EXHIBIT 10.1(F)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TRUE NORTH COMMUNICATIONS INC. AND
PT CONTROLLED, INC.
AND
MODEM MEDIA. XXXXX XXXXX, INC.,
XXXXXXX X. XXXXXX,
XXXXXX X. XXXXX, XX,
XXXXXX X. X'XXXXXXX, AND
KRAFT ENTERPRISES LTD.
DATED AS OF FEBRUARY __, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER........................................................... 4
1.1 The Merger............................................................. 4
1.2 Effective Time......................................................... 4
1.3 Effect of the Merger................................................... 4
1.4 Certificate of Incorporation; Bylaws................................... 4
1.5 Directors and Officers................................................. 4
1.6 Maximum Shares to Be Issued; Effect on Capital Stock................... 4
1.7 No Further Ownership Rights in Controlled Capital Stock................ 5
1.8 Lost, Stolen or Destroyed Certificates................................. 6
1.9 Taking of Necessary Action; Further Action............................. 6
1.10 Tax Treatment.......................................................... 6
ARTICLE II [INTENTIONALLY LEFT BLANK]........................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MMPT.............................. 6
3.1 Good Standing, Authority............................................... 6
3.2 No Conflicts: Consents................................................. 7
3.3 MMPT Capital Structure................................................. 7
3.4 Organization and Standing.............................................. 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CONTROLLED AND
TRUE NORTH............................................................. 8
4.1 Good Standing; Authority............................................... 8
4.2 No Conflicts; Consents................................................. 8
4.3 Financial Statements................................................... 8
4.4 Taxes.................................................................. 9
4.5 Assets Other than Real Property Interests.............................. 10
4.6 Real Property.......................................................... 11
4.7 Intellectual Property.................................................. 11
4.8 Contracts.............................................................. 12
4.9 Litigation............................................................. 14
4.10 Insurance.............................................................. 14
4.11 Environmental.......................................................... 14
4.12 Benefit Plans.......................................................... 15
4.13 Compliance with Applicable Laws........................................ 15
4.14 Employee and Labor Matters............................................. 16
4.15 Customer Accounts Receivable........................................... 16
4.16 Licenses; Permits...................................................... 17
4.17 Tax Treatment.......................................................... 17
4.18 Disclosure............................................................. 17
4.19 Asset Purchases........................................................ 17
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TABLE OF CONTENTS
(CONTINUED)
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4.20 Sufficiency of Controlled Business..................................... 17
4.21 Effect of Transaction.................................................. 17
4.22 Events Subsequent to Most Recent Financial Statements of Controlled.... 17
[4.23 Restructuring Actions]................................................. 17
ARTICLE V [INTENTIONALLY LEFT BLANK]............................................ 18
ARTICLE VI CERTAIN AGREEMENTS AND COVENANTS..................................... 18
6.1 Agreements of each of MMPT and the Stockholders........................ 18
6.2 Agreements of MMPT..................................................... 18
6.3 Agreements of True North............................................... 19
ARTICLE VII ADDITIONAL AGREEMENTS............................................... 19
7.1 Access to Information.................................................. 19
7.2 Expenses............................................................... 19
7.3 Public Disclosure...................................................... 19
7.4 Consents............................................................... 19
7.5 Reasonable Efforts..................................................... 20
7.6 Notification of Certain Matters........................................ 20
7.7 Additional Documents and Further Assurances............................ 20
7.8 Blue Sky Laws.......................................................... 20
7.9 Legal Requirements..................................................... 20
7.10 Tax Status............................................................. 21
ARTICLE VIII [INTENTIONALLY LEFT BLANK]........................................ 21
ARTICLE IX INDEMNIFICATION...................................................... 21
9.1 Survival of Representations and Warranties; Liability Threshold;
Limitation on Recovery................................................. 21
9.2 Indemnification........................................................ 21
9.3 Insurance.............................................................. 22
9.4 Losses Net of Taxes, Etc............................................... 22
9.5 Procedures Relating to Indemnification................................. 23
9.6 Other Claims........................................................... 24
9.7 Termination of Indemnification......................................... 25
9.8 Mitigation............................................................. 25
9.9 Stockholder Claims..................................................... 25
9.10 Accounts Receivable Reserve............................................ 25
ARTICLE X DISPUTE RESOLUTION................................................... 25
10.1 Binding Arbitration.................................................... 25
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE XI TERMINATION, AMENDMENT AND WAIVER.................................... 26
11.1 Termination............................................................. 26
11.2 Effect of Termination................................................... 27
11.3 Amendment............................................................... 27
11.4 Extension; Waiver....................................................... 27
ARTICLE XII GENERAL PROVISIONS.................................................. 27
12.1 Notices................................................................. 27
12.2 Interpretation.......................................................... 28
12.3 Counterparts............................................................ 28
12.4 Entire Agreement; Assignment............................................ 28
12.5 Severability............................................................ 29
12.6 Governing Law........................................................... 29
12.7 Specific Performance.................................................... 29
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INDEX OF SCHEDULES
SCHEDULE DESCRIPTION
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Schedule 1.6(a) Shares to be Received
Schedule 1.6(b) Options to be Converted
Schedule 4.3 Controlled Financial Statements
Schedule 4.6 Real Property
Schedule 4.15 Customer Accounts Receivable
[Schedule 4.23 Restructuring Actions]
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
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Exhibit 6.2(a) Public Offering Committee Charter
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
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into this ___ day of February, 1999, with effect from October 1, 1998, among
TRUE NORTH COMMUNICATIONS INC., a Delaware corporation ("True North"), PT
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CONTROLLED, INC., a Delaware corporation and wholly-owned subsidiary of True
North ("Controlled"), MODEM MEDIA . XXXXX XXXXX, INC., a Delaware corporation
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("MMPT"), and each of Xxxxxxx X. Xxxxxx, a resident of Norwalk, Connecticut,
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Xxxxxx X. Xxxxx, XX, a resident of Danbury, Connecticut, Xxxxxx X. X'Xxxxxxx, a
resident of Wilton, Connecticut, and Kraft Enterprises LTD, an Illinois general
partnership (collectively, the "Stockholders").
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RECITALS
A. The Boards of Directors of each of MMPT and Controlled believe it is
in the best interests of each company and their respective stockholders that the
business and operations of MMPT and Controlled be combined through the statutory
merger of Controlled with and into MMPT (the "Merger").
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B. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, all of the issued and outstanding shares of
capital stock of Controlled ("Controlled Capital Stock") and all outstanding
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options and other rights to acquire or receive shares of Controlled Capital
Stock shall be converted into the right to receive shares of Class A Common
Stock, par value $0.001 per share, of MMPT or Class B Common Stock, par value
$0.001 per share, of MMPT, as set forth on Schedule 1.6(a) hereto, of MMPT
(collectively, "MMPT Common Stock").
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C. This Agreement and the transactions contemplated hereby constitute the
"Plan of Merger" required by Section 257 of the Delaware General Corporation Law
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("Delaware Law").
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D. The Boards of Directors of MMPT and Controlled have approved this
Agreement as part of the Plan of Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:
CERTAIN DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
following meanings:
Action: any action, claim, suit, arbitration, inquiry, subpoena, discovery
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request, proceeding or investigation by or before any court or grand jury, any
governmental or other regulatory or administrative agency or commission or any
arbitration tribunal involving or related to a party or its business.
Acquisition Agreement: the Amended and Restated Acquisition Agreement
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dated as of December 31, 1996 among MMPT, True North, Xxxxx, Cone & Xxxxxxx
Advertising, Inc., Xxxxx Cone & Xxxxxxx, Inc., R/GA Media Group, Inc. and the
Stockholders.
Affiliate: with respect to any specified person, a person that, directly
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or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with, such specified person.
Code: the Internal Revenue Code of 1986, as amended.
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Common Exchange Ratio: shall have the meaning set forth in Section 1.6(e)
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hereto.
Controlled: PT Controlled, Inc., a Delaware corporation. For purposes of
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Article IV of this Agreement, Controlled shall include the Controlled
Subsidiaries.
Controlled Asset Contribution Agreement: The Asset Contribution Agreement
---------------------------------------
dated _________, 1999 between Xxxxx Xxxxx, Inc., a Delaware corporation ("Xxxxx
Xxxxx") and Controlled relating to the contribution of certain assets of Xxxxx
Xxxxx by Controlled.
Controlled Business: the interactive media services, properties and
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business of Controlled as conducted following the effective date of the
transactions contemplated by the Controlled Asset Contribution Agreement.
Controlled Subsidiaries: Modem Media . Xxxxx Xxxxx (Hong Kong) Limited
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and Xxxxx Xxxxx (Europe) Limited.
Indemnifiable Losses: with respect to any claim by an Indemnitee for
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indemnification authorized pursuant to Article 9 hereof, any and all losses,
liabilities, claims, damages, obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and all actions,
demands, assessments, judgments, settlements and compromises relating thereto
and reasonable attorneys' fees and expenses in connection therewith) suffered by
such Indemnitee with respect to such claim.
Indemnifying Party: any party who is required to pay any other person
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pursuant to Article 9 hereof.
Indemnitee: any party who is entitled to receive payment from an
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Indemnifying Party pursuant to Article 9 hereof.
Indemnity Payment: the amount an Indemnifying Party is required to pay an
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Indemnitee pursuant to Article 9 hereof.
Intercompany Agreements: the Administrative Services Agreement, the
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Intercompany Credit Agreement, the Tax Matters Agreement, each dated as of
_____, 1999, between True North and
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MMPT, and the Sublease Modification Agreement between MMPT and Bozell, Jacobs,
Xxxxxx & Xxxxxxxx, Inc., dated August 1, 1998.
Letter of Intent: The Letter of Intent dated May 20, 1998 between True
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North, MMPT and the Stockholders relating to, among other things, the
transactions contemplated by this Agreement.
Liabilities: any and all debts, liabilities and obligations, whether
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accrued, contingent or reflected on a balance sheet, including, without
limitation, those arising under any law, rule, regulation, Action, order or
consent decree of any governmental entity or any judgment of any court of any
kind or any award of any arbitrator of any kind, and those arising under any
contract, commitment or undertaking.
Material Adverse Effect: a material adverse effect on the business,
-----------------------
assets, condition (financial or otherwise), results of operations or business
prospects of a party, or on the ability of a party to consummate the
transactions or complete the performance of the activities contemplated by this
Agreement.
Merger Agreement: The Amended and Restated Merger Agreement dated as of
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December 31, 1996 among True North, MMPT and the Stockholders.
MPPT: Modem Media . Xxxxx Xxxxx, Inc., a Delaware corporation (formerly TN
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Technologies Inc., a Delaware corporation).
MMPT Asset Purchase Agreements: The Asset Purchase Agreements each dated
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as of February __, 1999 (i) between True North and MMPT relating to the purchase
of certain assets of MMPT by True North and (ii) between R/GA Media Group Inc.
and MMPT relating to the purchase of certain assets of MMPT by R/GA Media Group
Inc.
Partnership Interest and Stock Purchase Agreement: The Amended and
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Restated Partnership Interest and Stock Purchase Agreement dated as of December
31, 1996 among True North and the Stockholders.
Restructuring Transactions: The series of steps and transactions
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implemented by True North relating to (i) MMPT and certain predecessor entities
of Controlled (including their affiliates) and (ii) the combination of
Controlled with MMPT pursuant to this Agreement, including the following: (a)
the transactions contemplated by the MMPT Asset Purchase Agreements; (b) the
transactions contemplated by the Controlled Asset Contribution Agreement; (c)
the merger of Xxxxx Xxxxx (US) with and into an acquisition subsidiary of
Bozell, Jacobs, Kenyan & Xxxxxxxx, Inc.; (d) the liquidation of Xxxxx Xxxxx
(Malaysia) and Xxxxx Xxxxx BV; (e) the dividend of the stock of Xxxxx Xxxxx
(Brazil); (f) the dividend of the stock of Controlled to True North; and (g) the
merger contemplated by this Agreement.
Return or Returns: all returns, declarations of estimated tax payments,
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reports, estimates, information returns and statements with respect to Taxes,
including any related or supporting
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information with respect to any of the foregoing, filed or required to be filed
with any taxing authority.
Tax, Taxable or Taxes: all Federal, state, local, foreign and other taxes
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and assessments, duties or charges of any kind, including all payroll,
employment or other withholding taxes, and including all interest, penalties and
additions imposed with respect to such amounts and penalties for late filing or
nonfiling of Returns.
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
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subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Controlled shall be merged with and into
MMPT, the separate corporate existence of Controlled shall cease and MMPT shall
continue as the surviving corporation. MMPT as the surviving corporation after
the Merger is hereinafter sometimes referred to as the "Surviving Corporation."
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1.2 Effective Time. The closing of the Merger (the "Closing") will take
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place on the date hereof (the "Closing Date"). On the Closing Date, the parties
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hereto shall cause the Merger to be consummated by filing and/or causing to
become effective a Certificate of Merger (or like instrument) with the Secretary
of State of the State of Delaware (the "Certificate of Merger"), in accordance
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with the relevant provisions of Delaware Law (the time effectiveness of the
Certificate of Merger being referred to herein as the "Effective Time").
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1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
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shall be as provided in the applicable provisions of Delaware Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property, rights, privileges, powers and franchises of MMPT and
Controlled shall vest in the Surviving Corporation, and all debts, liabilities
and duties of MMPT and Controlled shall become the debts, liabilities and duties
of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
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(a) Unless otherwise determined by MMPT prior to the Effective Time,
at the Effective Time, the Certificate of Incorporation of MMPT shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation.
(b) The Bylaws of MMPT as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter amended.
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1.5 Directors and Officers. The directors of MMPT shall be the initial
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directors of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and Bylaws of the Surviving Corporation. The
officers of MMPT shall be the initial officers of the Surviving Corporation,
each to hold office in accordance with the Bylaws of the Surviving Corporation.
1.6 Maximum Shares to Be Issued; Effect on Capital Stock. The maximum
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aggregate number of shares of MMPT Common Stock to be issued in the Merger
(including Class A Common Stock of MMPT to be reserved for issuance upon
exercise of any of Controlled options to be assumed by MMPT in exchange for the
acquisition by MMPT of all outstanding Controlled Capital Stock) shall be
1,753,986 (the "Aggregate Share Number"). No adjustment shall be made in the
----------------------
number of shares of MMPT Common Stock issued in the Merger as a result of any
cash proceeds received by Controlled from the date hereof to the Closing Date
pursuant to the exercise of options to acquire Controlled Capital Stock.
Subject to the terms and conditions of this Agreement, as of the Effective Time,
by virtue of the Merger and without any action on the part of Controlled, MMPT
or the holder of any shares of Controlled Capital Stock, the following shall
occur:
(a) Conversion of Controlled Capital Stock. Each share of Common
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Stock of Controlled ("Controlled Capital Stock") issued and outstanding
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immediately prior to the Effective Time will be canceled and extinguished and
will be converted automatically into the right to receive that number of shares
of Class A Common Stock or Class B Common Stock, as set forth on Schedule 1.6(a)
hereto, multiplied by the Common Exchange Ratio (as defined in paragraph (e)
below).
(b) Stock Options. At the Effective Time, those outstanding options
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to purchase shares of Controlled Capital Stock that are set forth on Schedule
1.6(b) (each, a "Controlled Option") shall be, in connection with the Merger,
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canceled and extinguished and be converted automatically into options to
purchase that number of shares of Class A Common Stock of MMPT equal to the
number of shares of Controlled Capital Stock underlying such Controlled Option
multiplied by the Common Exchange Ratio, rounded down to the nearest whole
number of shares of MMPT Common Stock. The per share exercise price for the
shares of Class A Common Stock of MMPT issuable upon exercise of such exchanged
Controlled Option shall be equal to the quotient determined by dividing the
exercise price per share of the Controlled Capital Stock at which such
Controlled Option was exercisable immediately prior to the Effective Time by the
Common Exchange Ratio rounded up to the nearest whole cent. All other
outstanding options to purchase Controlled Capital Stock, whether vested or
unvested ("Unconverted Options"), will be canceled and extinguished as of the
Effective Time and will not be converted into options to purchase shares of MMPT
Common Stock.
(c) Adjustments to Common Exchange Ratio. The Common Exchange Ratio
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shall be adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities convertible
into MMPT Common Stock or Controlled Capital Stock), merger, recapitalization or
other like change with respect to MMPT Common Stock or Controlled Capital Stock
occurring after the date hereof and prior to the Effective Time, other than as
contemplated hereby.
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(d) Common Exchange Ratio. The "Common Exchange Ratio" shall be the
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Aggregate Share Number divided by the sum of (A) the total number of shares of
Controlled Capital Stock outstanding as of immediately prior to the Effective
Time and (B) the total number of shares of Controlled Capital Stock underlying
Controlled Options (other than Unconverted Options) outstanding as of
immediately prior to the Effective Time.
1.7 No Further Ownership Rights in Controlled Capital Stock. All shares
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of MMPT Common Stock issued upon the surrender for exchange of shares of
Controlled Capital Stock in accordance with the terms hereof (including any cash
paid in respect thereof) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Controlled Capital
Stock, and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of Controlled Capital Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, certificates representing shares of Controlled Capital Stock are presented
to the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Article I.
1.8 Lost, Stolen or Destroyed Certificates. In the event any certificates
--------------------------------------
representing Controlled Capital Stock shall have been lost, stolen or destroyed,
Controlled shall issue in exchange for such lost, stolen or destroyed
certificates, upon the making of an affidavit of that fact by the holder
thereof, such shares of MMPT Common Stock and cash for fractional shares, if
any, as may be required pursuant to Section 1.6.
1.9 Taking of Necessary Action; Further Action. If, at any time after the
------------------------------------------
Effective Time, any such further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of MMPT and Controlled, the officers and directors of MMPT and
Controlled are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary action.
1.10 Tax Treatment. The Merger is intended to constitute a "Merger" within
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the meaning of Section 368(a) of the Internal Revenue Code of 1986 (the "Code")
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and the exchange of Controlled Capital Stock for MMPT Common Stock pursuant to
the Merger is intended to constitute an exchange described in Section 354 of the
Code.
ARTICLE II
[INTENTIONALLY LEFT BLANK]
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MMPT
MMPT hereby represents and warrants to Controlled, subject to such
exceptions as are disclosed in the disclosure letter supplied by MMPT to
Controlled (the "MMPT Schedules") dated the date hereof, as follows:
3.1 Good Standing, Authority. MMPT is a corporation duly organized,
------------------------
validly existing and in good standing under the laws of the State of Delaware.
MMPT has all requisite corporate power and authority to enter into this
Agreement to perform its obligations hereunder and to consummate the
transactions contemplated hereby. All corporate acts and other proceedings
required to be taken by MMPT to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, approval by the stockholders
of MMPT by the requisite vote under applicable law and MMPT's Certificate of
Incorporation of this Agreement and the Merger, have been duly and properly
taken. This Agreement has been duly executed and delivered by MMPT and
constitutes a legal, valid and binding obligation of MMPT enforceable against
MMPT in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, merger, moratorium or other similar laws
relating thereto or affecting creditors' rights generally or by general
equitable principles.
3.2 No Conflicts: Consents. The execution and delivery of this Agreement
----------------------
by MMPT do not, and the consummation of the transactions contemplated hereby and
compliance with the terms hereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or to loss of a material benefit under, or to materially
increased, additional, accelerated or guaranteed rights or entitlements of any
person under, or result in the creation of any material lien, claim,
encumbrance, security interest, option, charge or restriction of any kind upon
MMPT under, any provision of (a) the Certificate of Incorporation or Bylaws of
MMPT, (b) any material note, bond, mortgage, indenture, deed of trust, license,
lease, contract, commitment, agreement or arrangement to which MMPT is a party
or by which any of its properties or assets are bound or (c) any judgment, order
or decree, or statute, law, ordinance, rule or regulation applicable to MMPT or
its properties or assets. No consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any governmental
entity is required to be obtained or made by or with respect to MMPT in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
3.3 MMPT Capital Structure. Except as disclosed on Schedule 1.6(a) and
----------------------
other than True North (including certain wholly-owned subsidiaries of True
North) and the Stockholders, no other person or entity owns any Controlled
Capital Stock. Schedule 1.6(a) sets forth the ownership of all such issued and
outstanding Controlled Capital Stock. Other than as set forth on Schedule
1.6(c), there are no options, warrants, calls, rights, commitments or agreements
of any character, written or oral other than arising hereunder, to which MMPT is
a party or by which such party is bound obligating MMPT to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold,
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repurchased or redeemed any equity interest in MMPT or to grant, or enter into
any such option, warrant, call, right, commitment or agreement.
3.4 Organization and Standing. MMPT has full corporate power an
-------------------------
authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or otherwise
hold its properties and assets and to carry on its business as presently
conducted. MMPT is duly qualified and in good standing to do business as a
foreign corporation in each jurisdiction in which the conduct or nature of its
business or the ownership, leasing or holding of its properties makes such
qualification necessary, except such jurisdictions where the failure to be so
qualified or in good standing, individually or in the aggregate, would not have
a Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CONTROLLED AND TRUE NORTH
Controlled and True North represent and warrant to MMPT and the
Stockholders, subject to such exceptions as are disclosed in the disclosure
letter supplied by Controlled to MMPT (the "Controlled Schedules") and dated as
--------------------
of the date hereof, as follows:
4.1 Good Standing; Authority. Controlled is a corporation duly organized,
------------------------
validly existing and in good standing under the laws of the State of Delaware.
Controlled was incorporated on November 16, 1998 for the purpose of effecting
the separate transactions contemplated by this Agreement and the Controlled
Asset Contribution Agreement. Controlled has not engaged in any business
operations since the date of its formation. Controlled and True North have all
requisite corporate power and authority to enter into this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. All corporate acts and other proceedings required to be taken by
Controlled and True North to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and properly taken. This Agreement has been duly executed and
delivered by Controlled and True North and constitutes a legal, valid and
binding obligation of each of Controlled and True North, enforceable against
them in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, merger, moratorium or other similar laws
relating thereto or affecting creditors' rights generally or by general
equitable principles.
4.2 No Conflicts; Consents. The execution and delivery of this Agreement
----------------------
by Controlled and True North do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of, any material obligation or to loss of a material benefit under,
or to materially increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of any material
lien, claim, encumbrance, security interest, option, charge or restriction of
any kind upon Controlled under, any provision of (a) the Certificate of
Incorporation or Bylaws of Controlled or True North, as the case may be, (b) any
material note, bond, mortgage,
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indenture, deed of trust, license, lease, contract, commitment, agreement or
arrangement to which Controlled or True North, as the case may be, or its is a
party or by which its properties or assets are bound or (c) any judgment, order
or decree, or statute, law, ordinance, rule or regulation applicable to
Controlled, True North, their respective properties or assets. No consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any governmental entity is required to be obtained
or made by or with respect to Controlled in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
4.3 Financial Statements.
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(a) Schedule 4.3(a) sets forth the consolidated balance sheets of
Controlled as of September 30, 1998 and December 31, 1997 and the consolidated
statements of income and cash flows of Controlled and the Controlled
Subsidiaries for each of the three years ended on December 31, 1997, together
with all the notes that have been prepared to such financial statements, if any,
which financial statements reflect, on a pro forma basis, the Controlled
Business (collectively, the "Controlled Financial Statements"). The Controlled
-------------------------------
Financial Statements are complete and accurate in all material respects and
fairly present the consolidated financial condition and results of operations of
Controlled and the Controlled Subsidiaries, including the Controlled Business,
in accordance with generally accepted accounting principles consistently
applied, in each case as of the respective dates thereof and for the respective
periods indicated.
(b) Except as disclosed on Schedule 4.3(b), there are, and at the
Closing there will be, no liabilities or obligations of any nature (whether
accrued, absolute, contingent, unasserted or otherwise) relating to Controlled,
including the Controlled Business, except (i) as specifically disclosed,
reflected or fully reserved against as part of the balance sheet of Controlled
or the Controlled Subsidiaries as of September 30, 1998 (the "Controlled Balance
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Sheet") and (ii) for non-material liabilities and obligations incurred in the
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ordinary course of business of Controlled, including the Controlled Business,
consistent with past practice since the date of the Controlled Balance Sheet.
(c) At the Closing, MMPT will not incur any liabilities, costs or
obligations (including severance costs) as a result of the Merger, other than
the Assumed Liabilities (as defined in the Controlled Asset Contribution
Agreement).
4.4 Taxes. All Tax Returns, statements, reports and forms (including
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estimated Tax returns and reports and information Returns and reports) required
to be filed with any Taxing Authority with respect to any Taxable period ending
on or before the date hereof relating to or otherwise affecting Controlled or
the Controlled Business (collectively, the "Controlled Returns"), have been or
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will be filed when due in accordance with all applicable laws (including any
extensions of such due date), and all amounts shown or required to be shown due
thereon have been paid or have been fully accrued on the Controlled Balance
Sheet in accordance with generally accepted accounting principles. Except to
the extent disclosed in the Controlled Financial Statements (including notes
thereto), the Controlled Returns correctly reflect (and, as to any Controlled
Returns
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not filed as of the date hereof but filed on or prior to the Closing Date, will
correctly reflect) the Tax liability of Controlled. Controlled has withheld and
paid to the applicable financial institution or Taxing Authority all amounts
required to be withheld including, without limitation, all amounts required to
be withheld with respect to employees of Controlled. Controlled has not granted
any extension or waiver of the limitation period applicable to any Controlled
Returns involving a Tax issue with respect to or otherwise affecting Controlled
or the Controlled Business. There is no claim, audit, action, suit, proceeding,
or investigation now pending or, to the best knowledge of Controlled or True
North, threatened against or with respect to Controlled in respect of any Tax
deficiency or assessment relating to or otherwise affecting Controlled. No
notice of deficiency or similar document of any Tax Authority relating to or
otherwise affecting Controlled has been received by Controlled or True North,
and there are no liabilities for Taxes (including liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to the
issues that have been raised (and are currently pending) by any Tax Authority
relating to Controlled that could, if determined adversely to Controlled,
materially affect the liability of Controlled, for Taxes with respect to or
otherwise affecting Controlled or the Controlled Business in other Taxable
periods. To the knowledge of Controlled and True North, there are no liens for
Taxes on the assets included in or otherwise affecting Controlled or the
Controlled Business other than liens for Taxes which are not yet due and
payable. Controlled has not been or will not be required to include any material
adjustment in Taxable income for any Tax period (or portion thereof) ending on
or prior to the date hereof pursuant to Sections 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed in respect of Controlled
prior to the date hereof. There is no contract, agreement, plan or arrangement,
including, but not limited to, the provisions of this Agreement, covering any
employee or former employee of Controlled that, individually or collectively,
will give rise to the payment of any amount that will not be deductible pursuant
to Section 162 (as unreasonable compensation) or pursuant to Section 280G of the
Code. Controlled is not a party to (or obligated under) any Tax allocation, Tax
distribution, Tax sharing, Tax indemnity or similar agreement or arrangement
with respect to any Tax relating to or otherwise affecting Controlled
(including, without limitation, any such agreement or arrangement imposed by
operation of law). None of (i) the sale of certain assets by MMPT to True North
or its affiliate pursuant to the terms of the MMPT Asset Purchase Agreements,
(ii) the contribution of certain assets by Xxxxx Xxxxx to Controlled pursuant to
the terms of the Controlled Asset Contribution Agreement or (iii) any of the
transactions contemplated or consummated pursuant to or in connection with this
Agreement, or (iv) any other transaction contemplated by the Restructuring
Transactions, has given or will give rise to any Tax Liability on the part of
Controlled, MMPT or the Stockholders.
4.5 Assets Other than Real Property Interests.
-----------------------------------------
(a) Controlled has good and valid title to all assets (other than
real property) reflected on the Controlled Balance Sheet or thereafter acquired,
except those sold or otherwise disposed of since the date of the Controlled
Balance Sheet in the ordinary course of business consistent with past practice,
which are not material to the Controlled Business in each case free and clear of
all mortgages, liens, security interests or encumbrances of any kind other than
(i) mechanics, carriers', workmen's, repairmen's or other like liens arising or
incurred in the ordinary course of business, liens arising under original
purchase price conditional sales contracts and equipment leases
-10-
with third parties entered into in the ordinary course of business and liens for
Taxes which are not due and payable or which may thereafter be paid without
penalty or premium, (ii) mortgages, liens, security interests and encumbrances
which secure debt that is reflected as a liability on the Controlled Balance
Sheet and (iii) other imperfections of title or encumbrances, if any, which do
not, individually or in the aggregate, materially impair the continued use,
operation or value of the assets to which they relate (the mortgages, liens,
security interests, encumbrances and imperfections of title described in clauses
(i), (ii) and (iii) above are hereinafter referred to collectively as
"Controlled Permitted Liens").
--------------------------
(b) All the tangible assets of Controlled have been maintained in all
material respects in accordance with normal industry practice. Each of the
tangible assets of Controlled and each item of material tangible personal
property of Controlled is in all material respects in good operating condition
and repair, ordinary wear and tear excepted. All leased personal property of
Controlled is in all material respects in the condition required of such
property by the terms of the lease applicable thereto during the term of the
lease and upon the expiration thereof.
(c) The Controlled Subsidiaries are wholly-owned subsidiaries of
Controlled. Controlled has no subsidiaries other than the Controlled
Subsidiaries.
4.6 Real Property.
-------------
(a) Schedule 4.6 sets forth a complete list of all leased and other
interests in real property of any kind leased or held by Controlled
(individually, a "Controlled Leased Property") and further identifies any
--------------------------
material agreements relating to said interests in real property. Controlled has
good, valid, and subsisting title to the Controlled Leased Property, in each
case free and clear of all leasehold mortgages, leasehold liens, leasehold
security interests, leasehold encumbrances, leases, assignments, subleases,
easements, covenants, rights-of-way, rights of refusal, and other restrictions
of any nature whatsoever, except (a) such as are set forth on Schedule 4.6, (b)
zoning, building and similar restrictions, or (c) easements, covenants, rights-
of-way, rights of first refusal and other similar restrictions that affect the
fee title to the Controlled Leased Property, none of which items set forth in
clauses (b) or (c), individually or in the aggregate, materially impair the
continued use, operation or value of the property to which they relate. The
current use by Controlled of the offices and other facilities located on
Controlled Leased Property does not violate any local zoning ordinance and, to
the knowledge of Controlled and True North, there is no proposed change in any
local zoning ordinance that would have a material adverse effect on the
Controlled Business.
(b) Neither the whole nor any part of the Controlled Leased Property
is subject to any pending suit for condemnation or other taking by any public
authority, and, to the knowledge of Controlled and True North, no such
condemnation or other taking is threatened or contemplated.
4.7 Intellectual Property.
---------------------
(a) Controlled owns the freely transferable right to make, use, sell,
have made, lease, export, execute, reproduce, display, perform, modify, enhance,
distribute, prepare derivative works of and sublicense, without payment to any
other person, all Intellectual Property owned, used,
-11-
filed by or licensed to Controlled (the "Controlled Intellectual Property"), and
--------------------------------
the consummation of the transactions contemplated hereby will not conflict with,
alter or impair any such rights. Controlled owns or licenses under valid
agreements all Controlled Intellectual Property as is necessary to conduct the
Controlled Business.
(b) Controlled has not granted any options, licenses or agreements of
any kind relating to Controlled Intellectual Property or the marketing or
distribution thereof, except non-exclusive licenses to end users in the ordinary
course of business. Controlled is not bound by or a party to any options,
licenses or agreements of any kind relating to the Controlled Intellectual
Property of any other person. All Controlled Intellectual Property is free and
clear of the claims of others and of all liens, security interests and
encumbrances whatsoever. Controlled's conduct of the Controlled Business does
not violate, conflict with or infringe the Intellectual Property of any other
person. No claims are pending or, to the knowledge of Controlled or True North,
threatened, against Controlled by any person with respect to the ownership,
validity, enforceability, effectiveness or use of any Controlled Intellectual
Property, and, to the knowledge of Controlled and True North, there are no
reasonable grounds existing to support the commencement or assertion of any such
claims which such claims would be of a material nature; and neither Controlled
nor True North has received any written communications alleging that any such
party has violated any rights relating to Intellectual Property of any person.
(c) The Controlled Intellectual Property has been maintained in
confidence in accordance with protection procedures customarily used in the
industries of Controlled to protect rights of like importance. All former and
current members of management and key personnel of Controlled, including all
current employees, agents, consultants and independent contractors who have
contributed to or participated in the conception and development of software or
other Controlled Intellectual Property (collectively, "Controlled Personnel"),
have executed and delivered to Controlled a proprietary information agreement
restricting such person's right to disclose proprietary information of
Controlled and its clients. All former and current Controlled Personnel either
(i) have been party to a "work-for-hire" arrangement or agreement with
Controlled, in accordance with applicable Federal and state law, that has
accorded Controlled full, effective, exclusive and original ownership of all
tangible and intangible property thereby arising or (ii) have executed
appropriate instruments of assignment in favor of Controlled as assignee that
have conveyed to Controlled full, effective and exclusive ownership of all
tangible and intangible property thereby arising. None of the current or former
officers or employees of Controlled have any patents issued or applications
pending for any device, process, design or invention of any kind now used in its
business.
4.8 Contracts. Controlled is not a party to nor is it bound by any:
---------
(a) employment agreement that represents an aggregate future
liability in excess of $50,000 and is not terminable by Controlled by notice of
not more than 60 days for a cost of less than $10,000;
(b) employee collective bargaining agreement or other contract with
any labor union;
-12-
(c) covenant not to compete or other covenant restricting in any
material respect the development, manufacture, marketing or distribution of
Controlled's products and services;
(d) agreement or other material arrangement with any current or
former officer, director or employee of Controlled;
(e) lease, sublease or similar agreement with any person under which
Controlled is a lessor or sublessor of, or makes available for use to any
person, (A) any Controlled Leased Property or (B) any portion of any premises
otherwise occupied by Controlled;
(f) lease, sublease or similar agreement with any person under which
(A) Controlled is lessee of, or holds or uses, any machinery, equipment, vehicle
or other tangible personal property owned by any person or (B) Controlled is a
lessor or sublessor of, or makes available for use by any person, any tangible
personal property owned or leased by Controlled in any such case which
represents an aggregate future liability or receivable, as the case may be, in
excess of $50,000 and is not terminable by Controlled by notice of not more than
60 days for a cost of less than $10,000;
(g) (A) continuing contract or arrangement with a stated term
(including permitted renewals) of more than 180 days for the future purchase of
materials, supplies or equipment, (B) management service, consulting or other
similar type of contract or arrangement or (C) advertising agreement or
arrangement, in any such case which represents an aggregate future liability to
any person in excess of $50,000 and is not terminable by Controlled by notice of
not more than 60 days for a cost of less than $50,000;
(h) license, option or other agreement relating in whole or in part
to the Controlled Intellectual Property (including any license or other
agreement under which Controlled, True North or any of their Affiliates is
licensee or licensor of any such Controlled Intellectual Property) or to trade
secrets, confidential information or proprietary rights and processes of
Controlled or any other person to which Controlled is a party;
(i) agreement, contract or other instrument under which Controlled
has borrowed any money from, or issued any note, bond, debenture or other
evidence of indebtedness to, any person or any other note, bond, debenture or
other evidence of indebtedness issued to any person;
(j) agreement or other arrangement (including so-called take-or-pay
or keepwell agreements) under which (A) any person has directly or indirectly
effectively guaranteed indebtedness, liabilities or obligations of Controlled or
(B) Controlled has directly or indirectly effectively guaranteed indebtedness,
liabilities or obligations of any person (in each case other than endorsements
for the purpose of collection in the ordinary course of business);
(k) agreement or arrangement under which Controlled has, directly or
indirectly, made any advance, loan, extension of credit or capital contribution
to, or other investment in, any person;
-13-
(l) mortgage, pledge, security agreement, deed of trust or other
instrument granting a lien or other encumbrance upon any real and personal
property of Controlled (other than such that fall within clauses (i) and (iii)
of the definition of Controlled Permitted Liens);
(m) agreement or instrument providing for indemnification of any
person with respect to liabilities relating to any current or former business of
Controlled or any predecessor person; or
(n) other agreement, contract, lease, sublease, license, commitments
or instrument to which Controlled is a party or by or to which it or any of its
assets or business is bound or subject which represents an aggregate future
liability to any person in excess of $50,000 and is not terminable by Controlled
by notice of not more than 60 days for a cost of less than $10,000.
(o) group of agreements, contracts, leases, subleases, licenses,
commitments or instruments falling within subparagraphs (a), (f), (g) and (n) of
this Section 4.8 that collectively represent future aggregate liabilities in
excess of $100,000 or that are not terminable by Controlled by notice of not
more than sixty (60) days for an aggregate cost of less than $10,000; except as
specifically contemplated by this Agreement; any contract not made in the
ordinary course of business; or any other contract, agreement, commitment or
understanding that is material to Controlled.
All agreements, contracts, leases, subleases, licenses, commitments or
instruments of Controlled which are material to business and operations of
Controlled (collectively, the "Controlled Contracts") are valid, binding and in
--------------------
full force and effect and are enforceable by Controlled in accordance with their
terms (except as against third parties that properly invoke the protection of
applicable bankruptcy laws of which, to the knowledge of Controlled and True
North, there are currently none) and, to the knowledge of Controlled and True
North, the consummation of the transactions contemplated hereby will not affect
the validity or enforceability of the Controlled Contracts. Controlled has
performed all material obligations required to be performed by it to date under
the Controlled Contracts and they are not (with or without the lapse of time or
the giving of notice, or both) in breach or default in any material respect
thereunder and, to the knowledge of Controlled and True North, no other party to
any of the Controlled Contracts is (with or without the lapse of time or the
giving of notice, or both) in breach or default in any material respect
thereunder. Controlled is not currently renegotiating any of the Controlled
Contracts or paying liquidated damages in lieu of performance.
4.9 Litigation. Controlled is not a party to any litigation. Controlled
----------
is not a party or subject to or in default under any judgment, order, injunction
or decree of any Governmental Entity or arbitration tribunal applicable to
Controlled or any of its properties, assets, operations or business. To the
knowledge of Controlled and True North, there are no unasserted claims which if
asserted could reasonably be expected to have a Material Adverse Effect. There
is no lawsuit or claim by Controlled pending, or which such claim Controlled
intends to initiate, against any other person involving a claim in excess of
$10,000. To the knowledge of Controlled and True North, there is no pending or
threatened investigation of Controlled by any Governmental Entity.
-14-
4.10 Insurance. All insurance policies maintained by Controlled are in
---------
full force and effect, all premiums due and payable thereon have been paid
(other than retroactive or retrospective premium adjustments that are not yet,
but may be, required to be paid with respect to any period ending prior to the
date hereof under comprehensive general liability and workmen's compensation
insurance policies), and no notice of cancellation or termination has been
received with respect to any such policy which has not been replaced on
substantially similar terms prior to the date of such cancellation. To the
knowledge of Controlled and True North, Controlled has conducted its Business in
a manner so as to conform in all material respects to all applicable provisions
of such insurance policies.
4.11 Environmental.
-------------
(a) For the purposes of this Agreement, the following terms shall
have the following definitions:
(i) "Environmental Claim" means any notice, claim, act, cause
of action or investigation by any Person alleging potential liability (including
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries
or penalties) arising out of, based on or resulting from (A) the presence, or
release into the environment, of any Hazardous Materials (as hereinafter
defined) or (B) any violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Laws" means all Federal, state, local and
foreign laws and regulations relating to pollution or protection of the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata) or the protection of human health, including laws and
regulations relating to emissions, discharges, releases or threatened releases
of Hazardous Materials, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials.
(iii) "Hazardous Materials" means chemicals, pollutants,
contaminants, wastes, toxic substances, radioactive and biological materials,
asbestos containing materials (ACM), hazardous substances, petroleum and
petroleum products or any fraction thereof.
(b) Controlled has been and is in compliance (which compliance
includes, but is not limited to, the possession of all permits and other
governmental authorizations required under applicable Environmental Laws and
compliance with the terms and conditions thereof) in all material respects with
all Environmental Laws, and Controlled has not received any notice of any
alleged claim, violation of or liability under any Environmental Law which has
not heretofore been cured or for which there is any remaining liability.
(c) Neither Controlled nor True North has received notice of any
Environmental Claim filed or threatened against Controlled or relating to
Controlled, or against any person or entity whose liability for any
Environmental Claim Controlled has retained or assumed either contractually or
by operation of law and there are no past or present actions, activities,
circumstances, conditions, events or incidents, that could reasonably be
expected to form the basis of any Environmental Claim
-15-
against Controlled or against any person or entity whose liability for any
Environmental Claim Controlled has retained or assumed either contractually or
by operation of law.
(d) Controlled has not disposed of, emitted, discharged, handled,
stored, transported, used or released any Hazardous Materials, arranged for the
disposal, discharge, storage or release of any Hazardous Materials, or exposed
any employee or other individual to any Hazardous Materials so as to give rise
to any material liability or corrective or remedial obligation under any
Environmental Laws.
(e) No Hazardous Materials are present in, on, under or adjacent to
any properties owned, leased or used at any time (including both land and
improvements thereon) by Controlled or for its business so as to give rise to
any material liability or corrective or remedial obligation under any
Environmental Laws.
4.12 Benefit Plans. Controlled does not maintain or contribute to, or is
-------------
not required to maintain or contribute to an "employee pension plan" (as defined
in Section 3(2) of ERISA) or an "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) and neither Controlled nor any benefit plan maintained by
Controlled is subject to ERISA.
4.13 Compliance with Applicable Laws. Controlled is in compliance in all
-------------------------------
material respects with all applicable statutes, laws, ordinances, rules, orders
and regulations of any governmental entity, including those relating to
occupational health and safety ("Applicable Laws"). Neither Controlled nor True
North has received any order or communication since December 31, 1997 from a
Governmental Entity that alleges that Controlled is not in compliance in any
respect with any Applicable Laws.
4.14 Employee and Labor Matters.
--------------------------
(a) (i) There is, and since December 31, 1997 there has been, no
labor strike, dispute, work stoppage or lockout pending, or, to the knowledge of
Controlled and True North, threatened, against Controlled, (ii) to the knowledge
of Controlled and True North, no union organizational campaign is in progress
with respect to the employees of Controlled and no question concerning
representation exists respecting such employees; (iii) Controlled is not engaged
in any unfair labor practice; (iv) there is no unfair labor practice charge or
complaint against Controlled pending, or, to the knowledge of Controlled and
True North, threatened, before the National Labor Relations Board; (v) there are
no pending, or, to the knowledge of Controlled and True North, threatened, union
grievances against Controlled; (vi) there are no pending, or, to the knowledge
of Controlled and True North, threatened, charges against Controlled or any
current or former employee of Controlled before the Equal Employment Opportunity
Commission or any state or local agency responsible for the prevention of
unlawful employment practices; (vii) none of Controlled, True North or
Controlled has received written notice during the past three years of the intent
of any Governmental Entity responsible for the enforcement of labor or
employment laws to conduct an investigation of or affecting Controlled and, to
the knowledge of Controlled and True North, no such investigation is in
progress; and (viii) Controlled is not liable for any arrears of wages,
penalties or taxes with respect to the foregoing.
-16-
(b) No officer or director of Controlled is, and, to the knowledge of
Controlled and True North, no other employee of Controlled is a party to or
bound by any contract, license, covenant or agreement of any nature, or subject
to any judgment, decree or order of any Governmental Entity, that would conflict
with Controlled or the transactions contemplated hereby or have a Material
Adverse Effect. To the knowledge of Controlled and True North, no activity of
any employee of Controlled as or while an employee of Controlled or Controlled
has caused a violation of any employment contract, confidentiality agreement,
patent disclosure agreement, or other contract or agreement. To the knowledge
of Controlled and True North, the execution and delivery of this Agreement will
not conflict with or result in a breach of the terms, conditions or provisions
of, or constitute a default under, any contract, covenant or instrument under
which any such employees are now obligated.
4.15 Customer Accounts Receivable. All customer accounts receivable of
----------------------------
Controlled, whether reflected on the Controlled Balance Sheet or subsequently
created, have arisen from bona fide transactions in the ordinary course of
business. To the knowledge of Controlled and True North, all accounts
receivable reflected in the Controlled Balance Sheet are good and collectible in
the ordinary course of business. Set forth on Schedule 4.15 is a list of the
names of the ten largest customers of the Controlled Business and the percentage
of the Controlled Business' total revenues that each customer represented during
the fiscal year ended December 31, 1997 and through the date hereof. Except as
set forth on Schedule 4.15, there exists no actual or threatened termination,
cancellation or limitation of, or any material modification of or change in, the
business relationship of Controlled with any of the ten largest customers of
Controlled during the fiscal year ended December 31, 1997 and through the date
hereof and, to the knowledge of the Controlled or True North, the consummation
of the transactions contemplated hereby will not result in the termination,
cancellation or limitation of, or any material change in, the business
relationship of Controlled with any such customer.
4.16 Licenses; Permits. All licenses, permits and authorizations issued or
-----------------
granted to Controlled by Governmental Entities which are necessary for the
conduct of the Controlled Business are validly held by Controlled. Controlled
has complied in all material respects with all terms and conditions of such
licenses, permits and authorizations, and the same will not be subject to
suspension, modification, revocation or nonrenewal as a result of the execution
and delivery of this Agreement, the Merger or the consummation of the
transactions contemplated hereby.
4.17 Tax Treatment. The Merger will constitute a Merger within the meaning
-------------
of Section 368(a) of the Code.
4.18 Disclosure. No representation or warranty of Controlled or True North
----------
contained in this Agreement, and no statement contained in any document,
certificate, Schedule, Annex or Exhibit furnished or to be furnished by or on
behalf of Controlled or True North to MMPT pursuant to this Agreement, contains
or will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary, in the light of the circumstances under which
it was or will be made, in order to make the statements herein or therein not
misleading or necessary in order to fully and fairly provide the information
required to be provided in any such document, certificate, Schedule or Exhibit.
-17-
4.19 Asset Purchases. The transactions contemplated by the Controlled
---------------
Asset Contribution Agreement and the MMPT Asset Purchase Agreements have been
consummated in accordance with their respective terms and without breach by True
North of any covenant or obligation thereunder.
4.20 Sufficiency of Controlled Business. The assets of Controlled comprise
----------------------------------
all of the business, properties, assets (including Intellectual Property) and
goodwill necessary for, and are sufficient for, the conduct of the business of
Controlled (including the Controlled Business) by Controlled in the same manner
as conducted by Controlled (including Controlled) prior to the Controlled
Merger.
4.21 Effect of Transaction. No creditor, employee, client, customer or
---------------------
other person having a material business relationship with the Controlled has
informed Controlled or True North, that such person intends to change such
relationship because of the consummation of any of the transactions contemplated
hereby.
4.22 Events Subsequent to Most Recent Financial Statements of Controlled.
-------------------------------------------------------------------
Since December 31, 1997, there has not been any material adverse change in the
assets that comprise the Controlled Business.
4.23 Restructuring Actions. TNC has taken or caused to be taken the
---------------------
restructuring actions relating to MMPT and Controlled as set forth on Schedule
4.23.
4.24 No Order; HSR. No Governmental Entity has enacted, issued,
-------------
promulgated, enforced or entered any stature, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger. All waiting periods, if any,
under HSR relating to the transactions contemplated hereby have expired or
terminated early.
ARTICLE V
[INTENTIONALLY LEFT BLANK]
ARTICLE VI
CERTAIN AGREEMENTS AND COVENANTS
6.1 Agreements of each of MMPT and the Stockholders. Each of MMPT and the
-----------------------------------------------
Stockholders hereby agree in consideration of the Merger and other agreements
and transactions contemplated by this Agreement, to waive any claim such party
may have with respect to, or arising out of, a breach of any representation and
warranty or the failure to comply with any covenant by True North directly
related to any of the Transferred Assets or the Acquired Entities (as such terms
are defined in the Acquisition Agreement) set forth in the Acquisition Agreement
if and only to the extent such Transferred Assets or Acquired Entities
(including any related liabilities or obligations)
-18-
have been transferred and assigned to True North pursuant to the MMPT Asset
Purchase Agreements.
6.2 Agreements of MMPT. MMPT hereby agrees with True North and the
------------------
Stockholders as follows:
(a) Public Offering Committee. As of the date hereof, MMPT has
established, and shall continue to maintain until completion of an initial
public offering of MMPT Common Stock, a Public Offering Committee of the Board
of Directors, consisting of Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, Xx. and X.X.
X'Xxxxxxx, in accordance with the provisions set forth in the form of Public
Offering Committee charter attached hereto as Exhibit 6.2(a) hereto. Subject to
the provisions of Section 6.7 of the Acquisition Agreement, True North and MMPT
shall use their respective best efforts to consummate an initial public offering
of MMPT Common Stock as promptly as practicable following the Closing on a
valuation agreed upon by the Stockholders, True North and MMPT, which agreement
shall not be unreasonably withheld.
(b) Board of Directors. As of the date hereof, the Board of Directors
of MMPT consists of five members, three of whom have been selected by True North
and two of whom have been selected by the Stockholders. Subsequent to the
Closing, the Board of Directors will appoint two additional independent
directors reasonably satisfactory to the Stockholders.
(c) Insurance. As of the date hereof, MMPT maintains insurance with
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the business in which it is
engaged.
(d) Bylaws. As of the date hereof, the bylaws of MMPT provide that
meetings of the Board of Directors may be called by the chairman of the Board,
the chief executive officer or a majority of the directors then in office.
(e) Miscellaneous Corporate Governance Matters. Each of the parties
acknowledge and agree that the commitments relating to the governance and
operation of MMPT set forth in the Letter of Intent shall survive the Closing.
(f) Survival. This Section 6.2 shall survive the Closing of this
Agreement.
6.3 Agreements of True North. True North hereby agrees with the other
------------------------
parties as follows:
Consent to Assignment. True North consents to the assignment to MMPT
of all contracts and agreements between it and Controlled resulting from the
Merger.
-19-
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Access to Information. Subject to any applicable contractual
---------------------
confidentiality obligations each party shall afford the others and its
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to (a) all of its
properties, books, contracts, agreements and records, and (b) all other
information concerning the business, properties and personnel of it as the
others may reasonably request. No information or knowledge obtained in any
investigation pursuant to this Section 7.1 shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
7.2 Expenses. Whether or not the Merger is consummated, all fees and
--------
expenses incurred in connection with the Merger including, without limitation,
all legal, accounting, financial advisory, consulting and all other fees and
expenses of third parties ("Third Party Expenses") incurred by a party in
--------------------
connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby, shall be the obligation
of the respective party incurring such fees and expense; provided, however, that
True North shall pay (i) all fees and expenses of Xxxxxx Xxxxxxxx LLP and Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, in connection with
accounting and legal services rendered in connection with the Merger and the
other transactions contemplated by this Agreement, and (ii) one-half, but not to
exceed $50,000, of the legal fees and expenses of the Stockholders in connection
with the Merger and the other transactions contemplated by this Agreement.
7.3 Public Disclosure. Unless otherwise required by law (including,
-----------------
without limitation, securities laws) no disclosure (whether or not in response
to an inquiry) of the subject matter of this Agreement shall be made by any
party hereto unless approved by True North and MMPT prior to release, provided
that such approval shall not be unreasonably withheld or delayed.
7.4 Consents. MMPT shall use its reasonable efforts to obtain the
--------
consents, waivers and approvals under the Controlled Contracts as may be
required in connection with the Merger (all of such consents, waivers and
approvals are set forth in Controlled Schedules) so as to preserve all rights
of, and benefits to MMPT thereunder.
7.5 Reasonable Efforts. Subject to the terms and conditions provided in
------------------
this Agreement, each of the parties hereto shall use its reasonable efforts to
take promptly, or cause to be taken, all actions, and to do promptly, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
hereby to obtain all necessary waivers, consents and approvals and to effect all
necessary registrations and filings and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions contemplated by this Agreement for the purpose of
securing to the parties hereto the benefits contemplated by this Agreement;
provided that True North shall not be required to agree to any divestiture by
True North or MMPT or any of True North's subsidiaries or affiliates of shares
of capital stock or of any
-20-
business, assets or property of True North or its subsidiaries or affiliates or
MMPT or its affiliates, or the imposition of any material limitation on the
ability of any of them to conduct their businesses or to own or exercise control
of such assets, properties and stock.
7.6 Notification of Certain Matters. MMPT shall give prompt notice to
-------------------------------
True North, and True North shall give prompt notice to MMPT, of (i) the
occurrence or non-occurrence of any event, the occurrence or non-occurrence of
which is likely to cause any representation or warranty of MMPT, Controlled or
True North, respectively, contained in this Agreement to be untrue or inaccurate
in any material respect at or prior to the Effective Time except as contemplated
by this Agreement and (ii) any failure of MMPT or Controlled or True North, as
the case may be, to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 7.6
shall not limit or otherwise affect any remedies available to the party
receiving such notice.
7.7 Additional Documents and Further Assurances. Each party hereto, at
-------------------------------------------
the request of the other party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be reasonably
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
7.8 Blue Sky Laws. True North and Controlled shall take such steps as
-------------
may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable to the issuance of the MMPT Common Stock
pursuant hereto. MMPT shall use its reasonable best efforts to assist True North
and Controlled as may be necessary to comply with the securities and blue sky
laws of all jurisdictions which are applicable in connection with the issuance
of MMPT Common Stock pursuant hereto.
7.9 Legal Requirements. Each of Controlled, True North and MMPT will
------------------
take all reasonable actions necessary or desirable to comply promptly with all
legal requirements which may be imposed on them with respect to the consummation
of the transactions contemplated by this Agreement (including furnishing all
information required in connection with approvals by or filings with any
Governmental Entity, and prompt resolution of any litigation prompted hereby)
and will promptly cooperate with and furnish information to any party hereto
necessary in connection with any such filings with or investigations by any
Governmental Entity, and any other such requirements imposed upon any of them or
their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement.
7.10 Tax Status. The parties hereto will take no action that could
----------
reasonably be expected to cause the exchange of Controlled Capital Stock for
MMPT Common Stock to fail to qualify as an exchange pursuant to a merger within
the meaning of Section 368(a).
-21-
ARTICLE VIII
[INTENTIONALLY LEFT BLANK]
ARTICLE IX
INDEMNIFICATION
9.1 Survival of Representations and Warranties; Liability Threshold;
----------------------------------------------------------------
Limitation on Recovery.
----------------------
(a) All representations, warranties, covenants and agreements of the
parties contained in this Agreement shall survive the Closing.
(b) Except as specifically provided herein, the provisions of this
Article IX shall terminate and be of no further force and effect on the third
anniversary of the date hereof. Notwith standing the foregoing, the
representations and warranties of Controlled and True North contained in
Sections 4.3, 4.4, 4.11, 4.15, 4.17, 4.19, 4.20, 4.23 and the covenant set forth
in Section 6.3 shall survive the Closing and shall continue in full force and
effect without limit as to time (subject to any applicable statutes of
limitations).
(c) No party to this Agreement shall be entitled to indemnification
for any loss contemplated by this Article IX until the aggregate of all
indemnified or indemnifiable losses, damages or expenses suffered by such party
or its successors and assigns, pursuant to this Agreement exceeds $100,000 (the
"Initial Threshold"). If such losses, damages or expenses exceed the Initial
Threshold, the applicable indemnifying party shall be obligated to pay the
entire amount of such losses, damages or expenses suffered by the other, less
$100,000. The foregoing two sentences shall not apply to a breach of the
representations and warranties or covenants set forth in Sections 4.3, 4.4,
4.11, 4.15, 4.17, 4.19, 4.20, 4.23 and 6.3 hereof.
9.2 Indemnification.
---------------
(a) True North shall indemnify, defend and hold harmless MMPT, each of
its directors, officers, employees and agents, each Affiliate of MMPT and the
Stockholders (the "Indemnified Parties") from and against any and all
Indemnifiable Losses of MMPT, any of its Affiliates or the Stockholders, as the
case may be, arising out of or due to, directly or indirectly, (i) any breach by
MMPT or Controlled or True North of any representation or warranty of Controlled
or True North given for the benefit of MMPT or the Stockholders, as the case may
be, contained in Article IV of this Agreement or in any certificate or Schedule
delivered pursuant hereto, and (ii) any breach of any covenant of Controlled or
True North contained in this Agreement and (iii) third party claims relating to
Neterra; provided, however, that the indemnification obligations of True North
pursuant to this Article IX shall not apply to the breach by MMPT or Controlled
of any representation or warranty given by MMPT or Controlled, the untruth of
which is actually known to any Stockholder as of the date hereof or as of the
Closing Date. The parties hereto acknowledge and
-22-
agree that the Stockholders shall have no obligation to undertake any
investigation of the accuracy of representations and warranties contained in
Article IV.
(b) True North's indemnity obligation under this Section 9.2 shall
include, but not be limited to, Indemnifiable Losses resulting from claims by
former shareholders of any predecessor businesses or entities of Controlled
that arise out of the Restructuring Transactions.
(c) MMPT shall indemnify, defend and hold harmless Controlled and True
North, each of their respective directors, officers, employees and agents and
each Affiliate of Controlled and True North from and against any and all
Indemnifiable Losses of Controlled and True North or any of their respective
Affiliates arising out of or due to, directly or indirectly, (i) any breach by
MMPT of any representations or warranties of MMPT contained in Article III of
this Agreement, or in any certificate or Schedule delivered pursuant hereto, or
(ii) any breach of any covenant of MMPT contained in this Agreement.
9.3 Insurance. Amounts required to be paid pursuant to this Article IX
---------
are hereafter sometimes collectively called "Indemnity Payments" and are
individually called an "Indemnity Payment." The amount which any party (an
"Indemnifying Party") is required to pay to any other party (an "Indemnitee")
pursuant to Section 9.2 shall be reduced (including, without limitation,
retroactively) by any insurance proceeds and other amounts actually recovered by
such Indemnitee in reduction of the related Indemnifiable Loss. If an
Indemnitee shall have received an Indemnity Payment in respect of an
Indemnifiable Loss and shall subsequently actually receive insurance proceeds or
other amounts in respect of such Indemnifiable Loss, then such Indemnitee shall
pay to such Indemnifying Party a sum equal to the lesser of (a) the amount of
such insurance proceeds or other amounts or (b) such Indemnity Payment actually
received previously. The Indemnitee agrees that the Indemnifying Party shall be
subrogated to such Indemnitee under any insurance policy.
9.4 Losses Net of Taxes, Etc. The amount of any loss, liability, claim,
-------------------------
damage, expense or Tax (collectively, a "Loss") for which indemnification is
provided under this Article IX shall be (a) increased to take account of any net
Tax cost incurred by the indemnified party arising from the receipt of indemnity
payments hereunder (i.e. grossed up for such increase) and (b) reduced to take
account of any net Tax benefit realized by the indemnified party arising from
the incurrence or payment of any such Loss. In computing the amount of any such
Tax cost or Tax benefit, the indemnified party shall be deemed to recognize all
other items of income, gain, loss, deduction or credit before recognizing any
item arising from the receipt of any indemnity payment hereunder or the
incurrence or payment of any indemnified Loss. Any indemnification payment
hereunder shall initially be made without regard to this paragraph and shall be
increased or reduced to reflect any such net Tax cost (including gross-up) or
net Tax benefit only after the indemnified party has actually realized such cost
or benefit. For purposes of this Agreement, an indemnified party shall be
deemed to have "actually realized" a net Tax cost or a net Tax benefit to the
extent that, and at such time as, the amount of Taxes payable by such
indemnified party is increased above or reduced below, as the case may be, the
amount of Taxes that such indemnified party would be required to pay but for
-23-
the receipt of the indemnity payment or the incurrence or payment of such Loss,
as the case may be. The amount of any increase or reduction hereunder shall be
adjusted to reflect any Final Determination (which shall include the execution
of Form 870-AD or any successor form) with respect to the indemnified party's
liability for Taxes and payments between the parties to this Agreement to
reflect such adjustment shall be made if necessary.
9.5 Procedures Relating to Indemnification.
--------------------------------------
(a) In order for an Indemnitee to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or involving a
claim or demand made by any person against the Indemnitee (a "Third Party
-----------
Claim"), such Indemnitee must notify the Indemnifying Party in writing, and in
-----
reasonable detail, of the Third Party Claim within 20 business days after
receipt by such Indemnitee party of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not affect the
-------- -------
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been actually prejudiced as a result of such failure (except that the
Indemnifying Party shall not be liable for any expenses incurred by the
Indemnitee during the period in excess of 20 days in which the Indemnitee failed
to give such notice). Thereafter, the Indemnitee shall deliver to the
Indemnifying Party, within ten business days after the Indemnitee's receipt
thereof, copies of all notices and documents (including court papers) received
by the Indemnitee relating to the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges its obligation to indemnify the indemnified
party therefor, to assume the defense thereof at its sole expense with counsel
selected by the Indemnifying Party and reasonably acceptable to the indemnified
party; provided, however, that the Indemnitee shall have the right to employ
-------- -------
separate counsel to represent itself in connection with any claim in respect of
which indemnity may be sought hereunder if the defendants in respect of any such
claim reasonably conclude that there may be legal defenses available to them or
another Indemnitee that are different from or additional to those available to
the Indemnifying Party or that there exists some other conflict of interest
between the interests of the indemnified parties and the Indemnifying Party with
respect to such claim that makes separate representation desirable in the
reasonable judgment of the indemnified parties, and, in the event of the
foregoing, the fees and expenses reasonably incurred by such separate counsel
shall be paid by the Indemnifying Party. It is understood, however, in
connection with the proviso in the preceding sentence that the Indemnifying
Party shall not be liable for the expenses of more than one separate counsel for
all the Indemnitees (together with not more than one local counsel in each
jurisdiction in which any claim or action is brought). Should the Indemnifying
Party elect to assume the defense of a Third Party Claim, except where it may
not so elect pursuant to the proviso in the second preceding sentence, in
accordance with the second preceding sentence the Indemnifying Party shall not
be liable to the Indemnitee for legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof. If the Indemnifying Party
assumes such defense, the Indemnitee shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party, it being understood that the
Indemnifying Party shall control such defense. The Indemnifying Party shall be
liable for the reasonable fees and expenses of counsel employed by the
Indemnitee for any period during which the
-24-
Indemnifying Party has failed to assume the defense thereof (other than during
any period during which the Indemnitee shall have failed to give timely notice
of the Third Party Claim as provided above).
(c) If the Indemnifying Party elects to assume the defense of any
Third Party Claim in accordance with the provisions of this Section 9.5, all of
the Indemnitees shall cooperate with the Indemnifying Party in the defense or
prosecution thereof. Such cooperation shall include the retention and (upon the
Indemnifying Party's request) the provision to the Indemnifying Party of records
and information which are reasonably relevant to such Third Party Claim, and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Whether or not
the Indemnifying Party shall have assumed the defense of a Third Party Claim,
the Indemnitee shall not settle, compromise or discharge such Third Party Claim
without the Indemnifying Party's prior written consent (which consent shall not
be unreasonably withheld). If the Indemnifying Party shall have assumed the
defense of a Third Party Claim, the Indemnitee shall agree to any settlement,
compromise or discharge of a Third Party Claim which the Indemnifying Party may
recommend and which by its terms obligates the Indemnifying Party to pay the
full amount of the liability in connection with such Third Party Claim, which
releases the Indemnitee completely in connection with such Third Party Claim and
which would not otherwise adversely affect the Indemnitee.
(d) Notwithstanding the foregoing, the Indemnifying Party shall not be
entitled to assume the defense of any Third Party Claim (and shall be liable for
the fees and expenses of counsel incurred by the Indemnitee in defending such
Third Party Claim) if the Third Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages against the Indemnitee
which the Indemnitee reasonably determines cannot be separated from any related
claim for money damages. If such equitable relief or other relief portion of
the Third Party Claim can be so separated from that for money damages, the
Indemnifying Party shall be entitled to assume the defense of the portion
relating to money damages. The indemnification required hereunder 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 loss, liability,
claim, damage or expense is incurred. All claims under Section 9.2 other than
Third Party Claims shall be governed by Section 9.6.
9.6 Other Claims. In the event any Indemnitee should have a claim against
------------
any Indemnifying Party under Section 9.2 that does not involve a Third Party
Claim being asserted against or sought to be collected from such Indemnitee, the
Indemnitee shall deliver notice of such claim with reasonable promptness to the
Indemnifying Party. The failure by any Indemnitee so to notify the Indemnifying
Party shall not relieve the Indemnifying Party from any liability which it may
have to such Indemnitee under Section 9.2. If the Indemnifying Party does not
notify the Indemnitee within 20 business days following its receipt of such
notice that the Indemnifying Party disputes its liability to the Indemnitee
under Section 9.2, such claim specified by the Indemnitee in such notice shall
be conclusively deemed a liability of the Indemnifying Party under Section 9.2
and the Indemnifying Party shall pay the amount of such liability to the
Indemnitee on demand or, in the case of any notice in which the amount of the
claim (or any portion thereof) is estimated, on such later date when the amount
of such claim (or such portion thereof) becomes finally determined. If the
Indemnifying Party has timely disputed its liability with respect to such claim,
as provided above, the
-25-
Indemnifying Party and the Indemnitee shall proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through negotiations, such
dispute shall be resolved by litigation in an appropriate court of competent
jurisdiction.
9.7 Termination of Indemnification. The obligations to indemnify and hold
------------------------------
harmless a party hereto pursuant to Section 9.2 shall not terminate except as
provided in Section 9.1 hereof.
9.8 Mitigation. The parties hereto shall cooperate with each other with
----------
respect to resolving any claim or liability with respect to which one party is
obligated to indemnify any other party hereunder, including by making
commercially reasonable efforts to mitigate or resolve any such claim or
liability; provided, that an Indemnitee shall not be required to make such
--------
efforts if they would be detrimental in any material respect to such party.
9.9 Stockholder Claims. If the Stockholders are entitled to
------------------
indemnification pursuant to Section 9.2(a) or (b) hereof, the Stockholders may,
at their election, direct True North to satisfy its indemnity obligation to the
Stockholders by indemnifying and making whole MMPT for the entire amount of the
loss sustained by MMPT. To the extent not duplicative, the Stockholders shall
also be entitled to indemnity for any or all of their Indemnifiable Losses
arising from such claim.
9.10 Accounts Receivable Reserve. In addition to the indemnification
---------------------------
provided for in this Article IX, True North agrees to purchase from MMPT, at
MMPT's election, any accounts receivable of MMPT arising on or prior to the
Closing Date, net of reserves of MMPT, which are not collected by MMPT after the
Closing within 90 days after such amounts become due and payable. MMPT shall
undertake reasonable steps to collect such amounts during such period.
ARTICLE X
DISPUTE RESOLUTION
10.1 Binding Arbitration.
-------------------
(a) Except as set forth in Section 12.7, (a) any dispute, controversy
or claim arising in connection with this Agreement, shall be settled by binding
arbitration if so requested by any party hereto pursuant to paragraph (b) below.
The arbitration shall be conducted by three arbitrators, who shall be appointed
pursuant to the rules of the American Arbitration Association (the "AAA"). The
arbitration shall be held in Chicago, Illinois and shall be conducted in
accordance with the commercial arbitration rules of the AAA, except that the
rules set forth in this Section 9.1 shall govern such arbitration to the extent
they conflict with the rules of the AAA.
(b) Upon written notice by a party to the other parties of a request
for arbitration hereunder, the parties shall use their commercially reasonable
efforts to cause the arbitration to be conducted in an expeditious manner. All
other procedural matters shall be within the discretion of the arbitrators. In
the event a party fails to comply with the procedures in any arbitration in a
manner deemed material by the arbitrators, the arbitrators shall fix a
reasonable period of time for
-26-
compliance and, if the party does not comply within said period, a remedy deemed
just by the arbitrators, including an award of default, may be imposed.
(c) The determination of the arbitrators shall be final and binding on
the parties. Judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction. The parties shall each be responsible for
their own expenses in connection with such arbitration, including, without
limitation, counsel fees and fees of experts; provided, however, that the
-------- -------
parties shall share equally in the expense of the arbitrators and of the AAA.
(d) Notwithstanding anything contained herein to the contrary, the
arbitrators shall not be limited as to the form of relief or remedy provided
pursuant to this Section 10.1.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. Except as provided in Section 11.3 below, this Agreement
-----------
may be terminated and the Merger abandoned at any time prior to the Effective
Time:
(a) by mutual consent of the parties hereto;
(b) by True North or MMPT if: (i) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of the Merger; or (ii) there shall be any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the Merger, by
any governmental entity that would make consummation of the Merger illegal;
(c) by True North or MMPT if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger, by any Governmental Entity, which would: (i) prohibit
True North's, Controlled's or MMPT's ownership or operation of any portion of
the business of MMPT or (ii) compel True North, Controlled or MMPT to dispose of
or hold separate, as a result of the Merger, any portion of the business or
assets of MMPT or True North.
(d) by True North if it is not in material breach of its obligations
under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of MMPT
and as a result of such breach the conditions set forth in Section 7.3(a) or
7.3(b), as the case may be, would not then be satisfied; provided, however, that
if such breach is curable by MMPT prior to the Closing Date through the exercise
of its reasonable best efforts, then for so long as MMPT continues to exercise
such reasonable best efforts True North may not terminate this Agreement under
this Section 11.1(d) unless such breach is not cured prior to the Closing Date
(but no cure period shall be required for a breach which by its nature cannot be
cured);
-27-
(e) by MMPT or the Stockholders if it is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of Controlled or True North and as a result of such breach the
conditions set forth in Section 8.2(a) or 8.2(b), as the case may be, would not
then be satisfied; provided, however, that if such breach is curable by True
North or Controlled prior to the Closing Date through the exercise of its
reasonable best efforts, then for so long as True North or Controlled continues
to exercise such reasonable best efforts MMPT may not terminate this Agreement
under this Section 11.1(e) unless such breach is not cured prior to the Closing
Date (but no cure period shall be required for a breach which by its nature
cannot be cured);
11.2 Effect of Termination. In the event of termination of this Agreement
---------------------
as provided in Section 11.1, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of Controlled, True North,
MMPT or the Stockholders, or their respective officers, directors or
stockholders.
11.3 Amendment. Except as is otherwise required by applicable law after
---------
the stockholders of MMPT approve this Agreement, this Agreement may be amended
by the parties hereto at any time by execution of an instrument in writing
signed on behalf of each of the parties hereto.
11.4 Extension; Waiver. At any time prior to the Effective Time,
-----------------
Controlled and True North, on the one hand, and MMPT, on the other, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. No such waiver shall affect or impair the rights or potential claims of
the Stockholders.
ARTICLE XII
GENERAL PROVISIONS
12.1 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
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(a) if to Controlled or True North, to:
True North Communications Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Secretary
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) if to MMPT, to:
Modem Media . Xxxxx Xxxxx, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
12.2 Interpretation. The words "include," "includes" and "including" when
--------------
used herein shall be deemed in each case to be followed by the words "without
limitation." The word "agreement" when used herein shall be deemed in each case
to mean any contract, commitment or other agreement, whether oral or written,
that is legally binding. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
12.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
12.4 Entire Agreement; Assignment. This Agreement, the Schedules and
----------------------------
Exhibits hereto, and the documents and instruments and other agreements among
the parties hereto referenced herein (a) constitute the entire agreement among
the parties with respect to the subject matter specifically covered hereby and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter specifically covered hereby;
provided that the parties hereto acknowledge that certain matters governing the
relationship of certain of the parties hereto
-29-
with respect to matters related to, but not specifically covered by, this
Agreement are covered by various agreements and understandings among those
parties (including the Letter of Intent, the Acquisition Agreement, the Merger
Agreement and the Partnership Interest and Stock Purchase Agreement); (b) are
not intended to confer upon any other person any rights or remedies hereunder;
and (c) shall not be assigned by operation of law or otherwise except as
otherwise specifically provided, except that Controlled and True North may
assign their respective rights and delegate their respective obligations
hereunder to their respective affiliates.
12.5 Severability. In the event that any provision of this Agreement or
------------
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
12.6 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Illinois, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Each of the parties hereto agrees that process may be served upon them in any
manner authorized by the laws of the State of Illinois for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction and such process.
12.7 Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
-30-
IN WITNESS WHEREOF, Controlled, True North, MMPT and the Stockholders have
caused this Agreement to be signed, all as of the date first written above.
MODEM MEDIA . XXXXX XXXXX, INC. TRUE NORTH COMMUNICATIONS INC.
By:_____________________________ By:_____________________________
Name: X.X. X'Xxxxxxx Name: Xxxx X. Xxxxxx
Title: President Title: Senior Vice President
PT CONTROLLED, INC.
________________________________
Xxxxxxx X. Xxxxxx
________________________________ By:_____________________________
Xxxxxx X. Xxxxx, XX Name: Xxxx X. Xxxxxx
Title: President
________________________________
Xxxxxx X. X'Xxxxxxx
XXXXX ENTERPRISES LTD.
By:_____________________________
Name:
Title:
