTS" shall mean
the costs of any alteration, addition, improvement, replacement, repair,
equipment or tool the costs of which, under generally accepted accounting
principles consistently applied, are required to be capitalized, (B) the term
"SUBSEQUENT LEGAL REQUIREMENT" shall mean (i) any statute or governmental rule
or regulation in implementation thereof which is adopted after the date hereof
or (ii) any amendment to or modification of a statute or governmental rule or
regulation in implementation thereof, which amendment or modification is adopted
after the date hereof (and, without limiting the generality of the foregoing,
such term shall exclude any Existing Legal Requirement taking effect after the
date hereof), (C) the term "EXISTING LEGAL REQUIREMENT" shall mean any statute
or governmental rule or regulation in implementation thereof which is adopted on
or prior to the date hereof or (ii) any amendment to or modification of a
statute or governmental rule or regulation in implementation thereof, which
amendment or modification is adopted prior to the date hereof, and (D) the term
"USEFUL LIFE", of any alteration, addition, improvement, replacement, repair,
equipment or tool, shall mean the useful life thereof determined in accordance
with generally accepted accounting principles;
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(J) management fees; or, if no managing agent is employed in
respect of the Real Property, then a sum in lieu thereof equal to a standard and
customary management fee for a Similar Building, but in no event an amount in
excess of two and one-half percent (2-1/2%) of the gross rents payable in
respect of the Real Property (it being agreed that if no managing agent is
employed with respect to the Real Property and there is included in Operating
Expenses the aforesaid "in lieu of" fee, then Operating Expenses shall not
include any cost in respect of services customarily provided by a managing agent
as part of its standard and customary management fee (i.e., without separate or
additional charge), such as, by way of example, bookkeeping);
(K) all reasonable costs and expenses of legal, accounting and
other professional services incurred with respect to the repair, replacement,
maintenance, operation and/or security of the Real Property; and
(L) vault taxes, sewer rents, water frontage charges.
Notwithstanding anything to the contrary contained in the foregoing
provisions of this subsection (c), the term "OPERATING EXPENSES" shall not
include the following items:
(1) depreciation and amortization (except as provided above in
this subsection (c));
(2) interest on and amortization of debts (except as provided
above in this subsection (c));
(3) the cost of tenant improvements, installations and
decorations made in connection with preparing space for tenant(s) or renovating
space for an existing tenant, including any permit, license and inspection fees
and any contribution by Landlord to the cost of tenant improvements,
installations and decorations;
(4) leasing and brokerage commissions and similar fees;
(5) financing or refinancing costs;
(6) the cost of any work or service (or level or amount
thereof) provided to any tenant(s) of the Building (including Tenant) which is
in excess of the work or service (or level or amount thereof) which Landlord is
required by this lease to furnish to Tenant without separate or additional
charge (including without limitation the costs of all overtime HVAC,
supplemental HVAC, supplemental chilled water, supplemental condenser water,
special or supplemental cleaning, and overtime freight elevator service);
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(7) the cost of any electricity consumed in the Premises or
any other leasable areas of the Building (together with any taxes and surcharges
on, and fees paid to third parties in connection with the calculation and
billing of such electricity);
(8) Taxes, as well as franchise, gains, transfer, inheritance,
estate and income taxes, excess profit taxes and capital stock taxes;
(9) interest, fines or penalties resulting from the violation
by Landlord or any tenant of the Building of any laws or requirements of public
authorities;
(10) costs and expenses incurred in connection with procuring
tenants, including lease concessions, landlord contributions and allowances,
lease takeover or rental assumption obligations;
(11) damages and attorneys' fees and disbursements and other
costs in connection with any judgment, settlement or arbitration award resulting
from any liability of Landlord; provided, however, that any portion of such
damages, fees, disbursements and costs (other than any thereof which awarded as
compensation for bodily or personal injury) which by its nature would otherwise
be included in and not excluded from Operating Expense pursuant to this Section
3.01(c), irrespective of such liability, shall notwithstanding the foregoing,
constitute an Operating Expense;
(12) Labor Costs for personnel above the grade of building
manager;
(13) rent and all other amounts payable under any ground,
overriding or underlying lease of all or any portion of the Real Property;
provided, however, that any sums paid under any such lease in respect of
expenses which would otherwise be included in and not excluded from Operating
Expenses pursuant to this Section 3.01(c) shall not be excluded from Operating
Expenses even though denominated as "rent" under any such lease;
(14) costs incurred for the repair and restoration of the
Building the need for which results from a casualty; provided, however, that
Operating Expenses shall include such costs to the extent of any commercially
reasonable deductible under the applicable insurance policy(ies), it being
agreed that (i) the costs so included in Operating Expenses shall be attributed
to the item(s) of the Landlord Restoration Work (as hereinafter defined) which
have the longest useful life(s) (such useful life(s) being determined in
accordance with generally accepted accounting principles), and (ii) in respect
of each such item, for each month of the useful life of such item (as so
determined) there shall be included in Operating Expenses an amount equal to the
combined constant monthly principal and interest payment
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which would be payable on a loan (i) having an original principal amount equal
to the cost of such item, (ii) bearing interest at the Capital Cost Rate (as
hereinafter defined) applicable to such cost, and (iii) providing for a combined
constant monthly payment of principal and interest sufficient to fully-liquidate
such loan over a period of time equal in length to the length of such useful
life (except, that (x) if such useful life shall not commence on the first day
of a month, the amount so included in the month in which such useful life shall
commence shall be computed on a prorata basis, and (y) if such useful life shall
not end on the last day of a month, the amount so included in the month in which
such useful life shall end shall be computed on a prorata basis);
(15) the excess, if any, of (i) any sums paid or incurred
between affiliated parties for goods, services or other items the costs of which
are includable in Operating Expenses over (ii) the sums which would have been
paid or incurred therefor if the same had been furnished by unaffiliated third
parties on a competitive basis;
(16) any compensation paid to clerks, attendants or other
persons in commercial concessions;
(17) advertising and promotional expenditures;
(18) all costs which under generally accepted accounting
principles consistently applied are required to be capitalized, except for (i)
Capital Costs includable in Operating Expenses pursuant to Section 3.01(c) (I)
above, (ii) costs includable in Operating Expenses pursuant to Section
3.01(c)(14) above, and (iii) costs which under generally accepted accounting
principles consistently applied would qualify as deferred expenses (e.g.,
prepaid charges) (which deferred expenses shall be includable as and when
chargeable in accordance with generally accepted accounting principles
consistently applied); except, in any case pursuant to this clause (18), if and
to the extent otherwise excluded from Operating Expenses by any other provision
of this Section 3.01(c);
(19) any charges or penalties resulting from a late payment of
any item of Operating Expenses;
(20) costs incurred in the removal, encapsulation, handling or
other treatment of asbestos;
(21) the costs of purchasing sculptures, paintings and other
works of fine art located within or outside the Building;
(22) any costs related to the portion of the concourse level
of the Building currently occupied by a retail branch of The Chase Manhattan
Bank,
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N.A. (provided, however, that Operating Expenses shall include costs incurred in
connection the portions of the Real Property (other than the leasable areas of
the Building) that serve both such part of the concourse and other parts of the
Building to the extent the same are otherwise includable in Operating Expenses);
(23) costs incurred for the repair and restoration of the
Building the need for which results from a condemnation;
(24) costs incurred with respect to a sale of all or any
portion of the Real Property;
(25) legal fees, expenses and disbursements relating (A) to
the enforcement of leases, recovery of possession, collection of rent, (B) to
disputes with tenants or prospective tenants of the Building or real estate
brokers, or (C) to disputes with purchasers or mortgagees or underlying lessors
of the Real Property, (C) to negotiations of leases, contracts of sale or
mortgages or sale or finance documents, or (D) to the defense of any claims for
bodily or personal injury or for any other damages the payment of which would
not constitute Operating Expenses;
(26) costs incurred in the operation and maintenance of any
parking garage now or hereafter located in the Building;
(27) costs relating to withdrawal liability or unfunded
pension liability under the Multi-Employer Pension Plan Act or similar law;
(28) the cost of installing, operating and maintaining any
specialty facility, such as an observatory, broadcasting facilities, luncheon
club, athletic or recreational club, cafeteria or dining facility; provided,
however, that Operating Expenses shall include costs incurred in connection with
common areas of the Real Property that serve both any such specialty facility
and other parts of the Building to the extent the same are otherwise includable
in Operating Expenses; and
(29) Landlord's general overhead not related to the Building.
As used in this Section 3.01(c) the term "tenant" shall
include Landlord, and any Affiliate of Landlord, as occupant of any leasable
space in the Building.
If during any relevant period (i) any leasable area of the
Building shall be vacant or unoccupied, and/or (ii) the tenant or occupant of
any space in the Building shall undertake to perform work or services therein,
the cost of which would otherwise have been included in Operating Expenses,
then, in any such event(s), the operating Expenses for such period shall be
adjusted to reflect the Operating Expenses that would have been paid or incurred
if one-hundred (100%)
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percent of the leasable areas of the Building had been occupied or if the costs
of all such work or services were paid or incurred as Operating Expenses, as the
case may be.
(d) "OPERATING YEAR" shall mean each calendar year in which occurs
any part of the term of this lease.
(e) "BASE OPERATING YEARS" shall mean the calendar years commencing
on January 1, 1993 and January 1, 1994.
(f) "BASE OPERATING AMOUNT" shall mean the sum of (i) one-half (1/2)
of the Operating Expenses for the Base Operating Year commencing January 1,
1993, plus (ii) one-half (1/2) of the Operating Expenses for the Base Operating
Year commencing January 1, 1994.
(g) "CAPITAL COST RATE", in respect of any costs, shall mean a per
annum rate equal to the Base Rate (as defined in Article 31 hereof) in effect as
of December 31st of the Operating Year in which such costs are incurred.
(h) "REAL PROPERTY" shall mean, collectively, the Building and all
fixtures, machinery and equipment installed therein or used in the operation
thereof (including, without limitation, the entire Base Building (as hereinafter
defined) and all improvements and betterments of the Building's tenants (whether
or not owned by Landlord), including, but not limited to, all cables, fans,
pumps, boilers, heating and cooling equipment, wiring and electrical fixtures
and metering, control and distribution equipment, component parts of the HVAC,
electrical, plumbing, elevator and any life or property protection systems
(including, without limitation, sprinkler systems), window washing equipment and
snow removal equipment, the Land, the curbs, sidewalks and plazas on the Land,
and all easements and other appurtenances to the Building and/or the Land.
(k) "TAXES" shall mean all (A) the real estate taxes and assessments
(special or otherwise), rates, charges and any other levies, impositions or
charges of a similar or dissimilar nature, whether general, special, ordinary or
extraordinary, foreseen or unforeseen, which may be levied, assessed or imposed
upon or with respect to the Real Property at any time by any federal, state,
municipal or other governments or governmental bodies or authorities, and (B)
expenses incurred in contesting taxes or assessments and/or the assessed value
of the Real Property, which expenses shall be allocated to the Tax Year to which
such expenses relate. If at any time during the term of this lease the methods
of taxation prevailing on the date hereof shall be altered so that in lieu of,
or as an addition to or as a substitute for, the whole or any part of such real
estate taxes or assessments (special or otherwise) now imposed on real estate,
there shall be levied, assessed or imposed (x) a tax, assessment, levy,
imposition, license fee or charge wholly or partially as a capital levy
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or otherwise on the rents received therefrom, or (y) a tax, charge or
assessment, special or otherwise, intended to serve as a real estate tax or to
fulfill substantially the same function as existing real estate taxes, then the
same shall be deemed to be included within the term "Taxes" for the purposes
hereof; provided, however, that, for purposes of such inclusion, the amounts
described in clause (x) above shall be computed as if the Real Property was the
only real estate owned by Landlord. For the purposes hereof, assessments
included within Taxes shall, regardless of how actually paid, be deemed to be
paid in the maximum number of installments permitted by the taxing authority
imposing any such assessment, together with interest calculated at a rate equal
to the rate then being charged by the taxing authority imposing such assessment.
(l) "TAX YEAR" shall mean each period of twelve (12) months,
commencing on the first day of July of each such period, in which occurs any
part of the term of this lease, or such other period of twelve (12) months
occurring during the term of this lease as hereafter may be duly adopted as the
fiscal year for real estate tax purposes of the City of New York.
(m) "BASE TAX AMOUNT" shall mean the sum of Taxes for the Tax Year
commencing on July 1, 1993 and ending on the June 30, 1994.
(n) "TENANT'S OPERATING SHARE", during any period, shall mean a
fraction (expressed as a percentage rounded to the nearest one hundredth of one
percent), (i) the numerator of which is the then aggregate rentable area of the
Premises, and (ii) the denominator of which is equal to Tenant's Operating Share
Denominator (as defined below). The term "TENANT'S OPERATING SHARE DENOMINATOR"
shall be deemed to mean 1,897,835; provided, however, in no event shall such
number constitute or imply any representation or warranty by Landlord
whatsoever, as to the actual size of the Building or any portion thereof. As of
the date hereof, Tenant's Operating Share is 1.725%. If, for any Operating Year,
Tenant's Operating Share shall not remain a constant percentage throughout the
entirety of such Operating Year, then Tenant's Operating Share for such
Operating Year shall be that percentage which represents the weighted average
(computed on a per diem basis) of all the percentages constituting Tenant's
Operating Share during such Operating Year.
(o) "TENANT'S TAX SHARE", during any period, shall mean a fraction
(expressed as a percentage rounded to the nearest one hundredth of one percent),
(i) the numerator of which is the then aggregate rentable area of the Premises,
and (ii) the denominator of which is equal to Tenant's Tax Share Denominator (as
defined below). The term "TENANT'S TAX SHARE DENOMINATOR" shall be deemed to
mean 1,683,497; provided, however, in no event shall such number constitute or
imply any representation or warranty by Landlord whatsoever, as to the actual
size of the Building or any portion thereof. As of the date hereof, Tenant's Tax
Share is 1.945%.
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If, for any Tax Year, Tenant's Tax Share shall not remain a constant percentage
throughout the entirety of such Tax Year, then Tenant's Tax Share for such Tax
Year shall be that percentage which represents the weighted average (computed on
a per diem basis) of all the percentages constituting Tenant's Tax Share during
such Tax Year.
3.02. (a) Tenant, for each Tax Year occurring after the Tax Year ending
June 30, 1994, shall pay to Landlord as Additional Charges an amount (herein
called the "TAX PAYMENT") equal to Tenant's Tax Share of the excess of (i) the
Taxes for such Tax Year, over (ii) the Base Tax Amount; provided, however, that
the Tax Payment for the Tax Year in which the term of this lease shall end shall
be computed on a pro-rata basis, according to the portion of such Tax Year
falling within the term of this lease.
(b) Landlord, at anytime prior to, during, or after the end of, any
Tax Year, may deliver to Tenant a Tax Statement(s) for such Tax Year. Tenant,
for each Tax Year, shall pay to Landlord the Tax Payment set forth on the Tax
Statement(s) for such Tax Year in the same number of installments as Taxes are
required to be paid to the City of New York for such Tax Year, with each such
installment being due on the later to occur of (x) the date that is thirty (30)
days prior to the due date of the corresponding installment of Taxes and (y) the
date that is ten (10) Business Days after the date that Tenant receives the
initial Tax Statement for such Tax Year.
(c) If, at any time after the delivery of the initial Tax Statement
for any Tax Year, it is determined that, the Tax Payment for such Tax Year is
greater or less than the amount set forth on the then most recent Tax
Statement(s) (for any reason including without limitation (i) any increase in
Taxes for such Tax Year, whether before, during or after such Tax Year, (ii) any
decrease in the Taxes for any Tax Year, whether or before, during or after such
Tax Year, including without limitation any such decrease resulting from any
refund of Taxes for such Tax Year, or (iii) any decrease in Taxes comprising the
whole or any part of the Base Tax Amount, including without limitation any such
decrease resulting from any refund of Taxes for the 1993/94 Tax Year), then, in
any case that the Tax Payment is greater, Landlord may, or, in any case that the
Tax Payment is less, Landlord shall, furnish to Tenant a revised Tax
Statement(s) for such Tax Year. If any revised Tax Statement shall set forth a
Tax Payment that is greater than that set forth on the previous Tax Statement,
then Tenant shall pay to Landlord such additional amount within thirty (30) days
after Tenant's receipt of such revised Tax Statement. If any revised Tax
Statement shall set forth a Tax Payment that is less than that set forth on the
previous Tax Statement, then Landlord, within thirty (30) days after Tenant's
receipt of such revised Tax Statement, shall pay to Tenant the difference
between the Tax Payment, as set forth on the revised Tax Statement, and the Tax
Payment set forth on the previous Tax Statement.
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(d) Nothing contained in this lease shall require the filing of any
application, or the institution of any proceeding, seeking a reduction in Taxes
or assessed valuation. Tenant, for itself and its immediate and remote
subtenants and successors in interest hereunder, hereby waives, to the extent
permitted by law, any right Tenant may now or in the future have to protest or
contest any Taxes or to bring any application or proceeding seeking a reduction
in Taxes or assessed valuation or otherwise challenging the determination
thereof.
(e) Landlord represents that, as of the date hereof, the Real
Property is not subject to any tax deferral or abatement program which has
affected, or may hereafter affect, Taxes for the Tax Year commencing July 1,
1993 and ending June 30, 1994, or any subsequent Tax Year.
3.03. (a) Tenant, for each Operating Year subsequent to the Base Operating
Years, shall pay to Landlord, as Additional Charges for such Operating Year, an
amount (herein called the "OPERATING PAYMENT") equal to Tenant's Operating Share
of the excess of (i) Operating Expenses for such Operating Year, over (ii) the
Base Operating Amount; provided, however, that the Operating Payment for the
Operating Year in which the term of this lease shall end shall be computed on a
pro-rata basis, according to the portion of such Operating Year falling within
the term of this lease.
(b) Landlord may furnish to Tenant, prior to the commencement of
each Operating Year subsequent to the Base Operating Years, a written statement
setting forth Landlord's reasonable estimate of the Operating Payment for such
Operating Year (such estimate, as the same may be revised as hereinafter
provided, the "LANDLORD'S ESTIMATED OPERATING PAYMENT"). Tenant shall pay to
Landlord on the first day of each month during the Operating Year for which the
Operating Payment will be due, an amount equal to one-twelfth (1/12th) of the
Landlord's Estimated Operating Payment for such Operating Year. If, however,
Landlord shall not furnish any such estimate for an Operating Year or if
Landlord shall furnish any such estimate for an Operating Year subsequent to the
commencement thereof, then (i) until the first day of the month following the
month in which such estimate is furnished to Tenant, Tenant shall pay to
Landlord on the first day of each month an amount equal to the monthly sum
payable by Tenant to Landlord under this Section 3.03 for the last month of the
preceding Operating Year, (ii) after such estimate is furnished to Tenant,
Landlord shall give notice to Tenant stating whether the installments of the
Operating Payment previously made for such Operating Year were greater or less
than the installments of the Operating Payment which should have been previously
made for such Operating Year in accordance with such estimate, and (A) if there
shall be a deficiency, Tenant shall pay the amount thereof within thirty (30)
days after Tenant's receipt of such notice, or (B) if there shall have been an
overpayment, Landlord shall, within thirty (30) days from the giving of such
notice, refund to Tenant the amount thereof, together with interest on the
amount
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thereof at the Base Rate for the period from the date(s) of such overpayment to
the date such payment is made, and (iii) on the first day of the month following
the month in which such estimate is furnished to Tenant, and on the first day of
each month thereafter throughout the remainder of such Operating Year, Tenant
shall pay to Landlord an amount equal to one-twelfth (1/12th) of the Landlord's
Estimated Operating Payment set forth on such estimate. Landlord may, during
each Operating Year (but not more than twice during any Operating Year), furnish
to Tenant a revised statement of Landlord's Estimated Operating Payment for such
Operating Year, and in such case, the Landlord's Estimated Operating Payment for
such Operating Year shall be adjusted and paid or refunded, as the case may be,
substantially in the same manner as provided in the preceding sentence.
(c) Landlord, after the end of each Operating Year subsequent to the
Base Operating Years, shall furnish to Tenant an Operating Statement for such
Operating Year. Landlord, prior to or together with the delivery of the initial
Operating Statement for the first Operating Year after the Base Operating Years,
shall furnish to Tenant an Operating Statement for each of the Base Operating
Years (the "BASE YEAR OPERATING STATEMENTS"). If, for any Operating Year after
the Base Operating Years, the Operating Statement shall show that the sums paid
by Tenant, if any, under Section 3.03(b) exceeded the Operating Payment to be
paid by Tenant for such Operating Year (such excess for any Operating Year being
herein called the "OPERATING OVERPAYMENT"), then Landlord, within thirty (30)
days after delivery of such Operating Statement, shall refund to Tenant the
amount of such Operating Overpayment, together with interest on the amount
thereof at the Base Rate for the period commencing on the last day of the
Operating Year in question and ending on the date the appropriate refund is
made. If the Operating Statement for such Operating Year shall show that the
sums so paid by Tenant were less than the Operating Payment to be paid by Tenant
for such Operating Year (such deficiency for any Operating Year being herein
called the "OPERATING DEFICIENCY"), Tenant shall pay the amount of such
Operating Deficiency within thirty (30) days after Tenant's receipt of the
Operating Statement.
(d) (1) Tenant, upon notice given no later than the applicable Audit
Notice Deadline Date (as hereinafter defined) with respect to any Operating
Statement, may elect to have Tenant's employees, accountants or other agents
examine, at reasonable times and at such location(s) in the City of New York as
Landlord may reasonably designate, the Operating Expense Records (as hereinafter
defined) with respect to such Operating Statement; if Tenant shall not timely
give such notice, then the Operating Statement in question shall be conclusive
and binding upon Tenant (it being agreed that the foregoing shall not be
construed to prejudice Tenant's rights with respect to items constituting
revisions or corrections to such Operating Statement which are set forth in a
subsequently delivered revised or corrected Operating Statement for the same
Operating Year). As used herein, the "AUDIT NOTICE DEADLINE DATE", with respect
to any Operating Statement shall refer to
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the date one hundred eighty (180) days after the date of Tenant's receipt
thereof; provided, however, that with respect to the initial Base Year Operating
Statements, the initial Operating Statement for the first Operating Year after
the Base Operating Years and the initial Operating Statement for the second
Operating Year after the Base Operating Years (such four Operating Statements
being herein collectively called the "THRESHOLD OPERATING STATEMENTS"), the term
"Audit Notice Deadline Date" shall refer to the date (herein called the "INITIAL
AUDIT NOTICE DEADLINE DATE") that is one hundred eighty (180) days after the
first date that all of the Threshold Operating Statements shall have been
furnished to Tenant. As used herein, "OPERATING EXPENSE RECORDS", with respect
to any Operating Statement, shall mean such books and records as are relevant to
the Operating Expenses incurred in the Operating Year for which such Operating
Statement is furnished. In connection with any examination by Tenant of the
Operating Expense Records, Tenant agrees to treat, and to instruct its
employees, accountants, attorneys and agents to treat, all information as
confidential and not disclose it to any other person except Tenant's
accountants, employees, attorneys and agents, except as may be required by law
or may be necessary or appropriate in connection with the prosecution of any
claim by Tenant hereunder.
(2) If Tenant shall, in good-faith, disagree with any
Operating Statement, then Tenant, no later than the Audit Notice Deadline Date,
may send a written notice ("TENANT'S STATEMENT") to Landlord, setting forth such
disagreement and specifying in reasonable detail the basis for such disagreement
and Tenant's determination of the Operating Expenses for such Operating Year. If
Tenant shall not timely give such Tenant's Statement, then the Operating
Statement in question shall be conclusive and binding upon Tenant. If Tenant
shall timely give such Tenant's Statement, then Landlord and Tenant shall
attempt to adjust such disagreement. If they are unable to do so, Landlord and
Tenant shall designate a certified public accountant (the "ARBITER") whose
determination made in accordance with this Section 3.03(d)(2) shall be binding
upon the parties. The Arbiter shall be a member of an independent certified
public accounting firm having at least twenty (20) accounting professionals and
shall have practiced as a certified public accountant for at least ten (10)
years. In the event that Landlord and Tenant shall be unable to agree upon the
designation of the Arbiter within thirty (30) days after receipt of notice from
the other party requesting agreement as to the designation of the Arbiter, which
notice shall contain the names and addresses of two or more certified public
accountants who are acceptable to the party sending such notice (any one of
whom, if acceptable to the party receiving such notice as shall be evidenced by
notice given by the receiving party to the other party within such thirty (30)
day period, shall be the agreed upon Arbiter), then either party shall have the
right to request the American Arbitration Association (the "AAA") (or any
organization which is the successor thereto) to designate as the Arbiter a
certified public accountant whose determination made in accordance with this
Section 3.03(d)(2) shall be conclusive and binding upon the parties, and the
cost of the Arbiter designated by the AAA (or any organization which is the
successor thereto), shall be borne as hereinbefore provided in the case of
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the Arbiter designated by the Landlord and Tenant. Landlord and Tenant hereby
agree that (A) except with respect to the Base Operating Years, any
determination of Operating Expenses made by an Arbiter designated pursuant to
this Section 3.03(d)(2) shall neither exceed the determination of Landlord set
forth in the Operating Statement nor be less the determination of Tenant set
forth in Tenant's Statement, (B) with respect to the Base Operating Years, any
determination of Operating Expenses made by an Arbiter designated pursuant to
this Section 3.03(d)(2) shall neither exceed the determination of Tenant set
forth in Tenant's Statement, nor be less than the determination of Landlord set
forth in the Operating Statement, and (C) that any determination which does not
comply with the foregoing shall be deemed increased or decreased, as the case
may be, to cure such noncompliance. In rendering such determination the Arbiter
shall not add to, subtract from or otherwise modify the provisions of this
lease, including the immediately preceding sentence. Notwithstanding the
foregoing provisions of this Section 3.03(d), Tenant, pending the resolution of
any contest pursuant to the terms hereof shall continue to pay in the manner
provided for in this Section 3.03 all sums as determined to be due based upon
the Operating Statement. If, and to the extent that, Tenant shall prevail, then
within thirty (30) days after the resolution of such contest (i.e., the
Arbiter's determination), Landlord shall make an appropriate refund to Tenant,
together with interest on the amount thereof at the Interest Rate (as defined in
Article 31 hereof) for the period commencing on the last day of the Operating
Year to which such refund relates and ending on the date such appropriate refund
is made; if such determination shall relate to the Base Operating Years, any
applicable refund shall be made with respect to all subsequent Operating Years
with respect to which an initial Operating Statement shall have been furnished
to Tenant. With respect to any Operating Year other than the Base Operating
Years, (i) if the Operating Expenses set forth in the Operating Statement shall,
in the aggregate, exceed 105% of the Arbiter's determination thereof, the costs
of the Arbiter shall be borne by Landlord, (ii) if the Operating Expenses set
forth in Tenant's Statement shall, in the aggregate, be less than 95% of the
Arbiter's determination thereof, the costs of the Arbiter shall be borne by
Tenant, and (iii) otherwise, the costs of the Arbiter shall be shared equally.
With respect to the Base Operating Years, (x) if the Operating Expenses set
forth in Tenant's Statement shall, in the aggregate, exceed 105% of the
Arbiter's determination thereof, the costs of the Arbiter shall be borne by
Tenant, (y) if the Operating Expenses set forth in the Operating Statement
shall, in the aggregate be less than 95% of the Arbiter's determination thereof,
the costs of the Arbiter shall be borne by Landlord, and (z) otherwise, the
costs of the Arbiter shall be shared equally.
3.04. (a) In any case provided in this Article 3 in which Tenant is
entitled to a payment from Landlord pursuant to the terms of this Article 3,
Landlord, in lieu of making such payment, may credit the amount thereof against
the immediately following future installments of Fixed Rent and Additional
Charges; provided, however, that if such a credit would exceed Tenant's next
installment of Fixed Rent and Recurring Additional Charges, then the uncredited
portion of such excess shall
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bear interest at the Base Rate from the date due until the date credited.
Nothing in this Article 3 shall be construed so as to result in a decrease in
the Fixed Rent hereunder. If this lease shall expire before any such credit
shall have been fully applied, then Landlord, within thirty (30) days after the
expiration hereof, shall refund to Tenant the unapplied balance of such credit,
but if Tenant is in monetary default hereunder Landlord may, in lieu thereof,
credit the same against the amount of such default or withhold the same until
such default is cured.
(b) The expiration or termination of this lease during any Tax Year
or Operating Year (for any part or all of which there is a Tax Payment or
Operating Payment under this Article) shall not affect the rights or obligations
of the parties hereto respecting such payment and any Operating Statement or Tax
Statement, as the case may be, relating to such payment may be sent to Tenant
subsequent to, and all such rights and obligations of Landlord and Tenant with
respect thereto shall survive, any such expiration or termination. Any payments
due under such Operating Statement and Tax Statement, as the case may be, shall
be payable within thirty (30) days after such statement or bill is sent to
Tenant.
3.05. (a) (1) Landlord's failure to render, or delay in rendering, a Tax
Statement, or a revised or corrected Tax Statement, for any Tax Year shall not
prejudice Landlord's right to thereafter render a Tax Statement, or a revised or
corrected Tax Statement, for such Tax Year or any other Tax Year, nor shall the
rendering of a revised or corrected Tax Statement for any Tax Year prejudice
Landlord's right to thereafter render a further revised or corrected Tax
Statement for such Tax Year.
(2) Notwithstanding the provisions of Section 3.05(a)(1)
above or anything hereinabove contained to the contrary, if Landlord shall not
have rendered an initial Tax Statement for any Tax Year on or prior to the date
that is two (2) years after the end of such Tax Year, then Tenant may deliver to
Landlord a notice setting forth such failure, which notice shall expressly refer
to this Section 3.05(a)(2), and, in such event, if Landlord's failure to deliver
an initial Tax Statement for such Tax Year shall continue for a further period
of three (3) months after Landlord's receipt of such notice, then Landlord shall
no longer have the right to deliver a Tax Statement for such Tax Year and Tenant
shall not be obligated to make any Tax Payment for such Tax Year (it being
understood that the provisions of this Section 3.05(a)(2) however, shall not
affect, in any way, Landlord's right to deliver a Tax Statement for any other
Tax Year or to collect from Tenant any Tax Payment for such other Tax Year).
(3) Notwithstanding the provisions of Section 3.05(a)(1)
above or anything hereinabove contained to the contrary, Landlord shall not have
the right later than two (2) years after rendering the initial Tax Statement for
any Tax Year to render a revised or corrected Tax Statement with respect to such
Tax Year; provided,
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however, that Landlord shall always be (a) entitled and required to render a
revised Tax Statement based upon a decrease in Taxes or increase in the Base Tax
Amount pursuant to any tax reduction proceeding or other tax litigation, and (b)
entitled to render a revised Tax Statement based upon an increase in Taxes or
decrease in the Base Tax Amount pursuant to any tax reduction proceeding or
other tax litigation.
(b) (1) Landlord's failure to render, or delay in rendering, an
Operating Statement with respect to any Operating Year shall not prejudice
Landlord's right to thereafter render an Operating Statement for such Operating
Year or any other Operating Year, nor shall the rendering of an Operating
Statement (or a revised or corrected Operating Statement) for any Operating Year
prejudice Landlord's right to thereafter render one or more revised or corrected
Operating Statements for such Operating Year.
(2) Notwithstanding the provisions of Section 3.05(b)(1)
above or anything hereinabove contained to the contrary, if Landlord shall not
have rendered an initial Operating Statement for any operating year prior to the
date that is two (2) years after the end of such operating Year, then Tenant may
deliver to Landlord a notice setting forth such failure, which notice shall
expressly refer to this Section 3.05(b)(2), and, in such event, if Landlord's
failure to deliver an initial Operating Statement for such Operating Year shall
continue for a further period of three (3) months after Landlord's receipt of
such notice, then (i) Landlord shall still be obligated to deliver an Operating
Statement for such Operating Year and Tenant may suspend payment of any sums
which would otherwise come due under Section 3.03(b) until such Operating
Statement is furnished, (ii) Tenant shall not be obligated to pay any operating
Deficiency for such Operating Year, and (iii) Landlord, within thirty (30) days
from delivery of such an Operating Statement for such Operating Year, shall
refund to Tenant the amount of such Operating Overpayment, together with
interest on the amount thereof at the Interest Rate (rather than at the Base
Rate as provided in Section 3.03(c) above) for the period commencing on the last
day of the Operating Year in question and ending on the date the appropriate
refund is made (it being understood that the provisions of this Section
3.05(b)(2), however, shall not affect, in any way, Landlord's right to deliver
an Operating Statement for any other Operating Year or to collect from Tenant
any Operating Deficiency for such other Operating Year). The provisions of this
Section 3.05(b)(2) shall not apply to the Base Year Operating statements;
provided, however, that Landlord shall not be deemed to have delivered an
Operating Statement for any Operating Year subsequent to the Base Operating
Years unless and until it shall have furnished both of the Base Year Operating
Statements.
(3) Notwithstanding the provisions of Section 3.05(b)(1)
above or anything hereinabove contained to the contrary, (I) with respect to any
Operating Year in respect of which one of the Threshold Operating Statements was
rendered, Landlord shall not have the right later than one (1) year after the
Initial Audit Notice
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Deadline Date to render a revised or corrected Operating Statement with respect
to such Operating Year, and (II) with respect to each Operating Year occurring
after the Operating Years in respect of which the Threshold Operating Statements
were rendered, Landlord shall not have the right later than one (1) year after
rendering the initial Operating Statement with respect to such Operating Year to
render a revised or corrected Operating Statement with respect to such Operating
Year.
ARTICLE 4
Delivery of Premises; Landlord's Work
4.01. Tenant acknowledges that it has inspected the Premises and is fully
familiar with the condition of the Premises. Tenant hereby accepts the Premises
"as is" on the date hereof. Except for Landlord's Work (as hereinafter defined),
Landlord shall have no obligation to perform any work in readying the Premises
for Tenant's occupancy. No provision of this Article 4 shall release Landlord
from the performance of any of its obligations under any other Article of this
lease.
4.02. Landlord, after its receipt of Tenant's Article 4 Notice (as
hereinafter defined), shall, at its expense, promptly commence, and thereafter
diligently prosecute to completion, Landlord's Work, subject to one or more
Events of Force Majeure (as hereinafter defined). Landlord's Work shall be
prosecuted in a good and workmanlike manner in accordance with all applicable
laws and requirements of public authorities having jurisdiction thereover, and
sound construction practice. As used herein, (I) "LANDLORD'S WORK" shall mean
the work described on Schedule C attached hereto and made a part hereof, and
(II) "TENANT'S ARTICLE 4 NOTICE" shall mean a notice from Tenant to Landlord
referring to this Section 4.02, indicating that Tenant has substantially
completed the Initial Alterations (as hereinafter defined) and that requesting
that Landlord perform Landlord's Work.
ARTICLE 5
Subordination
5.01. For purposes of this lease, the following terms shall have the
following meanings:
(a) "UNDERLYING LEASE" shall mean any ground lease, overriding lease
or underlying lease of the Land and/or any portion of the Building of which the
Premises are a part (but excluding any such lease of any portion of the Building
of which the Premises are not a part), now or hereafter existing, and all
renewals, modifications, replacements and extensions of any such lease; and the
lessor of an
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Underlying Lease or its successor in interest, at the time referred in question,
is herein called an "UNDERLYING LESSOR".
(b) "MORTGAGE" shall mean any mortgage which may now or hereafter
affect the Land and/or any portion of the Building of which the premises are a
part and/or any Underlying Lease, whether or not any such mortgage shall also
cover other lands and/or buildings and/or leases, including each and every
advance made or hereafter to be made under any such mortgage, and to all
modifications, replacements and extensions, spreaders and consolidations of any
such mortgage; and the holder of a Mortgage is herein called a "MORTGAGEE".
(c) "NON-DISTURBANCE AGREEMENT" shall mean (1) in the case of an
Underlying Lease, an agreement between the Underlying Lessor under such
Underlying Lease and Tenant, either in the form annexed hereto as Exhibit F-l or
in such other form as shall be proposed by such Underlying Lessor so long as
such other form, as compared to the form annexed as Exhibit F-l, does not, in
any material respect, increase the obligations or liabilities of Tenant or
decrease the rights or remedies of Tenant, and, in all cases, in recordable
form, providing in substance that (A) such Underlying Lessor will not name or
join Tenant as a party defendant or otherwise in any suit, action or proceeding
to enforce any rights granted to such Underlying Lessor under its Underlying
Lease (unless required by law), and (B) that if such Underlying Lease shall
terminate or be terminated, the Underlying Lessor will recognize Tenant as the
direct tenant of such Underlying Lessor on the same terms and conditions as are
contained in this Lease, and (2) in the case of a Mortgage, an agreement between
the Mortgagee under such Mortgage and Tenant, either in the form annexed hereto
as Exhibit F-2 or in such other form as shall be proposed by such Mortgagee so
long as such other form, as compared to the form annexed as Exhibit F-2, does
not, in any material respect, increase the obligations or liabilities of Tenant
or decrease the rights or remedies of Tenant, and, in all cases, in recordable
form, providing in substance that (A) Tenant shall not be named or joined as a
party defendant or otherwise in any suit, action or proceeding to enforce any
rights granted to such Mortgagee under its Mortgage (unless required by law),
and (B) the possession of Tenant shall not be disturbed or evicted and this
lease, Tenant's leasehold estate and Tenant's rights hereunder shall not be
terminated or otherwise adversely affected as a result of any foreclosure of any
such Mortgage, and any sale pursuant to any such foreclosure or the delivery of
a deed in lieu of foreclosure, or other acquisition of Landlord's interest in
the Land and/or Building pursuant to the enforcement of the Mortgagee's
remedies; provided, however, that (i) any such provisions of any Non-Disturbance
Agreement may be conditioned upon this lease being in full force and effect and
no Event of Default having occurred and being continuing, and may be further
conditioned upon and made subject to Tenant's compliance with the provisions of
Section 5.04 hereof (pursuant to the same or separate agreement), and (ii) any
Non-Disturbance Agreement may contain the substance of Section 5.03 hereof and
subclauses (a) through (f) of Section 5.04 hereof.
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5.02. Subject to Section 5.05 hereof, this lease, and all rights of Tenant
hereunder, are and shall be subject and subordinate to each and every Underlying
Lease and to each and every Mortgage. In confirmation of such subordination,
Tenant shall promptly execute, acknowledge and deliver any instrument that
Landlord, any underlying Lessor or any Mortgagee, or any of their respective
successors in interest, may reasonably request to evidence such subordination.
Landlord represents that, as of the date hereof, there are no Mortgages or
Underlying Leases.
5.03. If any act or omission of Landlord would give Tenant the right,
immediately or after lapse of a period of time, to cancel or terminate this
lease, or to abate or offset against the payment of rent or to claim a partial
or total eviction, Tenant shall not exercise such right (a) until it has given
written notice of such act or omission to Landlord and each Mortgagee and each
Underlying Lessor whose name and address shall previously have been furnished to
Tenant, and (b) until a reasonable period for remedying such act or omission
shall have elapsed following the giving of such notice which shall include a
reasonable period of time for such Mortgagee or Underlying Lessor to have become
entitled under such Mortgage or Underlying Lease, as the case may be, to remedy
the same (which latter reasonable period shall in no event be less than the
period to which Landlord would be entitled under this lease or otherwise, after
similar notice, to effect such remedy plus thirty (30) days), provided that such
Mortgagee or Underlying Lessor shall within thirty (30) days after its receipt
of Tenant's notice given in accordance herewith, give Tenant notice of its
intention to remedy such act or omission, with diligence and continuity,
promptly after becoming entitled to do so. This Section 5.03 shall not be
applicable to any situation governed by Article 19, 20, 33, 36 (including
Article 36 as made applicable to (x) the Option Space or any Offer Space by
virtue of the provisions of Article 37 or 38, or (y) any Deposited Proceeds by
virtue of the provisions of Section 19.08 hereof) or 39.
5.04. If any Underlying Lessor or Mortgagee, any designee of any
Underlying Lessor or Mortgagee, or any other person shall succeed to the rights
of Landlord under this lease, whether through possession or foreclosure action
or delivery of a new lease or deed, then at the request of such party so
succeeding to Landlord's rights (herein called "SUCCESSOR LANDLORD"), Tenant
shall attorn to and recognize such Successor Landlord as Tenant's landlord under
this lease and shall promptly execute and deliver any instrument that such
Successor Landlord may reasonably request to evidence such attornment. Upon such
attornment this lease shall continue in full force and effect as a direct lease
between the Successor Landlord and Tenant upon all of the terms, conditions and
covenants as are set forth in this lease, except that a Successor Landlord shall
not be:
(a) liable for any previous act or omission of Landlord (or its
predecessors in interest); it being understood that the foregoing is not
intended
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to relieve Successor Landlord of any liability arising by reason of its
acts or omissions from and after the date of such attornment, including a
continuation of the failure of the prior Landlord to perform its
obligations under this lease, in which case Successor Landlord upon
receipt of notice of such continuation from Tenant shall have a reasonable
period of time to remedy same (which period shall not exceed the time
period granted Landlord for such remedy pursuant to the terms of this
lease);
(b) responsible for any monies owing by Landlord to the credit of
Tenant;
(c) subject to any offsets, claims, counterclaims, demands or
defenses which Tenant may have against Landlord (or its predecessors in
interest);
(d) bound by any payments of rent which Tenant might have made for
more than one (1) month in advance to Landlord (or its predecessors in
interest);
(e) required to account for any security deposit other than any
security deposit actually delivered to the Successor Landlord; and
(f) bound by any modification of this lease, which is made after the
date Tenant has actual notice of the existence of such Successor
Landlord's Mortgage or Underlying Lease, and which is made without the
written consent of the Mortgagee or Underlying Lessor.
Notwithstanding the foregoing provisions of this Section 5.04, such Successor
Landlord shall be liable for Landlord's obligations to make payments to Tenant
in respect of Landlord's Contribution (as set forth in Article 36 hereof),
Landlord's Option Space Contribution (as set forth in Article 37 hereof), any
Landlord's Offer Space Contribution (as set forth in Article 38 hereof), and any
Deposited Proceeds (as set forth in Section 19.08 hereof) regardless of whether
the payment thereof was due hereunder prior to or after such Successor Landlord
becomes Successor Landlord, and, with respect thereto, Tenant may exercise
against such Successor Landlord Tenant's right of set-off as set forth in
Section 36.04 hereof (including Section 36.04 as made applicable to (x) the
Option Space or any Offer Space by virtue of the provisions of Article 37 or 38,
or (y) any Deposited Proceeds by virtue of the provisions of Section 19.08
hereof).
5.05. (a) Landlord, with respect to any Mortgage or Underlying Lease
executed after the date hereof, shall deliver to Tenant a Non-Disturbance
Agreement from the Mortgagee or Underlying Lessor thereunder; provided, however,
that if an Event of Default has occurred and is continuing, then Landlord shall
have no obligation to deliver a Non-Disturbance Agreement to Tenant with respect
to any
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such future Mortgage or future Underlying Lease until such time as such Event of
Default shall have ceased to continue, and, during the continuance of such Event
of Default, this lease shall be subject and subordinate to such Underlying Lease
or Mortgage notwithstanding that a Non-Disturbance Agreement has not been
delivered to Tenant.
(b) If, in any instance, (i) Landlord shall have delivered to Tenant
a form of Non-Disturbance Agreement for execution by Tenant (whether or not such
form of Non-Disturbance Agreement shall have theretofore been executed by the
applicable Underlying Lessor or Mortgagee) together with a request, referring to
this clause (i) of this Section 5.05(b) and conforming to the last sentence of
this Section 5.05(b), that Tenant execute the same, (ii) Tenant shall fail or
refuse to execute and deliver same within fifteen (15) Business Days after such
delivery (or, in any case that the form of Non-Disturbance Agreement is either
(x) a form proposed by the applicable Underlying Lessor which differs from the
form annexed hereto as Exhibit F-1, or (y) a form proposed by the applicable
Mortgagee which differs from the form annexed hereto as Exhibit F-2, within
twenty (20) Business Days after such delivery), (iii) following the expiration
of such fifteen (15) Business Day period (or, as the case may be, twenty (20)
Business Day period), Landlord delivers to Tenant a notice setting forth such
failure or refusal and referring to this clause (iii) of this Section 5.05(b)
and conforming to the last sentence of this Section 5.05(b), and (iv) Tenant's
failure or refusal shall continue for a period of five (5) Business Days after
Tenant's receipt of the notice described in clause (iii) above (the last day of
such five (5) Business Day period being herein called, with respect to such
Underlying Lease or Mortgage, the "NDA EXECUTION DEADLINE DATE"), then Landlord
shall have no further obligation pursuant to this Section 5.05 with respect to
such Underlying Lease or Mortgage, all of Landlord's obligations being deemed
satisfied, and this lease and all rights of Tenant hereunder shall remain
subject and subordinate to such Underlying Lease or Mortgage without any need to
deliver to Tenant a Non-Disturbance Agreement, and no further instrument of
subordination shall be required. Any notice from Landlord under this Section
5.05(b) shall include, on the first page thereof, in capital letters the
following legend: AS MORE FULLY SET FORTH IN SECTION 5.05(b) OF THE LEASE, YOUR
FAILURE TIMELY TO RESPOND TO THIS NOTICE MAY RESULT IN THE LEASE BEING SUBJECT
AND SUBORDINATE TO AN UNDERLYING LEASE OR MORTGAGE WITHOUT NON-DISTURBANCE
PROTECTION.
(c) If, in any instance, (i) Landlord shall deliver to Tenant a form
of Non-Disturbance Agreement for execution by Tenant which has not theretofore
been executed by the applicable Underlying Lessor or Mortgagee, as the case may
be, and (ii) Tenant executes such form of Non-Disturbance Agreement and delivers
the same to Landlord on or prior to the applicable NDA Execution Deadline Date,
then Landlord shall, within fifteen (15) Business Days after Tenant's execution
thereof, cause the same to be executed by such Underlying Lessor or Mortgagee,
as the case
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may be, and delivered to Tenant and, until such time as the Non-Disturbance
Agreement is so delivered to Tenant, this lease shall be superior to such
Underlying Lease or Mortgage, as the case may be.
(d) If, with respect to any Mortgage or Underlying Lease executed
after the date hereof, Landlord shall not deliver to Tenant a Non-Disturbance
Agreement from the Mortgagee or Underlying Lessor thereunder as required by the
foregoing provisions of this Section 5.05, then, unless and until the same is
delivered, this lease shall be superior to such Underlying Lease or Mortgage
(and Landlord shall have no liability by reason of such not having delivered the
Non-Disturbance Agreement with respect to such Underlying Lease or Mortgage).
(e) Tenant shall have the right to record any Non-Disturbance
Agreement, provided that Tenant shall pay for all costs, taxes and/or expenses
necessary for the recordation of such Non-Disturbance Agreement. Upon the
expiration or earlier termination of this lease (or the expiration or
termination of the applicable Mortgage or Underlying Lease, as the case may be),
Tenant agrees to promptly execute, acknowledge and deliver to Landlord all
necessary instrument(s) prepared by Landlord in recordable form and otherwise in
form reasonably satisfactory to Tenant, evidencing such expiration or
termination of this lease and sufficient to discharge of record any
Non-Disturbance Agreements (or, in the case of the expiration or termination of
the applicable Mortgage or Underlying Lease, to promptly execute, acknowledge
and deliver to Landlord all necessary instrument(s) prepared by Landlord (or by
the applicable Underlying Lessor or Mortgagee) in recordable form and otherwise
in form reasonably satisfactory to Tenant, sufficient to discharge of record any
Non-Disturbance Agreements delivered to Tenant by the holder of any such expired
or terminated Mortgage or Underlying Lease, as the case may be), and, in all
cases, Tenant shall pay for all costs, taxes and/or expenses necessary to effect
the recordation of such instrument(s). In the event that Tenant shall fail to
comply with the foregoing sentence, Tenant shall be liable for all Landlord's
damages, costs and other liability occasioned by such failure.
ARTICLE 6
Quiet Enjoyment
6.01. So long as no Event of Default has occurred and is continuing,
Tenant shall peaceably and quietly have, hold and enjoy the Premises without
hindrance, ejection or molestation by Landlord or any person lawfully claiming
through or under Landlord, subject, nevertheless, to the provisions of this
lease. This covenant shall be construed as a covenant running with the Land, and
is not, nor shall it be construed as, a personal covenant of Landlord, except to
the extent of Landlord's interest in the Real Property and only so long as such
interest shall continue, and
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thereafter, with respect to the period commencing on the date Landlord has no
interest in the Real Property and ending on the date Landlord reacquires an
interest therein, Landlord shall be relieved of all liability hereunder and this
covenant shall be binding only upon subsequent successors in interest of
Landlord's interest in this lease, to the extent of their respective interests,
as and when they shall acquire the same, and so long as they shall retain such
interest.
ARTICLE 7
Assignment, Subletting and Mortgaging
7.01. Except as may be expressly permitted herein, Tenant shall not,
whether voluntarily, involuntarily, or by operation of law or otherwise, without
in each instance obtaining the prior written consent of Landlord: (a) assign in
whole or in part or otherwise transfer in whole or in part this lease or the
term and estate hereby granted, (b) sublet the Premises or any part thereof, or
allow the same to be used, occupied or utilized by anyone other than Tenant, (c)
mortgage, pledge, encumber or otherwise hypothecate this lease or the Premises
or any part thereof or any Tenant's Improvements in any manner whatsoever, other
than as specifically set forth in Section 11.10, or (d) permit the Premises or
any part thereof to be occupied or used for desk space or mailing privileges by
any person other than Tenant.
7.02. (a) If Tenant is a corporation, then a transfer of stock (by a
single transfer or by multiple transfers effected pursuant to a common plan) or
any other transaction (such as, by way of example, the issuance of additional
stock, the redemption of stock, a stock voting agreement, a change in classes of
stock or a merger or consolidation involving Tenant) which transfer or other
transaction results in a change of control of Tenant (or, in the event of a
merger or consolidation involving Tenant, a change of control of the resulting
corporation), shall be deemed, for all purposes of this Article 7, an assignment
of this lease, and if Tenant is a partnership, joint venture or other
non-corporate entity, then a transfer of an interest in the distributions of
profits and losses of such partnership, joint venture or other non-corporate
entity (by a single transfer or by multiple transfers effected pursuant to a
common plan) or any other transaction (such as, by way of example, the creation
of partnership interests) which transfer or other transaction results in a
change of control of such partnership, joint venture or other non-corporate
entity, shall be deemed, for all purposes of this Article 7, an assignment of
this lease. As used above in this Section 7.02(a), the term "TRANSFER" shall not
include sales effected through the "over-the-counter market" or through any
recognized stock exchange, unless such sales are effected by persons deemed
"insiders" within the meaning of the Securities Exchange Act of 1934, as
amended. As used herein, the term "CONTROL" shall have the meaning ascribed
thereto in Article 31 hereof.
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(b) (1) Notwithstanding the provisions of Section 7.02(a) above, the
transfers and other transactions which, pursuant to the aforesaid provisions,
constitute deemed assignments of this lease, shall nevertheless be permitted
hereunder (without the consent of Landlord) if (i) immediately after such deemed
assignment, Tenant (which, in the event of a merger or consolidation involving
Tenant, is the resulting corporation), together with the Guarantor (as
hereinafter defined), has a net worth computed in accordance with generally
accepted accounting principles consistently applied which is not less than the
Minimum Net Worth (as hereinafter defined), and (ii) such transfer or other
transaction is effected for legitimate business purposes, and not primarily for
the purpose of transferring this lease.
(2) Tenant shall have the right, without the consent of
Landlord, to assign its interest in this lease to a person acquiring, by
purchase or other transfer, all or substantially all of Tenant's assets provided
that (i) such purchase or other transfer is effected for legitimate business
purposes, and not primarily for the purpose of transferring this lease and (ii)
immediately after such assignment, the purchaser or other transferee, as the
case may be, together with the Guarantor, has a net worth computed in accordance
with generally accepted accounting principles consistently applied which is not
less the Minimum Net Worth.
(3) Within ten (10) after any deemed assignment or assignment
permitted by this Section 7.02(b) without Landlord's consent, Tenant (which, in
the event of a merger or consolidation involving Tenant, is the resulting
corporation, and, in the event of an assignment pursuant to Section 7.02, is the
purchaser or other transferee) shall furnish Landlord with (i) proof reasonably
satisfactory to Landlord that its net worth, together with the net worth of the
Guarantor, exceeds the Minimum Net Worth, and (ii) a written description of the
transaction and a duplicate original instrument of the assignment, or equivalent
instrument, effecting the assignment, or deemed assignment, of this lease, as
the case may be.
(4) The term "MINIMUM NET WORTH" shall mean (i) with respect
to any deemed assignment or assignment made during the initial term of this
lease, a net worth, computed in accordance with generally accepted accounting
principles, equal to eighteen (18) times the sum of the aggregate of the Fixed
Rent due and payable over the last twelve (12) months of the initial term of
this lease (computed without regard to any abatements, credits or offsets
applicable thereto and without regard to any expansion rights unexercised as of
the date of such assignment or deemed assignment), or (ii) with respect to any
deemed assignment or assignment made during any Renewal Term (as hereinafter
defined), a net worth, computed in accordance with generally accepted accounting
principles, equal to eighteen (18) times the sum of the aggregate of the Fixed
Rent due and payable over the last twelve (12) months of such Renewal Term
(computed without regard to any abatements, credits
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or offsets applicable thereto and without regard to any expansion rights
unexercised as of the date of such assignment or deemed assignment).
(c) (1) Notwithstanding anything to the contrary contained herein,
Tenant, without any need to obtain Landlord's consent, may sublet the whole or
any portion of the Premises to any person that, at the time of the making of
such sublease, is an Affiliate of Tenant, provided, that, at the time such
sublease is made, Tenant has no intention of effecting or permitting a transfer
of control of such Affiliate. Within ten (10) days of the commencement date of
any such sublease, Tenant shall furnish Landlord with a duplicate original
instrument thereof duly executed by Tenant and the subtenant.
(2) Notwithstanding anything to the contrary contained herein,
if any person purchases or otherwise acquires a VKM Business Unit (as
hereinafter defined), then Original Tenant, without any need to obtain
Landlord's consent, may sublet to such person all or any portion of the Premises
which, prior to such purchase or acquisition, was occupied, exclusively or
primarily, by such VKM Business Unit, provided, that (i) such VKM Business Unit
shall have been occupying space in the Premises for a period of at least one (1)
year prior to such purchase or other acquisition, (ii) such sublease shall be
made together with such purchase or other acquisition, and (iii) immediately
after such purchase or other acquisition, Original Tenant, together with the
Guarantor, shall have a net worth computed in accordance with generally accepted
accounting principles consistently applied which is not less the Minimum Net
Worth. The term "VKM BUSINESS UNIT" shall mean any discernable and on-going part
of the business which Original Tenant and/or Affiliates of Original Tenant
conduct at the Premises (whether or not organized as a separate legal entity). A
person shall be deemed to have purchased or otherwise acquired a VKM Business
Unit only if such person shall purchase or otherwise acquire all or
substantially all of the Tenant's Property used by such VKM Business Unit
immediately prior to such purchase or other acquisition and, immediately after
such purchase or other acquisition, shall employ, or seek to employ, all or
substantially all of the employees of such VKM Business Unit immediately prior
to such purchase or other acquisition. For purposes of this Section 7.02(c)(2),
a person which "purchases or otherwise acquires a VKM Business Unit" shall
include, without limitation, an Affiliate of Original Tenant (whether
pre-existing or newly formed) which acquires a VKM Business Unit, even in a case
where Original Tenant has an intention of effecting or permitting a transfer of
control of such Affiliate immediately after such acquisition. Within ten (10)
days of the commencement date of any such sublease, Original Tenant shall
furnish Landlord with a duplicate original instrument thereof duly executed by
Original Tenant and the subtenant.
(d) (1) The terms and provisions of Section 7.02(a) shall be deemed
to apply, mutatis mutandis, to any permitted subtenant of Tenant with respect to
the assignment or deemed assignment of such subtenant's sublease.
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(2) The terms and provisions or section 7.02(b) hereof shall
be deemed to apply, mutatis mutandis, to any permitted subtenant of Tenant with
respect to the assignment or deemed assignment of such subtenant's sublease,
except that the subtenant's assignee or deemed assignee need not comply with the
provisions thereof relating to net worth; provided, however, that such terms and
provisions shall not apply to permit any such assignment or deemed assignment,
if, immediately prior to such assignment or deemed assignment, the subtenant is
an Affiliate of Tenant, unless, immediately after such assignment or deemed
assignment, Tenant, together with the Guarantor, has a net worth computed in
accordance with generally accepted accounting principles consistently applied
which is not less the Minimum Net Worth.
(3) The terms and provisions of Section 7.02(c)(1) hereof shall apply,
mutatis mutandis, to any permitted subtenant of Tenant with respect to the
undersubletting of all or any part of the sublease premises to Affiliates of
such subtenant; provided, however, that such terms and provisions shall not
apply to any undersubletting by a subtenant that, at the time of the making of
such undersubletting, is an Affiliate of Tenant.
7.03. If this lease shall be assigned, whether or not in violation of the
provisions of this lease, Landlord may collect rent from the assignee. If the
Premises or any part thereof are sublet or used or occupied by anybody other
than Tenant, whether or not in violation of this lease, Landlord may, after
default by Tenant, and expiration of Tenant's time to cure such default, collect
rent from the subtenant or occupant. In either event, Landlord shall apply the
net amount collected to the Fixed Rent and Additional Charges herein reserved,
but no such assignment, subletting, occupancy or collection shall be deemed a
waiver of any of the provisions of Section 7.01, or the acceptance of the
assignee, subtenant or occupant as tenant, or a release of Tenant from the
performance by Tenant of Tenant's obligations under this lease. The consent by
Landlord to a particular assignment, mortgaging, subletting or use or occupancy
by others shall not in any way be considered a consent by Landlord to any other
or further assignment, mortgaging or subletting or use or occupancy by others
not expressly permitted by this Article. References in this lease to use or
occupancy by others (that is, anyone other than Tenant) shall not be construed
as limited to subtenants and those claiming under or through subtenants but
shall also include licensees and others claiming under or through Tenant,
immediately or remotely.
7.04. Any assignment or transfer, whether made with Landlord's consent
pursuant to the provisions of this Article 7, or without the need of Landlord's
consent pursuant to this Article 7, shall be made only if, and shall not be
effective until, the assignee (which shall include any entity holding the
Tenant's interest following an event being treated as an assignment) shall
execute, acknowledge and deliver to Landlord an agreement in form and substance
reasonably satisfactory to Landlord
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whereby the assignee shall assume the obligations of this lease on the part of
Tenant to be performed or observed (as of the effective date of the assignment
(or deemed assignment), or, in the case of an assignment (or deemed assignment)
permitted by Section 7.02 to be effected without the need of Landlord's consent,
as of the Commencement Date) and whereby the assignee shall agree that the
provisions in Article 7 shall, notwithstanding such assignment or transfer,
continue to be binding upon it in respect of all future assignments and
transfers. Tenant covenants that, notwithstanding any assignment or transfer,
whether or not in violation of the provisions of this lease, and notwithstanding
the acceptance of Fixed Rent and/or Additional Charges by Landlord from an
assignee, transferee, or any other party, Tenant shall remain fully liable for
the payment of the Fixed Rent and Additional Charges and for the performance and
observance of other obligations of this lease on the part of Tenant to be
performed or observed.
7.05. The joint and several liability of Tenant and any immediate or
remote successor in interest of Tenant and the due performance of the
obligations of this lease on Tenant's part to be performed or observed shall not
be discharged, released or impaired in any respect by any agreement or
stipulation made by Landlord extending the time of, or modifying any of the
obligations of, this lease, or by any waiver or failure of Landlord to enforce
any of the obligations of this lease.
Notwithstanding the foregoing, if this lease shall be assigned, then the
assignor Tenant shall not thereafter be liable with respect to any obligations
of Tenant that arise solely out of any modification of this lease effected after
the effective date of such assignment.
7.06. The listing of any name other than that of Tenant, whether on the
doors of the Premises or the Building directory, or otherwise, shall not operate
to vest any right or interest in this lease or in the Premises, nor shall it be
deemed to be the consent of Landlord to any assignment or deemed assignment of
this lease or to any sublease of the Premises or to the use or occupancy thereof
by others.
7.07. (a) Notwithstanding anything to the contrary contained in this
Article, if Tenant shall at any time or times during the term of this lease
desire to assign this lease or sublet all or part of the Premises (other than
(i) an assignment, or deemed assignment, pursuant to Section 7.02(b) for which
Landlord's consent is not required, (ii) a sublease pursuant to Section 7.02(c)
for which Landlord's consent is not required, or (iii) a Short-Term Sublease (as
hereinafter defined)), Tenant shall give notice thereof to Landlord, which
notice ("TENANT'S INITIAL NOTICE") shall contain all of the following terms and
conditions:
(1) in the case of a desired assignment, (i) the desired
effective date thereof (which shall not be not more than twelve (12)
months, after the date Landlord receives Tenant's Initial Notice), (ii)
the total amount of all sums
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and other consideration, if any, that Tenant in good faith, contemplates
receiving from a prospective third party assignee in consideration of such
assignment (assuming there will be no Excess Tenant Property Payments (as
hereinafter defined) in connection with such assignment), (iii) the nature
and amount of all tenant inducements (such as, by way of example only,
direct payments, work allowances and workletters), if any, that Tenant, in
good faith, contemplates being required to grant a prospective third party
assignee, and (iv) Tenant's reasonably detailed computation of the Net
Effective Assignment Price (as hereinafter defined) or the Net Effective
Assignment Payment (as hereinafter defined), as the case may be, for the
desired assignment set forth in such Tenant's Initial Notice; and
(2) in the case of a desired sublease, (i) the desired
commencement date of such desired sublease (it being agreed that such
desired commencement date shall not be more than twelve (12) months after
the date Landlord receives Tenant's Initial Notice), and the desired
expiration date of such desired sublease (it being agreed that no Tenant's
Initial Notice shall set forth or contemplate any renewal, extension,
termination or other options whereby the term of the desired sublease
could be shortened or lengthened), (ii) a description of the portion of
the Premises that Tenant desires to sublease, including a floor plan
delineating the same (it being agreed that no Tenant's Initial Notice
shall set forth or contemplate any expansion, contraction or other option
or provision whereby the space to be demised under the desired sublease
will or could be enlarged or reduced at anytime during the term of the
desired sublease), (iii) all rent, additional rent and other consideration
(including without limitation all rent and additional rent payable with
respect to taxes, operating expenses and other "pass-through" expenses,
including, if applicable, information as to base years or amounts, and
rent concessions) which Tenant, in good faith, contemplates receiving from
a prospective third party subtenant in respect of the desired sublease
(assuming there will be no Excess Tenant Property Payments in connection
with such desired sublease) (it being agreed that each Tenant's Initial
Notice shall set forth a fixed rent which is payable in equal monthly
amounts throughout the term of the desired sublease, except that, at
Tenant's option, a Tenant's Initial Notice may set forth a period, prior
to the first such monthly payment, during which such fixed rent would
abate), (iv) the nature and amount of all tenant inducements (such as, by
way of example only, direct payments, work allowances and workletters), if
any, that Tenant, in good faith, contemplates being required to offer a
prospective third party subtenant in respect of the desired sublease, and
(v) Tenant's reasonably detailed computation of the Net Effective Sublease
Rental (as hereinafter defined) for the desired sublease set forth in such
Tenant's Initial Notice (together, if applicable, with a statement setting
forth any assumptions made by Tenant in computing such Net Effective
Sublease Rental, including without limitation any assumptions made
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with respect to future taxes, operating expenses and other "pass-through"
expenses, all of which assumptions shall be reasonable).
As used herein, the following terms shall have the following meanings:
(A) The term "NET EFFECTIVE ASSIGNMENT PRICE" shall
mean, with respect to any desired assignment set forth in a Tenant's Initial
Notice or any proposed assignment set forth in a Tenant's Proposal Notice (as
hereinafter defined), the excess, if any, of (I) the net present value,
determined as of the effective date of the desired or proposed assignment using
a discount rate of 10% per annum, of all sums and other consideration to be paid
by the assignee in respect of the desired or proposed assignment (as well as, in
the case of any proposed assignment, any Excess Tenant Property Payments in
connection therewith), discounted from the date that any such payment(s) are to
be made under the desired or proposed assignment to the effective date of such
desired or proposed assignment, over (II) the net present value, determined as
of the effective date of the desired or proposed assignment using a discount
rate of 10% per annum, of all tenant inducements (such as, by way of example
only, direct payments, work allowances and workletters) to be paid or incurred
by assignor to assignee in respect of such desired or proposed assignment,
discounted from the date that such tenant inducements are to be paid or incurred
under the desired or proposed assignment to the effective date of such desired
or proposed assignment.
(B) The term "NET EFFECTIVE ASSIGNMENT PAYMENT" shall
mean, with respect to any desired assignment set forth in a Tenant's Initial
Notice or any proposed assignment set forth in a Tenant's Proposal Notice, the
excess, if any, of (I) the net present value, determined as of the effective
date of the desired or proposed assignment using a discount rate of 10% per
annum, of all tenant inducements (such as, by way of example only, direct
payments, work allowances and workletters) to be paid or incurred by assignor to
assignee in respect of such desired or proposed assignment, discounted from the
date that such tenant inducements are to be paid or incurred under the desired
or proposed assignment to the effective date of such desired or proposed
assignment, over (II) the net present value, determined as of the effective date
of the desired or proposed assignment using a discount rate of 10% per annum, of
the aggregate of all sums and other consideration to be paid by the assignee in
respect of the desired or proposed assignment (as well as, in the case of any
proposed assignment, any Excess Tenant Property Payments in connection
therewith), discounted from the date that any such payment(s) are to be made
under the desired or proposed assignment to the effective date of such desired
or proposed assignment.
(C) The term "NET EFFECTIVE SUBLEASE RENTAL" shall mean,
with respect to any desired sublease set forth in a Tenant's Initial Notice or
proposed sublease set forth in a Tenant's Proposal Notice, the monthly amount
per
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rentable square foot, equal to the quotient obtained by dividing (I) the
quotient obtained by dividing (i) the excess of (x) the net present value,
determined as of the commencement date of the desired or proposed sublease using
a discount rate of 10% per annum, of the aggregate of all rent, additional rent
and other consideration payable under the desired or proposed sublease (as well
as, in the case of a proposed sublease, any Excess Tenant Property Payments in
connection therewith), discounted from the dates that such payments are to be
made under the desired or proposed sublease to the commencement date of such
desired or proposed sublease, over (y) the net present value of all tenant
inducements (such as, by way of example only, direct payments, work allowances
and workletters) to be paid or incurred to the subtenant under the desired or
proposed sublease, discounted, using a discount rate of 10% per annum, from the
date that such tenant inducements are to be paid or incurred under the desired
or proposed sublease to the commencement date of such desired or proposed
sublease, by (ii) the number of calendar months (rounded to the nearest one-half
month) within the term of such desired or proposed sublease, by (II) the number
of rentable square feet in the area to be demised by such desired or proposed
sublease.
(b) Each Tenant's Initial Notice shall be deemed an offer from
Tenant to Landlord, whereby Landlord may, at its option, (i) terminate this
lease, in the case of (x) a desired assignment or (y) a desired sublease of an
area comprising 90% or more of the rentable area of the Premises, or (ii)
terminate this lease with respect to the desired sublease area, in the case of a
desired sublease. Said option(s) ("LANDLORD'S RECAPTURE OPTIONS") may be
exercised by Landlord by giving notice to Tenant at any time within the period
(the "OPTION PERIOD") of thirty (30) days after Landlord's receipt of Tenant's
Initial Notice.
(c) No Tenant's Initial Notice (or series of Tenant's Initial
Notices) shall contemplate a sublease (or series of subleases) which is (or are)
intentionally structured in a manner which is designed to frustrate Landlord's
rights hereunder with respect to its Recapture Options. Without limiting the
generality of the foregoing, if any Tenant's Initial Notice shall set forth a
desired sublease of less than all of the Premises located on any floor of the
Building, then each of the desired sublease premises and the remaining balance
of the Premises located on such floor shall consist solely of one or more
Rentable Blocks. The term "RENTABLE BLOCK" shall mean any contiguous block of
not less than 6,000 rentable square feet which, taking into account its size,
location and configuration, can be leased as office space to willing office
tenants in accordance with applicable laws and requirements of public
authorities.
(d) If, at the time it delivers Tenant's Initial Notice, Tenant is
then negotiating with any specific potential assignees or subtenants, then
Tenant shall set forth in Tenant's Initial Notice (A) the name and address of
each such potential assignee or subtenant, and (B) a reasonably detailed
description of the nature and
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character of the business of each such potential assignee or subtenant. In
addition, if a sublease, letter of intent or similar writing has theretofore
been executed (all of which writings must be conditioned upon both Landlord not
exercising any of its applicable Recapture Options and Landlord granting its
consent hereunder), then Tenant shall deliver a copy of the same to Landlord
with the Tenant's Initial Notice; and, if such a sublease, letter or similar
writing is thereafter executed prior to the end of the Option period, then
Tenant shall deliver a copy of the same to Landlord promptly after the same is
executed.
7.08. (a) If Landlord exercises Landlord's Recapture Option set forth in
Section 7.07(b)(i) to terminate this lease, then, this lease shall end and
expire on (i) in the case of desired assignment, the later to occur of (x) the
date which is six (6) months after the date that Landlord received the Tenant's
Initial Notice setting forth such desired assignment, and (y) the effective date
of the desired assignment set forth in such Tenant's Initial Notice, or (ii) in
the case of a desired sublease, the later to occur of (A) the date which is six
(6) months after the date that Landlord received the Tenant's Initial Notice
setting forth such desired sublease, and (B) the commencement date of the
desired sublease set forth in such Tenant's Initial Notice; and, in each such
case, the Fixed Rent and Additional Charges shall be paid and apportioned to the
date of such termination.
(b) If Landlord exercises its Recapture Option set forth in Section
7.07(b)(ii) to terminate this lease with respect to the desired sublease area
set forth in a Tenant's Initial Notice, then (i) this lease shall end and expire
with respect to such desired sublease area on the later to occur of (A) the date
which is six (6) months after the date that Landlord received such Tenant's
Initial Notice, and (B) the commencement date of the desired sublease as set
forth in such Tenant's Initial Notice (any such area being hereinafter referred
to as "RECAPTURED SPACE"), (ii) from and after such date the Fixed Rent and
Additional Charges shall be adjusted, based upon the proportion that the
rentable area of the Premises remaining after the deletion of the Recaptured
Space bears to the total rentable area of the Premises prior to the deletion of
the Recaptured Space, and (iii) Landlord shall physically separate the
Recaptured Space from the balance of the Premises and in comply with any laws
and requirements of any public authorities relating to such separation, and
Tenant, thereafter upon demand, shall pay to Landlord, as Additional Charges
hereunder, an amount equal to one-half (1/2) the actual out-of-pocket costs
incurred by Landlord in physically separating such Recaptured Space from the
balance of the Premises, and in complying with any laws and requirements of any
public authorities relating to such separation.
(c) If (i) any Recaptured Space constitutes less than the entire
rentable area on any floor of the Building, and portions of the Premises remain
on such floor, and (ii) Landlord thereafter leases such Recaptured Space to one
or more tenants, then Tenant, as applicable, shall (x) in any case where the
Recaptured Space
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is not appurtenant to the Building's passenger elevator lobby located on such
floor or the Building's freight elevator lobby located on such floor, provide
such tenants of Landlord with ingress and egress to and from such passenger and
freight elevator lobbies, and (y) in all cases, provide such tenants with
ingress and egress to and from, and with the use of, the Core Lavatories located
on such floor.
7.09. (a) If, in any case that Landlord has received a Tenant's Initial
Notice and Landlord has not exercised any of its Recapture Options within the
Option Period, Tenant, thereafter, continues to desire to assign this lease or
to sublease all or a portion of the Premises as set forth in such Tenant's
Initial Notice, then Tenant, no later than the Post-Option Submission Deadline
Date (as hereinafter defined) with respect to such Tenant's Initial Notice, may
submit to Landlord one or more Tenant's Proposal Notices (as hereinafter
defined), each describing either a proposed assignment (in any case that the
Tenant's Initial Notice set forth a desired assignment) or a proposed sublease
(in any case that the Tenant's Initial Notice set forth a desired sublease). As
used herein, the term "POST-OPTION SUBMISSION DEADLINE DATE", with respect to
any Tenant's Initial Notice, shall be the date that is one hundred twenty (120)
days after the effective date of the desired assignment set forth in such
Tenant's Initial Notice or the commencement date of the desired sublease set
forth in such Tenant's Initial Notice, as the case may be.
(b) In any case that Tenant desires to enter into a Short-Term
Sublease (and, accordingly, Tenant is not obligated under Section 7.07 hereof to
submit a Tenant's Initial Notice), Tenant (without first submitting a Tenant's
Initial Notice) may submit to Landlord a Tenant's Proposal Notice describing a
proposed Short-Term Sublease. The term "SHORT-TERM SUBLEASE" shall mean a
sublease which will expire prior to the date that is thirty-six (36) months
prior to the Expiration Date (as of the execution of such sublease); it being
understood that a Short-Term Sublease may include one or more renewal or
extension options, provided, that, in the event that all such renewal and
extension options are exercised, such sublease will still expire prior to the
date that is thirty-six (36) months prior to the Expiration Date (as of the
execution of such sublease).
(c) A "TENANT'S PROPOSAL NOTICE" shall be a notice from Tenant to
Landlord setting forth a proposed assignment or sublease and requesting
Landlord's consent thereto, which notice shall have rendered pursuant to either
Section 7.09(a) or Section 7.09(b) above, and shall comply with all the
provisions of this Section 7.09. Each Tenant's Proposal Notice shall set forth
(i) the name and address of the proposed assignee or subtenant, (ii) the
effective date of the proposed assignment or the commencement date and
expiration date of the proposed sublease (it being agreed that no proposed
sublease, other than a proposed Short-Term Sublease, set forth in a Tenant's
Proposal Notice shall set forth or contemplate any renewal, extension,
termination or other option whereby the term of the proposed sublease could be
shortened or lengthened), (iii) in the case of a proposed sublease, a
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description of the portion of the Premises to be sublet (including a floor plan)
and its proposed use (it being agreed that no proposed sublease, other than a
proposed Short-Term Sublease, set forth in a Tenant's Proposal Notice shall set
forth or contemplate any expansion, contraction or other option or provision
whereby the space to be demised under the proposed sublease will or could be
enlarged or reduced at anytime during the term of the proposed sublease), (iv)
the economic terms of the proposed assignment or sublease, which shall include
(x) in the case of a proposed assignment, the sums and other consideration, if
any, payable to Tenant in respect of the assignment, and the nature and amount
of all tenant inducements to be paid or incurred to the proposed assignee (and,
if applicable, any Excess Tenant Property Payments payable in connection with
such proposed assignment), and (y) in the case of a proposed sublease, all rent,
additional rent and other consideration (including without limitation all rent
and additional rent with respect to taxes, operating expenses and other
"pass-through" expenses, including, if applicable, information as to base years
or amounts and rent concessions) payable to Tenant under the proposed sublease,
and the nature and amount of all tenant inducements to be paid or incurred to
the proposed subtenant (and, if applicable, any Excess Tenant Property Payments
payable in connection with such proposed sublease). Each Tenant's Proposal
Notice shall be accompanied by (A) a conformed or photostatic executed copy of
the proposed assignment or sublease (the effectiveness or commencement of which
shall be expressly conditioned upon Landlord granting its consent to the
proposed assignment or sublease in accordance with this Article 7 (which express
condition of Landlord's consent, with respect to any proposed assignment or
sublease, is herein called the "CONSENT CONDITION")), (B) a reasonably detailed
description of the nature and character of the business of the proposed
subtenant or assignee, and reasonably detailed character references for such
proposed assignee or subtenant, and (C) with respect to any assignment,
reasonably detailed financial references with respect to the proposed assignee
and current financial information with respect to the proposed assignee,
including, without limitation, its most recent balance sheet and income
statements certified by its chief financial officer, or, if available, a
certified public accountant, to the extent available to Tenant. Each Tenant's
Proposal Notice shall expressly request Landlord's consent to the proposed
assignment or sublease set forth therein and shall include, on the first page
thereof, in capital letters the following legend: AS MORE FULLY SET FORTH IN
SECTION 7.10 OF THE LEASE, LANDLORD'S FAILURE TO RESPOND TO THIS NOTICE WITHIN
FIFTEEN (15) BUSINESS DAYS OF ITS SUBMISSION TO LANDLORD MAY RESULT IN LANDLORD
BEING DEEMED TO HAVE CONSENTED TO THE PROPOSED ASSIGNMENT OR SUBLEASE DESCRIBED
HEREIN.
(d) Each Tenant's Proposal Notice that is submitted pursuant to
Section 7.09(a) prior to the Post-Option Submission Deadline Date, shall also
include Tenant's reasonably detailed computation of the Net Effective Assignment
Price or Net Effective Assignment Payment, as applicable, with respect to the
proposed
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assignment set forth in such Tenant's Proposal Notice, or the Net Effective
Sublease Rental with respect to the proposed sublease set forth in such Tenant's
Proposal Notice (which Net Effective Sublease Rental shall be computed using the
same assumptions as were reasonably set forth in the applicable Tenant's Initial
Notice with respect to the desired sublease set forth therein). It shall be
condition precedent to Tenant's right to proceed with the proposed assignment or
proposed sublease set forth in any such Tenant's Proposal Notice that such
proposed assignment or sublease satisfy the following conditions:
(i) (x) the effective date of any such proposed assignment (it
being agreed that, for purposes of determining such effective date, the
Consent Condition with respect to such assignment shall be deemed
satisfied on the date Landlord receives Tenant's Proposal Notice) shall be
no more than one hundred twenty (120) days before or after the effective
date of the desired assignment set forth in the applicable Tenant's
Initial Notice, and (y) the commencement date of any proposed sublease (it
being agreed that, for purposes of determining such commencement date, the
Consent Condition with respect to such sublease shall be deemed satisfied
on the date Landlord receives Tenant's Proposal Notice) shall be no more
than one hundred twenty (120) days before or after the commencement date
of the desired sublease set forth in the applicable Tenant's Initial
Notice;
(ii) in the case of a proposed sublease, the space proposed to
be sublet shall not be materially different in size (i.e., larger or
smaller by more than 5%), and, except for the foregoing size differential,
shall not be in a different location, than the desired sublease area set
forth in the applicable Tenant's Initial Notice;
(iii) in the case of a proposed sublease, the expiration date
of the sublease term shall not be materially earlier or later (i.e.,
earlier or later by more than (x) three (3) months, if the sublease term
of such proposed sublease is five (5) years or less, or (y) six (6)
months, if the sublease term of such proposed sublease is longer than five
(5) years) than the desired expiration date set forth in the applicable
Tenant's Initial Notice; and
(iv) (x) in the case of a proposed sublease, the Net Effective
Sublease Rental of the proposed sublease shall be equal to or greater than
95% of the Net Effective Sublease Rental of the desired sublease set forth
in the Tenant's Initial Notice, or (y) in the case of a proposed
assignment, either (1) both such proposed assignment and the desired
assignment set forth in the applicable Tenant's initial Notice shall
reflect a Net Effective Assignment Price and the Net Effective Assignment
Price of such proposed assignment shall be equal to or greater than 95% of
the Net Effective Assignment Price of such desired assignment, or (2) both
such proposed assignment and the desired
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assignment set forth in the applicable Tenant's initial Notice shall
reflect a Net Effective Assignment Payment and the Net Effective
Assignment Payment of such proposed assignment shall be equal to or less
than 105% of the Net Effective Assignment Payment of such desired
assignment, or (3) neither such proposed assignment nor the desired
assignment set forth in the applicable Tenant's Initial Notice shall
reflect a Net Effective Assignment Price or a Net Effective Assignment
Payment.
In any case that a proposed assignment or sublease does not meet the foregoing
conditions, Tenant shall not have the right to render a Tenant's Proposal Notice
with respect thereto, and any purported Tenant's Proposal Notice rendered
pursuant thereto shall be null and void and Landlord need not consider the same.
(e) If, in any case where a Tenant's Initial Notice is required
under Section 7.07 and delivered in accordance therewith, (i) Landlord fails to
exercise any of its Recapture Options under Section 7.07, and (ii) Tenant fails
to submit a complying Tenant's Proposal Notice on or before the Post-Option
Submission Deadline Date, then Tenant shall again comply with all of the
provisions and conditions of Section 7.07, if applicable, before assigning this
lease or subletting all or part of the Premises.
7.10. If Tenant shall have complied with the provisions of Sections 7.07,
if applicable, and Tenant shall have submitted a Tenant's Proposal Notice in
accordance, and shall have otherwise complied, with Section 7.09, then
Landlord's consent to the proposed assignment or sublease set forth in a
Tenant's Proposal Notice shall not be unreasonably withheld, provided and upon
condition that:
(a) the proposed assignee or subtenant is engaged in a business
which is in keeping with the then standards of the Building;
(b) the proposed assignee or subtenant is a reputable person or
entity in keeping with the then standards of the Building;
(c) the proposed assignee or subtenant (or any person or entity
which, directly or indirectly, controls, is controlled by, or is under
common control with, the proposed assignee or subtenant) shall not then be
an occupant of any part of the Building; provided, however, that this
clause (c) shall not apply to a proposed subtenant that, at the time
Landlord receives the Tenant's Proposal Notice, is an existing subtenant
of Tenant and is not an existing direct tenant of Landlord;
(d) the proposed assignee or subtenant (or any person or entity
which, directly or indirectly, controls, is controlled by, or is under
common control with, the proposed assignee or subtenant) shall not be a
person or
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entity with whom Landlord has, within the six (6) month period prior to
Landlord's receipt of Tenant's Proposal Notice, been actively negotiating
to lease space in the Building (as used herein the term "ACTIVELY
NEGOTIATING" shall mean Landlord has either sent to a specific prospective
subtenant (or its designated agent), or received from a specific subtenant
(or its designated agent), a written proposal to lease space in the
Building, which proposal shall contain the financial terms of the proposed
lease and indicate the approximate square footage of the space to be
demised by such proposed lease);
(e) in the case of a proposed assignment, the proposed assignee
shall have a net worth computed in accordance with generally accepted
accounting principles equal to or greater than the Minimum Net Worth;
(f) there shall not be more than five (5) Premises Occupants (as
hereinafter defined) on any floor of the Building on which the Premises
are located (which number "five (5)" shall be pro-rated on a rentable
square foot basis, and rounded to the nearest whole number, for floors on
which the Premises do consist of the entire leasable area on such floor
(as used herein, the term "PREMISES OCCUPANT" shall mean any occupant of
the Premises, including Tenant, any subtenant and any undersubtenant (but
excluding (i) the In-House Computer Contractor (as hereinafter defined) if
such contractor only subleases space in the Premises not separated by
demising walls from the balance of the Premises, and (ii) any Affiliate of
Tenant which only subleases space in the Premises that is not separated by
demising walls from the balance of the Premises));
(g) in the case of a proposed sublease, if the area to be demised
thereby consists of less than the entire rentable area of a floor of the
Building, then each of such area and the remaining balance of the Premises
on such floor shall consist of one or more Rentable Blocks; and
(h) Tenant shall reimburse Landlord on demand for any out-of-pocket
costs incurred by Landlord in connection with said assignment or sublease,
including, without limitation, the costs of making investigations as to
the acceptability of the proposed assignee or subtenant, and reasonable
legal costs incurred in connection with the granting of any requested
consent; and
(i) Tenant shall have complied with all the provisions of this
Article 7 (including without limitation Article 7.11), and no Event of
Default shall then exist hereunder.
Provided Tenant shall have complied with the provisions of Section 7.07, if
applicable and shall have submitted a Tenant's Proposal Notice in accordance
with, and shall have otherwise complied with, Section 7.09, Landlord shall give
(or withhold) its
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consent to a proposed assignment or sublease within fifteen (15) Business Days
after the submission to Landlord of the Tenant's Proposal Notice setting forth
the same (if such consent is not given or withheld within such fifteen (15)
Business Day period, the same shall be deemed given).
7.11. (a) For purposes of this Section 7.11 and Section 7.12, the
following definitions shall apply:
(1) "ASSIGNMENT CONSIDERATION", with respect to any
assignment, shall mean the sum of (i) any and all sums and other consideration
actually paid to Assignor (whether before, upon or after the assignment) by the
Assignee for or by reason of such assignment (including without limitation any
amounts paid in respect of the sale or transfer of any Tenant's Improvements),
and (ii) any Excess Tenant Property Payments in connection with such assignment.
"ASSIGNOR" shall mean the Tenant prior to the assignment.
(2) "SUBLEASE CONSIDERATION", with respect to any sublease for
any calendar year, shall mean the sum of (i) any and all rents, additional
charges or other consideration actually paid to Tenant by the subtenant pursuant
to such sublease or in respect thereof (including without limitation any amounts
paid for the sale or other transfer of any Tenant's Improvements) during such
calendar year, and (ii) any Excess Tenant Property Payments in connection with
such sublease for such calendar year.
(3) "SUBLEASE PROFIT", with respect to any sublease for any
calendar year, shall mean the positive excess, if any, of (i) the Sublease
Consideration with respect to such sublease for such calendar year, over (ii)
the Fixed Rent and Additional Charges accruing hereunder during such calendar
year (or, if applicable, the portion of such calendar year which is within the
term of such sublease) in respect of the sublease premises (determined on a
pro-rated rentable square foot basis) pursuant to the terms hereof.
(4) "SUBLEASE LOSS", with respect to any sublease for any
calendar year, shall mean the positive excess, if any, of (i) the Fixed Rent and
Additional Charges accruing hereunder during such calendar year (or, if
applicable, the portion of such calendar year which is within the term of such
sublease) in respect of the sublease premises (determined on a pro-rated
rentable square foot basis) pursuant to the terms hereof, over (ii) the Sublease
Consideration with respect to such sublease for such calendar year.
(5) "TRANSACTION EXPENSES", with respect to any assignment or
sublease, shall mean the sum of the customary brokerage commissions actually
paid or incurred by Assignor or Tenant in connection therewith, as well as any
amount paid to Landlord pursuant to Section 7.10(h) hereof.
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(6) "TENANT INDUCEMENTS", with respect to any assignment or
sublease, shall mean the sum of all tenant inducements (by way of example only,
direct payments, work allowances and workletters) paid or incurred to the
assignee or the subtenant in connection therewith (and, in the case of any such
tenant inducement not paid in cash, shall refer to the dollar value thereof).
(7) "EXCESS TENANT PROPERTY PAYMENTS", shall mean (i) in
connection with any assignment (or, if applicable, any desired or proposed
assignment), the positive excess, if any, of (A) the aggregate of all sums paid
for the sale or rental of Tenant's Property by the assignee under such
assignment (or, if applicable, such desired or proposed assignment), over (B)
the then (as of the date of the assignment) net unamortized or undepreciated
cost thereof (as set forth on Tenant's federal income tax return for the year of
the assignment), or (ii) in connection with any sublease (or, if applicable, any
desired or proposed sublease) for any calendar year, shall mean the positive
excess, if any, of (A) the aggregate of all sums paid for the sale or rental of
Tenant's Property during such calendar year by the subtenant under such sublease
(or, if applicable, such desired or proposed sublease), over (B) the portion of
the cost thereof amortized or depreciated during such calendar year (as set
forth on Tenant's federal income tax return for such calendar year), or, for any
calendar year that is partly within and partly without the term of the sublease,
a pro-rated portion thereof.
(8) "COLLECTION EXPENSES", with respect to any assignment or
sublease, shall mean the costs paid or incurred by Tenant or Assignor with
respect to such assignment or sublease, as the case may be, pursuant to the
provisions of Section 7.11(d)(1) hereof.
(b) If Landlord shall consent to any assignment of this lease, then,
in consideration therefor, Assignor, within ten (10) days after Assignor's
receipt of any Assignment Consideration, shall (i) deliver to Landlord a written
statement, certified by an officer of Assignor, setting forth, in reasonable
detail, the Assignment Consideration theretofore received and the Tenant
Inducements and Transaction Expenses theretofore paid or incurred by Assignor
with respect to such assignment, and (ii) retain such Assignment Consideration
or pay the same to Landlord in accordance with the following:
first, such Assignment Consideration shall be retained by Assignor
to the extent of the sum of (x) all Tenant Inducements theretofore paid or
incurred by Assignor with respect to such assignment, plus (y) all
Transaction Expenses theretofore paid or incurred by Assignor with respect
to such assignment, plus (z) all Collection Expenses theretofore paid or
incurred by Assignor with respect to such assignment (except to the extent
that amounts were previously retained by Assignor pursuant to this clause
first with respect to such assignment); and
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second, with respect to the balance of such Assignment
Consideration, (x) fifty percent (50%) shall be retained by Assignor, and
(y) fifty percent (50%) shall be paid to Landlord.
Tenant and Assignor shall be and remain jointly and severally liable for all
amounts due under this Section 7.11(b), and, in the case of Tenant, the all such
amounts due shall be due as Additional Charges hereunder.
(c) If Landlord shall consent to any sublease of all or any portion
of the Premises, then, in consideration therefor, Tenant, within thirty (30)
days after the close of each calendar year during the term of this lease in
which such sublease is in effect, shall (i) deliver to Landlord a written
statement, certified by an officer of Tenant, setting forth, in reasonable
detail, the Sublease Consideration and the Sublease Profit, if any, with respect
to such sublease for such calendar year, and the Tenant Inducements and
Transaction Expenses with respect to such sublease, and (ii) retain such
Sublease Profit or pay the same to Landlord in accordance with the following:
first, such Sublease Profit shall be retained by Tenant to the
extent of the sum of (w) all Tenant Inducements theretofore paid or
incurred by Tenant with respect to such sublease, plus (x) all Transaction
Expenses theretofore paid or incurred by Tenant with respect to such
sublease, plus (y) all Collection Expenses theretofore paid or incurred by
Tenant with respect to such sublease, plus (z) any Sublease Losses for
prior calendar years with respect to such sublease (except to the extent
that amounts were retained by Tenant for previous calendar years pursuant
to this clause first with respect to such sublease); and
second, with respect to the balance of such Sublease Profit, (x)
fifty percent (50%) shall be retained by Tenant, and (y) fifty percent
(50%) shall be paid to Landlord.
(d) (1) Tenant covenants to make all commercially reasonable efforts
to collect from its assignee or subtenants, as the case may be, any amounts
which would comprise Assignment Consideration or Sublease Consideration,
respectively; provided, however, that (i) Tenant may compromise or settle any
claim in good faith, (ii) Tenant shall not be required to commence or continue
such efforts if Tenant reasonably believes that the amount and likelihood of
recovery does not justify the costs and risks of commencing or continuing such
efforts, and (iii) this Section 7.11(d) (1) shall not be deemed to restrict
Tenant's rights to terminate a sublease, in whole or in part, as set forth in
Section 7.14 hereof.
(2) Tenant, from time to time within forty-five (45) days of a
request therefor by Landlord, shall (i) provide Landlord with an accounting of
all
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such sums paid or payable to it as either Assignment Consideration or Sublease
Consideration (which accounting shall set forth any past-due amounts), as well
as any amounts paid or payable by it as Tenant Inducements or Transaction
Expenses, and (ii) permit Landlord, at reasonable times during Business Hours,
to inspect Tenant's books and records in respect of Assignment Consideration,
Sublease Consideration, Tenant Inducements, Transaction Expenses and Collection
Expenses.
7.12. (a) For purposes of this Section 7.12, the following definitions
shall apply:
(1) "CONTEMPLATED ASSIGNMENT" shall mean any desired
assignment set forth in a Tenant's Initial Notice, if, with respect to such
desired assignment and Tenant's Initial Notice, Landlord exercises its Recapture
Option set forth in Section 7.07(b) (i).
(2) "CONTEMPLATED ASSIGNMENT CONSIDERATION PV AMOUNT", with
respect to any Contemplated Assignment, shall mean the present value, determined
as of the effective date of such Contemplated Assignment using a discount rate
of 10% per annum, of all Assignment Consideration that would have been paid
pursuant to such Contemplated Assignment; assuming that (i) the Contemplated
Assignment had been consummated as contemplated in the applicable Tenant's
Initial Notice, and (ii) all such Assignment Consideration that would have been
payable thereunder had been paid as and when due (except that any such
Assignment Consideration that would have been payable prior to the effective
date of the Contemplated Assignment shall be deemed payable on such effective
date).
(3) "CONTEMPLATED SUBLEASE" shall mean any desired sublease
set forth in a Tenant's Initial Notice (but only as to the initial term
thereof), if, with respect to such desired sublease and Tenant's Initial Notice,
Landlord exercises any of its Recapture Options set forth in Section 7.07(b).
(4) "CONTEMPLATED SUBLEASE CONSIDERATION PV AMOUNT", with
respect to any Contemplated Sublease, shall mean the present value, determined
as of the commencement date of such Contemplated Sublease using a discount rate
of 10% per annum, of all the Sublease Consideration that would have been paid
pursuant to such Contemplated Sublease for the entire term of such Contemplated
Sublease; assuming that (i) such Contemplated Sublease had been consummated as
contemplated in the applicable Tenant's Initial Notice and that all such
Sublease Consideration that would have been payable thereunder had been paid as
and when contemplated (except that any such Sublease Consideration that would
have been payable prior to the commencement date of the Contemplated Sublease
shall be deemed payable on such commencement date), and (ii) Taxes for the Tax
Year in which the commencement date of the Contemplated Sublease occurs and each
Tax Year thereafter shall be an amount equal to the Taxes as reflected on the
then most
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recent real estate tax bill(s) for the Real Property, and (iii) Operating
Expenses for the Operating Year in which the commencement date of the
Contemplated Sublease occurs and each Operating Year thereafter shall be an
amount equal to Operating Expenses as reflected in last Operating Statement
issued by Landlord.
(5) "CONTEMPLATED LEASE RENT PV AMOUNT", with respect to any
Contemplated Sublease, shall mean the present value, determined as of the
commencement date of such Contemplated Sublease using a discount rate of 10% per
annum, of all the Fixed Rent and Additional Charges which, but for the
termination of this lease in respect of the premises contemplated to be demised
by such Contemplated Sublease, would have accrued and payable hereunder during
entire term of the Contemplated Sublease in respect of the premises contemplated
to be demised by the Contemplated Sublease (determined on a pro-rated rentable
square foot basis); assuming that (i) all such Fixed Rent and Additional Charges
would have been payable as and when herein provided, and (ii) Taxes for the Tax
Year in which the commencement date of the Contemplated Sublease occurs and each
Tax Year thereafter shall be an amount equal to the Taxes as reflected on the
then most recent real estate tax bill(s) for the Real Property, and (iii)
Operating Expenses for the Operating Year in which the commencement date of the
Contemplated Sublease occurs and each Operating Year thereafter shall be an
amount equal to Operating Expenses as reflected in last Operating Statement
issued by Landlord.
(6) "CONTEMPLATED TENANT INDUCEMENT PV AMOUNT", with respect
to any Contemplated Assignment or Contemplated Sublease, shall mean the present
value, determined as of the effective date of such Contemplated Assignment using
a discount rate of 10% per annum, of all Tenant Inducements which would have
been paid or incurred to the assignee or the subtenant in connection therewith;
assuming that the Contemplated Assignment or Contemplated Sublease had been
consummated as contemplated in the applicable Tenant's Initial Notice and that
all such Tenant Inducements that would have been payable or incurrable
thereunder had been paid or incurred as and when due.
(7) "CONTEMPLATED BROKERAGE EXPENSES", with respect to any
Contemplated Assignment or Contemplated Sublease, shall mean the customary
brokerage commissions which would have been payable by Tenant in connection
therewith (assuming that the Contemplated Assignment or Contemplated Sublease
was consummated as provided in the applicable Tenant's Initial Notice); it being
further agreed that, for purposes of this Section 7.12, the Contemplated
Brokerage Expenses for any Contemplated Assignment or Contemplated Sublease, as
the case may be, shall be deemed incurred on effective date of the Contemplated
Assignment or the commencement date of the Contemplated Sublease, as the case
may be.
(b) If Landlord shall exercise its Recapture Option set forth in
Section 7.07(b)(i) hereof in respect of a desired assignment set forth in any
Tenant's Initial
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Notice, and, as a result thereof, this lease shall be terminated as provided in
Section 7.08(a) hereof, then, with respect to the Contemplated Assignment
resulting from such exercise, Tenant, on or prior to the date of such
termination, shall pay to Landlord an amount equal to the positive excess, if
any, of (1) the sum of (i) an amount equal to the Contemplated Brokerage
Expenses with respect to such Contemplated Assignment, plus (ii) an amount equal
to the Contemplated Tenant Inducement PV Amount with respect to such
Contemplated Assignment, over (2) an amount equal to the Contemplated Assignment
Consideration PV Amount with respect to such Contemplated Assignment.
(c) If either (i) Landlord shall exercise its Recapture Option set
forth in Section 7.07(b)(i) hereof in respect of a desired sublease set forth in
any Tenant's Notice, and, as a result thereof, this lease shall be terminated
pursuant to Section 7.08(a) hereof, or (ii) Landlord shall exercise its
Recapture Option set forth in Section 7.07(b)(ii) hereof in respect of a desired
sublease set forth in any Tenant's Notice, and, as a result thereof, this lease
shall be terminated with respect to Recaptured Space pursuant to the provisions
of Section 7.08(b) hereof, then, with respect to the contemplated Sublease
resulting from each such termination, Tenant, on or prior to the date of such
termination, shall pay to Landlord an amount equal to the positive excess, if
any, of (1) the sum of (x) an amount equal to the Contemplated Brokerage
Expenses with respect to such Contemplated Sublease, plus (y) an amount equal to
the Contemplated Tenant Inducement PV Amount with respect to such Contemplated
Sublease, plus (z) an amount equal to the Contemplated Lease Rent PV Amount with
respect to such Contemplated Sublease, over (2) an amount equal to the
Contemplated Sublease Consideration PV Amount with respect to such Contemplated
Sublease.
(d) The payment of obligations of Tenant under this Section 7.12
shall survive the termination of this lease (in whole or in part).
7.13. With respect to each and every sublease or subletting under this
lease (including any sublease to which Landlord has consented and any sublease
entered into pursuant to Section 7.02(c) hereof), it is further agreed as
follows:
(a) No subletting shall be for a sublease term ending later than one
day prior to the Expiration Date.
(b) No sublease shall be valid, and no subtenant shall take
possession of the Premises or any part thereof, until an executed counterpart of
such sublease has been delivered to Landlord.
(c) Each sublease shall provide that it is subject and subordinate
to this lease and to any matters to which this lease is or shall be subordinate,
and that in the event of termination, reentry or dispossess by Landlord under
this lease
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Landlord may, at its option, take over all of the right, title and interest of
Tenant, as sublessor, under such sublease, and such subtenant shall, at
Landlord's option, attorn to Landlord pursuant to the then executory provisions
of such sublease, except that Landlord shall not be (1) liable for any previous
act or omission of Tenant under such sublease, (2) subject to any credit,
offset, claim, counterclaim, demand or defense which such subtenant may have
against Tenant, (3) bound by any previous prepayment of more than one (1)
month's rent, (4) required to account for any security deposit of the subtenant
other than any security deposit actually delivered to Landlord by Tenant, or (5)
required to remove any person occupying the Premises or any part thereof.
(d) (1) Each sublease shall provide that, except as may be
contemplated in subsections (2) and (3) of this Section 7.13(d), the subtenant
may not assign its rights thereunder or undersublet the space demised under the
sublease, in whole or in part, without Landlord's consent, and shall set forth
the terms and provisions of Section 7.02(a) hereof, mutatis mutandis, with
respect to the assignment or deemed assignment of such sublease.
(2) Each sublease may set forth the terms and provisions of
Section 7.02(b) hereof, mutatis mutandis, with respect to the assignment or
deemed assignment of such sublease, except that the subtenant's assignee or
deemed assignee need not comply with the provisions thereof relating to net
worth; provided, however, that each such sublease shall expressly provide that
such terms and provisions shall not apply to permit any such assignment or
deemed assignment, if, immediately prior to such assignment or deemed
assignment, the subtenant is an Affiliate of Tenant, unless, immediately after
such assignment or deemed assignment, Tenant has a net worth computed in
accordance with generally accepted accounting principles consistently applied
which is not less the Minimum Net Worth.
(3) Each sublease may set forth the terms and provisions of
Section 7.02(c)(1) hereof, mutatis mutandis, with respect to the undersubletting
by the subtenant of all or any part of the sublease premises to Affiliates of
such subtenant; provided, however, that each such sublease shall expressly
provide that such terms and provisions shall not apply to any undersubletting by
a subtenant that, at the time of the making of such undersubletting, is an
Affiliate of Tenant.
7.14. Tenant, without Landlord's consent (and without submitting any
Tenant's Initial Notice or Tenant's Proposal Notice), may modify, amend or
terminate, in whole or in part, any sublease; provided, however, that (a) no
such modification or amendment of any sublease (other than a sublease which, at
the time of such modification or amendment, is to an Affiliate of Tenant), shall
either (i) extend the term of the sublease (other than an extension of the term
of a Short-Term Sublease pursuant to any option or other provision set forth in
the original form of such sublease, it being understood that such provision need
not be implemented
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precisely in accordance with its terms, so long as the commencement and
expiration of the pertinent renewal term and the rent payable during such
renewal term are the same as each would have been had such provision been
implemented precisely in accordance with its terms), (ii) expand the premises
demised by the sublease (other than an expansion of the premises demised by a
Short-Term Sublease pursuant to any option or other provision set forth in the
original form of such sublease, it being understood that such provision need not
be implemented precisely in accordance with its terms, so long as the space
added to the premises demised by such sublease is the same and the per annum
rent payable therefor are the same as each would have been had such provision
been implemented precisely in accordance with its terms), or (iii) decrease the
rent payable under the sublease (other than a proportional decrease in rent
resulting from a partial termination of the sublease), (b) no such modification
or amendment of any sublease shall cause the sublease not to comply with any of
the provisions of Sections 7.13, 7.15 and 7.16 hereof, and (c) no such
modification, amendment or termination shall be valid until an executed
counterpart thereof has been delivered to Landlord, together with, in the case
of a termination, a certificate, signed by an officer of Tenant at or above the
level of Vice President (or, if Tenant is then a partnership, a partner of
Tenant), indicating that the termination was not contemplated at the time the
sublease was executed.
7.15. Each subletting shall be subject to all of the covenants,
agreements, terms, provisions and conditions contained in this lease.
Notwithstanding any subletting to any subtenant and/or acceptance of rent or
additional rent by Landlord from any subtenant, Tenant shall and will remain
fully liable for the payment of the Fixed Rent and Additional Charges due and to
become due hereunder and for the performance of all the covenants, agreements,
terms, provisions and conditions contained in this lease on the part of Tenant
to be performed and all acts and omissions of any licensee or subtenant or
anyone claiming under or through any subtenant which shall be in violation of
any of the obligations of this lease, and any such violation shall be deemed to
be a violation by Tenant.
7.16. (a) Tenant agrees that, notwithstanding any subletting by Tenant
pursuant to this Article 7, (i) no other subletting of the Premises (or any
portion thereof) shall be made by Tenant, except in accordance with this Article
7, and (ii) except as contemplated by subsections (2) and (3) of Section
7.13(d), no undersubletting of any part of the Premises shall be made by any
subtenant, and no subtenant shall assign its sublease, without Landlord's
consent.
(b) (1) If Tenant, on behalf of any subtenant under a Qualified
Sublease (as hereinafter defined), other than a subtenant that, at the time of
the request pursuant to this Section 7.16(b), is an Affiliate of Tenant, shall
request Landlord's consent to any proposed assignment of such sublease or to a
proposed undersubletting of all or a portion of the sublease premises demised
thereby, then, provided that Tenant and such subtenant shall have previously
complied with the
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provisions of such sublease described in Section 7.16(b)(3)(C) below and
provided that such request is made pursuant to a notice substantially in the
form of a Tenant's Proposal Notice as described in Section 7.09, Landlord's
consent, subject to the conditions set forth in Section 7.10, applied mutatis
mutandis, shall not be unreasonably withheld. The provisions of Sections 7.07,
7.08, 7.09 (other than subsection (c) thereof), 7.11 (except as provided below)
and 7.12 shall not apply to any such assignment of a sublease or to any such
undersubletting.
(2) With respect to (i) any sublease other than a Qualified
Sublease, and (ii) any sublease to an Affiliate of Tenant, Landlord,
notwithstanding anything herein to the contrary, shall have no obligation to
consent to any assignment of any such sublease or to any undersubletting of the
sublease premises demised thereby, or to be reasonable in any such regard.
(3) As used herein, the term "QUALIFIED SUBLEASE" shall mean
any sublease which (A) demises an area in excess of 16,350 rentable square feet,
(B) has an initial term of five (5) years or more (it being agreed that, for
purposes of this clause (B) only, the "initial term" of a sublease shall be the
initial term thereof, excluding any period within such initial term during which
the subtenant under such sublease is an Affiliate of Tenant), (C) provides that
if the subtenant under such sublease shall desire to assign its sublease or
undersublease the whole or any portion of its sublease premises (other than as
contemplated in subsections (2) and (3) of Section 7.13(d)), then Tenant and the
subtenant shall jointly notify Landlord of the subtenant's desire, which
notification shall be given prior to the subtenant either marketing its sublease
for assignment or its sublease premises or any part thereof for undersubletting,
or otherwise considering offers therefor, (D) sets forth the provisions of
Section 7.11 hereof, mutatis mutandis, with respect to the assignment of the
sublease (other than an assignment or deemed assignment contemplated by the
provisions described in Section 7.13(d)(2) hereof) and the undersubletting of
all or a part of the sublease premises (other than an undersubletting
contemplated by the provisions described in Section 7.13(d)(3) hereof), such
that Tenant shall be entitled to receive from the subtenant (I) the same portion
of the consideration paid to the subtenant on account of an assignment of the
sublease that Landlord is entitled to receive under Section 7.11(b) hereof from
Tenant on account of an assignment of this lease, and (II) the same portion of
the rent and other consideration paid to the subtenant on account of an
undersubletting that Landlord is entitled to receive under Section 7.11(c)
hereof from Tenant on account of a sublease of all or a part of the Premises,
and (E) provides that any and all of the rights of Tenant, as sublandlord, under
the provisions of the sublease described in clause (D) above shall be assignable
by Tenant to Landlord at any time and from time to time.
(c) (1) As used herein, the following terms shall have the following
meanings: (i) "SUBLEASE-LEVEL PROFIT PROVISIONS", of any sublease, shall mean
the provisions of such sublease described in Section 7.16(b)(3)(D) above; (ii)
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"ASSIGNMENT OF SUBLEASE PROFIT", with respect to the assignment of any sublease,
shall mean the amounts which Tenant is entitled to receive pursuant to the
Sublease-Level Profit Provisions of such sublease from the subtenant thereunder
on account of such assignment of such sublease; and (iii) "UNDERSUBLETTING
PROFIT", with respect to any undersubletting, shall mean the amounts which
Tenant is entitled to receive pursuant to the Sublease-Level Profit Provisions
of such sublease from the subtenant thereunder on account of such
undersubletting.
(2) Tenant, as and when it receives the same pursuant to the
Sublease-Level Profit Provisions of any sublease, shall pay to Landlord, as
Additional Charges hereunder, the entire amount of any Assignment of Sublease
Profit and Undersubletting Profit. Such amounts received by Tenant and paid to
Landlord shall not be considered "Assignment Consideration" or "Sublease
Consideration" for purposes of Section 7.11 hereof.
(3) Tenant, from time to time within forty-five (45) days of a
request therefor by Landlord, shall provide Landlord with an accounting of all
such sums paid or payable to Tenant as either Assignment of Sublease Profit or
Undersubletting Profit (which accounting shall set forth any past-due amounts).
(4) Tenant covenants to make all commercially reasonable
efforts to enforce the Sublease-Level Profit Provisions in each of its subleases
and collect from its subtenants (or former subtenants) any Assignment of
Sublease Profit or Undersubletting Profit due thereunder; provided, however,
that (i) Tenant may compromise or settle any claim in good faith (provided that
Tenant shall not compromise or settle any claim until after it shall have given
Landlord thirty (30) days written notice of its intention to do so, it being
understood that Landlord may exercise its rights set forth in the last sentence
of this Section 7.16(c)(4) with respect to any such claim during such 30-day
period), (ii) Tenant shall not be required to commence or continue such efforts
if Tenant reasonably believes that the amount and likelihood of recovery does
not justify the costs and risks of commencing or continuing such efforts, and
(iii) this Section 7.16(c)(3) shall not be deemed to restrict Tenant's rights to
terminate a sublease, in whole or in part, as set forth in Section 7.14 hereof.
Tenant, upon demand, shall assign to Landlord any or all of its rights under the
Sublease-Level Profit Provisions of any sublease (including without limitation
the right thereunder to receive Assignment of Sublease Profit or Undersubletting
Profit and the rights thereunder to receive accountings and inspect books and
records).
7.17. If Landlord shall decline to give its consent to any proposed
assignment or sublease, or if Landlord shall exercise any of its Recapture
Options, Tenant shall indemnify, defend and hold harmless Landlord against and
from any and all loss, liability, damages, costs and expenses (including
reasonable counsel fees) resulting from any claims that may be made against
Landlord by the proposed assignee or
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sublessee, or by any brokers or other persons claiming a commission or similar
compensation in connection with the proposed assignment or sublease.
7.18. If Tenant is a partnership (or is comprised of two (2) or more
persons, individually and/or as co-partners of a partnership) or if Tenant's
interest in this lease shall be assigned to a partnership (or to two (2) or more
persons, individually and/or as co-partners of a partnership) pursuant to this
article (any such partnership and such persons are referred to in this section
as "PARTNERSHIP TENANT"), the following provisions of this section shall apply
to such Partnership Tenant: (a) the liability of each of the parties comprising
Partnership Tenant (other than limited Partners) shall be joint and several, (b)
each of the parties comprising Partnership Tenant hereby consents in advance to,
and agrees to be bound by, any written instrument which may hereafter be
executed, changing, modifying or discharging this lease, in whole or in part, or
surrendering all or any part of the Premises to Landlord or renewing or
extending this lease and by any notices, demands, requests or other
communications which may hereafter be given, by Partnership Tenant or by any of
the parties comprising Partnership Tenant, (c) any bills, statements, notices,
demands requests or other communications given or rendered to Partnership Tenant
or to any of the parties comprising Partnership Tenant shall be deemed given or
rendered to Partnership Tenant and to all such parties and shall be binding upon
Partnership Tenant and all such parties, (d) if Partnership Tenant shall admit
new general partners, all of such new general partners shall, by their admission
to Partnership Tenant, be deemed to have assumed performance of all of the
terms, covenants and conditions of this lease on Tenant's part to be observed
and performed, (e) Partnership Tenant shall give prompt notice to Landlord of
the admission of any partner or partners, and upon demand of Landlord, shall
cause each such general partner to execute and deliver to Landlord an agreement
in form reasonably satisfactory to Landlord, wherein each such new general
partner shall assume performance of all of the terms, covenants and conditions
of this lease on Tenant's part to be observed and performed (but neither
Landlord's failure to request any such agreement nor the failure of any such new
partner to execute or deliver any such agreement to Landlord shall vitiate the
provisions of subdivision (d) of this section) and (f) on each anniversary of
the Commencement Date, Partnership Tenant shall deliver to Landlord a list of
all partners together with their current residential addresses.
7.19. Notwithstanding anything to the contrary contained herein, without
Landlord's consent, Tenant may sublease space in the Premises to an In-House
Computer Contractor (as hereinafter defined), without being subject to the
attornment provisions of Section 7.13(c) hereof or any provisions of Sections
7.13(d) or 7.16 hereof, provided, that (i) the space so sublet shall not exceed
2,000 rentable square feet, (ii) there shall be no more than one such sublease
to an In-House Computer Contractor at any time, (iii) the In-House Computer
Contractor shall utilize the space so sublet primarily for the operation and
maintenance of some or all of the computer
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systems in Premises and, secondarily, for its other business, and (iv) Tenant
shall not receive any rent or other payment for such sublease. Within ten (10)
days after the execution of such sublease, Tenant shall deliver to Landlord a
fully executed copy of the same. As used herein, an "In-House Computer
Contractor" shall mean any person with whom Tenant, Guarantor, VKM (as defined
in Article 31) or any other subtenant of Tenant which is then an Affiliate of
Tenant, contracts to operate and maintain a substantial part of the computer
systems located in the Premises.
ARTICLE 8
Compliance with Laws
8.01. (a) Tenant shall give prompt notice to Landlord of any written
notice of any violation of any law or requirement of any public authority with
respect to the Premises or the use or occupation thereof which Tenant receives
from any governmental authority.
(b) Tenant, at its expense, shall comply with all present and future
laws and requirements of any public authorities to the extent that the same
require compliance in, to or upon the Premises or the Base Building Premises
Components (including without limitation compliance requiring the performance of
alterations, additions, improvements, replacements or repairs, whether the same
are structural or non-structural, ordinary or extraordinary, foreseen or
unforeseen); provided, however, that Tenant shall not be required to make any
alterations, additions, improvements, replacements or repairs to the Base
Building Premises Components (other than as provided in Section 8.03 hereof) in
order to comply with any such law or requirement of public authorities, except
to the extent that the need for such compliance arises by reason of (i) Tenant's
use and occupancy of the Premises for the Primary Use, but Only if (x) the need
for such compliance arises by reason of Tenant's particular manner of using the
Premises for the Primary Use (including, without limitation, the layout and type
of Tenant's Improvements and Tenant's Property and the density of personnel),
and (y) such particular manner of use is untypical among tenants of Similar
Buildings which use space for the Primary Use or an equivalent use, (ii)
Tenant's use and occupancy of the Premises for any Secondary Use, (iii) Tenant's
performance of any Alterations (whether within or outside the Premises), (iv)
the presence or operation of any Tenant's Improvements located outside the
Premises, or (v) a violation by Tenant of the provisions of this lease.
(c) Tenant, in addition, shall be responsible for the cost of
compliance with all present and future laws and requirements of any public
authorities to the extent that the same require compliance in, to or upon the
Real Property outside the Premises and the Base Building Premises Components
(including without limitation compliance requiring the performance of
alterations,
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additions, improvements, replacements or repairs whether the same are structural
or non-structural, ordinary or extraordinary, foreseen or unforeseen), but only
to the extent that the need for compliance therewith arises by reason of (i)
Tenant's use and occupancy of the Premises for any Secondary Use, (ii) Tenant's
performance of Alterations outside of the Premises, (iii) the presence or
operation of any Tenant's Improvements located outside the Premises, or (iv) any
violation by Tenant of the provisions of this lease.
(d) In addition to the foregoing, Tenant, within thirty (30) days
after its receipt of a demand therefor, shall pay all expenses, fines and
penalties which may be imposed upon Landlord or any Landlord Party (as
hereinafter defined) by reason of or arising out of Tenant's failure to fully
and Promptly comply with and observe the provisions of this Article 8 after
Tenant has notice of the need for such compliance.
(e) Whenever, pursuant to the provisions of this Section 8.01,
Tenant shall be required to comply, or to be responsible for the costs of
compliance with, any law or requirement of any public authority, Tenant may, in
lieu thereof, as the case may be, (i) cease or alter its use giving rise to such
requirement of compliance, or (ii) cease or alter its performance of Alterations
giving rise to such requirement of compliance, or (iii) remove or alter the
Tenant's Improvements (or cease or alter the operation thereof) giving rise to
such requirement of compliance, or (iv) cure the violation of this lease giving
rise to such requirement of compliance, such that after such cessation,
alteration, removal or cure, such compliance is no longer required Furthermore,
notwithstanding the foregoing provisions of this Section 8.01, Tenant need not
comply with any law or requirement of any public authority referred to in
Section 8.01(b) above, and Tenant shall not be responsible for the costs of
compliance with any law or requirement of any public authority referred to in
Section 8.01(c) above, in either case, so long as Tenant shall be contesting the
validity thereof, or the applicability thereof, in accordance with Section 8.02.
(f) The parties agree that nothing in this Section 8.01 is intended
to, or shall be deemed to, impose any liability or obligation upon Tenant with
respect to any violations of law or requirements of public authorities affecting
the Premises on the date of this lease.
8.02. Tenant, at its expense, after notice to Landlord, may contest, by
appropriate proceedings prosecuted diligently and in good faith, the validity or
applicability of any law or requirement of any public authority, provided that
(a) Tenant shall be obligated to comply with the same pursuant to Section
8.01(b) above or responsible for the cost of complying with the same pursuant to
Section 8.01(c) above, (b) no Event of Default shall have occurred and be
continuing, (c) neither Landlord nor any Landlord Party shall be subject to
criminal penalty or to prosecution for a crime, or any other fine or charge
(unless Tenant pays such other
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fine or charge), nor shall the Premises or any part thereof or the Real Property
or any part thereof, be subject to being condemned or vacated, nor shall the
Real Property or any part thereof, be subjected to any lien or encumbrance, by
reason of non-compliance or otherwise by reason of such contest, unless such
lien or encumbrance shall be bonded, discharged or otherwise removed of record
within thirty (30) days after the creation of such lien or encumbrance, (d) if
any Underlying Lease and/or any Mortgage shall permit such noncompliance or
contest on condition of the furnishing of security by Landlord or any Landlord
Party, such security shall be furnished at the expense of Tenant, (e) such
non-compliance or contest shall not prevent Landlord from obtaining any and all
permits and licenses in connection with the operation of the Real Property, and
(f) Tenant, upon request, shall keep Landlord advised as to the status of such
proceedings; in addition, Tenant shall indemnify Landlord against any loss,
cost, damage or expense (including reasonably attorneys, fees, but excluding
consequential damages) incurred by Landlord by reason of any such contest or any
such deferral of compliance. Without limiting the application of the above, a
party shall be deemed subject to prosecution for a crime if such party, as an
individual, is charged with a crime of any kind or degree whatever, whether by
service of a summons or otherwise, unless such charge is withdrawn before such
party is required to plead or answer thereto.
8.03. Notwithstanding anything to the contrary contained herein, as part
of the Initial Alterations, Tenant shall perform all work and make all
installations necessary in order to fully sprinkler the Premises in compliance
with the provisions of Local Law 5 of the New York City Administrative Code, as
approved January 18, 1973, as amended and as may be hereafter amended from time
to time through the completion of the Initial Alterations.
8.04. (a) Landlord, at its expense, shall comply with all present and
future laws and requirements of any public authorities to the extent that the
same require the performance of alterations, additions, improvements,
replacements or repairs, whether the same are structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen) in, to or upon the Base
Building Premises Components, except to the extent that Tenant is obligated to
comply therewith pursuant to the provisions of Section 8.01(b) or Section 8.03
hereof.
(b) Landlord, at its expense (except as otherwise provided below),
shall comply with all present and future laws and requirements of public
authorities to the extent that the same require compliance in, to or upon the
Base Building other than the Base Building Premises Components (including
without limitation compliance requiring the performance of alterations,
additions, improvements, replacements and repairs whether the same are
structural or non-structural, ordinary or extraordinary, foreseen or
unforeseen), but only to the extent that the failure to effect such compliance
would subject Tenant to liability or adversely affect, other than to a de
minimis extent, (i) Tenant's use or occupancy of the Premises, (ii) access
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to the Premises, (iii) the provision of Building Services to the Premises, or
(iv) Tenant's right and ability to perform Alterations which would otherwise be
permitted hereunder; provided, however, that such compliance shall be at
Tenant's expense to the extent Tenant is responsible for the cost of such
compliance pursuant to Section 8.01(c) hereof; provided, further, however, that
(I) if Tenant is validly exercising its rights under Section 8.02 hereof to
contest the applicability of the law or requirement of public authority
requiring such compliance, then, during the pendency of such contest, (x)
Landlord shall have no obligation under this Section 8.04 to effect such
compliance, and (y) in the event that Landlord elects to effect such compliance,
the same shall be at Landlord's expense (as opposed to Tenant's expense),
provided that, in such event, Tenant shall reimburse Landlord the cost of such
compliance to the extent that Landlord can demonstrate that such law or
requirement of public authority was valid and applicable, and (II) except in
cases of emergency (in which cases no such notice or opportunity need by
furnished or afforded), it shall be a condition precedent to Tenant's obligation
to pay the costs of such compliance that Landlord shall have (A) furnished
Tenant with reasonable prior notice of Landlord's intention to effect such
compliance at Tenant's expense and (B) afforded Tenant a reasonable opportunity
to exercise its rights under the first sentence of Section 8.01(e) hereof such
that, after the exercise thereof, such compliance is no longer required.
(c) Notwithstanding the foregoing provisions of this Section 8.04,
Landlord may defer compliance with any law or requirements of public authorities
with which it is obligated to comply hereunder, so long as Landlord shall be
contesting the validity or applicability thereof in good faith by appropriate
proceedings, provided that (i) Tenant shall not be subject to criminal penalty
or to prosecution for a crime, or any other fine or charge (unless Landlord pays
such other fine or charge), (ii) neither the Premises (or any part thereof) nor
any part of the Real Property which affects the Premises or Tenant's use and
occupancy thereof, shall be subject to being condemned or vacated, by reason of
non-compliance or otherwise by reason of such contest, (iii) such non-compliance
or contest shall not prevent Tenant from lawfully occupying the Premises and
obtaining any and all permits and licenses required to be obtained by it in
connection therewith, and (iv) Landlord, after request, shall use reasonable
efforts to keep Tenant advised as to the status of such proceedings; in
addition, Landlord shall indemnify Tenant against any loss, cost, damage or
expense (including reasonably attorneys fees) incurred by Tenant by reason of
any such contest or any such deferral of compliance.
ARTICLE 9
Insurance
9.01. Tenant shall not violate, or permit the violation of, any condition
imposed by any insurance policy then issued to Landlord, any Mortgagee or any
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receiver in possession in respect of the Real Property and shall not do, or
permit anything to be done, or keep or permit anything to be kept in the
Premises which would (i) increase any insurance rate in respect of the Real
Property over the rate which would otherwise then be in effect, (ii) result in
insurance companies of good standing refusing to insure the Real Property in
amounts reasonably satisfactory to Landlord, or (iii) result in the cancellation
(in whole or in part) of, or give rise to any defense by the insurer to claims
under, any policy of insurance in respect of the Real Property. Tenant's use of
the Premises for the Primary Use in accordance with the provisions of this lease
shall not, in and of itself, violate the provisions of this Section 9.01. Tenant
shall not be deemed in violation of the provisions of this Section 9.01 unless
and until Tenant receives notice thereof from Landlord.
9.02. If, by reason of any failure of Tenant to comply with the provisions
of this lease, the premiums on any insurance of Landlord on the Real Property
shall be higher than they otherwise would be, then Tenant shall reimburse
Landlord, on demand and as Additional Charges, for that part of such premiums
attributable to such failure on the part of Tenant. A schedule or "make up" of
rates for the Real Property or the Premises, as the case may be, issued by the
New York Fire Insurance Rating Organization or other similar body making rates
for insurance for the Real Property or the Premises, as the case may be, shall
be conclusive evidence of the facts therein stated and of the several items and
charges in the insurance rate then applicable to the Real Property or the
Premises, as the case may be.
9.03. Tenant, at its expense, shall maintain at all times during the term
of this lease (a) "all risk" property insurance covering Tenant's Improvements
and all Tenant's Property to a limit of not less than the full replacement cost
thereof with a deductible of not more than $10,000), (b) commercial general
liability insurance (including a contractual liability endorsement and an
endorsement specifying that such insurance is primary and does not require
contribution by any insurance policy maintained by Landlord or any other person
or entity), and personal injury liability coverage, in respect of the Premises
and the conduct or operation of business therein, with Landlord, the Building's
managing agent, if any, and each Underlying Lessor and Mortgagee whose name and
address shall previously have been furnished to Tenant, as additional insureds,
with limits for bodily injury and death of not less than Five Million
($5,000,000) Dollars for any occurrence involving one person, Ten Million
($10,000,000) Dollars for any occurrence involving two or more persons and not
less than Five Million ($5,000,000) Dollars for property damage liability in any
one occurrence, (c) steam boiler, air conditioning or machinery insurance, if
there is a boiler or pressure object or similar equipment in the Premises and
installed by Tenant, with Landlord, the Building's managing agent, if any, and
each Underlying Lessor and Mortgagee whose name and address shall previously
have been furnished to Tenant, as additional insureds, with limits of not less
than Five Million ($5,000,000) Dollars, (d) Workers' Compensation Insurance with
coverage applicable in New York State with limits in accordance with the
statutory requirements of New York State,
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which insurance shall contain provisions waiving underwriters' rights of
subrogation against Landlord, (e) Coverage B -- Employer's Liability Coverage,
including occupational disease with a limit of not less than $1,000,000 per
accident, which insurance shall contain provisions waiving underwriters' rights
of subrogation against Landlord, and (f) when Alterations are in progress, the
insurance specified in Section 11.06 hereof and/or in the Alterations Rules and
Regulations (as hereinafter defined). The limits of such insurance shall not
limit the liability of Tenant. Tenant shall deliver to Landlord and any
additional insureds, on or prior to the Commencement Date, such fully paid-for
policies or certificates of insurance, in form reasonably satisfactory to
Landlord, issued by the insurance company or its authorized agent. Tenant shall
procure and pay for renewals of such insurance from time to time before the
expiration thereof, and Tenant shall deliver to Landlord and any additional
insureds such renewal policy or a certificate thereof at least thirty (30) days
before the expiration of any existing policy. All such policies shall be issued
by companies of recognized responsibility licensed to do business in New York
State and rated by Best's Insurance Reports or any successor publication of
comparable standing and carrying a rating of "A" or better (or the then
equivalent of such rating) with a financial size category of VIII or better (or
the then equivalent of such financial size), and all such policies shall contain
a provision whereby the same cannot be cancelled or modified unless Landlord and
any additional insureds are given at least thirty (30) days' prior written
notice of such cancellation or modification. Tenant shall have the right to
insure and maintain the insurance coverages set forth in this Section under
blanket insurance policies covering other premises occupied or owned by Tenant
and Affiliates of Tenant so long as such blanket policies comply as to terms and
amounts with the insurance provisions set forth in this lease without
co-insurance; provided that upon request, Tenant shall deliver to Landlord a
certificate of Tenant's insurer evidencing the portion of such blanket insurance
allocated to the Premises.
9.04. (a) During the term of this lease, Tenant shall include in each of
its insurance policies insuring Tenant's Improvements and Tenant's Property and
the use thereof against loss, damage or destruction by fire or other casualty, a
waiver of the insurer's right of subrogation against Landlord and the Building's
managing agent or, if such waiver should be unobtainable or unenforceable, (i)
an express agreement that such policy shall not be invalidated if the insured
party waives the right of recovery against the person responsible for a casualty
covered by the policy before the casualty or (ii) any other form of permission
for the release of Landlord and the Building's managing agent. If such waiver,
agreement or permission shall not be, or shall cease to be, obtainable from
Tenant's then current insurance company, then Tenant shall so notify Landlord
promptly after learning thereof, and shall use its best efforts to obtain the
same from another insurance company described in Section 9.03 hereof. Tenant
hereby releases Landlord and the Building's managing agent, with respect to any
claim (including a claim for negligence) which it might otherwise have against
Landlord and/or the Building's agent, for loss, damage or destruction of or to
any Tenant's Property, or the use thereof, to the extent to which it is, or is
required to be,
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insured under a policy or policies containing a waiver of subrogation or
permission to release liability, as provided in this Section 9.04(a).
(b) Landlord shall include in each of its insurance policies
insuring the Building and all Landlord's Property and interest therein and the
rents therefrom against loss, damage or destruction by fire or other casualty, a
waiver of the insurer's right of subrogation against Tenant and any subtenant of
the Premises during the term of this lease or, if such waiver should be
unobtainable or unenforceable, (i) an express agreement that such policy shall
not be invalidated if the insured party waives the right of recovery against the
person responsible for a casualty covered by the policy before the casualty or
(ii) any other form of permission for the release of Tenant and any subtenant of
the Premises. If such waiver, agreement or permission shall not be, or shall
cease to be, obtainable from the then current insurance company of Landlord,
then Landlord shall so notify Tenant promptly after learning thereof, and shall
use its best efforts, to obtain the same from another insurance company
described in Section 9.03 hereof. Landlord hereby releases Tenant and any
subtenant of the Premises, with respect to any claim (including a claim for
negligence) which it might otherwise have against Tenant or any subtenant, for
loss, damage or destruction of or to the Building or the rents therefrom to the
extent to which it is, or is required to be, insured under a policy or policies
containing a waiver of subrogation or permission to release liability, as
provided in this Section 9.04(b).
(c) Nothing contained in this Section 9.04 shall be deemed to
relieve either Landlord or Tenant of any duty imposed elsewhere in this lease to
repair, restore or rebuild or to nullify any abatement of rents provided for
elsewhere in this lease.
9.05. Landlord may from time to time require that the amount of the
insurance to be maintained by Tenant under Section 9.03 hereof be increased, so
that the amount thereof is substantially equivalent to the amount generally
required of tenants by prudent landlords of Similar Buildings.
9.06. Landlord, throughout the term of this lease, shall keep and maintain
such insurance with respect to the Building and all Landlord's property and
interests therein and the rents therefrom as is customarily maintained by most
reasonably prudent landlords of Similar Buildings.
ARTICLE 10
Rules and Regulations
10.01. Tenant and its employees and agents shall faithfully observe and
comply with the rules and regulations annexed hereto as Exhibit C, and such
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reasonable changes therein, whether by addition, modification or elimination, as
Landlord at any time or times hereafter may make and communicate in writing to
Tenant, which, in the reasonable judgment of Landlord, shall be necessary for
the reputation, safety, care and appearance of the Real Property, or the
preservation of good order therein, or the operation or maintenance of the Real
Property, and which do not materially affect the conduct of Tenant's business in
the Premises or materially affect Tenant's rights or obligations under this
lease (such rules and regulations as changed from time to time being herein
called "RULES AND REGULATIONS"); provided, however, that in case of any conflict
or inconsistency between the provisions of this lease and any of the Rules and
Regulations, the provisions of this lease shall control.
10.02. Nothing in this lease contained shall be construed to impose upon
Landlord any duty or obligation to enforce the Rules and Regulations against
Tenant or any other tenant or any employees or agents of Tenant or any other
tenant, and Landlord shall not be liable to Tenant for violation of the Rules
and Regulations by another tenant or its employees, agents, invitees or
licensees. Landlord shall not enforce against Tenant, and Tenant shall have no
obligation to comply with, any Rule or Regulation except to the extent that the
same is applicable to, and enforced by Landlord against, all office tenants and
occupants of the Building other than any as to which or against which, on the
basis of reasonable concerns of Landlord relating to the operation and
maintenance of the Building, applied by Landlord in a non-discriminatory manner,
such Rule or Regulation is not applicable or not enforced.
ARTICLE 11
Alterations
11.01. For purposes of this Article 11, the following terms shall have the
following meanings:
(a) "ALTERATIONS" shall mean any alterations, additions,
improvements or changes of any nature which are performed, by or on behalf of
Tenant, in, to or about the Building, including without limitation the Premises
and the Building Systems. "Alterations" shall not include any alterations,
additions, improvements or changes which are performed by or on behalf of
Landlord.
(b) "INITIAL ALTERATIONS" shall mean any and all Alterations
performed by or on behalf of Tenant in order to prepare the Premises (as
initially demised), or any Portion thereof, for Tenant's initial occupancy
thereof (and, unless otherwise expressly provided to the contrary, the term
"Alterations" shall include Initial Alterations).
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(c) "MATERIAL ALTERATIONS" shall mean any Alterations which (i) are
not limited to the interior of the Premises or which affect the exterior of the
Building (it being understood that Alterations within the Premises shall not be
deemed Material Alterations solely by reason of being visible from outside the
Premises) (Material Alterations described in this clause (i) are hereinafter
referred to as "EXTERIOR MATERIAL ALTERATIONS"), (ii) affect the structural
elements of the Building (Material Alterations described in this clause (ii) are
hereinafter referred to as "STRUCTURAL MATERIAL ALTERATIONS"), (iii) affect the
functioning or performance of the Building Systems (as hereinafter defined) in
areas of the Building outside of the Premises, or (iv) are Initial Alterations
or are subsequent Alterations which have a cost which, when aggregated with all
related Alterations undertaken as a single project, is in excess of $250,000.
(d) "MINOR ALTERATIONS" shall mean any Alterations which are not
Material Alterations or Decorating.
(e) "DECORATING" shall mean Alterations (other than Material
Alterations) which involve solely painting, decorating and/or wall covering.
11.02. (a) Tenant, subject to its compliance with the applicable provisions
of this lease, including without limitation the provisions of this Article 11,
may perform Minor Alterations and Decorating without the need to obtain
Landlord's approval. Tenant, not less than ten (10) Business Days prior to
commencing any Decorating for which Tenant has retained a contractor, shall give
Landlord notice thereof, which notice shall include a description of the work to
be performed. Tenant, not less than fifteen (15) Business Days prior to
commencing any Minor Alterations, shall give Landlord notice thereof, which
notice shall include a description of the work to be performed, and which notice
shall be accompanied by reasonably detailed plans and specifications therefor.
(b) Tenant, subject to its compliance with the applicable provisions
of this lease, including without limitation the provisions of this Article 11,
may perform Material Alterations, provided that Tenant shall have first obtained
Landlord's prior written approval of such Material Alterations as set forth on
plans and specifications therefor, which approval, other than with respect to
Exterior Material Alterations and Structural Material Alterations, shall not be
unreasonably withheld or conditioned. Tenant, prior to commencing any Material
Alterations, shall request Landlord's approval thereof by written notice, which
notice shall include a description of the work to be performed, and reasonably
detailed plans and specifications setting forth such Material Alterations. If
Tenant shall request Landlord's approval of any Material Alterations, other than
Exterior Material Alterations or Structural Material Alterations, in accordance
with the preceding sentence, and in such request Tenant shall specifically refer
to this Section 11.02(b) and the time period set forth below for the giving or
withholding of such approval, then Landlord shall either approve or
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disapprove such Material Alterations as set forth on the delivered plans and
specifications therefor within fifteen (15) Business Days after Landlord's
receipt of all reasonably necessary information required by Landlord to make its
decision; it being agreed that if Landlord shall fail to either deny such
approval or request additional reasonably necessary information within such time
period, then Tenant may send Landlord a second notice requesting such approval,
which notice shall specifically state, in capitalized and underscored text,
that, pursuant to this Section 11.02(b) Landlord shall be deemed to have granted
such approval if it does not respond to said notice within five (5) Business
Days thereof, and if Landlord shall fail to either deny such approval or request
additional reasonably necessary information within such 5 Business Day period
after Landlord's receipt of such second notice, then such Material Alterations
as set forth on such plans and specifications shall be deemed approved.
(c) Except as expressly permitted by this Article 11, Tenant shall
not perform any Alterations.
11.03. (a) (1) Tenant, in connection with any Alterations, shall pay to, or
reimburse, Landlord, as Additional Charges, Landlord's actual costs incurred in
connection with or arising out of such Alterations, including without limitation
(i) all reasonable out-of-pocket costs incurred by Landlord on an arms-length
basis to outside parties for reviewing plans and specifications submitted by
Tenant (but not any costs incurred by Landlord for or in connection with the
review thereof by employees of Landlord or any Affiliate of Landlord), (ii) all
reasonable out-of-pocket costs incurred by Landlord on an arms length basis to
outside parties for on-site inspections (but not any costs incurred by Landlord
for or in connection with on site inspections by employees of Landlord or any
Affiliate of Landlord), and (iii) any supervision and coordination costs
incurred pursuant to Section 11.03(c) below, whether the same are incurred to
outside parties or to Landlord's employees.
(2) Tenant, in connection with any Alterations, shall pay to
Landlord, as Additional Charges, Landlord's labor costs incurred in connection
with the performance of such Alterations on an overtime basis (i.e., after
Business Hours on Business Days), including, without limitation, all labor costs
for hoisting and stand-by overtime personnel (including without limitation
operating engineers and stand-by electricians) payable in respect of periods
other than Business Hours on Business Days; provided, however, if any such labor
shall simultaneously be used by Landlord in connection with any work by
Landlord, or by any other tenant or occupant of the Building in connection with
any work by such tenant or occupant, then such labor costs shall be equitably
apportioned among Tenant, Landlord and such other tenants or occupants, as
applicable.
(3) Tenant, in connection with any Alterations, shall pay for
and obtain directly all labor and carting for the cleanup and removal of debris.
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(4) All sums payable by Tenant to Landlord pursuant to this
Section 11.03(a) shall be due thirty (30) days after demand therefor by
Landlord, each of which demands shall set forth with reasonable detail the
manner in which the amount due thereunder was calculated.
(b) Tenant agrees that any review or approval by Landlord of any
plans and/or specifications with respect to any Alterations is solely for
Landlord's benefit, and without any representation or warranty whatsoever to
Tenant with respect to the adequacy, correctness or efficiency thereof or
otherwise. No approval of plans or specifications by Landlord or consent by
Landlord allowing Tenant to make Alterations shall in any way be deemed to be an
agreement by Landlord that the contemplated Alterations comply with any laws and
requirements of any public authorities or requirements of insurance bodies or
the certificate of occupancy for the Building nor shall it be deemed to be a
waiver by Landlord of the compliance by Tenant with any of the terms of this
lease (it being the intent of the parties that this sentence shall not be
construed to mean that Landlord may take the position that Tenant failed to
obtain Landlord's approval of the plans and specifications for an Alteration
after Landlord has approved such plans and specifications). Notice is hereby
given that neither Landlord nor any Landlord Party shall be liable for any labor
or materials furnished or to be furnished to Tenant upon credit, and that no
mechanic's or other lien for such labor or materials shall attach to or affect
any estate or interest of Landlord or any Landlord Party in and to the Premises,
the Building or the Real Property.
(c) To the extent that any Alterations permitted to be made
hereunder, or any portions thereof, require work to be performed outside of the
Premises, such work shall be performed only at such time or times as are
reasonably designated by Landlord, and, at Landlord's option, under the
supervision of Landlord or its designated representative. Landlord shall have
the right to coordinate such work with any of work then being undertaken by
Landlord or by any other tenants of the Building.
11.04. (a) Tenant shall perform Alterations using only contractors that
have either been (i) designated by Landlord pursuant to the provisions of
Section 11.04(b) below with respect to the work described therein, or (ii)
approved by Landlord pursuant to the provisions of Section 11.04(c) below with
respect to all other work.
(b) (1) Tenant shall perform Alterations using only (i) Landlord's
designated system contractor to make connections between the Building's life
safety system and the sensors, strobes, speakers alarms and other terminal
devices installed by Tenant, and (ii) one or more Designated MEP Contractors (as
hereinafter defined) to perform Alterations involving electrical, HVAC or
plumbing work.
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(2) Landlord, upon Tenant's request, shall provide Tenant with
a list of at least four (4) trade contractors in each of the electrical, HVAC,
plumbing and fire protection/sprinkler trades who are then approved by Landlord
to perform electrical, HVAC or plumbing work, respectively, in the Building;
each contractor on any such list shall be deemed a "DESIGNATED MEP CONTRACTOR"
for the trade so listed for a period of one (1) year from the date that Landlord
delivered such list, unless Landlord, upon notice to Tenant, elects to delete
such contractor from such list and, in which event, such deleted contractor,
upon the giving of such notice to Tenant, shall no longer be deemed a Designated
MEP Contractor (except that such deleted contractor shall remain a Designated
MEP Contractor with respect to any contract that Tenant shall have theretofore
entered into with such contractor prior to the giving of such notice).
(c) Tenant, except with respect to the work described in Section
11.04(b) above, shall perform Alterations using only contractors that are first
approved by Landlord with respect to such Alterations, in writing, which
approval shall not be unreasonably withheld, conditioned or delayed. Any
contractor that Landlord hereafter approves in writing in connection with any
Alterations, shall be deemed approved for a period of one (1) year from the date
of Landlord's notice approving such contractor, unless Landlord, upon notice to
Tenant, thereafter elects to revoke its approval of any such contractor, in
which event, such contractor, upon the giving of such notice to Tenant, shall no
longer be deemed approved (except that such contractor shall remain approved
with respect to any contract that Tenant shall have theretofore entered into
with such contractor prior to the giving of such notice).
(d) Without limiting the generality of the foregoing, Landlord
hereby designates and approves with respect to the Initial Alterations, the
contractors listed on Schedule D annexed hereto; the contractors so listed shall
be deemed approved for the duration of the Initial Alterations.
(e) All contractors designated or approved by Landlord pursuant to
this Section 11.04 shall be subject to the provisions of Section 11.07 hereof.
11.05. Tenant shall, and shall cause its contractors to, faithfully observe
and comply with the alteration rules and regulations annexed hereto as Exhibit
D, and such reasonable changes therein (whether by addition, modification or
elimination) as Landlord at any time or times hereafter may make and communicate
in writing to Tenant, which, in the reasonable judgment of Landlord, shall be
necessary for the reputation, safety, care and appearance of the Real Property,
or the preservation of good order therein, or the operation or maintenance of
the Real Property, and which do not materially affect the performance of
Alterations in the Premises or materially affect Tenant's rights or obligations
under this lease (such alteration rules and regulations as changed from time to
time being herein called "ALTERATION RULES AND REGULATIONS"); provided, however,
that In case of any conflict or inconsistency
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between any of the provisions of this Article 11 and any of the provisions of
the Alteration Rules and Regulations, the provisions of this Article 11 shall
control. The provisions of Section 10.02 shall apply, mutatis mutandis, to the
Alteration Rules and Regulations.
11.06. (a) Tenant, at its expense, shall obtain (and furnish true and
complete copies to Landlord of) all necessary governmental permits and
certificates for the commencement and prosecution of Alterations and for final
approval thereof upon completion, and shall cause Alterations to be performed in
compliance therewith, with all applicable laws and requirements of public
authorities, with all applicable requirements of insurance bodies and, if
applicable, with the plans and specifications approved by Landlord. Landlord,
reasonably promptly after a written request from Tenant therefor, shall execute
(and provide any readily accessible information known by Landlord for) any
permit applications and similar documents reasonably required in connection with
obtaining such permits and certificates and any such final approvals, provided
that such applications and documents are in proper form. Tenant hereby agrees
that it shall (i) reimburse Landlord all Landlord's out-of-pocket expenses
incurred in connection with Tenant's obtaining of any such permits, certificates
or approvals (including without limitation those incurred in connection with
Landlord's execution of any permit applications and similar documents, or its
provision of information, as provided in the preceding sentence), and (ii)
Indemnify and hold harmless Landlord against any and all liabilities which
Landlord may incur by reason of its execution of any permit applications and
similar documents, or its provision of information, as provided in the preceding
sentence; provided, however, that neither such reimbursement nor such indemnity
shall include any such expenses or liabilities to the extent that (A) the same
would be, or would have been, discharged, satisfied or avoided by Landlord's
performance of its obligations under this lease (including without limitation
its obligations under Articles 8 and 13 hereof), or (B) the same arise out of
any inaccuracy in any information provided by Landlord.
(b) Alterations shall be diligently performed in a good and
workmanlike manner, using materials at least equal in quality and class to the
then standards for the Building.
(c) Alterations (including the Initial Alterations) shall be
performed in such manner as not to unreasonably interfere with or delay and as
not to impose any additional expense (except to the extent Tenant reimburses
Landlord therefor) upon Landlord in the construction, maintenance, repair or
operation of the Real Property; if the performance of an Alteration will impose
any additional expense upon Landlord, then Landlord shall advise Tenant of the
amount of such additional expense promptly after Landlord becomes aware of such
amount.
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(d) Throughout the performance of Alterations, Tenant, at its
expense, shall carry, or cause to be carried, (i) workers' compensation
insurance in statutory limits, (ii) general liability insurance, with completed
operation endorsement, for any occurrence in or about the Premises (or, if
applicable, any other area of the Real Property in which the Alterations in
question are being performed), under which Landlord and its managing agent, if
any, and any Underlying Lessor and Mortgagee whose name and address shall
previously have been furnished to Tenant shall be named as parties insured, in
such limits as Landlord may reasonably require, and (iii) "all risk" Builders
Risk coverage, all with insurers reasonably satisfactory to Landlord. Tenant
shall furnish Landlord with reasonably satisfactory evidence that such insurance
is in effect at or before the commencement of Alterations and, on request, at
reasonable intervals thereafter during the continuance of Alterations.
11.07. Tenant shall not exercise any of its rights pursuant to the
provisions of this Article 11 in a manner which would violate Landlord's union
contracts affecting the Real Property, or create any work stoppage, picketing,
labor disruption or dispute or any interference (other than de minimis
interference) with the operation of the Building by (or for) Landlord. In
addition, Tenant shall not enter into any service contract in respect of
Tenant's Improvements (as opposed to Tenant's Property) or any cleaning
contract, if any such contract or the performance of work thereunder would
violate Landlord's union contracts affecting the Real Property, or create any
work stoppage, picketing, labor disruption or dispute or any interference (other
than de minimis interference) with the operation of the Building by (or for)
Landlord. Tenant shall immediately stop any work or other activity under this
Article 11 or pursuant to one or more of the aforementioned contracts if
Landlord notifies Tenant that continuing such work or activity would violate
Landlord's union contracts affecting the Real Property, or create any work
stoppage, picketing, labor disruption or dispute or any interference (other than
de minimis interference) with the operation of the Building by (or for)
Landlord, provided such notice sets forth a reasonably detailed explanation of
the circumstances giving rise to the delivery of such notice.
11.08. Tenant, at its expense, and with diligence and dispatch, shall
procure the cancellation or discharge of all notices of violation arising from
or otherwise connected with Alterations, or any other work, labor, services or
materials done for or supplied to Tenant, or any person claiming through or
under Tenant, which shall be issued by the Department of Buildings of the City
of New York or any other public authority having or asserting jurisdiction;
provided, however, that Tenant may defer procuring such cancellation or
discharge so long as Tenant is contesting such notice of violation in accordance
with Section 8.02. Tenant shall defend, indemnify and save harmless Landlord
from and against any and all mechanic's and other liens and encumbrances filed
in connection with Alterations, or any other work, labor, services or materials
done for or supplied to Tenant, or any person claiming through or under Tenant,
including, without limitation, security interests in any materials,
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fixtures or articles so installed in and constituting part of the Premises and
against all costs, expenses and liabilities incurred in connection with any such
lien or encumbrance or any action or proceeding brought thereon. Tenant, at its
expense, shall procure the satisfaction or discharge of record by bonding,
payment or otherwise, of all such liens and encumbrances within thirty (30) days
after knowledge or notice thereof.
11.09. Tenant, promptly upon the completion of any Alterations, other than
Decorating, shall deliver to Landlord "as built" drawings of such Alterations,
or, in the event Tenant does not have "as built" drawings prepared, a set of
construction drawings marked to show any change(s) made during construction.
11.10. All Tenant's Improvements shall be fully paid for by Tenant in cash
and shall not be subject to conditional bills of sale, chattel mortgage or other
title retention agreements. Tenant, however, may lease or finance purchases of
Tenant's Property, provided that, in conducting any entry to and removal of
fixtures or equipment from the Premises and/or the Building, any lessor, vendor
or lender shall, (a) prior to entry, provide Landlord upon Landlord's request
with evidence of appropriate liability insurance as reasonably determined by
Landlord, (b) use reasonable care, (c) repair all damage caused by its
activities in or about the Real Property, and (d) comply with applicable law. In
the event of a default by Tenant under this lease, Landlord shall not be
required to notify any such vendor, lessor or lender prior to exercising
Landlord's rights and remedies under this lease. Notice is hereby given that
neither Landlord nor any Landlord Party shall be liable for any labor or
materials furnished or to be furnished to Tenant upon credit, and that no
mechanics' or other lien for such labor or materials shall attach to or affect
any estate or interest of Landlord or any Landlord Party in any part of the Real
Property.
11.11. Tenant shall keep records of Tenant's Alterations costing in excess
of $25,000 and of the cost thereof for two (2) years after final payment for any
such Alteration. Tenant, within forty-five (45) days after a request by
Landlord, shall furnish to Landlord copies of all records which Tenant has with
respect to Alterations and the cost thereof, if the same shall be required in
connection with any proceeding to reduce the assessed valuation of the Real
Property, or in connection with any proceeding instituted pursuant to Article 8
hereof or for any other valid business reason or purpose.
11.12. (a) Before proceeding with any Alteration (other than the Initial
Alterations) the cost of which, when aggregated with the cost of all other
Alterations which have not then been completed, will cost more than
one-twentieth (1/20) of the then net worth of Tenant, together with the
Guarantor, computed in accordance with generally accepted accounting principles
consistently applied (exclusive of the costs of Decorating and items
constituting Tenant's Property), as such cost is estimated by a reputable
contractor designated by Landlord, Tenant shall furnish to Landlord one of
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the following (as selected by Tenant): (i) a cash deposit, (ii) an irrevocable,
unconditional, negotiable letter of credit, issued by and drawn on a bank or
trust company which is a member of the New York Clearing House Association
naming Landlord as beneficiary and in a form reasonably satisfactory to Landlord
or (iii) a payment and performance bond issued by a bonding company reasonably
satisfactory to Landlord naming Landlord as beneficiary, and in a form
reasonably satisfactory to Landlord (it being agreed that a bond which requires
any payment as a condition to the bonding company performing its obligations
under the bond shall not be a form reasonably satisfactory to Landlord); each to
be in an amount equal to one hundred twenty-five (125%) percent of the cost of
the Alteration, estimated as set forth above; provided, however, if the security
provided by Tenant is a cash deposit or letter of credit pursuant to subclauses
(i) or (ii) above, the amount thereof shall be the lesser of (x) 125% of the
cost of the Alteration, estimated as set forth above or (y) the amount by which
(1) the sum of the cost of the Alteration in question plus the cost of all other
Alterations which have not then been completed exceeds (2) the amount which is
1/20th of the then net worth of Tenant, together with the Guarantor. Any such
letter of credit shall be for one year and shall be renewed by Tenant each and
every year until the Alteration in question is completed and shall be delivered
to Landlord not less than thirty (30) days prior to the expiration of the then
current letter of credit. Failure to deliver such new letter of credit on or
before said date shall give Landlord the right, inter alia, to present the then
current letter of credit for payment. Upon Landlord's request made in connection
with any Alteration proposed to be made by Tenant which Landlord reasonably
believes might cost in excess of 1/20th of the then net worth of Tenant,
together with the Guarantor, but not, in any case, more often than once in any
calendar year, Tenant shall submit to Landlord a balance sheet of Tenant,
together with the Guarantor, prepared in accordance with generally accepted
accounting principles consistently applied, as of the end of the most recent
calendar year. together with a certification of the Chief Financial Officer of
Tenant certifying that such balance sheet is true and correct and accurately
reflects the net worth of Tenant, together with the Guarantor, as of its date.
(b) Upon (i) the completion of the Alteration in accordance with the
terms of this Article 11 and (ii) the submission to Landlord of proof evidencing
the payment in full for said Alteration, the security deposited with Landlord
(or the balance of the proceeds thereof, if Tenant has furnished cash or a
letter of credit and if Landlord has drawn on the same) shall be returned
promptly to Tenant.
(c) Upon the Tenant's failure to properly perform, complete and
fully pay for all sums due for the said Alteration, Landlord shall be entitled
to draw on the security deposited under this Article 11 to the extent it deems
necessary in connection with the said Alteration, the restoration and/or
protection of the Premises or the Real Property and the payment or satisfaction
of any costs, damages or
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expenses in connection with the foregoing and/or Tenant's obligations under this
Article 11.
ARTICLE 12
Tenant's Improvements and Tenant's Property
12.01. For purposes of this lease, the following terms shall have the
following meanings:
(a) The term "TENANT'S IMPROVEMENTS" shall mean all improvements,
betterments, fixtures (other than trade fixtures), equipment and appurtenances
affixed to, attached to, built into, or otherwise installed in or on, the
Building by or on behalf of Tenant (whether or not at Tenant's expense) during
the term of this lease, inclusive of all Initial Alterations and subsequent
Alterations, including without limitation (i) all installations, systems and
facilities installed in or about the Building by or on behalf of Tenant (whether
wholly within the Premises, wholly without the Premises, or partly within and
partly without the Premises), (ii) Tenant's line and other connections to any
such installations, systems and facilities, (iii) Tenant's line and other
connections to the Building Systems, and (iv) raised floors, and all wiring and
cabling installed below such raised floors, as well as any wiring and cabling
installed within shafts; but excluding, in all cases, Tenant's Property.
(b) The term "TENANT'S PROPERTY" shall mean all articles of movable
personal property owned or leased by Tenant and located in the Premises,
including without limitation office furniture and furnishings, trade fixtures,
business equipment, office machinery, movable partitions, communications
equipment, including without limitation computer and telephone wiring and
cabling (other than wiring or cabling, or the portions thereof, installed below
raised floors and/or installed within shafts).
12.02. (a) All Tenant's Improvements, as they exist upon the expiration or
earlier termination of the term of this lease, shall be and remain a part of the
Building and shall be deemed Landlord's property, and, accordingly, Tenant's
Improvements shall not be removed by Tenant upon the expiration or earlier
termination of this lease; provided, however, that Tenant may remove all or any
portion of Tenant's Improvements during the term of this lease (except that no
such removal shall be effected within the last twelve (12) months of the term,
unless the such removal is effected for a legitimate business purpose and the
same does not leave the Premises in an unsafe or unleasable condition). Any such
removal shall constitute Alterations subject to the provisions of Article 11.
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(b) Notwithstanding the foregoing, Landlord, upon notice to Tenant
given no later than the date which is thirty (30) days prior to the Expiration
Date (or, in the case of an earlier termination of this lease, the date which is
thirty (30) days after the later of (x) the date of such earlier termination and
(y) the date all of Tenant's personnel have vacated the Premises), may require
Tenant, at its expense, to remove all or any portion of Tenant's Improvements;
provided, however, that Tenant shall not be obligated to remove any Tenant's
Improvements (1) that are customary office installations, or (2) that are
non-customary office installations but with respect to which Landlord, pursuant
to Section 12.02(c) below, shall be deemed to have waived its right to require
Tenant to remove. If Landlord, by notice given in accordance herewith, requires
Tenant to remove any Tenant's Improvements, then Tenant, at its expense, shall
remove the same from the Building on or prior to the later to occur of (i) the
Expiration Date (or, in the case of an earlier termination of this lease, the
date of any such earlier termination), and (ii) the date thirty (30) days after
Landlord shall have given such notice. Upon such removal, Tenant, at its
expense, shall repair and restore the applicable portions of the Building to the
condition existing prior to the installation of such Tenant's Improvements
(except that the Premises, as opposed to the Base Building Premises Components,
need only be restored to a safe condition) and repair any other damage to the
Building (including without limitation the Premises) caused by such removal. It
is hereby agreed that the following items, without limitation, do not constitute
customary office installations: raised floors; all wiring and cabling installed
under raised floors; safes; internal stairways connecting floors of the
Premises; high density filing systems; kitchens (excluding kitchenettes or
pantries); any shafts installed by Tenant (together with all cables, wires and
risers located in any such shafts); vaults; and generators and equipment
ancillary thereto.
(c) Tenant may, by written notice to Landlord given simultaneously
with its submission to Landlord of plans and specifications for any Alterations,
request that Landlord identify any portions of such Alterations which are
non-customary office installations and which Landlord reserves the right to
require Tenant to remove at the expiration or earlier termination of the term of
this lease. If Tenant makes such a written request with respect to any
Alterations and such notice specifically refers to this Section 12.02(c) and the
time period set forth below for Landlord's response, then Landlord, within ten
(10) Business Days after its receipt of such notice (or, in the case of Material
Alterations, within five (5) Business Days after the later to occur of (i) ten
(10) Business Days after its receipt of such notice, and (ii) the date upon
which Landlord approves, or is deemed to have approved, such Material
Alterations), shall, by written notice to Tenant, identify those portions of
such Alterations which are non-customary office installations and which Landlord
reserves the right to require Tenant to remove at the expiration or earlier
termination of the term of this lease; it being agreed that Landlord shall be
deemed to have waived its right to require Tenant to remove any portion of such
Alterations except
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for those portions which, by such written notice given within such time period,
are so identified.
12.03. All Tenant's Property shall be and shall remain the property of
Tenant throughout the term of this lease and may be removed by Tenant at any
time during the term of this lease (or, if applicable, within the 15-day period
referred to below). On or prior to the Expiration Date (or within fifteen (15)
days after the earlier termination of this lease), Tenant, at its expense, shall
remove all Tenant's Property from the Premises. Tenant shall repair any damage
to the Building (including without limitation the Premises) caused by such
removal. Any items of Tenant's Property which shall remain in the Premises after
the Expiration Date (or, as the case may be, within fifteen (15) days following
the earlier termination of this lease), may, at the option of Landlord, be
deemed to have been abandoned, and in such case such items may be retained by
Landlord as its property or disposed of by Landlord, without accountability, in
such manner as Landlord shall determine and at Tenant's expense.
ARTICLE 13
Repairs and Maintenance
13.01. (a) Tenant, throughout the term of this lease, shall, at its
expense, take good care of and maintain in good order and condition, and shall
be responsible for all repairs and replacements (ordinary and extraordinary,
foreseen and unforeseen) to (i) the Premises (but not the Base Building Premises
Components), and (ii) all Tenant's Improvements. Without limiting the generality
of the foregoing, Tenant, at its expense, shall promptly replace all damaged or
broken doors (including, without limitation, entrance doors) and all interior
glass in and about the Premises. Notwithstanding the foregoing, Tenant shall not
be responsible for any repairs or replacements under this Section 13.01(a) to
the extent that Landlord is responsible for the same under Section 13.02(b)
hereof.
(b) Tenant, in addition, shall be responsible for all repairs and
replacements, interior and exterior, structural and non-structural, ordinary and
extraordinary, foreseen and unforeseen, in and to (x) the Real Property outside
of the Premises, and (y) the Base Building Premises Components, in each case, to
the extent the need for which arises out of (i) the performance of Alterations,
or the installation, use, operation or existence of any Tenant's Improvements or
Tenant's Property (provided, however, that Tenant shall not be responsible
therefor under this clause (i) to the extent that the repair or replacement in
question would not have been needed but for (x) a violation by Landlord of its
obligations under this lease, or (y) a representation made by Landlord hereunder
being untrue), (ii) the moving by or on behalf of Tenant of any Tenant's
Improvements or Tenant's Property in or out of the
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Building, (iii) the negligence or intentional misconduct of Tenant, any Tenant
Party or any of their agents, contractors or invitees.
(c) The repairs and replacements for which Tenant is responsible
pursuant to the provisions of this Section 13.01 (herein called "TENANT
REPAIRS") shall be performed in accordance with the following provisions:
(1) Tenant shall perform all Tenant Repairs for which Tenant
is responsible pursuant to Section 13.01(a) above (i.e., to the Premises), and
to all Tenant's improvements) promptly, at its expense, and in a manner which
will not interfere (in other than a de minimis manner) with the use of the
Building by others. If, and to the extent that, such Tenant Repairs are to
Tenant's Improvements located outside the Premises or otherwise require work to
be performed outside of the Premises, then (i) such work shall be performed only
at such time or times as are reasonably designated by Landlord, and, at
Landlord's option, under the supervision of Landlord or its designated
representative, (ii) Landlord shall have the right to coordinate such work with
any work then being undertaken by Landlord or by any other tenants of the
Building, and (iii) Tenant, within thirty (30) days after a written demand
therefor, shall reimburse Landlord all supervision and coordination costs
incurred by Landlord pursuant to clauses (i) or (ii) above (whether incurred to
Landlord's employees or outside parties).
(2) Landlord, at its option, may elect to perform Tenant
Repairs for which Tenant is responsible pursuant to Section 13.01(b) above
(i.e., to the Real Property outside of the Premises and to the Base Building
Premises Components) (each, a "TENANT BUILDING REPAIR") at Tenant's expense. If
Tenant notifies Landlord of the need for any Tenant Building Repair, then
Landlord shall promptly notify Tenant as to whether Landlord elects to perform
such Tenant Building Repair, at Tenant's expense, or to have Tenant perform such
repair. In all cases, except in cases of emergency (in which cases Landlord need
not so notify Tenant), Landlord, prior to commencing any Tenant Building Repair,
shall notify Tenant that Landlord has elected to perform the same at Tenant's
expense.
(A) To the extent that Landlord elects to perform any
Tenant Building Repair at Tenant's expense, (i) Landlord shall perform the same
promptly, and the provisions of Section 35.15 shall apply in respect thereof,
and (ii) Tenant, within thirty (30) days after a written demand therefor, shall
reimburse Landlord all of Landlord's out-of-pocket costs incurred in connection
with such Tenant Building Repair. Tenant, at its own expense, shall have the
right to monitor the progress of Tenant Building Repair undertaken by Landlord.
(B) To the extent that Landlord elects to have Tenant
perform any Tenant Building Repair, (i) Tenant shall perform the same promptly,
at its expense, and in a manner which will not interfere (in other than a de
minimis
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manner) with the use of the Building by others, (ii) such work shall be
performed only at such time or times as are reasonably designated by Landlord,
and, at Landlord's option, under the supervision of Landlord or its designated
representative, (iii) Landlord shall have the right to coordinate such work with
any work then being undertaken by Landlord or by any other tenants of the
Building, and (iv) Tenant, within thirty (30) days after a written demand
therefor, shall reimburse Landlord all supervision and coordination costs
incurred by Landlord pursuant to clauses (ii) and (iii) above (whether incurred
to Landlord's employees or outside parties).
13.02. (a) Except to the extent that Tenant shall be responsible for the
same pursuant to the provisions of Section 13.01(a) or (b) above, Landlord, at
its expense, shall make repairs and replacements to, and otherwise keep and
maintain (in a condition befitting a first-class downtown Manhattan office
building), the Base Building, other than those portions of the Base Building
which are not Base Building Premises Components and which do not affect, or
affect only to a de minimis extent, (i) Tenant's use and occupancy of the
Premises, (ii) access to the Premises, (iii) the provision of Building Services
to the Premises, and (iv) Tenant's right or ability to perform Alterations which
would otherwise be permitted hereunder.
(b) Landlord, in addition, shall be responsible for all repairs and
replacements, interior and exterior, structural and non-structural, ordinary and
extraordinary, foreseen and unforeseen, in and to the Premises, Tenant's
Improvements and Tenant's Property, in each case, to the extent, the need for
which arises out of (i) any performance of any work or the taking of any other
act in the Premises by Landlord, or person authorized by Landlord to enter the
Premises, or any of their respective employees, agents or contractors, (ii) the
conduct of alterations, additions, improvements or changes in the Building by
Landlord or any of its employees, agents or contractors, or (iii) the negligence
or intentional misconduct of Landlord or any of its employees, agents,
contractors or invitees.
13.03. Except as expressly set forth in this lease, Landlord shall have no
liability to Tenant, nor, except as expressly set forth in Section 39.01, shall
Tenant's covenants and obligations under this lease be reduced or abated in any
manner whatsoever, by reason of any inconvenience, annoyance, interruption or
injury arising from Landlord's making any repairs or changes which Landlord is
required or permitted by this lease, or required by law, to make in or to the
Building, including without limitation the Premises. The provisions of this
Section 13.03 shall not absolve Landlord of its obligations to comply with the
provisions of Section 35.15 hereof.
13.04. This Article 13 shall not be applicable, to any extent, to any fire
or other casualty referred to in Article 19, or to any repairs or replacements
of any damage or destruction resulting therefrom; the same shall be governed by
the other applicable provisions of this lease, including Articles 9 and 19.
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ARTICLE 14
Electric Energy
14.01. Tenant agrees to purchase from Landlord or from a meter company
designated by Landlord all electricity used or consumed in the Premises and in
the operation of Tenant's Improvements in accordance with the provisions of this
Article 14. Tenant shall pay for electricity used in the Premises and in the
operation of Tenant's Improvements at the rate(s) set forth In Section 14.03
below and, except as provided below, based upon Tenant's demand for and
consumption of electricity determined, from time to time, by one or more
submeters and related equipment each measuring demand and consumption (such
submeters, together with all related equipment, are herein called "TENANT'S
SUBMETERS"). All of Tenant's Submeters shall be installed and maintained by
Tenant, at its expense, throughout the term of this lease. Initially, Tenant's
electrical demand and consumption shall be measured by two (2) Tenant's
Submeters, one of which shall be located in the Building's core electrical
closet located on the east side of the 37th floor of the Building and the other
of which shall be located in the Building's core electrical closet located on
the west side of the 37th floor of the Building. Such initial Tenant's Submeters
shall be installed by Tenant as part of the Initial Alterations. If, and to the
extent that, Tenant shall so desire from time to time, Tenant, at its expense,
may cause two (2) or more of Tenant's Submeters to measure Tenant's co-incident
electrical demand (among such Tenant's Submeters), and, in which event Tenant
shall notify Landlord thereof. Bills for electricity consumed by Tenant, which
Tenant hereby agrees to pay, shall be rendered by Landlord or the meter company
to Tenant at such time as Landlord may elect, and shall be payable as an
Additional Charge within thirty (30) days after the rendition of any such bill.
14.02. (a) Landlord shall make electricity available to Tenant, for use in
the Premises and in the operation of Tenant's Improvements, at a level
sufficient to accommodate a demand load of six and one-half (6-1/2) watts
multiplied by the number of rentable square feet in the Initially Demised
Premises (as defined in Article 31) (such level being herein called the
"COMMITTED ELECTRICAL SERVICE LEVEL"). Such electricity shall be made available
(for distribution by Tenant within the Premises and to Tenant's Improvements) at
the electrical panels currently located in the Building's core electrical
closets located on the 37th floor of the Building.
(b) Tenant's use of electricity shall not at any time exceed a
demand load equal to the Committed Electrical Service Level or otherwise exceed
the capacity of any of the electrical conductors and equipment in or otherwise
serving the Premises or any Tenant's Improvements; provided that Landlord shall
furnish conductors and equipment sufficient to accommodate the Committed
Electrical Service Level. In order to insure that such load or capacity is not
exceeded, Tenant
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shall not, without Landlord's prior consent in each instance (which shall not be
withheld, conditioned or delayed unless Tenant would violate, and Landlord is
not in violation of, the preceding sentence), connect any fixtures, appliances
or equipment, other than office machines customarily used in connection with the
Primary Use (including, without limitation, communications systems and
equipment), to the Building's electric system.
(c) If, at time during the term of this lease, (i) Tenant shall
require electricity, for the purposes set forth in Section 14.02(a) above, at a
level in excess of the Committed Electrical Service Level, and (ii) Tenant shall
demonstrate such additional electricity requirements to Landlord, to Landlord's
reasonable satisfaction, then Landlord, as soon as practicable thereafter, shall
increase the Committed Electrical Service Level by the amount of such
additionally required electrical service; provided, however, that, in no event,
shall the "Committed Electrical Service Level" be increased pursuant to this
Section 14.02(c), in the aggregate, by an amount greater than one (1) watt
multiplied by the number of rentable square feet in the Initially Demised
Premises (and, accordingly, at no time during the term of this lease shall the
"Committed Electrical Service Level" ever be greater than seven and one-half
(7-1/2) watts multiplied by the number of rentable square feet in the Initially
Demised Premises). As more particularly described in Articles 37 and 38,
respectively, the provisions of this Section 14.02(c) shall apply only to the
Initially Demised Premises, and not to the Option Space or any Offer Space in
connection with the separate application of Section 14.02 to the same as set
forth in Articles 37 and 38, respectively; it being likewise understood that the
provisions of the preceding proviso shall not limit the separate "Committed
Electrical Service Level" for the Option Space or any Offer Space, which, in all
events, shall be as provided for in Articles 37 or 38, respectively.
14.03. The amount to be paid by Tenant to Landlord, for any billing period,
for electricity furnished to the Premises and to Tenant's Improvements (whether
the demand and consumption components thereof are measured by Tenant's Submeters
or determined by survey as herein elsewhere provided), shall be an amount equal
to 103% of the sum of (I) the product of Landlord's Cost per KW (as hereinafter
defined) for such period, multiplied by the number of KWs of Tenant's electrical
demand for such period (which demand shall be measured separately by each
Tenant's Submeter, except if Tenant, pursuant to Section 14.01 above, causes two
or more Tenant's Submeters to measure co-incident demand and so notifies
Landlord, then, for purposes of this clause (I), the portion of Tenant's
electrical demand measured by such Tenant's Submeters shall be such co-incident
demand), plus (II) the product of Landlord's Cost per KWHR (as hereinafter
defined) for such period, multiplied by the number of KWHRs of Tenant's
electrical consumption for such period. In addition, Tenant shall pay, and
Landlord shall remit to the appropriate governmental agency, all sales tax
payable on the amounts payable by Tenant to Landlord pursuant to the preceding
sentence. As used herein, (i) "LANDLORD'S COST
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PER KW", for any period, shall be the cost, exclusive of sales tax, that
Landlord pays to the public utility company furnishing electricity to the
Building (herein called "UTILITY COMPANY") per KW of demand for such period
(which cost shall be determined by averaging in any case where there is not a
single rate in effect for such period for all KWs), and (ii) "LANDLORD'S COST
PER KWHR", for any period, shall be the cost, exclusive of sales tax, that
Landlord pays to the Utility Company per KWHR of consumption for such period
(which cost shall be determined by averaging in any case where there is not a
single rate in effect for such period for all KWHRs). Each electric bill
rendered by Landlord to Tenant shall be accompanied by a copy of the electricity
bill(s) for the Building on which Landlord's Cost per KW and Landlord's Cost per
KWHR for the applicable billing period are based. If Tenant shall occupy the
Premises for business purposes and use electricity prior to the installation and
connection of Tenant's Submeters, then Tenant agrees to pay Landlord the sum of
$2.50 per rentable square foot per annum for electricity for the period
commencing with such occupancy and ending at the time that such Tenant's
Submeters are installed and connected, which amount shall be deemed a payment on
account for such period and shall be retroactively adjusted based upon the
readings of Tenant's Submeters for the first (12) months after the installation
and connection thereof in accordance with the provisions of Section 14.05
hereof. During the period of Tenant's construction occurring prior to the
installation and connection of the Tenant's Submeters, Tenant will pay to
Landlord a flat charge of $1.50 per rentable square foot per annum.
14.04. In the event that the "submetering" of electricity in the Building
is hereafter prohibited by any law hereafter enacted, or by any order or ruling
hereafter issued by the Public Service Commission of the State of New York, or
by any final judicial decision hereafter issued by any appropriate court, then,
at the request of Landlord, Tenant shall, unless Tenant elects to require
Landlord to provide electricity pursuant to Section 14.05 hereof, promptly apply
to the appropriate Utility Company for direct electric service and bear all
costs and expenses necessary to comply with all rules and regulations of the
Utility Company pertinent thereto, and, upon the commencement of such direct
service, Landlord shall be relieved of any further obligation to furnish
electricity to Tenant pursuant to this Article 14, except that Landlord shall
permit its wires, conduits and electrical equipment, to the extent available and
safely capable, to be used for such purpose. If any additional feeder, riser or
other equipment is necessary to supply such direct service, Landlord shall, at
the sole cost and expense of Tenant, install the same at reasonably competitive
rates, if in Landlord's reasonable judgment the same are so necessary and will
not cause damage or injury to the Building or the Premises or cause or create a
dangerous or hazardous condition (other than one which is temporary) or
unreasonably interfere with or disturb other tenants or occupants (other than on
a temporary basis).
14.05. (a) If submetering of electricity is prohibited as described in
Section 14.04 above and Tenant does not elect to obtain direct electric service
from the Utility
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Company, then the demand (KW) and consumption (KWHR) components of Tenant's
electricity shall be determined from time to time by electric survey made from
time to time in accordance with the provisions of this Section 14.05, Section
14.06 and Section 14.07. Pending an initial survey made by Landlord's utility
consultant, effective as of the date (the "INITIAL SURVEY EFFECTIVE DATE") when
Landlord has commenced furnishing electricity to Tenant pursuant to this Section
14.05 (with suitable proration for any period of less than a full calendar
month), the Fixed Rent specified in Section 1.04 shall be increased by an amount
(the "INITIAL CHARGE") which shall be at the rate of $2.50 per rentable square
foot per annum, or if there has been twelve (12) months' charges of submetered
electric, an amount equal to the average of the prior twelve (12) months'
charges for submetered electric. After completion of an electrical survey made
by Landlord's utility consultant of Tenant's demand (KW) and consumption (KWHR)
of electricity, said consultant shall apply the rates set forth in Section 14.03
hereof to arrive at an amount (the "ACTUAL CHARGE"), and the Fixed Rent shall be
appropriately adjusted retroactively to the initial Survey Effective Date to
reflect any amount by which the Actual Charge differs from the Initial Charge.
If the Actual Charge is greater than the Initial Charge, Tenant shall pay
resulting deficiency within ten (10) days after being billed therefor. If the
Actual Charge is less than the Initial Charge, Landlord shall refund the
resulting overpayment within ten (10) days after the determination of the Actual
Charge. Landlord shall cause its utility consultant to complete the aforesaid
survey and computation, and to notify the parties thereof, no later than sixty
(60) days after the Initial Survey Effective Date. Thereafter and from time to
time during the term of this lease, Landlord may, and whenever Tenant shall so
request, Landlord shall promptly, cause additional surveys of Tenant's electric
demand and consumption to be made by Landlord's utility consultant. Whenever
Tenant shall so request, the fees of Landlord's utility consultant shall be paid
by Tenant. In the event any of the foregoing surveys shall determine that there
has been an increase or decrease in Tenant's demand or consumption, then
effective retroactively to the date of such increase or decrease (except as
otherwise provided below) the then current Actual Charge, as same may have been
previously increased or decreased pursuant to the terms hereof, shall be
increased or decreased in accordance with such survey determination. If the
Actual Charge is thus increased, Tenant shall pay resulting deficiency within
ten (10) days after being billed therefor. If the Actual Charge is thus
decreased, Landlord shall refund the resulting overpayment within ten (10) days
after such determination. Notwithstanding the foregoing provisions of this
Section 14.06, (i) no increase resulting from any survey made after the initial
survey shall be retroactive to any date more than 30 days prior to the date of
such survey, (ii) no decrease resulting from any survey made after the initial
survey at Tenant's request shall be retroactive to any date more than 30 days
prior to the date of Tenant's request, and (iii) no decrease resulting from any
survey made after the initial survey without Tenant's request shall be
retroactive to any date more than 30 days prior to the date of such survey. Each
survey after the initial survey shall include a statement of the date,
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determined in accordance with this Section 14.05(a), to which it is to be given
retroactive effect.
(b) In the event from time to time after the initial survey or a
subsequent survey any additional electrically operated equipment is installed in
the Premises by Tenant or connected or any electrically operated equipment is
removed from the Premises or disconnected, or if Tenant shall increase or
decrease its hours of operation, or if the charges by the Utility Company are
increased or decreased, then and in any of such events the Actual Charge shall
be increased or decreased accordingly. The amount of such increase or decrease
in the Actual Charge shall be determined in the first instance by Landlord's
utility consultant. At any time after any such event shall occur, Landlord may,
and if Tenant shall so request, Landlord shall promptly, cause the amount of
such increase or decrease to be so determined. Whenever Tenant shall so request,
the fees of Landlord's utility consultant shall be paid by Tenant. In addition,
the Actual Charge will be increased or decreased quarterly in accordance with
calculations by Landlord's utility consultant to reflect changes in the fuel
adjustment component of the Utility Company's charge. Any increase or decrease
pursuant to this Section 14.05(b) in the amount charged Tenant for electricity
shall be retroactive to the date on which the fact or condition giving rise
thereto occurred; provided, however, that (i) no increase shall be retroactive
to any date more than 30 days prior to the date on which Tenant is notified
thereof, (ii) no decrease resulting from any determination made at Tenant's
request shall be retroactive to any date more than thirty (30) days prior to the
date of Tenant's request, and (iii) no decrease resulting from any determination
made without Tenant's request shall be retroactive to any date prior to the date
on which Tenant is notified thereof. Each determination shall include a
statement of the date, determined in accordance with this Section 14.05(b), to
which it is to be given retroactive effect.
14.06. Surveys made of Tenant's electrical demand and consumption shall be
based upon the use of electricity between the hours of 8:00 a.m. to 6:00 p.m.,
Mondays through Fridays, and such other days and hours as Tenant (together with
all Tenant Parties) uses electricity for lighting and for the conduct of its
business in the Premises (if Tenant uses electricity during certain hours in
portions of the Premises but not all of the Premises, such fact shall be taken
into account); and if cleaning services are provided by Landlord, such survey
shall include (i) during Landlord's normal cleaning hours of five (5) hours per
day (which shall not be subject to reduction), lighting within the Premises, and
(ii) during such portion of such five (5) hours as such equipment is ordinarily
so used, the use of the electrical equipment normally used for such cleaning.
The electric demand and consumption of any light or device shall not be deemed
to be constant or continuous (unless so by its nature) and the utility
consultant shall reasonably estimate the actual demand and consumption of each
light or device, and, for purposes of determining Tenant's total
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demand, the utility consultant shall also reasonably estimate the diversity
factor to be applied to the demand of each such light or device.
14.07. All survey determinations made in accordance with Section 14.05(a)
and all other determinations made in accordance with Section 14.05(b), in each
case including the date, determined in accordance with Section 14.05, to which
the same shall be given retroactive effect, shall be accompanied by full
documentation and shall be subject to contest by Tenant as provided in this
Section 14.07. In the event electricity shall be furnished to Tenant as
contemplated in Section 14.05 hereof, then Tenant, within sixty (60) days after
notification from Landlord of any determination of Landlord's utility consultant
in accordance with the provisions of Section 14.05(a) or (b), shall have the
right to contest, at Tenant's cost and expense, such determination, in each case
including the aforesaid date, by submitting to Landlord a like determination
prepared by a utility consultant of Tenant's selection which will highlight the
differences between Landlord's determination and Tenant's determination. If
Landlord's utility consultant and Tenant's utility consultant shall be unable to
reach agreement within thirty (30) days, then such two consultants shall
designate a third utility consultant to make the determination, and the
determination of such third consultant shall be binding and conclusive on both
Landlord and Tenant. If the determination of such third consultant shall
substantially confirm the finding of Landlord's utility consultant (i.e., within
ten percent (10%)), then Tenant shall pay the cost of such third consultant. If
such third consultant shall substantially confirm the determination of Tenant's
consultant (i.e., within ten percent (10%)), then Landlord shall pay the cost of
such third consultant. If such third consultant shall make a determination
substantially different from that of both Landlord's and Tenant's utility
consultants (or is within ten percent (10%) of both such determinations), then
the cost of such third consultant shall be borne equally by Landlord and Tenant.
In the event that Landlord's utility consultant and Tenant's utility consultant
shall be unable to agree upon the designation of a third utility consultant
within thirty (30) days after Tenant's utility consultant shall have made its
determination (different from that of Landlord's utility consultant) then either
party shall have the right to request the American Arbitration Association in
the City of New York to designate a third utility consultant whose decision
shall be conclusive and binding upon the parties, and the costs of such third
consultant shall be borne as hereinbefore provided in the case of a third
consultant designated by Landlord's and Tenant's utility consultants. Pending
the resolution of any contest pursuant to the terms hereof, Tenant shall pay the
Actual Charge determined by Landlord's utility consultant, and upon the
resolution of such contest, appropriate adjustment in accordance with such
resolution of such Actual Charge shall be made retroactive to (i) the date to
which the contested determination was given retroactive effect or (ii) if Tenant
shall have contested such date, to the date determined in such contest.
14.08. Landlord shall not be liable in any event to Tenant for any
failure, interruption or defect in the supply or character of electric energy
furnished to the
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Premises by reason of any act or omission of the public utility serving the
Building with electricity or for any other reason not attributable to Landlord's
willful misconduct or negligence (but in no event shall Landlord be responsible
for any consequential damages).
14.09. If pursuant to any law, ruling, order or regulation, the charges
under which Tenant is purchasing electricity from Landlord pursuant to this
Article shall be reduced below that which Landlord is otherwise entitled
hereunder, then Tenant shall pay said deficiency to Landlord as an Additional
Charge within thirty (30) days after being billed therefor by Landlord, as
compensation for the use and maintenance of the Building's electric distribution
system.
14.10. Landlord shall furnish and install all replacement lighting, tubes,
lamps, bulbs and ballasts required in the Premises; and in such event, Tenant
shall pay to Landlord or its designated contractor upon demand the then
established reasonable charges therefor of Landlord or its designated
contractor, as the case may be, but only to the extent such charges are
competitive with similar charges in Similar Buildings. Notwithstanding the
above, Tenant shall have the right from time to time to elect to have its own
employees, or a vendor or contractor selected by Tenant (subject to Landlord's
approval not to be unreasonably withheld), provide the aforesaid items.
14.11. Notwithstanding anything contained herein to the contrary, Tenant
hereby waives any claim to any rebates or similar amounts which Landlord
receives from the Utility Company based upon any of Tenant's lighting fixtures
installed during the term of this lease.
ARTICLE 15
Landlord's Services
15.01. For the purposes of this Article 15, the following terms shall have
the following meanings:
(a) "BUSINESS OCCUPANCY DATE" shall mean the date on which Tenant
takes occupancy of the Premises for the conduct of its usual business. Tenant
shall give Landlord notice of the Business Occupancy Date at least five (5)
Business Days prior to the occurrence thereof.
(b) "BUSINESS HOURS" shall mean the hours between 7:00 a.m. and 7:00
p.m. on Business Days.
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(c) "BUSINESS DAYS" shall mean all days, except Saturdays, Sundays
and Holidays.
(d) "HOLIDAYS" shall mean New Year's Day, Washington's Birthday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, the day following
Thanksgiving, Christmas and any other days which shall be either (i) observed by
the federal or the state governments as legal holidays or (ii) designated as a
holiday by the applicable Building Service Union Employee Service contract or by
the applicable Operating Engineers contract.
15.02. (a) Landlord shall furnish cold water to the sprinklers on floor(s)
on which the Premises are located to the extent required for sprinkler purposes
only, and hot and cold water to the Core Lavatories on the floor(s) on which the
Premises are located to the extent required for normal core lavatory, drinking
and cleaning purposes only.
(b) If Tenant shall require water for any purposes other than those
set forth in Section 15.02(a) above (including without limitation (i) for any
pantries or kitchenettes, inclusive of any sinks, dishwashers or coffee machines
therein, or (ii) any private lavatories installed by Tenant), then Landlord need
only furnish additional cold water for such other purposes, which additional
cold water shall be furnished through the Building's core riser to a point in
the Building's core located on the relevant floor(s) on which the Premises are
located, and shall be accessible to Tenant through a capped outlet located
therein. If Tenant uses water for any purposes other than as set forth in
Section 15.02(a) above, then Landlord may install and maintain, at Tenant's
expense, one or more meters to measure Tenant's consumption of cold water for
such other purposes. Tenant shall reimburse Landlord for the quantities of cold
water shown on such meter or meters, periodically, within thirty (30) days after
written demand therefor, in accordance with the rates and charges of the utility
company or municipality supplying water to the Building. Tenant, at its expense,
shall be solely responsible for distributing within the Premises, and, to the
extent Tenant requires hot water, heating, any additional cold water furnished
pursuant to this Section 15.02(b).
15.03. (a) Landlord, during Business Hours, shall furnish, in accordance
with the specifications set forth on Schedule E annexed hereto, (i) heat service
at the perimeter of the Premises through the existing perimeter equipment (such
heat service being herein called "BASE BUILDING HEAT SERVICE"), (ii)
air-conditioning service both at the perimeter of the Premises (through the
existing perimeter equipment) and at designated delivery points in the
Building's core located on the floor(s) on which the Premises are located (such
air-conditioning service being herein called "BASE BUILDING AIR-CONDITIONING
SERVICE"), and (iii) ventilation service, both at the perimeter of the Premises
as aforesaid and at the designated delivery points in the Building's core as
aforesaid (such ventilation service being herein called "BASE
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BUILDING VENTILATION SERVICE"). Landlord shall provide either Base Building Heat
Service or Base Building Air-Conditioning Service on a seasonal basis, not
according to outside conditions.
(b) If Tenant shall request that Landlord furnish Base Building Heat
Service ("OVERTIME HEAT"), Base Building Air-Conditioning Service ("OVERTIME
AC") or Base Building Ventilation ("OVERTIME VENTILATION") to any floor on which
the Premises are located at any time other than Business Hours, then Landlord
shall furnish such service at such times (x) upon no less than five (5) hours'
advance notice from Tenant for overtime service after six (6) p.m. on Business
Days, and (y) upon notice received before Noon on the preceding Business Day for
overtime service on non-Business Days. Each such notice shall specify the floor
or floors to which service is to be provided. Tenant, within thirty (30) days
after its receipt of a demand therefor, shall pay to Landlord (x) the Overtime
AC Rate for any Overtime AC, and (y) the Overtime Heat Rate for any Overtime
Heat. As of the date hereof, the "OVERTIME AC RATE" shall be $325 per hour, per
floor, and the "OVERTIME HEAT RATE" shall be $150 per hour, per floor. Each of
the Overtime AC Rate and the Overtime Heat Rate shall be adjusted by CPI (as
defined in Article 31 hereof). Overtime Ventilation shall be free of charge.
15.04. (a) Landlord shall furnish condenser water to the SCW Distribution
Point (as hereinafter defined), 24 hours a day, 7 days a week, at a level which,
subject to Tenant making proper connection thereto, will enable Tenant to draw
at least 40 tons of condenser water (such tonnage capacity being herein called
the "ALLOTTED SCW CAPACITY"), in the aggregate, from such point at any time.
Tenant shall have the right to draw from the SCW Distribution Point, at any
instance in time, up to, but not in excess of, the Allotted SCW Capacity, which
condenser water shall be used for the operation to one or more water-cooled
supplemental air-conditioning units located in the Premises (herein called
"TENANT'S SUPPLEMENTAL AC EQUIPMENT"). Tenant, at its expense, shall be
responsible for connecting to the SCW Distribution Point and distributing any
condenser water drawn from such SCW Distribution Point to Tenant's Supplemental
AC Equipment. As used herein, the "SCW Distribution Point" shall mean the single
point in the Building's core on the 37th floor of the Building, which shall be
designated by Landlord.
(b) In respect of Landlord agreeing to furnish condenser water to
the SCW Distribution Point as hereinabove provided in Section 15.04(a) (and
regardless of the quantity of condenser water, if any, that Tenant actually
draws therefrom), Tenant shall pay to Landlord, as Additional Charges, a monthly
charge, for each month during the term of this lease, equal to (i) the monthly
SCW Rate (as hereinafter defined) multiplied by (ii) the aggregate number of
tons of capacity of Tenant's Supplemental AC Equipment connected to, or
otherwise receiving condenser water from, the SCW Distribution Point at anytime
during such month (such monthly charge being herein called the "MONTHLY SCW
CHARGE"). The Monthly SCW Charge,
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for each month during the term of this lease, shall be payable, in arrears, on
the first day of the next succeeding month. The "MONTHLY SCW RATE", as of the
date hereof, is a rate of $43.75 per month per ton of capacity; such rate shall
be Adjusted By CPI.
15.05. Landlord shall provide passenger elevator service to the floor(s) on
which the Premises are located during Business Hours, with a minimum of one (1)
passenger elevator being subject to call at all other times; it being agreed
that, throughout the term of this lease, (x) all the passenger elevators that
serve the 37th floor of the Building shall have the 37th floor as their first
stop after the ground floor lobby, and (y) no passenger elevator not in the
passenger elevator bank known, as of the date hereof, as "Bank D", as shown on
Exhibit H attached hereto, shall serve the 37th floor of the Building.
Landlord's obligation to provide passenger elevator pursuant to the foregoing
provisions of this Section 15.05 shall not commence until the Business Occupancy
Date. Use of the passenger elevators shall be subject to the Rules and
Regulations.
15.06. (a) Landlord, during Business Hours, shall provide Tenant with
freight elevator service to the floor(s) on which the Premises are located on a
non-exclusive, first-come first-served basis (i.e., no advance scheduling).
(b) If Tenant shall require freight elevator service other than
during Business Hours ("OVERTIME FREIGHT ELEVATOR SERVICE"), then Landlord shall
provide the same on a first-reserved first-served basis, (i) upon notice from
Tenant that is received by Landlord no less than twenty-four (24) hours in
advance, for overtime service on Business Days, or (ii) upon notice from Tenant
that is received by Landlord before Noon on the preceding Business Day, for
overtime service on non-Business Days. Tenant, within thirty (30) days after its
receipt of a written demand therefor, shall pay to Landlord the applicable
Overtime Freight Rate (as hereinafter defined) for any Overtime Freight Elevator
Service. As of the date hereof, the "OVERTIME FREIGHT RATE" is $55 per hour per
freight elevator. The Overtime Freight Rate shall be Adjusted by CPI.
(c) Freight elevator service shall include, whenever Tenant shall so
elect, use of the loading dock and there shall be no separate charge therefor.
(d) Use of the freight elevators shall be subject to the Rules and
Regulations and the Alteration Rules and Regulations.
15.07. (a) Landlord shall cause the Premises and the applicable portions of
the Base Building (including the exterior windows serving the Premises), to be
cleaned in accordance with the cleaning specifications set forth on Exhibit E
annexed hereto (herein called the "CLEANING SPECIFICATIONS"). Tenant shall pay
to Landlord, within thirty (30) days after written demand, the additional costs
incurred by Landlord for (i) extra cleaning work in the Premises required
because of (x)
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carelessness, misuse or neglect on the part of Tenant or any Tenant Party or its
or their visitors, (y) interior glass partitions or unusual quantity of interior
glass surfaces, and (z) materials or finishes installed by or on behalf of
Tenant which are unusually difficult or time consuming to clean, and (ii)
removal from the Premises and the Building of any refuse and rubbish of Tenant
in excess of that ordinarily accumulated in business office occupancy,
including, without limitation, kitchen refuse and rubbish, and (iii) removal
from the Premises and the Building of any refuse and rubbish of Tenant at times
other than Landlord's standard cleaning times.
(b) Notwithstanding the foregoing provisions of Section 15.07(a),
Landlord shall not be required to clean any portions of the Premises used for
(A) kitchen, cafeteria or dining facilities, kitchenettes, pantries and vending
machine areas, (B) private lavatories or toilets installed by Tenant or any
Tenant Party, (C) printing, or (D) other special purposes requiring greater or
more difficult cleaning work than office areas (it being agreed that trading
floor use is not such a special purpose); and Tenant agrees, at Tenant's
expense, to retain Landlord's cleaning contractor (and no other cleaning
contractor) to perform such additional cleaning services; provided, however,
that if (i) Landlord's cleaning contractor proposes to charge Tenant for such
additional cleaning services at rates which, in the aggregate, are materially in
excess of the market rates for such additional cleaning services (which "market
rates" shall be determined with reference to the rates charged for such services
by cleaning contractors of Similar Buildings), and (ii) Tenant, prior to
retaining Landlord's cleaning contractor for such additional cleaning services,
notifies Landlord thereof in writing, then Landlord shall reimburse Tenant the
amount of such excess (unless Landlord, at its option, shall, in lieu thereof,
grant Tenant the right to employ its own contractor to perform such additional
cleaning services). Landlord shall not receive an override on any amounts paid
by Tenant to Landlord's cleaning contractor for such additional cleaning
services.
(c) Landlord, its cleaning contractor and their respective employees
shall have access to the Premises after 6:00 p.m. and before 8:00 a.m. and shall
have the right to use, without charge therefor, all light, power and water in
the Premises reasonably required to clean the Premises as required under this
Section 15.07.
(d) Tenant shall not clean, nor require, permit, suffer or allow any
windows in the Premises to be cleaned, from the outside in violation of Section
202 of the Labor Law, or any other applicable law.
(e) Notwithstanding anything to the contrary contained in the
foregoing provisions of this Section 15.07, Landlord shall have no obligation to
provide any of the aforesaid cleaning services prior to the Business Occupancy
Date therefor.
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15.08. Landlord shall provide life safety service through the Building's
Class E System to the DGP installed as part of Landlord's Work. Landlord shall
provide Tenant with seven (7) points on such DGP at which Tenant may tie-in to
the Building's Class E System.
15.09. Except as expressly provided in this Article 15, Landlord shall not
be required to provide any services to the Premises.
15.10. (a) Landlord, subject to the provisions of Section 15.10(b) below,
reserves the right, without liability to Tenant and without it being deemed a
constructive eviction, to stop or interrupt any heating, elevator, escalator,
lighting, ventilating, air-conditioning, steam, power, electricity, water,
condenser water, cleaning or other service and to stop or interrupt the use of
any Building Systems or Building facilities at such times as may be necessary
and only for as long as may reasonably be required by reason of accidents,
strikes, or the making of alterations, additions, improvements, replacements or
repairs, or inability to secure a proper supply of fuel, gas, steam, water,
electricity, labor or supplies, or by reason of any other similar or dissimilar
cause beyond the reasonable control of Landlord. No such stoppage or
interruption shall (i) result in any liability from Landlord to Tenant (except
for any liability, other than consequential damages, arising out of a violation
of the provisions Section 15.10(b) below) or (ii) entitle Tenant to any
diminution or abatement of rent (except as may be expressly provided for in
Section 39.01 hereof) or other compensation nor shall this lease or any of the
obligations of Tenant be affected or reduced by reason of any such stoppage or
interruption.
(b) Landlord shall not (i) voluntarily effect any Service Shutdown
without first providing Tenant with at least three (3) Business Days notice of
the times of such Service Shutdown, or (ii) voluntarily effect a Service
Shutdown of electricity or condenser water during Business Hours; provided,
however, that Landlord may voluntarily effect any Service Shutdown (including
without limitation a Service Shutdown of electricity or condenser water), at any
time or times and without any requirement that it give Tenant notice thereof, if
(A) the Service Shutdown is effected by Landlord with a view toward averting or
reducing danger to persons or damage to property, (B) the Service Shutdown is
effected by Landlord in response to any actual or perceived emergency, (C) the
Service Shutdown is effected by Landlord in response to the directive of a
governmental or quasi-governmental authority or a public utility, or (D) the
Service Shutdown is not a Service Shutdown to electricity or condenser water,
and does not otherwise materially affect the operation of Tenant's business in
the Premises; provided, further, however, that, in the cases described in
clauses (A), (B) and (C) above, Landlord shall, if practicable, give Tenant such
prior notice of the Service Shutdown to be effected as shall be reasonable under
the circumstances (which notice may be written or oral), except that Landlord
shall never be required to give notice in cases where it effects a Service
Shutdown in response to an actual or perceived emergency which could imminently
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result in danger to the health or safety of persons or in substantial damage to
property. For purposes of this Section 15.10(b), the term "SERVICE SHUTDOWN"
shall mean a shutdown of one or more Building System(s) which provide one or
more Building Services to Tenant; and Landlord shall be deemed to have
"VOLUNTARILY EFFECTED" a Service Shutdown only if Landlord, by its own direct,
intentional and affirmative act, effects such a Service Shutdown.
15.11. Only Landlord or persons approved by Landlord (which approval shall
not unreasonably be withheld) shall be permitted to furnish or sell laundry,
linen, towels, drinking water, ice, food, beverages, bootblacking, barbering and
other similar supplies and services to tenants. Such persons approved by
Landlord may contract directly with Tenant. Landlord may fix the reasonable
circumstances under which such supplies and services are to be furnished or
sold. Landlord expressly reserves the right to exclude from the Building any
person not so approved by Landlord. However, Tenant, its regular office
employees or invitees may personally bring food or beverages into the Building
or order the same for delivery for consumption within the Premises solely by
Tenant, its regular office employees or invitees.
ARTICLE 16
Access and Name of Building
16.01. Except for the space within the inside surfaces of all walls
bounding the Premises, slab ceilings, floors, windows and doors bounding the
Premises (other than any such space used on the date hereof for shafts, stacks,
pipes, conduits, fan rooms, ducts, electric or other utilities, sinks of other
Building facilities), all of the Building (including, without limitation,
exterior Building walls, core walls, doors and entrances (or, on any
multi-tenant floor, corridor walls, doors and entrances) and any terraces or
roofs (and further including without limitation the aforementioned space used on
the date hereof for shafts, stacks, pipes, conduits, fan rooms, ducts, electric
or other utilities, sinks of other Building facilities), and the use thereof, as
well as access thereto through the Premises for the purposes of operation,
maintenance, alteration, addition, improvement, replacement and repair) is
reserved to Landlord and/or persons authorized by Landlord and no space or
property so reserved shall be deemed to be part of the Premises. Telephone and
electric closets on the thirty-seventh (37th) floor of the Building shall be
included in the Premises if, and only if, the same are hatched on Exhibit B
attached hereto.
16.02. Landlord reserves the right, and Tenant shall permit Landlord and
persons authorized by Landlord to install, erect, use and maintain pipes, ducts
and conduits in and through the Premises; provided, however, that Landlord,
after the date hereof, may locate any such pipe, duct or conduit within the
Premises (as opposed to the areas reserved to Landlord pursuant to Section 16.01
hereof) only if it
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is not feasible for Landlord to locate such pipe, duct or conduit within areas
reserved to Landlord pursuant to Section 16.01 hereof; provided, further,
however, that, even in cases where, pursuant to the preceding proviso, Landlord
may locate a pipe, duct or conduit within the Premises, Landlord may only locate
such pipe, duct or conduit within one or more of the Primary Landlord Conduit
Areas (as hereinafter defined), unless it is also not feasible for Landlord to
locate such pipe, duct or conduit within Primary Landlord Conduit Areas, in
which event Landlord may locate such pipe, duct or conduit within one or more of
the Secondary Landlord Conduit Areas. Any pipe, duct or conduit located within
the Premises shall be concealed behind then existing walls, ceilings or raised
floors of the Premises if feasible (and if not feasible, then the same shall be
completely furred at points immediately adjacent to partitioning, columns or
ceilings). In exercising the rights reserved to it under this Section 16.02,
Landlord shall comply with the provisions of Section 35.15 hereof. As used in
this Section 16.02, (I) the term "FEASIBLE" shall mean both physically feasible
and economically feasible, from Landlord's perspective, and consistent with all
laws and requirements of public authorities, (II) the term "PRIMARY LANDLORD
CONDUIT AREAS" shall mean any of (x) the areas of the Premises located between
the hung and structural ceiling of the Premises on any floor, (y) the areas of
the Premises located underneath any raised flooring, and (z) the other areas of
the Premises, if any, shown hatched on Exhibit C attached hereto, and (III) the
term "SECONDARY LANDLORD CONDUIT AREAS" shall mean any area of the Premises
which is adjacent to (A) any walls, floors or ceilings bounding the Premises
(including without limitation core and exterior walls) or (B) any areas reserved
to Landlord pursuant to Section 16.01 hereof.
16.03. (a) Subject to the terms of Sections 16.03(b) and 35.15, Landlord
and persons authorized by Landlord shall have the right, upon reasonable prior
notice (except that no notice shall be required in the case of emergency), to
enter and/or pass through the Premises at any reasonable times (or at any time
in the case of emergency) for any one or more of the following purposes: (i) to
examine the Premises and to show them to actual and prospective Mortgagees or
Underlying Lessors or prospective purchasers of the Building; (ii) to make such
alterations, additions, improvements, repairs or replacements in or to the Real
Property (excluding, however, the Premises and Tenant's Improvements located
outside the Premises) as Landlord is required to make or deems reasonably
necessary to make, (iii) to make (x) such alterations, additions or improvements
in and to the Premises (and Tenant's Improvements located outside the Premises)
as Landlord is required or authorized by this lease to make, or (y) such repairs
or replacements in and to the Premises (and Tenant's Improvements located
outside the Premises) as Landlord is required or permitted by this lease or by
law to make; (iv) to provide the services which Landlord is required to provide
hereunder; and (V) to read any utility meters located therein.
(b) Tenant, from time to time (but not more frequently than twice in
any calendar year), may, upon not less than thirty (30) days prior written
notice to
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Landlord, designate one or more discrete portions of the Premises as high
security areas (herein called the "SECURITY AREAS"), provided, that (1) Tenant's
notice shall be accompanied by floor plans of the Premises designating the
Security Areas, and (2) any such designation shall be reasonable in light of
Tenant's business requirements. Landlord shall have no right to enter any
Security Areas except for any entry made (i) for the purpose of operating,
maintaining and repairing the Building and/or the Building Systems, and (ii)
either (x) at times reasonably designated by Tenant, or (y) at any time in case
of emergency. Except in the case of an emergency, Landlord shall notify Tenant
prior to entering the Security Areas and Tenant shall have the right to have its
representative(s) accompany Landlord's representative(s) during any such entry;
provided, however, that Tenant, at all times during Business Hours (and, upon 24
hours' notice from Landlord, at any other time), shall make one or more such
representatives available to so accompany Landlord. Landlord shall have no
obligation to provide any services, or make any repairs, to the Security Areas,
or to other portions of the Premises, to the extent that access to the Security
Areas is necessary to provide such services or make such repairs, unless Tenant
shall provide Landlord with access to the Security Areas for purposes of
providing such services or making such repairs at those times that Landlord
shall reasonably designate in respect thereof.
16.04. If at any time any windows of the Premises are either temporarily
darkened or obstructed by reason of any repairs, improvements, maintenance
and/or cleaning in or about the Building (or permanently darkened or obstructed
if required by law) or covered by any transparent material (which may create a
mirror-like effect) for the purpose of energy conservation, or if any part of
the Building, other than the Premises or access thereto, is temporarily or
permanently closed or inoperable, the same shall be without liability to
Landlord and without any reduction or diminution of Tenant's obligations under
this lease. Nothing contained in this Section 16.04 shall be deemed to abrogate
any of Landlord's obligations to furnish Building Services, as such obligations
are herein expressly set forth. This Section 16.04 shall not limit or restrict
any abatement or termination right granted Tenant pursuant to the provisions of
Article 19, 20 or 39.
16.05. During any Option Period (and following the exercise by Landlord of
any of its Recapture Options) and during the period of two (2) years prior to
the Expiration Date of this lease, Landlord and persons authorized by Landlord
may exhibit the Premises (or the applicable portions thereof) during Business
Hours on Business Days to prospective tenants upon reasonable advance notice.
16.06. Landlord reserves the right, at any time, without it being deemed a
constructive eviction and without incurring any liability to Tenant therefor, or
affecting or reducing any of Tenant's covenants and obligations hereunder, to
make or permit to be made such changes, alterations, additions and improvements
in or to the Building and the fixtures and equipment thereof (but not to the
interior of the
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Premises except as otherwise permitted under this lease), as well as in or to
the street entrances, doors, halls, passages, elevators, escalators and
stairways thereof, and other public parts of the Building, as Landlord shall
deem necessary or desirable, provided, that no such change, alteration, addition
or improvement shall (a) materially adversely affect (i) access to the Premises,
(ii) the size, configuration or utility of any of the Core Lavatories, or (iii)
the provision of any of the Building Services, or (b) otherwise affect any of
the rights and obligations of Landlord and Tenant that are expressly set forth
in this lease. In exercising the rights reserved unto it in this Section 16.06,
Landlord shall comply with the provisions of Section 35.15 hereof.
16.07. Landlord reserves the right to name the Building and to change the
name or address of the Building at any time and from time to time. Neither this
lease nor any use by Tenant shall give Tenant any easement or other right in or
to the use of any door, passage, concourse or plaza connecting the Building with
any subway or any other building or to any public conveniences, and the use of
such doors, passages, concourses, plazas and conveniences may upon reasonable
prior notice to Tenant (except in the case of emergency), be regulated, in
accordance with the provisions of Article 10 hereof, or generally discontinued
at any time by Landlord.
16.08. If Tenant shall not be personally present to open and permit an
entry into the Premises at any time when for any reason an entry therein shall
be urgently necessary by reason of fire or other emergency, Landlord or
Landlord's agents may forcibly enter the same without rendering Landlord or such
agents liable therefor (so long as Landlord or Landlord's agents shall exercise
reasonable care in respect of Tenant's Property) and without in any manner
affecting the obligations and covenants of this lease.
16.09. Tenant, and its permitted subtenants, may have ten (10) listings in
any Building directory located in the Building lobby. Landlord, from time to
time, shall, at Tenant's expense, make such changes in the listings as Tenant
shall request.
16.10. Tenant, throughout the term of this lease, shall have the right to
utilize the vents, if any, which are currently located in and serving the
Premises for the purposes for which the same are designed.
ARTICLE 17
Notice of Occurrences
17.01. Tenant, to the extent is has actual knowledge thereof, shall give
prompt notice to Landlord of any fire or other casualty in or affecting the
Premises.
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ARTICLE 18
Non-Liability and Indemnification
18.01. Neither Landlord nor any Landlord Party shall be liable to Tenant
for any loss, injury or damage to Tenant or to any other person, or to its or
their property, irrespective of the cause of such injury, damage or loss, nor
shall the aforesaid parties be liable to Tenant for any damage to any property
of Tenant or of others entrusted to employees of Landlord nor for loss of or
damage to any such property by theft or otherwise, except in any case to the
extent caused by or resulting from the negligence or willful and improper acts
of Landlord or such Landlord Party. Notwithstanding anything to the contrary
contained in this lease, neither Landlord nor any Landlord Party shall be liable
for consequential damages of any kind or nature (including without limitation
consequential damages in respect of any loss of use of the Premises or any
Tenant's Improvements or Tenant Property) in any event whatsoever, even if
arising from any act, omission or negligence of such party or from the breach by
such party of its obligations under this lease.
18.02. Tenant shall indemnify and hold harmless Landlord and all Landlord
Parties from and against any and all claims (to the extent in excess of any sums
reimbursed by insurance or, which would have been so reimbursed if Landlord had
maintained the insurance required to be maintained by it hereunder) to the
extent that the same arises from (a) the conduct or management of the Premises
or of any business therein, or any condition created (other than by Landlord or
any Landlord Party) in, at or upon the Premises, (b) the negligence or willful
misconduct of Tenant or any Tenant Party, (c) any accident, injury or damage
whatever (except to the extent caused by any negligence or willful misconduct of
Landlord or any Landlord Party) occurring in, at or upon the Premises, or (d)
any breach or default by Tenant in the full and prompt payment and performance
of Tenant's obligations under this lease; together, subject to the provisions of
this Section 18.02, with all costs, expenses and liabilities incurred in or in
connection with each such claim or any action or proceeding brought thereon,
including, without limitation, all reasonable attorneys' fees and expenses. If
any such claim is asserted against Landlord and/or any Landlord Party, Landlord
shall give Tenant prompt notice thereof. If Tenant shall, in good faith, believe
that such claim is or may not be within the scope of the indemnity set forth in
this Section then, pending determination of that question, Tenant shall not be
deemed to be in default under this lease by reason of its failure or refusal to
indemnify and hold harmless Landlord or any Landlord Party therefrom or to pay
such costs, expenses and liabilities, but if it shall be finally determined by a
court of competent jurisdiction that such claim was within the scope of the
indemnity set forth in this Section 18.02, then Tenant shall be liable for any
judgement or reasonable settlement or any reasonable legal fees incurred by the
party entitled to indemnity hereunder. If the issuer of any insurance policy
maintained by Tenant shall assume
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the defense of any claim then Landlord shall permit such insurance carrier to
defend the claim with its counsel and (x) neither Landlord nor any Landlord
Party shall settle such claim without the consent of the insurance carrier
(unless such settlement would relieve Landlord or such Landlord Party of all
liability for which Tenant or its insurance carrier may be liable hereunder),
(y) Landlord and all Landlord Parties shall reasonably cooperate, at Tenant's
expense, with the insurance carrier in its defense of any such claim, and (z)
Tenant shall not be liable for the costs of any separate counsel employed by
Landlord or any Landlord Party.
18.03. Landlord shall indemnify and hold harmless Tenant and all Tenant
Parties from and against any and all claims (to the extent in excess of any sums
reimbursed by insurance or, which would have been so reimbursed if Tenant had
maintained the insurance required to be maintained by it hereunder) to the
extent that the same arises from (a) the negligence or willful misconduct of
Landlord or any Landlord Party, or (b) any breach or default by Landlord in the
full and prompt payment and performance of Landlord's obligations under this
lease; together, subject to the provisions of this Section 18.03, with all
costs, expenses and liabilities incurred in or in connection with each such
claim or any action or proceeding brought thereon, including, without
limitation, all attorneys' fees and expenses. If any such claim is asserted
against Tenant and/or any Tenant Party, Tenant shall give Landlord prompt notice
thereof. If Landlord shall, in good faith, believe that such claim is or may not
be within the scope of the indemnity set forth in this Section then, pending
determination of that question, Landlord shall not be deemed to be in default
under this lease by reason of its failure or refusal to indemnify and hold
harmless Tenant or any Tenant Party therefrom or to pay such costs, expenses and
liabilities, but if it shall be finally determined by a court of competent
jurisdiction that such claim was within the scope of the indemnity set forth in
this Section 18.03, then Landlord shall be liable for any judgement or
reasonable settlement or any reasonable legal fees incurred by the party
entitled to indemnity hereunder. If the issuer of any insurance policy
maintained by Landlord shall assume the defense of any claim then Tenant shall
permit such insurance carrier to defend the claim with its counsel and (x)
neither Tenant nor any Tenant Party shall settle such claim without the consent
of the insurance carrier (unless such settlement would relieve Tenant or such
Tenant Party of all liability for which Landlord or its insurance carrier may be
liable hereunder), (y) Tenant and all Tenant Parties shall reasonably cooperate,
at Landlord's expense, with the insurance carrier in its defense of any such
claim, and (z) Landlord shall not be liable for the costs of any separate
counsel employed by Tenant or any Tenant Party.
ARTICLE 19
Damage or Destruction
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19.01. If the Building or the Premises shall be partially or totally
damaged or destroyed by fire or other casualty, then, unless this lease is
terminated as hereinafter provided in this Article 19, the following provisions
shall apply:
(a) Landlord shall repair the damage to and restore and rebuild the
Base Building (inclusive of the Base Building Premises Components) to a
condition which is substantially the same condition as (or to a better condition
than) the condition of the same immediately prior to the fire or other casualty;
excluding, however, (1) those portions of the Base Building which do not affect,
or affect only to a de minimis extent, (i) Tenant's use and occupancy of the
Premises, (ii) access to the Premises, (iii) the provision of Building Services
to the Premises, and (iv) Tenant's ability to perform Alterations which would
otherwise be permitted hereunder, and (2) in all events, Tenant's Improvements
and Tenant's Property; all such repair, restoration and rebuilding work being
herein called the "LANDLORD RESTORATION WORK". Landlord shall commence the
Landlord Restoration Work with due diligence after the Landlord Restoration
Start Date (as hereinafter defined) and, subject to Events of Force Majeure,
shall prosecute the same to completion with diligence and continuity.
(b) Tenant may, but shall not be required to, perform the Tenant
Restoration Work (as hereinafter defined); provided, however, that Tenant shall
be required to perform the Tenant Restoration Work to the extent required so
that the value of the Tenant's Improvements in the Premises (undamaged or
repaired, restored and rebuilt) shall be at least equal to the value of the
Tenant's Improvements which would have been in the Premises immediately prior to
such fire if the Initial Alterations had been limited to those which were paid
for by application of Landlord's Contribution and if Tenant had made no
subsequent Alterations in the Premises. As used herein, the "TENANT RESTORATION
WORK" shall mean all the repairs, restoration and rebuilding required to restore
the Tenant's Improvements to their condition immediately prior to the fire or
other casualty. All Tenant Restoration Work shall be deemed Alterations for the
purpose of Article 11, and Tenant shall perform all such work in accordance with
the provisions thereof, provided, however, that Landlord's approval of the plans
therefor shall not be required to the extent the Tenant Restoration Work
consists of restoring the same Tenant's Improvements which were damaged or
destroyed (unless the same were made in violation of this lease). Tenant shall
commence so much of the Tenant Restoration Work as it shall be required by the
provisions of this Section 19.01(b) to perform on or prior to the Tenant
Restoration Start Date (as hereinafter defined), and, subject to Events of Force
Majeure, shall prosecute the same to completion with diligence and continuity.
In addition and in all events, Tenant shall move or remove from the Premises, as
soon as it is feasible to do so, such salvageable Tenant's Improvements and
Tenant's Property as may be reasonably designated by Landlord as necessary for
Landlord to perform the Landlord Restoration Work.
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(c) (1) The "LANDLORD RESTORATION START DATE" shall mean the date
ten (10) days after the date that Landlord shall first have knowledge of the
damage or destruction giving rise to the need for the Landlord Restoration Work;
provided, however, that (I) in any case where Landlord is required to designate
an Expert (as hereinafter defined) pursuant to Section 19.03 hereof, the
"Landlord Restoration Start Date" shall not occur prior to the date that Tenant
receives a statement from the Expert setting forth the Section 19.03 Estimated
Period (as hereinafter defined) (or, if the Section 19.03 Estimated Period is
longer than nine (9) months, then the date that is twenty (20) Business Days
after Tenant's receipt of such statement), and (II) in any case where Landlord
designates an Expert pursuant to Section 19.04 hereof, the "Landlord Restoration
Start Date" shall not occur until the date that Tenant receives a statement from
the Expert setting forth the Section 19.04 Estimate (as hereinafter defined)
(or, if, by reason of the Section 19.04 Estimate, Landlord shall have a right to
terminate this lease pursuant to Section 19.04, the first date that Landlord no
longer has such termination right).
(2) The "TENANT RESTORATION START DATE" shall mean the Ten Day
Date (as hereinafter defined); provided, however, that (I) in any case where
Landlord is required to designate an Expert (as hereinafter defined) pursuant to
Section 19.03 hereof, the "Tenant Restoration Start Date" shall not occur prior
to the date that Tenant receives a statement from the Expert setting forth the
Section 19.03 Estimated Period (as hereinafter defined) (or, if the Section
19.03 Estimated Period is longer than nine (9) months, then the date that is
twenty (20) Business Days after Tenant's receipt of such statement), and (II) in
any case where Landlord designates an Expert pursuant to Section 19.04 hereof,
the "Tenant Restoration Start Date" shall not occur until the date that Tenant
receives a statement from the Expert setting forth the Section 19.04 Estimate
(as hereinafter defined) (or, if, by reason of the Section 19.04 Estimate,
Landlord shall have a right to terminate this lease pursuant to Section 19.04,
the first date that Landlord no longer has such termination right).
(3) The "TEN DAY DATE" shall mean the date that is ten (10)
Business Days after Landlord shall have substantially completed enough of the
Landlord Restoration Work (if any), that Tenant shall be able, in accordance
with good construction practices, to commence prosecution of the Tenant
Restoration Work (including without limitation any Landlord Restoration Work
that is needed to provide Tenant with the access required to commence such
Tenant's Restoration Work) and shall have notified Tenant thereof in writing; or
if no Landlord Restoration Work is applicable, then the "Ten Day Date" shall be
the date ten (10) Business Days after the date on which Tenant first learns of
the damage or destruction giving rise to the need for the Tenant Restoration
Work.
19.02. If, on account of fire or other casualty, all or a part of the
Premises shall be rendered untenantable (whether as a result of damage or
destruction to the Premises or damage or destruction to parts of the Building
outside the Premises),
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then the Fixed Rent, the Tax Payments and the Operating Payments attributable to
each portion of the Premises that is so rendered untenantable shall abate for
the period (if any) commencing on the date that such portion of the Premises
first becomes untenantable and ending on the day preceding the later to occur of
the following dates (as applicable):
(a) the earliest to occur of (i) the date that Tenant shall have
substantially completed so much of the Tenant Restoration Work (if any) as
is needed to render such portion of the Premises tenantable, (ii) the date
that Tenant would have substantially completed so much of the Tenant
Restoration Work (if any) as is needed to render such portion of the
Premises tenantable, had Tenant, from and after the Tenant Restoration
Start Date, prosecuted such work to completion with diligence and
continuity (subject to Events of Force Majeure), and (iii) the date that is
six (6) months after the Ten Day Date (provided that this subsection (a)
shall only be applicable if Tenant Restoration Work is needed to render
such portion of the Premises tenantable); and
(b) the date upon which Landlord shall have substantially completed
so much of the Landlord Restoration Work as is needed to allow such portion
of the Premises, subject to the completion of the applicable Tenant
Restoration Work, to be made tenantable (provided that this subsection (b)
shall only be applicable if Landlord Restoration Work is needed to render
such portion of the Premises tenantable);
provided, however, that the aforesaid abatement period with respect to any
portion of the Premises shall not, in any event, extend beyond the day preceding
the date that such portion of the Premises becomes tenantable (e.g., if Tenant,
or any person claiming by, through or under Tenant, shall re-occupy such portion
of the Premises for the purposes demised hereunder, then the aforesaid abatement
with respect to such portion of the Premises shall thereupon automatically
cease).
19.03. (a) If, at anytime during the term of this lease, the Building shall
be damaged or destroyed by fire or other casualty, and, as a result thereof,
10,000 rentable square feet or more of the Premises are rendered untenantable
(whether as a result of damage or destruction to the Premises or damage or
destruction to parts of the Building outside the Premises), then the following
provisions shall apply:
(1) Landlord, within twenty (20) Business Days after Landlord
has notice of such damage, shall designate an independent, reputable contractor,
registered architect or licensed professional engineer, having at least ten (10)
years' experience in the applicable areas of expertise (any such contractor,
architect or engineer being herein called an "EXPERT") to act in accordance with
the provisions of this Section 19.03, which Expert shall be subject to Tenant's
approval, which approval shall not be unreasonably withheld. In any case that
Landlord requests Tenant's
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approval of one or more designated Experts (together with a brief written
description of each such entity's qualifications), Tenant, within five (5)
Business Days after Tenant's receipt of such request, shall either grant or deny
such approval with respect to each such Expert (it being agreed that Tenant's
failure to deny such approval of any such Expert in a notice setting forth, in
reasonable detail, its reasons therefor, within such five (5) Business Day
period shall be deemed an approval of such Expert). Tenant further agrees that
if, in connection with any fire or other casualty, an Expert has been approved
for substantially similar purposes by a tenant of the Building (other than
Tenant) that leases in excess of 300,000 rentable square feet in the Building,
then, with respect to such fire or other casualty, Tenant's approval of such
Expert shall be deemed given. Within twenty (20) Business Days after an Expert
has been approved (or deemed approved) by Tenant, Landlord shall deliver to
Tenant a statement prepared by such Expert setting forth such Expert's estimate
as to the time period (measured from the date of the fire or other casualty)
required for the substantial completion of so much of the Landlord Restoration
Work as is needed to allow the Premises, subject to the completion of the
applicable Tenant Restoration Work, to be made tenantable (the time period so
set forth in such estimate is referred to as the "SECTION 19.03 ESTIMATED
PERIOD").
(2) If the Section 19.03 Estimated Period exceeds nine (9)
months from the date of the fire or other casualty, then Tenant may elect to
terminate this lease by notice to Landlord given not later than twenty (20)
Business Days following receipt of such estimate, which notice shall set forth
the date upon which this lease shall terminate, which date shall in no event be
less than ten (10) days nor more than twelve (12) months following the date of
Tenant's notice (and in no event after the Expiration Date). If Tenant makes
such election, then this lease shall terminate upon the termination date set
forth in Tenant's notice as if such date was the Expiration Date.
(3) If (i) Tenant shall not have elected to terminate this
lease pursuant to Section 19.03(a)(2) above (or if Tenant shall not have been
entitled to terminate this lease pursuant to Section 19.03(a)(2) above), and
(ii) as of the Section 19.03 Outside Date (as defined below), Landlord shall not
have effected the substantial completion of so much of the Landlord Restoration
Work as is needed to allow the Premises, subject to the completion of the
applicable Tenant Restoration Work, to be made tenantable, then Tenant, as its
sole remedy on account thereof, may elect to terminate this lease by notice to
Landlord given not later than thirty (30) days following Section 19.03 Outside
Date, which notice shall set forth the date upon which this lease shall
terminate, which date shall in no event be less than ten (10) days nor more than
twelve (12) months after the date of Tenant's notice (and in no event after the
Expiration Date). The term "SECTION 19.03 OUTSIDE DATE", with respect to any
fire or other casualty, shall mean the later to occur of (I) the date that is
sixty days (60) days after the last day of the Section 19.03 Estimated Period,
and (II) the date that is nine (9) months after the date of the fire or other
casualty; except that the
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Section 19.03 Outside Date shall be postponed, but not by more than additional
sixty (60) days, by Events of Force Majeure.
(b) Upon the termination of this lease under any of the conditions
provided above in this Section 19.03, Tenant's liability for Fixed Rent, Tax
Payments and Operating Payments shall, subject to the provisions of Section
19.02, be prorated and adjusted as of the termination date.
19.04. (a) If, at anytime during the term of this lease, the Building shall
be materially damaged or destroyed by fire or other casualty (whether or not any
portion of the Premises is damaged, destroyed or rendered untenantable), then
Landlord, at anytime thereafter (but in no event more than sixty (60) days after
the date of the fire or other casualty), may designate an Expert to act in
accordance with the provisions of this Section 19.04, which Expert shall be
subject to Tenant's approval, which approval shall not be unreasonably withheld.
In any case that Landlord requests Tenant's approval of one or more designated
Experts (together with a brief written description of each such entity's
qualifications), Tenant, within five (5) Business Days after Tenant's receipt of
such request, shall either grant or deny such approval of each such Expert (it
being agreed that Tenant's failure to deny such approval of any such Expert in a
notice setting forth, in reasonable detail, its reasons therefor, within such
five (5) Business Day period shall be deemed an approval of such Expert). Tenant
further agrees that if an Expert has been approved, with respect to any fire or
other casualty, for substantially similar purposes by a tenant of the Building
(other than Tenant) that leases in excess of 300,000 rentable square feet in the
Building, then, with respect to such fire or other casualty, Tenant's approval
of such Expert shall be deemed given. At anytime after an Expert has been
approved (or deemed approved) by Tenant (but in no event more than thirty (30)
days after such Expert was approved or deemed approved), Landlord may deliver to
Tenant a statement prepared by such Expert setting forth such Expert's estimate
of (i) the time required to fully repair and restore the Base Building (measured
from the date of the fire or other casualty) and/or (ii) the cost of such repair
and restoration (such estimate being herein called the "SECTION 19.04
ESTIMATE").
(b) If the Section 19.04 Estimate shall indicate that the full
repair and restoration of the Base Building requires either (i) more than twelve
(12) months (measured from the date of the fire or other casualty) or (ii) the
expenditure of more than forty (40%) percent of the full insurable value of the
Base Building determined as of the date immediately prior to the casualty (which
term "FULL INSURABLE VALUE" shall refer to the replacement cost of the Base
Building, less the cost of footings, foundations and other structures below the
ground level of the Building), then, in either of such events, Landlord may
terminate this lease by giving Tenant notice to such effect within twenty (20)
Business Days after the date of the Section 19.04 Estimate (but not, in any
event, later than ninety (90) days after such fire or other casualty), which
notice shall set forth the date for the termination of this lease, which
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date shall not be less than three (3) months nor more than twelve (12) months
from the date of such notice. If Landlord makes such election, then this lease
shall terminate on the termination date set forth in Landlord's notice as if the
same was the Expiration Date, and the Fixed Rent, Tax Payments and Operating
Payments shall, subject to the provisions of Section 19.02, be prorated and
adjusted as of such termination date.
19.05. Except as expressly provided in this Article 19, neither Landlord
nor Tenant shall be entitled to terminate this lease on account of damage or
destruction by fire or other casualty. Landlord shall have no liability to
Tenant for inconvenience, loss of business or annoyance arising from any repair
or restoration of any portion of the Premises or of the Building pursuant to
this Article 19. Landlord shall prosecute the Landlord Restoration Work with
diligence and continuity (subject to Force Majeure) and consistent with the
provisions of Section 35.15 hereof, and, without limiting the generality of the
foregoing, shall use reasonable efforts to complete the applicable portions of
any Landlord Restoration Work prior to end of any Section 19.03 Estimated
Period; provided, however, that, except as expressly provided in Section 35.15
hereof, in no event shall Landlord ever be obligated to perform any Landlord
Restoration Work except during Business Hours on Business Days.
19.06. Landlord will not be required to carry insurance of any kind on
Tenant's Improvements or Tenant's Property and shall not be required to repair
any damage to or replace Tenant's Improvements or Tenant's Property.
19.07. The provisions of this Article 19 shall be deemed an express
agreement governing any case of damage or destruction of the Premises by fire or
other casualty, and Section 227 of the Real Property Law of the State of New
York, providing for such a contingency in the absence of an express agreement,
and any other law of like import, now or hereafter in force, shall have no
application in such case.
19.08. All proceeds of the insurance maintained by Tenant under clause (a)
of the first sentence of Section 9.03 with respect to Tenant's Improvements
shall be endorsed to, and deposited with, Landlord; such proceeds, together with
any interest earned thereon, being herein called the "DEPOSITED PROCEEDS".
Landlord shall disburse or retain the Deposited Proceeds in accordance with the
following provisions of this Section 19.08:
(a) If neither Landlord nor Tenant shall terminate this lease
pursuant to the provisions of Sections 19.03 or 19.04 hereof, then Landlord,
from and after the date that Tenant no longer has any further right to terminate
this lease pursuant to Section 19.03 hereof, shall make disbursements of the
Deposited Proceeds to Tenant as follows:
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(1) If Tenant is required pursuant to the provisions of
Section 19.01 to perform any Tenant Restoration Work (such required work being
herein called the "REQUIRED TENANT RESTORATION WORK"), Landlord shall (A) first,
disburse the Deposited Proceeds to Tenant as reimbursement for the costs and
expenses (including hard and soft costs, including without limitation clean-up,
rubbish and debris removal, and architectural and engineering fees) incurred by
Tenant in the prosecution of such Required Tenant Restoration Work
(collectively, the "REQUIRED TENANT RESTORATION COSTS"), such Deposited Proceeds
to be disbursed in accordance with the provisions of Section 36.01(a) and (b),
mutatis mutandis, except that references therein to (i) "Landlord's
Contribution" shall be deemed to mean the Required Tenant Restoration Costs,
(ii) "Initial Tenant Work" shall be deemed to mean the Required Tenant
Restoration Work, (iii) "One Million Nine Hundred Ten Thousand Four Hundred
Fifty-Nine and 98/100 ($1,910,459.98)" shall be deemed to mean the entire
Deposited Proceeds, and (iv) "Tenant's Soft Costs" shall be deemed to mean the
soft costs incurred by Tenant in the prosecution of the Tenant Restoration Work.
Sections 36.03 and 36.04 shall apply, mutatis mutandis, to the payment of the
Deposited Proceeds pursuant to the foregoing provisions of this Section
19.08(a), and (B) second, together with the final disbursement of Deposited
Proceeds as reimbursement for the Required Tenant Restoration Costs pursuant to
the foregoing provisions, also disburse the balance, if any, of the Deposited
Proceeds to Tenant.
(2) If there is no Required Tenant Restoration Work, then
Landlord shall disburse the entire Deposited Proceeds to Tenant. Such
disbursement to Tenant shall be made within thirty (30) days after the date that
Tenant no longer has any further right to terminate this lease pursuant to
Section 19.03 hereof.
(b) If this lease shall be terminated by Tenant pursuant to Section
19.03 hereof, then Landlord (i) may retain the Deposited Proceeds up an amount
equal to the Unamortized Contribution Amount as of the date of such termination,
and (ii) shall disburse the balance, if any, of the Deposited Proceeds to
Tenant. Such disbursement to Tenant, if any, shall be made within thirty (30)
days after the date of such termination. As used herein, the "UNAMORTIZED
CONTRIBUTION AMOUNT", as of any date, shall mean the principal balance which
would be outstanding, as of such date, under a loan (i) advanced on the Rent
Commencement Date in an original principal amount equal to Landlord's
Contribution, (ii) bearing interest at a rate of 9% per annum, and (iii)
providing for combined constant monthly payments of principal and interest
sufficient to fully liquidate such loan over the period commencing on the Rent
Commencement Date and ending on the Expiration Date.
(c) If this lease shall be terminated by Landlord pursuant to
Section 19.04 hereof, then Landlord, except to the extent it may have previously
disbursed the Deposited Proceeds to Tenant pursuant to Section 19.08(a) above,
shall disburse the entire Deposited Proceeds to Tenant. Such disbursement to
Tenant shall be made within thirty (30) days after the date of such termination.
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ARTICLE 20
Eminent Domain
20.01. If the whole of the Building or the Premises shall be taken by
condemnation or in any other manner for any public or quasi-public use or
purpose, this lease and the term and estate hereby granted shall terminate as of
the date of the vesting of title in connection with such taking (herein called
"DATE OF THE TAKING"), and the Fixed Rent and Additional Charges shall be
prorated and adjusted as of such date.
20.02. If any part of the Building or the Land shall be so taken, this
lease shall be unaffected by such taking, except that (a) if more than twenty
(20%) percent of the Building or if twenty (20%) percent or more of the rentable
area of the Premises shall be so taken, then, in either event, Landlord may, at
its option, terminate this lease by giving Tenant notice to that effect within
ninety (90) days after the Date of the Taking, and (b) if twenty (20%) percent
or more of the rentable area of the Premises shall be so taken and the remaining
rentable area of the Premises shall not be reasonably sufficient for Tenant to
continue feasible operation of its business, then Tenant may terminate this
lease by giving Landlord notice to that effect within ninety (90) days after the
Date of the Taking. This lease shall terminate on the date that such notice from
Landlord or Tenant to the other shall be given, and the Fixed Rent and
Additional Charges shall be prorated and adjusted as of such termination date.
Upon such partial taking and this lease continuing in force as to any part of
the Premises, the Fixed Rent, Tenant's Tax Share and Tenant's Operating Share
shall be reduced and the Base Tax Amount and Base Operating Amount shall be
adjusted, all in the proportion that the area of the Premises taken bears to the
total area of the Premises.
20.03. Landlord shall be entitled to receive the entire award or payment in
connection with any taking without reduction therefrom for any estate vested in
Tenant by this lease or any value attributable to the unexpired portion of the
term of this lease and Tenant shall receive no part of such award. Tenant hereby
expressly assigns to Landlord all of its right, title and interest in and to
every such award or payment and waives any right to the value of the unexpired
portion of the term of this lease, except as set forth in the preceding
sentence. Tenant may maintain a separate action for Tenant's Property and moving
expenses; provided, however, that any award shall not result in a reduction of
Landlord's award.
20.04. If the temporary use or occupancy of all or any part of the Premises
shall be taken by condemnation or in any other manner for any public or
quasi-public use or purpose during the term of this lease (any such taking being
herein called a "TEMPORARY TAKING"), then (i) this lease shall be and remain
unaffected
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by such taking and Tenant shall continue to be responsible for all of its
obligations hereunder insofar as such obligations are not affected by such
taking and shall continue to pay in full the Fixed Rent and Additional Charges
when due, (ii) Tenant shall be entitled, except as hereinafter set forth, to
receive that portion of the award for such temporary taking which represents
compensation for the use and occupancy of the Premises, for the temporary taking
of Tenant's Improvements, Tenant's Property and for moving expenses, and (iii)
Landlord shall be entitled to receive that portion of the award, if any, for
such temporary taking which represents reimbursement for the cost of restoring
the Premises. If the period of temporary use or occupancy shall extend beyond
the Expiration Date of this lease, that part of the award which represents
compensation for the use and occupancy of the Premises (or a part thereof) shall
be divided between Landlord and Tenant so that Tenant shall receive so much
thereof as represents the period up to and including such Expiration Date and
Landlord shall receive so much thereof as represents the period after such
Expiration Date.
20.05. In the event of a taking of less than the whole of the Building
and/or the Land which does not result in termination of this lease, or in the
event of a temporary taking of all or any part of the Premises which does not
result in a termination of this lease, (a) Landlord, at its expense, and whether
or not any award or awards shall be sufficient for the purpose (except as
provided below)~ shall proceed with reasonable diligence to perform the
Landlord's Condemnation Work (as defined below), and (b) Tenant, at its expense,
and whether or not any award or awards shall be sufficient for the purpose,
shall have the right (but shall not be obligated) to perform the Tenant's
Condemnation Work (as defined below). The "LANDLORD'S CONDEMNATION WORK" shall
mean the work necessary to repair the remaining parts of the Building and the
Premises (other than the Tenant's Improvements and Tenant's Property) to
substantially their former condition to the extent that the same may be feasible
(subject to reasonable changes which Landlord shall deem desirable) and so as to
constitute a complete and rentable Building and Premises. The "TENANT'S
CONDEMNATION WORK" shall mean the work necessary to repair the Tenant's
Improvements and Tenant's Property, to substantially their former condition to
the extent that the same may be feasible, subject to reasonable changes which
shall be deemed Alterations.
ARTICLE 21
Surrender
21.01. On the Expiration Date, or upon any earlier termination of this
lease, or upon any reentry by Landlord upon the Premises pursuant to Article 23,
Tenant shall quit and surrender the Premises to Landlord "broom-clean" and in
good order, condition and repair, except for ordinary wear and tear and such
damage or
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destruction as Landlord is required to repair or restore under this lease or
Tenant is not required under this lease to repair or restore, and Tenant (i)
shall remove those Tenant's Improvements which it is required to remove pursuant
to Article 12 hereof and (ii) shall remove all of the Tenant's Property except
as otherwise expressly provided in this lease.
21.02. No act or thing done by Landlord or its agents shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept such
surrender shall be valid unless in writing and signed by Landlord and each
Underlying Lessor and Mortgagee (of which Tenant has knowledge) whose lease or
mortgage, as the case may be, provides that no such surrender may be accepted
without its consent.
ARTICLE 22
Conditions of Limitation
22.01. This lease and the term and estate hereby granted are subject to the
limitation that whenever Tenant shall make a general assignment for the benefit
of creditors, or shall file a voluntary petition under any bankruptcy or
insolvency law, or an involuntary petition alleging an act of bankruptcy or
insolvency shall be filed against Tenant under any bankruptcy or insolvency law
(and such petition shall not be dismissed within 120 days after its filing), or
whenever a petition shall be filed by or against (and if against, such petition
shall not be dismissed within 120 days after its filing) Tenant under the
reorganization provisions of the United States Bankruptcy Code or under the
provisions of any law of like import, or whenever a petition shall be filed by
Tenant, under the arrangement provisions of the United States Bankruptcy Code or
under the provisions of any law of like import, or whenever a permanent receiver
of Tenant, or of or for the property of Tenant, shall be appointed and not
removed after a period of 120 days, then Landlord, at any time after the
occurrence of any such event, may give Tenant a notice of intention to end the
term of this lease at the expiration of five days from the date of service of
such notice of intention, and upon the expiration of said five-day period this
lease and the term and estate hereby granted, whether or not the term shall
theretofore have commenced, shall terminate with the same effect as if that day
were the expiration date of this lease, but Tenant shall remain liable for
damages as provided in Article 24.
22.02. This lease and the term and estate hereby granted are subject to the
further limitations that:
(a) if Tenant shall default in the payment of any (i) Fixed Rent,
and such default shall continue for ten (10) days after notice thereof from
Landlord or (ii) Additional Charges, and such default shall continue for a
period of fifteen (15) days after notice thereof from Landlord, or
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(b) if Tenant shall, whether by action or inaction, be in default of
any of its obligations under this lease (other than a default in the payment of
Fixed Rent or Additional Charges) and such default shall continue and not be
remedied as soon as reasonably practicable and in any event within thirty (30)
days after Landlord shall have given to Tenant a notice specifying the same, or,
in the case of a default which cannot with due diligence be cured within a
period of thirty (30) days, if Tenant shall not (x) within said thirty (30) day
period advise Landlord of Tenant's intention to take all steps necessary to
remedy such default, (y) duly commence within said 30-day period, and thereafter
diligently prosecute to completion all steps necessary to remedy the default and
(z) complete such remedy within a reasonable time after the date of said notice
of Landlord, or
(c) if any event shall occur or any contingency shall arise whereby
this lease or the estate hereby granted or the unexpired balance of the term
hereof would, by operation of law or otherwise, devolve upon or pass to any
person, firm or corporation other than Tenant, except as expressly permitted by
Article 7.
Then in any of said cases Landlord may give to Tenant a notice of
intention to end the term of this lease at the expiration of ten (10) days from
the date of the service of such notice of intention, and upon the expiration of
said ten (10) days this lease and the term and estate hereby granted, whether or
not the term shall theretofore have commenced, shall terminate with the same
effect as if that day was the day herein definitely fixed for the end and
expiration of this lease, but Tenant shall remain liable for damages as provided
in Article 24.
22.03. (a) If Tenant shall have assigned its interest in this lease, and
this lease shall thereafter be disaffirmed or rejected in any proceeding under
the United States Bankruptcy Code or under the provisions of any Federal, state
or foreign law of like import, or in the event of termination of this lease by
reason of any such proceeding, the assignor or any of its predecessors in
interest under this lease, upon request of Landlord given within ninety (90)
days after such disaffirmance or rejection shall (a) pay to Landlord all Fixed
Rent and Additional Charges then due and payable to Landlord under this lease to
and including the date of such disaffirmance or rejection and (b) enter into a
new lease as lessee with Landlord of the Premises for a term commencing on the
effective date of such disaffirmance or rejection and ending on the Expiration
Date, unless sooner terminated as in such lease provided, at the same Fixed Rent
and Additional Charges and upon the then executory terms, covenants and
conditions as are contained in this lease, except that (i) the rights of the
lessee under the new lease, shall be subject to any possessory rights of the
assignee in question under this lease and any rights of persons claiming through
or under such assignee, (ii) such new lease shall require all defaults existing
under this lease to be cured by the lessee with reasonable diligence, and (iii)
such new lease shall require the lessee to pay all Additional Charges which, had
this lease not been disaffirmed or rejected, would have become due after the
effective date of
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such disaffirmance or rejection with respect to any prior period. If the lessee
shall fail or refuse to enter into the new lease within ten (10) days after
Landlord's request to do so, then in addition to all other rights and remedies
by reason of such default, under this lease, at law or in equity, Landlord shall
have the same rights and remedies against the lessee as if the lessee had
entered into such new lease and such new lease had thereafter been terminated at
the beginning of its term by reason of the default of the lessee thereunder.
(b) If pursuant to the Bankruptcy Code Tenant is permitted to assign
this lease in disregard of the restrictions contained in Article 7 (or if this
lease shall be assumed by a trustee), the trustee or assignee shall cure any
default under this lease and shall provide adequate assurance of future
performance by the trustee or assignee including (i) the source of payment of
rent and performance of other obligations under this Lease, for which adequate
assurance shall mean the deposit of cash security with Landlord in an amount
equal to the sum of one year's Fixed Rent then reserved hereunder plus an amount
equal to all Additional Charges payable under Article 3 for the calendar year
preceding the year in which such assignment is intended to become effective,
which deposit shall be held by Landlord, without interest, for the balance of
the term as security for the full and faithful performance of all of the
obligations under this lease on the part of Tenant yet to be performed, and that
any such assignee of this lease shall have a net worth exclusive of good will,
computed in accordance with generally accepted accounting principles, equal to
at least ten (10) times the aggregate of the annual Fixed Rent reserved
hereunder plus all Additional Charges for the preceding calendar year as
aforesaid and (ii) that the use of the Premises shall in no way diminish the
reputation of the Building as a first-class office building or impose any
additional burden upon the Building or increase the services to be provided by
Landlord. If all defaults are not cured and such adequate assurance is not
provided within 60 days after there has been an order for relief under the
Bankruptcy Code, then this lease shall be deemed rejected, Tenant or any other
person in possession shall vacate the Premises, and Landlord shall be entitled
to retain any rent or security deposit previously received from Tenant and shall
have no further liability to Tenant or any person claiming through Tenant or any
trustee. If Tenant receives or is to receive any valuable consideration for such
an assignment of this Lease, such consideration, after deducting therefrom (a)
the brokerage commissions, if any, and other expenses reasonably incurred by
Tenant for such assignment and (b) any portion of such consideration reasonably
designed by the assignee as paid for the purchase of Tenant's Property in the
Premises, shall be and become the sole exclusive property of Landlord and shall
be paid over to Landlord directly by such assignee.
(c) If Tenant's trustee, Tenant or Tenant as debtor-in-possession
assumes this lease and proposes to assign the same (pursuant to Title 11 U.S.C.
Section 365, as the same may be amended) to any person, including, without
limitation, any individual, partnership or corporate entity, who shall have made
a bona fide offer to
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accept an assignment of this lease on terms acceptable to the trustee, Tenant or
Tenant as debtor-in-possession, then notice of such proposed assignment, setting
forth (x) the name and address of such person, (y) all of the terms and
conditions of such offer, and (z) the adequate assurance to be provided Landlord
to assure such person's future performance under this lease, including, without
limitation, the assurances referred to in Title 11 U.S.C. Section 365(b)(3) (as
the same may be amended), shall be given to Landlord by the trustee, Tenant or
Tenant as debtor-in-possession no later than twenty (20) days after receipt by
the trustee, Tenant or Tenant as debtor-in-possession of such offer, but in any
event no later than ten (10) days prior to the date that the trustee, Tenant or
Tenant as debtor-in-possession shall make application to a court of competent
jurisdiction for authority and approval to enter into such assignment and
assumption, and Landlord shall thereupon have the prior right and option, to be
exercised by notice to the trustee, Tenant or Tenant as debtor-in-possession,
given at any time prior to the effective date of such proposed assignment, to
accept an assignment of this lease upon the same terms and conditions and for
the same consideration, if any, as the bona fide offer made by such person, less
any brokerage commissions which may be payable out of the consideration to be
paid by such person for the assignment of this lease.
ARTICLE 23
Reentry by Landlord
23.01. If Landlord obtains a court order permitting reentry, or if this
lease shall terminate as provided in Article 22, Landlord or Landlord's agents
and employees may immediately or at any time thereafter reenter the Premises, or
any part thereof, either by summary dispossess proceedings or by any suitable
action or proceeding at law, without being liable to indictment, prosecution or
damages therefor, and may repossess the same, and may remove any person
therefrom, to the end that Landlord may have, hold and enjoy the Premises. The
word "reenter", as used herein, is not restricted to its technical legal
meaning. If this lease is terminated under the provisions of Article 22, or if
Landlord shall reenter the Premises under the provisions of this Article, or in
the event of the termination of this lease, or of reentry, by or under any
summary dispossess or other proceeding or action or any provision of law by
reason of default hereunder on the part of Tenant, Tenant shall thereupon pay to
Landlord the Fixed Rent and Additional Charges payable up to the time of such
termination of this lease, or of such recovery of possession of the Premises by
Landlord, as the case may be, and shall also pay to Landlord damages as provided
in Article 24.
23.02. In the event of a breach or threatened breach by Tenant of any of
its obligations under this lease, Landlord shall also have the right of
injunction. The special remedies to which Landlord may resort hereunder are
cumulative and are not
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intended to be exclusive of any other remedies to which Landlord may lawfully be
entitled at any time and Landlord may invoke any remedy allowed at law or in
equity as if specific remedies were not provided for herein.
23.03. If this lease shall terminate under the provisions of Article 22, or
if Landlord shall reenter the Premises under the provisions of this Article, or
in the event of the termination of this lease, or of reentry, by or under any
summary dispossess or other proceeding or action or any provision of law by
reason of default hereunder on the part of Tenant, Landlord shall be entitled to
retain all monies, if any, paid by Tenant to Landlord, whether as advance rent,
security or otherwise, but such monies shall be credited by Landlord against any
Fixed Rent or Additional Charges due from Tenant at the time of such termination
or reentry or, at Landlord's option, against any damages payable by Tenant under
Article 24 or pursuant to law.
ARTICLE 24
Damages
24.01. If this lease is terminated under the provisions of Article 22, or
if Landlord shall reenter the Premises under the provisions of Article 23, or in
the event of the termination of this lease by reason of Tenant's default, or of
reentry, by or under any summary dispossess or other proceeding or action or any
provision of law by reason of default hereunder on the part of Tenant, Tenant
shall pay to Landlord as damages, at the election of Landlord, either:
(a) a sum which at the time of such termination of this lease or at
the time of any such re-entry by Landlord, as the case may be, represents
the then present value, discounted to present value at the Article 24
Discount Rate (as defined below), of the excess, if any, of
(1) the aggregate amount of the Fixed Rent and the Additional
Charges under Article 3 which would have been payable by Tenant
(conclusively presuming the average monthly Additional Charges under
Article 3 to be the same as were payable for the last 12 calendar
months, or if less than 12 calendar months have then elapsed since
the Commencement Date, all of the calendar months immediately
preceding such termination or reentry) for the period (herein called
the "COMPUTATION PERIOD") commencing with such earlier termination
of this lease or the date of any such reentry, as the case may be,
and ending with the date contemplated as the Expiration Date hereof
if this lease had not so terminated or if Landlord had not so
reentered the Premises, over
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(2) the aggregate rental value of the Premises for the
Computation Period; or
(b) sums equal to the Fixed Rent and the Additional Charges under
Article 3 which would have been payable by Tenant had this lease not so
terminated, or had Landlord not so reentered the premises, payable upon the
due dates therefor specified herein following such termination or such
reentry and until the date contemplated as the Expiration Date hereof if
this lease had not so terminated or if Landlord had not so reentered the
Premises; provided, however, that if Landlord shall relet the Premises
during said period, Landlord shall credit Tenant with the net rents
received by Landlord from such reletting, such net rents to be determined
by first deducting from the gross rents as and when received by Landlord
from such reletting the expenses incurred or paid by Landlord in
terminating this lease or in reentering the Premises and in securing
possession thereof, as well as the expenses of reletting, including,
without limitation, altering and preparing the Premises for new tenants,
brokers' commissions, legal fees, and all other expenses properly
chargeable against the Premises and the rental therefrom, it being
understood that any such reletting may be for a period shorter or longer
than the remaining term of this lease; but in no event shall Tenant be
entitled to receive any excess of such net rents over the sums payable by
Tenant to Landlord hereunder, nor shall Tenant be entitled in any suit for
the collection of damages pursuant to this subdivision to a credit in
respect of any net rents from a reletting, except to the extent that such
net rents are actually received by Landlord. If the Premises or any part
thereof should be relet in combination with other space, then proper
apportionment on a square foot basis shall be made of the rent received
from such reletting and of the expenses of reletting.
If the Premises or any part thereof should be occupied by Landlord (or, if on
other than on an arms' length basis, by Landlord's agents or Affiliates) for the
conduct of such party's ordinary business (as distinguished from temporary use
for the business of operating and/or leasing the Real Property), then Landlord
shall credit Tenant with the fair market rental value of the portion of the
Premises so occupied, minus the costs incurred by Landlord (or such agent or
affiliate) to prepare such portion for its occupancy.
If the Premises or any part thereof be relet by Landlord for the unexpired
portion of the term of this lease, or any part thereof, before presentation of
proof of such damages to any court, commission or tribunal, the amount of rent
reserved upon such reletting shall, prima facie, be the fair and reasonable
rental value for the Premises, or part thereof, so relet during the term of the
reletting.
Landlord shall not be liable in any way whatsoever for its failure or refusal to
relet the Premises or any part thereof, or if the Premises or any part thereof
are relet, for
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its failure to collect the rent under such reletting, and no such refusal or
failure to relet or failure to collect rent shall release or affect Tenant's
liability or damages or otherwise under this lease.
For the purposes of this Article 24, the "ARTICLE 24 DISCOUNT RATE" shall mean
the per annum rate in effect on the first day of the Computation Period, equal
to the interest rate on United States Treasury Securities having a maturity date
that will occur within the same calendar month as occurs the 60% Day (as defined
below). The "60% DAY" shall be the day that occurs the following number of days
after the first day of the Computation Period: a number of days equal to the
product obtained by multiplying the total number of days in the Computation
Period by 0.6. If at any time United States Treasury Securities cease to be
issued or actively traded, Landlord, upon written notice to Tenant, shall
reasonably designate other obligations backed by the full faith and credit of
the United States having such maturities as the instruments to be substituted
for such United States Treasury Securities in order to compute the Treasury
Rate.
24.02. Suit or suits for the recovery of such damages, or any installments
thereof, may be brought by Landlord from time to time at its election, and
nothing contained herein shall be deemed to require Landlord to postpone suit
until the date when the term of this lease would have expired if it had not been
so terminated under the provisions of Article 22, or had Landlord not reentered
the Premises. Nothing herein contained shall be construed to limit or preclude
recovery by Landlord against Tenant of any sums or damages to which, in addition
to the damages particularly provided above, Landlord may lawfully be entitled by
reason of any default hereunder on the part of Tenant, except consequential
damages. Nothing herein contained shall be construed to limit or prejudice the
right of Landlord to prove for and obtain as damages by reason of the
termination of this lease or reentry on the Premises for the default of Tenant
under this lease an amount equal to the maximum allowed by any statute or rule
of law in effect at the time when, and governing the proceedings in which, such
damages are to be proved whether or not such amount be greater than any of the
sums referred to in Section 24.01, except consequential damages.
24.03. In addition, if this lease is terminated under the provisions of
Article 22, or if Landlord shall reenter the Premises under the provisions of
Article 23, Tenant agrees that:
(a) the Premises then shall be in the condition in which Tenant has
agreed to surrender the same to Landlord at the expiration of the term hereof;
(b) Tenant shall have performed prior to any such termination any
covenant of Tenant contained in this lease for the making of any Alterations or
for restoring or rebuilding the Premises or the Building, or any part thereof;
and
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(c) for the breach of any covenant of Tenant set forth above in this
Section 24.03, Landlord shall be entitled immediately, without notice or other
action by Landlord, to recover, and Tenant shall pay, as and for liquidated
damages therefor, the cost of performing such covenant (as estimated by an
independent contractor selected by Landlord).
24.04. In addition to any other remedies Landlord may have under this
lease, and without reducing or adversely affecting any of Landlord's rights and
remedies under Article 22, if any Fixed Rent, Additional Charges or damages
payable hereunder by Tenant to Landlord are not paid within five (5) Business
Days after the due date therefor, the same shall bear interest at the Interest
Rate, from the due date thereof until paid, and the amount of such interest
shall be an Additional Charge hereunder.
ARTICLE 25
Affirmative Waivers
25.01. Tenant, on behalf of itself and any and all persons claiming through
or under Tenant, does hereby waive and surrender all right and privilege which
it, they or any of them might have under or by reason of any present or future
law, to redeem the Premises or to have a continuance of this lease after being
dispossessed or ejected therefrom by process of law or under the terms of this
lease or after the termination of this lease as provided in this lease.
25.02. If Tenant is in arrears in payment of Fixed Rent or Additional
Charges, Tenant waives Tenant's right, if any, to designate the items to which
any payments made by Tenant are to be credited, and Tenant agrees that Landlord
may apply any payments made by Tenant to such items as Landlord sees fit,
irrespective of and notwithstanding any designation or request by Tenant as to
the items which any such payments shall be credited.
25.03. Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim brought by either against the other on any matter
whatsoever arising out of or in any way connected with this lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises,
including, without limitation, any claim of injury or damage, and any emergency
and other statutory remedy with respect thereto.
25.04. Tenant shall not interpose any counterclaim of any kind in any
summary action or proceeding commenced by Landlord to recover possession of the
Premises, other than a counterclaim which states only one or more claims which,
if not raised in such action or proceeding, would be irrevocably waived by
Tenant.
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ARTICLE 26
No Waivers
26.01. The failure of either party to insist in any one or more instances
upon the strict performance of any one or more of the obligations of this lease,
or to exercise any election herein contained, shall not be construed as a waiver
or relinquishment for the future of the performance of such one or more
obligations of this lease or of the right to exercise such election, and such
right to insist upon strict performance shall continue and remain in full force
and effect with respect to any subsequent breach, act or omission. The receipt
by Landlord of Fixed Rent or partial payments thereof or Additional Charges or
partial payments thereof with knowledge of breach by Tenant of any obligation of
this lease shall not be deemed a waiver of such breach.
26.02. If this lease is terminated by Landlord or by Tenant pursuant to any
of the terms hereof, Tenant shall not have the right by virtue of any renewal
option herein granted to reinstate this lease.
ARTICLE 27
Curing Tenant's Defaults
27.01. If Tenant shall default in the performance of any of Tenant's
obligations under this lease, Landlord, any Underlying Lessor or any Mortgagee
without thereby waiving such default, may (but shall not be obligated to)
perform the same for the account and at the expense of Tenant, without notice in
a case of emergency, and in any other case only if such default continues after
the expiration of any applicable notice and cure period. If Landlord effects
such cure by bonding any lien which Tenant is required to bond or otherwise
discharge, Tenant shall obtain and substitute a bond for Landlord's bond at its
sole cost and expense and reimburse Landlord for the cost of Landlord's bond.
27.02. Bills for any expenses incurred by Landlord or any Underlying Lessor
or any Mortgagee in connection with any such performance by it for the account
of Tenant, and, if Landlord shall be the successful party in any action or suit,
bills for all costs, expenses and disbursements of every kind and nature
whatsoever, including reasonable counsel fees, involved in collecting or
endeavoring to collect the Fixed Rent or Additional Charges or any part thereof
or enforcing or endeavoring to enforce any rights against Tenant or Tenant's
obligations hereunder, under or in connection with this lease or pursuant to
law, including any such cost, expense and disbursement involved in instituting
and prosecuting summary proceedings or in
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recovering possession of the Premises after default by Tenant or upon the
expiration or sooner termination of this lease, and interest on all sums
advanced by Landlord or such Underlying Lessor or Mortgagee under this Section
and/or Section 27.01 (at the Interest Rate) may be sent by Landlord or such
Underlying Lessor or Mortgagee to Tenant monthly, or immediately, at its option,
and such amounts shall be due and payable as Additional Charges in accordance
with the terms of such bills.
ARTICLE 28
Broker
28.01. Landlord and Tenant each covenant, warrant and represent to the
other that no broker except Cushman & Wakefield, Inc. and Equis Corporation
(collectively, the "BROKERS") was instrumental in bringing about or consummating
this lease and that they have had no conversations or negotiations with any
broker except the Brokers concerning the leasing of the Premises. Landlord and
Tenant each agree to indemnify and hold harmless the other against and from any
claims for any brokerage commissions and all costs, expenses and liabilities in
connection therewith, including, without limitation, attorneys' fees and
expenses, arising out of any conversations or negotiations had by that party
with any broker other than the Brokers. Landlord agrees to pay the Brokers
pursuant to a separate agreements.
ARTICLE 29
Notices
29.01. Any notice, statement, demand, consent, approval or other
communication required or permitted to be given, rendered or made by either
Landlord or Tenant pursuant to this lease or pursuant to any applicable law or
requirement of public authority (collectively, "NOTICES") shall be in writing
(whether or not so stated elsewhere in this lease) and shall be deemed to have
been properly given, rendered or made only if sent by (i) registered or
certified mail, return receipt requested, posted in a United States post office
station or letter box in the continental United States or (ii) overnight courier
service, addressed, in either event, to the other party at the address
hereinabove set forth (except that after the Business Occupancy Date, Tenant's
address, unless Tenant shall give notice to the contrary, shall be the
Building), and shall be deemed to have been given, rendered or made on the
Business Day after the day so mailed, unless mailed outside of the State of New
York, in which case it shall be deemed to have been given, rendered or made on
the third (3rd) Business Day after the day so mailed or when delivered by
overnight courier service; provided, however, that notices of default given by
one party hereto to the other shall be deemed to have been given, rendered or
made on the day when
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actually receipted by the sendee (or if the sendee refuses to accept such
notice, then on the day on which the sendee refused to accept delivery of such
notice). Either party may, by notice as aforesaid, designate a different address
or addresses for notices intended for it. Notwithstanding the foregoing, (a)
with respect to a default or termination of this lease, an occurrence presenting
imminent danger to the health or safety of persons or damage to property in, on
or about the Building or during a postal strike, notices may be hand delivered
to a party at the address to which notices to that party are to be sent,
provided that the same notice is also sent in the manner set forth above, and
(b) requests for Overtime AC, Overtime Heat, Overtime Ventilation or Overtime
Freight Elevator Service may be hand delivered to the applicable Building
Office.
29.02. Notices hereunder from Landlord to Tenant may be given by Landlord's
managing agent, if any, or Landlord's attorney.
29.03. A duplicate copy of all notices sent by Tenant to Landlord shall be
sent to Landlord at each of the following addresses: (i) Building Office, Ground
Floor, One Chase Manhattan Plaza, New York, New York 10081, Attention: Building
Manager; and (ii) Real Estate Resources, 4 Chase MetroTech Center, 17th Floor,
Brooklyn, New York 11245, Attention: Vice President.
ARTICLE 30
Estoppel Certificates
30.01. Each party agrees, at any time and from time to time, on or prior to
the tenth day following a written request by the other party, to execute and
deliver to the other a statement certifying that this lease is unmodified and in
full force and effect (or if there have been modifications, that the same is in
full force and effect as modified and stating the modifications), certifying the
Commencement Date, Expiration Date and the dates to which the Fixed Rent and
Additional Charges have been paid, stating whether or not, to the best knowledge
of the signer, the other party is in default in performance of any of its
obligations under this lease, and, if so, specifying each such default of which
the signer shall have knowledge and stating whether or not, to the best
knowledge of the signer, any event has occurred which with the giving of notice
or passage of time, or both, would constitute such a default, and, if so,
specifying each such event, it being intended that any such statement delivered
pursuant hereto shall be deemed a representation and warranty to be relied upon
by the party requesting the certificate and by others with whom such party may
be dealing, regardless of independent investigation. Tenant also shall include
or confirm in any such statement (i) the extent, if any, to which Landlord's
Work has not theretofore been completed, and/or (ii) such other Information
concerning this lease and known to Tenant as Landlord may reasonably request.
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ARTICLE 31
Definitions
31.01. For the purposes of this lease, the following terms have the
meanings indicated:
"ADJUSTED BY CPI" shall mean that the amount in question shall be
adjusted on each anniversary of the date hereof by adding to such amount in
question (as of the date hereof) an amount equal to the product of (i) such
amount, multiplied by (ii) the percentage of increase, if any, in the Consumer
Price Index for the month in which the applicable anniversary of the date hereof
occurs, over the Consumer Price Index for the month in which shall occur the
date hereof. "CONSUMER PRICE INDEX" shall mean the Consumer Price Index for all
Urban Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, New York, New York-Northeastern New Jersey Area (1982-84 =
100), or any successor index thereto, appropriately adjusted; provided that if
there shall be no successor index, a substitute index shall be reasonably
selected by Landlord.
"AFFILIATE", of any person, shall mean a corporation, partnership or
other entity which controls, is controlled by or is under common control with
such person.
"AND/OR" when applied to one or more matters or things shall be
construed to apply to any one or more or all thereof as the circumstances
warrant at the time in question.
"BASE BUILDING" shall mean (i) the structural elements of the Real
Property, (ii) the walkways, plazas, stairways and all other improvements or
landscaping on the Land, (iii) the pedestrian and freight and service entrances
to the Building, (iv) the Building's ground floor lobbies and all equipment,
improvements and fixtures therein, (v) the common and service areas of the Real
Property used by or available to tenants and occupants, and all equipment,
improvements and fixtures therein, (vi) the Building's core and its shafts,
stacks, pipes, ducts and other conduits and all other areas of the Building
located outside of the Premises and other leasable areas of the Building, and
all equipment, improvements and fixtures therein, (viii) the Building Systems
and all other facilities and equipment which are used for the provision of
Building Services (whether or not located in the Premises), (ix) the Core
Lavatories (whether or not included in the Premises), and (x) the elevator lobby
and common corridors on any multi-tenant floor and all equipment, improvements
and fixtures in such lobby and corridors; excluding, however, in all events,
Tenant's Improvements and Tenant's Property as well as the improvements and
betterments, and the moveable personal property, of other tenants of the
Building.
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"BASE BUILDING PREMISES COMPONENTS" shall mean (I) all components of
the Base Building which are within or bounding the Premises (including without
limitation the structural elements bounding the Premises) and (II) all other
components of the Base Building which are located on one or more floors on which
the Premises are located and which exclusively serve the Premises.
"BUILDING SERVICES" shall mean the services required to be furnished
to Tenant pursuant to the provisions of Article 14 or 15 hereof.
"BUILDING SYSTEMS" shall mean the electrical, HVAC, condenser water,
mechanical, sanitary, sprinkler, utility, power, plumbing, cleaning, fire
control, alarm and prevention systems, elevator, escalator, window washing,
waste compacting and removal, lighting, life safety and security systems of the
Building (together with all related equipment), brought to (and including), but
not beyond, the perimeter point of distribution to the Premises (or other
leasable area) or the perimeter point of connection to Tenant's Improvements (or
the improvements and betterments of any other tenant); provided, however, that
all components of the Building's perimeter HVAC systems (including the units and
controls located in the Premises or any other leasable area) and all components
of the Building's sprinkler system up to and including the main sprinkler loop
on each floor and all components of the Building's plumbing system in or serving
the Core Lavatories shall be deemed to be included in such term; excluding,
however, in all events, Tenant's Improvements and Tenant's Property (as well as
the improvements and betterments, and the moveable personal property, of any
other tenants of the Building). In the case of the Building's electrical system,
the aforesaid point of distribution shall be the electrical panels on the
thirty-seventh (37th) floor of the Building (or the corresponding electrical
panels on any other floor).
"CONTROL" shall mean (i) in the case of a corporation, either (A)
ownership or voting control, directly or indirectly, of at least fifty (50%)
percent of all the voting stock, or (B) the power to direct the management and
policies of such corporation, (ii) in case of a partnership or joint venture,
either (x) ownership, directly or indirectly, of at least fifty (50%) percent of
all the general or other partnership (or similar) interests therein, or (y) the
power to direct the management and policies of such partnership or joint
venture, and (iii) in the case of any other entity, either (x) ownership,
directly or indirectly, of at least fifty (50%) percent of all the equity or
other beneficial interest(s) therein, or (y) the power to direct the management
and policies of such entity.
"CORE LAVATORIES" shall mean (a) the Building's lavatories located
on the floor(s) of the Building on which the Premises are located and which are
in existence of the date hereof (including all toilets, urinals, partitions,
flooring, tiling, sinks, piping, counters, soap dispensers, towel dispensers,
trash disposal containers, and other hardware, fixtures and equipment within or
serving the same from time to
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time), and (b) slop sinks located on the floor(s) of the Building on which the
Premises are located and which are in existence on the date hereof (including
the slop sinks and other hardware, fixtures and equipment within or serving the
same from time to time).
"FORCE MAJEURE" and/or "EVENT(S) OF FORCE MAJEURE" shall mean fire,
casualty, any strike, lock-out or other labor trouble, governmental preemption
of priorities or other controls in connection with a national or other public
emergency or shortages of fuel, supplies or labor resulting therefrom, or any
other cause, whether similar or dissimilar, beyond Landlord's or Tenant's
reasonable control, as the case may be; or any failure or defect in the supply,
quantity or character of electricity or water furnished to the Premises, by
reason of any requirement, act or omission of the public utility or municipality
serving the Building with electricity or water (provided such public utility's
act or omission was not due to Landlord's or Tenant's willful misconduct,
negligence or failure to remit payment to such public utility or municipality),
or for any other reason whether similar or dissimilar, beyond Landlord's or
Tenant's reasonable control, as the case may be. A party's inability to pay
money or to obtain funding or financing shall not constitute Force Majeure or an
Event of Force Majeure.
"HEREIN," "HEREOF" and "HEREUNDER," and words of similar import,
shall be construed to refer to this lease as a whole, and not to any particular
Article or section, unless expressly so stated.
"GUARANTOR" shall mean The Van Kampen Merritt Companies, Inc., as
guarantor under that certain Guaranty dated as of even date herewith, together
with any successor thereto under such Guaranty. For purposes of Sections 7.02
and 11.12 hereof, the "net worth" of the Guarantor, in order to avoid double
counting, shall be determined exclusive of any part of Guarantor's assets which
consist of the stock of, or other ownership interest in, Tenant.
"INITIALLY DEMISED PREMISES" shall mean the Premises as initially
demised as set forth in Section 1.02 hereof.
"INTEREST RATE," when used in this lease, shall mean an interest
rate equal to two percent (2%) above the so-called annual "Base Rate" of
interest established and approved by The Chase Manhattan Bank (National
Association), from time to time, as its interest rate charged for unsecured
loans to its corporate customers, but in no event greater than the highest
lawful rate from time to time in effect.
"LANDLORD" shall mean only the owner, at the time in question, of
the Building or that portion of the Building of which the Premises are a part,
or of a lease of the Building or that portion of the Building of which the
Premises are a part, so that in the event of any transfer or transfers of title
to the Building or of Landlord's
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interest in a lease of the Building or such portion of the Building, the
transferor shall be and hereby is relieved and freed of all obligations of
Landlord under this lease accruing after such transfer, and it shall be deemed,
without further agreement, that such transferee has assumed and agreed to
perform and observe all obligations of Landlord herein accruing during the
period it is the holder of Landlord's interest under this lease.
"LANDLORD PARTY" shall mean (1) any principal, partner, member,
officer, stockholder, director, employee or agent of Landlord or of any partner
or member of any partnership constituting Landlord, disclosed or undisclosed,
(2) any Underlying Lessor and any principal, partner, member, officer,
stockholder, director, employee or agent thereof, or (3) any Mortgagee and any
principal, partner, member, officer, stockholder, director, employee or agent
thereof; and "LANDLORD PARTIES" shall have the corresponding plural meaning.
"LANDLORD SHALL HAVE NO LIABILITY TO TENANT" or "THE SAME SHALL BE
WITHOUT LIABILITY TO LANDLORD" or "WITHOUT INCURRING ANY LIABILITY TO TENANT
THEREFOR", or words of similar import shall mean (unless expressly set forth
herein to the contrary) that Tenant is not entitled to terminate this lease, or
to claim actual or constructive eviction, partial, or total, or to receive any
abatement or diminution of rent, or to be relieved in any manner of any of its
other obligations hereunder, or to be compensated for loss or injury suffered or
to enforce any other right or kind of liability whatsoever against Landlord
under or with respect to this lease or with respect to Tenant's use or occupancy
of the Premises.
"LAWS AND REQUIREMENTS OF ANY PUBLIC AUTHORITIES" and words of a
similar import shall mean laws and ordinances of any or all of the federal,
state, city, county and borough governments and rules, regulations, orders and
directives of any and all departments, subdivisions, bureaus, agencies or
offices thereof, and of any other governmental, public or quasi-public
authorities having jurisdiction over the Building and/or the Premises, and the
direction of any public officer pursuant to law, whether now or hereafter in
force.
"MORTGAGE" shall include a mortgage and/or a deed of trust, and the
term "HOLDER OF A MORTGAGE" or "MORTGAGEE" or words of similar import shall
include a mortgagee of a mortgage or a beneficiary of a deed of trust.
"PERSON" shall mean any natural person or persons, a partnership,
corporation, and any other form of business or legal association or entity.
"REQUIREMENTS OF INSURANCE BODIES" and words of similar import shall
mean rules, regulations, orders and other requirements of the New York Board of
Underwriters and/or the New York Fire Insurance Rating Organization and/or any
other similar body performing the same or similar functions and having
jurisdiction
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or cognizance over the Building and/or the Premises, whether now or hereafter in
force.
"SIMILAR BUILDINGS" shall mean buildings which contain in excess of
one million rentable square feet and which are of an age and construction
similar to the Building, and which are located in the downtown Manhattan
business district; it being understood that all references to "Similar
Buildings" shall allow for differences amongst the Building and other such
buildings based upon the different facilities and features thereof.
"STRUCTURAL ELEMENTS" shall mean the roof, the slabs, the beams,
columns, girders and other structural members and connections, the interior and
exterior of all exterior walls, window frames and windows and all other parts of
the Building's structure and supports.
"TENANT" shall mean the Tenant herein named or any assignee or other
successor in interest (immediate or remote) of the Tenant herein named, which at
the time in question is the owner of the Tenant's estate and interest granted by
this lease; but the foregoing provisions of this subsection shall not be
construed to permit any assignment of this lease or to relieve the Tenant herein
named or any assignee or other successor in interest (whether immediate or
remote) of the Tenant herein named from the full and prompt payment, performance
and observance of the covenants, obligations and conditions to be paid,
performed and observed by Tenant under this lease.
"TENANT PARTY" shall mean (1) any principal, partner, member,
officer, stockholder, director, employee or agent of Tenant or of any partner or
member of any partnership constituting Tenant, disclosed or undisclosed, and (2)
any subtenant of Tenant or any other party claiming by, through or under Tenant,
and any principal, partner, member, officer, stockholder, director, employee or
agent of such subtenant or such other party; and "TENANT PARTIES" shall have the
corresponding plural meaning.
"TENANT NAMED HEREIN" shall mean McCarthy, Cristani & Maffei, Inc.,
a New York corporation. "ORIGINAL TENANT" shall mean the Tenant Named Herein and
any immediate or remote assignee under one or more assignments under Section
7.02(b) hereof.
"UNITED STATES TREASURY SECURITIES" shall mean obligations of the
United States Government Treasury, yields for which obligations are reported in
Federal Reserve Statistical Release H.15 -- Selected Interest Rates.
"UNTENANTABLE", when used with respect to the Premises, or any
portion thereof, shall mean that (i) the Premises, or such portion thereof, is
not being
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occupied by Tenant (or any Tenant Party) for the purposes demised hereunder, and
(ii) either (x) the Premises, or such portion thereof, is not reasonably capable
of being occupied by Tenant (or any Tenant Party) for the purposes demised
hereunder in a reasonable manner, or (y) the Premises, or such portion thereof,
is not accessible by means of adequate passenger elevator service; and
"TENANTABLE", when used with respect to the Premises, or any portion thereof,
shall mean that the Premises, or such portion thereof, are not untenantable.
"VKM" shall mean Van Kampen Merritt, Inc., an existing Affiliate of
Tenant to which Tenant intends to sublease a portion of the Premises pursuant to
Section 7.02(c)(1), and any successor to Van Kampen Merritt, Inc., as subtenant
under any such sublease from Tenant, pursuant to the provisions thereof
contemplated by Section 7.13(d)(2).
ARTICLE 32
No Representations by Landlord
32.01. Tenant expressly acknowledges and agrees that Landlord has not made
and is not making, and Tenant, in executing and delivering this lease, is not
relying upon, any warranties, representations, promises or statements, except to
the extent that the same are expressly set forth in this lease or in any other
written agreement which may be made between the parties concurrently with the
execution and delivery of this lease and shall expressly refer to this lease.
All understandings and agreements heretofore had between the parties are merged
in this lease and any other written agreement(s) made concurrently herewith,
which alone fully and completely express the agreement of the parties and which
are entered into after full investigation, neither party relying upon any
statement or representation not embodied in this lease or any other written
agreement(s) made concurrently herewith.
ARTICLE 33
Tenant's Termination Rights
33.01. Subject to and in accordance with the provisions of this Article 33,
Tenant shall have two separate rights to terminate this lease (herein
respectively called "TERMINATION RIGHT I" and "TERMINATION RIGHT II" and
collectively called the "TERMINATION RIGHTS"), effective as of (a) in the case
of Termination Right I, November 30, 1999 (the "FIRST EARLY TERMINATION DATE")
and (b) in the case of Termination Right II, November 30, 2004 (the "SECOND
EARLY TERMINATION DATE").
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33.02. Tenant may exercise either Termination Right only by giving written
notice thereof (in either case, the "TENANT'S TERMINATION NOTICE"), which notice
shall (i) be received by Landlord on or prior to (a) in the case of the exercise
of Termination Right I, November 30, 1998 (time being of the essence), and (b)
in the case of the exercise of Termination Right II, November 30, 2003 (time
being of the essence), and (ii) be accompanied by Tenant's good and sufficient
check in the amount of (x) in the case of the exercise of Termination Right I, a
termination fee of Two Million Six Hundred Seven Thousand Eight Hundred
Twenty-Six and 25/100 ($2,607,826.25) Dollars, or (y) in the case of the
exercise of Termination Right II, a termination fee of Five Hundred Thirty-Three
Thousand Nine Hundred Eighty-Three and 48/100 ($533,983.48) Dollars. The payment
of either such termination fee shall be payable as Additional Charges hereunder.
Notwithstanding the foregoing, Landlord, at its option, may render any Tenant's
Termination Notice null and void (and, accordingly, such notice shall not be
effective to exercise the Termination Right it purports to exercise), if, on the
date Landlord receives such notice, a monetary Event of Default shall have
occurred and is then continuing (it being agreed that if Landlord shall render a
Tenant's Termination Notice null and void, then Landlord shall return to Tenant
the termination fee delivered therewith, less, at Landlord's option, any Fixed
Rent or Additional Charges then due and owing).
33.03. If Tenant timely exercises either Termination Right in accordance
with Section 33.02 above and timely pays the applicable termination fee in
accordance with Section 33.03 above, then, as of the First Early Termination
Date or Second Early Termination Date, as the case may be, this lease shall
terminate and end as fully and completely as if the First Early Termination Date
or Second Early Termination Date, as the case may be, was the Expiration Date.
Accordingly, and without limiting the generality of the foregoing, (i) on or
prior to the First Early Termination Date or Second Early Termination Date, as
the case may be, Tenant shall (and shall cause each Tenant Party) vacate the
Premises in accordance with the provisions of this lease, and (ii) as of the
First Early Termination Date or Second Early Termination Date, as the case may
be, Fixed Rent and Additional Charges shall be apportioned in the same manner
and to the same extent as if the First Early Termination Date or Second Early
Termination Date, as the case may be, was the Expiration Date.
ARTICLE 34
Holdover
34.01. (a) If Tenant shall remain in possession of any portion of the
Premises after the expiration or earlier termination of this lease, then Tenant
shall be deemed a holdover tenant and shall be liable to Landlord for rent, or a
charge in respect of use and occupancy, at a per diem rate computed at 150% of
the rate of Fixed Rent and Additional Charges payable by Tenant during the last
year of the
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term of this lease (i.e., the year immediately prior to the holdover period). In
addition to the foregoing, Landlord shall be entitled to recover from Tenant any
losses or damages arising from such holdover.
(b) Notwithstanding the foregoing, the acceptance of any rent paid
by Tenant pursuant to Section 34.01(a) above shall not preclude Landlord from
commencing and prosecuting a holdover or summary eviction proceeding, and the
preceding sentence shall be deemed to be an "agreement expressly providing
otherwise" within the meaning of Section 223-c of the Real Property Law of the
State of New York.
(c) If Tenant shall remain in possession of any portion of the
Premises after the expiration or earlier termination of this lease, then Tenant
shall be subject not only to summary proceeding and all damages related thereto,
but also to any damages arising out of any lost opportunities (and/or new
leases) by Landlord to re-let the Premises (or any part thereof). All damages to
Landlord by reason of such holding over by Tenant may be the subject of a
separate action and need not be asserted by Landlord in any summary proceedings
against Tenant.
ARTICLE 35
Miscellaneous Provisions and Definitions
35.01. No agreement shall be effective to change, modify, waive, release,
discharge, terminate or effect an abandonment of this lease, in whole or in
part, including, without limitation, this Section 35.01, unless such agreement
is in writing, refers expressly to this lease and is signed by the party against
whom enforcement of the change, modification, waiver, release, discharge,
termination or effectuation of the abandonment is sought. If Tenant shall at any
time request Landlord to sublet the Premises for Tenant's account, Landlord or
its agent is authorized to receive keys for such purposes without releasing
Tenant from any of its obligations under this lease, and Tenant hereby releases
Landlord of any liability for loss or damage to any of the Tenant's Property in
connection with such subletting.
35.02. Except as otherwise expressly provided in this lease, the
obligations of this lease shall bind and benefit the successors and assigns of
the parties hereto with the same effect as if mentioned in each instance where a
party is named or referred to; provided, however, that (a) no violation of the
provisions of Article 7 shall operate to vest any rights in any successor or
assignee of Tenant and (b) the provisions of this Section 35.02 shall not be
construed as modifying the conditions of limitation contained in Article 22.
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35.03. Tenant shall look only to Landlord's estate and interest in the Land
and the Building for the satisfaction of Tenant's remedies, for the collection
of a judgment (or other judicial process) requiring the payment of money by
Landlord in the event of any default by Landlord hereunder, and no other
property or assets of Landlord or its partners, officers, directors,
shareholders or principals, disclosed or undisclosed, shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this lease, the relationship of Landlord and
Tenant hereunder or Tenant's use or occupancy of the Premises.
35.04. (a) The obligations of Tenant hereunder shall be in no wise
affected, impaired or excused, nor shall Landlord have any liability whatsoever
to Tenant, nor shall it be deemed a constructive eviction to the extent that
Landlord is unable to fulfill, or is delayed in fulfilling, any of its
obligations under this lease by reason of Force Majeure.
(b) The obligations of Landlord hereunder shall be in no wise
affected, impaired or excused, nor shall Tenant have any liability whatsoever to
Landlord, to the extent that Tenant is unable to fulfill, or is delayed in
fulfilling, any of its obligations under this lease by reason of Force Majeure
and nor shall the same give rise to any default or conditional limitation under
Article 22.
(c) If this lease specifies a time period for performance of an
obligation by any party, that time period shall be extended by the period of any
delay in such party's performance caused by Force Majeure, except that (i) in
any instance under this lease in which either party has a termination,
cancellation, rescission or revocation right, the dates on which or the
circumstances under which such party may exercise such right shall not be
affected even if the other party suffers Force Majeure (except to the extent
expressly so provided), (ii) in any instance under this lease in which Tenant
has the right to an abatement of, or a credit against, Fixed Rent or Additional
Charges, the dates in respect of which, the circumstances under which and the
amount of such abatement shall not be affected even if Landlord suffers Force
Majeure (except to the extent expressly so provided), and (iii) the date on
which any party must furnish any notice or information, make any election, or
exercise any right shall not be affected even if such party suffers Force
Majeure (except to the extent expressly so provided).
35.05. The obligations of Landlord and Tenant with respect to all periods
prior to the expiration or other termination of this lease, including without
limitation the obligation to pay, and/or to refund overpayments of, Fixed Rent
and Additional Charges, shall survive the expiration or other termination of
this lease.
35.06. Tenant shall not record this lease, any instrument modifying this
lease or any memorandum hereof or thereof.
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35.07. If Tenant shall request Landlord's consent or approval and Landlord
shall fail or refuse to give such consent or approval, Tenant shall not be
entitled to any damages or any other remedy for any such failure or refusal by
Landlord to grant its consent or approval; provided, however, that in those
cases where Landlord has expressly agreed in writing not to unreasonably
withhold its consent or approval, or where as a matter of law Landlord may not
unreasonably withhold its consent or approval, Tenant shall have the right, as
its sole and exclusive remedies, to dispute Landlord's failure or refusal to
grant its consent or approval either (i) by prosecuting an action for specific
performance, injunction and/or damages (provided that Tenant shall be entitled
to damages if and only if Landlord acted in bad faith in failing or refusing to
grant its consent or approval) or (ii) by submitting such dispute to arbitration
in accordance with Article 40 hereof. The remedies described in clause (i) and
in clause (ii) of the preceding sentence are mutually exclusive. Tenant may
elect the remedy set forth in clause (ii) above only by sending written notice
thereof to Landlord within fifteen (15) Business Days after Tenant's receipt of
the applicable denial of the consent or approval by Landlord, and, in each such
case, the sole issue to be resolved by such arbitration shall be whether
Landlord's denial of consent or approval was reasonable.
35.08. If an excavation shall be made upon land adjacent to or under the
Building, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter the Premises
for the purpose of performing such work as is reasonably necessary to preserve
and protect the Building from injury or damage to support the same by proper
foundations, without any claim for damages or liability against Landlord and
without reducing or otherwise affecting Tenant's obligations under this lease.
35.09. Landlord represents that the floor load per square foot which the
floor of the Premises is designed to carry, and is capable of carrying, is fifty
(50) pounds per square foot live load. Tenant shall not place a load upon any
floor of the Premises which violates applicable law or the Certificate of
Occupancy of the Building or which exceeds the floor load per square foot which
such floor was designed to carry or which such floor is reinforced to carry. All
heavy material and/or equipment must be placed by Tenant, at Tenant's expense,
so as to distribute the weight. Business machines and mechanical equipment shall
be placed and maintained by Tenant, at Tenant's expense, in settings sufficient
in Landlord's reasonable judgment to absorb and prevent vibration, noise and
annoyance. If the Premises be or become infested with vermin as a result of the
use or any misuse or neglect of the Premises by Tenant, its agents, employees,
visitors or licensees, Tenant shall at Tenant's expense cause the same to be
exterminated from time to time to the reasonable satisfaction of Landlord and
shall employ such exterminators and such exterminating company or companies as
shall be reasonably approved by Landlord.
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35.10. The submission by Landlord of this lease in draft form shall be
deemed submitted solely for Tenant's consideration and not for acceptance and
execution. Such submission shall have no binding force or effect and shall
confer no rights nor impose any obligations, including brokerage obligations, on
either party unless and until both Landlord and Tenant shall have executed the
lease and duplicate originals thereof shall have been delivered to the
respective parties.
35.11. Irrespective of the place of execution or performance, this lease
shall be governed by and construed in accordance with the laws of the State of
New York. If any provisions of this lease or the application thereof to any
person or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, the remainder of this lease and the application of that provision
to other persons or circumstances shall not be affected but rather shall be
enforced to the extent permitted by law. The table of contents, captions,
headings and titles in this lease are solely for convenience of references and
shall not affect its interpretation. This lease shall be construed without
regard to any presumption or other rule requiring construction against the party
causing this lease to be drafted. All terms and words used in this lease, shall
be deemed to include any other number and any other gender as the context may
require.
35.12. If under the terms of this lease Tenant is obligated to pay Landlord
a sum in addition to the Fixed Rent under the lease and no payment period
therefor is specified, Tenant shall pay Landlord the amount due within thirty
(30) days after being billed.
35.13. (a) Tenant represents and warrants that this lease has been duly
authorized, executed and delivered by Tenant and constitutes the legal, valid
and binding obligation of Tenant.
(b) Landlord represents and warrants that this lease has been duly
authorized, executed and delivered by Landlord and constitutes the legal, valid
and binding obligation of Landlord.
35.14. If any sales or other tax is payable with respect to any cleaning or
other services which Tenant purchases directly from any third party or parties,
Tenant shall file any required tax returns and shall pay any such tax, and
Tenant shall indemnify and hold Landlord harmless from and against any loss,
damage or liability suffered or incurred by Landlord on account thereof.
35.15. (a) Landlord shall use reasonable efforts to (i) conduct (or cause
to be conducted) any entry into the Premises permitted under this lease and (ii)
perform (or cause to be performed) any work performed by Landlord pursuant to
the terms hereof (including any work necessary to alleviate or minimize the
duration of any stoppage or interruption of Building Services), in a manner so
as to minimize the
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inconvenience or interference with the operation of Tenant's business in the
Premises that may occasioned thereby. Landlord, however, shall not be obligated
to continuously perform any such work and shall not be liable for any
interruptions of such work nor shall Landlord, except as expressly provided in
Section 35.15(b) below, be obligated to employ contractors or labor outside of
Business Hours on Business Days.
(b) If (i) Landlord shall perform work in the Premises or on the
floor(s) of the Building on which the Premises are located, and (ii) Tenant
furnishes Landlord with a statement requesting that Landlord perform such work
(or specifically identified portions thereof) on an overtime basis, then (A)
Landlord shall perform such work (or specifically identified portions thereof)
on such overtime basis (provided, that (x) doing so will not have an adverse
impact on other tenants of the Building, and (y) overtime labor is reasonably
available, and provided, further, that, if Tenant's aforesaid request is
received by Landlord after Landlord has either commenced the work in question or
made arrangements with respect to the timing thereof, then Landlord need only
perform such work on an overtime basis to the extent it can reasonably do so
without disruption of such work), and (B) Tenant, within thirty (30) days after
its receipt of a demand therefor, shall pay to Landlord, as Additional Charges,
all of the costs Landlord incurs in connection with the performance of such work
on an overtime basis, including, without limitation, all the costs of any
standby personnel required in connection therewith (including, without
limitation, operating engineers and stand-by electricians).
35.16. Tenant acknowledges that it has no rights to any development rights,
"air rights" or comparable rights appurtenant to the Real Property, and
consents, without further consideration, to any utilization of such rights by
Landlord and agrees to promptly execute and deliver any instruments which may be
requested by Landlord, including instruments merging zoning lots, evidencing
such acknowledgment and consent. The provisions of this Section 35.16 shall be
deemed to be and shall be construed as an express waiver by Tenant of any
interest Tenant may have as a "party in interest" (as such quoted term is
defined in Section 12-10 Zoning Lot of the Zoning Resolution of the City of New
York) in the Real Property.
35.17. Tenant agrees to keep, and cause its employees and agents to keep,
all provisions of this lease confidential and shall not disclose same to any
other person, other than as and when required by law, or to its accountants,
attorneys, assignees and subtenants, or to real estate brokers or consultants
advising Tenant.
35.18. Notwithstanding anything to the contrary contained in this lease,
during the continuance of any default by Tenant beyond any applicable notice and
cure period, Tenant shall not be entitled to exercise any expansion or renewal
rights or options, or to receive any funds or proceeds being held, under or
pursuant to this lease. If such default is cured prior to termination of this
Lease, Tenant shall then
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become entitled to exercise or receive the same. If this lease is terminated
prior to such default being cured, such funds shall be credited against any sums
due or becoming due to Landlord hereunder.
35.19. Landlord represents that, to the best of its knowledge, there are no
asbestos-containing materials within the Premises. If any asbestos-containing
materials are found within the Premises (other than any such materials installed
by Tenant) and the same are required to be removed, encapsulated or otherwise
treated by any law or requirement of public authorities, then Landlord, promptly
after notice from Tenant in respect thereof, shall remove, encapsulate or
otherwise treat the same in accordance with such law or requirement of public
authorities.
35.20. This lease and all rights of Tenant hereunder are and shall be
subject and subordinate in all respects to any condominium declaration and any
other documents (collectively, the "DECLARATION") which shall be recorded in
order to convert the Land and improvements erected thereon to a condominium form
of ownership in accordance with the provisions of Article 9-B of the Real
Property Law of the State of New York or any successor thereto. If any such
Declaration is to be recorded, Tenant, upon request of Landlord, shall enter
into an amendment of this lease confirming such subordination and modifying this
lease in such respects as shall be necessary to conform to such
condominiumization, including, without limitation, appropriate adjustments to
Tenant's Tax Share and Tenant's Operating Share and appropriate reductions in
the Base Tax Amount and Base Operating Amount, provided that such modifications
shall be reasonably acceptable to Tenant and shall not increase the amounts
payable by Tenant under this lease.
ARTICLE 36
Landlord's Contribution
36.01. Landlord shall reimburse Tenant for the cost (incurred by Tenant or
any Affiliates of Tenant) of the Initial Tenant Work (as defined below) and
Tenant's Soft Costs (as defined below) in an aggregate amount equal to the
lesser of (i) the cost of the Initial Tenant Work plus Tenant's Soft Costs and
(ii) One Million Nine Hundred Ten Thousand Four Hundred Fifty-Nine and 98/100
($1,910,459.98) Dollars (which lesser amount between the amount described in
clause (i) above and the amount described in clause (ii) above being herein
called the "LANDLORD'S CONTRIBUTION") upon the terms and conditions hereinafter
set forth:
(a) Landlord shall make interim disbursements of Landlord's
Contribution to Tenant, from time to time during the progress of the Initial
Tenant Work, but no more frequently than once a month, in amounts equal to
ninety (90%) percent of the cost of such Initial Tenant Work theretofore
incorporated into the
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Premises less the amount of the interim disbursements of Landlord's Contribution
theretofore made by Landlord hereunder; provided, however, that in no event
shall the aggregate of all interim disbursements under this Section 36.01(a)
exceed ninety (90%) of One Million Nine Hundred Ten Thousand Four Hundred
Fifty-Nine and 98/100 ($1,910,459.98) Dollars. Each disbursement shall be made
by Landlord within thirty (30) days after Landlord's receipt of a request
therefor from Tenant, which request shall be accompanied by (I) evidence
reasonably satisfactory to Landlord establishing that all sums due and owing to
Tenant's general contractor in excess of thirty (30) days have been paid,
including lien waivers from Tenant's general contractor with respect to the sums
paid to Tenant's general contractor, and (II) a certificate from a licensed
architect or engineer employed by Tenant to supervise the construction and
performance of the Initial Tenant Work certifying (x) the cost of such Initial
Tenant Work incorporated into the Premises, or incorporated into the Premises
since the last request, or (y) the amount requested from Landlord and that such
amount is then due and payable from Tenant or has theretofore been paid by
Tenant.
(b) The balance of Landlord's Contribution, if any, shall be
disbursed to Tenant within thirty (30) days after the completion of the Initial
Tenant Work and Landlord's receipt of a notice from Tenant (the "FINAL
CONTRIBUTION REQUEST"), stating that such Initial Tenant Work has been
completed, which notice shall be accompanied by (I) evidence reasonably
satisfactory to Landlord establishing that all sums due and owing to
contractors, subcontractors and materialmen have been paid, including final lien
waivers (or, as to any disputed sums which do not exceed $90,000 in the
aggregate, evidence reasonably satisfactory to Landlord as to the amount of such
disputed sums does not exceed $90,000 in the aggregate), (II) a certificate of
the licensed architect or engineer employed by Tenant to supervise such Initial
Tenant Work certifying (x) the total cost of the Initial Tenant Work and
Tenant's Soft Costs, and (y) that the Initial Tenant Work has been performed and
completed in accordance with the provisions of this lease and the plans and
specifications theretofore approved by Landlord, and (III) evidence that all
governmental authorities (including, without limitation, the New York City
Department of Buildings) have issued final approval of the work as built and
occupancy of the Premises.
36.02. As used herein, "INITIAL TENANT WORK" shall be deemed to mean the
Initial Alterations (inclusive of all fixtures, improvements and appurtenances
attached to or built into the Premises in accordance with Tenant's plans and
specifications), and shall not include movable partitions, business and trade
fixtures, office machinery, business equipment, furniture, furnishings and other
articles of personal property. As used herein, "TENANT'S SOFT COSTS" shall be
deemed to mean the fees and expenses of Tenant's architect and engineer
incurred, in each case, with respect to the Initial Tenant Work, and the moving
expenses incurred in connection with Tenant's move into the Premises.
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36.03. The right to receive reimbursement for the cost of Initial Tenant
Work and Tenant's Soft Costs as set forth in this Article 36 shall be for the
exclusive benefit of Tenant, it being the express intent of the parties hereto
that in no event shall such right be conferred upon or for the benefit of any
third party, including, without limitation, any contractor, subcontractor,
materialman, laborer, architect, engineer, attorney or any other person, firm or
entity.
36.04. If Landlord shall default under the provisions of Section 36.01
hereof by failing to disburse the Landlord's Contribution, or any portion
thereof, in accordance with the provisions of Section 36.01 hereof, then Tenant
may furnish to Landlord a written notice setting forth such default, which
notice shall indicate the portions of Landlord's Contribution then due and owing
to Tenant, and expressly refer to and set forth, verbatim, the provisions of
this Section 36.04. If Landlord fails to pay the portions of Landlord's
Contribution then due and owing on or prior to the date thirty (30) days after
Landlord's receipt of the aforesaid notice, then Tenant, thereafter, shall have
the right to offset such amounts against the Fixed Rent and Additional Charges
next becoming due under this lease.
36.05. (a) Tenant, as part of the Initial Alterations, shall, in accordance
with the provisions of Article 11 hereof (including without limitation Sections
11.02 and 11.04 hereof), furnish and install the main sprinkler loop for the
37th floor of the Building in accordance with all laws and requirements of
public authorities. Landlord shall reimburse Tenant the reasonable out-of-pocket
costs incurred by Tenant to so furnish and install such sprinkler loop, up to an
aggregate maximum reimbursement of $15,000. Such reimbursement shall be made
within thirty (30) days after Tenant's submission to Landlord of a written
request therefor, which request shall be accompanied by paid invoices.
(b) Tenant, in accordance with the provisions of Article 11 hereof
(including without limitation Sections 11.02 and 11.04 hereof), shall be
responsible to perform its "tie-in" work to tie-in to the Building's Class E
System through the DGP installed as part of Landlord's Work. If the reasonable
out-of-pocket costs incurred by Tenant to perform such tie-in work shall exceed
$2,000, then Landlord shall reimburse Tenant such excess. Such reimbursement
shall be made within thirty (30) days after Tenant's submission to Landlord of a
written request therefor, which request shall be accompanied by paid invoices.
ARTICLE 37
Option Space
37.01. Landlord, once during the term of this lease, shall give Tenant a
written notice (herein called the "OPTION NOTICE"), which notice shall (i)
describe certain
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office space within the Building (the location of which office space within the
Building shall be determined by Landlord in its sole discretion, provided, that
such space shall be located on a floor of the Building above the 34th floor of
the Building), which office space shall (x) consist of between 4000 and 8000
contiguous rentable square feet, (y) be commercially reasonable in shape and
configuration, and (z) contain an amount of exterior window space which bears
substantially the same ratio to the rentable area of the Option Space, as the
total amount of exterior window space on the floor on which the Option Space is
located bears to the rentable area of such floor (such office space being herein
called the "OPTION SPACE"), (ii) be accompanied by a floor plan delineating the
Option Space, (iii) set forth Landlord's good-faith determination of the Option
Space Rentable Area (as hereinafter defined), and (iv) set forth the date upon
which Landlord anticipates being able to deliver the Option Space to Tenant (the
"OPTION SPACE SCHEDULED DATE"), which date shall not be less than six (6) months
and not more than twelve (12) months from the date of the Option Notice, and
which date shall be between the fifth (5th) anniversary and the seventh (7th)
anniversary of the Commencement Date (it being agreed that, at the time that
Landlord serves the Option Notice, Landlord shall have, or reasonably believe
that it has, a contractual right to possession of the Option Space as of the
Option Space Scheduled Date); provided, however, that Landlord shall have no
obligation to deliver the Option Notice if either (I) prior to the delivery of
the Option Notice, this lease shall be terminated or cancelled for any reason
whatsoever, or (II) at anytime during the term of this lease after the
substantial completion of the Initial Alterations and prior to the delivery of
the Option Notice, the Outside Occupancy Percentage (as hereinafter defined)
shall be greater than fifty (50%) percent, or (III) at anytime during the term
of this lease after the substantial completion of the Initial Alterations and
prior to the delivery of the Option Notice, (x) there shall be no portion of the
Initially Demised Premises having a rentable area equal to or greater than
12,000 rentable square feet which is occupied by Original Tenant, and (y) there
shall be no portion of the Initially Demised Premises having a rentable area
equal to or greater than 12,000 rentable square feet which is occupied by VKM.
As used in this lease, the term "OUTSIDE OCCUPANCY PERCENTAGE" shall refer to a
fraction, expressed as percentage (x) the numerator of which is the number of
rentable square feet in all Recaptured Space and in all portions of the Premises
then subject to any sublease, other than a sublease made pursuant to Section
7.02, and (y) the denominator of which is number of rentable square feet in the
Initially Demised Premises and all Option Space and Available Space theretofore
having become a part of the Premises. Subject to the provisions of this Article
37, the Option Notice shall constitute a one-time non-recurring offer by
Landlord to Tenant to lease all (and not less than all) of the Option Space upon
the terms and conditions set forth in this Article 37.
37.02. If Tenant desires to lease the Option Space upon the terms and
conditions set forth in this Article 37, then Tenant, within twenty (20)
Business Days after Landlord shall delivered the Option Notice (time being of
the essence), shall
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deliver to Landlord a written notice to such effect (herein called the "OPTION
SPACE ACCEPTANCE NOTICE"); provided, however, that the Option Space Acceptance
Notice shall automatically be null and void if this lease shall have theretofore
been terminated or cancelled for any reason whatsoever, and Landlord, at its
option, by notice to Tenant given no later than ten (10) Business Days after
Landlord's receipt of Tenant's Option Space Acceptance Notice, may render the
Option Space Acceptance Notice null and void if, at the time that Landlord
receives the same, (i) a monetary Event of Default shall have occurred and is
then continuing, or (ii) the Outside Occupancy Percentage shall be greater than
fifty (50%) percent, or (iii) (x) there shall be no portion of the Initially
Demised Premises having a rentable area equal to or greater than 12,000 rentable
square feet which is occupied by Original Tenant, and (y) there shall be no
portion of the Initially Demised Premises having a rentable area equal to or
greater than 12,000 rentable square feet which is occupied by VKM. If Tenant
shall fail to timely and properly deliver the Option Space Acceptance Notice in
accordance with this Section 37.02 or Landlord shall render the Option Space
Acceptance Notice null and void in accordance with this Section 37.02, then, in
either event, Tenant shall be conclusively deemed to have waived any rights it
may have to lease the Option Space, and Tenant shall have no further rights and
Landlord shall have no further obligations under this Article 37.
37.03. If Tenant shall timely and properly deliver the Option Space
Acceptance Notice in accordance with the provisions of Section 37.02 above (and
Landlord shall not render the same null and void in accordance with the
provisions of Section 37.02 above), then, effective as of the Option Space
Commencement Date (as hereinafter defined), the Option Space shall become, and
be deemed to comprise, part of the Premises upon all the then executory terms
hereof (including without limitation the Expiration Date), subject to and upon
the following terms and conditions:
(a) The Fixed Rent shall be increased by, and shall thereby include,
the Option Space Fixed Rent (as hereinafter defined). The "OPTION SPACE
FIXED RENT", for any part of the term of this lease, shall mean a per annum
amount equal to the product of (x) the number rentable square feet in the
Option Space Rentable Area, multiplied by (y) the Annual Rate Per RSF (as
hereinafter defined) for such part of the term of this lease. The "ANNUAL
RATE PER RSF" shall mean (I) $28 per annum, for that part of the term of
this lease occurring between the Commencement Date and November 30, 1999
(both dates inclusive), (II) $32.25 per annum, for that part of the term of
this lease occurring between December 1, 1999 and November 30, 2004 (both
dates inclusive), and (III) $37.50 per annum, for that part of the term of
this lease occurring between December 1, 2004 and the Expiration Date (both
dates inclusive).
(b) Tenant's Operating Share and Tenant's Tax Share, respectively,
shall be appropriately increased by operation of the provisions of
Sections 3.01(n) and 3.01(o), respectively, based upon the Option Space
Rentable Area. It
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is specifically understood that the Base Tax Amount and Base Operating
Amount shall be the same for the Option Space as for the Premises
originally demised hereunder.
(c) Article 14 hereof shall apply to the Option Space upon and
subject to the following provisions: (i) Tenant, at Tenant's expense as
part of the Initial Option Space Work (as hereinafter defined), shall
install one or more "Tenant's Submeters" for the Option Space to measure
Tenant's demand and consumption of electricity in the Option Space, (ii)
Section 14.02 shall apply separately to the Option Space, and, in respect
thereof, (x) the separate "Committed Electrical Service Level" for the
Option Space shall be a level of not less than six and one-half (6-1/2)
watts multiplied by the number of rentable square feet in the Option Space
Rentable Area, (y) such separate electrical capacity shall be made
available to Tenant at one or more points on the floor of the Building on
which the Option Space is located, and (z) Section 14.02(c) shall not apply
to the Option Space, and (iii) until such time as such "Tenant's Submeters"
are installed for the Option Space, the last two (2) sentences of Section
14.03 shall apply separately to the Option Space.
(d) Article 15 hereof shall apply to the Option Space upon and
subject to the following provisions: (i) Section 15.01(a) and the other
provisions of Article 15 dealing with the Business Occupancy Date shall
apply separately to the Option Space (and thus reflect a separate "Business
Occupancy Date" for the Option Space, which shall be the date for the
commencement of certain services to the Option Space as more particularly
provided in Article 15), and (ii) Section 15.04 shall apply separately to
the Option Space, and, in respect thereof, (x) the "Allotted SCW Capacity",
for the Option Space, shall be a number of tons of condenser water equal to
(A) one (1) ton multiplied by the number rentable square feet in the Option
Space Rentable Area, divided by (B) 1,000, and (y) the "SCW Distribution
Point", for the Option Space, shall mean a point in the Building's core on
the floor of the Building on which the Option Space is located, which point
shall be designated by Landlord.
(e) In no event shall any of the following provisions of this lease
apply to the Option Space: (i) Article 4 hereof (it being understood that
the provisions of Section 37.04 below shall apply in lieu thereof), (ii)
Article 36 hereof (except as and to the extent provided in Section 37.05
below), and (iii) any provisions providing for a free rent period or period
of rent abatement in respect of Fixed Rent, Tax Payments or Operating
Payments (it being understood that the provisions of Section 37.06 shall
apply in lieu thereof).
37.04. (a) Landlord shall deliver and Tenant shall accept the Option Space
in its "as is" condition as of the date of the Option Space Acceptance Notice,
subject to ordinary wear and tear to the Option Space occurring between such
date and the
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date of delivery; provided, however, that on the date of such delivery (i) the
Option Space shall be fully demised in accordance with all laws and requirements
of public authorities, (ii) the Option Space shall be served by an operational
sprinkler loop conforming to all laws and requirements of public authorities,
and (iii) the Option Space shall be in a condition which, if the same were
demised on the date hereof, would permit Landlord to obtain an ACP-5 with
respect thereto. Section 2.02 hereof, including Section 2.02(c) hereof, shall
apply to the Option Space.
(b) The "OPTION SPACE COMMENCEMENT DATE" shall be the later to occur
of (i) the Option Space Scheduled Date, and (ii) the day on which Landlord
actually delivers exclusive possession of the Option Space to Tenant in
accordance with the provisions of subsection (a) above.
(c) Landlord shall use reasonable efforts to deliver possession of
the Option Space to Tenant in accordance with the provisions of subsection (a)
above on or prior to the Option Space Scheduled Date. Landlord's obligation to
use reasonable efforts shall include an obligation to institute and prosecute a
holdover or other appropriate proceeding against any holdover tenant or occupant
of the Option Space, unless (i) Landlord reasonably believes that the holding
over in question will not delay its delivery of the Option Space to Tenant
beyond the Option Space Scheduled Date, or (ii) Landlord reasonably believes
that the institution or prosecution of such a proceeding, as the case may be,
will not result in such holdover tenant or occupant vacating of the Option Space
on a significantly earlier date.
(d) If, for any reason, Landlord is unable to deliver possession of
the Option Space to Tenant in accordance with the provisions of subsection (a)
above on or prior to the Option Space Scheduled Date, then (i) this lease and
the obligations of Tenant hereunder (including without limitation any obligation
of Tenant hereunder to lease the Option Space) shall not be impaired under such
circumstances (it being understood that the Option Space Commencement Date shall
occur only as set forth in subsection (b) above), and (ii) Landlord, except to
the extent that Landlord failed to exercise reasonable efforts to deliver the
Option Space as required in subsection (c) above, shall not be subject to any
liability on account of such failure. Tenant hereby waives any right to rescind
this lease under the provisions of Section 223-a of the Real Property Law of the
State of New York, and agrees that the provisions of this Article are intended
to constitute "an express provision to the contrary" within the meaning of said
Section 223-a.
(e) Notwithstanding the provisions of subsection (d) above, if, for
any reason, Landlord is unable to deliver possession of the Option Space on or
prior to the date that is two hundred and seventy (270) days after the Option
Space Scheduled Date, then Tenant, by written notice given within thirty (30)
days after the expiration of such 270-day period, may, at its option, rescind
the Option Space Acceptance Notice (which rescission shall render the Option
Space Acceptance Notice
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null and void), and, in which event and upon Landlord's receipt of such
rescission notice, neither Landlord nor Tenant shall have any further rights,
obligations or liability under this Article 37 with respect to the delivery or
leasing of the Option Space or otherwise.
37.05. If Tenant leases the Option Space, then Landlord shall reimburse
Tenant for the cost of the Initial Option Space Work (as hereinafter defined)
and the Option Space Soft Costs (as hereinafter defined), in an amount equal to
the lesser of (a) the aggregate cost of the Initial Option Space Work and the
Option Space Soft Costs and (b) an amount equal to the product of (i) the number
of rentable square feet in the Option Space Rentable Area, multiplied by (ii)
Fifty-Five ($55) Dollars, multiplied by (iii) a fraction, the numerator of which
is the number of days occurring within the period commencing on the Option Space
Commencement Date and ending on the Expiration Date (both days inclusive), and
the denominator of which is the number of days in the full term of this lease
(commencing on the Commencement Date and ending on the Expiration Date (both
days inclusive)) (which lesser amount between the amount described in clause (a)
and the amount described in clause (b) being herein called the "LANDLORD'S
OPTION SPACE CONTRIBUTION"), which Landlord's Option Space Contribution shall be
disbursed in the same manner as provided for Landlord's Contribution in Article
36 hereof, and, accordingly, the provisions of Section 36.01(a) and (b), as well
as the provisions of Sections 36.03 and 36.04, shall apply thereto, mutatis
mutandis, provided that (I) any references in such provisions to (x) "Landlord's
Contribution" shall be deemed to mean Landlord's Option Space Contribution, (y)
the "Initial Tenant Work" shall be deemed to mean the "Initial Option Space
Work", and (z) "Tenant's Soft Costs" shall be deemed to mean the Option Space
Soft Costs, and (II) the references in Section 36.01 to (X) "One Million Nine
Hundred Ten Thousand Four Hundred Fifty-Nine and 98/100 ($1,910,459.98) Dollars"
shall be deemed to mean the amount described in subsection (b) of this Section
37.05, and (Y) "$90,000" shall be deemed to refer to a dollar amount of
"$25,000". As used herein, (1) the "INITIAL OPTION SPACE WORK" shall mean the
Alterations, if any, performed by Tenant in the Option Space to prepare the
Option Space for Tenant's initial use and occupancy; and (2) the "OPTION SPACE
SOFT COSTS" shall mean the fees and expenses of Tenant's architect and engineer
incurred, in each case, with respect to the Initial Option Space Work, and the
moving expenses incurred in connection with Tenant's move into the Option Space.
37.06. Notwithstanding the provisions of Section 37.03(a) and (b), (i) the
Option Space Fixed Rent shall abate for the Option Space Abatement Period (as
hereinafter defined), and (ii) the increases in Tenant's Operating Share and
Tenant's Tax Share resulting from the addition of the Option Space to the
Premises shall abate for, i.e., not occur until the expiration of, the Option
Space Abatement Period. The "OPTION SPACE ABATEMENT PERIOD" shall mean the
period commencing on the Option Space Commencement Date and ending on the day
prior to the date which is three (3) months after the Option Space Commencement
Date, both dates inclusive.
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37.07. Landlord agrees that, during the period commencing on the date that
Landlord shall deliver the Option Notice and ending on the date twenty (20)
Business Days thereafter, Tenant may, from time to time, inspect and measure the
Option Space, after reasonable notice to Landlord, subject to the rights of any
tenants or occupants thereof, so long as such rights do not prevent Tenant from
conducting such inspections and measurements. If Tenant delivers the Option
Space Acceptance Notice, then Tenant, during the period commencing with the
expiration of such 20 Business Day period and ending on the Option Space
Commencement Date (or, in the event Tenant shall rescind the Option Space
Acceptance Notice pursuant to the provisions of Section 37.04(e) hereof, the
date of such rescission), shall have the right to periodically (but not more
frequently than twice a month) inspect the Option, subject, in all events, to
the rights of any tenants or occupants thereof.
37.08. (a) The "OPTION SPACE RENTABLE AREA" shall mean the rentable area of
the Option Space shall be determined in accordance with the following
provisions: (i) the "usable area" of the Option Space shall be that usable area
determined in accordance with the "Recommended Method of Floor Measurement for
Office Buildings" effective January 1, 1987 published by the Real Estate Board
of New York; and (ii) the "rentable area" of the Option Space shall be equal to
the product of (x) the usable area of the Option Space, multiplied by (y) 1.40.
(b) Landlord's determination of the Option Space Rentable Area set
forth in the Option Notice (herein called "LANDLORD'S DETERMINATION") shall be
conclusive and binding upon Tenant, unless Tenant shall expressly dispute the
same in good-faith in the Option Space Acceptance Notice, in which event, the
Option Space Acceptance Notice shall set forth Tenant's good-faith determination
of Option Space Rentable Area (herein called "TENANT'S DETERMINATION"), which
shall be based upon a measurement of the usable area of the Option Space
conducted by a licensed architect retained by Tenant in accordance with the
provisions of Section 37.08(a)(i) above, together with the name of such
architect.
(c) If Tenant shall dispute Landlord's Determination in accordance
with the provisions of subsection (b) above, then Landlord and Tenant shall
attempt in good-faith to resolve such dispute. If, by the date which is thirty
(30) days after Landlord's receipt of the Option Space Acceptance Notice,
Landlord and Tenant are unable to resolve the dispute, then Landlord and Tenant
shall designate a mutually acceptable licensed architect (the "OPTION SPACE
ARCHITECT") who shall measure the Option Space to determine the usable area of
the Option Space in accordance with the provisions of Section 37.08(a)(i) above,
which determination of the usable area of the Option Space shall be issued in
writing and shall be conclusive and binding upon both Landlord and Tenant, and
the final determination of the Option Space Rentable Area shall be as based
thereon in accordance with the provisions of Section 37.08(a)(ii); provided,
however, that the final determination of the Option Space Rentable Area shall
never exceed Landlord's Determination or be less than Tenant's
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Determination. In the event that Landlord and Tenant shall be unable to agree
upon the designation of the Option Space Architect within sixty (60) days after
Landlord's receipt of the Option Space Acceptance Notice, then either party
shall have the right to request the AAA (or any organization which is the
successor thereto) to designate as the Option Space Architect a licensed
architect who shall be independent and shall have at least five (5) years
experience in the measurement of usable area in office buildings in New York
City pursuant to the method set forth in Section 37.07(a)(i) above. Until the
determination of the Option Space Architect, all computations made pursuant to
this Article 37 shall be based upon Landlord's Determination, and if the final
determination of the Option Space Rentable Area shall be less than Landlord's
Determination, then all such computations shall be appropriately adjusted and
reconciled and Landlord shall refund to Tenant the amounts indicated thereby.
The costs of Option Space Architect shall be borne by Landlord if the final
determination of the Option Space Rentable Area is less than 95% of Landlord's
Determination, and by Tenant in all other cases.
37.09. Landlord and Tenant shall, upon the request of the other party,
execute, acknowledge and deliver to the other party an instrument or instruments
in form reasonably satisfactory to both parties confirming the addition of the
Option Space to the Premises, the Option Space Commencement Date, any resulting
increase in Fixed Rent, Tenant's Operating Share and Tenant's Tax Share, and any
other terms or conditions in respect of the Option Space, but any failure of the
parties to execute, acknowledge and deliver such instrument(s) shall not affect
the validity of the leasing of the Option Space or any of the provisions of this
Article 37.
ARTICLE 38
Preferential Right to Lease
38.01. (a) For purposes of this Article 38, the following terms shall have
the following meanings:
"DESIGNATED SPACE" shall mean all the leasable area on the
thirty-eighth (38th) floor of the Building.
"SUPERIOR TRANSACTION" shall mean (1) any renewal or extension
of any lease demising the whole or any part of the Designated Space,
whether such renewal or extension is effected pursuant to a specific right
or option included in the lease or otherwise, (2) any lease of the whole or
any part of the Designated Space effected pursuant to a specific right or
option contained in a lease existing as of the date hereof (so long as such
leasing is effected in substantial compliance with the terms of such right
or option), (3) any lease of the whole or any part of the Designated Space
which is vacant on the date
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hereof, but only if such lease is executed on or prior to the date that is
twenty-four (24) months after the date hereof, (4) any lease of the whole
or any part of the Designated Space which also demises other leasable space
in the Building which is not part of the Designated Space (but only if the
part of the Designated Space demised by such lease consists of a rentable
area that is equal to or greater than the rentable area of such other
leasable space in the Building demised by such lease), and (5) any lease of
the whole or any part of the Designated Space which commences after
eleventh (11th) anniversary of the Rent Commencement Date.
(b) If Landlord intends to lease the whole or any part of the
Designated Space, other than pursuant to a Superior Transaction, then, prior to
leasing such space, shall give Tenant a written notice (each, an "OFFER
NOTICE"), which notice shall (i) describe the portion of the Designated Space
which Landlord is so intending to lease (each such portion being herein called
"OFFER SPACE"), it being agreed that, if any Offer Space is less than the entire
Designated Space, then such Offer Space shall be (x) be commercially reasonable
in shape and configuration, and (y) contain an amount of exterior window space
which bears substantially the same ratio to the rentable area of the Offer
Space, as the total amount of exterior window space on the 38th floor of the
Building bears to the rentable area of the Designated Space, (ii) be accompanied
by a floor plan delineating such Offer Space (unless the Offer Space is
comprised of the entire Designated Space), (iii) set forth Landlord's good-faith
determination of the Offer Space Rentable Area (as hereinafter defined) with
respect to such Offer Space (unless the Offer Space consists of the entire
Designated Space), and (iv) set forth the date upon which Landlord anticipates
being able to deliver such Offer Space to Tenant (herein called, with respect to
such Offer Space, the "OFFER SPACE SCHEDULED DATE"), which date shall not be
less than ninety (90) days nor more than eighteen (18) months from the date of
such Offer Notice (it being agreed that, at the time that Landlord serves any
Offer Notice, Landlord shall have, or reasonably believe that it has, a
contractual right to possession of the Offer Space described therein as of the
Offer Space Scheduled Date with respect thereto); provided, however, that
Landlord shall have no obligation to deliver any Offer Notice if either (I)
prior to the delivery of the Offer Notice, this lease shall be terminated or
cancelled for any reason whatsoever, or (II) at anytime during the term of this
lease after the substantial completion of the Initial Alterations and prior to
the delivery of the Offer Notice, the Outside Occupancy Percentage (as
hereinafter defined) shall be greater than fifty (50%) percent, or (III) at
anytime during the term of this lease after the substantial completion of the
Initial Alterations and prior to the delivery of the Offer Notice, (x) there
shall be no portion of the Initially Demised Premises having a rentable area
equal to or greater than 12,000 rentable square feet which is occupied by
Original Tenant, and (y) there shall be no portion of the Initially Demised
Premises having a rentable area equal to or greater than 12,000 rentable square
feet which is occupied by VKM. Subject to the provisions of this Article 38,
each Offer Notice shall constitute a one-time non-recurring offer by
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Landlord to Tenant to lease all (and not less than all) of the Offer Space
described therein upon the terms and conditions set forth in this Article 38.
38.02. If Tenant desires to lease the Offer Space described in any Offer
Notice upon the terms and conditions set forth in this Article 38, then Tenant,
within fifteen (15) Business Days after Landlord shall delivered such Offer
Notice (time being of the essence), shall deliver to Landlord a written notice
to such effect (each such notice being herein called an "OFFER SPACE ACCEPTANCE
NOTICE"); provided, however, that the Offer Space Acceptance Notice shall
automatically be null and void if this lease shall have theretofore been
terminated or cancelled for any reason whatsoever, and Landlord, at its option,
by notice to Tenant given no later than ten (10) Business Days after Landlord's
receipt of Tenant's Offer Space Acceptance Notice, may render the Offer Space
Acceptance Notice null and void if, at the time that Landlord receives the same,
(i) a monetary Event of Default shall have occurred and is then continuing, or
(ii) the Outside Occupancy Percentage shall be greater than fifty (50%) percent,
or (iii) (x) there shall be no portion of the Initially Demised Premises having
a rentable area equal to or greater than 12,000 rentable square feet which is
occupied by Original Tenant, and (y) there shall be no portion of the Initially
Demised Premises having a rentable area equal to or greater than 12,000 rentable
square feet which is occupied by VKM. If Tenant shall fail to timely and
properly deliver the Offer Space Acceptance Notice for any Offer Space in
accordance with this Section 38.02, or Landlord shall render such Offer Space
Acceptance Notice null and void in accordance with this Section 38.02, then, in
either event, Tenant shall be conclusively deemed to have waived any rights it
may have to lease such Offer Space, and Tenant shall have no further rights and
Landlord shall have no further obligations under this Article 38 with respect to
such Offer Space.
38.03. If Tenant shall timely and properly deliver an Offer Space
Acceptance Notice with respect to the Offer Space described in any Offer Notice
in accordance with the provisions of Section 38.02 above (and Landlord shall not
render the same null and void in accordance with the provisions of Section 38.02
above), then, effective as of the Offer Space Commencement Date (as hereinafter
defined) with respect to such Offer Space, such Offer Space shall become, and be
deemed to comprise, part of the Premises upon all the then executory terms
hereof (including without limitation the Expiration Date), subject to and upon
the following terms and conditions:
(a) The Fixed Rent shall be increased by, and shall thereby include,
the Offer Space Fixed Rent (as hereinafter defined) for such Offer Space.
The "OFFER SPACE FIXED RENT", for any Offer Space for any part of the term
of this lease, shall mean a per annum amount equal to the product of (x)
the number rentable square feet in the Offer Space Rentable Area of such
Offer Space, multiplied by (y) the Annual Rate Per RSF for such part of the
term of this lease.
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(b) Tenant's Operating Share and Tenant's Tax Share, respectively,
shall be appropriately increased by operation of the provisions of Sections
3.01(n) and 3.01(o), respectively, based upon the Offer Space Rentable Area
of any Offer Space. It is specifically understood that the Base Tax Amount
and Base Operating Amount shall be the same for any Offer Space as for the
Premises originally demised hereunder.
(c) Article 14 hereof shall apply to any Offer Space upon and
subject to the following provisions: (i) Tenant, at Tenant's expense as
part of the Initial Offer Space Work (as hereinafter defined), shall
install one or more "Tenant's Submeters" for such Offer Space to measure
Tenant's demand and consumption of electricity in such Offer Space, (ii)
Section 14.02 shall apply separately to any Offer Space, and, in respect
thereof, (x) the separate "Committed Electrical Service Level" for any
Offer Space shall be a level of not less than six and one-half (6-1/2)
watts multiplied by the number of rentable square feet in the Offer Space
Rentable Area of such Offer Space, (y) such separate electrical capacity
shall be made available to Tenant at one or more points on the 38th floor
of the Building, and (z) Section 14.02(c) shall not apply to such Offer
Space, and (iii) until such time as such "Tenant's Submeters" are installed
for any Offer Space, the last two (2) sentences of Section 14.03 shall
apply separately to such Offer Space.
(d) Article 15 hereof shall apply to any Offer Space upon and
subject to the following provisions: (i) Section 15.01(a) and the other
provisions of Article 15 dealing with the Business Occupancy Date shall
apply separately to such Offer Space (and thus reflect a separate "Business
Occupancy Date" for such Offer Space, which shall be the date for the
commencement of certain services to such Offer Space as more particularly
provided in Article 15), and (ii) Section 15.04 shall apply separately to
such Offer Space, and, in respect thereof, (x) the "Allotted SCW Capacity",
for such Offer Space, shall be a number of tons of condenser water equal to
(A) one (1) ton multiplied by the number rentable square feet in the Offer
Space Rentable Area, divided by (B) 1,000, and (y) the "SCW Distribution
Point", for such Offer Space, shall mean a point in the Building's core on
the floor of the Building on which such Offer Space is located, which point
shall be designated by Landlord.
(e) In no event shall any of the following provisions of this lease
apply to any Offer Space: (i) Article 4 hereof (it being understood that
the provisions of Section 38.04 below shall apply in lieu thereof), (ii)
Article 36 hereof (except as and to the extent provided in Section 38.05
below), and (iii) any provisions providing for a free rent period or period
of rent abatement in respect of Fixed Rent, Tax Payments or Operating
Payments (it being understood that the provisions of Section 38.06 shall
apply in lieu thereof).
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38.04. (a) Landlord shall deliver and Tenant shall accept any Offer Space
in its "as is" condition as of the date of the Offer Space Acceptance Notice
subject to ordinary wear and tear to the Offer Space occurring between such date
and the date of delivery; provided, however, that on the date of such delivery
(i) the Offer Space shall be fully demised in accordance with all laws and
requirements of public authorities, (ii) the Offer Space shall be served by an
operational sprinkler loop conforming to all laws and requirements of public
authorities, and (iii) the Offer Space shall be in a condition which, if the
same were demised on the date hereof, would permit Landlord to obtain an ACP-5
with respect thereto. Section 2.02 hereof, including Section 2.02(c) hereof,
shall apply to the Offer Space.
(b) The "OFFER SPACE COMMENCEMENT DATE", with respect to any Offer
Space shall be the later to occur of (i) the Offer Space Scheduled Date with
respect to such Offer Space, and (ii) the day on which Landlord actually
delivers exclusive possession of such Offer Space to Tenant in accordance with
the provisions of subsection (a) above.
(c) Landlord shall use reasonable efforts to deliver possession of
any Offer Space to Tenant in accordance with the provisions of subsection (a)
above on or prior to the Offer Space Scheduled Date with respect to such Offer
Space. Landlord's obligation to use reasonable efforts shall include an
obligation to institute and prosecute a holdover or other appropriate proceeding
against any holdover tenant or occupant of any Offer Space, unless (i) Landlord
reasonably believes that the holding over in question will not delay its
delivery of such Offer Space to Tenant beyond the Offer Space Scheduled Date
with respect thereto, or (ii) Landlord reasonably believes that the institution
or prosecution of such a proceeding, as the case may be, will not result in such
holdover tenant or occupant vacating of such Offer Space on a significantly
earlier date.
(d) If, for any reason, Landlord is unable to deliver possession of
any Offer Space to Tenant in accordance with the provisions of subsection (a)
above on or prior to the Offer Space Scheduled Date with respect to such Offer
Space, then (i) this lease and the obligations of Tenant hereunder (including
without limitation any obligation of Tenant hereunder to lease such Offer Space)
shall not be impaired under such circumstances (it being understood that the
Offer Space Commencement Date with respect to such Offer Space shall occur only
as set forth in subsection (b) above), and (ii) Landlord, except to the extent
that Landlord failed to exercise reasonable efforts to deliver any Offer Space
as required in subsection (c) above, shall not be subject to any liability on
account of such failure. Tenant hereby waives any right to rescind this lease
under the provisions of Section 223-a of the Real Property Law of the State of
New York, and agrees that the provisions of this Article are intended to
constitute "an express provision to the contrary" within the meaning of said
Section 223-a.
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(e) Notwithstanding the provisions of subsection (d) above, if, for
any reason, Landlord is unable to deliver possession of any Offer Space on or
prior to the date that is two hundred and seventy (270) days after the Offer
Space Scheduled Date with respect thereto, then Tenant, by written notice given
within thirty (30) days after the expiration of such 270-day period, may, at its
option, rescind the Offer Space Acceptance Notice with respect to such Offer
Space (which rescission shall render such Offer Space Acceptance Notice null and
void), and, in which event and upon Landlord's receipt of such rescission
notice, neither Landlord nor Tenant shall have any further rights, obligations
or liability under this Article 38 with respect to the delivery or leasing of
such Offer Space or otherwise with respect to such Offer Space.
38.05. If Tenant leases any Offer Space, then Landlord shall reimburse
Tenant for the cost of the Initial Offer Space Work (as hereinafter defined)
with respect to such Offer Space and the Offer Space Soft Costs (as hereinafter
defined) with respect to such Offer Space, in an amount equal to the lesser of
(a) the aggregate cost of such Initial Offer Space Work and such Offer Space
Soft Costs, and (b) an amount equal to the product of (i) the number of rentable
square feet in the Offer Space Rentable Area of such Offer Space, multiplied by
(ii) Fifty-Five ($55) Dollars, multiplied by (iii) a fraction, the numerator of
which is the number of days occurring within the period commencing on the Offer
Space Commencement Date with respect to such Offer Space and ending on the
Expiration Date (both days inclusive), and the denominator of which is the
number of days in the full term of this lease (commencing on the Commencement
Date and ending on the Expiration Date (both days inclusive)) (which lesser
amount between the amount described in clause (a) and the amount described in
clause (b) being herein called, with respect to such Offer Space, the
"LANDLORD'S OFFER SPACE CONTRIBUTION"), which Landlord's Offer Space
Contribution shall be disbursed in the same manner as provided for Landlord's
Contribution in Article 36 hereof, and, accordingly, the provisions of Section
36.01(a) and (b), as well as the provisions of Sections 36.03 and 36.04, shall
apply thereto, mutatis mutandis, provided that (I) any references in such
provisions to (x) "Landlord's Contribution" shall be deemed to mean Landlord's
Offer Space Contribution with respect to such Offer Space, (y) the "Initial
Tenant Work" shall be deemed to mean the "Initial Offer Space Work" with respect
to such Offer Space, and (z) "Tenant's Soft Costs" shall be deemed to mean the
Offer Space Soft Costs with respect to such Offer Space, and (II) the references
in Section 36.01 to (X) "One Million Nine Hundred Ten Thousand Four Hundred
Fifty-Nine and 98/100 ($1,910,459.98) Dollars" shall be deemed to mean the
amount described in subsection (b) of this Section 38.05, and (Y) "$90,000"
shall be deemed to refer to a dollar amount of "$25,000". As used herein, (1)
the "INITIAL OFFER SPACE WORK", with respect to any Offer Space, shall mean the
Alterations, if any, performed by Tenant in such Offer Space to prepare the same
for Tenant's initial use and occupancy; and (2) the "OFFER SPACE SOFT COSTS",
with respect to any Offer Space, shall mean the fees and expenses of Tenant's
architect and engineer incurred, in each case, with respect to the Initial Offer
Space Work with respect to such Offer
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Space, and the moving expenses incurred in connection with Tenant's move into
such Offer Space.
38.06. Notwithstanding the provisions of Section 38.03(a) and (b), (i) the
Offer Space Fixed Rent for any Offer Space shall abate for the Offer Space
Abatement Period (as hereinafter defined) for such Offer Space, and (ii) the
increases in Tenant's Operating Share and Tenant's Tax Share resulting from the
addition of such Offer Space to the Premises shall abate for, i.e., not occur
until the expiration of, the Offer Space Abatement Period for such Offer Space.
The "OFFER SPACE ABATEMENT PERIOD", for any Offer Space, shall mean the period
commencing on the Offer Space Commencement Date for such Offer Space and ending
on the day prior to the date which is three (3) months after such Offer Space
Commencement Date, both dates inclusive.
38.07. Landlord agrees that, during the period commencing on the date that
Landlord shall deliver any Offer Notice and ending on the date fifteen (15)
Business Days thereafter, Tenant may, from time to time, inspect and measure the
Offer Space, after reasonable notice to Landlord, subject to the rights of any
tenants or occupants thereof, so long as such rights do not prevent Tenant from
conducting such inspections and measurements. If Tenant delivers an Offer Space
Acceptance Notice with respect to any Offer Space, then, with respect to such
Offer Space, Tenant, during the period commencing with the expiration of such 15
Business Day period and ending on the Offer Space Commencement Date with respect
to such Offer Space (or, in the event Tenant shall rescind such Offer Space
Acceptance Notice pursuant to the provisions of Section 38.04(e) hereof, the
date of such rescission), shall have the right to periodically (but not more
frequently than twice a month) inspect such Offer Space, subject, in all events,
to the rights of any tenants or occupants thereof.
38.08. (a) The "OFFER SPACE RENTABLE AREA", with respect to any Offer
Space, shall mean the rentable area of the Offer Space as determined in
accordance with the following provisions: (i) the "rentable area" of the entire
Designated Space shall be conclusively deemed to be 32,747 rentable square feet
(in no event shall any of the aforesaid usable or rentable square foot numbers
or amounts constitute or imply any representation or warranty by Landlord
whatsoever, as to the actual size of the Designated Space); (ii) the "usable
area" of any Offer Space which is less than the entire area of the Designated
Space shall be that usable area determined in accordance with the "Recommended
Method of Floor Measurement for Office Buildings", effective January 1, 1987
published by the Real Estate Board of New York; and (iii) the "rentable area" of
any Offer Space which is less than the entire area of the Designated Space shall
be equal to the product of (x) the usable area of such Offer Space, multiplied
by (y) 1.40.
(b) Landlord's determination of the Offer Space Rentable Area for
any Offer Space consisting of less than the entire Designated Space as set forth
in the
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Offer Notice describing such Offer Space (herein called "LANDLORD'S
DETERMINATION") shall be conclusive and binding upon Tenant, unless Tenant shall
expressly dispute the same in good-faith in the Offer Space Acceptance Notice
with respect to such Offer Space, in which event, such Offer Space Acceptance
Notice shall set forth Tenant's good-faith determination of Offer Space Rentable
Area for such Offer Space (herein called "TENANT'S DETERMINATION"), which shall
be based upon a measurement of the usable area of such Offer Space conducted by
a licensed architect retained by Tenant in accordance with the provisions of
Section 38.08(a)(ii) above, together with the name of such architect.
(c) If Tenant shall dispute Landlord's Determination with respect to
any Offer Space in accordance with the provisions of subsection (b) above, then
Landlord and Tenant shall attempt in good-faith to resolve such dispute. If, by
the date which is thirty (30) days after Landlord's receipt of the Offer Space
Acceptance Notice with respect to such Offer Space, Landlord and Tenant are
unable to resolve the dispute, then Landlord and Tenant shall designate a
mutually acceptable licensed architect (the "OFFER SPACE ARCHITECT") who shall
measure such Offer Space to determine the usable area of the same in accordance
with the provisions of Section 38.08(a)(ii) above, which determination of the
usable area of such Offer Space shall be issued in writing and shall be
conclusive and binding upon both Landlord and Tenant, and the final
determination of the Offer Space Rentable Area with respect to such Offer Space
shall be as based thereon in accordance with the provisions of Section 38.08(a)
(iii); provided, however, that the final determination of the Offer Space
Rentable Area with respect to any Offer Space shall never exceed Landlord's
Determination with respect to such Offer Space or be less than Tenant's
Determination with respect to such Offer Space. In the event that Landlord and
Tenant shall be unable to agree upon the designation of the Offer Space
Architect within sixty (60) days after Landlord's receipt of the Offer Space
Acceptance Notice with respect to such Offer Space, then either party shall have
the right to request the AAA (or any organization which is the successor
thereto) to designate as the Offer Space Architect a licensed architect who
shall be independent and shall have at least five (5) years experience in the
measurement of usable area in office buildings in New York City pursuant to the
method set forth in Section 38.08(a)(ii) above. Until the determination of the
Offer Space Architect, all computations made pursuant to this Article 38 with
respect to such Offer Space shall be based upon Landlord's Determination with
respect to such Offer Space, and if the final determination of the Offer Space
Rentable Area with respect to such Offer Space shall be less than Landlord's
Determination with respect thereto, then all such computations shall be
appropriately adjusted and reconciled and Landlord shall refund to Tenant the
amounts indicated thereby. The costs of the Offer Space Architect with respect
to any Offer Space shall be borne by Landlord if the final determination of the
Offer Space Rentable Area with respect to such Offer Space is less than 95% of
Landlord's Determination with respect to such Offer Space, and by Tenant in all
other cases.
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38.09. If, at anytime during the term of this lease, (i) Tenant shall be
leasing, and, together with its Affiliates, be in occupancy of, more than
one-half (1/2) of the rentable area of the Designated Space, and (ii) Tenant
shall be leasing, and, together with its Affiliates, be in occupancy of, more
than one-half (1/2) of the rentable area of the Initially Demised Premises,
then, during any such period, Tenant, subject to and in accordance with the
provisions of Article 11, shall have the right to install an interior staircase
connecting the portion of the Premises located on the 37th floor of the Building
with the portion of the Premises located on the 38th floor of the Building.
38.10. Landlord and Tenant shall, upon the request of the other party,
execute, acknowledge and deliver to the other party an instrument or instruments
in form reasonably satisfactory to both parties confirming the addition of any
Offer Space to the Premises, the Offer Space Commencement Date with respect to
such Offer Space, any resulting increase in Fixed Rent, Tenant's Operating Share
and Tenant's Tax Share, and any other terms or conditions in respect of such
Offer Space, but any failure of the parties to execute, acknowledge and deliver
such instrument(s) shall not affect the validity of the leasing of such Offer
Space or any of the provisions of this Article 38.
ARTICLE 39
Untenantability
39.01. If, at any time during the term of this lease, (i) there shall be a
failure of one or more of the Building Services, (ii) such failure is caused by
the negligence of Landlord, (iii) such failure is not the result of one or more
Events of Force Majeure and/or one or more acts or omissions of Tenant or any
Tenant Party, and (iv) as a result of such failure, the Premises (or a
substantial portion thereof, as more fully described below, that was then being
occupied) become untenantable (and, accordingly are vacated) and thereafter
remain untenantable for a period of five (5) consecutive Business Days after
Tenant notifies Landlord that the Premises (or such substantial portion thereof)
are untenantable, then Tenant, as its remedy, shall be entitled to an abatement
of Fixed Rent, the Operating Payment(s) and the Tax Payment(s) otherwise payable
hereunder in respect of the Premises (or such substantial portion thereof) for
the period commencing on the first Business Day after such five (5) Business Day
period and ending on the date upon which the Premises (or such substantial
portion thereof) is no longer untenantable. For purposes of this Section 39.01,
a substantial portion of the Premises shall be deemed to mean any portion of the
Premises which consists of at least 5,000 contiguous rentable square feet.
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ARTICLE 40
Arbitration
40.01. If, pursuant to any express provision of this lease, either Landlord
is entitled, Tenant is entitled, or either of Landlord or Tenant are entitled,
to submit a particular dispute to arbitration in accordance with the provisions
of this Article 40, then each party so entitled to submit the dispute in
question to arbitration may do so only by delivering a notice thereof to the
other party (each, an "ARBITRATION NOTICE"), and if such provision of this lease
shall set forth a specific period within which such party may submit the dispute
to arbitration, then such Arbitration Notice must be served prior to the
expiration of such time period (time being of the essence). For purposes of this
Article 40, the party delivering an Arbitration Notice shall be referred to as
the "INITIATING PARTY", and the party receiving an Arbitration Notice shall be
referred to as the "RESPONDING PARTY". Each Arbitration Notice shall (i)
specifically set forth the Article and Section of this lease in which are
located the provisions hereof expressly entitling the Initiating Party to submit
the dispute in question to arbitration (such provisions being herein called the
"AUTHORIZING PROVISIONS"), (ii) set forth, with reasonable specificity, the
dispute being submitted to arbitration pursuant to such Authorizing Provisions
and the issue to be determined by arbitration (which issue shall be consistent
with the Authorizing Provisions) (such issue being herein called the
"ARBITRATION ISSUE"), and (iii) appoint, and set forth the name and address of,
an arbitrator (herein called the "FIRST ARBITRATOR") to act in connection with
the dispute in question.
40.02. In each case that an Arbitration Notice is delivered in accordance
with the provisions of this lease, the following provisions shall apply:
(a) The Responding Party, within eight (8) Business Days after its
receipt of the Arbitration Notice, shall, by notice to Initiating Party,
appoint, and provided the name and address of, a second arbitrator (herein
called the "SECOND ARBITRATOR") to act in connection with the dispute in
question; it being agreed that if (x) the Responding Party shall fail to appoint
a Second Arbitrator within such 8 Business Day period, and (y) such failure
shall continue for 3 Business Days after the Responding Party receives a notice
of such failure from the Initiating Party (which notice shall expressly refer to
this Section 44.02(a)), then the First Arbitrator may appoint the Second
Arbitrator).
(b) After the appointment of both the First Arbitrator and the
Second Arbitrator (collectively, the "INITIAL ARBITRATORS"), the Initial
Arbitrators shall jointly appoint, by written instrument delivered to both the
Initiating Party and the Responding Party, a third arbitrator to act in
connection with the dispute in question (herein called the "THIRD ARBITRATOR");
it being agreed that if the Initial Arbitrators shall fail to appoint the Third
Arbitrator within the aforesaid 5 Business Day period,
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then either the Initiating Party or the Responding Party may apply to the AAA,
or if the AAA shall refuse or fail to act, to a court of competent jurisdiction
in the State of New York, for the appointment of the Third Arbitrator.
40.03. Promptly after the appointment of the Third Arbitrator, each of the
First Arbitrator, the Second Arbitrator and the Third Arbitrator shall proceed
to decide the Arbitration Issue. The arbitrators shall be instructed to render
their respective decisions, in writing, within eight (8) Business Days after the
appointment of the Third Arbitrator. The written decision of any two (2) of the
arbitrators shall be binding and conclusive upon both the Initiating Party and
the Responding Party.
40.04. Landlord and Tenant shall each have the right to appear and be
represented by counsel before any arbitrator(s) and to submit such data and
memoranda in support of their respective positions with respect to the
Arbitration Issue as may be reasonably necessary or appropriate in the
circumstances; it being agreed that if a dispute shall arise as to whether any
such data or memoranda is reasonable arises, a majority of the arbitrators are
hereby authorized to resolve same.
40.05. All the reasonable fees of the arbitrators appointed under Article
40 (whether by Tenant, Landlord, the AAA or a court) shall be paid by the
non-prevailing party in the arbitration. In addition, the non-prevailing party
shall reimburse the prevailing party the reasonable out-of-pocket costs
(including without limitation reasonable attorneys' fees and the reasonable
costs of producing witnesses and experts) incurred by the prevailing party in
connection with the arbitration.
40.06. With respect to any conclusive and binding decision of the
arbitrator(s) rendered pursuant to the provisions of this Article 40, judgment
may be entered thereupon in any court of competent jurisdiction. In rendering
any decision, the arbitrator(s) shall have no power to modify any of the
provisions of this lease, and the jurisdiction of arbitrator(s) is limited
accordingly, it being specifically understood that the arbitrator(s), in any
arbitration under this Article 40, shall only have authority to decide the
Arbitration Issue in question, and in no event shall the arbitrator(s) have any
authority to award damages.
40.07. Each "ARBITRATOR" appointed hereunder (whether by Landlord, Tenant
or any other person(s), organization or court) shall not then be employed by
Landlord, Tenant or any Affiliate of Landlord or Tenant, and, in all other
respects, shall be impartial. In addition, each arbitrator (x) shall meet the
specific qualifications set forth in the applicable Authorizing Provisions, or
(y) if no such qualifications are so set forth in the Authorizing Provisions,
shall be an attorney with at least ten (10) years experience in commercial real
estate law in the Borough of Manhattan.
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40.08. Landlord and Tenant shall not be deemed to have agreed to have any
dispute/issue arising out of this lease determined by arbitration unless a
determination in such manner shall be expressly provided hereunder.
ARTICLE 41
Effective Date of Lease
41.01. Tenant, by its execution of this lease, hereby acknowledges that (i)
Tenant has been in possession of the Premises from and after December 7, 1993
(the date which is, for all purposes hereof, the Commencement Date and the date
of this lease), and (ii) this lease, although executed at later date, is
effective, for all purposes, as of December 7, 1993, and shall be deemed, for
all purposes (including without limitation any obligations of Tenant to be
performed prior to the date of execution), to have been in full force and effect
since December 7, 1993 (and, accordingly and without limitation, Tenant's
possession of the Premises for the period from such date until the date of
execution shall be deemed to have been pursuant hereto), as fully and completely
as if this lease were executed on December 7, 1993 immediately prior to Tenant
taking possession of the Premises on such date.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this
lease as of the day and year first above written.
LANDLORD:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By: /s/ Victor Colman
-----------------------------
Name: Victor Colman
Title: Vice President
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TENANT:
McCARTHY, CRISTANI & MAFFEI,
INC.
By: /s/ Lindley B. Richert
-------------------------------
Name: Lindley B. Richert
Title: President
Tenant's Federal Tax I.D. No.:
13-2812663
-----------------------------------
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<PAGE> 151
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 19th day of July, 1994, before me personally came Victor
Colman, to me known, who, being duly sworn by me, did depose and say that he
resides at Westing, NY; that he is a Vice President of THE CHASE MANHATTAN
BANK, N.A., the national banking association described in and which executed
the foregoing instrument; and that he signed his name thereto by order of the
Board of Directors of said association.
/s/ [illegible signature]
---------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24th day of May, 1994, before me personally came Lindley B.
Richert, to me known, who, being duly sworn by me, did depose and say that he
resides at 249 Pequest Rd., Hoboken, New Jersey; that he is President of
McCARTHY, CRISTANI & MAFFEI, INC., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
/s/ Victoria Cosentino
--------------------------------------
Victoria Cosentino
Notary Public, State of New York
No. 24-4799317
Commission Expires January 31, 1997
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Schedule A
FIXED RENT
(a) NINE HUNDRED SIXTEEN THOUSAND NINE HUNDRED SIXTEEN and 00/100
($916,916.00) Dollars, per annum, for the period from the Commencement Date to
and including November 30, 1999;
(b) ONE MILLION FIFTY-SIX THOUSAND NINETY and 75/100 ($1,056,090.75)
Dollars, per annum, for the period from December 1, 1999 to and including
November 30, 2004; and
(c) ONE MILLION TWO HUNDRED TWENTY-EIGHT THOUSAND TWELVE and 50/100
($1,228,012.50) Dollars, per annum, for the period from December 1, 2004 to and
including the Expiration Date.
Schedule A
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<PAGE> 153
Schedule B to Exhibit 10.35
---------------------------
CERTIFICATE OF OCCUPANCY
DEPARTMENT OF BUILDINGS
AMENDED CERTIFICATE OF OCCUPANCY
- -------
BOROUGH MANHATTAN DATE APR 14 1982 NO.8[illegible]
Amends
This certificate xxxxxx No. 61477 ZONING DISTRICT C 5-5
THIS CERTIFIES that the xxx altered [illegible] building--premises 1,2,3,4,
located at 1 Chase Manhattan Plaza Block 44, 45 Lot 14 & 19
CONFORMS SUBSTANTIALLY TO THE APPROVED PLANS AND SPECIFICATIONS AND TO THE
REQUIREMENTS OF ALL APPLICABLE LAWS, RULES AND REGULATIONS FOR THE USES AND
OCCUPANCIES SPECIFIED HEREIN
<TABLE>
<CAPTION>
PERMISSIBLE USE AND OCCUPANCY
=========================================================================================================================
[illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] DESCRIPTION OF USE
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
5th Sub-cellar 100 203 - - - - bank vaults and offices
4th Sub-cellar 100 620 - - - - Offices and machine room
3rd Sub-cellar 100 & 362 - - - - Offices and mechanical
175 equipment
2nd Sub-cellar 175 428 - - - - Kitchen, storage,
maintenance shops,
mechanical equipment,
truck door, loading
berth
1st Sub-cellar 100 467 - - - - West dining room
846 East dining room
280 West Lounge
138 East Lounge
202 Garage, bank, and offices
Cellar
100 1261 - - - - Bank, meeting rooms,
lobby, offices, and
garage
Plaza-1st story
100 - - - - - Lobby
2nd Story
50 90 - - - - Offices
3rd Story
50 240 - - - - Offices
4th to 10th
Story, Incl 50 244 - - - - Offices on each story
each each
11th & 12th
Story, Incl 175 10 - - - - Mechanical equipment
each
13th to 17th
Story, Incl 50 244 - - - - Offices on each story
each each story
18th & 19th
Story, Incl 50 240 - - - - Offices on each story
each each
=========================================================================================================================
</TABLE>
(CONTINUED)
OPEN SPACE USES Plaza and Garden
---------------------------------------------------------------
(SPECIFY PARKING SPACES, LOADING BERTHS, OTHER USES, NONE)
================================================================================
NO CHANGES OF USE OR OCCUPANCY SHALL BE MADE UNLESS
A NEW AMENDED CERTIFICATE OF OCCUPANCY IS OBTAINED
THIS CERTIFICATE OF OCCUPANCY IS ISSUED SUBJECT TO FURTHER LIMITATIONS,
CONDITIONS AND SPECIFICATIONS NOTED ON THE REVERSE SIDE.
- ------------------------------- ----------------------------------
BOROUGH SUPERINTENDENT COMMISSIONER
<PAGE> 154
THE CITY OF NEW YORK
DEPARTMENT OF BUILDINGS
AMENDED CERTIFICATE OF OCCUPANCY
BOROUGH MANHATTAN DATE APR 14 1982 NO. 8[illegible]
Amends
This certificate xxxxxx No. 61477 ZONING DISTRICT C 5-5
THIS CERTIFIES that the xxx altered [illegible] building--premises
located at 1 Chase Manhattan Plaza Block 44, 45 Lot 14 & 19 CONFORMS
SUBSTANTIALLY TO THE APPROVED PLANS AND SPECIFICATIONS AND TO THE
REQUIREMENTS OF ALL APPLICABLE LAWS, RULES AND REGULATIONS FOR THE USES AND
OCCUPANCIES SPECIFIED HEREIN
PERMISSIBLE USE AND OCCUPANCY
<TABLE>
<CAPTION>
=========================================================================================================================
[illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] DESCRIPTION OF USE
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
20th to 27th 50 250 - - - - Offices on each story
Story, Incl. each each
28th Story 50 510 - - - - Offices and lecture room
29th & 30th 50 255 - - - - Offices on each story
stories each each
31st & 32nd 175 10 - - - - Mechanical equipment
stories each
33rd to 35th 50 255 - - - - Offices on each story
Story, Incl. each each
36th to 40th 50 253 - - - - Offices on each story
Story, Incl. each each
41st to 43rd 50 255 - - - - Offices on each
each each
44th floor 50 480 - - - - Offices and Employee
Cafeteria and conference
room
45th-50th floor 50 255 - - - - Offices on each floor
each each
51st & 52nd 175 10 - - - - Mechanical equipment
Stories each each
53rd to 58th 50 255 - - - - Offices on each story
Story, Incl. each each
59th Story 50 510 - - - - Private dining club and
kitchen
60th Story 50 510 - - - - Executive dining room and
kitchen
Penthouse 175 - - - - - Mechanical equipment and
paint storage
=========================================================================================================================
</TABLE>
(CONTINUED)
OPEN SPACE USES
-----------------------------------------------------------------
(SPECIFY PARKING SPACES, LOADING BERTHS, OTHER USES, NONE)
================================================================================
NO CHANGES OF USE OR OCCUPANCY SHALL BE MADE UNLESS
A NEW AMENDED CERTIFICATE OF OCCUPANCY IS OBTAINED
THIS CERTIFICATE OF OCCUPANCY IS ISSUED SUBJECT TO FURTHER LIMITATIONS,
CONDITIONS AND SPECIFICATIONS NOTED ON THE REVERSE SIDE.
- ------------------------------- ----------------------------------
BOROUGH SUPERINTENDENT COMMISSIONER
[ ] ORIGINAL [ ] OFFICE COPY - DEPARTMENT OF BUILDINGS [ ] COPY
<PAGE> 155
THE CITY OF NEW YORK
DEPARTMENT OF BUILDINGS
AMENDED CERTIFICATE OF OCCUPANCY
- -------
BOROUGH MANHATTAN DATE APR 14 1992 NO. 8[illegible]
Amends
This certificate xxxxxx No. 61477 ZONING DISTRICT C 5-5
THIS CERTIFIES that the xxx altered [illegible] building--premises
located at 1 Chase Manhattan Plaza Block 44, 45 Lot 14 & 19 CONFORMS
SUBSTANTIALLY TO THE APPROVED PLANS AND SPECIFICATIONS AND TO THE
REQUIREMENTS OF ALL APPLICABLE LAWS, RULES AND REGULATIONS FOR THE USES AND
OCCUPANCIES SPECIFIED HEREIN
<TABLE>
<CAPTION>
PERMISSIBLE USE AND OCCUPANCY
=========================================================================================================================
[illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] DESCRIPTION OF USE
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
TOTAL: Commercial
New-Code
This certificate is issued to amend certificate of occupancy
#61477 for change of use confined to the 44th floor only.
Note:Garage to be used exclusively for the storage of
passenger motor vehicles of tenants or their employees,
customers, patrons. No sales of gasoline or oil service or
repair facilities permitted.
FIRE DEPARTMENT APPROVALS:
--------------------------
Standpipe System-November 2, 1960.
Sprinkler System-November 30, 1960.
Diesel Oil Tanks, Permit No. E-1655
</TABLE>
================================================================================
OPEN SPACE USES
-----------------------------------------------------------------
(SPECIFY PARKING SPACES, LOADING BERTHS, OTHER USES, NONE)
================================================================================
NO CHANGES OF USE OR OCCUPANCY SHALL BE MADE UNLESS
A NEW AMENDED CERTIFICATE OF OCCUPANCY IS OBTAINED
THIS CERTIFICATE OF OCCUPANCY IS ISSUED SUBJECT TO FURTHER LIMITATIONS,
CONDITIONS AND SPECIFICATIONS NOTED ON THE REVERSE SIDE.
- ------------------------------- ----------------------------------
BOROUGH SUPERINTENDENT COMMISSIONER
[ ] ORIGINAL [ ] OFFICE COPY - DEPARTMENT OF BUILDINGS [ ] COPY
<PAGE> 156
THAT THE ZONING LOT ON WHICH THE PREMISES IS LOCATED IS BOUNDED AS FOLLOWS:
<TABLE>
<S> <C> <C>
BEGINNING at a point on the Southeast Corner of Nassau Street and Liberty Street
distant of East the corner formed by the intersection of
Nassau Street Nassau Street and Liberty Street
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
running thence EAST 409'-6" feet; thence SOUTH 312'-5 1/2" feet;
thence WEST 237'-3 1/4" feet; thence NORTH 71'-3" feet;
thence EAST 5'-11 1/4" feet; thence NORTH 72'-9 3/4" feet;
thence WEST 187'-6 1/4" feet; thence NORTH 219'-9 1/8" feet;
to the point or place of beginning
XXX ALT. No 817/79 DATE OF COMPLETION 2/16/82 CONSTRUCTION CLASSIFICATION 1-A-Fireproof
BUILDING OCCUPANCY GROUP CLASSIFICATION HEIGHT STORIES 787.94' FEET
Commercial 60 & Penthouse
</TABLE>
THE FOLLOWING FIRE DETECTION AND EXTINGUISHING SYSTEMS ARE REQUIRED AND WERE
INSTALLED IN COMPLIANCE WITH APPLICABLE LAWS.
--------- ---------
YES NO YES NO
- --------------------------------------------------------------------------------
STANDPIPE SYSTEM x AUTOMATIC SPRINKLER SYSTEM x
- --------------------------------------------------------------------------------
YARD HYDRANT SYSTEM
- -----------------------------------------
STANDPIPE FIRE TELEPHONE AND
SIGNALLING SYSTEM
- -----------------------------------------
SMOKE DETECTOR
- -----------------------------------------
FIRE ALARM AND SIGNAL SYSTEM
- -----------------------------------------
STORM DRAINAGE DISCHARGES INTO:
A)STORM SEWER [ ] B) COMBINED SEWER [ ] C) PRIVATE SEWAGE DISPOSAL SYSTEM [ ]
SANITARY DRAINAGE DISCHARGES INTO:
A)STORM SEWER [ ] B) COMBINED SEWER [ ] C) PRIVATE SEWAGE DISPOSAL SYSTEM [ ]
LIMITATIONS OR RESTRICTIONS:
BOARD OF STANDARDS AND APPEALS CAL. NO 347-56-BZ. 3337-BZY
---------------
CITY PLANNING COMMISSION CAL. NO. [ILLEGIBLE] October 25, 1956
-----------
OTHERS:
BOARD OF ESTIMATE CAL. #1-40-A
Schedule B - Page 4
<PAGE> 157
Schedule C
LANDLORD'S WORK
1. All convector covers will be cleaned, repaired or replaced as required.
2. A data gathering panel ("DGP") for the 37th floor of the Building will be
furnished, installed and connected to the Building's Class E System.
3. Door handles along the Building's core will be repaired or replaced, as
required.
Schedule C
Page 1
<PAGE> 158
Schedule D
CONTRACTORS APPROVED FOR INITIAL ALTERATIONS
GENERAL CONTRACTORS
Werner Krebs (212) 325-5400 Val Bonanno
J. Gallin (212) 889-9100 John Gallin
A.J. Contracting (212) 229-6301 Ken Smith
Turner (212) 586-8000 Pat A. Difillipo
McCann, Inc. (212) 586-8000 Vincent Allperti
Herbert Construction
Structuretone
Henegan
Lehr Construction
Schedule D
Page 1
<PAGE> 159
DEMOLITION
All City Interior Contracting Inc.
Sal Vilante (718) 599-0197
Casalino Interior Demolition Corp.
Carlo Casalino (718) 478-2292
Liberty Contracting Corp.
Glen Furman (201) 488-9300
MASONRY
Art Construction
Robert Tariche (718) 359-1424
Capri Construction, Inc.
Nat Minucci (516) 333-4414
Dovin Construction Inc.
Robert Lynch (516) 586-1927
Kelly Masonry Corp.
Robert Massina (516) 739-8110
STONE
Bergon County Cut Stone
Joe Mollturno (201) 796-0961
Port Morris Tile & Marble Corp.
Vincent Dalazzaro (212) 378-6100
AMI Assoc. Marble Industries
Angelo Romenelli (516) 371-9301
Sheppard Industries
Mike Fiorentino (212) 349-8240
STRUCTURAL STEEL
Burgass Steel
Tim Guerin (212) 563-6000
Dominick Iron Works, Inc.
Jack Stoff (914) 698-6177
Feinstein Iron Works, Inc.
Daniel Feinstein (718) 899-8300
Koenig Iron Works, Inc.
Norman Rosenbaum (212) 924-4333
Schedule D
Page 2
<PAGE> 160
MOVING
Liberty Moving
Tom Iucci (516) 234-3000
Guardian Moving
Michael Mariani (212) 585-9444
American Moving
Chris Shea (516) 543-5550
Central Moving
Nick DiVito (212) 268-8989
ELEVATORS
Otis Elevator Co.
Bill Mount (212) 620-8900
GLASS
Harris Glass
Liz Canale (212) 227-3191
Elmont Glass
Glen Greenburg (212) 336-1100
Checker Glass
Frank Cooper (516) 284-8818
Fox Glass
Rich Martin (718) 259-2705
Schedule D
Page 3
<PAGE> 161
PLUMBING
George Breslaw & Sons
Milton Breslaw (212) 265-4023
Lab Plumbing
Richard Bisso (718) 246-9690
Par Plumbing Co., Inc.
Marty Levine (516) 887-4000
MBR Mechanical Corp.
Morris Rosenman (718) 402-6136
HVAC
A.D. Winston Corp.
Charles Rodstrom (718) 786-7848
J.T. Falk & Co., Inc.
Arnold Robinson (212) 924-8900
P.J. Mechanical
Tom Lacarrozo (212) 966-6054
Landis & Gyr Powers
Frank Del Vecchio (201) 575-6300
Service Engineering
J. Ross (718) 821-6330
Sound A/C
Robert Guimi (516) 747-5678
V & S Temperature
Joe Jelik (212) 227-7774
ELECTRICAL
Coyne Electrical Contractors Inc.
Ron Nelson (212) 292-9100
George Kleinknacht Inc.
Mike Borman (212) 989-4500
L.K. Comstock
Manny Abad (212) 682-1020
Petrocelli Electric
Joseph Rutigliano (718) 837-1200
Unity Electric
Richard Scarpelli (718) 639-4000
Schedule D
Page 4
<PAGE> 162
PAINTING & FINISHES
Caruso Painting & Decorating Corp.
Tom Caruso (718) 948-7979
Century Painting
Val Bonanno (212) 325-5400
Brookside Painting
Bobby Wager (914) 738-0103
Bond Painting
Stuart Feld (212) 839-3900
SIGNAGE
Letters Graphics
Frank Lettera (212) 328-7702
BPC Industries
Lew Jacobs (212) 473-1630
Ultimate Signs
Mike Gysoek (516) 756-1010
TechSign
Savas Kay (212) 279-6666
FIRE PROTECTION/SPRINKLER
Firecraft (Class "E")
Don Ollerich (718) 322-3600
Rael Automatic Sprinkler Co., Inc.
David Israel (516) 392-2000
George Breslaw & Sons
Milton Breslaw (212) 265-4023
MBR Mechanical Corp.
Morris Rosenmann (718) 402-6136
ABLE
Richard Johnson (718) 366-9445
Sirina Fire Protection
Anthony Florez (516) 942-0400
Triangle
Fred Swirling (718) 343-8700
Schedule D
Page 5
<PAGE> 163
FINISH CARPENTRY
John Langenbacher Co., Inc.
Emmett Mickelson (212) 328-7600
Nordic Interiors Inc.
Joseph Personelli (718) 456-7000
Emco Woodworking
Ed Murawski (718) 894-5135
SPRAY-ON FIREPROOFING
Crown Plaster Inc.
Dough Schwartz (516) 489-8200
Island ADC, Inc.
Ron Lamarter (516) 289-2000
Rosen Plaster Corp.
Jerry Rose (718) 469-5232
Prism-Giambol Corp.
Chuck Newman (212) 756-4200
LATH/PLASTER
Crown Plaster Inc.
Doug Schwartz (516) 489-8200
Donaldson Acoustics Co., Inc.
Robert Donaldson (516) 681-7136
Island ADC, Inc.
Ron Lamarter (516) 289-2000
Rosen Plaster Inc.
Jerry Rosen (718) 469-5232
DRYWALL/ROUGH CARPENTRY
Donaldson Acoustics Co., Inc.
Robert Donaldson (516) 681-7136
Island ADC, Inc.
Ron Lamparter (516) 289-3000
Linden Construction Corp.
Peter Kaplow (516) 921-2050
Werner Krabs
Val Bonanno (212) 325-5400
S&H Drywall
Celestine Donaghy (718) 392-0190
Schedule D
Page 6
<PAGE> 164
Schedule E
HVAC SPECIFICATIONS
The Building's HVAC system for the office floors is designed to maintain the
following conditions provided Tenant's air distribution duct work conforms to
S.M.A.C.N.A. (Sheet Metal and Air Conditioning National Association, Inc.)
standards for variable air volume systems:
1. When summer outdoor ambient temperature is not in excess of
90(degree)F dry bulb and 78(degree)F wet bulb, indoor space
conditions shall be not greater than 75(degree)F dry bulb and
maximum relative humidity of 50%.
2. When winter outdoor temperature is not less than 10(degree)F, indoor
space conditions shall be not less than 70(degree)F dry bulb and
maximum relative humidity of 50%.
3. Introduction of outside ventilation air at New York City code
required quantity of 0.133 cubic feet per minute per occupied square
foot area.
Maintenance of these conditions is subject to:
(a) Light colored drape or blind on clear glass, no shading on tinted
reflective glass.
(b) Occupant density not in excess of one person per 100 usable square
foot of the Premises.
(c) Total individual floor lighting and equipment power consumption not
exceeding 6.0 watts per usable square foot of the Premises.
(d) Tenant's interior air distribution system will maintain a minimum of
1 c.f.m. per usable square foot of the Premises.
Schedule E
Page 1
<PAGE> 165
EXHIBIT A
LAND
ALL that certain lot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:
BEGINNING at the corner formed by the intersection of the southerly line of
Liberty Street before widening with the westerly line of William Street before
widening:
Running thence southerly, along the westerly line of William Street before
widening, 139'-10 1/4";
Thence westerly, along a line forming an angle of 85(degree)-20'-10" on its
northerly side with the preceding course, 15'-2 7/8" to a point in the westerly
line of William Street as widened;
Thence southerly, along the westerly line of William Street as widened,
34'-11 1/8" to a point in the former southerly line of Cedar Street, now closed
and discontinued;
Thence easterly, along the former southerly line of Cedar Street, now
closed and discontinued, 15'-4" to a point in the westerly line of William
Street before widening;
Thence southerly, along the westerly line of William Street before
widening, 137'-9 1/2" to the corner formed by the intersection of the westerly
line of William Street before widening with the northerly line of Pine Street
before widening;
Thence westerly, along the northerly line of Pine Street before widening,
237'-3 1/4";
Thence northerly, along a line forming an angle of 93(degree)-53'-00" on
its easterly side with the preceding course, 71'-3";
Thence easterly, along a line forming an angle of 86(degree)-07'-10" on its
southerly side with the preceding course, 5'-11 1/4";
Thence northerly, along a line forming an angle of 87(degree)-04'-30" on
its westerly side with the preceding course, 72'-9 3/4", to a point in the
former southerly line of Cedar Street, now closed and discontinued;
Exhibit A
Page 1
<PAGE> 166
Thence westerly, along the former southerly line of Cedar Street, now
closed and discontinued, forming an angle of 94(degree)-35'-00" on its southerly
side with the preceding course, 86'-3 3/4" to an angle point therein;
Thence still westerly, along the southerly line of Cedar Street, now closed
and discontinued, forming an angle of 179(degree)-24'-50" on its northerly side
with the preceding course, 73'-2" to a point in the easterly line of Nassau
Street as widened;
Thence northerly, along the easterly line of Nassau Street as widened,
35'-2";
Thence westerly, along a line forming an angle of 95(degree)-46'-20" on its
southerly side with the preceding course, 7'-7 3/4" to a point in the easterly
line of Nassau Street before widening;
Thence northerly, along the easterly line of Nassau Street before widening,
184'-11 1/8" to the corner formed by the intersection of the easterly line of
Nassau Street before widening with the southerly line of Liberty Street before
widening;
Thence easterly, along the southerly line of Liberty Street before
widening, 115'-9" to an angle point therein;
Thence still easterly, along the southerly line of Liberty Street before
widening, forming an angle of 181(degree)-81'-20" on its northerly side with the
preceding course, 99'-9 1/2" to an angle point therein;
Thence still easterly, along the southerly line of Liberty Street before
widening, forming an angle of 180(degree)-38'-00" on its northerly side with the
preceding course, 112'-1 7/8" to an angle point therein;
Thence still easterly, along the southerly line of Liberty Street before
widening, forming an angle of 179(degree)-41'-00" on its northerly side with the
preceding course, 82'-4 1/2" to the point or place of BEGINNING.
Exhibit A
Page 2
<PAGE> 167
EXHIBIT B
FLOOR PLAN OF THE PREMISES
This floor plan is annexed to and made a part of this lease solely
to indicate the Premises by outlining and diagonal marking. All areas,
conditions, dimensions and locations are approximate.
Diagram: depiction of the floor plan of the 37th Floor of One Chase
Manhattan Plaza, New York, New York. The floor is rectangular with Liberty and
Pine Streets bordering the length of the floor, respectively. Nassau and William
Streets border the width of the floor, respectively. The floor plan has been
marked with diagonal lines highlighting the area to be used for work space. In
the center, but shifted slightly to the left on the rectangular floor plan, are
two small sized rectangles. These two smaller rectangular areas are not
highlighted with diagonal lines but there is a small area separating these
rectangles which is highlighted with diagonal lines. Decipited inside of the two
small rectangles in the center is illegible (it appears to be evaluator banks
and stairs).
<PAGE> 168
EXHIBIT C
RULES AND REGULATIONS
1. No tenant shall obstruct or encumber, or use for any purpose
other than ingress to and egress from its premises, the sidewalks, driveways,
entrances, passages, courts, lobbies, esplanade areas, atrium, plazas,
elevators, escalators, stairways, vestibules, corridors, halls and other public
portions of the Building ("Public Areas") and no tenant shall permit any of its
employees, agents, licensees or invitees to congregate or loiter in any of the
Public Areas. No tenant shall invite to, or permit to visit, its premises
persons in such numbers or under such conditions as may interfere with the use
and enjoyment by others of the Public Areas. Fire exits and stairways are for
emergency use only, and they shall not be used for any other purposes by any
tenant, or the employees, agents, licensees or invitees of any tenant. Landlord
reserves the right to control and operate, and to restrict and regulate the use
of the Public Areas and the public facilities, as well as facilities furnished
for the common use of the tenants, in such reasonable manner as it deems best
for the benefit of the tenants generally, including the right to allocate
certain elevators for delivery service and the right to designate which Building
entrances shall be used by persons making deliveries in the Building. No
doormat, garbage or garbage receptacle, showcase, furniture, decoration or
sculpture or other article of any kind whatsoever shall be placed or left in the
Public Areas or outside any tenant's premises.
2. No awnings or other projections shall be attached to the outside
walls of the Building. Curtains, blinds, shades, louvered openings and screens
shall (i) not be attached to or hung in, or used in connection with, any window
or door of any tenant's premises, without the consent of Landlord, (ii) be of a
quality, type, design and color, and attached in the manner, approved by
Landlord, and (iii) once attached, hung or used with the consent of Landlord,
not be thereafter removed or changed. In order to maintain a uniform exterior
appearance of the Building, each tenant occupying the perimeter areas of the
Building shall (a) use only Building Standard lighting in areas where lighting
is visible from the outside of the Building and (b) use only Building Standard
blinds in window areas which are visible from the outside of the Building.
3. Signs, advertisements, graphics and notices visible from the
Public Areas or the exterior of the Building shall be subject to Landlord's
approval. Signs on each entrance door of any tenant's premises shall conform to
Building Standard signs, samples of which are on display in Landlord's rental
office. Such signs shall, at the expense of the tenant, be inscribed, painted or
affixed by signmakers approved by Landlord. Landlord shall have the right to
prohibit any advertising or identifying sign by any tenant which, in Landlord's
reasonable
Exhibit C
Page 1
<PAGE> 169
judgment, tends to impair the reputation of the Building or its desirability as
a building for others, and upon written notice from Landlord, such tenant shall
refrain from and discontinue such advertising or identifying sign. In the event
of the violation of any of the foregoing by any tenant, Landlord may remove the
same without any liability, and may charge the expense incurred in such removal
to the tenant violating this rule. Interior signs, elevator cab designations, if
any, and lettering on doors and the Building directory shall, if and when
approved by Landlord, be inscribed, painted or affixed for each tenant by
Landlord, at the expense of such tenant, and shall be of a size, color and style
acceptable to Landlord. Landlord will, at the request of any tenant, maintain
listings on the Building directory of the names of such tenant and any other
person, firm, association or corporation in occupancy of such tenant's premises
or any part thereof as permitted pursuant to its lease, and the names of any
officers or employees of, or partners in, the foregoing; provided, however, that
the maximum number of names so listed shall in no event exceed such tenant's
proportionate share of the listing capacity of the Building directory. Landlord
will change the listings of any tenant on the Building directory at the request
of such tenant and may charge the expense incurred in making such change to the
tenant.
4. No tenant shall (a) cover or obstruct the sashes, sash doors,
skylights or windows that reflect or admit light and air into the halls,
passageways or other public places in the Building or the heating, ventilating
and air conditioning vents and doors, or (b) place any bottles, parcels or other
articles on the window sills or on the peripheral heating enclosures. Whenever
the heating, ventilating or air conditioning systems are in operation, each
tenant shall draw the shades, blinds or other window coverings, as reasonably
required because of the position of the sun.
5. No tenant shall (a) discharge, or permit to be discharged, acids,
harmful vapors or other harmful materials into the waste lines, vents or flues
of the Building; (b) use the water and wash closets and other plumbing fixtures
for any purposes other than those for which they were designed and constructed,
or throw or deposit therein sweepings, rubbish, rags, acids or other foreign
substances; or (c) sweep or throw anything into the Public Areas or other areas
of the Building, or into or upon any heating or ventilating vents or registers
or plumbing apparatus in the Building, or upon adjoining buildings or land or
the street.
6. No tenant shall mark, paint, drill into, or in any way deface,
any part of the Building except in connection with the installation of customary
office decorations in such tenant's offices. No boring, cutting or stringing of
wires shall be permitted in any part of the Building, except with the prior
written consent of, and as directed by, Landlord. Tenant shall not attach or
affix any screws or fasteners to the exterior curtain wall of the Building or
install, except with the prior written consent of Landlord, any materials that
will come in contact with the exterior curtain wall of
Exhibit C
Page 2
<PAGE> 170
the Building. No telephone, telegraph or other wires or instruments shall be
introduced into the Building by any tenant except in a manner approved by
Landlord. No tenant shall install linoleum, or other similar floor covering, so
that the same shall come in direct contact with the floor of its premises, and,
if linoleum or other similar floor covering is desired to be used, an
interlining of builder's deadening felt shall be first affixed to the floor, by
a paste or other material, soluble in water, the use of cement or other similar
adhesive material being expressly prohibited.
7. No tenant shall bring into or keep in or about its premises any
bicycles, vehicles, animals (except seeing eye dogs), fish or birds of any kind.
8. No tenant, nor the employees, agents, licensees or invitees of
any tenant, shall at any time bring or keep upon its premises any inflammable
combustible or explosive fluid, chemical or substance.
9. No tenant shall (a) place or affix any additional locks or bolts
of any kind upon any of the doors or windows of its premises or the Building or
(b) make any changes in locks or the mechanism thereof. Duplicate keys for any
tenant's premises and toilet rooms shall be procured only from Landlord, and
Landlord may make a reasonable charge therefor. Each tenant shall, upon the
expiration or sooner termination of the Lease of which these Rules and
Regulations are a part, turn over to Landlord all keys to stores, offices and
toilet rooms, either furnished to, or otherwise procured by, such tenant, and in
the event of the loss of any keys furnished by Landlord, such tenant shall pay
to Landlord the cost of replacement locks. Notwithstanding the foregoing, a
tenant may, subject to Landlord's consent, install a security system in the
premises which uses master codes or cards instead of keys, provided that such
tenant shall provide Landlord with the master code or card for such system. No
tenant shall lend or furnish to any public messenger the keys to any toilet
rooms.
10. All removals, or the carrying in or out of any safes, freight,
furniture, packages, boxes, crates or any other object or matter shall take
place only during such hours and in such elevators as Landlord may from time to
time determine, which may involve overtime work for Landlord's employees. Each
tenant shall reimburse Landlord for extra costs incurred by Landlord on such
tenant's behalf, including the cost of such overtime work. No hand trucks shall
be used for such purposes except those equipped with rubber tires, side guards
and such other safeguards as Landlord shall require. No hand trucks shall be
used in passenger elevators. Tenants shall not use the elevators during Business
Hours on Business Days for haulage or removal of construction materials or
debris. The persons employed to move safes and other heavy objects shall be
reasonably acceptable to Landlord and, if so required by law, shall hold a
Master Rigger's license.
Exhibit C
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<PAGE> 171
Arrangements must be made with Landlord by any tenant for moving large
quantities of furniture and equipment into or out of the Building. All
reasonable labor and engineering costs incurred by Landlord in connection with
any moving specified in this rule shall be paid by tenants to Landlord as
Additional Charges on demand.
11. No tenant shall use or occupy, or permit any portion of its
premises to be used or occupied, as an office for a public stenographer or
public typist, or for the possession, storage, manufacture or sale of liquor,
tobacco or any controlled substance or as a barber, beauty or manicure shop,
telephone or telegraph agency, telephone or secretarial service, messenger
service, travel or tourist agency, retail service shop, labor union, company
engaged in the business of renting office or desk space. public finance
(personal loan) business, hiring employment agency, stock brokerage, or for the
conduct of any other business or occupation which predominantly involves direct
patronage of the general public. No tenant shall engage or pay any employee on
its premises, except those actually working for such tenant on its premises, nor
advertise for laborers giving an address at the Building.
12. Landlord may institute, revise and discontinue such security
measures, systems and requirements as Landlord shall deem appropriate. Landlord
reserves the right to inspect all objects and matter to be brought into the
Building and to exclude from the Building all objects and matter which violate
any of these Rules and Regulations or the Lease of which these Rules and
Regulations are a part. Landlord may require any person leaving the Building
with any package or other object or matter to submit a pass, listing such
package or object or matter, from the tenant from whose premises the package or
object or matter is being removed, but the establishment and enforcement or
non-enforcement of such requirement shall not impose any responsibility or
liability on Landlord for the protection of any tenant against the removal of
property from the premises of such tenant. Landlord reserves the right to
exclude from the Building all employees of any tenant who do not present a pass
to the Building signed by such tenant. Landlord or its agent will promptly
furnish passes to persons for whom any tenant requests same in writing. Landlord
reserves the right to require all other persons entering the Building to sign a
register, to be announced to the tenant such person is visiting, and to be
accepted as a visitor by such tenant or to be otherwise properly identified
(and, if not so accepted or identified, reserves the right to exclude such
persons from the Building) and to require persons leaving the Building to sign a
register or to surrender a pass given to such person by the tenant visited. Each
tenant shall be responsible for all persons for whom it requests any such pass
or any person who such tenant accepts, and such tenant shall be liable to
Landlord for all acts or omissions of such persons. Any person whose presence in
the Building at any time shall, in the judgment of Landlord, be prejudicial to
the safety, character, security, reputation or interests of the Building or the
tenants of the Building may be denied access to the Building or may
Exhibit C
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<PAGE> 172
be ejected from the Building. In the event of invasion, riot, public excitement
or other commotion, Landlord may prevent all access to the Building during the
continuance of the same by closing the doors or otherwise, if reasonably
necessary for the safety of tenants and the protection of property in the
Building. Landlord shall in no way be liable to any tenant for damages or loss
arising from the admission, exclusion or ejection of any person, objects or
matter to or from its premises or the Building under the provisions of this Rule
12.
13. Each tenant, before closing and leaving its premises at any
time, shall see that all lights are turned out. All entrance doors in each
tenant's premises shall be kept locked and all windows shall be left closed by
such tenant when its premises are not in use. Entrance doors shall not be left
open at any time.
14. Each tenant shall, at the expense of such tenant, provide light,
power and water for the employees of Landlord, and the agents, contractors and
employees of Landlord, while doing janitor service or other cleaning in the
premises demised to such tenant and while making repairs or alterations in its
premises.
15. No tenant shall use its premises for lodging or sleeping or for
any immoral or illegal purpose.
16. The requirements of tenants will be attended to only upon
application at the office of the Building. Employees of Landlord shall not
perform any work or do anything outside of their regular duties, unless under
special instructions from Landlord.
17. Canvassing, soliciting and peddling in the Building are
prohibited and each tenant shall cooperate to prevent the same.
18. No tenant shall obtain or accept for use in its premises ice,
drinking water, food, beverage, towel, barbering, bootblacking, floor polishing,
lighting, maintenance, cleaning or other similar services from any persons not
authorized by Landlord in writing to furnish such services (which authorization
shall not be unreasonably withheld) provided that the charges for such services
by persons authorized by Landlord are comparable to similar charges in other
first class office buildings in New York County. Such services shall be
furnished only at such hours, and under such reasonable regulations, as may be
fixed by Landlord from time to time.
19. All paneling, doors, trim or other wood products not considered
furniture shall, to the extent required by law, be of fire-retardant materials.
Before installation of any such materials, certification of such materials'
fire-retardant
Exhibit C
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<PAGE> 173
characteristics shall be submitted to and approved by Landlord, and such
materials shall be installed in a manner approved by Landlord.
20. Whenever any tenant shall submit to Landlord any plan, agreement
or other document for the consent or approval of Landlord, such tenant shall pay
to Landlord, within 5 Business Days after demand, a processing fee in the amount
of the reasonable fees for the review thereof, including the services of any
architect, engineer or attorney employed by Landlord to review such plan,
agreement or document. The fees payable by any tenant pursuant to this Rule 20
shall not be duplicative of the fees payable by such tenant pursuant to Section
11.02 of its lease.
Exhibit C
Page 6
<PAGE> 174
EXHIBIT D
ALTERATION RULES AND REGULATIONS
A. General
1. Tenant shall, prior to the commencement of any work, submit for
Landlord's written approval, a complete plan of the Premises, or of the floor on
which the Alterations are to occur. Drawings are to be complete with full
details and specifications for all of the Alterations.
2. The proposed Alterations must comply with the Administrative Code of The
City of New York and the rules and regulations of the Housing and Development
Administration of The City of New York and any other agencies having
jurisdiction.
3. No work shall be permitted to commence without the Landlord being
furnished with a valid permit from the Department of Buildings and/or other
agencies having jurisdiction.
4. All (i) demotion or removals, or (ii) other categories of work if such
work would disturb or interfere with any other tenant(s) of the Building or
disturb Building operations, or (iii) carrying in or out of construction
materials to or from the Building, must be scheduled and performed before or
after normal working hours, and Tenant shall provide the building Manager with
at least 24 hours' notice prior to proceeding with such work and shall pay for
any overtime labor or engineering costs incurred by Landlord in connection
therewith.
5. All inquiries, submissions, approvals and all other matters shall be
processed through the Building Manager.
B. Prior to Commencement of Work
1. Tenant shall submit to the Building Manager a request to perform the
work. The request shall include the following enclosures:
(i) A list of Tenant's contractors and/or subcontractors for
Landlord's approval.
(ii) Four complete sets of plans and specifications properly stamped
by a registered architect or professional engineer.
Exhibit D
Page 1
<PAGE> 175
(iii) A properly executed Building Notice application form or
Alteration form; Engineer's Statement "B" if HVAC work is to be performed;
Plumbing Specification sheet if any plumbing change is to be performed;
Form 10F if any controlled inspection is required.
(iv) Four executed copies of the Insurance Requirements agreement in
the form attached to these Rules and Regulations from Tenant's contractor
and if requested by Landlord from the contractor's subcontractors.
(v) Contractor's and subcontractor's insurance certificates
including a "hold harmless" in accordance with the Insurance Requirements
Agreement.
2. Landlord will return the following to Tenant:
(i) Plans approved or returned with comments (such approval or
comments shall not constitute a waiver of Department of Buildings approval
or approval of other jurisdictional agencies).
(ii) Signed application forms referred to in B1(iii), above,
providing proper submissions have been made.
(iii) Two fully executed copies of the Insurance Requirements
agreement.
(iv) Covering transmittal letter.
3. Tenant shall obtain Department of Buildings approval of plans and a
permit from the Department of Buildings. Tenant shall be responsible for keeping
current all permits. Tenant shall submit copies of all approved plans and
permits to Landlord and shall post the original permit on the Premises prior to
the commencement of any work.
C. Requirements and Procedures
1. All structural and floor loading requirements shall be subject to the
prior approval of Landlord's structural engineer.
2. All mechanical (HVAC, plumbing and sprinkler) and electrical
requirements shall be subject to the approval of Landlord's mechanical and
electrical engineers. When necessary, Landlord will require engineering and shop
drawings, which drawings must be approved by Landlord before work is started.
Drawings are to be prepared by Tenant and all approvals shall be obtained by
Tenant.
Exhibit D
Page 2
<PAGE> 176
3. Intentionally omitted.
4. Elevator service for construction work shall be charged to Tenant at
standard Building rates. Prior arrangements for elevator use shall be made with
Building Manager by Tenant. No material or equipment shall be carried under or
on top of elevators. If an operating engineer is required by any union
regulations, such engineer shall be paid for by Tenant.
5. If shutdown of risers and mains for electrical, HVAC, sprinkler and
plumbing work is required, such work shall be supervised by Landlord's
representative at Tenant's expense. No work will be performed in Building
mechanical equipment rooms without Landlord's approval and under Landlord's
supervision at Tenant's expense.
6. Tenant's contractor shall:
(i) have a Superintendent or Foreman on the Premises at all times;
(ii) police the job at all times, continually keeping the Premises
orderly;
(iii) maintain cleanliness and protection of all areas, including
elevators and lobbies;
(iv) protect the front and top of all peripheral HVAC units and
thoroughly clean them at the completion of work;
(v) block off supply and return grills, diffusers and ducts to keep
dust from entering into the Building air conditioning system; and
(vi) avoid the disturbance of other tenants.
7. If Tenant's contractor is negligent in any of its responsibilities,
Tenant shall be charged for the corrective work done by Building porters and
other personnel.
8. All equipment and installations must be equal to the standards of the
Building. Any deviation from Building standards will be permitted only if
indicated or specified on the plans and specifications and approved by Landlord.
9. A properly executed air balancing report signed by a professional
engineer shall be submitted to Landlord upon the completion of all HVAC work.
Exhibit D
Page 3
<PAGE> 177
10. Upon completion of the Alterations, Tenant shall submit to Landlord a
properly executed Form 23 and/or other documents indicating total compliance and
final approval by the Department of Buildings of the Building Notice or
Alteration.
11. Tenant shall submit to Landlord a final "as-built" set of drawings
showing all items of the Alterations in full detail.
12. Additional and differing provisions in the lease, if any, will be
applicable and will take precedence.
D. SPECIAL REQUIREMENTS REGARDING LOCAL LAW #5/73 (AS AMENDED)
1. Tenant acknowledges being advised that the Building has an active
Modified Class E Fire System ("Class E System"). Tenant shall notify its
contractors and subcontractors, as well as all persons and entities who shall
perform or supervise any alteration or demotion within the Premises, of such
facts.
2. Demolition by Tenant of all or any portions of the Premises shall be
carried out in such manner as to protect equipment and wiring of Landlord's
Class E System.
3. Landlord, after receipt of Tenant's notice of demolition, and at
Tenant's expense, shall secure and protect Building equipment connected to the
Class E System in the Premises to be demolished.
4. Landlord, at Tenant's expense, shall make such additions and alterations
within the requirements of Local Law #5/73 (as amended) to the existing Class E
System as may be necessary by reason of Alterations made within the Premises
either by or on behalf of Tenant or by Landlord, as part of the initial
installation, and work, if any, that Landlord is required to perform pursuant to
the provisions of the lease or any work letter or leasehold improvements
agreement entered into by Landlord and Tenant.
5. Landlord's contract fire alarm service personnel shall be the only
personnel permitted to adjust, test, alter, relocate, add to, or remove
equipment connected to the Class E system.
6. Landlord, at Tenant's expense, shall repair or cause to have repaired
any and all defects, deficiencies or malfunctions of the Class E System caused
by Tenant's alterations or demolition of the Premises. Such expense may include
expenses of engineering, supervision and standby fire watch personnel that
Landlord deems necessary to protect the Building during the time such defects,
deficiencies and malfunctions are being corrected.
Exhibit D
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7. During such times that Tenant's Alterations or demolition of the
Premises require that fire protection afforded by the Class E System be
disabled, Tenant, at Tenant's expense, shall maintain fire watch service deemed
reasonably suitable by Landlord.
8. Tenant and Tenant's architect shall familiarize themselves with and be
aware of Local Law #5/73 and all amendments thereto with regard to smoke
control, compartmentation, and areas of safe refuge. Tenant shall fully comply
with these requirements. Landlord, at Landlord's option, may withhold approval
of Tenant's alterations or demolition if such requirements are not met with
Landlord's reasonable satisfaction.
9. Should Tenant desire to install its own internal fire alarm system,
Tenant shall request Landlord to connect such system to the Class E System at
Tenant's expense in such reasonable manner as prescribed by the Landlord. Tenant
shall, at Tenant's expense, have such internal fire alarm system approved by
governing agencies having jurisdiction, and shall submit to the Landlord an
approved copy of plans of such system before initiating any installation of such
system.
10. In the event Tenant shall install its own internal fire alarm system
within the Premises and in such event (as required by law) requests Landlord to
connect same to the Class E System, then Tenant shall reimburse Landlord for its
costs incurred in making such connection within ten (10) days after being billed
therefor. Tenant shall also reimburse Landlord for costs of contracting for the
maintenance and supervision of Tenant's internal fire alarm system with the
company providing such services for the Class E System.
11. Tenant, at Tenant's expense, shall cause the Premises to be fully
sprinklered in accordance with the requirements of the Building Code of The City
of New York and all applicable rules and regulations pertaining thereto and
Landlord shall, at Tenant's expense, connect same to the Building system.
Exhibit D
Page 5
<PAGE> 179
STANDARD REQUIREMENTS
DRYWALLS
1. All drywall partitions are to be constructed of 2- 1/2" steel studs, 24"
on center, and a minimum of 5/8" thick fire code gypsum wallboard each side,
properly taped and spackled.
2. All steel studs shall extend from slab to slab. No drywall is to be
fastened to any ductwork or directly to any ceiling tile.
3. All walls butting mullions shall have a proper channel to receive the
sheetrock.
ELECTRICAL
1. Home runs shall be indicated on plans. Rigid conduit shall be used
throughout, 3/4" minimum size. Thin wall tubing is permitted.
2. Light fixtures shall be Building-standard or as previously approved by
Landlord.
3. All conduit shall be supported by standoffs, not wired to ceiling
supports. All conduit shall be concealed.
4. All electrical boxes shall meet code requirements.
5. All unused conduit and wiring shall be removed.
6. All wiring shall meet the requirements of the Department of Water
Supply, Gas and Electricity and of Underwriter's Laboratory. No wire molding
shall be permitted.
7. Special power shall be taken from main distribution board and not from
existing Building panels.
8. Plans with requirements shall be submitted to Landlord to determine
riser capacity.
9. Tenant shall pay for all electrical design and layout costs for related
work.
Exhibit D
Page 6
<PAGE> 180
10. Building Mechanic or Engineer shall supervise all riser shutdowns.
TELEPHONE
1. All telephone wire shall be concealed in conduit or thin wall tubing.
2. No telephone wire shall be run loose in the ceilings.
3. Telephone wire will be permitted to be run loose in periphery enclosures
only.
4. No telephone wire shall be run exposed on baseboards or walls.
DOORS
All wood doors shall have a fire rated label. All hollow metal doors shall
be properly fire rated if they are located in rated partitions.
HARDWARE
1. All hardware shall match existing.
2. All locks shall be keyed and mastered to Building setup. Two individual
keys must be supplied to the Building Manager.
EQUIPMENT
1. No equipment is to be suspended from the reinforcing rods in arch.
2. Equipment shall be suspended with fish plates through slab or steel
beams depending on load.
3. All floor loading and steel work shall be subject to the prior approval
of the Building structural engineer. All approvals shall be obtained by the
Tenant at Tenant's expense. Tenant shall also be responsible for the costs of
all controlled inspection by any professional engineers in connection with this
work.
Exhibit D
Page 7
<PAGE> 181
WOODWORK
All work shall be fireproofed and a New York City Affidavit of
Certification must be furnished.
PUBLIC AREAS
All public areas shall meet Department of Buildings' requirements or
requirements of other agencies having jurisdiction.
AIR CONDITIONING
1. Tenant shall be responsible for Alterations to existing air conditioning
ductwork or systems and for insuring that such work is properly integrated into
the existing Building systems with no adverse effects on the Building systems.
Landlord shall not be responsible for the proper HVAC design within the area of
any Tenant Alteration.
2. The system shall be balanced at the completion of the job.
3. Tenant shall furnish design balancing figures to Building office.
4. All air conditioning components shall match existing or shall receive
prior approval from Landlord.
5. Landlord will not permit any additional outside louvers unless the need
therefor is firmly established. The location of such louvers shall be subject to
Landlord's approval. Detailed sketches of all louvers shall be submitted for
Landlord's approval.
6. No outside louver or ductwork is to be installed in such a manner as to
interfere with the cleaning of windows or replacement of glass.
7. All periphery shutoff valves shall be accessible at all times.
8. All unused ductwork shall be removed.
9. All unused equipment, such as air handling units and air conditioning
units, shall be removed.
Exhibit D
Page 8
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10. All HVAC, kitchen, toilet and equipment exhaust fan systems and any
other systems shall be discharged to the atmosphere, not in ceilings or existing
Building return air systems.
PLUMBING
1. No water risers shall be shut down during Building office hours.
2. All plumbing shall conform to the code.
3. All fixtures shall match existing fixtures.
4. No exposed plumbing is permitted.
5. All unused fixtures and piping shall be removed and all unused piping
shall be capped at its respective riser.
6. No plastic pipe will be permitted.
7. All unused fixtures shall be returned to Landlord.
8. A Building mechanic shall supervise all riser shutdowns.
9. All run outs from risers shall be brass pipe.
10. All hot water lines shall be properly insulated, and, where necessary,
Landlord may require that cold water lines be insulated.
VENETIAN BLINDS AND CURTAINS
1. All venetian blinds shall match existing blinds.
2. No curtain rods are to be installed in venetian blind pockets.
3. Curtain rods shall not be supported by any part of the acoustical tile.
Rods shall be supported by headers attached to the ceiling's mechanical supports
of black iron.
4. If curtains are to be installed by Tenant, such curtains shall be
flameproof and shall not interfere with the proper functioning of the peripheral
HVAC system.
Exhibit D
Page 9
<PAGE> 183
CEILINGS
1. All ceilings shall meet all requirements of New York City Department of
Buildings.
2. All acoustic tile ceiling shall match the existing tile ceiling to the
extent possible.
3. All ceilings are to be supported independently and not from ductwork.
Exhibit D
Page 10
<PAGE> 184
INSURANCE REQUIREMENTS
The undersigned contractor or subcontractor (hereinafter called
"Contractor") has been hired by ___________________, a tenant or occupant
(hereinafter called "Tenant") of the Building named above or by Tenant's
contractor to perform certain work (hereinafter called "Work") for Tenant in the
Tenant's premises or elsewhere in the Building. Contractor and Tenant have
requested the undersigned landlord (hereinafter called "Landlord") to grant
Contractor access to the Building and its facilities in connection with the
performance of the Work and Landlord agrees to grant such access to Contractor
upon and subject to the following terms and conditions:
1. Contractor agrees to indemnify and save harmless the Landlord, Tenant
and their respective officers, employees and agents and their affiliates,
subsidiaries, and partners, and each of them, from and with respect to any
claims, demands, suits, liabilities, losses and expenses, including reasonable
attorneys' fees, arising out of or in connection with the Work (and/or imposed
by law upon any or all of them) because of personal injuries, including death at
any time resulting therefrom, and loss of or damage to property, including
consequential damages, whether such injuries to persons or property are claimed
to be due to negligence of the Contractor, Tenant, Landlord or any other party
entitled to be indemnified as aforesaid except to the extent specifically
prohibited by law (and any such prohibition shall not void this Agreement but
shall be applied only to the minimum extent required by law).
2. Contractor shall provide and maintain at its own expense, until
completion of the Work, the following insurance:
(a) Workers' Compensation and Employers' Liability Insurance
covering each and every workman employed in, about or upon the work, as
provided for in each and every statute applicable to Workers' Compensation
and Employers' Liability Insurance.
(b) Comprehensive General Liability Insurance Including Coverages
for Protective and Contractual Liability (to specifically include coverage
for the indemnification clause of this Agreement) for not less than the
following limits:
Bodily Injury and
Property Damage: $5,000,000 per occurrence
(c) Comprehensive Automobile Liability Insurance (covering all
owned, non-owned and/or hired motor vehicles to be used in connection with
the Work) for not less than the following limits:
Exhibit D
Page 11
<PAGE> 185
Bodily Injury and
Property Damage: $5,000,000 per occurrence
Contractor shall furnish a certificate from its insurance carrier or carriers to
the Building office before commencing the Work, showing that it has complied
with the above requirements regarding insurance and providing that the insurer
will give Landlord ten (10) days' prior written notice of the cancellation of
any of the foregoing policies.
3. Contractor shall require all of its subcontractors engaged in the Work
to provide the following insurance:
(a) Comprehensive General Liability Insurance Including Protective
and Contractual Liability Coverages with limits of liability at least equal
to the above stated limits.
(b) Comprehensive Automobile Liability Insurance (covering all
owned, non-owned and/or hired motor vehicles to be used in connection with
the Work) for not less than the following limits:
Bodily Injury and
Property Damage: $5,000,000 per occurrence
Upon the request of Landlord, Contractor shall require all of its
subcontractors engaged in the Work to execute an Insurance Requirements
agreement in the same form as this Agreement.
Agreed to and executed this day of , 19 .
Contractor:
_______________________________
By:____________________________
Name:__________________________
Title:_________________________
Exhibit D
Page 12
<PAGE> 186
EXHIBIT E
CLEANING SPECIFICATIONS
General & Private Offices, Conference Rooms
a. Nightly, light vacuuming is to be performed.
b. Quarterly, dust all high horizontal surfaces not reached in nightly
cleaning.
c. Nightly, empty waste paper receptacles. Empty and damp wipe ash trays.
d. Nightly, dust desk tops, tops of filing cabinets and table tops with cloth.
Dust arms, seat, back and rails of chairs. Dust furniture, tables, sills,
ledges, and wall decorations.
e. Nightly, disinfect telephones.
f. Nightly, spot clean vertical surfaces.
g. Nightly, sweep wood borders and saddles in reception areas and staircases.
h. Nightly, dust stair rails.
Interior Offices
a. Nightly check tile floor area for deposits and use a putty knife or scraper
to remove. Sweep using a treated mop.
b. Weekly, spot mopping is performed in normal traffic areas and only if the
floor area has an accumulation of spills and dirt that cannot be removed by
sweeping with a treated mop; then, use a mop that is wrung fairly dry to
remove these spots. Generally, there should be no moving of furniture when
this function is performed.
c. Weekly, damp mopping is performed in areas that receive fairly heavy
traffic.
d. Quarterly, dust all high horizontal surfaces not reached in nightly
cleaning.
e. Nightly, empty waste paper receptacles. Empty and damp wipe ash trays.
f. Nightly, dust desk tops, tops of filing cabinets and table tops with cloth.
Dust arms, seat, back and rails of chairs. Dust furniture, tables, sills,
ledges, and wall decorations.
Elevator Lobby
a. Nightly, light vacuuming is to be performed.
b. Quarterly, dust all high horizontal surfaces not reached in nightly
cleaning.
c. Nightly, empty waste paper receptacles. Empty and damp wipe ash trays,
sand/smoke urns (if sand urn, sift sand with strainer and replace sand to
proper level as necessary).
Exhibit E
Page 1
<PAGE> 187
Men's Lavatories/Foyers
a. Nightly, check floor area for deposits and use a putty knife or scraper to
remove. Sweep using a treated mop.
b. Monthly, any floor finish build-up in corners or at edging where different
floor types meet should be removed by using a wet sponge to loosen and wipe
the accumulation away from corner/edge or, if necessary, a putty knife
should be employed to scrape it away. Remove old finish and thoroughly
clean floor by wet mopping using solvent or disinfectant as necessary and
rinsing; then, apply at least two coats of finish material and buff to a
luster. Walls, baseboards, furniture and other surfaces should be free of
finish residue and marks from the equipment.
c. Nightly, wet mopping is performed in areas where an antiseptic level of
cleanliness is required or wherever damp mopping is ineffective.
d. Monthly, sprinkle floor with scouring powder and wet with warm water. Use a
small polishing machine with scrubbing brushes to scrub floor.
e. Nightly, spot clean walls and doors up to hand-high height to remove spots,
smudges and any splashes that may have occurred.
f. Monthly, spot wash toilet stall partitions and doors.
g. Quarterly, dust all high horizontal surfaces not reached in nightly
cleaning.
h. Nightly, empty waste paper receptacles.
i. Nightly, remove contents of waste towel receptacles as necessary, emptying
any trash receptacles.
j. Nightly, pick-up all wastepaper and trash from floor.
k. Nightly, check soap dispensers and refill.
l. Nightly, check toilet tissue and paper tower dispensers and put in supplies
necessary to fill them.
m. Nightly, spot clean wash basins, commodes and urinals.
n. Nightly, wet mop tiled floors with approved disinfectant.
o. Monthly, scrub tiled floors.
p. Nightly, clean and polish bright work on lavatory fixtures.
q. Bi-weekly, wash and disinfect stationary trash receptacles.
r. Nightly, clean mirrors.
Ladies' Lavatory/Powder Rooms
a. Nightly, check floor area for deposits and use a putty knife or scraper to
remove. Sweep using a treated mop.
b. Monthly, any floor finish build-up in corners or at edging where different
floor types meet should be removed by using a wet sponge to loosen and wipe
the accumulation away from corner/edge or, if necessary, a putty knife
should be employed to scrape it away. Remove old finish and thoroughly
clean floor by wet mopping using solvent or disinfectant as necessary and
rinsing; then, apply
Exhibit E
Page 2
<PAGE> 188
at least two coats of finish material and buff to a luster. Walls,
baseboards, furniture and other surfaces should be free of finish residue
and marks from the equipment.
c. Nightly, wet mopping is performed in areas where an antiseptic level of
cleanliness is required or wherever damp mopping is ineffective.
d. Monthly, sprinkle floor with scouring powder and wet with warm water. Use a
small polishing machine with scrubbing brushes to scrub floor.
e. Nightly, spot clean walls and doors up to hand-high height to remove spots,
smudges and any splashes that may have occurred.
f. Monthly, spot wash toilet stall partitions and doors.
g. Quarterly, dust all high horizontal surfaces not reached in nightly
cleaning.
h. Nightly, empty waste paper receptacles.
1. Nightly, remove contents of waste towel receptacles as necessary, emptying
any trash receptacles.
j. Nightly, pick-up all wastepaper and trash from floor.
k. Nightly, check soap dispensers and refill.
l. Nightly, check toilet tissue and paper towel dispensers and put in supplies
necessary to fill them.
m. Nightly, spot clean wash basins, commodes.
Window Cleaning
a. Clean twice per year inside and Outside.
Freight Lobbies
a. Nightly, check tile floor area for deposits and use a putty knife or
scraper to remove. Sweep using a treated mop.
b. Weekly, spot mopping is performed in normal traffic areas and only if the
floor area has an accumulation of spills and dirt that cannot be removed by
sweeping with a treated mop; then, use a mop that is wrung fairly dry to
remove these spots. Generally, there should be no moving of furniture when
this function is performed.
c. Weekly, damp mopping is performed in areas that receive fairly heavy
traffic.
d. Quarterly, dust all high horizontal surfaces not reached in nightly
cleaning.
e. Nightly, empty waste paper receptacles. Empty and damp wipe ash trays,
sand/smoke urns (if sand urn, sift sand with strainer and replace sand to
proper level as necessary).
f. Nightly, dust desk tops, tops of filing cabinets and table tops with cloth.
Dust arms, seat, back and rails of chairs. Dust furniture, tables, sills,
ledges, and wall decorations.
g. Nightly, sweep floors.
Exhibit E
Page 3
<PAGE> 189
Fire Stairwells
a. Weekly, check floor area for deposits and use a putty knife or scraper to
remove. Sweep using a treated mop.
b. Monthly, damp mopping is performed in areas that receive fairly heavy
traffic. The entire area is to be damp mopped.
c. Quarterly, damp mop floor. The entire area is to be damp mopped.
Exhibit E
Page 4
<PAGE> 190
EXHIBIT F-1
FORM OF NON-DISTURBANCE AGREEMENT
FOR UNDERLYING LEASES
Agreement made as of the ___ day of _________, 199__ between
________________, a _______________ corporation having an office at ______
___________, ________, ________ _____ ("GROUND LESSOR") and
_______________________________ a ________________ corporation having an office
at __________ _________, _____, _______________ ________ ("TENANT");
W I T N E S S E T H:
WHEREAS, Ground Lessor is the lessor pursuant to a ground lease
dated _______________ __, ______ (the "GROUND LEASE"), between Ground Lessor, as
ground lessor, and certain ground lessees described therein, covering the land
(the "GROUND LEASE PREMISES") described in Schedule I annexed hereto, on which
is located the building (the "BUILDING") commonly known as One Chase Manhattan
Plaza, Borough of Manhattan, City, County and State of New York; and
WHEREAS, Tenant has entered into a space lease dated ________ __,
____ (said space lease, as amended, and as same may be hereafter amended from
time to time, collectively referred to as the "LEASE"), covering the portions of
the Building (the "PREMISES") more particularly described in the Lease.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration the receipt and sufficiency of which are hereby
conclusively acknowledged, the parties hereto agree as follows:
1. Tenant covenants and agrees that the Lease now is and shall at
all times continue to be subject and subordinate in each and every respect to
the Ground Lease. The provisions of this Paragraph 1 shall be self-operative and
no further instrument shall be required. Tenant, upon request, shall execute and
deliver any certificate or other instrument which the Ground Lessor may
reasonably request to confirm said subordination by Tenant.
2. Tenant certifies (i) that the Lease is presently in full force
and effect and, except as provided in Schedule II annexed hereto, the Lease is
unmodified, (ii) that no Fixed Rent (as defined in the Lease) payable thereunder
has been paid more than one (1) month in advance of its due date, (iii) that to
the best of Tenant's knowledge, no default of Tenant exists under the Lease
which has continued beyond the expiration of any applicable grace period, and
(iv) that to the best of Tenant's
Exhibit F-1
Page 1
<PAGE> 191
knowledge, no default of Landlord (as defined below) exists under the Lease
which has continued beyond the expiration of any applicable grace period.
3. As long as Tenant is in compliance with the terms of this
Agreement and no default exists under the Lease which has continued beyond the
expiration of any applicable grace period, (i) Ground Lessor shall not name or
join Tenant as a party defendant to any action to terminate the Ground Lease or
recover possession (unless required by law, but such naming or joinder shall not
terminate the Lease or cause Tenant's possession of the Premises to be
disturbed), (ii) nor shall the Lease be terminated in connection with, or by
reason of, the termination or expiration of the Ground Lease, (iii) nor shall
Tenant's use or possession of the Premises be disturbed or interfered in
connection with, or by reason of, the termination or expiration of the Ground
Lease, unless, in case of (i), (ii) or (iii) above, the holder of the landlord's
interest under the Lease (the "Landlord"), would have had such right if the
Ground Lease had not been made, and (iv) if the Ground Lease shall terminate or
expire prior to the scheduled final expiration date of the Lease, the Lease
shall continue in full force and effect as a direct lease between the holder of
the landlord's interest in the Ground Lease immediately prior to such
termination or expiration, as landlord, and Tenant, as tenant. Notwithstanding
the foregoing, any person acquiring, or succeeding to, the interests of the
Landlord as a result of any such termination or expiration (the "Successor
Landlord"), shall not be:
(a) liable for any previous act or omission of Landlord (or
its predecessors in interest); it being understood that the foregoing is
not intended to relieve Successor Landlord of any liability arising by
reason of its acts or omissions from and after the date it succeeds to the
interests of the Landlord, including a continuation of the failure of the
prior Landlord to perform its obligations under the Lease, in which case
Successor Landlord upon receipt of notice of such continuation from Tenant
shall have a reasonable period of time to remedy same (which period shall
not exceed the time period granted Landlord for such remedy pursuant to the
terms of the Lease);
(b) responsible for any monies owing by Landlord to the credit
of Tenant;
(c) subject to any offsets, claims, counterclaims, demands or
defenses which Tenant may have against Landlord (or its predecessors in
interest);
(d) bound by any payments of rent which Tenant might have made
for more than one (1) month in advance to Landlord (or its predecessors in
interest);
Exhibit F-1
Page 2
<PAGE> 192
(e) required to account for any security deposit other than
any security deposit actually delivered to the Successor Landlord; and
(f) bound by any modification of the Lease, made after the
date hereof, which is made without the written consent of Ground Lessor.
Notwithstanding the foregoing provisions of this Paragraph 3, such Successor
Landlord shall be liable for Landlord's obligations to make payments to Tenant
in respect of Landlord's Contribution (as set forth in Article 36 hereof),
Landlord's Option Space Contribution (as set forth in Article 37 hereof), any
Landlord's Offer Space Contribution (as set forth in Article 38 hereof), and any
Deposited Proceeds (as set forth in Section 19.08 hereof), regardless of whether
the payment thereof was due hereunder prior to or after such Successor Landlord
becomes Successor Landlord and, with respect thereto, Tenant may exercise
against such Successor Landlord Tenant's right of set-off as set forth in
Section 36.04 of the Lease (including Section 36.04 as made applicable to (x)
the Option Space or any Offer Space by virtue of the provisions of Article 37 or
38, or (y) any Deposited Proceeds by virtue of the provisions of Section 19.08
hereof).
4. If the interest of the Landlord under the Lease shall be
transferred by reason of a termination of the Ground Lease, Tenant shall be
bound to the Successor Landlord, and, except as provided in this Agreement, the
Successor Landlord shall be bound to Tenant, under all of the terms, covenants
and conditions of the Lease for the balance of the term thereof remaining, with
the same force and effect as if the Successor Landlord were the Landlord, and
Tenant does hereby (i) agree to attorn to the Successor Landlord, including
Ground Lessor if it be the Successor Landlord, as its landlord, (ii) affirm its
obligations under the Lease, and (iii) agree to make payments of all sums due
under the Lease to the Successor Landlord, said attornment, affirmation and
agreement to be effective and self-operative without the execution of any
further instruments, upon the Successor Landlord succeeding to the interest of
the Landlord under the Lease. Tenant waives the provisions of any statute or
rule of law now or hereafter in effect that may give or purport to give it any
right or election to terminate or otherwise adversely affect the Lease or the
obligations of Tenant thereunder by reason of any termination of the Ground
Lease.
5. If any act or omission of Landlord would give Tenant the right,
immediately or after lapse of a period of time, to cancel or terminate the
Lease, or to abate or offset against the payment of Fixed Rent or Additional
Charges or to claim a partial or total eviction, Tenant shall not exercise such
right (a) until it has given written notice of such act or omission to Landlord
and Ground Lessor, and (b) until a reasonable period for remedying such act or
omission shall have elapsed following the giving of such notice which shall
include a reasonable period of time for Ground
Exhibit F-1
Page 3
<PAGE> 193
Lessor to have become entitled under the Ground Lease to remedy the same (which
latter reasonable period shall in no event be less than the period to which
Landlord would be entitled under the Lease or otherwise, after similar notice,
to effect such remedy plus thirty (30) days), provided Ground Lessor shall,
within thirty (30) days after its receipt of Tenant's notice given in accordance
herewith, give Tenant notice of its intention to remedy such act or omission,
with diligence and continuity, promptly after becoming entitled to do so. This
Paragraph 5 shall not be applicable to any situation governed by Article 19, 20,
33, 36 (including Article 36 as made applicable to the Option Space or any Offer
Space by virtue of the provisions of Article 37 or 38, or (y) any Deposited
Proceeds by virtue of the provisions of Section 19.08 hereof) or 39.
6. This Agreement may not be modified except by an agreement in
writing signed by the parties or their respective successors in interest. This
Agreement shall inure to the benefit of and be binding upon the parties thereto,
their respective heirs, representatives, successors and assigns.
7. The Tenant agrees that this Agreement satisfies any condition or
requirement in the Lease relating to the granting of a non-disturbance agreement
by Ground Lessor. Tenant further agrees that in the event there is any
inconsistency between the terms and provisions hereof and the terms and
provisions of the Lease dealing with non-disturbance by Ground Lessor, the terms
and provisions hereof shall be controlling.
8. All notices, demands or requests made pursuant to, under, or by
virtue of this Agreement must be in writing and mailed to the party whom the
notice, demand or request is being made by certified or registered mail, return
receipt requested, as its address set forth above, except that, after Tenant
occupies the Premises for the conduct of business, notices shall be sent to
Tenant at One Chase Manhattan Plaza, New York, New York _____, Attn:
___________________. Any party may change the place that notices and demands are
to be sent by written notice delivered in accordance with this Agreement.
9. This Agreement shall be governed by the laws of the State of New
York. If any term of this Agreement or the application thereof to any person or
circumstances shall to any extent be invalid or unenforceable, the remainder of
this Agreement or the application of such term to any person or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
10. All capitalized terms used herein which are not herein defined
shall have the meanings ascribed thereto in the Lease.
Exhibit F-1
Page 4
<PAGE> 194
11. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which taken together shall constitute one
and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
By:_________________________________
Name:___________________________
Title:__________________________
By:_________________________________
Name:___________________________
Title:__________________________
Exhibit F-1
Page 5
<PAGE> 195
Acknowledgements
Exhibit F-1
Page 6
<PAGE> 196
Schedule I to Exhibit F-1
Land
Exhibit F-1
Page 7
<PAGE> 197
Schedule II to Exhibit F-1
Amendments to Lease
Exhibit F-1
Page 8
<PAGE> 198
EXHIBIT F-2
FORM OF NON-DISTURBANCE AGREEMENT
FOR MORTGAGES
THIS AGREEMENT, made as of the ___ day of _______, _______ by and between
_____________________________, a _______________ corporation, having an office
at ___________________ ___________, _________ ________ (hereinafter called
"Mortgagee"), and ____________________ _______________, a ________________
corporation, having an office at ____________ ___________, hereinafter called
"Tenant").
W I T N E S S E T H:
WHEREAS, Mortgagee is the holder of that certain Mortgage, dated
_______ __, ____ (said Mortgage, as it may be amended, increased, renewed,
modified, consolidated, replaced, combined, substituted, severed, split, spread
or extended from time to time, being hereinafter referred to as the "Mortgage"),
between Mortgagee, as mortgagee, and certain mortgagors described therein which
encumbers, among other properties, the land described in Schedule I annexed
hereto (the "Land") and the building (the "Building") located at One Chase
Manhattan Plaza, Borough of Manhattan, City, County and State of New York (the
Land and the Building are sometimes hereinafter referred to collectively as the
"Property"); and
WHEREAS, Tenant has entered into a certain agreement of lease dated
as of ________ __, ____ (said agreement of lease, as amended, and as same may be
hereafter amended from time to time collectively referred to as the "Lease"),
covering the portions of the Building (the "Premises") more particularly
described in the Lease.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. Tenant covenants and agrees that the Lease now is and shall at
all times continue to be subject and subordinate in each and every respect to
the Mortgage. The provisions of this Paragraph 1 shall be self-operative and no
further instrument shall be required. Tenant, upon request, shall execute and
deliver any certificate or other instrument which the Mortgagee may reasonably
request to confirm said subordination by Tenant.
2. Tenant certifies (i) that the Lease is presently in full force
and effect and, except as provided in Schedule II annexed hereto, the Lease is
unmodified, (ii) that no Fixed Rent (as defined in the Lease) payable thereunder
has been paid
Exhibit F-2
Page 1
<PAGE> 199
more than one (1) month in advance of its due date, (iii) that, to the best of
Tenant's knowledge, no default of Tenant exists under the Lease which has
continued beyond the expiration of any applicable grace period, and (iv) that,
to the best of Tenant's knowledge, no default of Landlord (as defined below)
exists under the Lease which has continued beyond the expiration of any
applicable grace period.
3. As long as Tenant is in compliance with the terms of this
Agreement and no default exists under the Lease which has continued beyond the
expiration of any applicable grace period, Mortgagee shall not name or join
Tenant as a party defendant to any action for foreclosure or other enforcement
thereof (unless required by law, but such naming or joinder shall not cause
Tenant's possession of the Premises to be disturbed), nor shall the Lease be
terminated by Mortgagee in connection with, or by reason of, foreclosure or
other proceedings for the enforcement of the Mortgage, or by reason of a
transfer of the landlord's interest under the Lease pursuant to the taking of a
deed in lieu of foreclosure (or similar device), nor shall Tenant's use or
possession of the Premises be disturbed or interfered with by Mortgagee, unless
the holder of the landlord's interest under the Lease (the "Landlord"), would
have had such right if the Mortgage had not been made. Notwithstanding the
foregoing, any person acquiring, or succeeding to, the interests of the Landlord
as a result of any such action, foreclosure, transfer or other proceeding (any
of the foregoing being hereinafter referred to as the "Successor Landlord"),
shall not be:
(a) liable for any previous act or omission of Landlord (or
its predecessors in interest); it being understood that the foregoing is
not intended to relieve Successor Landlord of any liability arising by
reason of its acts or omissions from and after the date it succeeds to the
interests of the Landlord, including a continuation of the failure of the
prior Landlord to perform its obligations under the Lease, in which case
Successor Landlord upon receipt of notice of such continuation from Tenant
shall have a reasonable period of time to remedy same (which period shall
not exceed the time period granted Landlord for such remedy pursuant to the
terms of the Lease);
(b) responsible for any monies owing by Landlord to the credit
of Tenant;
(c) subject to any credits, offsets, claims, counterclaims,
demands or defenses which Tenant may have against Landlord (or its
predecessors in interest);
(d) bound by any payments of rent which Tenant might have made
for more than one (1) month in advance to Landlord (or its predecessors in
interest);
Exhibit F-2
Page 2
<PAGE> 200
(e) required to account for any security deposit other than
any security deposit actually delivered to the Successor Landlord; and
(f) bound by any modification of the Lease, made after the
date hereof, which is made without the written consent of Mortgagee.
Notwithstanding the foregoing provisions of this Paragraph 3, such Successor
Landlord shall be liable for Landlord's obligations to make payments to Tenant
in respect of Landlord's Contribution (as set forth in Article 36 hereof),
Landlord's Option Space Contribution (as set forth in Article 37 hereof), any
Landlord's Offer Space Contribution (as set forth in Article 38 hereof), and any
Deposited Proceeds (as set forth in Section 19.08 hereof), regardless of whether
the payment thereof was due hereunder prior to or after such Successor Landlord
becomes Successor Landlord and, with respect thereto, Tenant may exercise
against such Successor Landlord Tenant's right of set-off as set forth in
Section 36.04 of the Lease (including Section 36.04 as made applicable to (x)
the Option Space or any Offer Space by virtue of the provisions of Article 37 or
38, or (y) any Deposited Proceeds by virtue of the provisions of Section 19.08
hereof).
4. If the interest of the Landlord under the Lease shall be
transferred by reason of foreclosure or other proceedings for enforcement of the
Mortgage or pursuant to a taking of a deed in lieu of foreclosure (or similar
device), Tenant shall be bound to the Successor Landlord, and, except as
provided in this Agreement, the Successor Landlord shall be bound to Tenant,
under all of the terms, covenants and conditions of the Lease for the balance of
the term thereof remaining, with the same force and effect as if the Successor
Landlord were the Landlord, and Tenant does hereby (i) agree to attorn to the
Successor Landlord, including Mortgagee if it be the Successor Landlord, as its
landlord, (ii) affirm its obligations under the Lease, and (iii) agree to make
payments of all sums due under the Lease to the Successor Landlord, said
attornment, affirmation and agreement to be effective and self-operative without
the execution of any further instruments, upon the Successor Landlord succeeding
to the interest of the Landlord under the Lease. Tenant waives the provisions of
any statute or rule of law now or hereafter in effect that may give or purport
to give it any right or election to terminate or otherwise adversely affect the
Lease or the obligations of Tenant thereunder by reason of any foreclosure or
similar proceeding.
5. If any act or omission of Landlord would give Tenant the right,
immediately or after lapse of a period of time, to cancel or terminate this
lease, or to abate or offset against the payment of rent or to claim a partial
or total eviction, Tenant shall not exercise such right (a) until it has given
written notice of such act or omission to Landlord and Mortgagee, and (b) until
a reasonable period for remedying such act or omission shall have elapsed
following the giving of such
Exhibit F-2
Page 3
<PAGE> 201
notice which shall include a reasonable period of time for Mortgagee to have
become entitled under the Mortgage to remedy the same (which latter reasonable
period shall in no event be less than the period to which Landlord would be
entitled under this lease or otherwise, after similar notice, to effect such
remedy plus thirty (30) days), provided that Mortgagee shall within thirty (30)
days after its receipt of Tenant's notice given in accordance herewith, give
Tenant notice of its intention to remedy such act or omission, with diligence
and continuity, promptly after becoming entitled to do so. This Paragraph 5
shall not be applicable to any situation governed by Article 19, 20, 33, 36
(including Article 36 as made applicable to (x) the Option Space or Offer Space
by virtue of the provisions of Article 37 or 38, or (y) any Deposited Proceeds
by virtue of the provisions of Section 19.08 hereof) or 39.
6. This Agreement may not be modified except by an agreement in
writing signed by the parties or their respective successors in interest. This
Agreement shall inure to the benefit of and be binding upon the parties thereto,
their respective heirs, representatives, successors and assigns.
7. Nothing contained in this Agreement shall in any way impair or
affect the lien created by the Mortgage except as specifically set forth herein.
8. The Tenant agrees that this Agreement satisfies any condition or
requirement in the Lease relating to the granting of a non-disturbance agreement
by Mortgagee. Tenant further agrees that in the event there is any inconsistency
between the terms and provisions hereof and the terms and provisions of the
Lease dealing with non-disturbance by Mortgagee, the terms and provisions hereof
shall be controlling.
9. All notices, demands or requests made pursuant to, under, or by
virtue of this Agreement must be in writing and mailed to the party whom the
notice, demand or request is being made by certified or registered mail, return
receipt requested, as its address set forth above, except that, after Tenant
occupies the Premises for the conduct of business, notices shall be sent to
Tenant at One Chase Manhattan Plaza, New York, New York _____, Attn:
____________________. Any party may change the place that notices and demands
are to be sent by written notice delivered in accordance with this Agreement.
10. This Agreement shall be governed by the laws of the State of New
York. If any term of this Agreement or the application thereof to any person or
circumstances shall to any extent be invalid or unenforceable, the remainder of
this Agreement or the application of such term to any person or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
Exhibit F-2
Page 4
<PAGE> 202
11. All capitalized terms used herein which are not herein defined
shall have the meanings ascribed thereto in the Lease.
12. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which taken together shall constitute one
and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
By:____________________________________
Name:______________________________
Title:_____________________________
By:____________________________________
Name:______________________________
Title:_____________________________
Exhibit F-2
Page 5
<PAGE> 203
Acknowledgements
Exhibit F-2
Page 6
<PAGE> 204
Schedule I to Exhibit F-2
Exhibit F-2
Page 7
<PAGE> 205
Schedule I to Exhibit F-2
Land
Exhibit F-2
Page 8
<PAGE> 206
Schedule II to Exhibit F-2
Amendments to Lease
Exhibit F-2
Page 9
<PAGE> 207
EXHIBIT G
Primary Landlord Conduit Areas
There are no Primary Landlord Conduit Areas other than those delineated in
Section 16.02 of the lease.
Exhibit G
Page 1
<PAGE> 208
EXHIBIT H
Passenger Elevator Bank D
Diagram: depiction of the floor plan of the 37th Floor of One Chase
Manhattan Plaza, New York, New York. The floor is rectangular with Liberty and
Pine Streets bordering the length of the floor, respectively. Nassau and William
Streets border the width of the floor, respectively. In the center, but shifted
slightly to the left on the rectangular floor plan, are four small sized
rectangles. The floor plan has been marked with "'D' Bank" and an arrow pointing
between the second and third small rectangles in the center of the floor plan.
<PAGE> 1
Exhibit 10.36
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
LLC UNIT GRANT PLAN
Cambridge Energy Research Associates, Inc. ( the "Company"), a wholly-
owned subsidiary of Global Decisions Group LLC ("Parent LLC"), hereby
establishes the following Cambridge Energy Research Associates, Inc. LLC Unit
Grant Plan (the "Plan"):
1. PURPOSE. The purpose of the Plan is to provide for the distribution
to consultants and employees of the Company of certain LLC Units, and certain
rights to receive additional LLC Units, of Parent LLC issued by Parent LLC to
the Company.
2. PARTICIPANTS. The Participants in the Plan are the individuals
listed on Appendix A attached hereto, each of whom is either a consultant to, or
employee of, the Company.
3. BENEFITS. Each Participant shall receive an assignment from the
Company of that number of LLC Units issued by Parent LLC to the Company which is
set forth opposite his or her name in Appendix A, subject to adjustment in the
event that the number of LLC Units issued or to be issued pursuant to that
certain Merger Agreement (the "Merger Agreement") by and among MCM Group, Inc.,
the Parent LLC, GDG Merger Corporation, The Goldman Sachs Group, L.P. and
certain stockholders of the Company, is adjusted pursuant to Section 1.8 thereof
so that the agreed-upon value per LLC Unit at the time of the closing thereunder
is equal to $10.00. In addition, each Participant shall receive an assignment
from the Company
<PAGE> 2
of the right to receive additional LLC Units (hereinafter, "Contingent LLC
Units") in the event that certain contingencies are satisfied. The procedure for
determining the number of Contingent LLC Units to be received by each
Participant is set forth in Section 1.5 of the Merger Agreement.
4. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board"). The Board shall have complete power and
discretion to administer the Plan. Any determination made by the Board in the
exercise of its discretion hereunder shall be binding on all parties.
5. RESTRICTION. No distribution of LLC Units shall be made to a
Participant hereunder until the Participant shall have signed the CERA LLC Unit
Grant Agreement (as defined in the Merger Agreement) in the form approved by the
President of the Company. The certificate evidencing the Participant's LLC Units
shall bear the following legend:
"THE LLC UNITS REPRESENTED HEREBY ARE ENTITLED TO
THE BENEFITS OF AND ARE BOUND BY THE OBLIGATIONS,
AND ARE SUBJECT TO THE TRANSFER RESTRICTIONS,
HOLDBACK AND OTHER PROVISIONS OF AN LLC UNIT GRANT
AGREEMENT, DATED AS OF 1997, AS THE SAME
MAY BE AMENDED, SUPPLEMENTED OR MODIFIED FROM TIME
TO TIME (THE "GRANT AGREEMENT"), AND THE AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
GLOBAL DECISIONS GROUP LLC, DATED AS OF ,
1997, AS SUCH AGREEMENT MAY BE AMENDED, SUPPLEMENTED
OR MODIFIED FROM TIME TO TIME (THE "LLC AGREEMENT"),
AND NEITHER THIS CERTIFICATE NOR THE LLC UNITS
REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE
TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH GRANT AGREEMENT AND LLC
AGREEMENT, COPIES
-2-
<PAGE> 3
OF WHICH AGREEMENTS ARE ON FILE WITH THE SECRETARY
OF GLOBAL DECISIONS GROUP LLC."
"THE LLC UNITS REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE OR FOREIGN SECURITIES
LAWS AND MAY NOT BE TRANSFERRED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (I) (A)
SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, (B) THE HOLDER HEREOF SHALL HAVE
DELIVERED TO GLOBAL DECISIONS GROUP LLC AN OPINION
OF COUNSEL, WHICH OPINION AND COUNSEL SHALL BE
REASONABLY SATISFACTORY TO GLOBAL DECISIONS GROUP
LLC, TO THE EFFECT THAT SUCH DISPOSITION IS EXEMPT
FROM THE PROVISIONS OF SECTION 5 OF SUCH ACT OR (C)
A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION, REASONABLY SATISFACTORY TO COUNSEL FOR
GLOBAL DECISIONS GROUP LLC, SHALL HAVE BEEN OBTAINED
WITH RESPECT TO SUCH DISPOSITION AND (II) SUCH
DISPOSITION IS PURSUANT TO REGISTRATION UNDER ANY
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION
THEREFROM."
6. RIGHTS AS A HOLDER. A Participant shall have no rights as a holder
of LLC Units to be granted hereunder until such LLC Units have actually been
assigned and the LLC Unit Grant Agreement referred to in Section 5, above, have
been executed.
7. NO EMPLOYMENT CONTRACT. This Plan shall not constitute an express or
implied contract between the Company and any Participant and nothing contained
herein shall give to any Participant the right to be retained in the employ of
the Company or to interfere with the management of the Company's business or,
except as otherwise provided by law or as may be otherwise provided in a
separate written agreement (if any) between the Company and the Participant, the
right of the
-3-
<PAGE> 4
Company to discharge any Participant at any time, nor shall it give the Company
the right to require any Participant to remain in its employ, nor shall it
interfere with the right of any Participant to terminate his or her employment
at any time.
EXECUTED this ______________ day of ______________, 1997.
CERA, Inc.
By:__________________________________
-4-
<PAGE> 5
Appendix A
CERA Management Members
<TABLE>
<CAPTION>
CERA GDG
PARTICIPANT LTICP UNITS LLC UNITS
----------- ----------- ---------
<S> <C> <C>
Kevin Lindemer 7,500 11,250
Phillippe Michelon 7,500 11,250
Thomas Robinson 7,500 11,250
Gary Simon 7,500 11,250
William Durbin 3,750 5,625
Thane Gustafson 3,750 5,625
Daniel Lucking 3,750 5,625
Alice Barsoomian 2,000 3,000
Simon Blakey 2,000 3,000
Dennis Eklof 2,000 3,000
Robert Esser 2,000 3,000
Odd Hassel 2,000 3,000
Edward Jordan 2,000 3,000
Micheline Manoncourt 2,000 3,000
Sue Lena Thompson 2,000 3,000
Ray Vernon 2,000 3,000
Julian West 2,000 3,000
Steve Aldrich 1,000 1,500
Ann Louise Hittle 1,000 1,500
Steve Haggett 1,000 1,500
Bruce Humphrey 1,000 1,500
Chuck Jordan 1,000 1,500
Susan Leland 1,000 1,500
Larry Makovich 1,000 1,500
Greg McCormack 1,000 1,500
James Placke 1,000 1,500
Brian Ward 1,000 1,500
TOTAL 71,250 108,875
</TABLE>
<PAGE> 1
Exhibit 10.37
Draft--July 31, 1997
CAMBRIDGE ENERGY RESEARCH ASSOCIATES, INC.
LLC UNIT OPTION PLAN
Section 1. Purpose
The purpose of this Cambridge Energy Research Associates, Inc. LLC
Unit Option Plan is to foster and promote the long-term financial success of the
Company, its Affiliates and any Subsidiaries and to materially increase
unitholder value by (a) motivating superior performance by participants in the
Plan, (b) providing participants in the Plan with an ownership interest in the
Parent LLC, and (c) enabling the Company, its Affiliates and any Subsidiaries to
attract and retain the services of an outstanding management team upon whose
judgment, interest and special effort the successful conduct of its operations
is largely dependent.
Section 2. Definitions
2.1. Definitions. Whenever used herein, the following terms shall
have the respective meanings set forth below:
(a) "Affiliate" means an entity controlling, controlled by or under
common control with the specified person or entity.
(b) "Alternative Option" has the meaning given in Section 8.2.
(c) "Amended and Restated Parent LLC Agreement" means the amended
and restated limited liability company agreement of the Parent LLC, dated
as of the Effective Date, as amended, supplemented, waived or otherwise
modified and in effect from time to time.
(d) "Applicable LLC Unit Valuation" means, as of any Determination
Date, the annual valuation of the LLC Units as of the last day of the
latest fiscal year of the Parent LLC ending prior to such Determination
Date performed by an independent valuation firm chosen by the LLC Board,
except that (i) in the case of a Determination Date occurring on or after
the Effective Date but prior to the first day of the fourth fiscal quarter
of the Parent LLC's fiscal year ending on June 30, 1998, the term
"Applicable LLC Unit Valuation" shall mean the value per LLC Unit as of
the Effective Date as determined pursuant to Section 1.8 of the Merger and
Exchange Agreement, and (ii) in the case of a Determination Date occurring
during the fourth fiscal quarter of any
<PAGE> 2
fiscal year of the Parent LLC beginning with the fourth fiscal quarter of
its fiscal year ending on June 30, 1998, the term "Applicable LLC Unit
Valuation" shall mean the annual valuation of the LLC Units as of the last
day of such fourth fiscal quarter performed by an independent valuation
firm chosen by the LLC Board.
(e) "Board" means the Board of Directors of the Company.
(f) "C&D Fund" means The Clayton & Dubilier Private Equity Fund IV
Limited Partnership, a Connecticut limited partnership, and any successor
investment vehicle managed by Clayton, Dubilier & Rice, Inc.
(g) "Cause" means (i) the willful failure by the Participant to
perform substantially his duties as an employee of, or in connection with
his provision of services to, any member of the MGI/CERA Group (other than
any such failure due to physical or mental illness) after a demand for
substantial performance is delivered to the Participant by the executive
to whom the Participant reports or by the Board of Directors of the member
of the MGI/CERA Group by which he is employed or to which he provides
services, which notice identifies the manner in which such executive or
such Board, as the case may be, believes that the Participant has not
substantially performed his duties, (ii) the Participant's engaging in
willful and serious misconduct that is or is expected to be injurious to
the MGI/CERA Group, (iii) the Participant's having been convicted of, or
entered a plea of guilty or nolo contendere to, a crime that constitutes a
felony, (iv) the willful and material breach by the Participant of any
written covenant or agreement with any member of the MGI/CERA Group not to
disclose any information pertaining to the MGI/CERA Group, not to compete
or interfere with the MGI/CERA Group or with respect to any take-along or
similar covenants applicable to any LLC Units owned by the Participant, or
(v) any material violation by the Participant of any material federal,
state or foreign securities laws; provided that, with respect to a
Participant who, as of the Determination Date, is employed by any member
of the MGI/CERA Group under an effective employment agreement that
contains a different definition of Cause, the definition of Cause
contained in such employment agreement shall be substituted for the
definition set forth above for all purposes herein.
(h) "Change of Control" means with respect to, the Parent LLC, the
Company or MGI, the first of the following events to occur after the
Effective Date:
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<PAGE> 3
(i) the acquisition by any person, entity or "group" (as
defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended) (other than (v) a member of the MGI/CERA Group, (w) any
employee benefit plan of any member of the MGI/CERA Group, (x) the
C&D Fund or any of its Permitted Transferees, (y) any of Daniel H.
Yergin, Joseph A. Stanislaw or James P. Rosenfield or any of their
respective Permitted Transferees, and (z) in the event that all of
the then outstanding capital stock of the Company or MGI shall be
distributed to members of the Parent LLC, such members), of 50% or
more of the combined voting power of the then outstanding voting
securities or other voting equity interests of the Parent LLC, the
Company or MGI, as applicable;
(ii) the merger or consolidation of the Parent LLC, the Company
or MGI, as applicable, as a result of which persons who were members
of the Parent LLC or stockholders of the Company or MGI, as the case
may be, immediately prior to such merger or consolidation, do not,
immediately thereafter, own, directly or indirectly, securities or
other equity interests representing more than 50% of the combined
voting power of the merged or consolidated company's then
outstanding securities or other voting equity interests;
(iii) the liquidation or dissolution of the Parent LLC (other
than a dissolution occurring upon a merger or consolidation
thereof), the Company or MGI, as applicable, other than a
liquidation of the Company or MGI into the Parent LLC; and
(iv) the sale of all or substantially all of the assets of the
Parent LLC, the Company and its Subsidiaries, if any, or MGI and its
Subsidiaries, as applicable, to one or more persons or entities that
are not, immediately prior to such sale, Affiliates of the Parent
LLC, the Company or MGI, as applicable.
(i) "Change of Control Price" means (x) with respect to any
transaction involving a Change of Control of the Parent LLC, the price per
LLC Unit paid in conjunction with such transaction and (y) with respect to
any transaction involving a Change of Control of the Company or MGI, the
aggregate net purchase price paid for the Company or MGI, as the case may
be, divided by the aggregate number of LLC Units outstanding, on a fully
diluted basis, immediately prior to the closing of such transaction (in
each case, as determined in good faith by the LLC Board if any part of
such price is payable
3
<PAGE> 4
other than in cash).
(j) "Company" means Cambridge Energy Research Associates, Inc., a
Massachusetts corporation and a wholly owned Subsidiary of Parent LLC, and
any successor thereto.
(k) "Determination Date" means the date as of which the Fair Market
Value of the LLC Units is to be determined pursuant to the applicable
Option Agreement, generally the effective date of a Participant's
Termination for any reason.
(l) "Effective Date" means the effective date of the Transactions.
(m) "Employee" means any director, executive, senior officer or
other employee of, or consultant to, the Company or any Subsidiary.
(n) "Fair Market Value" means, as of any Determination Date, the
fair market value on such date per LLC Unit, as determined in good faith
by the LLC Board. In making a determination of Fair Market Value, the LLC
Board shall give due consideration to such factors as it deems
appropriate, including, without limitation, the earnings and other
financial and operating information of the MGI/CERA Group in recent
periods, the potential value of the MGI/CERA Group as a whole, the future
prospects of the MGI/CERA Group and the industries in which its members
compete, the history and management of the MGI/CERA Group, the general
condition of the securities markets, the fair market value of securities
of companies engaged in businesses similar to those of the members of the
MGI/CERA Group and the Applicable LLC Unit Valuation. The determination of
Fair Market Value will not give effect to any restrictions on transfer of
the LLC Units or the fact that such LLC Units would represent a minority
interest in the Parent LLC.
(o) "Grant Date" means, with respect to any Option, the date on
which such Option is granted pursuant to the Plan.
(p) "Involuntary Termination" means Termination by a New Employer
for any reason.
(q) "LLC Board" means the Board of Directors of the Parent LLC.
(r) "LLC Unit" means a unit representing a limited liability company
interest in the Parent LLC, the terms and conditions of which are subject
to and
4
<PAGE> 5
governed by the Amended and Restated Parent LLC Agreement, or the
securities into which such units shall have been converted or for which
such units shall have been exchanged in any merger, consolidation,
reorganization, exchange of securities, liquidation or dissolution or
similar transaction.
(s) "Merger and Exchange Agreement" means the Plan of Merger and
Exchange Agreement, dated as of August 1, 1997, among MGI, the Parent LLC,
GDG Merger Corporation, a wholly owned Subsidiary of the Parent LLC, the
stockholders of the Company named therein and The Goldman Sachs Group,
L.P.
(t) "MGI" means MCM Group, Inc., a Delaware corporation and a wholly
owned Subsidiary of the Parent LLC, and any successor thereto.
(u) "MGI/CERA Group" means, collectively, the Parent LLC, the
Company, MGI and each of their respective Subsidiaries.
(v) "MGI Performance Option" means a Performance Option the vesting
and exercisability of which is conditioned in whole or in part upon the
attainment of objectives based upon the financial or operating performance
of MGI and/or its Subsidiaries.
(w) "New Employer" means the Participant's employer, or the parent
or a subsidiary of such employer, immediately following a Change of
Control.
(x) "Option" means the right granted pursuant to the Plan to
purchase one LLC Unit from the Company at a price and on terms and
conditions determined in accordance with Section 6.
(y) "Option Agreement" means an agreement between the Company and
the Participant embodying the terms of any Options granted hereunder,
which agreement shall, unless the Board otherwise determines, be
substantially in the form attached hereto as Exhibit A.
(z) "Parent LLC" means Global Decisions Group LLC, a Delaware
limited liability company and the sole stockholder of the Company, and any
successor thereto.
(aa) "Participant" means any Employee designated by the Board, in
consultation with the LLC Board, to participate in the Plan.
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<PAGE> 6
(bb) "Performance Option" means an Option granted pursuant to the
Plan which becomes exercisable in accordance with the provisions of the
applicable Option Agreement based upon the financial or operating
performance of one or more members of the MGI/CERA Group.
(cc) "Permanent Disability" means a physical or mental disability or
infirmity that prevents the performance by the Participant of
substantially all of his duties lasting for a continuous period of six
months or longer. The good faith judgment of the Board as to the
Participant's Permanent Disability shall be final and shall be based on
the determination (evidenced by a written report or certificate) by a
physician selected by the Company or its insurers, and acceptable to the
Participant or the Participant's legal representative (such acceptance not
to be unreasonably withheld), to advise the Board; provided that, with
respect to a Participant who, as of the Determination Date, is employed by
any member of the MGI/CERA Group under an effective employment agreement
that contains a different definition of Permanent Disability, Disability
or Disabled, the definition contained in such employment agreement shall
be substituted for the definition set forth above for all purposes herein.
(dd) "Permitted Transferee" shall have the meaning assigned to such
term in Section 1.1 of the Amended and Restated Limited Liability Company
Agreement of the Parent LLC, dated as of ____, 1997, as the same may be
amended from time to time, except that, for purposes of the Plan, the term
Permitted Transferee shall not include any transferee described in clause
(v) of the definition of such term.
(ee) "Plan" means this Cambridge Energy Research Associates, Inc.
LLC Unit Option Plan, as the same may be amended from time to time.
(ff) "Principal Member" means each of the C&D Fund, Daniel H.
Yergin, Joseph A. Stanislaw and James P. Rosenfield (the "Original
Principal Members") and each of their respective Permitted Transferees who
are "accredited investors" within the meaning of rule 501(a) of Regulation
D of the Securities Act of 1933, as amended; provided, however, that a
Principal Member shall cease to be a Principal Member at such time as such
person or entity shall not beneficially own at least 20% of the LLC Units
that such Member (or the applicable Original Principal Member in the case
of a Permitted Transferee) beneficially owned on the Effective Date, and,
provided, further, that, solely for the purposes, under this Section
2.1(ff) and Section 7.4, of calculating the number of LLC Units
beneficially owned by a Principal
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<PAGE> 7
Member who is an individual, such number of LLC Units shall be deemed to
include any LLC Units held in a trust the only actual beneficiaries under
which are such Principal Member and/or his brothers and sisters (whether
by whole or half blood), spouse, ancestors and lineal descendants.
(gg) "Public Offering" means the first day as of which sales of LLC
Units are made to the public in the United States pursuant to an
underwritten public offering of such LLC Units led by one or more
underwriters, at least one of which is of nationally recognized standing.
(hh) "Retirement" means a Participant's voluntary Termination at or
after age 60 or such other age as may be specified in the applicable
Option Agreement or, in the case of a Participant who, as of the
Determination Date, is employed by any member of the MGI/CERA Group under
an effective employment agreement that contains a different definition of
Retirement, the definition contained in such employment agreement shall be
substituted for the definition set forth above for all purposes herein.
(ii) "Service Option" means an Option granted pursuant to the Plan
which becomes exercisable in accordance with the provisions of the
applicable Option Agreement based upon a Participant's completion of
service with the applicable member or members of the MGI/CERA Group.
(jj) "Special Termination" has the meaning specified in Section 7.1.
(kk) "Subsidiary" means, with respect to any person, any corporation
or other entity a majority of whose outstanding voting securities or other
voting equity interests is owned, directly or indirectly, by such person.
(ll) "Termination" means the termination of a Participant's
employment with the member of the MGI/CERA Group that employs such
Participant, or, in the case of a Participant who is not an employee of
any member of the MGI/CERA Group, the termination of such Participant's
provision of services to the member of the MGI/CERA Group for which such
Participant has been engaged to perform services.
(mm) "Transactions" means the acquisition by the Parent LLC pursuant
to the Merger and Exchange Agreement of (x) all of the outstanding capital
stock of MGI pursuant to the merger of GDG Merger Corporation, a Delaware
corporation and a wholly owned subsidiary of the Parent LLC, with and into
MGI, with MGI as the surviving corporation, and (y) all of the outstanding
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<PAGE> 8
capital stock of the Company and certain of the limited partnership
interests of Cambridge Energy Research Associates Limited Partnership, a
Delaware limited partnership, pursuant to the exchange of such capital
stock and such partnership interests for LLC Units and certain other
contingent interests in the Parent LLC.
2.2. Gender and Number. Except when otherwise indicated by the
context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.
Section 3. Eligibility and Participation
Participants in the Plan shall be those Employees selected by the
Board, in consultation with the LLC Board, to participate in the Plan. The
selection of an Employee as a Participant shall neither entitle such Employee to
nor disqualify such Employee from participation in any other award or incentive
plan of any member of the MGI/CERA Group.
Section 4. Powers of the Board
4.1. Power to Grant. The Board shall determine the Participants to
whom Options shall be granted and the terms and conditions of any and all
Options granted to Participants, provided that (i) such determinations shall be
made by the Board in consultation with the LLC Board, (ii) an Option may be
granted only if the Parent LLC shall have agreed to issue to or at the direction
of the Company, upon any exercise of such Option, such number of LLC Units as
may be issuable upon such exercise, and (iii) in connection with, and shortly
following, the consummation of the Transactions, the Board expects to grant
approximately 231,500 Options (with respect to approximately 231,500 LLC Units)
to the Participants listed on Schedule I hereto (and each such Participant is
expected to be granted the number of Options (with respect to the number of LLC
Units) specified opposite such Participant's name on such Schedule), on such
terms and conditions consistent with the Plan as the Board, in consultation with
the LLC Board, shall determine, including terms providing that each such Option
shall have an exercise price of $18.31 per LLC Unit and that one-half of such
Options will be Service Options and the remaining one-half of such Options will
be Performance Options, and the Parent LLC has agreed to issue, upon exercise of
such Options, the above number of LLC Units, as required by clause (ii) of this
sentence. Nothing in the Plan shall limit the right of members of the Board (or
of the LLC Board) who are Employees to receive awards hereunder.
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<PAGE> 9
4.2. Administration. The Board shall be responsible for the
administration of the Plan. Any authority exercised by the Board under the Plan,
other than in respect of matters required hereunder to be considered in
consultation with the LLC Board, shall be exercised by the Board in its sole
discretion, and any authority exercised by the Board under the Plan in respect
of matters required hereunder to be considered in consultation with the LLC
Board shall be exercised by the Board subject only to such consultation. Subject
to the terms of the Plan, the Board, by majority action thereof, is authorized
to prescribe, amend and rescind rules and regulations relating to the
administration of the Plan, to provide for conditions and assurances deemed
necessary or advisable to protect the interests of the members of the MGI/CERA
Group, and to make all other determinations necessary or advisable for the
administration and interpretation of the Plan in order to carry out its
provisions and purposes. Determinations, interpretations or other actions made
or taken by the Board pursuant to the provisions of the Plan shall be final,
binding and conclusive for all purposes and upon all persons.
4.3. Delegation by the Board. All of the powers, duties and
responsibilities of the Board specified in the Plan may, to the full extent
permitted by applicable law, be exercised and performed by any duly constituted
committee of the Board, in any such case, to the extent authorized by the Board
to exercise and perform such powers, duties and responsibilities, provided, that
with respect to any Option granted to or exercised by an officer or director of
the Parent LLC or the Company, such committee shall mean a committee of two or
more non-employee directors, each of whom (i) is not an officer or employee of
the Parent LLC or any other member of the MGI/CERA Group and (ii) is not
directly or indirectly receiving compensation from the Parent LLC other than for
services performed as a director.
Section 5. Options Subject to Plan
5.1. Number. Subject to the provisions of Sections 5.2 and 5.3, the
maximum number of Options (and the maximum number of LLC Units subject to
Options) granted under the Plan at any time may not exceed 462,699, minus such
number of options to purchase LLC Units (and number of LLC Units subject to such
options), not to exceed 154,233, as may have been granted and are then
outstanding or have been exercised under the MCM Group, Inc. LLC Unit Option
Plan.
5.2. Canceled, Terminated or Forfeited Options. Any Option (and the
LLC Unit subject to such Option) which for any reason is canceled, terminated or
otherwise forfeited, in whole or in part, without having been exercised, shall
again be
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<PAGE> 10
available for grant under the Plan to the extent so canceled, terminated or
otherwise forfeited.
5.3. Adjustment in Capitalization. The number and class of Options
(and the number of LLC Units available for issuance upon exercise of such
Options) granted under the Plan, and the number, class and exercise price of any
outstanding Options (and the number of LLC Units subject to outstanding
Options), may be adjusted by the Board, in consultation with the LLC Board, if
it shall deem such an adjustment to be necessary or appropriate to reflect (i)
any distribution of LLC Units to members of the Parent LLC after the Effective
Date, any LLC Unit split or combination, or any recapitalization, merger,
consolidation, exchange of LLC Units, liquidation or dissolution of the Parent
LLC, (ii) any distribution by the Parent LLC of all of the outstanding capital
stock of the Company or MGI to members of the Parent LLC or (iii) in the case of
Options other than MGI Performance Options, the occurrence of any event that
would constitute a Change of Control of MGI.
Section 6. Terms of Options
6.1. Grant of Options. Options may be granted to Participants at
such time or times upon or following the Effective Date as shall be determined
by the Board, in consultation with the LLC Board. The Board may provide that
different terms apply to Options granted to a Participant on the same or
different Grant Dates. Each Option granted to a Participant shall be evidenced
by an Option Agreement that shall specify the exercise price at which an LLC
Unit may be purchased pursuant to such Option, the duration of such Option, and
such other terms consistent with the Plan as the Board shall determine,
including customary representations, warranties, and covenants with respect to
securities law matters. Unless otherwise determined by the Board at the Grant
Date, such Option Agreement shall also state that upon exercise of any Options
granted thereby and upon admission to the Parent LLC as a member of the Parent
LLC, the holder of the LLC Units issued upon such exercise will be entitled to
the benefits of and bound by the obligations set forth in the Parent LLC
Agreement, to the extent set forth therein. Such Option Agreement shall, unless
the Board otherwise determines, be substantially in the form attached hereto as
Exhibit A.
6.2. Exercise Price. The exercise price per LLC Unit to be purchased
upon exercise of an Option shall be determined by the Board, in consultation
with the LLC Board, but shall not be less than the Fair Market Value on the
Grant Date.
6.3. Exercise of Options. (a) Service Options. Unless otherwise
determined by the Board, in consultation with the LLC Board, at the Grant Date
and
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as provided in the Option Agreement evidencing the Options granted hereunder,
[20%] of any Service Options granted to a Participant at any time shall become
exercisable on each of the first [five] anniversaries of the Grant Date of such
Service Options, subject in each such case to the Participant's continued
employment with, or, in the case of a Participant who is not an employee of the
Company or any Subsidiary of the Company, continued provision of services to,
any member of the MGI/CERA Group until such anniversary date; provided that 100%
of such Service Options shall become exercisable to the extent provided in
Section 8.1.
(b) Performance Options. Any Performance Options granted to a
Participant shall become vested and exercisable as determined by the Board in
consultation with the LLC Board and as provided in the Option Agreement
evidencing such Performance Options granted hereunder.
(c) Conditions to Exercise; Discretionary Authority. Notwithstanding
any other provision herein, the Board may accelerate the vesting and/or
exercisability of any Option, all Options or any class of Options, at any time
and from time to time. On or before the date upon which any Participant will
exercise any Option, the Company and such Participant shall enter into a
Management LLC Unit Subscription Agreement substantially in the form attached
hereto as Exhibit B. Notwithstanding any other provision of the Plan, each
Option shall terminate and shall not be exercisable on or after the tenth
anniversary of the Grant Date of such Option.
6.4. Payment. The Board shall establish procedures governing the
exercise of Options, which procedures shall generally require that written
notice of the exercise thereof be given to the Company and that the exercise
price thereof be paid in full in cash or cash equivalents, including by personal
check, at the time of exercise. If so determined by the Board in its sole
discretion at or after the Grant Date, the exercise price of any Options
exercised after there has been a Public Offering may be paid in full or in part
in the form of LLC Units which have been owned by the Participant for at least
six months, based on the Fair Market Value of such LLC Units on the date of
exercise. As soon as practicable after receipt of a written exercise notice and
payment in full of the exercise price of any exercisable Options, the Company
shall deliver to the Participant a certificate or certificates representing the
LLC Units acquired upon the exercise thereof.
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<PAGE> 12
Section 7. Termination of Employment
or Cessation of Provision of Services
7.1. Special Termination. Unless otherwise provided in the Option
Agreement or otherwise determined by the Board after the Grant Date, in the
event of a Termination by reason of the Participant's death, Permanent
Disability or Retirement (each a "Special Termination"), then any Options held
by the Participant that are or become vested and exercisable as of the date of
such Special Termination as provided in the applicable Option Agreement shall
remain exercisable, subject to Section 7.4, solely until the first to occur of
(x) the first anniversary of such Special Termination, or (y) the expiration of
the term of the Option. Any Options held by the Participant that are not or have
not become vested and exercisable as of the date of the Special Termination
shall terminate and be canceled immediately upon such Special Termination, and
any Options described in the preceding sentence that are not exercised within
the period described in such sentence shall terminate and be canceled upon the
expiration of such period.
7.2. Termination for Cause. Unless otherwise provided in the Option
Agreement or otherwise determined by the Board after the Grant Date, in the
event of a Termination for Cause, any Options held by such Participant (whether
or not then vested or exercisable) shall terminate and be canceled immediately
upon such Termination.
7.3. Other Termination of Employment. Unless otherwise provided in
the Option Agreement or otherwise determined by the Board after the Grant Date,
in the event of a Termination for any reason other than (i) a Special
Termination or (ii) for Cause, any Options held by such Participant that are or
become vested and exercisable as of the date of such Termination shall remain
exercisable, subject to Section 7.4, for a period of 60 days following such
Termination (or, if shorter, for the remaining term of the Options). Any Options
held by the Participant that are not and do not become vested and exercisable as
of the date of the Participant's Termination shall terminate and be canceled
immediately upon such Termination, and any Options described in the preceding
sentence that are not exercised within the period described in such sentence
shall terminate and be canceled upon the expiration of such period.
7.4. Certain Rights upon Termination Prior to Public Offering.
Unless otherwise provided in the Option Agreement or otherwise determined by the
Board in consultation with the LLC Board after the Grant Date, each Option
Agreement governing Options granted hereunder shall provide that (i) the Company
and (ii) the Principal Members (as a group) shall have successive rights to
purchase from the Participant Options held by such Participant upon any
Termination of such Participant
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prior to a Public Offering that are or then become vested and exercisable for a
purchase price per Option equal to the excess, if any, of (x) the Fair Market
Value of an LLC Unit on the date of Termination over (y) the exercise price per
LLC Unit pursuant to such Option, and upon such additional terms and conditions
as are set forth in the Option Agreement(s) evidencing such Options; provided,
that each Principal Member shall have the right to elect to purchase from the
Participant only its or his pro rata portion (determined as of the date of
Termination and on a partially diluted basis taking into account only such
options to purchase LLC Units as are then exercisable and held by the applicable
Principal Member) of such Options; provided, further, that if the Principal
Members in the aggregate do not elect, within the time period set forth in the
applicable Option Agreement, to purchase all of such Options, each Principal
Member that had elected to purchase all of its or his pro rata portion of such
Options shall have the right to purchase a portion of the remainder of such
Options, in an amount equal to either (i) the product of (x) the aggregate
number of such remaining Options and (y) a fraction, the numerator of which
shall be the number of LLC Units held by such Principal Member (on a partially
diluted basis taking into account only such options to purchase LLC Units as are
then exercisable and held by such Principal Member) and the denominator of which
shall be the aggregate number of LLC Units then held by each Principal Member
that had elected to purchase all of its or his pro rate portion of such Options
(on a partially diluted basis taking into account only such options to purchase
LLC Units as are then exercisable and held by any such Principal Member) or (ii)
such other amount as shall be agreed upon by all such Principal Members. If the
rights of the Company and the Principal Members to purchase all of the vested
and exercisable Options held by such Participant are not fully exercised, other
than as a result of the inability of the Company to complete a purchase due to
restrictions under Delaware law or any applicable financing arrangement of any
member of the MGI/CERA Group, such Participant (or such Participant's estate)
shall be entitled to retain and exercise any vested and exercisable Options not
so purchased, subject to all of the provisions of the Plan and the Option
Agreement evidencing such Options.
Section 8. Change of Control
8.1. Accelerated Exercisability and Payment. Unless otherwise
provided in the Option Agreement or otherwise determined by the Board in the
manner set forth in Section 8.2, (i) in the event of a Change of Control with
respect to the Parent LLC or the Company, each Service Option (whether or not
then vested and exercisable), each Performance Option that shall have become
vested and exercisable prior to such Change of Control and, as and to the extent
provided in the applicable Option Agreement, a proportionate share, if any, of
each Performance Option that
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<PAGE> 14
shall not have become vested and exercisable prior to such Change of Control,
and (ii) in the event of a Change of Control solely with respect to MGI, each
MGI Performance Option that shall have become vested and exercisable prior to
such Change of Control and, as and to the extent provided in the applicable
Option Agreement, a proportionate share, if any, of each MGI Performance Option
that shall not have become vested and exercisable prior to such Change of
Control, shall be canceled in exchange for a payment in cash of an amount equal
to the excess, if any, of the Change of Control Price over the exercise price
for such Option. All other outstanding Performance Options or, in the event of a
Change of Control with respect to MGI, MGI Performance Options shall be canceled
and forfeited as of the closing date of the transaction constituting such Change
of Control.
8.2. Alternative Options. Notwithstanding Section 8.1, no
cancellation, acceleration of exercisability, vesting or cash settlement or
other payment shall occur with respect to any Option as a result of the
occurrence of the applicable Change of Control if the Board reasonably
determines in good faith, prior to the occurrence of such Change of Control,
that such Option shall be honored or assumed, or new rights substituted therefor
(such honored, assumed or substituted Option being hereinafter referred to as an
"Alternative Option") by the New Employer, provided that any such Alternative
Option must:
(a) provide the Participant that held such Option with rights and
entitlements substantially equivalent to or better than the material
rights, terms and conditions applicable under such Option, including, but
not limited to, an identical or better exercise and vesting schedule, and
identical or better timing and methods of payment;
(b) have substantially equivalent economic value to such Option
(determined at the time of the applicable Change of Control and taking
into account any payment that may be made to the Participant in respect of
such Option); and
(c) have terms and conditions which provide that in the event that
such Participant suffers an Involuntary Termination within two years
following a Change of Control with respect to the Parent LLC or the
Company in case of an Option other than an MGI Performance Option, or with
respect to the Parent LLC, the Company or MGI in the case of an MGI
Performance Option:
(i) any conditions to such Participant's rights under, or any
restrictions on transfer or exercisability applicable to, each such
Alternative Option shall be waived or shall lapse, as the case may
be;
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<PAGE> 15
or
(ii) such Participant shall have the right to surrender such
Alternative Option within 30 days following such Termination in
exchange for a payment in cash equal to the excess of the Fair
Market Value of the securities subject to the Alternative Option
over the price, if any, that such Participant would be required to
pay to exercise such Alternative Option.
8.3 Certain Take-Along Rights Prior to a Public Offering. Unless
otherwise provided in the Option Agreement or otherwise determined by the Board
after the Grant Date, each Management LLC Unit Subscription Agreement evidencing
LLC Units issued upon the exercise of Options granted hereunder shall provide
that, upon certain transactions described therein, the Participant will be
required to sell such LLC Units then owned by him for a payment per LLC Unit
equal to the Change of Control Price, and upon such additional terms and
conditions as are set forth in such subscription agreement.
Section 9. Amendment, Modification and
Termination of the Plan
The Board at any time may terminate or suspend the Plan, and from
time to time may amend or modify the Plan provided that in the case of any
provision requiring consultation with the LLC Board, such provision may only be
amended or modified after prior consultation with the LLC Board, and with
respect to any provision regarding action to be taken by the LLC Board or
impacting the rights or obligations of the LLC Board, any member of the MGI/CERA
Group other than the Company or its Subsidiaries, or any Principal Member, such
provision may only be amended or modified with the prior approval of the LLC
Board. No amendment, modification, termination or suspension of the Plan shall
in any manner adversely affect any Option theretofore granted under the Plan,
without the consent of the Participant holding such Option. Shareholder approval
of any such amendment, modification, termination or suspension shall be obtained
to the extent mandated by applicable law, or if otherwise deemed appropriate by
the Board.
Section 10. Miscellaneous Provisions
10.1. Nontransferability of Awards. No Options granted under the
Plan may be sold, transferred, pledged, assigned, encumbered or otherwise
alienated or
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<PAGE> 16
hypothecated, other than (i) by a Participant to the Company or one or more
Principal Members pursuant to Section 7.4, or (ii) by will or by the laws of
descent and distribution and provided that the deceased Participant's
beneficiary or the representative of his estate acknowledges and agrees in
writing, in a form reasonably acceptable to the Company, to be bound by the
provisions of the Plan (including the purchase rights described in Section 7.4
and the take-along rights described in Section 8.3) and the Option Agreement
covering such Options as if such beneficiary or estate were the Participant. All
rights with respect to Options granted to and held by a Participant under the
Plan shall be exercisable during his lifetime only by such Participant or his
legal representative. Following a Participant's death, all rights with respect
to such Options that were exercisable at the time of such Participant's death
and have not terminated shall be exercisable by his designated beneficiary or by
his estate.
10.2. Beneficiary Designation. Each Participant under the Plan may
from time to time name any beneficiary or beneficiaries (who may be named
contingently or successively) by whom any right under the Plan is to be
exercised in case of his death. Each designation will revoke all prior
designations by the same Participant, shall be in a form reasonably prescribed
by the Board, and will be effective only when filed by the Participant in
writing with the Board during his lifetime.
10.3. No Guarantee of Employment or Participation. Nothing in the
Plan or in any Option Agreement shall interfere with or limit in any way the
right of any member of the MGI/CERA Group to terminate any Participant's
employment or provision of services at any time, or confer upon any Participant
any right to continue in the employ of or to provide services to any member of
the MGI/CERA Group. No Employee shall have a right to be selected as a
Participant or, having been so selected, to receive any Options.
10.4. Tax Withholding. The Company or any other member of the
MGI/CERA Group (as the case may be) employing or engaging the services of a
Participant shall have the power to withhold, or to require such Participant to
remit to the Company or such other member of the MGI/CERA Group, subject to such
other arrangements as the Board may set forth in the Option Agreement to which
such Participant is a party, an amount sufficient to satisfy all federal, state,
local and foreign withholding tax requirements in respect of any Option granted
under the Plan or any LLC Unit purchased upon the exercise of any such Option.
10.5. Indemnification. Each person who is or shall have been a
member of the Board or the LLC Board or any committee of the Board or the LLC
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<PAGE> 17
Board shall be indemnified and held harmless by the Company and its Subsidiaries
to the fullest extent permitted by law from and against any and all losses,
costs, liabilities and expenses (including any related attorneys' fees and
advances thereof) in connection with, based upon or arising or resulting from
any claim, action, suit or proceeding to which he may be made a party or in
which he may be involved by reason of any action taken or failure to act under
the Plan and from and against any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of any
judgment in any such action, suit or proceeding against him, provided that he
shall give the Company or, with the consent of the Company, another member of
the MGI/CERA Group an opportunity, at its own expense, to defend the same before
he undertakes to defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive and shall be independent of any other
rights of indemnification to which such persons may be entitled under the
Company's or any such Subsidiary's certificate of incorporation or by-laws, by
contract, as a matter of law, or otherwise.
10.6. No Limitation on Compensation. Nothing in the Plan shall be
construed to limit the right of the Company or any other member of the MGI/CERA
Group to establish other plans or to pay compensation to its employees, in cash
or property, in a manner that is not expressly authorized under the Plan.
10.7. Requirements of Law. The granting of Options and the issuance
of LLC Units pursuant to such Options shall be subject to all applicable laws,
rules and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required. No Options shall be granted
under the Plan, and no LLC Units shall be issued upon exercise of any Options
granted under the Plan, if such grant or exercise would result in a violation of
applicable law, including the federal securities laws and any applicable state
or foreign securities laws.
10.8. Freedom of Action. Subject to Section 9, nothing in the Plan
or any Option Agreement shall be construed as limiting or preventing any member
of the MGI/CERA Group from taking any action that it deems appropriate or in its
best interest.
10.9. Term of Plan. Subject to the consummation of the Transactions,
the Plan shall be effective as of the Effective Date. The Plan shall thereafter
continue in effect, unless sooner terminated pursuant to Section 9, until the
tenth anniversary of the Effective Date. The provisions of the Plan, however,
shall continue thereafter to govern all outstanding Options theretofore granted.
17
<PAGE> 18
10.10. No Voting Rights. Except as otherwise required by law, no
Participant holding any Options granted under the Plan shall have any right, in
respect of such Options, to vote on any matter submitted to the Parent LLC's
members until such time as the LLC Units issuable upon exercise of such Options
have been so issued and such Participant has been admitted to the Parent LLC as
a member of the Parent LLC.
10.11. Governing Law. The Plan, and all agreements hereunder, shall
be construed in accordance with and governed by the laws of the State of
Delaware, regardless of the law that might be applied under principles of
conflict of laws.
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<PAGE> 19
Draft --July 31, 1997
Exhibit A
MANAGEMENT LLC UNIT OPTION AGREEMENT
MANAGEMENT LLC UNIT OPTION AGREEMENT, dated as of __________, ____,
between Cambridge Energy Research Associates, Inc., a Massachusetts corporation
(together with any successor thereto, the "Company"), and the Grantee whose name
appears on the signature page hereof (the "Grantee").
W I T N E S S E T H:
WHEREAS, on _________, 1997, Global Decisions Group LLC, a Delaware
limited liability company (together with any successor thereto, the "Parent
LLC"), acquired (x) all of the outstanding capital stock of MGI, pursuant to the
merger of GDG Merger Corporation, a Delaware corporation and a wholly owned
subsidiary of the Parent LLC, with and into MGI, with MGI as the surviving
corporation, and (y) all of the outstanding capital stock of the Company and
certain of the limited partnership interests of Cambridge Energy Research
Associates Limited Partnership, a Delaware limited partnership, pursuant to the
exchange of such capital stock and such partnership interests for LLC Units and
certain other contingent interests in the Parent LLC (the "Transactions");
WHEREAS, in connection with the Transactions, the Board adopted the
Cambridge Energy Research Associates, Inc. LLC Unit Option Plan (as the same may
be amended, supplemented, waived or otherwise modified from time to time, the
"Plan"), and the Parent LLC has agreed to issue upon exercise of Options granted
under the Plan, an aggregate of __________ LLC Units;
WHEREAS, pursuant to the terms of the Plan, the Board, in
consultation with the LLC Board, has authorized the Company to grant to the
Grantee the number of non-qualified options set forth under the heading
"Initial Value Options" on the signature page hereof, at an exercise price of
$___ per LLC Unit, and the number (if any) of non-qualified options set forth
under the heading "Premium Options" on the signature page hereof, at an exercise
price of $______ per LLC Unit, each such option representing the right to
purchase one LLC Unit on the terms and conditions set forth herein and in the
Plan; and
WHEREAS, the Grantee and the Company desire to enter into an
agreement to evidence and confirm the grant of
<PAGE> 20
such options on the terms and conditions set forth herein and in the Plan;
NOW, THEREFORE, to evidence the options so granted, and to set forth
their terms and conditions, the Company and the Grantee hereby agree as follows:
1. Definitions. Whenever used herein, the following terms shall
have the respective meanings set forth below. Capitalized terms used herein
without definition shall have the meanings specified in the Plan.
(a) "Affiliate" means an entity controlling, controlled by, or under
common control with the specified person or entity.
(b) "Alternative Option" has the meaning given in Section 9(c).
(c) "Amended and Restated Parent LLC Agreement" means the amended
and restated limited liability company agreement of the Parent LLC, dated as of
the Effective Date, as amended, supplemented, waived or otherwise modified and
in effect from time to time.
(d) "Applicable Portion" means, with respect to Performance Options
granted hereunder, the percentage obtained by dividing (i) the excess of (x)
the lesser of (A) the Maximum EBITDA Target and (B) the cumulative EBITDA
actually achieved for the period commencing on the Grant Date and continuing
through the Target Date (or other applicable date of determination) over (y) the
Minimum EBITDA Target by (ii) the excess of the Maximum EBITDA Target over the
Minimum EBITDA Target; provided, however, that if the Applicable Portion is
being determined as of a date other than the Target Date, the Maximum EBITDA
Target and the Minimum EBITDA Target shall each be proportionately adjusted for
the purposes of determining such Applicable Portion by multiplying each such
target by a fraction, the numerator of which shall be the number of days from
the Grant Date to the date of determination and the denominator of which shall
be the number of days from the Grant Date to the Target Date.
(e) "Board" means the Board of Directors of the Company.
(f) "C&D Fund" means The Clayton & Dubilier Private Equity Fund IV
Limited Partnership, a Connecticut
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<PAGE> 21
limited partnership, and any successor investment vehicle managed by Clayton,
Dubilier & Rice, Inc.
(g) "Cause" means (i) the willful failure by the Grantee to perform
substantially his duties as an employee of, or in connection with his provision
of services to, any member of the MGI/CERA Group (other than any such failure
due to physical or mental illness) after a demand for substantial performance
is delivered to the Grantee by the executive to whom the Grantee reports or by
the Board of Directors of the member of the MGI/CERA Group by which he is
employed or to which he provides services, which notice identifies the manner in
which such executive or such Board, as the case may be, believes that the
Grantee has not substantially performed his duties, (ii) the Grantee's engaging
in willful and serious misconduct that is or is expected to be injurious to any
member of the MGI/CERA Group, (iii) the Grantee's having been convicted of, or
having entered a plea of guilty or nolo contendere to, a crime that constitutes
a felony, (iv) the willful and material breach by the Grantee of any written
covenant or agreement with any member of the MGI/CERA Group not to disclose any
information pertaining to the MGI/CERA Group, not to compete or interfere with
the MGI/CERA Group or with respect to any take-along or similar covenants
applicable to any LLC Units owned by the Participant or (v) any violation by
the Participant of any material federal, state or foreign securities laws;
provided that, if the Grantee is, as of the Determination Date, employed by any
member of the MGI/CERA Group under an effective employment agreement that
contains a different definition of Cause, the definition contained in such
employment agreement shall be substituted for the definition set forth above for
all purposes herein.
(h) "Change of Control" means, with respect to the Parent LLC, the
Company [or MGI]* the first of the following events to occur after the Effective
Date:
(i) the acquisition by any person, entity or "group" (as
defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended) (other than (v) a member of the MGI/CERA Group, (w) any
employee benefit plan of any member of the
- --------
* [Explanatory note: a Change of Control with respect to MGI will have
an effect only on Performance Options (if any), the vesting of which
is based in whole or in part upon the performance of MGI and/or its
Subsidiaries.]
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MGI/CERA Group, (x) the C&D Fund or any of its Permitted
Transferees, (y) any of Daniel H. Yergin, Joseph A. Stanislaw or
James P. Rosenfield or any of their respective Permitted
Transferees, and (z) in the event that all of the then outstanding
capital stock of the Company [or MGI] shall be distributed to
members of the Parent LLC, such members), of 50% or more of the
combined voting power of the then outstanding voting securities or
other voting equity interests of the Parent LLC, the Company [or
MGI, as applicable];
(ii) the merger or consolidation of the Parent LLC, the Company
[or MGI, as applicable], as a result of which persons who were
members of the Parent LLC or stockholders of the Company [or MGI, as
the case may be,] immediately prior to such merger or consolidation,
do not, immediately thereafter, own, directly or indirectly,
securities or other equity interests representing more than 50% of
the combined voting power of the merged or consolidated company's
then outstanding securities or other voting equity interests;
(iii) the liquidation or dissolution of the Parent LLC (other
than a dissolution occurring upon a merger or consolidation
thereof), the Company [or MGI], as applicable, other than a
liquidation of the Company [or MGI] into the Parent LLC; and
(iv) the sale of all or substantially all of the assets of the
Parent LLC, the Company and its Subsidiaries, if any, [or MGI and
its Subsidiaries, as applicable,] to one or more persons or
entities that are not, immediately prior to such sale, Affiliates of
the Parent LLC, the Company [or MGI], as applicable.
(i) "Change of Control Price" means (x) with respect to any
transaction involving a Change of Control of the Parent LLC, the price per LLC
Unit paid in conjunction with such transaction and (y) with respect to any
transaction involving a Change of Control of the Company or MGI, the aggregate
net purchase price paid for the Company or MGI, as the case may be, divided by
the aggregate number of LLC Units outstanding, on a fully diluted basis,
immediately prior to the closing of such transaction (in
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<PAGE> 23
each case, as determined in good faith by the LLC Board if any part of such
price is payable other than in cash).
(j) "Committee" means the Compensation Committee of the Board (or
such other committee of the Board which shall be authorized to administer the
Plan), provided, that with respect to any Option granted to or exercised by an
officer or director of the Parent LLC, the Company or MGI and its subsidiaries,
as applicable, Committee shall mean (x) the Board or (y) a committee of two or
more non-employee directors, each of whom (i) is not an officer or employee of
the Parent LLC or any other member of the MGI/CERA Group and (ii) is not
directly or indirectly receiving compensation from the Parent LLC other than for
services performed as a director. If at any time no Committee shall be in
office, the Board shall perform the functions of the Committee.
(k) "Company" has the meaning set forth in the introductory
paragraph hereof.
(l) "Covered Options" has the meaning set forth in Section 4(b).
(m) "Determination Date" means the effective date of the Grantee's
Termination.
(n) "Effective Date" means the effective date of the Transactions.
(o) "EBITDA", for any period, shall mean the consolidated net income
of [insert name[s] of the applicable member or members of the MGI/CERA Group],
determined in accordance with generally accepted accounting principles
consistently applied throughout the applicable period and prior to any reduction
for interest expense, taxes, depreciation or amortization, minus the aggregate
amount of interest income, if any, paid or accrued to [such member or members of
the MGI/CERA Group] by any other member of the MGI/CERA Group during such period
in respect of loans, if any, made to such other member, to the extent such
amount would otherwise be included in such consolidated net income.
(p) "Exercise Notice" means a written notice delivered by the
Principal Members or the Company of the exercise of its right to purchase any
portion of the Covered Options pursuant to Section 5(c).
(q) "Grant Date" means the date of this Agreement as of which the
Options are granted hereby.
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<PAGE> 24
(r) "Initial Value Options" means, collectively, the Options granted
hereunder set forth under the heading "Initial Value Options" on the signature
page hereof, at an option exercise price equal to $___ per LLC Unit.
(s) "Involuntary Termination" means Termination by a New Employer
for any reason.
(t) "LLC Board" means the Board of Directors of the Parent LLC.
(u) "LLC Unit" means a unit representing a limited liability company
interest in the Parent LLC, the terms and conditions of which are subject to and
governed by the Amended and Restated Parent LLC Agreement, or the securities
into which such units shall have been converted or for which such units shall
have been exchanged in any merger, consolidation, reorganization, exchange of
securities, liquidation or dissolution.
(v) "Maximum EBITDA Target" means, with respect to the Performance
Options granted hereunder, cumulative EBITDA of $____ million, which shall be
the cumulative EBITDA that [insert name[s] of the applicable member or members
of the MGI/CERA Group] must achieve during the period commencing on the Grant
Date and ending on the Target Date for 100% of such Performance Options to vest
and become exercisable as of the Target Date.
(w) "MGI" means MCM Group, Inc., a Delaware corporation and a wholly
owned subsidiary of the Parent LLC, and any successor thereto.
(x) "MGI/CERA Group" means, collectively, the Parent LLC, the
Company, MGI and each of their respective Subsidiaries.
(y) "Minimum EBITDA Target" means, with respect to the Performance
Options granted hereunder, cumulative EBITDA of $____ million, which shall be
the minimum cumulative EBITDA that [insert name[s] of the applicable member or
members of the MGI/CERA Group] must achieve during the period commencing on the
Grant Date and ending on the Target Date for any portion of such Performance
Options to vest and become exercisable as of the Target Date.
(z) "New Employer" means the Participant's employer, or the parent
or a subsidiary of such employer, immediately following a Change of Control.
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<PAGE> 25
(aa) "Option" means the right granted pursuant to Section 2 hereof
to purchase one LLC Unit from the Company at the price and on the terms and
conditions specified in this Agreement and in the Plan.
(bb) "Parent LLC" has the meaning set forth in the first recital
hereto.
(cc) "Performance Option" means those Initial Value Options and
Premium Options (if any) granted hereunder which are not Service Options and
which vest and become exercisable in accordance with the provisions of Section
3(b) based upon the financial or operating performance of [insert name[s] of the
applicable member or members of the MGI/CERA Group].
(dd) "Permanent Disability" means a physical or mental disability
that prevents the performance by the Grantee of substantially all of his duties
lasting for a continuous period of six months or longer. The good faith judgment
of the Board as to the Grantee's Permanent Disability shall be final and shall
be based on the determination (evidenced by a written report or certificate) by
a physician selected by the Company or its insurers, and acceptable to the
Grantee or the Grantee's legal representative (such acceptance not to be
unreasonably withheld) to advise the Board; provided that, if the Grantee is, as
of the Determination Date, employed by any member of the MGI/CERA Group under an
effective employment that contains a different definition of Permanent
Disability, Disability or Disabled, the definition contained in such employment
agreement shall be substituted for the definition set forth above for all
purposes herein.
(ee) "Permitted Transferee" shall have the meaning assigned to such
term in Section 1.1 of the Amended and Restated Limited Liability Company
Agreement of Parent LLC, dated as of _____, 1997, as the same may be amended
from time to time, except that, for purposes of the Plan, the term Permitted
Transferee shall not include any transferee described in clause (v) of the
definition of such term.
(ff) "Plan" has the meaning set forth in the recitals hereto.
(gg) "Premium Options" means, collectively, Options granted
hereunder set forth under the heading "Premium Options" on the signature page
hereof, if any, at
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<PAGE> 26
an option exercise price of $______ per LLC Unit.
(hh) "Premium Option Percentage" means a fraction, expressed as a
percentage, the numerator of which is equal to the number of Premium Options (if
any) granted hereunder, and the denominator of which is equal to the aggregate
number of Options granted hereunder.
(ii) "Principal Member" means each of the C&D Fund, Daniel H.
Yergin, Joseph A. Stanislaw and James P. Rosenfield (the "Original Principal
Members") and each of their respective Permitted Transferees who are "accredited
investors" within the meaning of Rule 501(a) of Regulation D of the Securities
Act; provided, however, that a Principal Member shall cease to be a Principal
Member at such time as such person or entity shall not beneficially own at least
20% of the LLC Units that such Member (or the applicable Original Principal
Member in the case of a Permitted Transferee) beneficially owned on the
Effective Date, and, provided, further, that solely for purposes, under this
Section 1 (ii) and Section 5(c), of calculating the number of LLC Units
beneficially owned by a Principal Member who is an individual, such number of
LLC Units shall be deemed to include any LLC Units held in a trust the only
actual beneficiaries under which are such Principal Member and/or his brothers
and sisters (whether by whole or half blood), spouse, ancestors and lineal
descendants.
(jj) "Public Offering" means the first day as of which sales of LLC
Units are made to the public in the United States pursuant to an underwritten
public offering of such LLC Units led by one or more underwriters, at least one
of which is of nationally recognized standing.
(kk) "Retirement" means the Grantee's voluntary Termination at or
after age 60, provided that if the Grantee is, as of the Determination Date,
employed by any member of the MGI/CERA Group under an effective employment
agreement that contains a different definition of Retirement, the definition
contained in such employment agreement shall be substituted for the definition
set forth above for all purposes herein.
(ll) "Securities Act" means the Securities Act of 1933, as amended.
(mm) "Service Options" means [50%] of the Initial Value Options [and
50% of the Premium Options] granted hereunder, which become exercisable in
accordance with the
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<PAGE> 27
provisions of Section 3(a) based upon the Grantee's completion of service with
the applicable member or members of the MGI/CERA Group.
(nn) "Special Termination" means a Termination by reason of death,
Permanent Disability or Retirement or, in the event that the Grantee is, at the
time of such Termination, a party to an effective employment agreement with the
Company or any member of the MGI/CERA Group, by the Grantee for "good reason,"
as defined in such employment agreement.
(oo) "Subsidiary" means, with respect to any person, any corporation
or other entity a majority of whose outstanding voting securities or other
voting equity interests is owned, directly or indirectly, by such person.
(pp) "Target Date" means, with respect to Performance Options
granted hereunder, the third anniversary of the Grant Date.
(qq) "Termination" means the termination of the Grantee's employment
with the member of the MGI/CERA Group that employs the Grantee, or, in the case
of a Grantee who is not an employee of any member of the MGI/CERA Group, the
termination of such Grantee's provision of services to the member of the
MGI/CERA Group for which the Grantee was engaged to perform services.
(rr) "Transactions" has the meaning set forth in the first recital
hereof.
2. Confirmation of Grant; Option Price. The Company hereby evidences
and confirms the grant to the Grantee, effective as of the date hereof, of
[(a)] the Initial Value Options, at an option exercise price of $_____ per LLC
Unit[, and (b) the Premium Options, at an option exercise price of $______ per
LLC Unit]. This Agreement is subordinate to, and the terms and conditions of
the Options granted hereunder are subject to, the terms and conditions of the
Plan.
3. Exercisability.
(a) Service Options. Except as otherwise provided in this
Agreement, the Service Options shall become vested and exercisable, subject to
the provisions hereof, in [five] equal annual installments, on each of the first
[five] anniversaries of the Grant Date, subject in each such
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<PAGE> 28
case to the Grantee's continued employment with, or, if the Grantee is not an
employee of the Company or any Subsidiary of the Company, continued provision of
services to, any member of the MGI/CERA Group until such anniversary date.
(b) Performance Options. Except as otherwise provided in this
Agreement, the Performance Options shall become vested and exercisable based on
the financial performance of [insert name[s] of the applicable member or
members of the MGI/CERA Group] during the period from the Grant Date to the
Target Date as follows. Except as otherwise provided in this Agreement, the
Applicable Portion of the Performance Options shall vest and become exercisable
as of the Target Date, if and only if (i) [insert name[s] of the applicable
member or members of the MGI/CERA Group] shall have achieved at least the
Minimum EBITDA Target as of such Target Date and (ii) the Grantee shall have
been continuously employed by, or, if the Grantee is not an employee of the
Company or any Subsidiary of the Company, shall have continuously provided
services to, a member of the MGI/CERA Group from the Grant Date until the Target
Date; provided that, if the Grantee's employment or provision of services, as
applicable, is sooner terminated by reason of a Special Termination, then a
proportionate share of the Applicable Portion of the Performance Options (such
proportionate share to be determined by multiplying (x) the Applicable Portion,
if any, determined as of the last day of the calendar quarter ending prior to
the date of the Special Termination for which the applicable financial
information is available, on the basis of the cumulative EBITDA achieved as of
such date, by (y) the product of (A) the number of Performance Options
multiplied by (B) a fraction, the numerator of which is equal to the number of
days in the period commencing on the Grant Date and ending on the date of the
Special Termination and the denominator of which is equal to 1095) shall become
exercisable as of the date of such Special Termination. In the event of the
acceleration of the exercisability of any Performance Options by reason of a
Special Termination of the Grantee's employment or provision of services, as
applicable, prior to the Target Date, the Premium Option Percentage (if any) of
such accelerated Performance Options shall be Premium Options and the remaining
such accelerated Performance Options shall be Initial Value Options.
Notwithstanding the foregoing provisions of this paragraph (b),
subject to the continuous employment or provision of services, as applicable, of
the Grantee with a member of the MGI/CERA Group, Performance Options shall
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<PAGE> 29
become exercisable nine years following the Grant Date, regardless of whether
the EBITDA Target has been achieved.
(c) Conditions. The Board may accelerate the vesting and
exercisability of any Option, all Options or any class of Options, at any time
and from time to time. LLC Units subject to vested and exercisable Options may
be purchased, subject to the provisions hereof, at any time and from time to
time until the date one day prior to the date on which the related Option
terminates, provided that any such purchase shall be effected pursuant to and
subject to the provisions contained in a management LLC Unit subscription
agreement related to such LLC Unit. Any Options held by the Grantee as of the
date of Termination that have not become vested and exercisable on or prior to
the date of such Termination in accordance with Section 3(a) or 3(b) shall
terminate and be canceled immediately on such date.
4. Termination of Options.
(a) Normal Termination Date. Unless an earlier termination date
shall occur as specified in Section 4(b), the Options shall terminate on the
tenth anniversary of the date hereof (the "Normal Termination Date").
(b) Early Termination. In the event of a voluntary or involuntary
Termination for any reason whatsoever prior to the Normal Termination Date, any
then outstanding Options that have not become vested and exercisable on or
before the effective date of such Termination shall terminate on such effective
date. Any then outstanding Options that have become vested and exercisable on or
before the effective date of such Termination (such vested and exercisable
Options, the "Covered Options"), shall, subject to the provisions of Section
5(c), remain exercisable for whichever of the following periods is applicable,
and if not exercised within such period, shall terminate upon the expiration of
such period: (i) in the event of Special Termination, then Covered Options shall
remain exercisable solely until the first anniversary of the Special
Termination, and (ii) in the event of a Termination for any reason other than a
Special Termination or for Cause, the Covered Options shall be exercisable only
during the 60-day period beginning on the earlier of (x) the expiration of the
Second Purchase Period (as defined in Section 5(c)(i)) and (y) receipt by the
Grantee of written notice from the Company that the Company and the Principal
Members do not intend to exercise their respective rights to purchase all of the
Covered Options pursuant to Sec-
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<PAGE> 30
tion 5(c)(i), provided that in no event shall any Options be or remain
exercisable on or after the Normal Termination Date. Notwithstanding anything
else contained in this Agreement, in the event of a Termination for Cause, then
all Options (whether or not then vested or exercisable) shall terminate and be
canceled immediately upon such termination. Nothing in this Agreement shall be
deemed to confer on the Grantee any right to continue in the employ of, or to
provide services to, as the case may be, any member of the MGI/CERA Group, or to
interfere with or limit in any way the right of any member of the MGI/CERA Group
to terminate such employment or provision of services, as applicable, at any
time.
5. Restrictions on Exercise; Non-Transferability of Options;
Repurchase of Options.
(a) Restrictions on Exercise. The Options may be exercised only with
respect to full LLC Units. No fractional LLC Unit shall be issued.
Notwithstanding any other provision of this Agreement, the Options may not be
exercised in whole or in part, and no certificates or other documents
representing LLC Units shall be delivered, (i) unless the provisions of Section
6 have been complied with and all requisite approvals and consents of any
governmental authority of any kind having jurisdiction over the exercise of
options shall have been secured, (ii) unless the purchase of the LLC Units upon
the exercise of the Options shall be exempt from registration under applicable
U.S. federal and state securities laws, and applicable non-U.S. securities laws,
or the LLC Units shall have been registered under such laws, (iii) unless all
applicable U.S. federal, state and local and non-U.S. tax withholding
requirements shall have been satisfied, and (iv) if such exercise would result
in a violation of the terms or provisions of or a default or an event of default
under any of the Financing Agreements (as such term is defined in Section 10).
The Company shall use commercially reasonable efforts to obtain the consents and
approvals referred to in clause (i) of the preceding sentence and, if
applicable, to obtain the consent of the parties to the Financing Agreements
referred to in clause (iv) of the preceding sentence so as to permit the Options
to be exercised.
(b) Non-Transferability of Options. The Options held by the Grantee
may be exercised only by the Grantee or by his estate. The Options are not
assignable or transferable, in whole or in part, and may not, directly or
indirectly, be offered, transferred, sold, pledged,
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<PAGE> 31
assigned, alienated, hypothecated or otherwise disposed of or encumbered
(including without limitation by gift, operation of law or otherwise), other
than (i) by the Grantee to the Company or the Principal Members pursuant to
Section 5(c) below, or (ii) by will or by the laws of descent and distribution
to the estate of the Grantee upon his death, provided that the deceased
Grantee's beneficiary or the representative of his estate shall acknowledge and
agree in writing, in a form reasonably acceptable to the Company, to be bound by
the provisions of this Agreement and the Plan as if such beneficiary or the
estate were the Grantee.
(c) Repurchase of Options on Termination of Employment.
(i) Termination of Employment. In the event of a Termination for any
reason, the Company shall have the right to purchase all of the Covered
Options, and shall have 60 days from the date of the Grantee's Termination
(the "First Purchase Period"), during which to deliver an Exercise Notice
to the Grantee (or if the Termination resulted from the Grantee's death,
his estate) of its election to exercise such right to purchase all or any
of such Covered Options. Thereafter, if, as of the end of the First
Purchase Period, the Grantee has received Exercise Notices with respect to
fewer than all of the Covered Options, then the Company shall forward to
the Principal Members a written notice setting forth the number of Covered
Options that the Company shall have elected not to purchase, and the
Principal Members shall have the right to purchase all or any portion of
the Covered Options that have not been purchased by the Company and shall
have until the expiration of the earlier of (x) 60 days following the end
of the First Purchase Period, or (y) 60 days from the date of receipt by
the Principal Members of written notice that the Company does not intend
to exercise such right in full (the "Second Purchase Period") to deliver
an Exercise Notice to the Grantee (or his estate) (with a copy to the
Company) of their election to purchase a specified number of the Covered
Options; provided, that during the first thirty days of the Second
Purchase Period, each Principal Member shall have the right to elect to
purchase from the Grantee only up to its or his pro rata portion
(determined as of the date of the Grantee's Termination and on a partially
diluted basis taking into account only such options to purchase LLC Units
as are then exercisable and held by the
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<PAGE> 32
applicable Principal Member) of such Covered Options; provided,
further, that if, during the first 30 days of the Second Purchase Period,
the Company has not received Election Notices from the Principal Members
indicating that the Principal Members, in the aggregate, have elected to
purchase all of such Covered Options, then the Company shall send a
follow-up written notice to each Principal Member from whom the Company
has received an Election Notice as to all of its or his pro rata portion
of the Covered Options in the first 30-day period, which follow-up notice
shall state the number of Covered Options as to which elections to
purchase have not been made, and during the remainder of the Second
Purchase Period, each such Principal Member shall have the right to
purchase a portion of the remainder of such Covered Options in an amount
equal to either (i) the product of (x) the aggregate number of such
remaining Covered Options and (y) a fraction, the numerator of which shall
be the number of LLC Units held by such Principal Member (on a partially
diluted basis taking into account only such options to purchase LLC Units
as are then exercisable and held by such Principal Member) as of the date
of the Exercise Notice and the denominator of which shall be the aggregate
number of LLC Units then held by each Principal Member that had elected to
purchase all of its or his pro rata portion of such Covered Options (on a
partially diluted basis taking into account only such options to purchase
LLC Units as are then exercisable and held by any such Principal Member)
or (ii) such other amount as shall be agreed upon by all such Principal
Members.
If the rights to purchase the Covered Options granted in this
subsection are not exercised in full as provided herein, the Grantee (or his
estate) shall be entitled to retain the Covered Options that will not be so
repurchased, subject to all of the provisions of this Agreement, including,
without limitation, Section 4(b).
(ii) Purchase Price, etc. All purchases pursuant to this Section 5(c)
by the Company or the Principal Members shall be for a purchase price and
shall be effected in the manner prescribed by Sections 5(f), (g), and (h).
(d) Notice of Termination. The Company shall give written notice of
any Termination to each Principal Member, except that if such Termination (if
other than by
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<PAGE> 33
reason of death) is by the Grantee, the Grantee shall give written notice of
such Termination to the Company and the Company shall give written notice of
such Termination to each Principal Member.
(e) Public Offering. In the event of a Public Offering, neither the
Company nor the Principal Members shall have any rights to purchase the Covered
Options pursuant to this Section 5, and this Section 5 shall not apply to a sale
as part of a Public Offering or at any time thereafter.
(f) Purchase Price. Subject to Section 10(c), the purchase price to
be paid to the Grantee (or his estate) for each Covered Option (the "Purchase
Price") shall be equal to the excess, if any, of (A) the fair market value of an
LLC Unit (the "Fair Market Value") as of the Determination Date over (B) the
exercise price for such LLC Unit under the related Covered Option. Whenever
determination of the Fair Market Value of the LLC Units is required by this
Agreement, such Fair Market Value shall be such amount as is determined in good
faith by the LLC Board. In making a determination of Fair Market Value, the LLC
Board shall give due consideration to such factors as it deems appropriate,
including, without limitation, the earnings and certain other financial and
operating information of the MGI/CERA Group in recent periods, the potential
value of the MGI/CERA Group as a whole, the future prospects of the MGI/CERA
Group and the industries in which its members compete, the history and
management of the MGI/CERA Group, the general condition of the securities
markets, the fair market value of securities of companies engaged in businesses
similar to those of the MGI/CERA Group and the Applicable LLC Unit Valuation, as
defined below. The determination of Fair Market Value will not give effect to
any restrictions on transfer of the LLC Units or the fact that such LLC Units
would represent a minority interest in the Parent LLC. For purposes of this
Agreement, the term "Applicable LLC Unit Valuation" shall mean the annual
valuation of the LLC Units as of the last day of the last fiscal year of the
Parent LLC ending prior to the Determination Date performed by an independent
valuation firm chosen by the LLC Board, except that (i) in the case of a
Determination Date occurring on or after the Effective Date but prior to the
first day of the fourth fiscal quarter of the Parent LLC's fiscal year ending on
June 30, 1998, the term "Applicable LLC Unit Valuation" shall mean the value per
LLC Unit as of Effective Date as determined pursuant to Section 1.8 of the
Merger and Exchange Agreement, and (ii) in the case of a Determination
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<PAGE> 34
Date occurring during the fourth fiscal quarter of any fiscal year of the Parent
LLC beginning with the fourth quarter of the fiscal year ending on June 30, 1998
of the Parent LLC, the term "Applicable LLC Unit Valuation" shall mean the
annual valuation of the LLC Units performed as of the last day of such fourth
fiscal quarter by an independent valuation firm chosen by the LLC Board. The
Fair Market Value as determined in good faith by the LLC Board and in the
absence of fraud shall be binding and conclusive upon all parties hereto. If the
Parent LLC at any time subdivides (by any securities split, securities dividend
or otherwise) the LLC Units into a greater number of units, or combines (by
reverse securities split or otherwise) the LLC Units into a smaller number of
units, the Purchase Price shall be appropriately adjusted to reflect such
subdivision or combination.
(g) Closing of Purchase; Payment of Purchase Price. Subject to
Section 10, the closing of a purchase pursuant to this Section 5 shall take
place at the principal office of the Company on the tenth business day following
the date as of which the Grantee shall have received one or more Exercise
Notices that, collectively, provide for the exercise of elections by the Company
and/or the Principal Members with respect to any of the Covered Options. At the
closing, (i) subject to the proviso below, the Company and, if applicable, the
Principal Members that have submitted an Exercise Notice to purchase any Covered
Options (such Principal Members, the "Applicable Principal Members") shall pay
to the Grantee (or his estate) the Purchase Price for the Covered Options by
delivery of a check for such Purchase Price payable to the order of the Grantee
(or his estate) and (ii) the Grantee (or his estate) shall deliver to the
Company and/or the Applicable Principal Members, as the case may be, such
instruments as the Company or any such Applicable Principal Member may
reasonably request signed by the Grantee (or his estate); provided, however,
that if the Determination Date occurs during the first or last fiscal quarter of
any fiscal year of the Company, the Company and each Applicable Principal Member
may defer the payment of a portion of the Purchase Price payable by it until the
tenth business day following receipt by the Company of the Applicable LLC Unit
Valuation (such tenth business day, the "Deferred Payment Date"). In the event
of any such deferral by the Company or any Applicable Principal Member, (i) at
the closing of the purchase of the Covered Options, the Company and each such
Applicable Principal Member shall pay to the Grantee (or his estate) an amount
(the "First Installment Amount") equal to 80% of the excess of (A) the
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<PAGE> 35
Fair Market Value of the LLC Units which may be purchased upon exercise of the
Covered Options purchased by the Company or such Applicable Principal Member,
determined pursuant to Section 5(f) hereof on the basis of the most recent
available valuation of the LLC Units, over (B) the aggregate exercise price of
such Covered Options, and (ii) no later than the Deferred Payment Date, the
Company and each such Applicable Principal Member shall pay an additional amount
to the Grantee (or his estate) equal to the excess, if any, of (A) the sum of
(1) the Purchase Price for the Covered Options purchased by the Company or such
Applicable Principal Member, as the case may be, and (2) an amount calculated by
multiplying the First Installment Amount by a percentage equal to the average
annual cost to the MGI/CERA Group of its bank indebtedness obligations
outstanding during the period that payment of a portion of such Purchase Price
is delayed hereunder or, if there are no such obligations outstanding, one
percentage point greater than the average annual prime rate charged during such
period by The Chase Manhattan Bank or such other nationally recognized bank
designated by the Company, over (B) the First Installment Amount.
(h) Application of the Purchase Price to Certain Loans. The Grantee
agrees that the Company and the Applicable Principal Members shall be entitled
to apply any amounts to be paid by any such person to repurchase any Covered
Options pursuant to this Section 5 to discharge any indebtedness of the Grantee
to any member of the MGI/CERA Group, or indebtedness that is guaranteed by any
member of the MGI/CERA Group, including, but not limited to, any indebtedness of
the Grantee incurred to purchase any LLC Units.
(i) Withholding. Whenever LLC Units are to be issued pursuant to any
Options, the Company may require the recipient of the LLC Units to remit to the
Company an amount sufficient to satisfy any applicable U.S. federal, state and
local, and non-U.S. tax withholding requirements. In the event any cash is paid
to the Grantee or his estate or beneficiary pursuant to this Section 5, the
Company shall have the right to withhold and remit to the Company an amount from
such payment sufficient to satisfy any applicable U.S. federal, state and local
and non-U.S. tax withholding requirements.
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<PAGE> 36
6. Manner of Exercise. To the extent that the Options shall have
become and remain vested and exercisable as provided in Section 3 and subject to
such reasonable administrative regulations as the Board or the Committee may
have adopted, such Options may be exercised, in whole or in part, by notice to
the Secretary of the Company in writing given 15 business days prior to the date
on which the Grantee will so exercise any of the Options (the "Exercise Date"),
specifying the number of LLC Units with respect to which the Options are being
exercised (the "Exercise Units") and the Exercise Date. On or before the
Exercise Date, the Company and the Grantee shall enter into a management LLC
Unit subscription agreement, substantially in the form attached to the Plan as
Exhibit B, or in such other form as may be agreed upon by the Company and the
Grantee, in consultation with the LLC Board, setting forth certain rights and
obligations of the Company, the Principal Members and the Grantee with respect
to such Units. In accordance with such agreement, (a) on or before the Exercise
Date, the Grantee shall deliver to the Company full payment for the Exercise
Units in United States dollars in cash, or cash equivalent satisfactory to the
Company, and in an amount equal to the aggregate option exercise price for the
Exercise Units and (b) on the Exercise Date, the Company shall deliver to the
Grantee a certificate or certificates or other documents representing the
Exercise Units, issued in the name of the Grantee. The Company may require the
Grantee to furnish or execute such other documents as the Company or the Parent
LLC shall reasonably deem necessary (i) to evidence such exercise, (ii) to
determine whether registration is then required under the Securities Act, and
(iii) to comply with or satisfy the requirements of the Securities Act,
applicable state or non-U.S. securities laws or any other law.
If so determined by the Board in its sole discretion at or after the
Grant Date, the exercise price of any Exercise Units exercised after there has
been a Public Offering, may be paid in the form of LLC Units that have been
owned by the Grantee for at least six months in full or partial payment of the
Exercise Price for any Exercise Units.
7. Grantee's Representations, Warranties and Covenants.
(a) Investment Intention. The Grantee represents and warrants that
the Options have been, and any Exercise Units will be, acquired by him solely
for his own account
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<PAGE> 37
for investment and not with a view to or for sale in connection with any
distribution thereof. The Grantee agrees that he will not, directly or
indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of
any of the Options or Exercise Units (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of any of the Options or Exercise Units),
except in compliance with the Securities Act and the rules and regulations of
the Securities and Exchange Commission (the "Commission") thereunder, and in
compliance with applicable state and foreign securities or "blue sky" laws. The
Grantee further understands, acknowledges, and agrees that none of the Exercise
Units may be transferred, sold, pledged, hypothecated, or otherwise disposed of
unless the provisions of the related management LLC Unit subscription agreement
and the Amended and Restated Parent LLC Agreement shall have been complied with
or have expired.
(b) Legend. The Grantee acknowledges that any certificate or other
documents representing the Exercise Units shall bear an appropriate legend,
which will include, without limitation, the following language:
"THE LLC UNITS REPRESENTED HEREBY ARE ENTITLED TO THE BENEFITS OF
AND ARE BOUND BY THE OBLIGATIONS, AND ARE SUBJECT TO THE TRANSFER
RESTRICTIONS, HOLDBACK AND OTHER PROVISIONS OF A MANAGEMENT LLC UNIT
SUBSCRIPTION AGREEMENT, DATED AS OF _____, 1997, AS THE SAME MAY BE
AMENDED, SUPPLEMENTED, MODIFIED OR WAIVED FROM TIME TO TIME (THE
"SUBSCRIPTION AGREEMENT"), AND THE AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF GLOBAL DECISIONS
GROUP LLC ("PARENT LLC"), DATED AS OF _____, 1997, AS SUCH AGREEMENT
MAY BE AMENDED, SUPPLEMENTED OR MODIFIED FROM TIME TO TIME (THE "LLC
AGREEMENT"), AND NEITHER THIS CERTIFICATE NOR THE LLC UNITS
REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH SUBSCRIPTION AGREEMENT AND
LLC AGREEMENT, COPIES OF WHICH AGREEMENTS ARE ON FILE WITH THE
SECRETARY OF PARENT LLC.
"THE LLC UNITS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE OR FOREIGN
SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) (A) SUCH
DISPOSITION IS PURSUANT TO AN EFFECTIVE
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
(B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO PARENT LLC AN OPINION
OF COUNSEL, WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE PARENT LLC, TO THE EFFECT THAT SUCH DISPOSITION
IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF SUCH ACT, OR (C) A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION,
REASONABLY SATISFACTORY TO COUNSEL FOR PARENT LLC, SHALL HAVE BEEN
OBTAINED WITH RESPECT TO SUCH DISPOSITION AND (ii) SUCH DISPOSITION
IS PURSUANT TO REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION THEREFROM."
(c) Securities Law Matters. The Grantee acknowledges receipt of
advice from the Company that (i) the Exercise Units will not be registered
under the Securities Act or any state or foreign securities or "blue sky" laws,
(ii) it is not anticipated that there will be any public market for the Exercise
Units, (iii) the Exercise Units must be held indefinitely and the Grantee must
continue to bear the economic risk of the investment in the Exercise Units
unless the Exercise Units are subsequently registered under the Securities Act
and such state or foreign laws or an exemption from registration is available,
(iv) Rule 144 under the Securities Act ("Rule 144") is not presently available
with respect to sales of securities of the Parent LLC and the Parent LLC has
made no covenant to make Rule 144 available, (v) when and if the Exercise Units
may be disposed of without registration in reliance upon Rule 144, such
disposition can generally be made only in limited amounts in accordance with the
terms and conditions of such Rule, (vi) except to the extent required by
applicable law, the Parent LLC does not plan to file reports with the Commission
or make information concerning the Parent LLC and any member of the MGI/CERA
Group publicly available, (vii) if the exemption afforded by Rule 144 is not
available, sales of the Exercise Units may be difficult to effect because of
the absence of public information concerning the Parent LLC and any other member
of the MGI/CERA Group, (viii) a restrictive legend in the form heretofore set
forth shall be placed on the certificates or other documents representing the
Exercise Units and (ix) a notation shall be made in the appropriate records of
the Parent LLC indicating that the Exercise Units are subject to restrictions on
transfer described in this Agreement and, if the Parent LLC should in the future
engage the services of a stock transfer agent, appropriate stop-transfer
restrictions will be issued to such transfer agent with respect to the Exercise
Units.
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(d) Compliance with Rule 144. If any of the Exercise Units are to be
disposed of in accordance with Rule 144 under the Securities Act, the Grantee
shall transmit to the Company and the Parent LLC an executed copy of Form 144
(if required by Rule 144) no later than the time such form is required to be
transmitted to the Commission for filing and such other documentation as the
Company or the Parent LLC may reasonably require to assure compliance with Rule
144 in connection with such disposition.
(e) Ability to Bear Risk. The Grantee covenants that he will not
exercise all or any portion of any of the Options unless (i) the financial
situation of the Grantee is such that he can afford to bear the economic risk of
holding the Exercise Units for an indefinite period and (ii) he can afford to
suffer the complete loss of his investment in the Exercise Units.
(f) Registration; Restrictions on Transfer; Holdback upon Public
Offering. In respect of any Exercise Units purchased upon exercise of any of the
Options, the Grantee, upon admission to the Parent LLC as a member of the Parent
LLC, shall be entitled to the rights and subject to the obligations created
under the Amended and Restated Parent LLC Agreement, to the extent set forth
therein. The Grantee shall also be subject to the restrictions on transfer
contained in a management LLC Unit subscription agreement entered into at the
time of the exercise of any Options hereunder. Further, the Grantee agrees that,
in the event that after the Effective Date, the Parent LLC files a registration
statement under the Securities Act with respect to an underwritten public
offering of LLC Units, the Grantee will not effect any public sale (including a
sale under Rule 144) or distribution of any LLC Units (other than as part of
such underwritten public offering) during the 20 days prior to and one year
after the effective date of such registration statement.
(g) Section 83(b) Election. The Grantee agrees that, within 20 days
after any Exercise Date, he shall give notice to the Company as to whether or
not he has made or will make an election pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, with respect to the Exercise Units
purchased on such date, and acknowledges that he will be solely responsible for
any and all tax liabilities payable by him in connection with his receipt of
the Exercise Units or attributable to his making or failing to make such an
election.
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8. Representations and Warranties of the Company. The Company
represents and warrants to the Grantee that (a) the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the Commonwealth of Massachusetts, and (b) this Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
legally binding obligation of the Company enforceable against the Company in
accordance with its terms.
9. Change of Control.
(a) Accelerated Exercisability and Payment. Unless the Board shall
otherwise determine in the manner set forth in Section 9(c), [(i)] in the event
of a Change of Control with respect to the Parent LLC or the Company, each
Service Option (whether or not then vested and exercisable), each Performance
Option, if any, that shall have become vested and exercisable prior to such
Change of Control and the Applicable Portion of the Performance Options, if any,
determined as provided in Section 9(b) below, [and (ii) in the event of a Change
of Control solely with respect to MGI, each Performance Option, if any, that
shall have become vested and exercisable prior to such Change of Control and the
Applicable Portion of the Performance Options, if any, that shall not have
become vested and exercisable prior to such Change of Control,]* shall be
canceled in exchange for a payment in cash of an amount equal to the excess, if
any, of the Change of Control Price over the exercise price for such Option.
Such payment shall be made within 30 days following the closing of the
transaction constituting the relevant Change of Control. Subject to Section 9(c)
below, all other Performance Options then outstanding shall be canceled and
forfeited effective as of the closing of such transaction.
(b) Determination of Exercisable Performance Options. For purposes
of Section 9(a), the Applicable Portion of the Performance Options that shall be
canceled in exchange for the payment described in Section 9(a) shall be
determined on the basis of the cumulative EBITDA achieved during the period from
the Grant Date to the last day of the most recent calendar quarter ending prior
to the date of the
- --------
* [Explanatory note: applies only to Performance Options (if any)
the vesting of which is based in whole or in part upon the
performance of MGI and/or its Subsidiaries.]
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consummation of the transaction constituting the relevant Change of Control for
which the applicable financial information is available.
(c) Alternative Options. Notwithstanding Sections 9(a) and 9(b), no
cancellation, acceleration of exercisability, vesting or cash settlement or
other payment shall occur with respect to any Option as a result of the
occurrence of the applicable Change of Control if the Board reasonably
determines in good faith, prior to the occurrence of such Change of Control,
that such Option shall be honored or assumed, or new rights substituted therefor
(such honored, assumed or substituted Option being hereinafter referred to as an
"Alternative Option") by the New Employer, provided that any such Alternative
Option must:
(i) provide the Grantee with rights and entitlements substantially
equivalent to or better than the material rights, terms and
conditions applicable under such Option, including, but not
limited to, an identical or better exercise and vesting
schedule and identical or better timing and methods of
payment;
(ii) have substantially equivalent economic value to such Option
(determined at the time of the applicable Change of Control
and taking into account any payment that may be made to the
Grantee in respect of such Option); and
(iii) have terms and conditions that provide that in the event that
the Grantee suffers an Involuntary Termination within two
years following a Change of Control [with respect to the
Parent LLC or the Company in the case of a Service Option or
with respect to the Parent LLC, the Company or MGI in the case
of a Performance Option]:*
(1) any conditions to the Grantee's rights under, or any
restrictions on transfer or exercisability applicable
to, each
- --------
* [Explanatory note: the language shown in brackets is to be included
only in Option Agreements pursuant to which MGI Performance Options
are granted.]
23
<PAGE> 42
such Alternative Option shall be waived or shall
lapse, as the case may be; or
(2) the Grantee shall have the right to surrender such
Alternative Option within 30 days following such
Termination in exchange for a payment in cash
equal to the excess of the Fair Market Value of
the securities subject to the Alternative Option
over the price, if any, that the Grantee would be
required to pay to exercise such Alternative
Option.
10. Certain Restrictions on Repurchases.
(a) Financing Agreements, etc. Notwithstanding any other provision
of this Agreement, the Company shall not be permitted to repurchase any Covered
Options from the Grantee if (i) such repurchase would result in a violation of
the terms or provisions of, or result in a default or an event of default under,
any financing or security agreement or document entered into in connection with
the Transactions or the operations of the MGI/CERA Group from time to time (such
agreements and documents, as each may be amended, modified or supplemented from
time to time, are referred to herein as the "Financing Agreements"), in each
case as the same may be amended, modified or supplemented from time to time,
(ii) such repurchase would violate any of the terms or provisions of the
Certificate of Incorporation of the Company or the Amended and Restated Parent
LLC Agreement, or (iii) the Company has no funds legally available therefor
under applicable Massachusetts law.
(b) Delay of Repurchase. In the event that a repurchase by the
Company otherwise permitted under Section 5(c) is prevented solely by the terms
of Section 10(a), (i) such repurchase will be postponed and will take place
without the application of further conditions or impediments (other than as set
forth in Section 5 hereof or in this Section 10) at the first opportunity
thereafter when such repurchase will not result in any default, event of default
or violation under any of the Financing Agreements or in a violation of any term
or provision of the Certificate of Incorporation of the Company or the Amended
and Restated Parent LLC Agreement and (ii) such repurchase obligation shall rank
against other similar repurchase rights with respect to LLC Units or options to
purchase LLC Units according to priority in time of the effective date of the
Termination, provided that any such repurchase right as to
24
<PAGE> 43
which a common date determines priority shall be of equal priority and shall
share pro rata in any repurchase payments made pursuant to clause (i) above.
(c) Purchase Price Adjustment. In the event that a repurchase of any
Covered Options by the Company from the Grantee is delayed pursuant to this
Section 10, the purchase price for such Covered Options when the repurchase of
such Covered Options eventually takes place as contemplated by Section 10(b)
shall be the sum of (i) the Purchase Price of such Covered Option determined in
accordance with Section 5(f) at the time that the repurchase of such Option
would have occurred but for the operation of this Section 10, plus (ii) an
amount equal to interest on such Purchase Price for the period from the date on
which the completion of the repurchase would have taken place but for the
operation of this Section 10 to the date on which such repurchase actually takes
place (the "Delay Period") at a rate equal to the weighted average cost of the
MGI/CERA Group's bank indebtedness obligations outstanding during the Delay
Period or, if there are no such obligations outstanding, one percentage point
greater than the average prime rate charged during such period by The Chase
Manhattan Bank or such other nationally recognized bank designated by the
Company.
11. No Rights as Member. The Grantee shall have no voting or other
rights as a member of the Parent LLC with respect to any LLC Units covered by
the Options until the exercise of the Options, the issuance of a certificate or
certificates or other documents to him for such LLC Units and the admission of
the Grantee to the Parent LLC as a member of the Parent LLC. No adjustment shall
be made for distributions or other rights for which the record date is prior to
the issuance of such certificate or certificates or other documents.
12. Capital Adjustments. The number and price of the LLC Units
covered by the Options shall be proportionately adjusted to reflect any
securities dividend, securities split, or securities combination affecting
outstanding LLC Units or any recapitalization of the Parent LLC. Subject to any
required action by the members of the Parent LLC, in any merger, consolidation,
reorganization, conversion, exchange of securities, liquidation, or dissolution,
the Options shall pertain to the securities and other property, if any, that a
holder of the number of LLC Units covered by the Options would have been
entitled to receive in connection with such event.
25
<PAGE> 44
13. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, the Principal Members
or the Grantee, as the case may be, at the following addresses or to such other
address as the Company, the Principal Members or the Grantee, as the case may
be, shall specify by notice to the others:
(i) if to the Company, to it at:
Cambridge Energy Research Associates, Inc.
Charles Square
20 University Road
Cambridge, Massachusetts 02138
Attention: President
(ii) if to a Principal Member, to it or him at the address
specified for it or him on the books and records of the Parent
LLC
(iii) if to the Grantee, to the Grantee at the address set forth on
the signature page hereof
(iv) if to the Parent LLC, to:
Global Decisions Group LLC
20 University Road
Cambridge, Massachusetts 02138
Attention: _____________
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof. Copies of any notice or other communication given under this
Agreement shall also be given to:
26
<PAGE> 45
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Attention: Donald J. Gogel
Brera Capital Partners, LLC
590 Madison Avenue, 18th Floor
New York, New York 10022
Attention: Alberto Cribiore
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Steven R. Gross, Esq.
and
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: Paul P. Brountas, Esq.
The Parent LLC also shall be given a copy of any notice or other communication
between the Grantee and the Company under this Agreement at its address as set
forth above.
(b) Binding Effect; Benefits. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Except as provided in Section 5, nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy, or claim under or in respect of
any agreement or any provision contained herein.
(c) Waiver; Amendment.
(i) Waiver. Any party hereto may by written notice to the other
parties (A) extend the time for the performance of any of the obligations
or other actions of the other parties under this Agreement, (B) waive
compliance with any of the conditions or covenants of the other parties
contained in this Agreement and (C) waive or modify performance of any of
the obliga-
27
<PAGE> 46
tions of the other parties under this Agreement, provided that any waiver
of the provisions of Section 5 must be consented to by each of the
Principal Members. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute
a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any preceding or
succeeding breach and no failure by a party to exercise any right or
privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
(ii) Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Grantee and the
Company, provided that any amendment adversely affecting the rights of any
Principal Member hereunder must be consented to by such Principal Member.
The parties hereto acknowledge that the Company's consent to an amendment
or modification of this Agreement is subject to the terms and provisions
of the Financing Agreements.
(d) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Grantee without the prior written consent of
the other parties. The C&D Fund may assign from time to time all or any portion
of its rights under Section 5 to one or more of its affiliates or affiliates of
Clayton, Dubilier & Rice, Inc., and each other Principal Member may assign from
time to time all or any portion of his rights under Section 5 to one or more of
his Permitted Transferees.
(e) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, REGARDLESS OF THE
LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICT OF LAWS.
(f) Section and Other Headings, etc. The section and other headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or
28
<PAGE> 47
interpretation of this Agreement. In this Agreement all references to "dollars"
or "$" are to United States dollars.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
29
<PAGE> 48
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement as of the date first above written.
CAMBRIDGE ENERGY RESEARCH
ASSOCIATES, INC.
By:
----------------------------
Name:
Title:
THE GRANTEE:
[NAME OF GRANTEE]
By:
----------------------------
Name:
Attorney-in-fact
Address of the Grantee:
Address
Initial Value Options [Premium Options
Total Number of --------------------- -----------------
LLC Units for the of which __ are of which __ are
Purchase of Which Service Options Service Options]
Options have Been
Granted:
30
<PAGE> 49
Draft -- July 31, 1997
EXHIBIT B
FORM OF
MANAGEMENT LLC UNIT SUBSCRIPTION AGREEMENT
MANAGEMENT LLC UNIT SUBSCRIPTION AGREEMENT, dated as of
____________, between Cambridge Energy Research Associates, Inc., a
Massachusetts corporation (the "Company"), and the Purchaser whose name appears
on the signature page hereof (the "Purchaser").
W I T N E S S E T H:
WHEREAS, on _________, 1997, Global Decisions Group LLC, a Delaware
limited liability company (together with any successor thereto, "Parent LLC"),
acquired (x) all of the outstanding capital stock of MCM Group, Inc., a Delaware
corporation ("MGI" and, together with Parent LLC, the Company and each of their
respective subsidiaries, the "MGI/CERA Group"), pursuant to the merger of GDG
Merger Corporation, a Delaware corporation and a wholly owned subsidiary of
Parent LLC, with and into MGI, with MGI as the surviving corporation and (y) all
of the outstanding capital stock of the Company and certain of the limited
partnership interests of Cambridge Energy Research Associates Limited
Partnership, a Delaware limited partnership, pursuant to the exchange of such
capital stock and such partnership interests for LLC Units (as defined in the
Plan) and certain other contingent interests in Parent LLC (the foregoing (x)
and (y), collectively, the "Transactions");
WHEREAS, in connection with the Transactions, the Board of Directors
of the Company (the "Board") adopted the Cambridge Energy Research Associates,
Inc. LLC Unit Option Plan (as the same may be amended, supplemented, waived or
otherwise modified from time to time, the "Plan");
WHEREAS, pursuant to the terms of the Plan, the Company and the
Purchaser entered into a Management LLC Unit Option Agreement, dated as of
__________ (the "Option Agreement"), evidencing and confirming the grant by the
Company to the Purchaser of options to purchase ______LLC Units (the "Options")
at a price of $____ per LLC Unit; and
WHEREAS, the Purchaser has exercised Options to purchase ____ LLC
Units (the "Exercise LLC Units") pursuant to Section 6 of the Option Agreement,
and the Company and
<PAGE> 50
the Purchaser desire to enter into this Agreement in order to provide for the
terms and conditions of the purchase of the Exercise Units by the Purchaser;
NOW, THEREFORE, to implement the foregoing and in consideration of
the mutual agreements contained herein, the parties hereto hereby agree as
follows:
1. Purchase and Sale of Exercise LLC Units.
(a) Purchase of Exercise LLC Units. Subject to all of the terms and
conditions of this Agreement, the Purchaser hereby subscribes for and shall
purchase, and the Company shall sell to the Purchaser, the Exercise LLC Units at
a purchase price of $________ per LLC Unit, at the Closing provided for in
Section 2(a) hereof. Notwithstanding anything in this Agreement to the contrary,
the Company shall have no obligation to sell any Exercise LLC Units to (i) any
person who will not be an employee or director of or a consultant to the Company
or a direct or indirect subsidiary of the Company immediately following the
Closing at which such LLC Units are to be sold or (ii) any person who is a
resident of a jurisdiction in which the sale of LLC Units to such person would
constitute a violation of the securities, "blue sky" or other laws of such
jurisdiction.
(b) Consideration. Subject to all of the terms and conditions of
this Agreement, the Purchaser shall deliver to the Company at the Closing
referred to in Section 2(a) hereof immediately available funds in an amount
equal to 100% of the aggregate purchase price set forth on the signature page
hereof.
(c) The Purchaser agrees to be bound by the Amended and Restated
Limited Liability Company Agreement, dated as of ____________ ___, 1997, of
Parent LLC, as such agreement may be amended, supplemented, waived or modified
from time to time (the "LLC Agreement"), and Purchaser's execution of this
Agreement also constitutes execution of a counterpart to the LLC Agreement.
2. Closing.
(a) Time and Place. Except as otherwise agreed by the Company and
the Purchaser, the closing (the "Closing") of the transaction contemplated by
this Agreement shall be held at the offices of Debevoise & Plimpton, 875
2
<PAGE> 51
Third Avenue, New York, New York at 10:00 a.m. (New York City time) on
____________.
(b) Delivery by the Company. At the Closing, the Company shall
deliver to the Purchaser a certificate registered in such Purchaser's name and
representing the Exercise LLC Units, which certificate shall bear the legends
set forth in Section 3(b).
(c) Delivery by the Purchaser. At the Closing the Purchaser shall
deliver to the Company the consideration referred to in Section 1(b) hereof.
3. Purchaser's Representations, Warranties and Covenants.
(a) Investment Intention. The Purchaser represents and warrants that
he is acquiring the Exercise LLC Units solely for his own account for investment
and not with a view to or for sale in connection with any distribution thereof.
The Purchaser agrees that he will not, directly or indirectly, offer, transfer,
sell, pledge, hypothecate or otherwise dispose of any of the Exercise LLC Units
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge of
any Exercise LLC Units), except in compliance with the Securities Act of 1933,
as amended (the "Securities Act"), and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder, and in
compliance with applicable state and foreign securities or "blue sky" laws. The
Purchaser further understands, acknowledges and agrees that none of the
Exercise LLC Units may be transferred, sold, pledged, hypothecated or otherwise
disposed of (i) unless the provisions of Sections 4 through 7 hereof, inclusive,
shall have been complied with or have expired, (ii) unless the provisions of the
Amended and Restated Limited Liability Company Agreement of Parent LLC, dated as
of ________, 1997, as such agreement may be amended, supplemented, waived or
otherwise modified from time to time (the "LLC Agreement"), have been complied
with or have expired, (iii) unless (A) such disposition is pursuant to an
effective registration statement under the Securities Act, (B) the Purchaser
shall have delivered to the Company an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to the Company, to the effect that such
disposition is exempt from the provisions of Section 5 of the Securities Act or
(C) a no-action letter from the Commission, reasonably satisfactory to the
Company, shall have been obtained with respect to such disposition and (iv)
unless such disposition is pursuant to registration
3
<PAGE> 52
under any applicable state securities laws or an exemption therefrom.
(b) Legends. The Purchaser acknowledges that the certificate or
certificates representing the Exercise LLC Units shall bear an appropriate
legend, which will include, without limitation, the following language:
"THE LLC UNITS REPRESENTED HEREBY ARE ENTITLED TO THE BENEFITS OF
AND ARE BOUND BY THE OBLIGATIONS, AND ARE SUBJECT TO THE TRANSFER
RESTRICTIONS, HOLDBACK AND OTHER PROVISIONS OF A MANAGEMENT LLC UNIT
SUBSCRIPTION AGREEMENT, DATED AS OF ________, 199_, AS THE SAME MAY
BE AMENDED, SUPPLEMENTED, MODIFIED OR WAIVED FROM TIME TO TIME (THE
"SUBSCRIPTION AGREEMENT") AND THE AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT OF GLOBAL DECISIONS GROUP LLC ("PARENT
LLC"), DATED AS OF _________, 1997, AS SUCH AGREEMENT MAY BE
AMENDED, SUPPLEMENTED OR MODIFIED FROM TIME TO TIME (THE "LLC
AGREEMENT"), AND NEITHER THIS CERTIFICATE NOR THE LLC UNITS
REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH SUBSCRIPTION AGREEMENT AND
LLC AGREEMENT, COPIES OF WHICH AGREEMENTS ARE ON FILE WITH THE
SECRETARY OF PARENT LLC."
"THE LLC UNITS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE OR FOREIGN
SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) (A) SUCH
DISPOSITION IS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (B) THE HOLDER HEREOF
SHALL HAVE DELIVERED TO PARENT LLC AN OPINION OF COUNSEL, WHICH
OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO PARENT LLC,
TO THE EFFECT THAT SUCH DISPOSITION IS EXEMPT FROM THE PROVISIONS OF
SECTION 5 OF SUCH ACT, OR (C) A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION, REASONABLY SATISFACTORY TO
COUNSEL FOR PARENT LLC, SHALL HAVE BEEN OBTAINED WITH RESPECT TO
SUCH DISPOSITION AND (ii) SUCH DISPOSITION IS PURSUANT TO
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM."
4
<PAGE> 53
(c) Securities Law Matters. The Purchaser acknowledges receipt of
advice from the Company that (i) the Exercise LLC Units have not been registered
under the Securities Act or any state or foreign securities or "blue sky" laws,
(ii) it is not anticipated that there will be any public market for the Exercise
LLC Units, (iii) the Exercise LLC Units must be held indefinitely and the
Purchaser must continue to bear the economic risk of the investment in the
Exercise LLC Units unless the Exercise LLC Units are subsequently registered
under the Securities Act and such state or foreign laws or an exemption from
registration is available, (iv) Rule 144 promulgated under the Securities Act
("Rule 144") is not presently available with respect to sales of securities of
Parent LLC and Parent LLC has made no covenant to make Rule 144 available, (v)
when and if the Exercise LLC Units may be disposed of without registration in
reliance upon Rule 144, such disposition can generally be made only in limited
amounts in accordance with the terms and conditions of such Rule, (vi) except to
the extent required by applicable law, Parent LLC does not plan to file reports
with the Commission or make information concerning Parent LLC or any of its
direct or indirect subsidiaries publicly available, (vii) if the exemption
afforded by Rule 144 is not available, sales of the Exercise LLC Units may be
difficult to effect because of the absence of public information concerning
Parent LLC, (viii) a restrictive legend in the form heretofore set forth shall
be placed on the certificates representing the Exercise LLC Units and (ix) a
notation shall be made in the appropriate records of Parent LLC indicating that
the Exercise LLC Units are subject to restrictions on transfer set forth in this
Agreement and, if Parent LLC should in the future engage the services of a stock
transfer agent, appropriate stop-transfer restrictions will be issued to such
transfer agent with respect to the Exercise LLC Units.
(d) Compliance with Rule 144. If any of the Exercise LLC Units are
to be disposed of in accordance with Rule 144, the Purchaser shall transmit to
the Company and Parent LLC an executed copy of Form 144 (if required by Rule
144) no later than the time such form is required to be transmitted to the
Commission for filing and such other documentation as the Company or Parent LLC
may reasonably require to assure compliance with Rule 144 in connection with
such disposition.
(e) Ability to Bear Risk. The Purchaser represents and warrants
that (i) the financial situation of the Purchaser is such that he can afford to
bear the economic
5
<PAGE> 54
risk of holding the Exercise LLC Units for an indefinite period and (ii) he can
afford to suffer the complete loss of his investment in the Exercise LLC Units.
(f) Questionnaire. The Purchaser agrees to furnish such documents
and comply with such reasonable requests of the Company or Parent LLC as may be
necessary to substantiate his status as a qualifying investor in connection with
the private offering of Exercise LLC Units to the Purchaser. The Purchaser
represents and warrants that all information contained in such documents and any
other written materials concerning the status of the Purchaser furnished by the
Purchaser to the Company and/or Parent LLC in connection with such requests will
be true, complete and correct in all material respects.
(g) Access to Information. The Purchaser represents and warrants
that (i) he has carefully reviewed the materials furnished to him in connection
with the transaction contemplated hereby, (ii) he has been granted the
opportunity to ask questions of, and receive answers from, representatives of
the Company and Parent LLC concerning the terms and conditions of the purchase
of the Exercise LLC Units and to obtain any additional information that he deems
necessary to verify the accuracy of the information contained in such materials
and (iii) his knowledge and experience in financial and business matters is such
that he is capable of evaluating the risks of the investment in the Exercise LLC
Units.
(h) Registration; Restrictions on Sale upon Public Offering. The
Purchaser shall be entitled to the rights and subject to the obligations created
under the LLC Agreement, to the extent provided therein. The Purchaser agrees
that, in the event that Parent LLC files a registration statement under the
Securities Act with respect to an underwritten public offering of any LLC Units,
the Purchaser will not effect any public sale (including a sale under Rule 144)
or distribution of any LLC Units (other than as part of such underwritten public
offering) during the 20 days prior to and one year after the effective date of
such registration statement.
(i) Section 83(b) Election. The Purchaser agrees that, within 20
days after the Closing, he shall give notice to the Company as to whether or not
he has made or will make an election pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended, with respect to the Exercise LLC Units
purchased at such Closing, and acknowledges that
6
<PAGE> 55
he will be solely responsible for any and all tax liabilities payable by him in
connection with his receipt of the Exercise LLC Units or attributable to his
making or failing to make such an election.
4. Restrictions on Disposition of Exercise LLC Units. Neither the
Purchaser nor any of his heirs or representatives shall sell, assign, transfer,
pledge or otherwise directly or indirectly dispose of or encumber any of the
Exercise LLC Units to or with any other person, firm or corporation (including,
without limitation, transfers to any other holder of LLC Units, dispositions by
gift, by will, by a corporation as a distribution in liquidation and by
operation of law other than a transfer of Exercise LLC Units by operation of law
to the estate of the Purchaser upon the death of the Purchaser, provided that
such estate shall be bound by all provisions of this Agreement and the LLC
Agreement), except as provided in Sections 5 and 6 hereof, and in the LLC
Agreement. The restrictions contained in this Section 4 (but not the
restrictions contained in the LLC Agreement which shall terminate only as
provided therein) shall terminate in the event that an underwritten public
offering of LLC Units (or the securities into which such units shall have been
converted or for which such units shall have been exchanged) of the Company led
by one or more underwriters at least one of which is of nationally recognized
standing (a "Public Offering") has been consummated and shall not apply to a
sale as part of a Public Offering or at any time thereafter.
5. Options Effective on Termination of Employment or Unforeseen
Personal Hardship of the Purchaser.
(a) Termination of Employment. If the Purchaser's employment with
or provision of services to the member or members of the MGI/CERA Group that
employs the Purchaser or has engaged the Purchaser to provide services, as
applicable, is terminated for any reason whatsoever the Company shall have an
option to purchase all or a portion of the Exercise LLC Units then held by the
Purchaser (or, if his employment or provision of services was terminated by his
death, his estate) and shall have 60 days from the date of the Purchaser's
termination (such 60-day period being hereinafter referred to as the "First
Option Period") during which to give notice in writing to the Purchaser (or his
estate) of its election to exercise or not to exercise such option, in whole or
in part. The Company hereby undertakes to use reasonable efforts to act as
promptly as practicable following such termination to make such election. If the
7
<PAGE> 56
Company fails to give notice that it intends to exercise such option within the
First Option Period or the Company gives notice that it intends to exercise such
option with respect to only a portion of the Exercise LLC Units, the Restricted
Holders (as such term is defined in the LLC Agreement) shall have the right to
purchase all or a portion of the Exercise LLC Units then held by the Purchaser
(or his estate) that will not be repurchased by the Company and shall have until
the expiration of the earlier of (x) 60 days following the end of the First
Option Period or (y) 60 days from the date of receipt by the Restricted Holders
of written notice that the Company does not intend to exercise such option or
intends to exercise such option with respect to only a portion of the Exercise
LLC Units (such 60-day period being hereinafter referred to as the "Second
Option Period"), to give notice in writing to the Purchaser (or his estate)
(with a copy to the Company) of the Restricted Holder's exercise of its option,
in whole or in part; provided, that, during the first 30 days of the Second
Option Period, each Restricted Holder shall have the right to elect to purchase
from the Purchaser only its or his pro rata portion (determined as of the date
of termination of the Purchaser's employment or provision of services, as
applicable, and taking into account only such options to purchase LLC Units as
are then exercisable and held by the applicable Restricted Holder) of such LLC
Units; and, provided, further, that if the Restricted Holders in the aggregate
do not elect to purchase all of such LLC Units during the first 30 days of the
Second Option Period, then the Company shall send a written notice to each
Restricted Holder who had elected to purchase all of its or his pro rata portion
of the LLC Units in the first 30-day period, which notice shall state the number
of Exercise LLC Units as to which elections have not been made, and during the
remainder of the Second Option Period, each such Restricted Holder shall have
the right to purchase a portion of the remainder of such LLC Units in an amount
equal to either (i) the product of (x) the aggregate number of such remaining
LLC Units and (y) a fraction, the numerator of which shall be the number of LLC
Units held by such Restricted Holder (on a partially diluted basis taking into
account only such options to purchase LLC Units as are then exercisable and
held by such Restricted Holder) as of the date of the Purchaser's termination
and the denominator of which shall be the aggregate number of LLC Units then
held by each Restricted Holder that had elected to purchase all of its or his
pro rata portion of such LLC Units (on a partially diluted basis taking into
account only such options to purchase LLC Units as are then exercisable and
8
<PAGE> 57
held by any such Restricted Holder) or (ii) such other amount as shall be
agreed upon by all such Restricted Holders. If the options of the Company and
the Restricted Holders to purchase the Exercise LLC Units pursuant to this
subsection are not exercised with respect to all of the Exercise LLC Units as
provided herein (other than as a result of Section 9 hereof), the Purchaser (or
his estate) shall be entitled to retain those Exercise LLC Units which will not
be so purchased, subject to all of the provisions of this Agreement. If the
Company and the Restricted Holders have failed to exercise their respective
options pursuant to this Section 5(a) with respect to all of the Exercise LLC
Units within the time periods specified herein, and if the Purchaser's
employment or provision of services with the member of the MGI/CERA Group that
employs the Purchaser or has engaged the Purchaser to perform services, as
applicable, is terminated (A) by such employer without Cause, (B) by the
Purchaser by Retirement at Normal Retirement Age, (C) by reason of the
Permanent Disability or death of the Purchaser or (D) if, as of the effective
date of such termination, the Purchaser is employed by any member of the
MCM/CERA Group under an effective Employment Agreement (the "Employment
Agreement"), between such member of the MCI/CERA Group and the Purchaser, by
the Purchaser for Good Reason (as such term is defined in the Employment
Agreement), then on notice from the Purchaser (or his estate) in writing and
delivered to the Company within 30 days following the end of the Second Option
Period, the Company shall purchase all (but not less than all) of the Exercise
LLC Units then held by the Purchaser (or his estate). All purchases pursuant to
this Section 5(a) by the Company or the Restricted Holders shall be for a
purchase price and in the manner prescribed by Section 6 hereof.
(b) Unforeseen Personal Hardship. In the event that the Purchaser,
while in the employment of or providing services to any member of the MGI/CERA
Group, experiences Unforeseen Personal Hardship, the Board will carefully
consider any request by the Purchaser that the Company repurchase the
Purchaser's LLC Units at a price determined in accordance with Section 6 hereof,
but the Company shall have no obligation to repurchase such LLC Units. The Board
shall consider such request with respect to Unforeseen Personal Hardship as soon
as practicable after receipt by the Company of a written request by the
Purchaser, such request to include sufficient details of the Purchaser's
Unforeseen Personal Hardship to permit the Board to review the request and the
circumstances in an informed manner.
9
<PAGE> 58
(c) Certain Definitions. As used in this Agreement the following
terms shall have the following meanings:
(i) "Cause" shall mean (A) the willful failure by the Purchaser to
perform substantially his duties as an employee of, or in connection with
his provision of services to, any member of the MGI/CERA Group (other than
any such failure due to physical or mental illness) after a demand for
substantial performance is delivered to the Purchaser by the executive to
whom the Purchaser reports or by the Board of Directors of the member of
the MGI/CERA Group by which he is employed or to which he provides
services, which notice identifies the manner in which such executive or
such Board, as the case may be, believes that the Purchaser has not
substantially performed his duties, (B) the Purchaser's engaging in
willful and serious misconduct that is or is expected to be injurious to
any member of the MGI/CERA Group, (C) the Purchaser's having been
convicted of, or entered a plea of guilty or nolo contendere to, a crime
that constitutes a felony, (D) the willful and material breach by the
Purchaser of any written covenant or agreement with any member of the
MGI/CERA Group not to disclose any information pertaining to the MGI/CERA
Group, not to compete or interfere with the MGI/CERA Group or with respect
to any take-along or similar covenants applicable to any LLC Units owned
by the Purchaser or (E) any violation by the Purchaser of any material
federal, state or foreign securities laws; provided that if the Purchaser
is, as of the date of determination, employed by any member of the
MGI/CERA Group under an effective employment agreement that contains a
different definition of Cause, the definition contained in such employment
agreement shall be substituted for the definition set forth above for all
purposes hereunder.
(ii) "Retirement at Normal Retirement Age" shall mean the Purchaser's
voluntary termination of employment from, or provision of services to, the
Company or other member of the MGI/CERA Group that employs the Purchaser
or has engaged the Purchaser to perform services, as applicable, at age 60
or later.
(iii) "Permanent Disability" shall mean a physical or mental disability
that prevents the performance by the Purchaser of substantially all of his
duties lasting for a continuous period of six months or longer. The good
faith judgment of the Board as to the
10
<PAGE> 59
Purchaser's Permanent Disability shall be final and shall be based on the
determination (evidenced by a written report or certificate) by a
physician selected by the Company or its insurers, and acceptable to the
Purchaser or the Purchaser's legal representative (such acceptance not to
be unreasonably withheld) to advise the Board; provided that if the
Purchaser is, as of the date of determination, employed by any member of
the MGI/CERA Group under an effective employment agreement that contains a
different definition of Permanent Disability, Disability or Disabled, the
definition contained in such employment shall be substituted for the
definition set forth above for all purposes herein.
(iv) "Permitted Transferee" shall have the meaning assigned to such
term in Section 1.1 of the LLC Agreement.
(v) "Principal Member" shall mean each of the C&D Fund, Daniel H.
Yergin, Joseph A. Stanislaw and James P. Rosenfield (the "Original
Principal Members") and each of their respective Permitted Transferees who
are "accredited investors" within the meaning of Rule 501(a) of Regulation
D of the Securities Act; provided, however, that a Principal Member shall
cease to be a Principal Member at such time as such person or entity shall
not beneficially own at least 20% of the LLC Units that such Member (or
the applicable Original Principal Member in the case of a Permitted
Transferee) beneficially owned on the Effective Date, and, provided,
further, that solely for purposes, under this
Section 5, of calculating the number of LLC Units beneficially owned by a
Principal Member who is an individual, such number of LLC Units shall be
deemed to include any LLC Units held in a trust the only actual
beneficiaries under which are such Principal Member and/or his brothers
and sisters (whether by whole or half blood), spouse, ancestors and lineal
descendants.
(vi) "Unforeseen Personal Hardship" shall mean financial hardship
arising from (x) extraordinary medical expenses or other expenses
directly related to illness or disability of the Purchaser, a member of
the Purchaser's immediate family or one of the Purchaser's parents or (y)
payments necessary or required to prevent the eviction of the Purchaser
from the Purchaser's principal residence or foreclosure on the mortgage on
that residence. The Board's reasoned and good faith
11
<PAGE> 60
determination of Unforeseen Personal Hardship shall be binding on the
Company and the Purchaser.
(d) Notice of Termination. The Company shall give written notice of
any termination of the Purchaser's employment with, or provision of services to,
any member of the MGI/CERA Group to the Principal Members, except that if such
termination (if other than as a result of death) is by the Purchaser, the
Purchaser shall give written notice of such termination to the Company and the
Company shall give written notice of such termination to the Principal Members.
(e) Public Offering. In the event that a Public Offering has been
consummated, none of the Company, the Principal Members or the Purchaser shall
have any rights to purchase or sell the Exercise LLC Units, as the case may be,
pursuant to this Section 5 and this Section 5 shall not apply to a sale as part
of a Public Offering.
6. Determination of the Purchase Price; Manner of Payment.
(a) Purchase Price. For the purposes of any purchase of the Exercise
LLC Units pursuant to Section 5, and subject to Section 9(c), the purchase price
per Exercise LLC Unit to be paid to the Purchaser (or his estate) for each
Exercise LLC Unit (the "Purchase Price") shall be equal to the fair market value
(the "Fair Market Value") of such LLC Unit as of the effective date of the
termination of employment or provision of services, whichever is applicable,
that gives rise to the right or obligation to repurchase or, in the case of a
repurchase as a result of Unforeseen Personal Hardship, as of the date such LLC
Units are repurchased (such date of termination or repurchase, as applicable,
the "Determination Date"); provided that if the Purchaser's employment or
provision of services is terminated by any member of the MGI/CERA Group for
Cause, the Purchase Price for such LLC Unit shall be the lesser of (i) the Fair
Market Value of such LLC Unit as of the effective date of the termination of
employment or provision of services, whichever is applicable, that gives rise to
the right or obligation to repurchase and (ii) the price at which the Purchaser
purchased such LLC Unit from the Company. Whenever determination of the Fair
Market Value of such LLC Units is required by this Agreement, such Fair Market
Value shall be such amount as is determined in good faith by the Board of the
Parent LLC (the "LLC Board"). In making a determination of Fair Market Value,
the LLC Board shall give due consideration to such factors as it deems
12
<PAGE> 61
appropriate, including, without limitation, the earnings and certain other
financial and operating information of Parent LLC and its subsidiaries in recent
periods, the potential value of Parent LLC and its subsidiaries as a whole, the
future prospects of Parent LLC and its subsidiaries and the industries in which
they compete, the history and management of Parent LLC and its subsidiaries, the
general condition of the securities markets, the fair market value of securities
of companies engaged in businesses similar to those of Parent LLC and its
subsidiaries and the Applicable LLC Unit Valuation (as defined below). The
determination of Fair Market Value will not give effect to any restrictions on
transfer of the Exercise LLC Units or the fact that such LLC Units would
represent a minority interest in the Company. For purposes of this Agreement,
the term "Applicable LLC Unit Valuation" shall mean the annual valuation of the
LLC Units performed as of the last day of the last fiscal year of Parent LLC
ending prior to the Determination Date by an independent valuation firm chosen
by the LLC Board, except that, (i) in the case of a Determination Date occurring
on or after the Effective Date but prior to the first day of the fourth fiscal
quarter of Parent LLC's 1997 fiscal year, the term "Applicable LLC Unit
Valuation" shall mean the value per LLC Unit as of the effective date of the
Transactions as determined pursuant to Section 1.8 of the Plan of Merger and
Exchange Agreement, dated as of August 1, 1997, by and among MGI, Parent LLC and
the other individuals and entities named therein, and (ii) in the case of a
Determination Date occurring during the fourth fiscal quarter of any fiscal year
of Parent LLC beginning with the fourth quarter of the 1997 fiscal year of
Parent LLC, the term "Applicable LLC Unit Valuation" shall mean the annual
valuation of the LLC Units as of the last day of such fourth fiscal quarter
performed by an independent valuation firm chosen by the LLC Board. The Fair
Market Value as determined in good faith by the LLC Board and in the absence of
fraud shall be binding and conclusive upon all parties hereto. If Parent LLC at
any time subdivides (by any securities split, securities dividend or otherwise)
the LLC Units into a greater number of LLC Units, or combines (by reverse
securities split or otherwise) the LLC Units into a smaller number of LLC Units,
the Purchase Price (including any minimum or maximum Purchase Price specified
herein or in effect as a result of a prior adjustment) shall be appropriately
adjusted by the LLC Board to reflect such subdivision or combination.
(b) Closing of Purchase; Payment of Purchase Price. Subject to
Section 9, the closing of a purchase
13
<PAGE> 62
pursuant to this Section 6 shall take place at the principal office of the
Company on the tenth business day following whichever of the following is
applicable: (i) the receipt by the Purchaser (or his estate) of the notice of
any of the Principal Members or the Company, as the case may be, of its exercise
of its option to purchase pursuant to Section 5(a) or (ii) the Company's receipt
of notice by the Purchaser (or his estate) to sell Exercise LLC Units pursuant
to Section 5(a) or (iii) the Board's determination (which shall be delivered to
the Purchaser) that the Company is authorized to purchase the Exercise LLC Units
as a result of Unforeseen Personal Hardship pursuant to Section 5(b). At the
closing, (x) subject to the proviso below, the Company and/or the Principal
Member, as the case may be, shall pay to the Purchaser (or his estate) an amount
equal to the Purchase Price and (y) the Purchaser (or his estate) shall deliver
to the Company and/or such Principal Member such certificates or other
instruments representing the Exercise LLC Units so purchased, appropriately
endorsed by the Purchaser (or his estate), as the Company or such Principal
Member may reasonably require; provided, however, that if the Determination Date
occurs during the first or last fiscal quarter of any fiscal year of Parent LLC,
the Company or the applicable Principal Member, as the case may be, may elect to
pay the Purchase Price in two installments. In any such event, (i) at the
closing of the purchase of the Exercise LLC Units, the Company or such Principal
Member shall pay to the Purchaser (or his estate) a net amount (the "First
Installment Amount") equal to 80% of the Purchase Price determined pursuant to
Section 6(a) hereof on the basis of the most recent available valuation of the
LLC Units and (ii) no later than the tenth business day following receipt by the
Company of the Applicable LLC Unit Valuation, the Company or such Principal
Member shall pay an additional amount to the Purchaser (or his estate) equal to
the sum of (1) the excess (the "Excess Payment"), if any, of (A) the Purchase
Price for the Exercise LLC Units, over (B) the First Installment Amount and (2)
an amount calculated by multiplying the Excess Payment by a percentage equal to
the average annual cost to the Company of its bank indebtedness obligations
outstanding during the period commencing on the closing date of the purchase of
the Exercise LLC Units and ending on the date of payment of such additional
amount pursuant to this clause (ii) or, if there are no such obligations
outstanding, one percentage point greater than the average annual prime rate
charged during such period by The Chase Manhattan Bank or such other nationally
recognized bank designated by the Company.
14
<PAGE> 63
(c) Application of the Purchase Price to Certain Loans. The
Purchaser agrees that the Company and the Principal Members shall be entitled to
apply any amounts to be paid by the Company or the Principal Members, as the
case may be, to repurchase Exercise LLC Units pursuant to Section 5 hereof to
discharge any indebtedness of the Purchaser to the Company or any of its direct
or indirect subsidiaries, including, without limitation, indebtedness of the
Purchaser incurred to purchase the Exercise LLC Units or indebtedness that is
guaranteed by the Company or any of its direct or indirect subsidiaries.
7. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser that (a) the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the Commonwealth of Massachusetts, (b) this Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and legally
binding obligation of the Company enforceable against the Company in accordance
with its terms and (c) the Exercise LLC Units, when issued, delivered and paid
for in accordance with the terms hereof, will be free and clear of any liens or
encumbrances other than those created pursuant to this Agreement and the LLC
Agreement, or otherwise in connection with the transactions contemplated hereby.
8. Covenants of the Company.
(a) State Securities Laws. The Company agrees to use its best
efforts to comply with all state securities or "blue sky" laws applicable to the
sale of the Exercise LLC Units to the Purchaser, provided that the Company shall
not be obligated to qualify or register the Exercise LLC Units under any such
law or to qualify as a foreign corporation or file any consent to service of
process under the laws of any jurisdiction or subject itself to taxation as
doing business in any such jurisdiction.
9. Certain Restrictions on Repurchases.
(a) Financing Agreements, etc. Notwithstanding any other provision
of this Agreement, the Company shall not be permitted or obligated to repurchase
any LLC Units from the Purchaser if (i) such repurchase would result in a
violation of the terms or provisions of, or result in a default or an event of
default under any financing or security agreement or document entered into in
connection with the Transactions or in connection with the operations
15
<PAGE> 64
of the Company or its subsidiaries from time to time (such agreements and
documents, as each may be amended, modified or supplemented from time to time,
are referred to herein as the "Financing Agreements"), in each case as the same
may be amended, modified or supplemented from time to time, or (ii) such
repurchase would violate any of the terms or provisions of the LLC Agreement or
(iii) the Company has no funds legally available therefor under Chapter 156B of
the Massachusetts General Laws, or any successor statute.
(b) Delay of Repurchase. In the event that a repurchase by the
Company otherwise permitted or required under Section 5(a) is prevented solely
by the terms of Section 9(a), (i) such repurchase will be postponed and will
take place without the application of further conditions or impediments (other
than as set forth in Section 6 hereof or in this Section 9) at the first
opportunity thereafter when the Company has funds legally available therefor and
when such repurchase will not result in any default, event of default or
violation under any of the Financing Agreements or in a violation of any term or
provision of the LLC Agreement and (ii) such repurchase obligation shall rank
against other similar repurchase obligations with respect to LLC Units or
options to purchase LLC Units according to priority in time of the effective
date of the termination of employment, or provision of services, as applicable,
provided that any such repurchase right as to which a common date determines
priority shall be of equal priority and shall share pro rata in any repurchase
payments made pursuant to clause (i) above.
(c) Purchase Price Adjustment. In the event that a repurchase of
Exercise LLC Units from the Purchaser is delayed pursuant to this Section 9, the
purchase price per LLC Unit when the repurchase of such LLC Units eventually
takes place as contemplated by Section 9(b) shall be (i) if the repurchase is
pursuant to an exercise of the option of the Company or any Principal Member
under Section 5(a), the sum of (A) the Purchase Price determined in accordance
with Section 6 hereof at the time that the repurchase of such LLC Units would
have occurred but for the operation of this Section 9, plus (B) an amount equal
to interest on such Purchase Price for the period from the date on which the
completion of the repurchase would have taken place but for the operation of
this Section 9 to the date on which such repurchase actually takes place (the
"Delay Period") at a rate equal to the weighted average cost of the MGI/CERA
Group's bank indebtedness obligations outstanding during the Delay Period or, if
there are no such obligations
16
<PAGE> 65
outstanding, one percentage point greater than the average prime rate charged
during such period by The Chase Manhattan Bank or such other nationally
recognized bank designated by the Company, or (ii) if the repurchase is pursuant
to an exercise of the Purchaser's right to require a repurchase under Section
5(a), the Fair Market Value of such LLC Units (determined as set forth in
Section 6(a)) on the date on which such repurchase actually takes place.
10. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, the Principal Members
or the Purchaser, as the case may be, at the following addresses or to such
other address as the Company, the Principal Members or the Purchaser, as the
case may be, shall specify by notice to the others:
(i) if to the Company, to it at:
Cambridge Energy Research Associates, Inc.
Charles Square
20 University Road
Cambridge, Massachusetts 02138
Attention: President
(ii) if to a Principal Member, to it or him at the address
specified for it on the books and records of Parent LLC.
(iii) if to the Purchaser, to the Purchaser at the address set forth
on the signature page hereof.
(iv) if to Parent LLC, to:
Global Decisions Group LLC
20 University Road
Cambridge, Massachusetts 02138
Attention: __________________________
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof.
17
<PAGE> 66
Copies of any notice or other communication given under this Agreement shall
also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Attention: Donald J. Gogel
Brera Capital Partners, LLC
590 Madison Avenue, 18th Floor
New York, New York 10022
Attention: Alberto Cribiore
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Steven R. Gross, Esq.
and
Hale and Dorr LLP
60 State Street, 25th Floor
Boston, MA 02109
Attention: Paul P. Brountas, Esq.
Parent LLC also shall be given a copy of any notice or other communication
between the Purchaser and the Company under this Agreement at its address as set
forth above.
(b) Binding Effect; Benefits. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Except as provided in Sections 4 through 6, inclusive,
nothing in this Agreement, express or implied, is intended or shall be construed
to give any person other than the parties to this Agreement or their respective
successors or assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein.
(c) Waiver; Amendment.
(i) Waiver. Any party hereto may by written notice to the other
parties (A) extend the time for the performance of any of the obligations
or other actions of the other parties under this Agreement, (B) waive
compliance with any of the conditions or covenants of
18
<PAGE> 67
the other parties contained in this Agreement and (C) waive or modify
performance of any of the obligations of the other parties under this
Agreement, provided that any waiver of the provisions of Sections 4
through 6, inclusive, must be consented to by each of the Principal
Members. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute
a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any preceding or
succeeding breach and no failure by a party to exercise any right or
privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
(ii) Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Purchaser and
the Company, provided that any amendment adversely affecting the rights of
any Principal Member hereunder must be consented to by such Principal
Member. The parties hereto acknowledge that the Company's consent to an
amendment or modification of this Agreement is subject to the terms and
provisions of the Financing Agreements.
(d) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Purchaser without the prior written consent of
the other parties. The C&D Fund may assign from time to time all or any portion
of its rights under Sections 4 through 6, inclusive, to one or more of its
affiliates or affiliates of Clayton, Dubilier & Rice, Inc., and each other
Principal Member may assign from time to time all or any portion of his rights
under Sections 4 through 6, inclusive, to one or more of his Permitted
Transferees (as defined in the LLC Agreement).
(e) Merger, Consolidation, etc. In the event of any merger,
consolidation, reorganization, exchange of securities, recapitalization,
liquidation or similar transaction where the LLC Units are converted into or
exchanged for other securities, all references in this
19
<PAGE> 68
Agreement to LLC Units shall be deemed to refer to such securities into which
the LLC Units shall have been converted or for which the LLC Units shall have
been exchanged, and the provisions of this Agreement shall be applicable to such
securities.
(f) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, REGARDLESS OF THE
LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICT OF LAWS.
(g) Section and Other Headings, etc. The section and other headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
20
<PAGE> 69
IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the date first above written.
CAMBRIDGE ENERGY RESEARCH
ASSOCIATES, INC.
By:
-----------------------------
Name:
Title:
THE PURCHASER:
Name
By:
-----------------------------
Name:
Attorney-in-fact
Address of the Purchaser:
(Address)
Total Number of LLC Units
to be Purchased:
(Amount1) LLC Units
Aggregate Purchase Price: (Amount3)
21
<PAGE> 70
Schedule I
OPTIONS EXHIBIT
<TABLE>
<CAPTION>
# OF LLC UNITS EXERCISE
GROUP NAMES UNDER OPTION PRICE
----- ----- -------------- --------
<S> <C> <C> <C>
I Steve Aldrich 17,000 $18.31
Kevin Lindemer 17,000 $18.31
Dan Lucking 17,000 $18.31
Philippe Michelon 17,000 $18.31
Thomas Robinson 17,000 $18.31
Gary Simon 17,000 $18.31
II William Durbin 10,500 $18.31
Dennis Eklof 10,500 $18.31
Thane Gustafson 10,500 $18.31
Steve Haggett 10,500 $18.31
Sue Lena Thompson 10,500 $18.31
Julian West 10,500 $18.31
III Kimra Anderson Graves 2,000 $18.31
Peter Augustini 2,000 $18.31
Alice Barsoomian 2,000 $18.31
Simon Blakey 2,000 $18.31
Mack Brothers 2,000 $18.31
Lou Carranza 2,000 $18.31
Bob Esser 2,000 $18.31
Scott Foster 2,000 $18.31
Odd Hassel 2,000 $18.31
Peter Hughes 2,000 $18.31
Gary Hunt 2,000 $18.31
Ed Kelly 2,000 $18.31
</TABLE>
<PAGE> 71
Schedule I
OPTIONS EXHIBIT - continued
<TABLE>
<CAPTION>
# OF LLC UNITS EXERCISE
GROUP NAMES UNDER OPTION PRICE
----- ----- -------------- --------
<S> <C> <C> <C>
II (cont'd) Ann Louise Hittle 2,000 $18.31
Mike Maddox 2,000 $18.31
Larry Makovich 2,000 $18.31
Micheline Manoncourt 2,000 $18.31
Susan Ruth 2,000 $18.31
Helen Sisley 2,000 $18.31
Brian Ward 2,000 $18.31
III Jennifer Battersby 1,250 $18.31
Claire Behrens 1,250 $18.31
Peter Bogin 1,250 $18.31
Ben Frickel 1,250 $18.31
Aldyn Hockstra 1,250 $18.31
Paul Hoffman 1,250 $18.31
Bruce Humphrey 1,250 $18.31
Huaibin Lu 1,250 $18.31
Elizabeth McCrary 1,250 $18.31
Jim Meitl 1,250 $18.31
Martin Meyers 1,250 $18.31
Jim Placke 1,250 $18.31
Laurent Ruseckas 1,250 $18.31
Sondra Scott 1,250 $18.31
Bill Veno 1,250 $18.31
V Mike Banville 325 $18.31
Paul Barnhill 325 $18.31
Teresa Chang 325 $18.31
</TABLE>
<PAGE> 72
Schedule I
OPTIONS EXHIBIT - continued
<TABLE>
<CAPTION>
# OF LLC UNITS EXERCISE
GROUP NAMES UNDER OPTION PRICE
----- ----- -------------- --------
<S> <C> <C> <C>
V (cont'd) Susan Cummings Wiseman 325 $18.31
Frederic de Collar 325 $18.31
Ken Downey 325 $18.31
Frederic Egel 325 $18.31
Eduardo Fernandez 325 $18.31
Kelly Gemiti 325 $18.31
Judy Gideonse 325 $18.31
John Hoffman 325 $18.31
Chuck Jordan 325 $18.31
Mike Kelly 325 $18.31
Ross Kiener 325 $18.31
Roberta Klix 325 $18.31
Kelley Knight 325 $18.31
Sue Kroscup 325 $18.31
Pat Maio 325 $18.31
Greg McCormack 325 $18.31
Gig Moineau 325 $18.31
Susan Nardone 325 $18.31
Breda Nolan 325 $18.31
Les Peters 325 $18.31
Mary Alice Sanderson 325 $18.31
Joe Sannicandro 325 $18.31
Kirby Scudder 325 $18.31
Shankari Srinivasan 325 $18.31
William Stubblefield 325 $18.31
</TABLE>
<PAGE> 73
Schedule I
OPTIONS EXHIBIT - continued
<TABLE>
<CAPTION>
# OF LLC UNITS EXERCISE
GROUP NAMES UNDER OPTION PRICE
----- ----- -------------- --------
<S> <C> <C> <C>
V (cont'd) Lietza von Wodtke 325 $18.31
Dagmar Wulf 325 $18.31
TOTAL 231,500 $18.31
</TABLE>
<PAGE> 1
Exhibit 10.38
CONTINGENT OPTION AGREEMENT
CONTINGENT OPTION AGREEMENT, dated as of ______________, 1997,
between Global Decisions Group LLC, a Delaware limited liability company (the
"Parent"), and [insert name of Stockholder or GS LP] (the "Grantee").
W I T N E S S E T H:
WHEREAS, pursuant to a Plan of Merger and Exchange Agreement,
dated as of August 1, 1997 (the "Merger and Exchange Agreement"; capitalized
terms used herein without definition have the meanings specified therein), among
MCM Group, Inc., a Delaware corporation ("MGI"), the Parent, GDG Merger
Corporation, a Delaware corporation and a wholly owned subsidiary of the Parent
("Merger Sub"), the stockholders of Cambridge Energy Research Associates, Inc.,
a Massachusetts corporation ("CERA Inc."), named therein (collectively, the
"Stockholders") and The Goldman Sachs Group, L.P., a Delaware limited
partnership ("GS LP"), the Parent has agreed to acquire (i) all of the
outstanding capital stock of MGI, pursuant to the merger of Merger Sub with and
into MGI, with MGI as the surviving corporation, and (ii) all of the outstanding
CERA Common Stock and certain of the limited partnership interests of Cambridge
Energy Research Associates Limited Partnership, a Delaware limited partnership,
pursuant to the exchange of such common stock (the "CERA Stock Exchange") and
such partnership interests (the "GS Partnership Interest Exchange") for LLC
Units and certain contingent interests in the Parent;
WHEREAS, pursuant to the Merger and Exchange Agreement, as
part of the consideration for the [shares of CERA Common Stock] [GS Partnership
Interest] to be received by the Parent from the Grantee in the [CERA Stock
Exchange] [GS Partnership Interest Exchange], the Parent is required to grant to
the Grantee an option to purchase, in the event that the CERA CAGR shall be
equal to or greater than 20%, the number of LLC Units set forth on the signature
page hereof under the heading "Number of LLC Units Subject to Contingent
Option", at an exercise price of $34.53 per LLC Unit (the "Contingent Option");
and
WHEREAS, the Grantee and the Parent desire to enter into an
agreement to evidence and confirm the grant of
<PAGE> 2
the Contingent Option on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and the
mutual covenants and agreements set forth herein, the Parent and the Grantee
hereby agree as follows:
1. Grant of Contingent Option; Exercise Price. The Parent
hereby grants to the Grantee the Contingent Option, at an exercise price of
$34.53 per LLC Unit (the "Exercise Price").
2.(a) Exercisability; Termination. Subject to the provisions
hereof, if a Sale of the Parent or CERA Inc., a Spin-Off of CERA Inc. or a
Public Offering (a "Termination Event") shall not have occurred prior to June
30, 2000, the Contingent Option shall become exercisable on the date of the
notice from the Parent described in Section 2(b) if the Board of Directors of
the Parent shall determine in accordance with Section 2(b) that the CERA CAGR
was equal to or greater than 20%. In the event that the Board of Directors of
the Parent shall determine in accordance with Section 2(b) that the CERA CAGR
was less than 20%, the Contingent Option shall not be exercisable for any LLC
Units and shall terminate on the date of such determination. In addition, if a
Termination Event shall occur prior to June 30, 2000, the Contingent Option
shall not be exercisable for any LLC Units and shall terminate on the date of
the closing of such Termination Event. The Grantee may exercise the Contingent
Option with respect to all or any portion of the LLC Units for which the
Contingent Option has become exercisable, at any time and from time to time
after the applicable time set forth in the first sentence of this Section 2(a)
and until the fifth anniversary of the date on which the Contingent Option first
became exercisable.
(b) Notice from the Parent. Not later than 15 days after the
audited financial statements of CERA Inc. for the fiscal year ending June 30,
2000 shall have been completed and delivered to the Parent, the Board of
Directors of the Parent shall determine in good faith the CERA CAGR, and the
Parent shall send a written notice to the Grantee, setting forth (i) the
Qualifying Revenues for such fiscal year, as determined for purposes of
calculating the CERA CAGR, (ii) the CERA CAGR and (iii) whether the Contingent
Option shall be exercisable pursuant to Section 2(a). The determination by the
Parent, as set forth in such notice, whether the Contingent Option shall be
exercisable
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<PAGE> 3
shall, in the absence of manifest error, be final, conclusive and binding on the
parties hereto.
3. Restrictions on Exercise; Non-Transferability of
Contingent Option; Payment In Lieu of Delivery.
(a) Restrictions on Exercise. The Contingent Option may be
exercised only with respect to whole LLC Units. No certificates for fractions of
LLC Units shall be issued. Notwithstanding any other provision of this
Agreement, the Contingent Option may not be exercised in whole or in part, and
no certificates representing LLC Units shall be delivered, unless all requisite
approvals and consents of any governmental authority of any kind having
jurisdiction over the exercise of options shall have been secured and the
requirements of the Amended and Restated Limited Liability Company Agreement,
dated as of 1997, of the Parent, as such agreement may be amended,
supplemented or modified from time to time (the "LLC Agreement"), shall have
been met. The Parent agrees that at any time when the Contingent Option is
exercisable there shall be a sufficient number of LLC Units available for
delivery upon the exercise of the Contingent Option which are authorized but
previously unissued and not reserved for any other purpose. The Parent shall use
reasonable efforts to obtain the consents and approvals referred to in the third
sentence of this Section 3(a).
(b) Non-Transferability of Contingent Option. The Contingent
Option (i) may be exercised only by the Grantee [or the Grantee's permitted
transferee], (ii) is not assignable or transferable, in whole or in part, [other
than as provided below,] and (iii) may not, directly or indirectly, be offered,
transferred, sold, pledged, assigned, alienated, hypothecated or otherwise
disposed of or encumbered (including without limitation by gift, operation of
law or otherwise), to or by any person[, provided that the Grantee may transfer
the Contingent Option without the consent of the Parent (and subject to the
terms hereof) (x) by will or the laws of descent or distribution upon the death
of the Grantee or (y) to a trust the only actual beneficiaries under which are
the Grantee and/or such Grantee's brothers and sisters (whether by whole or half
blood), spouse, ancestors and lineal descendants, but in each case only if each
transferee assumes and agrees in writing, pursuant to an agreement in form and
substance reasonably satisfactory to the Parent, to be bound by the terms and
provisions hereof, and makes the same
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<PAGE> 4
representations and warranties as to itself as in Section 6*.
4. Manner of Exercise. To the extent that the Contingent
Option shall have become and remains exercisable as provided in Section 2, the
Contingent Option may be exercised, in whole or in part, by notice to the Parent
in writing, given at least five business days prior to the date on which the
Grantee [or the relevant permitted transferee, as applicable] will so exercise
the Contingent Option (the "Exercise Date"), specifying the number of LLC Units
with respect to which the Contingent Option is being exercised and the Exercise
Date. Upon such exercise, (a) on or before the Exercise Date, the Grantee [or
the relevant permitted transferee, as applicable] shall deliver to the Parent
full payment for the LLC Units to be issued and delivered by the Parent upon
such exercise of the Contingent Option (the "Exercise LLC Units") in United
States dollars in cash, or cash equivalents satisfactory to the Parent, and in
an amount equal to the aggregate Exercise Price for the Exercise LLC Units and
(b) on the Exercise Date, the Parent shall deliver to the Grantee [or the
relevant permitted transferee, as applicable] a certificate or certificates
representing the Exercise LLC Units, registered in the name of the Grantee [or
the relevant permitted transferee, as applicable]. The Parent may require the
Grantee [or the relevant permitted transferee, as applicable] to furnish or
execute such other documents as the Parent shall reasonably deem necessary (i)
to evidence such exercise and (ii) to comply with or satisfy the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), applicable state
or non-U.S. securities laws or any other law.
5. Exercise Units Subject to LLC Agreement. The Grantee [or
the relevant permitted transferee, as applicable] hereby agrees that Exercise
LLC Units shall be entitled to the benefits of and are bound by the transfer
restrictions, holdback and other provisions of the LLC Agreement (including,
without limitation, Article XIII and Section 15.2 thereof) as in effect at the
relevant time.
6. Representations, Warranties and Covenants of the Grantee.
- ----------
* Explanatory note: bracketed text shall be applicable only if the
Grantee is a natural person.
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<PAGE> 5
(a) Organization; Investment Intention; Restriction on
Disposition. [The Grantee represents and warrants that it is a _________ duly
organized, validly existing and in good standing under the laws of the State of
_________.]* The Grantee agrees that he will not, directly or indirectly, offer,
transfer, sell, pledge, hypothecate or otherwise dispose of any of the Exercise
LLC Units (or solicit any offers to buy, purchase or otherwise acquire or take a
pledge of any of the Exercise LLC Units), except in compliance with the
Securities Act and the rules and regulations of the Securities and Exchange
Commission (the "Commission") thereunder, and in compliance with applicable
state securities or "blue sky" laws. The Grantee further understands,
acknowledges and agrees that none of the Exercise LLC Units may be transferred,
sold, pledged, hypothecated or otherwise disposed of unless the provisions of
the LLC Agreement shall have been complied with or have expired.
(b) Legend. The Grantee acknowledges that any certificate
representing the Exercise LLC Units shall bear the following legend:
"THE LLC UNITS REPRESENTED HEREBY ARE ENTITLED TO
THE BENEFITS OF AND ARE BOUND BY THE OBLIGATIONS,
AND ARE SUBJECT TO THE TRANSFER RESTRICTIONS,
HOLDBACK AND OTHER PROVISIONS OF THE AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
THE PARENT, DATED AS OF ________, 1997, AS SUCH
AGREEMENT MAY BE AMENDED, SUPPLEMENTED OR MODIFIED
FROM TIME TO TIME (THE "LLC AGREEMENT"), AND
NEITHER THIS CERTIFICATE NOR THE LLC UNITS
REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE
TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SUCH LLC AGREEMENT, A COPY OF WHICH
AGREEMENT IS ON FILE WITH THE SECRETARY OF THE
PARENT.
(c) Securities Law Matters. The Grantee acknowledges receipt
of advice from the Parent that (i) the Exercise LLC Units may not be offered,
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or
encumbered except in accordance with the LLC Agreement,
- --------
* [Applicable only if Grantee (or relevant permitted transferee, as
applicable) is not a natural person. Representation is to be made at
Exercise Date.]
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<PAGE> 6
(ii) it is not anticipated that there will be any public market for the Exercise
LLC Units, (iii) the resale restrictions under Rule 144 ("Rule 144") or Rule 145
("Rule 145") promulgated under the Securities Act may be applicable to sales of
the Exercise LLC Units by the Grantee [or the relevant permitted transferee, as
applicable], (iv) the Parent has made no covenant to make Rule 144 available
with respect to sales of securities of the Parent, (v) the Parent does not plan
to file reports with the Commission or make information concerning the Parent
publicly available unless required to do so by law or by the terms of its
financing agreements, (vi) if the exemption afforded by Rule 144 is not
available, sales of the Exercise LLC Units may be difficult to effect because of
the absence of public information concerning the Parent, (vii) a restrictive
legend in the form heretofore set forth shall be placed on the certificates
representing the Exercise LLC Units and (viii) a notation shall be made in the
appropriate records of the Parent indicating that the Exercise LLC Units are
subject to restrictions on transfer set forth in the LLC Agreement and, if the
Parent should in the future engage the services of a stock transfer agent,
appropriate stop-transfer restrictions will be issued to such transfer agent
with respect to the Exercise LLC Units.
(d) Compliance with Rule 144. If any of the Exercise LLC Units
are to be disposed of in accordance with Rule 144, the Grantee shall transmit to
the Parent an executed copy of Form 144 (if required by Rule 144) no later than
the time such form is required to be transmitted to the Commission for filing
and such other documentation as the Parent may reasonably require to assure
compliance with Rule 144 in connection with such disposition.
(e) Registration; Restrictions on Sale upon Public Offering.
The Exercise LLC Units shall constitute "Registrable Securities" under the LLC
Agreement. The Grantee agrees that, in the event that the Parent files a
registration statement under the Securities Act with respect to an underwritten
public offering of any of its LLC Units, options, warrants or other rights to
purchase such LLC Units or securities convertible into such LLC Units, it will
not effect any public sale (including a sale under Rule 144) or distribution of
any LLC Units (other than as part of such underwritten public offering) during
the 20 days prior to and one year after the effective date of such registration
statement.
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<PAGE> 7
7. Representations and Warranties of the Parent. The Parent
represents and warrants to the Grantee that (a) the Parent is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware, (b) this Agreement has been duly authorized,
executed and delivered by the Parent and constitutes a valid and legally binding
obligation of the Parent, enforceable against the Parent in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting creditors'
rights generally and by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and (c) upon
exercise of the Contingent Option in accordance with the terms hereof, the
Exercise LLC Units, when issued, delivered and paid for in accordance with the
terms hereof and upon compliance with any applicable requirements of the LLC
Agreement, will be duly and validly issued, and free and clear of any liens or
encumbrances other than the restrictions on transfer set forth herein or in the
LLC Agreement.
8. No Rights as a Holder of LLC Units. The Grantee shall have
no voting or other rights as a holder of LLC Units with respect to any of the
LLC Units covered by the Contingent Option until the exercise of the Contingent
Option, the issuance of an LLC Unit certificate or certificates to the Grantee
for such LLC Units, and the admission of the Grantee to the Parent in accordance
with the LLC Agreement. No adjustment shall be made for distribution or other
rights for which the record date is prior to the issuance of such certificate or
certificates.
9. Capital Adjustments. The number and price of the LLC Units
covered by the Contingent Option shall be proportionately adjusted to reflect
any distribution in the form of LLC Units or options, warrants or other rights
to acquire LLC Units, LLC Unit split or any recapitalization of the Parent.
In the event of any merger, consolidation, reorganization,
exchange of securities, recapitalization, liquidation or similar transaction
where the Exercise LLC Units are converted into or exchanged for other
securities, all references in this Agreement to Exercise LLC Units shall be
deemed to refer to such securities into which the Exercise LLC Units shall have
been converted or for which the Exercise LLC Units shall have been exchanged.
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<PAGE> 8
10. Miscellaneous.
(a) Notices. All notices, demands and other communications
made in connection with this Agreement shall be in writing. Any notice or other
communication in connection herewith shall be deemed duly given to any party (a)
three Business Days after it is sent by express, registered or certified mail,
return receipt requested, postage prepaid or (b) two Business Days after it is
sent by overnight courier guaranteeing next day delivery, in each case, to the
address of such party set forth below, or to such other address as the Parent or
the Grantee, as the case may be, shall specify by notice to the others:
(i) if to the Parent, to:
Global Decisions Group LLC
20 University Road
Cambridge, Massachusetts 02138
Facsimile:
Telephone:
Attention:
(ii) if to the Grantee, to:
All such notices and communications shall be deemed to have been received on the
date of delivery or on the third business day after the mailing thereof.
Copies of any notice or other communication given under this Agreement shall
also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
Attention: Donald J. Gogel
Brera Capital Partners, LLC
590 Madison Avenue, 18th Floor
New York, New York 10022
Attention: Alberto Cribiore
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<PAGE> 9
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Steven R. Gross, Esq.
and
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: Paul P. Brountas, Esq.
(b) Binding Effect; Benefits. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and permitted assigns. Nothing in this Agreement, express
or implied, is intended or shall be construed to give any person other than the
parties to this Agreement or their respective successors or permitted assigns
any legal or equitable right, remedy or claim under or in respect of any
agreement or any provision contained herein.
(c) Waiver; Amendment.
(i) Waiver. Any party hereto may by written notice to the
other party (A) extend the time for the performance of any of
the obligations or other actions of the other party under this
Agreement, (B) waive compliance with any of the conditions or
covenants of the other party contained in this Agreement and
(C) waive or modify performance of any of the obligations of
the other party under this Agreement. Except as provided in
the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of any representations
or warranties contained herein, or of compliance with any
covenants or agreements contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any preceding
or succeeding breach and no failure by a party to exercise any
right or privilege hereunder shall be
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<PAGE> 10
deemed a waiver of such party's rights or privileges hereunder
or shall be deemed a waiver of such party's rights to exercise
the same at any subsequent time or times hereunder.
(ii) Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Grantee and
the Parent.
(d) Assignability. Except as otherwise expressly provided
herein, neither this Agreement nor any right, remedy, obligation or liability
arising hereunder or by reason hereof shall be assignable by the Parent or the
Grantee without the prior written consent of the other party.
(e) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REFERENCE
TO ITS CONFLICTS OF LAWS PRINCIPLES.
(f) Section and Other Headings, etc. The section and other
headings of this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement. In this Agreement all
references to "dollars" or "$" are to United States dollars.
(g) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
(h) Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein have the meaning given to them in the Merger and
Exchange Agreement.
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<PAGE> 11
IN WITNESS WHEREOF, the Parent and the Grantee have executed
this Agreement as of the date first above written.
GLOBAL DECISIONS GROUP LLC
By:______________________________________
Name:
Title:
[NAME OF GRANTEE]
By:______________________________________
Name:
Title:
Number of LLC Units Subject to
Contingent Option:
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<PAGE> 1
Exhibit 10.39
MCM GROUP, INC.
SPECIAL STOCK OPTION PLAN
-------------------------
SECTION 1. PURPOSE
The purpose of this MCM Group, Inc. Special Stock Option Plan
is to provide for a one time grant of Options to certain current and former
executives and other key employees of the Company or its Affiliates immediately
prior to the Spin-off in order to provide them with an ownership interest in the
Company following the Spin-off.
SECTION 2. DEFINITIONS
2.1. DEFINITIONS. Whenever used herein, the following terms
shall have the respective meanings set forth below:
(a) "Affiliate" means an entity controlling, controlled by or
under common control with the Company.
(b) "Alternative Option" has the meaning given in Section 7.2.
(c) "Board" means the Board of Directors of the Company.
(d) "C&D Fund" means The Clayton & Dubilier Private Equity
Fund IV Limited Partnership, a Connecticut limited partnership, and any
successor investment vehicle managed by Clayton, Dubilier & Rice, Inc.
(e) "Change in Control" means the first to occur of the
following events after the Effective Date:
(i) the acquisition by any person, entity or
"group" (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended), other than the Company, its
subsidiaries, any employee benefit plan of the Company or its
subsidiaries, or the C&D Fund, of 50% or more of the combined
voting power of the Company's then outstanding voting
securities;
(ii) the merger or consolidation of the
Company, as a result of which persons who were
<PAGE> 2
stockholders of the Company immediately prior to such merger
or consolidation, do not, immediately thereafter, own,
directly or indirectly more than 50% of the combined voting
power entitled to vote generally in the election of directors
of the merged or consolidated company;
(iii) the liquidation or dissolution of the
Company; and
(iv) the sale of all or substantially all of the
assets of the Company to one or more persons or entities that
are not, immediately prior to such sale, Affiliates.
(f) "Common Stock" means the Class A Common Stock, par value
$.01 per share, of the Company.
(g) "Company" means MCM Group, Inc., a Delaware corporation,
and any successor thereto.
(h) "Effective Date" means the date of the Spin-off, currently
expected to be August 31, 1996.
(i) "Fair Market Value" means the fair market value per share
of Common Stock as of the Effective Date, as determined in good faith
by the VK/AC Board. In making a determination of Fair Market Value, the
VK/AC Board shall give due consideration for such factors as it deems
appropriate, including, without limitation, the earnings and certain
other financial and operating information of the Company in recent
periods, the potential value of the Company as a whole, the future
prospects of the Company and the industries in which it competes, the
history and management of the Company, the general condition of the
securities markets, the fair market value of securities of companies
engaged in businesses similar to those of the Company and a valuation
of the shares, which shall be performed prior to the Effective Date by
an independent valuation firm chosen by the VK/AC Board. The
determination of Fair Market Value will not give effect to any
restrictions on transfer of the shares or the fact that such shares
would represent a minority interest in the Company.
(j) "Option" means the right granted pursuant to the Plan to
purchase one share of Common Stock at a price equal to the Fair Market
Value.
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<PAGE> 3
(k) "Option Agreement" means an agreement between the Company
and the Participant embodying the terms of any Options granted
hereunder, which agreement shall be substantially in the form attached
hereto as Exhibit A.
(l) "Participant" means any executive, officer or other key
employee of VK/AC Holding or any Subsidiary who is designated prior to
the Spin-off as a participant in the Plan and who, on the Effective
Date, holds options to purchase shares of common stock of VK/AC
Holding.
(m) "Plan" means this MCM Group, Inc. Special Stock Option
Plan, as the same may be amended from time to time.
(n) "Public Offering" means the first day as of which sales of
Common Stock are made to the public in the United States pursuant to an
underwritten public offering of the Common Stock led by one or more
underwriters, at least one of which is of nationally recognized
standing.
(o) "Spin-off" means the distribution by VK/AC Holding of 100%
of the outstanding Common Stock to the holders of record of the common
stock of VK/AC Holding, at the close of business on the Effective Date.
(p) "Subsidiary" means any corporation a majority of whose
outstanding voting securities is owned, directly or indirectly, by
VK/AC Holding.
(q) "VK/AC Board" shall mean the Board of Directors of VK/AC
Holding.
(r) "VK/AC Holding" means VK/AC Holding, Inc., a Delaware
corporation and indirect parent of the Company immediately prior to the
Spin-off.
2.2. GENDER AND NUMBER. Except when otherwise indicated by the
context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION
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<PAGE> 4
Participation in the Plan shall be limited to those current or
former executives, officers and other key employees of VK/AC Holding or any
Subsidiary who, prior to the Spin-off, are designated by the Board as
participants in the Plan and, who, on the Effective Date, hold options to
purchase shares of common stock of VK/AC Holding. Selection as a Participant in
the Plan shall neither entitle any such Participant to nor disqualify such
Participant from participation in any other award or incentive plan.
SECTION 4. ADMINISTRATION OF THE PLAN
The Board shall be responsible for the administration of the
Plan. Any authority exercised by the Board under the Plan shall be exercised by
the Board in its sole discretion. Subject to the terms of the Plan, the Board,
by majority action thereof, is authorized to prescribe, amend and rescind rules
and regulations relating to the administration of the Plan, to provide for
conditions and assurances deemed necessary or advisable to protect the interests
of the Company, and to make all other determinations necessary or advisable for
the administration and interpretation of the Plan in order to carry out its
provisions and purposes. Determinations, interpretations or other actions made
or taken by the Board pursuant to the provisions of the Plan shall be final,
binding and conclusive for all purposes and upon all persons. All of the powers,
duties and responsibilities of the Board specified in the Plan may, to the full
extent permitted by applicable law, be exercised and performed by any duly
constituted committee of the Board, in any such case, to the extent authorized
by the Board to exercise and perform such powers, duties and responsibilities.
SECTION 5. OPTIONS SUBJECT TO PLAN
5.1. NUMBER. Subject to the provisions of Sections 5.2 and
5.3, the maximum number of Options (and the maximum number of shares of Common
Stock subject to Options) granted under the Plan may not exceed 48,359. The
shares of Common Stock to be delivered upon the exercise of Options granted
under the Plan may consist, in whole or in part, of treasury Common Stock or
authorized but unissued Common Stock, not reserved for any other purpose.
5.2. CANCELED, TERMINATED OR FORFEITED OPTIONS. Any Option
(and the share of Common Stock subject to such
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<PAGE> 5
Option) which for any reason is canceled, terminated or otherwise forfeited, in
whole or in part, without having been exercised, shall no longer be available
for grant under the Plan.
5.3. ADJUSTMENT IN CAPITALIZATION. The number, class and
exercise price of any outstanding Options (and the number of shares of Common
Stock available for issuance upon exercise of such Options) granted under the
Plan, may be adjusted by the Board, in its sole discretion, if it shall deem
such an adjustment to be necessary or appropriate to reflect any Common Stock
dividend, stock split or share combination or any recapitalization, merger,
consolidation, exchange of shares, liquidation or dissolution of the Company.
SECTION 6. TERMS OF OPTIONS
6.1. GRANT OF OPTIONS. The Plan is intended to provide for a
one time grant of Options to Participants in connection with the Spin-off and,
accordingly, Options shall be granted to Participants only as of the Effective
Date. Each Option granted to a Participant shall be evidenced by an Option
Agreement that shall specify that the exercise price at which a share of Common
Stock may be purchased pursuant to such Option shall be equal to the Fair Market
Value, that such Option shall have a term of five years, commencing on the
Effective Date, and such other terms consistent with the Plan as the Board shall
determine, including customary representations, warranties and covenants with
respect to securities law matters. Such Option Agreement shall also state that
the holder thereof is entitled to the benefits of and bound by the obligations
set forth in the Registration and Participation Agreement, dated as of the
Effective Date, among the Company and certain stockholders of the Company (as
the same may be amended, waived, modified or supplemented from time to time), to
the extent set forth therein. Such Option Agreement shall be in substantially
the form attached hereto as Exhibit A.
6.2. EXERCISE PRICE. The exercise price per share of Common
Stock to be purchased upon exercise of an Option shall be equal to the Fair
Market Value.
6.3. EXERCISE OF OPTIONS. Options granted to a Participant
hereunder shall be fully vested at all times and, subject to Section 6.5, shall
be exercisable as of the date or dates during the period commencing on May 15
and
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<PAGE> 6
ending on June 1 of each calendar year commencing during the term of such Option
(each such period, an "Exercise Window") established from time to time by the
Board. Notwithstanding the foregoing, upon or following a Public Offering, the
Board may, subject to compliance with all applicable securities laws, permit the
exercise of Options at any time prior to the expiration of the term of the
Options. On or before the date during an Exercise Window as of which a
Participant will exercise any Option, the Company and such Participant shall
enter into a Management Stock Subscription Agreement substantially in the form
attached hereto as Exhibit B. Notwithstanding any other provision of the Plan,
each Option shall terminate and shall not be exercisable on or after the fifth
anniversary of the Effective Date.
6.4. PAYMENT. The Board shall establish procedures governing
the exercise of Options, which procedures shall generally require that the
Participant submit written notice of his election to exercise any Options to the
Secretary of the Company at least 15 business days prior to the first day of the
Window Period for such proposed exercise (or, following a Public Offering, at
least five business days prior to any proposed exercise date), that the exercise
price thereof be paid in full in cash or cash equivalents, including by personal
check, at the time of exercise and that the exercise complies with Sections 6.3
and 6.5. If so determined by the Board in its sole discretion at or after the
Effective Date, the exercise price of any Options exercised after there has been
a Public Offering may be paid in full or in part in the form of shares of Common
Stock already owned by the Participant, based on the average of the high and low
trading prices for the Common Stock on the date of exercise or, if there are no
trades on such date, on the next preceding date on which there were trades in
the Common Stock. Subject to Section 6.5, prior to the end of the applicable
Window Period and as soon as practicable after receipt of payment in full of the
exercise price of any exercisable Options, the Company shall deliver to the
Participant a certificate or certificates representing the shares of Common
Stock acquired upon the exercise thereof.
6.5. LIMITATIONS ON EXERCISABILITY.
(a) SUSPENSION OF EXERCISABILITY. Notwithstanding any other
provision hereof or in any Option Agreement, the exercisability of
outstanding Options and the Company's obligation to honor an election
to exercise any such Options during a Window
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<PAGE> 7
Period shall be suspended in the event that, during the twelve month
period preceding the effective date of such suspension, the sum of (i)
the aggregate exercise price for shares of Common Stock purchased upon
the exercise of Options granted hereunder and (ii) the aggregate
purchase price for shares of Common Stock purchased during such twelve
month period that, in the reasonable good faith judgement of the Board,
must be integrated with the offering and sale of Common Stock pursuant
to Options granted hereunder under Regulation D promulgated under the
Securities Act of 1993, as amended (such sum referred to as the
"Aggregate Price"), equals $1,000,000. Such period of suspension shall
continue until the first day during a Window Period as of which (x) the
Aggregate Price during the preceding twelve month period did not exceed
$750,000 or (y) sale of the shares of Common Stock subject to the
Options is registered under all applicable federal, state and foreign
securities laws. The exercisability of the Options shall be suspended
in accordance with the foregoing provisions of this Section 6.5(a) more
than one time, if and to the extent necessary to comply with all
applicable federal, state and foreign securities laws.
(b) PRIORITY OF EXERCISE. As soon as reasonably practicable
following the commencement of each Window Period, (x) the Board shall
determine if there is an excess of (i) the number of Options with
respect to which the Secretary has received elections to exercise as of
any date during such Window Period, over (ii) the number of Options
that may be exercised during such Window Period under the limitations
set forth in Section 6.5(a) and (y) in the event of any such excess,
the Board shall direct the Secretary of the Company to (i) reduce the
number of Options permitted to be exercised by all electing
Participants during such Window Period by each such Participant's pro
rata share of such excess, determined on the basis of the number of
Options that each such Participant has elected to exercise, and (ii)
notify each such Participant of such reduction, of the number of
Options that he will be permitted to exercise during such Window Period
and of the aggregate exercise price for such exercisable Options.
(c) DEFERRAL OF EXERCISE. In the event that (i) one or more
Participants shall have delivered to the Board a notice of election to
exercise, during the
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Window Period ending on June 1, 2001, all or a portion of any then
outstanding Options granted to such Participant and (ii) the
exercisability of all or any portion of such Options is suspended
pursuant to Section 6.5(a) (such Options, the "Suspended Options"),
then, notwithstanding the termination of such Suspended Options on the
fifth anniversary of the Effective Date pursuant to Section 6.1, the
Board shall cause all elections to exercise Suspended Options to be
honored as of the first date after the expiration of the Window Period
ending June 1, 2001 as of which the sum of (x) the Aggregate Price
during the preceding twelve months and (y) the aggregate exercise price
for the shares of Common Stock to be purchased upon exercise of 100% of
the Suspended Options does not exceed $1,000,000.
(d) PUBLIC OFFERING. Following a Public Offering and the
registration of the sale of the shares pursuant to exercise of the
Options under the Securities Act of 1933, as amended, the provisions of
Sections 6.5(a) and 6.5(b) shall terminate and cease to have further
effect.
SECTION 7. CHANGE IN CONTROL; TAKE-ALONG
7.1 EXERCISE OF OPTIONS. In the event of a Change in Control,
each Option that has not been exercised on or prior to the closing of the
transaction constituting the Change in Control shall be canceled and shall
terminate upon the consummation of such transaction and, thereupon, the Company
shall be relieved of any and all liabilities and obligations in respect of such
canceled and terminated Options and the holders thereof.
7.2 ALTERNATIVE OPTIONS. Notwithstanding Section 7.1, in the
event that the transaction constituting a Change in Control is intended to be
accounted for using the "pooling of interest" method of accounting, (i) no
cancellation or termination shall occur with respect to any Options and (ii) all
Options remaining outstanding as of the closing of such transaction shall be
honored or assumed, or new rights substituted therefor (such honored, assumed or
substituted Option being hereinafter referred to as an "Alternative Option") by
the surviving entity in the transaction constituting the Change in Control,
PROVIDED that any such Alternative Option must:
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<PAGE> 9
(a) provide the Participant that held such Option with rights
and entitlements substantially equivalent to or better than the rights,
terms and conditions applicable under such Option, including, but not
limited to, identical or better timing and methods of payment; and
(b) have substantially equivalent economic value to such
Option (determined at the time of the Change in Control).
7.3 CERTAIN TAKE-ALONG RIGHTS PRIOR TO A PUBLIC OFFERING. The
Board shall provide in each Subscription Agreement evidencing Common Stock
purchased upon the exercise of Options granted hereunder that, upon certain
transactions described therein, the Participant will be required to sell such
shares of Common Stock then owned by him, for a cash payment per share of Common
Stock equal to the price per share of Common Stock paid in conjunction with such
transaction, and upon such additional terms and conditions as are set forth in
such Subscription Agreement.
SECTION 8. AMENDMENT, MODIFICATION AND
TERMINATION OF THE PLAN
The Board at any time may terminate or suspend the Plan, and
from time to time may amend or modify the Plan. No amendment, modification,
termination or suspension of the Plan shall in any manner adversely affect any
Option theretofore granted under the Plan, without the consent of the
Participant holding such Option. Shareholder approval of any such amendment,
modification, termination or suspension shall be obtained to the extent mandated
by applicable law, or if otherwise deemed appropriate by the Board.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1. NONTRANSFERABILITY OF AWARDS. No Options granted under
the Plan may be sold, transferred, pledged, assigned, encumbered or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution and provided that the deceased Participant's beneficiary or the
representative of his estate acknowledges and agrees in writing, in a form
reasonably acceptable to the Company, to be bound by the provisions of the Plan
(including the take-along rights described in Section 7.3)
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<PAGE> 10
and the Option Agreement covering such Options as if such beneficiary or estate
were the Participant. All rights with respect to Options granted to a
Participant under the Plan shall be exercisable during his life-time by such
Participant only. Following a Participant's death, all rights with respect to
Options that were exercisable at the time of such Participant's death and have
not terminated shall be exercised by his designated beneficiary or by his
estate.
9.2. BENEFICIARY DESIGNATION. Each Participant under the Plan
may from time to time name any beneficiary or beneficiaries (who may be named
contingently or successively) by whom any right under the Plan is to be
exercised in case of his death. Each designation will revoke all prior
designations by the same Participant, shall be in a form reasonably prescribed
by the Board, and will be effective only when filed by the Participant in
writing with the Board during his lifetime.
9.3. TAX WITHHOLDING. With respect to those Participants who
are employees of the Company or one of its subsidiaries at the time of the
exercise of an option, the Company or such subsidiary shall have the power to
withhold, or to require such Participant to remit to the Company or such
subsidiary, subject to such other arrangements as the Board may set forth in the
Option Agreement to which such Participant is a party, an amount sufficient to
satisfy all federal, state, local and foreign withholding tax requirements in
respect of any Option granted under the Plan or any share of Common Stock
purchased upon the exercise of any such Option.
9.4. INDEMNIFICATION. Each person who is or shall have been a
member of the VK/AC Board, of the Board or any committee thereof shall be
indemnified and held harmless by the Company to the fullest extent permitted by
law from and against any and all losses, costs, liabilities and expenses
(including any related attorneys' fees and advances thereof) in connection with,
based upon or arising or resulting from any claim, action, suit or proceeding to
which he may be made a party or in which he may be involved by reason of any
action taken or failure to act under the Plan and from and against any and all
amounts paid by him in settlement thereof, with the Company's approval, or paid
by him in satisfaction of any judgment in any such action, suit or proceeding
against him, PROVIDED that he shall give the Company an opportunity, at its own
expense, to defend the same before he undertakes to defend it on his own behalf.
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The foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of indemnification to which such persons may be
entitled under the Company's Certificate of Incorporation or By-laws, by
contract, as a matter of law, or otherwise.
9.5. NO LIMITATION ON COMPENSATION. Nothing in the Plan shall
be construed to limit the right of the Company or any of its subsidiaries to
establish other plans or to pay compensation to its employees, in cash or
property, in a manner that is not expressly authorized under the Plan.
9.6. REQUIREMENTS OF LAW. The granting of Options and the
issuance of shares of Common Stock pursuant to such Options shall be subject to
all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. No
Options shall be granted under the Plan, and no shares of Common Stock shall be
issued upon exercise of any Options granted under the Plan, if such grant or
exercise would result in a violation of applicable law, including the federal
securities laws and any applicable state or foreign securities laws.
9.7. FREEDOM OF ACTION. Subject to Section 8, nothing in the
Plan or any Option Agreement shall be construed as limiting or preventing the
Company or any of its subsidiaries from taking any action that it deems
appropriate or in its best interest.
9.8. TERM OF PLAN. Subject to the consummation of the
Spin-off, the Plan shall be effective as of the Effective Date. The Plan shall
thereafter continue in effect, unless sooner terminated pursuant to Section 8,
until the fifth anniversary of the Effective Date.
9.9. NO VOTING RIGHTS. Except as otherwise required by law, no
Participant holding any Options granted under the Plan shall have any right, in
respect of such Options, to vote on any matter submitted to the Company's
stockholders until such time as the shares of Common Stock issuable upon
exercise of such Options have been so issued.
9.10. GOVERNING LAW. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
Delaware, regardless of the law that might be applied under principles of
conflict of laws.
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EXHIBIT A
[Form of Management Stock Option Agreement]
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<PAGE> 13
MANAGEMENT STOCK OPTION AGREEMENT
MANAGEMENT STOCK OPTION AGREEMENT, dated as of October 8,
1996, between MCM Group, Inc., a Delaware corporation (the "Company"), and the
Grantee whose name appears on the signature page hereof (the "Grantee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on August 31, 1996, 100% of the outstanding Class A
common stock of the Company and 100% of the outstanding Class B common stock of
the Company was distributed to the stockholders of record of VK/AC Holding, Inc.
("VK/AC") on the record date for such distribution (such distribution, the
"Spin-off");
WHEREAS, immediately prior to the Spin-off, the Company
granted options to purchase an aggregate of approximately 48,359 shares of the
Class A common stock of the Company to those members of management of VK/AC and
its subsidiaries, including the Company and its subsidiaries, who, on the
effective date of the Spin-off, held options to purchase common stock of VK/AC;
WHEREAS, in connection with the Spin-off, the
Board of Directors of the Company has adopted the MCM Group,
Inc. Stock Purchase Plan (the "Stock Purchase Plan");
WHEREAS, on the date hereof, the Grantee and certain other
purchasers who are executives, senior officers or other key employees of the
Company or one of its direct or indirect subsidiaries have purchased an
aggregate of 18,200 shares of the Class C common stock of the Company, par value
$0.01 per share (the "Common Stock"), for a purchase price of $100.00 per
share, pursuant to the Stock Purchase Plan and separate management stock
subscription agreements between the Company and each such purchaser;
WHEREAS, in connection with the Spin-off, the Board of
Directors of the Company has adopted the MCM Group, Inc. Stock Option Plan (the
"Plan");
WHEREAS, pursuant to the terms of the Plan, the Board has
approved the grant to the Grantee of non-qualified stock options to purchase the
aggregate number of shares of Common Stock set forth under the heading "Initial
Value Options" on the signature page hereof, at an exercise price
<PAGE> 14
of $100 per share, and non-qualified options to purchase the aggregate number of
shares of Common Stock set forth under the heading "Premium Options" on the
signature page hereof, at an exercise price of $143.60 per share; and
WHEREAS, the Grantee and the Company desire to enter into an
agreement to evidence and confirm the grant of the options on the terms and
conditions set forth herein;
NOW, THEREFORE, to evidence the options so granted, and to set
forth its terms and conditions under the Plan, the Company and the Grantee
hereby agree as follows:
1. DEFINITIONS. Whenever used herein, the following terms
shall have the respective meanings set forth below:
(a) "Affiliate" means an entity controlling, controlled by or
under common control with the Company.
(b) "Alternative Option" has the meaning given in
Section 9(c).
(c) "Applicable Portion" means, with respect to Performance
Options granted hereunder, the percentage obtained by dividing (i) the excess of
(x) the EBITDA actually achieved as of the Target Date (or other applicable date
of determination) over (y) the Minimum EBITDA Target by (ii) the excess of the
Maximum EBITDA Target over the Minimum EBITDA Target.
(d) "Board" means the Board of Directors of the Company.
(e) "C&D Fund" means The Clayton & Dubilier Private Equity
Fund IV Limited Partnership, a Connecticut limited partnership, and any
successor investment vehicle managed by Clayton, Dubilier & Rice, Inc.
(f) "Cause" means (i) the willful failure by the Grantee to
perform substantially his duties as an employee of the Company or any Subsidiary
(other than any such failure due to physical or mental illness) after a demand
for substantial performance is delivered to the Grantee by the executive to
which the Grantee reports or by the Board, which notice identifies the manner in
which such executive or the Board, as the case may be, believes that the Grantee
has not substantially performed his duties, (ii) the
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Grantee's engaging in willful and serious misconduct that is or is expected to
be injurious to the Company or any Subsidiary, (iii) the Grantee's having been
convicted of, or entered a plea of guilty or NOLO CONTENDERE to, a crime that
constitutes a felony, (iv) the willful and material breach by the Grantee of any
written covenant or agreement with the Company or any Subsidiary not to disclose
any information pertaining to the Company, any Subsidiary or any Affiliate or
not to compete or interfere with the Company, any Subsidiary or any Affiliate or
with respect to any take-along or similar covenants applicable to any Common
Stock of the Grantee or (v) any violation by the Grantee of any federal, state
or foreign securities laws; PROVIDED that in the event that the Participant is
employed by the Company or a Subsidiary under an effective employment agreement
on the date of determination and such employment agreement shall contain a
different definition of Cause, the definition of Cause contained in such
employment agreement shall be substituted for the definition set forth above for
all purposes hereunder.
(g) "Change of Control" means the first to occur after
the Grant Date of the following events:
(i) the acquisition by any person, entity or "group"
(as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended), other than the Company, the Subsidiaries,
any employee benefit plan of the Company or the Subsidiaries,
or the C&D Fund, of 50% or more of the combined voting power
of the Company's then outstanding voting securities;
(ii) the merger or consolidation of the Company, as a
result of which persons who were stockholders of the Company
immediately prior to such merger or consolidation, do not,
immediately thereafter, own, directly or indirectly more than
50% of the combined voting power entitled to vote generally in
the election of directors of the merged or consolidated
company;
(iii) the liquidation or dissolution of the Company;
and
(iv) the sale of all or substantially all of the
assets of the Company to one or more persons or entities that
are not, immediately prior to such sale, Affiliates.
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(h) "Change in Control Price" means the price per share of
Common Stock paid in conjunction with any transaction resulting in a Change in
Control (as determined in good faith by the Board if any part of such price is
payable other than in cash).
(i) "Committee" means the Compensation Committee of the Board
(or such other committee of the Board which shall have jurisdiction over the
compensation of officers). If at any time no Committee shall be in office, the
Board shall perform the functions of the Committee.
(j) "Common Stock" means the Class C Common Stock, par value
$.01 per share, of the Company.
(k) "Company" means MCM Group, Inc., a Delaware corporation,
and any successor thereto.
(l) "EBITDA", for any period, shall mean the consolidated net
income of the Company and the Subsidiaries, determined prior to any reduction
for interest expense, taxes, depreciation or amortization.
(m) "Grant Date" means the date of this Agreement as of which
the Options are granted hereby.
(n) "Initial Value Options" means those Options granted
hereunder to purchase the number of Shares set forth under the heading "Initial
Value Options" on the signature page hereof, at an option exercise price equal
to $100.00 per share.
(o) "Involuntary Termination" means termination of the
Grantee's employment by the New Employer for any reason.
(p) "Maximum EBITDA Target" means, with respect to the
Performance Options granted hereunder, cumulative EBITDA of $25.8 million, which
shall be the cumulative EBITDA that the Company and the Subsidiaries must
achieve during the period commencing on the Grant Date and ending on the Target
Date for 100% of such Performance Options to become exercisable as of the Target
Date.
(q) "Minimum EBITDA Target" means, with respect to the
Performance Options granted hereunder, cumulative EBITDA of $22.2 million, which
shall be the minimum cumulative EBITDA that the Company and the Subsidiaries
must achieve during the period commencing on the Grant Date and
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<PAGE> 17
ending on the Target Date for any portion of such Performance Options to become
exercisable as of the Target Date.
(r) "New Employer" means the Participant's employer, or the
parent or a subsidiary of such employer, immediately following a Change in
Control.
(s) "Option" means the right granted pursuant to Section 2
hereof to purchase one share of Common Stock at the price and on the terms and
conditions specified in this Agreement.
(t) "Permanent Disability" means a physical or mental
disability or infirmity that prevents the performance of the Grantee's
employment-related duties lasting (or likely to last, based on competent medical
evidence presented to the Board) for a period of six months or longer. The
Board's reasoned and good faith judgment as to Permanent Disability shall be
final and shall be based on such competent medical evidence as shall be
presented to it by the Grantee or by any physician or group of physicians or
other competent medical expert employed by the Grantee or the Company to advise
the Board.
(u) "Performance Option" means those Options granted hereunder
which become exercisable in accordance with the provisions of Section 3(b) based
upon the financial performance of the Company and the Subsidiaries.
(v) "Plan" means the MCM Group, Inc. Stock Option
Plan, as the same may be amended from time to time.
(w) "Premium Options" means Options granted hereunder to
purchase the number of Shares set forth under the heading "Premium Options" on
the signature page hereof, at an option exercise price of $143.60 per share.
(x) "Public Offering" means the first day as of which sales of
Class A common stock of the Company are made to the public in the United States
pursuant to an underwritten public offering of the Class A common stock of the
Company led by one or more underwriters, at least one of which is of nationally
recognized standing.
(y) "Retirement" means the Grantee's retirement at or after
age 60.
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(z) "Service Options" means those Options granted hereunder
which become exercisable in accordance with the provisions of Section 3(a) based
upon the Grantee's completion of service with the Company and the Subsidiaries.
(aa) "Shares" means the shares of Common Stock
covered by the Options.
(bb) "Spin-off" means the distribution by VK/AC of 100% of the
outstanding Class A common stock of the Company and 100% of the outstanding
Class B common stock of the Company to the holders of record of the common stock
of VK/AC at the close of business on the record date for the distribution.
(cc) "Special Termination" means a termination of the
Grantee's active employment with the Company and the Subsidiaries that employ
the Grantee by reason of a termination by such employer Without Cause or a
termination due to death, Permanent Disability or Retirement or, in the event
that the Grantee is, at the time of such termination, party to an effective
employment agreement with the Company or any Subsidiary, dated as of the date
hereof, by the Grantee for "good reason," as defined in such employment
agreement.
(dd) "Subsidiary" means any corporation a majority of whose
outstanding voting securities is owned, directly or indirectly, by the Company.
(ee) "Target Date" means, with respect to Performance Options
granted hereunder, the third anniversary of the Grant Date.
2. CONFIRMATION OF GRANT; OPTION PRICE. The Company hereby
evidences and confirms its grant to the Grantee, effective as of the date
hereof, of (a) the Initial Value Options, at an option exercise price of $100.00
per share, and (b) the Premium Options, at an option exercise price of $143.60
per share. The Options are not intended to be incentive stock options under the
U.S. Internal Revenue Code of 1986, as amended. This Agreement is subordinate
to, and the terms and conditions of the Options granted hereunder are subject
to, the terms and conditions of the Plan.
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3. EXERCISABILITY.
(a) SERVICE OPTIONS. Except as otherwise provided in this
Agreement, 50% of the Initial Value Options and 50% of the Premium Options (such
Initial Value Options and Premium Options, the "Service Options") shall become
available for exercise, subject to the provisions hereof, in 20% installments,
with the first installment becoming exercisable on the first anniversary of the
date of this Agreement and with an additional 20% becoming exercisable on each
of the second, third, fourth and fifth anniversaries of the date of this
Agreement, subject in each such case to the Grantee's continued employment with
the Company or a Subsidiary until such anniversary date.
(b) PERFORMANCE OPTIONS. Except as otherwise provided in this
Agreement, the remaining 50% of the Initial Value Options and the remaining 50%
of the Premium Options (such remaining Initial Value Options and Premium
Options, the "Performance Options") shall become exercisable based on the
financial performance of the Company and the Subsidiaries during the period from
the Grant Date to the Target Date as follows. Except as otherwise provided in
this Agreement, the Applicable Portion of the Performance Options shall become
exercisable as of the Target Date, if and only if (i) the Company shall have
achieved at least the Minimum EBITDA Target as of such Target Date and (ii) the
Grantee shall have been continuously employed by the Company or one of the
Subsidiaries from the Grant Date until the Target Date; PROVIDED that, if the
Grantee's employment is sooner terminated by reason of a Special Termination,
then a proportionate share of the Applicable Portion of the Performance Options
(such proportionate share to be determined by multiplying (x) the Applicable
Portion, if any, determined as of the last day of the calendar quarter ending
prior to the date of the Special Termination for which the applicable financial
information is available, on the basis of the cumulative EBITDA achieved as of
such date, by (y) the product of (a) the number of Performance Options
multiplied by (b) a fraction, the numerator of which is equal to the number of
days in the period commencing on the Grant Date and ending on the date of the
Special Termination and the denominator of which is equal to 1,095) shall become
exercisable as of the date of such Special Termination. In the event of the
acceleration of the exercisability of any Performance Options by reason of a
Special Termination of the Grantee's employment prior to the Target Date,
one-half of such accelerated Performance Options shall be Initial
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<PAGE> 20
Value Options and the remaining one-half of such accelerated Performance Options
shall be Premium Options.
Notwithstanding the foregoing provisions of this paragraph
(b), subject to the continuous employment of the Grantee with the Company or one
of the Subsidiaries, Performance Options shall become exercisable nine years
following the Grant Date, regardless of whether the EBITDA Target has been
achieved.
(c) CONDITIONS. The Board may accelerate the exercisability of
any Option, all Options or any class of Options, at any time and from time to
time. Shares eligible for purchase may, subject to the provisions hereof,
thereafter be purchased, at any time and from time to time until the date one
day prior to the date on which the Options terminate, provided that any such
purchase shall be effected pursuant to and subject to the provisions contained
in the management stock subscription agreement related to such Shares. Any
Options held by the Grantee as of the date of the termination of his active
employment with the Company and the Subsidiaries that have not become
exercisable on or prior to the date of such termination in accordance with
Section 3(a) or 3(b) shall terminate and be cancelled immediately on such date.
4. TERMINATION OF OPTION.
(a) NORMAL TERMINATION DATE. Unless an earlier termination
date shall occur as specified in Section 4(b), the Options shall terminate on
the tenth anniversary of the date hereof (the "Normal Termination Date").
(b) EARLY TERMINATION. If the Grantee's active employment with
the Company and the Subsidiaries that employ the Grantee is voluntarily or
involuntarily terminated for any reason whatsoever prior to the Normal
Termination Date, any Options that have not become exercisable on or before the
effective date of such termination of employment shall terminate on such
effective date. Any Options that have become exercisable on or before the
effective date of such termination of the Grantee's active employment shall,
subject to the provisions of Section 5(c), remain exercisable for whichever of
the following periods is applicable, and if not exercised within such period,
shall terminate upon the expiration of such period: (i) if the Grantee's active
employment is terminated by reason of a Special Termination, any Options held by
the Grantee and then exercisable shall remain exercisable solely until the
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<PAGE> 21
first anniversary of the Grantee's termination of employment and (ii) if the
Grantee's active employment is terminated for any reason other than a Special
Termination or for Cause, any then exercisable Options held by such Grantee
shall remain exercisable for a period of sixty days after the earlier of (x) the
expiration of the Second Purchase Period (as defined in Section 5(c)(i)) and (y)
receipt by the Grantee of written notice that the C&D Fund does not intend to
exercise its right to purchase pursuant to Section 5(c)(i), provided that in no
event shall any Options be or remain exercisable on or after the Normal
Termination Date. Notwithstanding anything else contained in this Agreement, if
the Grantee's active employment with the Company and Subsidiaries that employ
the Grantee is terminated by any such employer for Cause, then all Options
(whether or not then exercisable) shall terminate and be cancelled immediately
upon such termination. Nothing in this Agreement shall be deemed to confer on
the Grantee any right to continue in the employ of the Company or any of the
Subsidiaries, or to interfere with or limit in any way the right of the Company
or any of the Subsidiaries to terminate such employment at any time.
5. RESTRICTIONS ON EXERCISE; NON-TRANSFERABILITY OF OPTION;
REPURCHASE OF OPTION.
(a) RESTRICTIONS ON EXERCISE. The Options may be exercised
only with respect to full shares of Common Stock. No fractional shares of Common
Stock shall be issued. Notwithstanding any other provision of this Agreement,
the Options may not be exercised in whole or in part, and no certificates
representing Shares shall be delivered, (i) unless all requisite approvals and
consents of any governmental authority of any kind having jurisdiction over the
exercise of options shall have been secured, (ii) unless the purchase of the
Shares upon the exercise of the Options shall be exempt from registration under
applicable U.S. federal and state securities laws, and applicable non-U.S.
securities laws, or the Shares shall have been registered under such laws, (iii)
unless all applicable U.S. federal, state and local and non-U.S. tax withholding
requirements shall have been satisfied and (iv) if such exercise would result in
a violation of the terms or provisions of or a default or an event of default
under any of the Financing Agreements (as such term is defined in Section 10).
The Company shall use commercially reasonable efforts to obtain the consents and
approvals referred to in clause (i) of the preceding sentence, to satisfy the
withholding requirements referred to in clause (iii) of the preceding sentence
and,
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if applicable, to obtain the consent of the parties to the Financing Agreements
referred to in clause (iv) of the preceding sentence so as to permit the Options
to be exercised.
(b) NON-TRANSFERABILITY OF OPTIONS. The Options may be
exercised only by the Grantee or by his estate. The Options are not assignable
or transferable, in whole or in part, and may not, directly or indirectly, be
offered, transferred, sold, pledged, assigned, alienated, hypothecated or
otherwise disposed of or encumbered (including without limitation by gift,
operation of law or otherwise) other than by will or by the laws of descent and
distribution to the estate of the Grantee upon his death, PROVIDED that the
deceased Grantee's beneficiary or the representative of his estate shall
acknowledge and agree in writing, in a form reasonably acceptable to the
Company, to be bound by the provisions of this Agreement and the Plan as if such
beneficiary or the estate were the Grantee.
(c) REPURCHASE OF OPTION ON TERMINATION OF EMPLOYMENT.
(i) TERMINATION OF EMPLOYMENT. If the Grantee's active
employment with the Company and any direct and indirect subsidiaries of
the Company that employ the Grantee is terminated for any reason, the
Company shall have an option to purchase all of those Options that have
become exercisable on or prior to the effective date of termination of
employment (the "Covered Options"), and shall have 60 days from the
date of the Grantee's termination (the "First Purchase Period") during
which to give notice in writing to the Grantee (or if his employment
was terminated by his death, his estate) of its election to exercise or
not to exercise such right to purchase all or any of the Covered
Options. The Company hereby undertakes to use reasonable efforts to act
as promptly as practicable following such termination to make such
election. If the Company fails to give notice that it intends to
exercise its right to purchase the Covered Options within the First
Purchase Period or the Company has given notice of its exercise of its
right to purchase only a portion of the Covered Options, the C&D Fund
shall have the right to purchase all or a portion of the Covered
Options that will not be purchased by the Company and shall have until
the expiration of the earlier of (x) 60 days following the end of the
First Purchase Period, or (y) 60 days from the date of receipt by the
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<PAGE> 23
C&D Fund of written notice that the Company does not intend to exercise
such right in full (the "Second Purchase Period"), to give notice in
writing to the Grantee (or his estate) of the C&D Fund's exercise of
its right to purchase all or any of the Covered Options. If the rights
to purchase the Covered Options of the Company and the C&D Fund granted
in this subsection are not exercised in full as provided herein, the
Grantee (or his estate) shall be entitled to retain the Covered Options
that will not be so repurchased, subject to all of the provisions of
this Agreement.
(ii) PURCHASE PRICE, ETC. All purchases pursuant to this
Section 5(c) by the Company or the C&D Fund shall be for a purchase
price and in the manner prescribed by Sections 5(f), (g), and (h).
(d) NOTICE OF TERMINATION. The Company shall give written
notice of any termination of the Grantee's active employment with each of the
Company and any direct or indirect subsidiaries of the Company that employ the
Grantee to the C&D Fund, except that if such termination (if other than as a
result of death) is by the Grantee, the Grantee shall give written notice of
such termination to the Company and the Company shall give written notice of
such termination to the C&D Fund.
(e) PUBLIC OFFERING. In the event of a Public Offering, none
of the Company or the C&D Fund shall have any rights to purchase the Covered
Options pursuant to this Section 5, and this Section 5 shall not apply to a
sale as part of a Public Offering or at any time thereafter.
(f) PURCHASE PRICE. Subject to Section 10(c), the purchase
price to be paid to the Grantee (or his estate) for the Covered Option (the
"Purchase Price") shall be equal to the excess, if any, of (a) the fair market
value of the Shares which may be purchased upon exercise of the Covered Option
(the "Fair Market Value") as of the effective date of the termination of
employment that gives rise to the right or obligation to repurchase (such
effective date, the "Determination Date"), over (b) the aggregate exercise price
of the Covered Option. Whenever determination of the Fair Market Value of such
Shares is required by this Agreement, such Fair Market Value shall be such
amount as is determined in good faith by the Board. In making a determination of
Fair Market Value, the Board shall give due consideration to such factors as it
deems appropriate, including, without limitation, the earnings and certain other
financial and
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<PAGE> 24
operating information of the Company and the Subsidiaries in recent periods, the
potential value of the Company and the Subsidiaries as a whole, the future
prospects of the Company and the Subsidiaries and the industries in which they
compete, the history and management of the Company and the Subsidiaries, the
general condition of the securities markets, the fair market value of securities
of companies engaged in businesses similar to those of the Company and the
Subsidiaries and the Applicable Share Valuation, as defined below. The
determination of Fair Market Value will not give effect to any restrictions on
transfer of the Shares or the fact that such Shares would represent a minority
interest in the Company. For purposes of this Agreement, the term "Applicable
Share Valuation" shall mean the annual valuation of the Shares performed by an
independent valuation firm chosen by the Board as of the last day of the last
fiscal year of the Company ending prior to the Determination Date, except that,
in the case of a Determination Date occurring during the fourth fiscal quarter
of any fiscal year of the Company beginning with the fourth quarter of the 1996
fiscal year of the Company, the term "Applicable Share Valuation" shall mean the
annual valuation of the Shares performed by an independent valuation firm chosen
by the Board as of the last day of such fourth fiscal quarter. Such annual
valuations shall be performed as promptly as practicable following the end of
each fiscal year of the Company, beginning with the 1996 fiscal year of the
Company. The Fair Market Value as determined in good faith by the Board and in
the absence of fraud shall be binding and conclusive upon all parties hereto. If
the Company at any time subdivides (by any stock split, stock dividend or
otherwise) the Common Stock into a greater number of shares, or combines (by
reverse stock split or otherwise) the Common Stock into a smaller number of
shares, the Purchase Price shall be appropriately adjusted to reflect such
subdivision or combination.
(g) CLOSING OF PURCHASE; PAYMENT OF PURCHASE PRICE. Subject to
Section 10, the closing of a purchase pursuant to this Section 5 shall take
place at the principal office of the Company on the tenth business day following
the receipt by the Grantee (or his estate) of the C&D Fund's or the Company's
notice of exercise of the right to purchase any of the Covered Options pursuant
to Section 5(c). At the closing, (i) subject to the proviso below, the Company,
shall pay the Purchase Price to the Grantee (or his estate) by delivery of a
check for the Purchase Price payable to the order of the Grantee (or his estate)
and (ii) the Grantee (or his estate) shall deliver to the Company such instru-
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<PAGE> 25
ments as the Company may reasonably request signed by the Grantee (or his
estate); provided, however, that if the Determination Date occurs during the
first or last fiscal quarter of any fiscal year of the Company, the Company may
defer the payment of a portion of the Purchase Price until the tenth business
day following receipt by the Company of the Applicable Share Valuation (such
tenth business day, the "Deferred Payment Date"). In the event of any such
deferral, (i) at the closing of the purchase of the Covered Option, the Company
shall pay to the Grantee (or his estate) an amount (the "First Installment
Amount") equal to 80% of the excess of (a) the Fair Market Value of the Shares
which may be purchased upon exercise of the Covered Option, determined pursuant
to Section 5(f) hereof on the basis of the most recent available valuation of
the Shares, over (b) the aggregate exercise price of the Covered Option, and
(ii) no later than the Deferred Payment Date, the Company shall pay an
additional amount to the Grantee (or his estate) equal to the excess, if any, of
(a) the sum of (1) the Purchase Price for the Covered Option and (2) an amount
calculated by multiplying the First Installment Amount by a percentage equal to
the average annual cost to the Company of its bank indebtedness obligations
outstanding during the period that payment of a portion of the Purchase Price is
delayed hereunder or, if there are no such obligations outstanding, one
percentage point greater than the average annual prime rate charged during such
period by Chase Bank or such other nationally recognized bank designated by the
Company, over (b) the First Installment Amount.
(h) APPLICATION OF THE PURCHASE PRICE TO CERTAIN LOANS. The
Grantee agrees that the Company and the C&D Fund shall be entitled to apply any
amounts to be paid by the Company or the C&D Fund, as the case may be, to
repurchase the Covered Option pursuant to this Section 5 to discharge any
indebtedness of the Grantee to the Company or any of its direct or indirect
subsidiaries, or indebtedness that is guaranteed by the Company or any of its
subsidiaries, including, but not limited to, any indebtedness of the Grantee
incurred to purchase any shares of Common Stock.
(i) WITHHOLDING. Whenever Shares are to be issued pursuant to
the Option, the Company may require the recipient of the Shares to remit to the
Company an amount sufficient to satisfy any applicable U.S. federal, state and
local and non-U.S. tax withholding requirements. In the event any cash is paid
to the Grantee or his estate or beneficiary pursuant to this Section 5, the
Company shall have the right to withhold an amount from such payment sufficient
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<PAGE> 26
to satisfy any applicable U.S. federal, state and local and non-U.S. tax
withholding requirements. If shares of Common Stock are traded on a national
securities exchange or bid and ask prices for shares of Common Stock are quoted
on the NASDAQ National Market System ("NASDAQ") operated by the National
Association of Securities Dealers, Inc., the Company may, if requested by the
Grantee, withhold Shares to satisfy applicable withholding requirements, subject
to the provisions of the Plan and any rules adopted by the Board or the
Committee regarding compliance with applicable law, including, but not limited
to, Section 16(b) of the U.S. Securities Exchange Act of 1934, as amended (the
"Exchange Act").
6. MANNER OF EXERCISE. To the extent that the Options shall
have become and remain exercisable as provided in Section 3 and subject to such
reasonable administrative regulations as the Board or the Committee may have
adopted, such Options may be exercised, in whole or in part, by notice to the
Secretary of the Company in writing given 15 business days prior to the date on
which the Grantee will so exercise any of the Options (the "Exercise Date"),
specifying the number of Shares with respect to which the Options are being
exercised (the "Exercise Shares") and the Exercise Date, PROVIDED that if shares
of Common Stock are traded on a U.S. national securities exchange or bid and ask
prices for shares of Common Stock are quoted over NASDAQ, notice may be given
five business days before the Exercise Date. On or before the Exercise Date, the
Company and the Grantee shall enter into a management stock subscription
agreement (the "Exercise Management Stock Subscription Agreement") substantially
in the form attached to the Plan as Exhibit B, or in such other form as may be
agreed upon by the Company and the Grantee. In accordance with the Exercise
Management Stock Subscription Agreement, (a) on or before the Exercise Date, the
Grantee shall deliver to the Company full payment for the Exercise Shares in
United States dollars in cash, or cash equivalent satisfactory to the Company,
and in an amount equal to the aggregate option exercise price for the Exercise
Shares and (b) on the Exercise Date, the Company shall deliver to the Grantee a
certificate or certificates representing the Exercise Shares, registered in the
name of the Grantee. If shares of common stock of the Company are listed for
trading on a national securities exchange or bid and ask prices for shares of
common stock of the Company are quoted over NASDAQ, the Grantee may, in lieu of
cash, tender shares of common stock of the Company having a market price on the
Exercise Date equal to the aggregate option exercise price for the Exercise
Shares or may deliver a combination
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<PAGE> 27
of cash and shares of common stock of the Company having a market price equal to
the difference between such aggregate exercise price and the amount of such cash
as payment for the aggregate option exercise price for the Exercise Shares,
subject to such rules and regulations as may be adopted by the Board or the
Committee to provide for the compliance of such payment procedure with
applicable law, including Section 16(b) of the Exchange Act. The Company may
require the Grantee to furnish or execute such other documents as the Company
shall reasonably deem necessary (i) to evidence such exercise, (ii) to determine
whether registration is then required under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and (iii) to comply with or satisfy the
requirements of the Securities Act, applicable state or non-U.S. securities laws
or any other law.
7. GRANTEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) INVESTMENT INTENTION. The Grantee represents and warrants
that the Options have been, and any Exercise Shares will be, acquired by him
solely for his own account for investment and not with a view to or for sale in
connection with any distribution thereof. The Grantee agrees that he will not,
directly or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise
dispose of any of the Options or Exercise Shares (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of any of the Options or Exercise
Shares), except in compliance with the Securities Act and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder, and in compliance with applicable state and foreign securities or
"blue sky" laws. The Grantee further understands, acknowledges and agrees that
none of the Exercise Shares may be transferred, sold, pledged, hypothecated or
otherwise disposed of unless the provisions of the related Exercise Management
Stock Subscription Agreement and the Certificate of Incorporation of the
Company shall have been complied with or have expired.
(b) LEGEND. The Grantee acknowledges that any certificate
representing the Exercise Shares shall bear an appropriate legend, which will
include, without limitation, the following language:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TRANSFER RESTRICTIONS, HOLDBACK AND OTHER PROVISIONS OF A
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, DATED AS OF OCTOBER
8,
15
<PAGE> 28
1996, AND NEITHER THIS CERTIFICATE NOR THE SHARES REPRESENTED
BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN
ACCORDANCE WITH THE PROVI SIONS OF SUCH MANAGEMENT STOCK
SUBSCRIPTION AGREE MENT, A COPY OF WHICH IS ON FILE WITH THE
SECRE TARY OF THE COMPANY. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE ENTITLED TO CERTAIN OF THE BENEFITS OF AND ARE
BOUND BY THE OBLIGATIONS SET FORTH IN A REGISTRATION AND
PARTICIPATION AGREEMENT, DATED AS OF AUGUST 31, 1996, AND ANY
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS THERETO, AMONG THE
COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS (i) (A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE
COMPANY AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL
BE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
SUCH DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
SUCH ACT OR (C) A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION, REASONABLY SATISFACTORY TO COUNSEL FOR
THE COMPANY, SHALL HAVE BEEN OBTAINED WITH RESPECT TO SUCH
DISPOSITION AND (ii) SUCH DISPOSITION IS PURSUANT TO
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM."
(c) SECURITIES LAW MATTERS. The Grantee acknowledges receipt
of advice from the Company that (i) the Exercise Shares will not be registered
under the Securities Act or any state or foreign securities or "blue sky" laws,
(ii) it is not anticipated that there will be any public market for the Exercise
Shares, (iii) the Exercise Shares must be held indefinitely and the Grantee must
continue to bear the economic risk of the investment in the Exercise Shares
unless the Exercise Shares are subsequently registered under the Securities Act
and such state or foreign laws or an exemption from registration is available,
(iv) Rule 144 under the Securities Act ("Rule 144") is not presently available
with respect to sales of securities of the Company and the Company has made no
covenant to make
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<PAGE> 29
Rule 144 available, (v) when and if the Exercise Shares may be disposed of
without registration in reliance upon Rule 144, such disposition can generally
be made only in limited amounts in accordance with the terms and conditions of
such Rule, (vi) the Company does not plan to file reports with the Commission or
make information concerning the Company publicly available, (vii) if the
exemption afforded by Rule 144 is not available, sales of the Exercise Shares
may be difficult to effect because of the absence of public information
concerning the Company, (viii) a restrictive legend in the form heretofore set
forth shall be placed on the certificates representing the Exercise Shares and
(ix) a notation shall be made in the appropriate records of the Company
indicating that the Exercise Shares are subject to restrictions on transfer set
forth in this Agreement and, if the Company should in the future engage the
services of a stock transfer agent, appropriate stop-transfer restrictions will
be issued to such transfer agent with respect to the Exercise Shares.
(d) COMPLIANCE WITH RULE 144. If any of the Exercise Shares
are to be disposed of in accordance with Rule 144 under the Securities Act, the
Grantee shall transmit to the Company an executed copy of Form 144 (if required
by Rule 144) no later than the time such form is required to be transmitted to
the Commission for filing and such other documentation as the Company may
reasonably require to assure compliance with Rule 144 in connection with such
disposition.
(e) ABILITY TO BEAR RISK. The Grantee covenants that he will
not exercise all or any portion of any of the Options prior to the registration
of the Shares under the Securities Act unless (i) the financial situation of the
Grantee is such that he can afford to bear the economic risk of holding the
Exercise Shares for an indefinite period and (ii) he can afford to suffer the
complete loss of his investment in the Exercise Shares.
(f) REGISTRATION; RESTRICTIONS ON TRANSFER; HOLDBACK UPON
PUBLIC OFFERING. In respect of any Exercise Shares purchased upon exercise of
any of the Options, the Grantee shall be entitled to the rights and subject to
the obligations created under the Registration and Participation Agreement,
dated as of August 31, 1996, as the same may be amended from time to time, among
the Company and certain stockholders of the Company, to the extent set forth
therein. The Grantee shall also be subject to the restrictions on transfer
contained in the Exercise
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<PAGE> 30
Management Stock Subscription Agreement. Further, the Grantee agrees that, in
the event that the Company files a registration statement under the Securities
Act with respect to an underwritten public offering of any shares of its
capital stock, the Grantee will not effect any public sale (including a sale
under Rule 144) or distribution of any shares of Common Stock (other than as
part of such underwritten public offering) during the 20 days prior to and the
180 days after the effective date of such registration statement.
(g) SECTION 83(b) ELECTION. The Grantee agrees that, within 20
days after any Exercise Date, he shall give notice to the Company as to whether
or not he has made or will make an election pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, with respect to the Exercise Shares
purchased on such date, and acknowledges that he will be solely responsible for
any and all tax liabilities payable by him in connection with his receipt of
the Exercise Shares or attributable to his making or failing to make such an
election.
8. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Grantee that (a) the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the State of Delaware, (b) this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding obligation
of the Company enforceable against the Company in accordance with its terms,
and (C) the Exercise Shares, when issued, delivered and paid for, upon exercise
of any of the Options in accordance with the terms hereof and the Exercise
Management Stock Subscription Agreement, will be duly and validly issued, fully
paid and nonassessable, and free and clear of any liens or encumbrances other
than those created pursuant to this Agreement or otherwise in connection with
the transactions contemplated hereby.
9. CHANGE IN CONTROL.
(a) ACCELERATED EXERCISABILITY AND PAYMENT. Unless the Board
shall otherwise determine in the manner set forth in Section 9(c), in the event
of a Change in Control, each Service Option (whether or not then exercisable)
and the Applicable Portion of the Performance Options, determined as provided in
Section 9(b) below, shall be cancelled in exchange for a payment in cash of an
amount equal to the excess, if any, of the Change in Control Price
18
<PAGE> 31
over the aggregate exercise price for such Options. Such payment shall be made
within 30 days following the closing of the transaction constituting the Change
in Control. Subject to Section 9(c) below, all Performance Options then
outstanding, other than the Applicable Portion of such Performance Options,
shall be canceled and forfeited effective as of the closing of such transaction.
(b) DETERMINATION OF EXERCISABLE PERFORMANCE OPTIONS. For
purposes of Section 9(a), the Applicable Portion of the Performance Options that
shall be canceled in exchange for the payment described in Section 9(a) shall be
determined on the basis of the cumulative EBITDA achieved during the period from
the Grant Date to the last day of the calendar quarter ending prior to the date
of the consummation of the transaction constituting the Change in Control for
which the applicable financial information is available.
(c) ALTERNATIVE OPTIONS. Notwithstanding Sections 9(a)
and 9(b), no cancellation, acceleration of exercisability, vesting or cash
settlement or other payment shall occur with respect to any Option if the Board
reasonably determines in good faith, prior to the occurrence of a Change in
Control, that such Option shall be honored or assumed, or new rights substituted
therefor (such honored, assumed or substituted Option being hereinafter referred
to as an "Alternative Option") by the New Employer, PROVIDED that any such
Alternative Option must:
(i) provide the Grantee with rights and entitlements
substantially equivalent to or better than the
rights, terms and conditions applicable under such
Option, including, but not limited to, an identical
or better exercise and vesting schedule, and
identical or better timing and methods of payment;
(ii) have substantially equivalent economic value to such
Option (determined at the time of the Change in
Control); and
(iii) have terms and conditions which provide that in the
event that the Grantee suffers an Involuntary
Termination within two years following a Change in
Control:
(1) any conditions on the Grantee's rights
under, or any restrictions on transfer
19
<PAGE> 32
or exercisability applicable to, each such
Alternative Option shall be waived or shall
lapse, as the case may be; or
(2) the Grantee shall have the right to
surrender such Alternative Option within 30
days following such termination in exchange
for a payment in cash equal to the excess of
the Fair Market Value of the common stock
subject to the Alternative Option over the
price, if any, that the Grantee would be
required to pay to exercise such Alternative
Option.
10. CERTAIN RESTRICTIONS ON REPURCHASES.
(a) FINANCING AGREEMENTS, ETC. Notwithstanding any other
provision of this Agreement, the Company shall not be permitted to repurchase
any Covered Options from the Grantee if (i) such repurchase would result in a
violation of the terms or provisions of, or result in a default or an event of
default under, any financing or security agreement or document entered into in
connection with the Spin-off or the operations of the Company or the
Subsidiaries from time to time (such agreements and documents, as each may be
amended, modified or supplemented from time to time, are referred to herein as
the "Financing Agreements"), in each case as the same may be amended, modified
or supplemented from time to time, or (ii) such repurchase would violate any of
the terms or provisions of the Certificate of Incorporation of the Company, or
(iii) the Company has no funds legally available therefor under the General
Corporation Law of the State of Delaware.
(b) DELAY OF REPURCHASE. In the event that a repurchase by the
Company otherwise permitted or required under Section 5(c) is prevented solely
by the terms of Section 10(a), (i) such repurchase will be postponed and will
take place without the application of further conditions or impediments (other
than as set forth in Section 5 hereof or in this Section 10) at the first
opportunity thereafter when the Company has funds legally available therefor and
when such repurchase will not result in any default, event of default or
violation under any of the Financing Agreements or in a violation of any term or
provision of the Certificate of Incorporation of the Company and (ii) such
repurchase obligation shall rank against other similar repurchase obligations
with respect to shares of Common Stock or
20
<PAGE> 33
options in respect thereof according to priority in time of (A) the effective
date of the termination of employment in connection with any repurchase
obligation arising pursuant to an exercise of the option of the Company under
Section 5(c)(i) of the applicable management stock option agreements or under
the comparable provisions of any applicable management stock subscription
agreements, or (B) as to any repurchase obligation arising pursuant to an
exercise of any holder's right to require a repurchase under any applicable
management stock subscription agreement, the date upon which the Company
receives written notice of such exercise, PROVIDED that any such repurchase
obligations as to which a common date determines priority under clause (A) or
(B) above shall be of equal priority and shall share pro rata in any repurchase
payments made pursuant to clause (i) above and PROVIDED, FURTHER, that any
repurchase commitment with respect to shares of Common Stock arising from
Permanent Disability, death, Retirement or financial hardship pursuant to any
applicable management stock subscription agreement shall have priority over any
other repurchase obligation.
(c) PURCHASE PRICE ADJUSTMENT. In the event that a repurchase
of any Covered Options from the Grantee is delayed pursuant to this Section 10,
the purchase price for such Covered Options when the repurchase of such Covered
Options eventually takes place as contemplated by Section 10(b) shall be the
sum of (i) the Purchase Price of such Covered Option determined in accordance
with Section 5(f) at the time that the repurchase of such Option would have
occurred but for the operation of this Section 10, plus (ii) an amount equal to
interest on such Purchase Price for the period from the date on which the
completion of the repurchase would have taken place but for the operation of
this Section 10 to the date on which such repurchase actually takes place (the
"Delay Period") at a rate equal to the weighted average cost of the Company's
bank indebtedness obligations outstanding during the Delay Period or, if there
are no such obligations outstanding, one percentage point greater than the
average prime rate charged during such period by Chase Bank or such other
nationally recognized bank designated by the Company.
11. NO RIGHTS AS STOCKHOLDER. The Grantee shall have no voting
or other rights as a stockholder of the Company with respect to any Shares
covered by the Options until the exercise of the Options and the issuance of a
certificate or certificates to him for such Shares. No adjustment shall be made
for dividends or other rights for
21
<PAGE> 34
which the record date is prior to the issuance of such certificate or
certificates.
12. CAPITAL ADJUSTMENTS. The number and price of the Shares
covered by the Options shall be proportionately adjusted to reflect any stock
dividend, stock split or share combination of the Common Stock or any
recapitalization of the Company. Subject to any required action by the
stock holders of the Company, in any merger, consolidation, reorganization,
exchange of shares, liquidation or dissolution, the Options shall pertain to
the securities and other property, if any, that a holder of the number of
shares of Common Stock covered by the Options would have been entitled to
receive in connection with such event.
13. MISCELLANEOUS.
(a) NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, the C&D Fund or the
Grantee, as the case may be, at the following addresses or to such other address
as the Company, the C&D Fund or the Grantee, as the case may be, shall specify
by notice to the others:
(i) if to the Company, to it at:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
ATTENTION: General Counsel
(ii) if to the Grantee, to the Grantee at the
address set forth on the signature page hereof.
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<PAGE> 35
(iii) if to the C&D Fund, to:
The Clayton & Dubilier Private Equity
Fund IV Limited Partnership
270 Greenwich Avenue
Greenwich, Connecticut 06830
ATTENTION: Clayton & Dubilier Associates
IV Limited Partnership,
Joseph L. Rice, III
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof. Copies of any notice or other communication given under this
Agreement shall also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
ATTENTION: Alberto Cribiore
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
ATTENTION: Franci J. Blassberg, Esq.
The C&D Fund also shall be given a copy of any notice or other communication
between the Grantee and the Company under this Agreement at its address as set
forth above.
(b) BINDING EFFECT; BENEFITS. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Except as provided in Section 5, nothing in
this Agreement, express or implied, is intended or shall be construed to give
any person other than the parties to this Agreement or their respective
successors or assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein.
(c) WAIVER; AMENDMENT.
(i) WAIVER. Any party hereto may by written notice to the
other parties (A) extend the time for the
23
<PAGE> 36
performance of any of the obligations or other actions of the other
parties under this Agreement, (B) waive compliance with any of the
conditions or covenants of the other parties contained in this
Agreement and (C) waive or modify performance of any of the
obligations of the other parties under this Agreement, PROVIDED that
any waiver of the provisions of Section 5 must be consented to
by the C&D Fund. Except as provided in the preceding sentence, no
action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or
agreements contained herein. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach and no
failure by a party to exercise any right or privilege hereunder shall
be deemed a waiver of such party's rights or privileges hereunder or
shall be deemed a waiver of such party's rights to exercise the same
at any subsequent time or times hereunder.
(ii) AMENDMENT. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Grantee and
the Company, PROVIDED that any amendment adversely affecting the rights
of the C&D Fund hereunder must be consented to by the C&D Fund. The
parties hereto acknowledge that the Company's consent to an amendment
or modification of this Agreement is subject to the terms and
provisions of the Financing Agreements.
(d) ASSIGNABILITY. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Grantee without the prior written consent of
the other parties. The C&D Fund may assign from time to time all or any portion
of its rights under Section 5 to one or more persons or other entities
designated by it.
(e) APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, REGARDLESS OF THE
LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICT OF LAWS.
(f) SECTION AND OTHER HEADINGS, ETC. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or
24
<PAGE> 37
interpretation of this Agreement. In this Agreement all references to "dollars"
or "$" are to United States dollars.
(g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
25
<PAGE> 38
IN WITNESS WHEREOF, the Company and the Grantee have executed
this Agreement as of the date first above written.
MCM GROUP, INC.
By:
----------------------------------------
Name:
Title:
THE GRANTEE:
[Name]
By:
----------------------------------------
Name:
Attorney-in-fact
Address of the Grantee:
Address
Initial Value Options Premium Options
--------------------- ---------------
Total Number of
Shares of Common
Stock for the
Purchase of Which
Options have Been
Granted: Amount4 Shares Amount4 Shares
26
<PAGE> 39
EXHIBIT B
[Form of Management Stock Subscription Agreement]
18
<PAGE> 40
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, dated as of October
8, 1996, between MCM Group, Inc., a Delaware corporation (the "Company"), and
the Purchaser whose name appears on the signature page hereof (the "Purchaser").
W I T N E S S E T H:
WHEREAS, on August 31, 1996, 100% of the outstanding Class A
common stock of the Company (the "Company Common Stock") was distributed to the
stockholders of record of VK/AC Holding, Inc. ("VK/AC") on the record date for
such distribution (such distribution, the "Spin-off"), including the Clayton &
Dubilier Private Equity Fund IV Limited Partnership, a Connecticut limited
partnership and majority stockholder of VK/AC (together with any successor
investment vehicle managed by Clayton, Dubilier & Rice, Inc., the "C&D Fund");
WHEREAS, immediately prior to the Spin-off, the Company
granted options to purchase an aggregate of approximately 48,359 shares of the
Class A common stock of the Company to those members of management of VK/AC and
its subsidiaries, including the Company and its subsidiaries, who, on the
effective date of the Spin-off, held options to purchase the common stock of
VK/AC;
WHEREAS, in connection with the Spin-off, the Board of
Directors of the Company has adopted the MCM Group, Inc. Stock Purchase Plan
(the "Stock Purchase Plan");
WHEREAS, following the Spin-off, the Company will issue up to
an aggregate of 18,200 shares of its Class C Common Stock, par value $.01 per
share (the "Common Stock"), to the Purchaser and to certain other purchasers who
are executives, senior officers or other key employees of the Company or one of
its direct or indirect subsidiaries, pursuant to the Stock Purchase Plan, this
Agreement and other substantially identical management stock subscription
agreements and will grant options to purchase up to 44,052 shares of Common
Stock to the Purchaser and such other executive officers and key employees
pursuant to the MCM Group, Inc. Stock Option Plan;
WHEREAS, the Purchaser (an executive, senior officer or other
key employee of the Company or one of its
<PAGE> 41
direct or indirect subsidiaries) desires to subscribe for and purchase, and the
Company desires to sell to the Purchaser, the aggregate number of shares of
Common Stock set forth on the signature page hereof (each a "Share" and,
collectively, the "Shares");
NOW, THEREFORE, to implement the foregoing and in
consideration of the mutual agreements contained herein, the parties hereto
hereby agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
(a) PURCHASE OF COMMON STOCK. Subject to all of the terms
and conditions of this Agreement, the Purchaser hereby subscribes for and shall
purchase, and the Company shall sell to the Purchaser, the Shares at a purchase
price of $100.00 per Share, at the Closing provided for in Section 2(a) hereof.
Notwithstanding anything in this Agreement to the contrary, the Company shall
have no obligation to sell any Common Stock to (I) any person who will not be an
employee of the Company or a direct or indirect subsidiary of the Company
immediately following the Closing at which such Common Stock is to be sold or
(II) any person who is a resident of a jurisdiction in which the sale of Common
Stock to him would constitute a violation of the securities, "blue sky" or other
laws of such jurisdiction.
(b) CONSIDERATION. Subject to all of the terms and
conditions of this Agreement, the Purchaser shall deliver to the Company at the
Closing referred to in Section 2(a) hereof (i) immediately available funds in an
amount equal to 40% of the aggregate purchase price set forth on the signature
page hereof and (ii) a fully executed promissory note (the "Promissory Note")
substantially in the form attached hereto as Annex A, evidencing the full
recourse interest bearing loan by the Company to the Purchaser of a principal
amount equal to 60% of such aggregate purchase price.
2. CLOSING.
(a) TIME AND PLACE. Except as otherwise agreed by the
Company and the Purchaser, the closing (the "Closing") of the transaction
contemplated by this Agreement shall be held at the offices of Debevoise &
Plimpton, 875 Third Avenue, New York, New York at 10:00 a.m. (New York time) on
October 8, 1996.
2
<PAGE> 42
(b) DELIVERY BY THE COMPANY. At the Closing the Company shall
deliver to the Purchaser a stock certificate registered in such Purchaser's name
and representing the Shares, which certificate shall bear the legends set forth
in Section 3(b).
(c) DELIVERY BY THE PURCHASER. At the Closing the Purchaser
shall deliver to the Company the consideration referred to in Section 1(b)
hereof.
3. PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) INVESTMENT INTENTION. The Purchaser represents and
warrants that he is acquiring the Shares solely for his own account for
investment and not with a view to or for sale in connection with any
distribution thereof. The Purchaser agrees that he will not, directly or
indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of
any of the Shares (or solicit any offers to buy, purchase or otherwise acquire
or take a pledge of any Shares), except in compliance with the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder, and in
compliance with applicable state and foreign securities or "blue sky" laws. The
Purchaser further understands, acknowledges and agrees that none of the Shares
may be transferred, sold, pledged, hypothecated or otherwise disposed of (i)
unless the provisions of Sections 4 through 8 hereof, inclusive, shall have
been complied with or have expired, (ii) unless the provisions of the
Certificate of Incorporation have been complied with or have expired, (iii)
unless (A) such disposition is pursuant to an effective registration statement
under the Securities Act, (B) the Purchaser shall have delivered to the Company
an opinion of counsel, which opinion and counsel shall be reasonably
satisfactory to the Company, to the effect that such disposition is exempt from
the provisions of Section 5 of the Securities Act or (C) a no-action letter from
the Commission, reasonably satisfactory to the Company, shall have been
obtained with respect to such disposition and (IV) unless such disposition is
pursuant to registration under any applicable state securities laws or an
exemption therefrom.
(b) LEGENDS. The Purchaser acknowledges that the certificate
or certificates representing the Shares shall bear an appropriate legend, which
will include, without limitation, the following language:
3
<PAGE> 43
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TRANSFER RESTRICTIONS, HOLDBACK AND OTHER PROVISIONS OF A
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, DATED AS OF OCTOBER
8, 1996, AND NEITHER THIS CERTIFICATE NOR THE SHARES
REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE TRANSFERABLE
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH MANAGEMENT
STOCK SUBSCRIPTION AGREEMENT, A COPY OF WHICH IS ON FILE WITH
THE SECRETARY OF THE COMPANY. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE ENTITLED TO CERTAIN OF THE BENEFITS OF AND ARE
BOUND BY THE OBLIGATIONS SET FORTH IN A REGISTRATION AND
PARTICIPATION AGREEMENT, DATED AS OF AUGUST 31, 1996, AND ANY
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS THERETO, AMONG THE
COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS (I) (A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE
COMPANY AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL
BE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
SUCH DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF
SUCH ACT OR (C) A NO-ACTION LETTER FROM THE SECURITIES AND
EXCHANGE COMMISSION, REASONABLY SATISFACTORY TO COUNSEL FOR
THE COMPANY, SHALL HAVE BEEN OBTAINED WITH RESPECT TO SUCH
DISPOSITION AND (II) SUCH DISPOSITION IS PURSUANT TO
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM."
(c) SECURITIES LAW MATTERS. The Purchaser acknowledges
receipt of advice from the Company that (i) the Shares have not been registered
under the Securities Act or any state or foreign securities or "blue sky" laws,
(ii) it is not anticipated that there will be any public market for the Shares,
(iii) the Shares must be held indefinitely and the Purchaser must continue to
bear the economic risk of the investment in the Shares unless the Shares are
subsequently registered under the Securities Act and such state or foreign laws
or an exemption from registration is available,
4
<PAGE> 44
(IV) Rule 144 promulgated under the Securities Act ("Rule 144") is not presently
available with respect to sales of securities of the Company and the Company has
made no covenant to make Rule 144 available, (v) when and if the Shares may be
disposed of without registration in reliance upon Rule 144, such disposition can
generally be made only in limited amounts in accordance with the terms and
conditions of such Rule, (vi) the Company does not plan to file reports with the
Commission or make information concerning the Company publicly available, (vii)
if the exemption afforded by Rule 144 is not available, sales of the Shares may
be difficult to effect because of the absence of public information concerning
the Company, (viii) a restrictive legend in the form heretofore set forth shall
be placed on the certificates representing the Shares and (ix) a notation shall
be made in the appropriate records of the Company indicating that the Shares are
subject to restrictions on transfer set forth in this Agreement and, if the
Company should in the future engage the services of a stock transfer agent,
appropriate stop-transfer restrictions will be issued to such transfer agent
with respect to the Shares.
(d) COMPLIANCE WITH RULE 144. If any of the Shares are to be
disposed of in accordance with Rule 144, the Purchaser shall transmit to the
Company an executed copy of Form 144 (if required by Rule 144) no later than the
time such form is required to be transmitted to the Commission for filing and
such other documentation as the Company may reasonably require to assure
compliance with Rule 144 in connection with such disposition.
(e) ABILITY TO BEAR RISK. The Purchaser represents and
warrants that (I) the financial situation of the Purchaser is such that he can
afford to bear the economic risk of holding the Shares for an indefinite period
and (II) he can afford to suffer the complete loss of his investment in the
Shares.
(f) QUESTIONNAIRE. The Purchaser agrees to furnish such
documents and comply with such reasonable requests of the Company as may be
necessary to substantiate his status as a qualifying investor in connection
with the private offering of shares of Common Stock to the Purchaser and the
other purchasers to whom such shares are being sold in connection with the
Spin-off. The Purchaser represents and warrants that all information contained
in such documents and any other written materials concerning the status of the
Purchaser furnished by the Purchaser to the Company in
5
<PAGE> 45
connection with such requests will be true, complete and correct in all material
respects.
(g) ACCESS TO INFORMATION. The Purchaser represents and
warrants that (i) he has carefully reviewed the materials furnished to him in
connection with the transaction contemplated hereby, (ii) he has been granted
the opportunity to ask questions of, and receive answers from, representatives
of the Company concerning the terms and conditions of the purchase of the Shares
and to obtain any additional information that he deems necessary to verify the
accuracy of the information contained in such materials and (iii) his knowledge
and experience in financial and business matters is such that he is capable of
evaluating the risks of the investment in the Shares.
(h) REGISTRATION; RESTRICTIONS ON SALE UPON PUBLIC OFFERING.
The Purchaser shall be entitled to the rights and subject to the obligations
created under the Registration and Participation Agreement, dated as of August
31, 1996, as the same may be amended from time to time, among the Company and
certain stockholders of the Company, to the extent provided therein. The
Purchaser agrees that, in the event that the Company files a registration
statement under the Securities Act with respect to an underwritten public
offering of any shares of its capital stock, the Purchaser will not effect any
public sale (including a sale under Rule 144) or distribution of any shares of
the Common Stock (other than as part of such underwritten public offering)
during the 20 days prior to and the 180 days after the effective date of such
registration statement.
(i) SECTION 83(B) ELECTION. The Purchaser agrees that, within
20 days after the Closing, he shall give notice to the Company as to whether or
not he has made or will make an election pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, with respect to the Shares purchased
at such Closing, and acknowledges that he will be solely responsible for any and
all tax liabilities payable by him in connection with his receipt of the Shares
or attributable to his making or failing to make such an election.
4. RESTRICTIONS ON DISPOSITION OF SHARES. Neither the
Purchaser nor any of his heirs or representatives shall sell, assign, transfer,
pledge or otherwise directly or indirectly dispose of or encumber any of the
Shares to or with any other person, firm or corporation (including, without
limitation, transfers to any other holder of the Com-
6
<PAGE> 46
pany's capital stock, dispositions by gift, by will, by a corporation as a
distribution in liquidation and by operation of law other than a transfer of
Shares by operation of law to the estate of the Purchaser upon the death of the
Purchaser, PROVIDED that such estate shall be bound by all provisions of this
Agreement and the Certificate of Incorporation of the Company) except as
provided in Sections 5 through 8 hereof, inclusive and in the transfer
restrictions contained in the Certificate of Incorporation of the Company. The
restrictions contained in this Section 4 (but not the restrictions contained in
the Certificate of Incorporation which shall terminate only as provided therein)
shall terminate in the event that an underwritten public offering of the Class A
common stock of the Company led by one or more underwriters at least one of
which is of nationally recognized standing (a "Public Offering") has been
consummated and shall not apply to a sale as part of a Public Offering or at any
time thereafter.
5. OPTIONS OF THE COMPANY AND THE C&D FUND UPON PROPOSED
DISPOSITION.
(a) RIGHTS OF FIRST REFUSAL. If the Purchaser desires to
accept an offer (which must be in writing and for cash, be irrevocable by its
terms for at least 60 days and be a bona fide offer as determined in good faith
by the Board of Directors of the Company (the "Board") or the Executive
Committee thereof) from any prospective purchaser to purchase all or any part of
the Shares at any time owned by him, he shall give notice in writing to the
Company and the C&D Fund (i) designating the number of Shares proposed to be
sold, (ii) naming the prospective purchaser of such Shares and (iii) specifying
the price (the "Offer Price") at and terms (the "Offer Terms") upon which he
desires to sell the same. During the 30-day period following receipt of such
notice by the Company and the C&D Fund (the "First Refusal Period"), the Company
shall have the right to purchase from the Purchaser all (but not less than all)
of the Shares specified in such notice, at the Offer Price and on the Offer
Terms. The Company hereby undertakes to use reasonable efforts to act as
promptly as practicable following receipt of such notice to determine whether it
shall elect to exercise such right. If the Company fails to exercise such rights
within the First Refusal Period, the C&D Fund shall have the right to purchase
all (but not less than all) of the Shares specified in such notice, at the Offer
Price and on the Offer Terms, at any time during the period beginning at the
earlier of (x) the end of the First Refusal Period and (y) the date of receipt
by the C&D Fund of
7
<PAGE> 47
written notice that the Company has elected not to exercise its rights under
this Section 5(a) and ending 30 days thereafter (the "Second Refusal Period").
The rights provided hereunder shall be exercised by written notice to the
Purchaser given at any time during the applicable period. If such right is
exercised, the Company or the C&D Fund, as the case may be, shall deliver to the
Purchaser a certified or bank check for the Offer Price, payable to the order of
the Purchaser, against delivery of certificates or other instruments
representing the Shares so purchased, appropriately endorsed by the Purchaser.
If such right shall not have been exercised prior to the expiration of the
Second Refusal Period, then at any time during the 30 days following the
expiration of the Second Refusal Period, the Purchaser may sell such Shares to
(but only to) the intended purchaser named in his notice to the Company and the
C&D Fund at the Offer Price and on the Offer Terms specified in such notice,
free of all restrictions or obligations imposed by, and free of any rights or
benefits set forth in, Sections 5 through 8, inclusive, of this Agreement,
PROVIDED that such intended purchaser shall have agreed in writing to make and
be bound by the representations, warranties and covenants set forth in Section 3
hereof, other than those set forth in Sections 3(g), the first sentence of 3(h)
and 3(i), pursuant to an instrument of assumption satisfactory in substance and
form to the Company. The right of the Purchaser to sell Shares set forth in this
Section 5(a), subject to the rights of first refusal set forth in this Section
5(a), shall be suspended during the Option Periods referred to in Section 6
hereof, but the provisions of Section 6 shall not otherwise restrict the
ability of the Purchaser to sell the Shares, whether before or after such
Option Periods, pursuant to the terms and subject to the restrictions set forth
in this Section 5(a). The rights of the Company and the C&D Fund under the
Certificate of Incorporation of the Company shall not be effected by the
provisions of this Section 5(b).
(b) PUBLIC OFFERING. In the event that a Public Offering has
been consummated, neither the Company nor the C&D Fund shall have any rights to
purchase the Shares from the Purchaser pursuant to this Section 5 and this
Section 5 shall not apply to a sale as part of a Public Offering or at any time
thereafter.
8
<PAGE> 48
6. OPTIONS EFFECTIVE ON TERMINATION OF EMPLOYMENT OR
UNFORESEEN PERSONAL HARDSHIP OF THE PURCHASER.
(a) TERMINATION OF EMPLOYMENT. If the Purchaser's active
employment with the Company and any direct and indirect subsidiaries of the
Company that employ the Purchaser is terminated for any reason whatsoever the
Company shall have an option to purchase all or a portion of the Shares then
held by the Purchaser (or, if his employment was terminated by his death, his
estate) and shall have 60 days from the date of the Purchaser's termination
(such 60-day period being hereinafter referred to as the "First Option Period")
during which to give notice in writing to the Purchaser (or his estate) of its
election to exercise or not to exercise such option, in whole or in part. The
Company hereby undertakes to use reasonable efforts to act as promptly as
practicable following such termination to make such election. If the Company
fails to give notice that it intends to exercise such option within the First
Option Period or the Company gives notice that it intends to exercise such
option with respect to only a portion of the Shares, the C&D Fund shall have the
right to purchase all or a portion of the Shares then held by the Purchaser (or
his estate) that will not be repurchased by the Company and shall have until the
expiration of the earlier of (X) 60 days following the end of the First Option
Period, or (Y) 60 days from the date of receipt by the C&D Fund of written
notice that the Company does not intend to exercise such option or intends to
exercise such option with respect to only a portion of the Shares (such 60-day
period being hereinafter referred to as the "Second Option Period"), to give
notice in writing to the Purchaser (or his estate) of the C&D Fund's exercise of
its option, in whole or in part. If the options of the Company and the C&D Fund
to purchase the Shares pursuant to this subsection are not exercised with
respect to all of the Shares as provided herein (other than as a result of
Section 11 hereof), the Purchaser (or his estate) shall be entitled to retain
the Shares which could have been acquired on exercise thereof, subject to all of
the provisions of this Agreement (including without limitation Section 5(a)). If
the Company and the C&D Fund have failed to exercise their respective options
pursuant to this Section 6(a) with respect to all of the Shares within the time
periods specified herein, and if the Purchaser's active employment with each of
the Company and any direct and indirect subsidiaries of the Company that employ
the Purchaser is terminated (A) by such employer or employers without Cause, (B)
by the Purchaser by Retirement at Normal Retirement Age, (C) by reason of the
Permanent Disability or
9
<PAGE> 49
death of the Purchaser, or (D) if, as of the effective date of such termination,
the Purchaser is employed by the Company under an effective Employment
Agreement, dated as of the date hereof (the "Employment Agreement"), among the
Company or any of its direct or indirect subsidiaries and the Purchaser, by the
Purchaser for Good Reason (as such term is defined in the Employment Agreement),
then on notice from the Purchaser (or his estate) in writing and delivered to
the Company within 30 days following the end of the Second Option Period, the
Company shall purchase all (but not less than all) of the Shares then held by
the Purchaser (or his estate). All purchases pursuant to this Sec tion 6(a) by
the Company or the C&D Fund shall be for a purchase price and in the manner
prescribed by Section 7 hereof.
(b) UNFORESEEN PERSONAL HARDSHIP. In the event that the
Purchaser, while in the employment of the Company or any direct or indirect
subsidiary of the Company, experiences Unforeseen Personal Hardship, the Board
will carefully consider any request by the Purchaser that the Company
repurchase the Purchaser's Shares at a price determined in accordance with
Section 7 hereof, but the Company shall have no obligation to repurchase such
Shares. The Board shall consider such request with respect to Unforeseen
Personal Hardship as soon as practicable after receipt by the Company of a
written request by the Purchaser, such request to include sufficient details of
the Purchaser's Unforeseen Personal Hardship to permit the Board to review the
request and the circumstances in an informed manner.
(c) CERTAIN DEFINITIONS. As used in this Agreement the
following terms shall have the following meanings:
(i) "CAUSE" shall mean (A) the willful failure by the
Purchaser to perform substantially his duties as an employee of the
Company or any Subsidiary (other than any such failure due to physical
or mental illness) after a demand for substantial performance is
delivered to the Purchaser by the executive to which the Purchaser
reports or by the Board, which notice identifies the manner in which
such executive or the Board, as the case may be, believes that the
Purchaser has not substantially performed his duties, (B) the
Purchaser's engaging in willful and serious misconduct that is or is
expected to be injurious to the Company or any Subsidiary, (C) the
Purchaser's having been convicted of, or entered a plea of guilty or
NOLO CONTENDERE to, a crime that constitutes a felony, (D) the willful
and
10
<PAGE> 50
material breach by the Purchaser of any written covenant or agreement
with the Company or any Subsidiary, not to disclose any information
pertaining to the Company, any Subsidiary or any Affiliate or not to
compete or interfere with the Company, any Subsidiary or any Affiliate
or (E) any violation by the Purchaser of any federal, state or foreign
securities laws; PROVIDED that in the event that the Purchaser is
employed by the Company or a Subsidiary under an effective employment
agreement on the date of determination and such employment agreement
shall contain a different definition of Cause, the definition of Cause
contained in such employment agreement shall be substituted for the
definition set forth above for all purposes hereunder.
(ii) "RETIREMENT AT NORMAL RETIREMENT AGE" shall mean
retirement at age 60 or later.
(iii) "PERMANENT DISABILITY" shall mean a physical or mental
disability or infirmity that prevents the performance of a Purchaser's
employment-related duties lasting (or likely to last, based on
competent medical evidence presented to the Board) for a period of six
months or longer. The Board's reasoned and good faith judgment as to
Permanent Disability shall be final and shall be based on such
competent medical evidence as shall be presented to it by the Purchaser
or by any physician or group of physicians or other competent medical
expert employed by the Purchaser or the Company to advise the Board.
(iv) "UNFORESEEN PERSONAL HARDSHIP" shall mean financial
hardship arising from (x) extraordinary medical expenses or other
expenses directly related to illness or disability of the Purchaser, a
member of the Purchaser's immediate family or one of the Purchaser's
parents or (y) payments necessary or required to prevent the eviction
of the Purchaser from the Purchaser's principal residence or
foreclosure on the mortgage on that residence. The Board's reasoned and
good faith determination of Unforeseen Personal Hardship shall be
binding on the Company and the Purchaser.
(d) NOTICE OF TERMINATION. The Company shall give written
notice of any termination of the Purchaser's active employment with each of the
Company and any direct or indirect subsidiaries of the Company that employ the
Purchaser to the C&D Fund, except that if such termination (if
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<PAGE> 51
other than as a result of death) is by the Purchaser, the Purchaser shall give
written notice of such termination to the Company and the Company shall give
written notice of such termination to the C&D Fund.
(e) PUBLIC OFFERING. In the event that a Public Offering has
been consummated, none of the Company, the C&D Fund or the Purchaser shall have
any rights to purchase or sell the Shares, as the case may be, pursuant to this
Section 6 and this Section 6 shall not apply to a sale as part of a Public
Offering.
7. DETERMINATION OF THE PURCHASE PRICE; MANNER OF PAYMENT.
(a) PURCHASE PRICE. For the purposes of any purchase of the
Shares pursuant to Section 6, and subject to Section 11(c), the purchase price
per Share to be paid to the Purchaser (or his estate) for each Share shall be a
net amount (such net amount, the "Purchase Price") equal to the excess of (i)
the fair market value (the "Fair Market Value") of such Share as of the
effective date of the termination of employment that gives rise to the right or
obligation to repurchase or, in the case of a repurchase as a result of
Unforeseen Personal Hardship, as of the date such Shares are repurchased (such
date of termination or repurchase, as applicable, the "Determination Date"),
over (ii) the principal balance and accrued interest outstanding under the
Promissory Note as of the closing date for such repurchase; PROVIDED that if the
Purchaser's employment is terminated by the Company or any of its direct or
indirect subsidiaries for Cause, the Purchase Price for such Share shall be the
lesser of (i) the Fair Market Value of such Share as of the effective date of
the termination of employment that gives rise to the right or obligation to
repurchase and (ii) the price at which the Purchaser purchased such Share from
the Company. Whenever determination of the Fair Market Value of such Shares is
required by this Agreement, such Fair Market Value shall be such amount as is
determined in good faith by the Board. In making a determination of Fair Market
Value, the Board shall give due consideration to such factors as it deems
appropriate, including, without limitation, the earnings and certain other
financial and operating information of the Company and its subsidiaries in
recent periods, the potential value of the Company and its Subsidiaries as a
whole, the future prospects of the Company and its subsidiaries and the
industries in which they compete, the history and management of the Company and
its subsidiaries, the general condition
12
<PAGE> 52
of the securities markets, the fair market value of securities of companies
engaged in businesses similar to those of the Company and its subsidiaries and
the Applicable Share Valuation (as defined below). The determination of Fair
Market Value will not give effect to any restrictions on transfer of the Shares
or the fact that such Shares would represent a minority interest in the Company.
For purposes of this Agreement, the term "Applicable Share Valuation" shall mean
the annual valuation of the Shares performed by an independent valuation firm
chosen by the Board as of the last day of the last fiscal year of the Company
ending prior to the Determination Date, except that, in the case of a
Determination Date occurring during the fourth fiscal quarter of any fiscal year
of the Company beginning with the fourth quarter of the 1996 fiscal year of the
Company, the term "Applicable Share Valuation" shall mean the annual valuation
of the Shares performed by an independent valuation firm chosen by the Board as
of the last day of such fourth fiscal quarter. Such annual valuations shall be
performed as promptly as practicable following the end of each fiscal year of
the Company, beginning with the 1996 fiscal year of the Company. The Fair Market
Value as determined in good faith by the Board and in the absence of fraud
shall be binding and conclusive upon all parties hereto. If the Company at any
time subdivides (by any stock split, stock dividend or otherwise) the Common
Stock into a greater number of shares, or combines (by reverse stock split or
otherwise) the Common Stock into a smaller number of shares, the Purchase Price
(including any minimum or maximum Purchase Price specified herein or in effect
as a result of a prior adjustment) shall be appropriately adjusted to reflect
such subdivision or combination.
(b) CLOSING OF PURCHASE; PAYMENT OF PURCHASE PRICE. Subject
to Section 11, the closing of a purchase pursuant to this Section 6 shall take
place at the principal office of the Company on the tenth business day following
whichever of the following is applicable: (i) the receipt by the Purchaser (or
his estate) of the notice of the C&D Fund or the Company, as the case may be, of
its exercise of its option to purchase pursuant to Section 6(a) or (ii) the
Company's receipt of notice by the Purchaser (or his estate) to sell Shares
pursuant to Section 6(a) or (iii) the Board's determination (which shall be
delivered to the Purchaser) that the Company is authorized to purchase Shares as
a result of Unforeseen Personal Hardship pursuant to Section 6(b). At the
closing, (i) subject to the proviso below, the Company shall pay to the
Purchaser (or his estate) an amount equal to the Purchase Price and (ii) the
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Purchaser (or his estate) shall deliver to the Company such certificates or
other instruments representing the Shares so purchased, appropriately endorsed
by the Purchaser (or his estate), as the Company may reasonably require;
provided, however, that if the Determination Date occurs during the first or
last fiscal quarter of any fiscal year of the Company, the Company may elect to
pay the Purchase Price in two installments. In any such event, (i) at the
closing of the purchase of the Shares, the Company shall pay to the Purchaser
(or his estate) a net amount (the "First Installment Amount") equal to 80% of
the Fair Market Value of the Shares, determined pursuant to Section 7(a) hereof
on the basis of the most recent available valuation of the Shares, reduced by
the principal balance and accrued interest then outstanding under the Promissory
Note, and (ii) no later than the tenth business day following receipt by the
Company of the Applicable Share Valuation, the Company shall pay an additional
amount to the Purchaser (or his estate) equal to the sum of (1) the excess (the
"Excess Payment"), if any, of (A) the Purchase Price for the Shares, over (B)
the First Installment Amount and (2) an amount calculated by multiplying the
Excess Payment by a percentage equal to the average annual cost to the Company
of its bank indebtedness obligations outstanding during the period commencing on
the closing date of the purchase of the Shares and ending on the date of payment
of such additional amount pursuant to this clause (ii) or, if there are no such
obligations outstanding, one percentage point greater than the average annual
prime rate charged during such period by Chase Bank or such other nationally
recognized bank designated by the Company.
(c) APPLICATION OF THE PURCHASE PRICE TO CERTAIN LOANS. The
Purchaser agrees that the Company and the C&D Fund shall be entitled to apply
any amounts to be paid by the Company or the C&D Fund, as the case may be, to
repurchase Shares pursuant to Section 5 or 6 hereof to discharge any
indebtedness of the Purchaser to the Company or any of its direct or indirect
subsidiaries, including, without limitation, indebtedness of the Purchaser
incurred to purchase the Shares or indebtedness that is guaranteed by the
Company or any of its direct or indirect subsidiaries.
8. TAKE-ALONG RIGHTS.
(a) TAKE-ALONG NOTICE. If the C&D Fund intends to effect a
sale of all of its shares of common stock of the Company to a third party (a
"100% BUYER") and elects to exercise its rights under this Section 8, the C&D
Fund shall
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deliver written notice (a "TAKE-ALONG NOTICE") to the Purchaser, which notice
shall (i) state (w) that the C&D Fund wishes to exercise its rights under this
Section 8 with respect to such transfer, (x) the name and address of the 100%
Buyer, (y) the per share amount and form of considera tion the C&D Fund proposes
to receive for its shares of common stock of the Company and (z) drafts of
purchase and sale documentation setting forth the terms and conditions of
payment of such consideration and all other material terms and conditions of
such transfer (the "DRAFT SALE AGREEMENT"), (ii) contain an offer (the
"TAKE-ALONG OFFER") by the 100% Buyer to purchase from the Purchaser all of the
Shares, on and subject to the same price, terms and conditions offered to the
C&D Fund and (iii) state the anticipated time and place of the closing of such
transfer (a "SECTION 8 CLOSING"), which (subject to such terms and conditions)
shall occur not fewer than five (5) days nor more than ninety (90) days after
the date such Take-Along Notice is delivered, PROVIDED that if such Section 8
Closing shall not occur prior to the expiration of such 90-day period, the C&D
Fund shall be entitled to deliver another Take-Along Notice with respect to such
Take-Along Offer.
(b) CONDITIONS TO TAKE-ALONG. Upon delivery of a Take-Along
Notice, the Purchaser shall have the obligation to transfer all of the Shares
pursuant to the Take-Along Offer, as such offer may be modified from time to
time, PROVIDED that the C&D Fund transfers all of its shares of common stock of
the Company to the 100% Buyer at the Section 8 Closing and that all shares of
common stock of the Company held by the C&D Fund are sold to the 100% Buyer at
the same price, and on the same terms and conditions. Within 10 days of receipt
of the Take-Along Notice, the Purchaser shall (i) deliver to the C&D Fund or an
affiliate thereof designated in the Take-Along Notice certificates representing
the Shares, duly endorsed for transfer or accompanied by duly executed stock
powers, and (ii) execute and deliver to the C&D Fund a power of attorney and a
letter of transmittal and custody agreement in favor, and in form and substance
reasonably satisfactory to, the C&D Fund appointing the C&D Fund or one or more
persons designated by the C&D Fund (the "Custodian") as the true and lawful
attorney-in-fact and custodian for the Purchaser, with full power of
substitution, and authorizing the Custodian to execute and deliver a purchase
and sale agreement substantially in the form of the Draft Sale Agreement and to
take such actions as the Custodian may deem necessary or appropriate to effect
the sale and transfer of the Shares to the 100% Buyer, upon receipt of the
purchase price therefor set forth in the
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Take-Along Notice at the Section 8 Closing, free and clear of all security
interests, liens, claims, encumbrances, charges, options, restrictions on
transfer, proxies and voting and other agreements of whatever nature, together
with all other documents delivered with such notice and required to be executed
in connection with the sale thereof pursuant to the Take-Along Offer. The
Custodian shall hold the Shares and other documents in trust for the Purchaser
pending completion or abandonment of such sale. If, within 90 days after the C&D
Fund delivers the Take-Along Notice, the C&D Fund has not completed the sale of
all of the shares of common stock of the Company owned by the C&D Fund and the
Purchaser to the 100% Buyer and another Take-Along Notice with respect to such
Take-Along Offer has not been sent to the Purchaser, the C&D Fund shall return
to the Purchaser all certificates representing the Shares and all other
documents that the Purchaser delivered in connection with such sale. The C&D
Fund shall be permitted to send only two Take-Along Notices with respect to any
one Take-Along Offer. Promptly after the Section 8 Closing, the C&D Fund shall
give notice thereof to the Purchaser, shall remit to the Purchaser the total
consideration for the Shares sold pursuant thereto, and shall furnish such other
evidence of the completion and time of completion of such sale and the terms
thereof as may reasonably be requested by the Purchaser.
(c) REMEDIES. The Purchaser acknowledges that the C&D Fund
would be irreparably damaged in the event of a breach or a threatened breach by
the Purchaser of any of its obligations under this Section 8 and the Purchaser
agrees that, in the event of a breach or a threatened breach by the Purchaser of
any such obligation, the C&D Fund shall, in addition to any other rights and
remedies available to it in respect of such breach, be entitled to an injunction
from a court of competent jurisdiction (without any requirement to post bond)
granting it specific performance by the Purchaser of his obligations under this
Section 8. In the event that the C&D Fund shall file suit to enforce the
covenants contained in this Section 8 (or obtain any other remedy in respect of
any breach thereof), the prevailing party in the suit shall be entitled to
recover, in addition to all other damages to which it may be entitled, the costs
incurred by such party in conducting the suit, including reasonable attorneys'
fees and expenses. In the event that, following a breach or a threatened breach
by the Purchaser of the provisions of this Section 8, the C&D Fund does not
obtain an injunction granting it specific performance of the Purchaser's
obligations under this Section 8 in connection
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with any proposed sale prior to the time the C&D Fund completes the sale of its
shares of common stock of the Company or the C&D Fund, in its sole discretion,
abandons such sale, then the Company shall have the option to purchase the
Shares from the Purchaser at a purchase price per Share equal to the lesser of
(i) the price per share at which the Purchaser purchased the Shares from the
Company pursuant to this Agreement and (ii) the price per share offered in the
applicable Take-Along Offer.
(d) PUBLIC OFFERING. In the event that a Public Offering has
been consummated, the provisions of this Section 8 shall terminate and cease to
have further effect.
9. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Purchaser that (a) the Company has been
duly incorporated and is an existing corporation in good standing under the
laws of the State of Delaware, (b) this Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and legally
binding obligation of the Company enforceable against the Company in accordance
with its terms, and (c) the Shares, when issued, delivered and paid for in
accordance with the terms hereof, will be duly and validly issued, fully paid
and nonassessable, and free and clear of any liens or encumbrances other than
those created pursuant to this Agreement, or otherwise in connection with the
transactions contemplated hereby.
10. COVENANTS OF THE COMPANY.
(a) RULE 144. The Company agrees that at all times after it
has filed a registration statement after the date hereof pursuant to the
requirements of the Securities Act or Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), relating to any class of equity
securities of the Company (other than (i) the registration of equity securities
of the Company and/or options in respect thereof to be offered primarily to
directors and members of management and employees of the Company, any of its
direct or indirect subsidiaries or any of their respective predecessors, and
senior executives of, or consultants to, corporations in which entities managed
or sponsored by Clayton, Dubilier & Rice, Inc. have made equity investments, or
(ii) the registration of equity securities and/or options in respect thereof
solely on Form S-4 or S-8 or any successor form), it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the Commission
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thereunder (or, if the Company is not required to file such reports, it will,
upon the request of the Purchaser, make publicly available such information as
necessary to permit sales pursuant to Rule 144 under the Securities Act), and
will take such further action as the Purchaser may reasonably request, all to
the extent required from time to time to enable the Purchaser to sell Shares
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144, as such Rule may be amended from time to
time, or (ii) any successor rule or regulation hereafter adopted by the
Commission.
(b) STATE SECURITIES LAWS. The Company agrees to use its best
efforts to comply with all state securities or "blue sky" laws applicable to the
sale of the Shares to the Purchaser, PROVIDED that the Company shall not be
obligated to qualify or register the Shares under any such law or to qualify as
a foreign corporation or file any consent to service of process under the laws
of any jurisdiction or subject itself to taxation as doing business in any such
jurisdiction.
11. CERTAIN RESTRICTIONS ON REPURCHASES.
(a) FINANCING AGREEMENTS, ETC. Notwithstanding any other
provision of this Agreement, the Company shall not be permitted or obligated to
repurchase any Shares from the Purchaser if (i) such repurchase would result in
a violation of the terms or provisions of, or result in a default or an event of
default under any financing or security agreement or document entered into in
connection with the Spin-off or in connection with the operations of the Company
or its subsidiaries from time to time (such agreements and documents, as each
may be amended, modified or supplemented from time to time, are referred to
herein as the "Financing Agreements"), in each case as the same may be amended,
modified or supplemented from time to time, or (ii) such repurchase would
violate any of the terms or provisions of the Certificate of Incorporation of
the Company, or (iii) the Company has no funds legally available therefor under
the General Corporation Law of the State of Delaware.
(b) DELAY OF REPURCHASE. In the event that a repurchase by
the Company otherwise permitted or required under Section 6(a) is prevented
solely by the terms of Section 11(a), (i) such repurchase will be postponed and
will take place without the application of further conditions or impediments
(other than as set forth in Section 7 hereof or in this Section 11) at the first
opportunity thereafter when
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the Company has funds legally available therefor and when such repurchase will
not result in any default, event of default or violation under any of the
Financing Agreements or in a violation of any term or provision of the
Certificate of Incorporation of the Company and (ii) such repurchase
obligation shall rank against other similar repurchase obligations with respect
to shares of Common Stock or options in respect thereof according to priority
in time of (A) the effective date of the termination of employment in
connection with any repurchase obligation arising pursuant to an exercise of
the option of the Company (x) under Section 6(a) of this Agreement or under the
comparable provision of any other applicable management stock subscription
agreement or (y) under any comparable provisions regarding the repurchase of
options of any applicable management stock option agreement, or (B) as to any
repurchase obligation arising pursuant to an exercise of any purchaser's right
to require a repurchase under Section 6(a) of this Agreement or the comparable
provisions of any other applicable management stock subscription agreement, the
date upon which the Company receives written notice of such exercise, PROVIDED
that any such repurchase obligations as to which a common date determines
priority under clause (A) or (B) above shall be of equal priority and shall
share pro rata in any repurchase payments made pursuant to clause (i) above and
PROVIDED, FURTHER, that any repurchase commitment arising from Permanent
Disability, death or Retirement at Normal Retirement Age or any repurchase
commitment made by the Board pursuant to Section 6(b) or the comparable
provisions of any other applicable management stock subscription agreement
shall have priority over any other repurchase obligation.
(c) PURCHASE PRICE ADJUSTMENT. In the event that a repurchase
of Shares from the Purchaser is delayed pursuant to this Section 11, the
purchase price per Share when the repurchase of such Shares eventually takes
place as contemplated by Section 11(b) shall be (i) if the repurchase is
pursuant to an exercise of the option of the Company under Section 6(a), the
sum of (A) the Purchase Price determined in accordance with Section 7 hereof at
the time that the repurchase of such Shares would have occurred but for the
operation of this Section 11, plus (B) an amount equal to interest on such
Purchase Price for the period from the date on which the completion of the
repurchase would have taken place but for the operation of this Section 11 to
the date on which such repurchase actually takes place (the "Delay Period") at
a rate equal to the weighted average cost of the Company's bank indebtedness
obligations outstanding
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during the Delay Period or, if there are no such obligations outstanding, one
percentage point greater than the average prime rate charged during such period
by Chase Bank or such other nationally recognized bank designated by the
Company, or (ii) if the repurchase is pursuant to an exercise of the Purchaser's
right to require a repurchase under Section 6(a), the Fair Market Value of such
Shares (determined as set forth in Section 7(a)) on the date on which such
repurchase actually takes place.
12. MISCELLANEOUS.
(a) NOTICES. All notices and other communications required
or permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, the C&D Fund or the
Purchaser, as the case may be, at the following addresses or to such other
address as the Company, the C&D Fund or the Purchaser, as the case may be, shall
specify by notice to the others:
(i) if to the Company, to it at:
c/o McCarthy, Crisanti & Maffei, Inc.
One Chase Manhattan Plaza, 37th Floor
New York, New York 10005
ATTENTION: General Counsel
(ii) if to the Purchaser, to the Purchaser at the address
set forth on the signature page hereof.
(iii) if to the C&D Fund, to:
The Clayton & Dubilier Private Equity
Fund IV Limited Partnership
270 Greenwich Avenue
Greenwich, Connecticut 06830
ATTENTION: Clayton & Dubilier Associates
IV Limited Partnership,
Joseph L. Rice, III
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof.
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Copies of any notice or other communication given under this Agreement shall
also be given to:
Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18th Floor
New York, New York 10152
ATTENTION: Alberto Cribiore
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
ATTENTION: Franci J. Blassberg, Esq.
The C&D Fund also shall be given a copy of any notice or other communication
between the Purchaser and the Company under this Agreement at its address as set
forth above.
(b) BINDING EFFECT; BENEFITS. This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Except as provided in Sections 4 through 8,
inclusive, nothing in this Agreement, express or implied, is intended or shall
be construed to give any person other than the parties to this Agreement or
their respective successors or assigns any legal or equitable right, remedy or
claim under or in respect of any agreement or any provision contained herein.
(c) WAIVER; AMENDMENT.
(i) WAIVER. Any party hereto may by written notice to the
other parties (A) extend the time for the performance of any of the
obligations or other actions of the other parties under this Agreement,
(B) waive compliance with any of the conditions or covenants of the
other parties contained in this Agreement and (C) waive or modify
performance of any of the obliga tions of the other parties under this
Agreement, PROVIDED that any waiver of the provisions of Sections 4
through 8, inclusive, must be consented to by the C&D Fund. Except as
provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representations,
warranties, covenants or agreements contained herein. The waiver by any
party hereto of a
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breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach and no
failure by a party to exercise any right or privilege hereunder shall
be deemed a waiver of such party's rights or privileges hereunder or
shall be deemed a waiver of such party's rights to exercise the same at
any subsequent time or times hereunder.
(ii) AMENDMENT. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Purchaser and
the Company, PROVIDED that any amendment adversely affecting the rights
of the C&D Fund hereunder must be consented to by the C&D Fund. The
parties hereto acknowledge that the Company's consent to an amendment
or modification of this Agreement is subject to the terms and
provisions of the Financing Agreements.
(d) ASSIGNABILITY. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Purchaser without the prior written consent of
the other parties. The C&D Fund may assign from time to time all or any portion
of its rights under Sections 4 through 8, inclusive, to one or more persons or
other entities designated by it.
(e) APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, REGARDLESS OF THE
LAW THAT MIGHT BE APPLIED UNDER PRINCIPLES OF CONFLICT OF LAWS.
(f) SECTION AND OTHER HEADINGS, ETC. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
(g) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall constitute one and the same instrument.
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<PAGE> 62
IN WITNESS WHEREOF, the Company and the Purchaser have
executed this Agreement as of the date first above written.
MCM GROUP, INC.
By: _______________________________
Name:
Title:
THE PURCHASER:
Name
By: _______________________________
Name:
Attorney-in-fact
Address of the Purchaser:
Address
Total Number of Shares of
Common Stock to be
Purchased: Amount1 Shares
Aggregate Purchase Price: $Amount3
23
<PAGE> 1
EXHIBIT 10.40
MCM GROUP, INC. STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of this MCM Group, Inc. Stock Option Plan is to
foster and promote the long-term financial success of the Company and its
Subsidiaries and to increase materially stockholder value by (A) motivating
superior performance by participants in the Plan, (B) providing participants in
the Plan with an ownership interest in the Company and (C) enabling the Company
and the Subsidiaries to attract and retain the services of an outstanding
management team upon whose judgment, interest and special effort the successful
conduct of its operations is largely dependent.
SECTION 2. DEFINITIONS
2.1. DEFINITIONS. Whenever used herein, the following terms
shall have the respective meanings set forth below:
(a) "Affiliate" means an entity controlling, controlled by
or under common control with the Company.
(b) "Alternative Option" has the meaning given in
Section 8.2.
(c) "Applicable Share Valuation" means the annual valuation
of the Common Stock performed by an independent valuation firm chosen
by the Board as of the last day of the last fiscal year of the Company
ending prior to the Determination Date, except that, in the case of a
Determination Date occurring during the fourth fiscal quarter of any
fiscal year of the Company beginning with the fourth quarter of the
1996 fiscal year of the Company, the term "Applicable Share Valuation"
shall mean the annual valuation of the Common Stock performed by an
independent valuation firm chosen by the Board as of the last day of
such fourth fiscal quarter.
(d) "Board" means the Board of Directors of the Company.
(e) "C&D Fund" means The Clayton & Dubilier Private Equity
Fund IV Limited Partnership, a Connecticut limited partnership, and any
successor
<PAGE> 2
investment vehicle managed by Clayton, Dubilier & Rice, Inc.
(f) "Cause" means (I) the willful failure by the Participant
to perform substantially his duties as an employee of the Company or
any Subsidiary (other than any such failure due to physical or mental
illness) after a demand for substantial performance is delivered to the
Participant by the executive to which the Participant reports or by the
Board, which notice identifies the manner in which such executive or
the Board, as the case may be, believes that the Participant has not
substantially performed his duties, (II) the Participant's engaging in
willful and serious misconduct that is or is expected to be injurious
to the Company or any Subsidiary, (III) the Participant's having been
convicted of, or entered a plea of guilty or NOLO CONTENDERE to, a
crime that constitutes a felony, (IV) the willful and material breach
by the Participant of any written covenant or agreement with the
Company or any Subsidiary not to disclose any information pertaining to
the Company, any Subsidiary or any Affiliate or not to compete or
interfere with the Company, any Subsidiary or any Affiliate or with
respect to any take-along or similar covenants applicable to any Common
Stock of the Participant or (V) any violation by the Participant of any
federal, state or foreign securities laws; PROVIDED that in the event
that the Participant is employed by the Company or a Subsidiary under
an effective employment agreement on the date of determination and such
employment agreement shall contain a different definition of Cause, the
definition of Cause contained in such employment agreement shall be
substituted for the definition set forth above for all purposes
hereunder.
(g) "Change of Control" means the first to occur of the
following events after the Effective Date:
(i) the acquisition by any person, entity or "group"
(as defined in Section 13(d) of the Securities Exchange Act of
1934, as amended), other than the Company, the Subsidiaries,
any employee benefit plan of the Company or the Subsidiaries,
or the C&D Fund, of 50% or more of the combined voting power
of the Company's then outstanding voting securities;
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<PAGE> 3
(ii) the merger or consolidation of the Company, as a
result of which persons who were stockholders of the Company
immediately prior to such merger or consolidation, do not,
immediately thereafter, own, directly or indirectly more than
50% of the combined voting power entitled to vote generally in
the election of directors of the merged or consolidated
company;
(iii) the liquidation or dissolution of the Company; and
(iv) the sale of all or substantially all of the assets
of the Company to one or more persons or entities that are
not, immediately prior to such sale, Affiliates.
(h) "Change in Control Price" means the price per share of
Common Stock paid in conjunction with any transaction resulting in a
Change in Control (as determined in good faith by the Board if any part
of such price is payable other than in cash).
(i) "Common Stock" means the Class C Common Stock, par value
$.01 per share, of the Company.
(j) "Company" means MCM Group, Inc., a Delaware corporation,
and any successor thereto.
(k) "Determination Date" means the date as of which the Fair
Market Value of the Common Stock is to be determined pursuant to the
applicable Option Agreement, generally the effective date of a
Participant's termination of employment for any reason.
(l) "EBITDA", for any period, shall mean the consolidated net
income of the Company and the Subsidiaries, determined prior to any
reduction for interest expense, taxes, depreciation or amortization,
unless provided otherwise in the Option Agreement evidencing an Option
granted hereunder.
(m) "Effective Date" means the effective date of the
Spin-off.
(n) "Employee" means any executive, senior officer or other
key employee of the Company or any Subsidiary.
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<PAGE> 4
(o) "Fair Market Value" means, as of any Determination Date,
the fair market value on such date per share of Common Stock as
determined in good faith by the Board. In making a determination of
Fair Market Value, the Board shall give due consideration for such
factors as it deems appropriate, including, without limitation, the
earnings and certain other financial and operating information of the
Company and the Subsidiaries in recent periods, the potential value of
the Company and the Subsidiaries as a whole, the future prospects of
the Company and the Subsidiaries and the industries in which they
compete, the history and management of the Company and the
Subsidiaries, the general condition of the securities markets, the fair
market value of securities of companies engaged in businesses similar
to those of the Company and the Subsidiaries and the Applicable Share
Valuation. The determination of Fair Market Value will not give effect
to any restrictions on transfer of the Shares or the fact that such
Shares would represent a minority interest in the Company.
(p) "Grant Date" means, with respect to any Option, the date
on which such Option is granted pursuant to the Plan.
(q) "Involuntary Termination" means termination of the
Participant's employment by the New Employer for any reason.
(r) "Maximum EBITDA Target" means, with respect to
Performance Options granted under the Plan, the cumulative EBITDA that
the Company and the Subsidiaries must achieve during the period
specified in the Option Agreement evidencing such Performance Options
for 100% of such Performance Options to become exercisable as of the
applicable Target Date.
(s) "Minimum EBITDA Target" means, with respect to
Performance Options granted under the Plan, the minimum cumulative
EBITDA that the Company and the Subsidiaries must achieve during the
period specified in the Option Agreement evidencing such Performance
Options for any portion of such Performance Options to become
exercisable as of the applicable Target Date.
(t) "New Employer" means the Participant's employer, or the
parent or a subsidiary of such employer, immediately following a Change
in Control.
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<PAGE> 5
(u) "Option" means the right granted pursuant to the Plan to
purchase one share of Common Stock at a price determined in accordance
with Section 6.2 and on terms and conditions established in accordance
with Section 6.3.
(v) "Option Agreement" means an agreement between the Company
and the Participant embodying the terms of any Options granted
hereunder, which agreement shall, unless the Board otherwise
determines, be substantially in the form attached hereto as Exhibit A.
(w) "Participant" means any Employee designated by the Board
to participate in the Plan.
(x) "Permanent Disability" means a physical or mental
disability or infirmity that prevents the performance of a
Participant's employment-related duties lasting (or likely to last,
based on competent medical evidence presented to the Board) for a
period of six months or longer. The Board's reasoned and good faith
judgment as to Permanent Disability shall be final and shall be based
on such competent medical evidence as shall be presented to it by the
Participant or by any physician or group of physicians or other
competent medical expert employed by the Participant or the Company to
advise the Board.
(y) "Performance Option" means an Option granted pursuant to
the Plan which becomes exercisable in accordance with the provisions of
Section 6.3(b) based upon the financial performance of the Company and
the Subsidiaries.
(z) "Plan" means this MCM Group, Inc. Stock Option Plan, as
the same may be amended from time to time.
(aa) "Public Offering" means the first day as of which sales
of Class A common stock of the Company are made to the public in the
United States pursuant to an underwritten public offering of the Class
A Common Stock of the Company led by one or more underwriters, at least
one of which is of nationally recognized standing.
(bb) "Retirement" means a Participant's retirement at or after
age 60 or such other age as may be specified in the applicable Option
Agreement.
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<PAGE> 6
(cc) "Service Option" means an Option granted pursuant to the
Plan which becomes exercisable in accordance with the provisions of
Section 6.3(a) based upon a Participant's completion of service with
the Company and the Subsidiaries.
(dd) "Spin-off" means the distribution by VK/AC Holding, Inc.
of 100% of the outstanding Class A common stock of the Company to the
holders of record of the common stock of VK/AC Holding, Inc. at the
close of business on the Effective Date.
(ee) "Special Termination" has the meaning given in
Section 7.1.
(ff) "Subsidiary" means any corporation a majority of whose
outstanding voting securities is owned, directly or indirectly, by the
Company.
(gg) "Target Date" means, with respect to Performance Options
granted under the Plan, the date specified in the Option Agreement
evidencing such Performance Options as of which the cumulative EBITDA
achieved by the Company and the Subsidiaries since the Grant Date of
such Performance Options (or such other date as may be specified by the
Board) is to be determined for purposes of determining the portion, if
any, of such Performance Options that will become exercisable as of
such date.
2.2. GENDER AND NUMBER. Except when otherwise indicated by
the context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.
SECTION 3. ELIGIBILITY AND PARTICIPATION
Participants in the Plan shall be those Employees selected by
the Board to participate in the Plan. The selection of an Employee as a
Participant shall neither entitle such Employee to nor disqualify such Employee
from participation in any other award or incentive plan.
SECTION 4. POWERS OF THE BOARD
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<PAGE> 7
4.1. POWER TO GRANT. The Board shall determine the
Participants to whom Options shall be granted and the terms and conditions of
any and all Options granted to Participants, PROVIDED that nothing in the Plan
shall limit the right of members of the Board who are Employees to receive
awards hereunder.
4.2. ADMINISTRATION. The Board shall be responsible for the
administration of the Plan. Any authority exercised by the Board under the Plan
shall be exercised by the Board in its sole discretion. Subject to the terms of
the Plan, the Board, by majority action thereof, is authorized to prescribe,
amend and rescind rules and regulations relating to the administration of the
Plan, to provide for conditions and assurances deemed necessary or advisable to
protect the interests of the Company and the Subsidiaries, and to make all other
determinations necessary or advisable for the administration and interpretation
of the Plan in order to carry out its provisions and purposes. Determinations,
interpretations or other actions made or taken by the Board pursuant to the
provisions of the Plan shall be final, binding and conclusive for all purposes
and upon all persons.
4.3. DELEGATION BY THE BOARD. All of the powers, duties and
responsibilities of the Board specified in the Plan may, to the full extent
permitted by applicable law, be exercised and performed by any duly constituted
committee of the Board, in any such case, to the extent authorized by the Board
to exercise and perform such powers, duties and responsibilities.
SECTION 5. OPTIONS SUBJECT TO PLAN
5.1. NUMBER. Subject to the provisions of Sections 5.2 and
5.3, the maximum number of Options (and the maximum number of shares of Common
Stock subject to Options) granted under the Plan may not exceed 49,000. The
shares of Common Stock to be delivered upon the exercise of Options granted
under the Plan may consist, in whole or in part, of treasury Common Stock or
authorized but unissued Common Stock, not reserved for any other purpose.
5.2. CANCELLED, TERMINATED OR FORFEITED OPTIONS. Any Option
(and the share of Common Stock subject to such Option) which for any reason is
cancelled, terminated or otherwise forfeited, in whole or in part, without
having been exercised, shall again be available for grant under the
7
<PAGE> 8
Plan to the extent so canceled, terminated or otherwise forfeited.
5.3. ADJUSTMENT IN CAPITALIZATION. The number and class of
Options (and the number of shares of Common Stock available for issuance upon
exercise of such Options) granted under the Plan, and the number, class and
exercise price of any outstanding Options (and the number of shares of Common
Stock subject to outstanding Options), may be adjusted by the Board, in its sole
discretion, if it shall deem such an adjustment to be necessary or appropriate
to reflect any Common Stock dividend, stock split or share combination or any
recapitalization, merger, consolidation, exchange of shares, liquidation or
dissolution of the Company.
SECTION 6. TERMS OF OPTIONS
6.1. GRANT OF OPTIONS. Options may be granted to Participants
at such time or times upon or following the Effective Date as shall be
determined by the Board. The Board may provide that different terms apply to
Options granted to a Participant on the same Grant Date. Each Option granted to
a Participant shall be evidenced by an Option Agreement that shall specify the
exercise price at which a share of Common Stock may be purchased pursuant to
such Option, the duration of such Option and such other terms consistent with
the Plan as the Board shall determine, including customary representations,
warranties and covenants with respect to securities law matters. Unless
otherwise determined by the Board at the Grant Date, such Option Agreement shall
also state that the holder thereof is entitled to the benefits of and bound by
the obligations set forth in the Registration and Participation Agreement, dated
as of the Effective Date, among the Company and certain stockholders of the
Company (as the same may be amended, waived, modified or supplemented from time
to time), to the extent set forth therein. Such Option Agreement shall, unless
the Board otherwise determines, be substantially in the form attached hereto as
Exhibit A.
6.2. EXERCISE PRICE. The exercise price per share of Common
Stock to be purchased upon exercise of an Option shall be determined by the
Board but shall not be less than the Fair Market Value on the Grant Date.
6.3. EXERCISE OF OPTIONS. (a) SERVICE OPTIONS. Unless
otherwise determined by the Board at the Grant
8
<PAGE> 9
Date and provided in the Option Agreement evidencing the Options
granted hereunder, 20% of any Service Options granted to a Participant
at any time shall become exercisable on each of the first five
anniversaries of the Grant Date of such Service Options, subject in
each such case to the Participant's continued employment with the
Company or a Subsidiary until such anniversary date; PROVIDED that 100%
of such Service Options shall become exercisable to the extent provided
in Section 8.1.
(b) PERFORMANCE OPTIONS. Unless otherwise determined by the
Board at the Grant Date and provided in the Option Agreement evidencing
the Options granted hereunder, subject to Sections 8.1 and 9, (i) no
portion of any Performance Options shall become exercisable unless, as
of the Target Date, the Company and the Subsidiaries shall have
achieved the Minimum EBITDA Target specified in the Option Agreement
evidencing such Performance Options, (ii) 100% of any Performance
Options shall become exercisable if, as of the Target Date, the Company
and the Subsidiaries shall have achieved the Maximum EBITDA Target
specified in the Option Agreement and (iii) a proportionate share of
Performance Options shall become exercisable if, as of the Target Date,
the cumulative EBITDA achieved by the Company and the Subsidiaries for
the period of determination exceeds the Minimum EBITDA Target but does
not exceed the Maximum EBITDA Target, provided, in each such case, that
the Participant is in the continuous employment of the Company or one
of the Subsidiaries from the Grant Date to the applicable Target Date.
Notwithstanding the foregoing provisions of this paragraph (b), subject
to the continuous employment of the Participant with the Company or one
of the Subsidiaries, Performance Options shall become exercisable in
full nine years following the Grant Date, regardless of whether the
applicable EBITDA target was achieved as of the applicable Target Date.
(c) CONDITIONS. Notwithstanding any other provision herein,
the Board may accelerate the exercisability of any Option, all Options
or any class of Options, at any time and from time to time. On or
before the date upon which any Participant will exercise any Option,
the Company and such Participant shall enter into a Management Stock
Subscription Agreement substantially in the form attached hereto as
Exhibit B. Notwithstanding any other provision of the
9
<PAGE> 10
Plan, each Option shall terminate and shall not be exercisable on or
after the tenth anniversary of the Grant Date of such Option.
6.4. PAYMENT. The Board shall establish procedures governing
the exercise of Options, which procedures shall generally require that written
notice of the exercise thereof be given and that the exercise price thereof be
paid in full in cash or cash equivalents, including by personal check, at the
time of exercise. If so determined by the Board in its sole discretion at or
after the Grant Date, the exercise price of any Options exercised after there
has been a Public Offering may be paid in full or in part in the form of shares
of common stock of the Company already owned by the Participant, based on the
Fair Market Value of such common stock on the date of exercise. As soon as
practicable after receipt of a written exercise notice and payment in full of
the exercise price of any exercisable Options, the Company shall deliver to the
Participant a certificate or certificates representing the Shares of Common
Stock acquired upon the exercise thereof.
SECTION 7. TERMINATION OF EMPLOYMENT
7.1. SPECIAL TERMINATION. (a) Unless otherwise provided in
the Option Agreement evidencing the Options granted hereunder or
otherwise determined by the Board at or after the Grant Date, in the
event that a Participant's active employment with the Company and the
Subsidiaries terminates by reason of the Participant's death, Permanent
Disability or Retirement (each a "Special Termination") then (i) any
Options held by the Participant that are then exercisable and (ii) in
the case of any Performance Options then held by the Participant that
have not yet become exercisable in accordance with Section 6.3(b) and
with respect to which the Target Date has not yet occurred, a
proportionate share of such Performance Options, determined as provided
in Section 7.1(b) below, shall remain or, in the case of any such
Performance Options, become exercisable solely until the first to occur
of (x) the first anniversary of the Participant's termination of
employment or (y) the expiration of the term of the Option. Any Options
held by the Participant that are not exercisable at the date of the
Special Termination shall terminate and be cancelled immediately upon
such Special Termination, and any Options described in the preceding
sentence that are
10
<PAGE> 11
not exercised within the period described in such sentence shall
terminate and be cancelled upon the expiration of such period.
(b) For purposes of Section 7.1(a), the proportionate share
of Performance Options that shall become exercisable as of the date of
a Participant's Special Termination shall be equal to the quotient
obtained by multiplying (i) all such Performance Options by (ii) the
percentage obtained by dividing (A) the cumulative EBITDA in excess of
the Minimum EBITDA Target achieved by the Company and the Subsidiaries
during the period from the Grant Date (or such other date specified in
the applicable Option Agreement) to the last day of the calendar
quarter ending prior to the date of the Participant's Special
Termination for which the applicable financial information is
available, by (B) the Maximum EBITDA Target specified in the Option
Agreement evidencing the grant of such Performance Options.
7.2. TERMINATION FOR CAUSE. Unless otherwise determined by
the Board at or after the Grant Date, in the event that a Participant's
employment with the Company and the Subsidiaries is terminated for Cause, any
Options held by such Participant (whether or not then exercisable) shall
terminate and be cancelled immediately upon such termination of employment.
7.3. OTHER TERMINATION OF EMPLOYMENT. Unless otherwise
provided in the Option Agreement or otherwise determined by the Board at or
after the Grant Date, in the event that a Participant's employment with the
Company and the Subsidiaries terminates for any reason other than (i) a Special
Termination or (ii) for Cause, any Options held by such Participant that are
exercisable as of the date of such termination shall remain exercisable for a
period of 60 days (or, if shorter, during the remaining term of the Options).
Any Options held by the Participant that are not exercisable at the date of the
Participant's termination of employment shall terminate and be cancelled
immediately upon such termination, and any Options described in the preceding
sentence that are not exercised within the period described in such sentence
shall terminate and be cancelled upon the expiration of such period.
7.4. CERTAIN RIGHTS UPON TERMINATION OF EMPLOYMENT PRIOR TO
PUBLIC OFFERING. Unless otherwise determined by the Board at the Grant Date, the
Board shall
11
<PAGE> 12
provide in each Option Agreement governing Options granted hereunder that the
Company and the C&D Fund shall have successive rights to purchase any
exercisable Options from the Participant upon any termination of his employment
prior to a Public Offering for a purchase price per Option equal to the excess,
if any, of (x) the Fair Market Value on the date of termination over (y) the
exercise price per share of Common Stock pursuant to such Options, and upon such
additional terms and conditions as are set forth in the Option Agreement
evidencing such Options. If the rights of the Company and the C&D Fund to
purchase all of the exercisable Options are not fully exercised, other than as a
result of the inability of the Company to complete a purchase due to
restrictions under Delaware law or any applicable financing arrangement of the
Company or the Subsidiaries, the Participant (or the Participant's estate) shall
be entitled to retain any exercisable Options not so purchased, subject to all
of the provisions of the Plan and the Option Agreement evidencing the Options.
SECTION 8. CHANGE IN CONTROL
8.1. ACCELERATED EXERCISABILITY AND PAYMENT. (a) Unless the
Board shall otherwise determine in the manner set forth in Section 8.2,
in the event of a Change in Control, each Service Option (whether or
not then exercisable) and a proportionate share of the Performance
Options, determined as provided in Section 8.1(b) below, shall be
cancelled in exchange for a payment in cash of an amount equal to the
excess, if any, of the Change in Control Price over the exercise price
for such Option. All remaining Performance Options shall be cancelled
and forfeited as of the closing date of the transaction constituting
the Change in Control.
(b) For purposes of Section 8.1(a), the proportionate share
of Performance Options that shall be canceled in exchange for the
payment described in Section 8.1(a) shall be equal to the quotient
obtained by multiplying (i) all such Performance Options by (ii) the
percentage obtained by dividing (A) the cumulative EBITDA in excess of
the Minimum EBITDA Target achieved by the Company and the Subsidiaries
during the period from the Grant Date (or such other date specified in
the applicable Option Agreement) to the last day of the calendar
quarter ending prior to the date of the consummation of the transaction
constituting the Change
12
<PAGE> 13
in Control for which the applicable financial information is available,
by (B) the Maximum EBITDA Target specified in the Option Agreement
evidencing the grant of such Performance Options.
8.2. ALTERNATIVE OPTIONS. Notwithstanding Section 8.1, no
cancellation, acceleration of exercisability, vesting or cash settlement or
other payment shall occur with respect to any Option if the Board reasonably
determines in good faith, prior to the occurrence of a Change in Control, that
such Option shall be honored or assumed, or new rights substituted therefor
(such honored, assumed or substituted Option being hereinafter referred to as an
"Alternative Option") by the New Employer, PROVIDED that any such Alternative
Option must:
(a) provide the Participant that held such Option with
rights and entitlements substantially equivalent to or better than the
rights, terms and conditions applicable under such Option, including,
but not limited to, an identical or better exercise and vesting
schedule, and identical or better timing and methods of payment;
(b) have substantially equivalent economic value to such
Option (determined at the time of the Change in Control); and
(c) have terms and conditions which provide that in the
event that such Participant suffers an Involuntary Termination within
two years following a Change in Control:
(i) any conditions on such Participant's rights under,
or any restrictions on transfer or exercisability applicable
to, each such Alternative Option shall be waived or shall
lapse, as the case may be; or
(ii) such Participant shall have the right to surrender
such Alternative Option within 30 days following such
termination in exchange for a payment in cash equal to the
excess of the Fair Market Value of the common stock subject to
the Alternative Option over the price, if any, that such
Participant would be required to pay to exercise such
Alternative Option.
13
<PAGE> 14
8.3 CERTAIN TAKE-ALONG RIGHTS PRIOR TO A PUBLIC OFFERING.
Unless otherwise determined by the Board at the time of grant, the Board shall
provide in each Subscription Agreement evidencing Common Stock purchased upon
the exercise of Options granted hereunder that, upon certain transactions
described therein, the Participant will be required to sell such shares of
Common Stock then owned by him, for a cash payment per share of Common Stock
equal to the Change in Control Price, and upon such additional terms and
conditions as are set forth in such Subscription Agreement.
SECTION 9. AMENDMENT, MODIFICATION AND
TERMINATION OF THE PLAN
The Board at any time may terminate or suspend the Plan, and
from time to time may amend or modify the Plan. No amendment, modification,
termination or suspension of the Plan shall in any manner adversely affect any
Option theretofore granted under the Plan, without the consent of the
Participant holding such Option. Shareholder approval of any such amendment,
modification, termination or suspension shall be obtained to the extent mandated
by applicable law, or if otherwise deemed appropriate by the Board.
SECTION 10. MISCELLANEOUS PROVISIONS
10.1. NONTRANSFERABILITY OF AWARDS. No Options granted under
the Plan may be sold, transferred, pledged, assigned, encumbered or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution and provided that the deceased Participant's beneficiary or the
representative of his estate acknowledges and agrees in writing, in a form
reasonably acceptable to the Company, to be bound by the provisions of the Plan
(including the purchase rights described in Section 7.4 and the take-along
rights described in Section 8.3) and the Option Agreement covering such Options
as if such beneficiary or estate were the Participant. All rights with respect
to Options granted to a Participant under the Plan shall be exercisable during
his life-time by such Participant only. Following a Participant's death, all
rights with respect to Options that were exercisable at the time of such
Participant's death and have not terminated shall be exercised by his designated
beneficiary or by his estate.
14
<PAGE> 15
10.2. BENEFICIARY DESIGNATION. Each Participant under the
Plan may from time to time name any beneficiary or beneficiaries (who may be
named contingently or successively) by whom any right under the Plan is to be
exercised in case of his death. Each designation will revoke all prior
designations by the same Participant, shall be in a form reasonably prescribed
by the Board, and will be effective only when filed by the Participant in
writing with the Board during his lifetime.
10.3. NO GUARANTEE OF EMPLOYMENT OR PARTICIPATION. Nothing in
the Plan or in any Option Agreement shall interfere with or limit in any way the
right of the Company or any Subsidiary to terminate any Participant's employment
at any time, or confer upon any Participant any right to continue in the employ
of the Company or any Subsidiary. No Employee shall have a right to be selected
as a Participant or, having been so selected, to receive any Options.
10.4. TAX WITHHOLDING. The Company or the Subsidiary
employing a Participant shall have the power to withhold, or to require such
Participant to remit to the Company or such Subsidiary, subject to such other
arrangements as the Board may set forth in the Option Agreement to which such
Participant is a party, an amount sufficient to satisfy all federal, state,
local and foreign withholding tax requirements in respect of any Option granted
under the Plan or any share of Common Stock purchased upon the exercise of any
such Option.
10.5. INDEMNIFICATION. Each person who is or shall have been
a member of the Board or any committee of the Board shall be indemnified and
held harmless by the Company to the fullest extent permitted by law from and
against any and all losses, costs, liabilities and expenses (including any
related attorneys' fees and advances thereof) in connection with, based upon or
arising or resulting from any claim, action, suit or proceeding to which he may
be made a party or in which he may be involved by reason of any action taken or
failure to act under the Plan and from and against any and all amounts paid by
him in settlement thereof, with the Company's approval, or paid by him in
satisfaction of any judgment in any such action, suit or proceeding against him,
PROVIDED that he shall give the Company an opportunity, at its own expense, to
defend the same before he undertakes to defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of
15
<PAGE> 16
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or By-laws, by contract, as a matter of law, or
otherwise.
10.6. NO LIMITATION ON COMPENSATION. Nothing in the Plan
shall be construed to limit the right of the Company or any Subsidiary to
establish other plans or to pay compensation to its employees, in cash or
property, in a manner that is not expressly authorized under the Plan.
10.7. REQUIREMENTS OF LAW. The granting of Options and the
issuance of shares of Common Stock pursuant to such Options shall be subject to
all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. No
Options shall be granted under the Plan, and no shares of Common Stock shall be
issued upon exercise of any Options granted under the Plan, if such grant or
exercise would result in a violation of applicable law, including the federal
securities laws and any applicable state or foreign securities laws.
10.8. FREEDOM OF ACTION. Subject to Section 9, nothing in
the Plan or any Option Agreement shall be construed as limiting or preventing
the Company or any Subsidiary from taking any action that it deems appropriate
or in its best interest.
10.9. TERM OF PLAN. Subject to the consummation of the
Spin-off, the Plan shall be effective as of the Effective Date. The Plan shall
thereafter continue in effect, unless sooner terminated pursuant to Section 9,
until the tenth anniversary of the Effective Date. The provisions of the Plan,
however, shall continue thereafter to govern all outstanding Options theretofore
granted.
10.10. NO VOTING RIGHTS. Except as otherwise required by law,
no Participant holding any Options granted under the Plan shall have any right,
in respect of such Options, to vote on any matter submitted to the Company's
stockholders until such time as the shares of Common Stock issuable upon
exercise of such Options have been so issued.
10.11. GOVERNING LAW. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
Delaware, regardless of the law that might be applied under principles of
conflict of laws.
16
<PAGE> 17
EXHIBIT A
[Form of Management Stock Option Agreement]
See Exhibit A as filed with Exhibit 10.39
<PAGE> 18
EXHIBIT B
[Form of Management Stock Subscription Agreement]
See Exhibit B as filed with Exhibit 10.39
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
Name Jurisdiction of Incorporation/Organization
---- ------------------------------------------
GDG Merger Corporation Delaware
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 of our
report dated August 14, 1997, on our audit of the balance sheet of Global
Decisions Group LLC as of June 30, 1997 (date of inception). We also consent to
the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
New York, New York
August 27, 1997
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement of Global Decisions
Group LLC on Form S-4 of our report dated February 7, 1997, on our audit of
the financial statements of MCM Group, Inc. as of and for the year ended
December 31, 1996. We consent to the inclusion of our report on the financial
statement schedule, which appears above. We also consent to the reference to
our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
New York, New York
August 27, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
MCM Group, Inc.:
We consent to the inclusion of our reports dated January 26, 1996, with respect
to the consolidated balance sheet of MCM Group, Inc. and subsidiaries, formerly
McCarthy, Crisanti, & Maffei, Inc. and subsidiaries, as of December 31, 1995,
the related consolidated statements of income and changes in stockholder's
equity and cash flows for each of the years in the two-year period ended
December 31, 1995 and the supplementary information for each of the years in
the two-year period ended December 31, 1995 included in Schedule II, and to the
reference to our firm under the heading "EXPERTS" which reports and heading
appear in the Form S-4 of Global Decisions Group LLC.
KPMG Peat Marwick LLP
Chicago, Illinois
August 20, 1997
<PAGE> 1
Exhibit 23.4
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULE
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Cambridge Energy Research Associates, Inc.:
The audits referred to in our report dated August 9, 1996, included the related
financial statement schedule as of June 30, 1996, and for each of the years in
the three-year period ended June 30, 1996, included in the Form S-4 of Global
Decisions Group LLC. The financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on the
financial statement schedule based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the Form S-4 of Global Decisions Group LLC.
KPMG Peat Marwick LLP
Boston, Massachusetts
August 27, 1997
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 0
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<ALLOWANCES> 0
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0
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