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Exhibit 10.38
Draft--December 2, 1997
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 Xxxxxxx Xxxxx 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
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WHEREAS, the Grantee and the Parent desire to enter into an agreement
to evidence and confirm the grant of 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 shall, in the absence
of manifest error, be final, conclusive and binding on the parties hereto.
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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 (I) all requisite approvals
and consents of any governmental authority of any kind having jurisdiction over
the exercise of options shall have been secured and (II) the purchase of the LLC
Units upon the exercise of the Contingent Option shall be exempt from
registration under applicable U.S. federal and state securities laws and
non-U.S. securities laws or the LLC Units shall have been registered under such
laws and (III) 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
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be bound by the terms and provisions hereof, and makes the same 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 confirm that registration is not 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.
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.
(a) ORGANIZATION; INVESTMENT INTENTION; RESTRICTION ON DISPOSITION.
[The Grantee represents and warrants that it is a _________ duly organized,
validly
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* Explanatory note: bracketed text shall be applicable only if the Grantee is
a natural person.
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existing and in good standing under the laws of the State of _____________.]*
The Grantee represents and warrants that the Contingent Option has been, and any
Exercise LLC Units will be, acquired by the Grantee solely for his own account
and not with a view to or for sale in connection with any distribution thereof
in violation of the Securities Act. 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.
THE LLC UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933,
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* [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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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) SUCH DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF SUCH
ACT AND, EXCEPT UNDER CERTAIN CIRCUMSTANCES REFERRED TO IN THE
SUBSCRIPTION AGREEMENT, THE HOLDER HEREOF SHALL HAVE DELIVERED TO THE
PARENT AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL BE
REASONABLY SATISFACTORY TO THE PARENT, TO THAT EFFECT, OR (C) A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION,
REASONABLY SATISFACTORY TO COUNSEL FOR THE PARENT, 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 Parent that (I) the Exercise LLC Units will not be registered
under the Securities Act or under any state securities or "blue sky" laws, (II)
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, (III) the Exercise LLC Units must be held indefinitely and
the Grantee must continue to bear the economic risk of the investment in the
Exercise LLC Units until the Exercise LLC Units are substequently registered
under the Securities Act and any applicable state securities laws or any
exemption from registration is available, (IV) it is not anticipated that there
will be any public market for the Exercise LLC Units, (V) 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], (VI) the
Parent has made no covenant to make Rule 144 available with respect to sales of
securities of the Parent, (VII) 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,
(VIII) 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, (IX) a restrictive legend in the form
heretofore set forth
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shall be placed on the certificates representing the Exercise LLC Units and (X)
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) ABILITY TO BEAR RISK. The Grantee covenants that he will not
exercise all or any portion of the Contingent Option unless (I) the financial
situation of the Grantee is such that he can afford to bear the economic 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) 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.
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
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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.
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:
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(i) if to the Parent, to:
Global Decisions Group LLC
c/x XxXxxxxx, Xxxxxxxx & Xxxxxx, Inc.
000 Xxxxxxx Xxxxxx,
00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxxx Xxxxx
(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:
Xxxxxxx, Dubilier & Rice, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTENTION: Xxxxxx X. Xxxxx
Brera Capital Partners, LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTENTION: Xxxxxxx Xxxxxxxx
Xxxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTENTION: Xxxxxx X. Xxxxx, Esq.
and
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Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Xxxx X. Xxxxxxxx, 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 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.
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(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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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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