CONFIDENTIAL
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STOCK PURCHASE AGREEMENT
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dated as of March 17, 1998
between
Dow Xxxxx & Company, Inc.
and
Bridge Information Systems, Inc.
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................1
SECTION 1.01. Certain Defined Terms.................................1
SECTION 1.02. Other Defined Terms...................................6
ARTICLE II PURCHASE AND SALE...........................................7
SECTION 2.01. Purchase and Sale.....................................7
SECTION 2.02. Purchase Price........................................8
SECTION 2.03. Closing...............................................8
SECTION 2.04. Adjustments to the Consideration......................9
SECTION 2.05. Resolution of Differences............................11
SECTION 2.06. Payment of Consideration Adjustment..................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF DOW XXXXX................12
SECTION 3.01 Incorporation and Authority of Dow Xxxxx.............12
SECTION 3.02. Incorporation and Qualification of DJM...............13
SECTION 3.03. Capital Stock of DJMH................................13
SECTION 3.04. Subsidiaries.........................................14
SECTION 3.05. No Conflict..........................................14
SECTION 3.06. Financial Statements.................................14
SECTION 3.07. Labor Matters........................................14
SECTION 3.08. Absence of Certain Changes or Events.................15
SECTION 3.09. Absence of Litigation................................15
SECTION 3.10. Compliance with Laws.................................15
SECTION 3.11. Consents, Approvals, Licenses, Etc...................16
SECTION 3.13. Real Property........................................16
SECTION 3.14. Employee Benefit Matters............................17
SECTION 3.15. Taxes................................................18
SECTION 3.16. Contracts............................................20
SECTION 3.17. Transactions with Affiliates.........................21
SECTION 3.18. Insurance............................................21
SECTION 3.19. Brokers..............................................21
SECTION 3.20. Environmental Matters................................22
SECTION 3.21. Intellectual Property................................23
SECTION 3.22. Investment Representations...........................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...........25
SECTION 4.01. Organization, Authority and Qualification............25
SECTION 4.02. Capitalization; New Shares...........................26
SECTION 4.03. [Intentionally Omitted]..............................27
SECTION 4.04. No Conflict..........................................27
SECTION 4.05. Consents, Approvals, Licenses, Etc...................27
SECTION 4.06. Absence of Litigation................................28
SECTION 4.07. Financial Statements.................................28
SECTION 4.08. Absence of Undisclosed Liabilities...................28
SECTION 4.09. Compliance with Laws.................................29
SECTION 4.10. Brokers..............................................29
ARTICLE V ADDITIONAL AGREEMENTS......................................29
SECTION 5.01. Conduct of Business Prior to the Closing.............29
SECTION 5.02. Access to Information................................30
SECTION 5.02A. Certain Financial Statements.........................31
SECTION 5.03. Efforts; Consents; Guarantees, Etc...................31
SECTION 5.04. No Use of Dow Xxxxx Names............................33
SECTION 5.05. Ancillary Documents; Etc.............................33
SECTION 5.06. Notification of Certain Matters......................34
SECTION 5.07. Intercompany Debt....................................34
SECTION 5.08. Covenant Not to Compete..............................34
ARTICLE VI EMPLOYMENT AND EMPLOYEE BENEFIT ARRANGEMENTS...............36
SECTION 6.01. Definitions..........................................36
SECTION 6.02. Employment...........................................36
SECTION 6.03. Pension and Other Plans..............................36
SECTION 6.04. Other Benefit Plans..................................39
SECTION 6.05. Severance and Retention Benefits.....................40
SECTION 6.06. Unions...............................................41
SECTION 6.07. Indemnity............................................41
ARTICLE VII TAX MATTERS................................................41
SECTION 7.01. Tax Returns and Payments.............................41
ARTICLE VIII CONDITIONS TO CLOSING.....................................46
SECTION 8.01. Conditions to Obligations of Dow Xxxxx...............46
SECTION 8.02. Conditions to Obligations of the Purchaser...........47
ARTICLE IX INDEMNIFICATION............................................49
SECTION 9.01. Survival.............................................49
SECTION 9.02. Indemnification by Dow Xxxxx.........................49
SECTION 9.03. Indemnification by Purchaser.........................50
SECTION 9.04. Claims...............................................50
SECTION 9.05. Limitations on Indemnification.......................51
ARTICLE X TERMINATION, AMENDMENT AND WAIVER..........................48
SECTION 10.01. Termination..........................................48
SECTION 10.02. Effect of Termination................................53
SECTION 10.03. Waiver...............................................53
ARTICLE XI GENERAL PROVISIONS.........................................49
SECTION 11.01. Expenses.............................................54
SECTION 11.02. Notices..............................................54
SECTION 11.03. Public Announcements.................................55
SECTION 11.04. Headings.............................................55
SECTION 11.05. Severability.........................................55
SECTION 11.06. Entire Agreement.....................................56
SECTION 11.07. Assignment...........................................56
SECTION 11.08. No Third-Party Beneficiaries.........................56
SECTION 11.09. Waivers and Amendments...............................56
SECTION 11.10. Specific Performance.................................57
SECTION 11.11. Governing Law........................................57
SECTION 11.12. Counterparts.........................................57
EXHIBITS:
Exhibit A - Terms of News Distribution Agreement
Exhibit B - Terms of 1998 Budget
Exhibit C - Form of Certificate of Designation for Preferred Stock
Exhibit D - Form of Registration Rights Agreement Amendment
Exhibit E - Form of Stockholders Agreement Amendment
Exhibit F - Terms of Transitional Services Agreement
Exhibit G - Terms of Subordinated Note
STOCK PURCHASE AGREEMENT, dated as of March 17, 1998, between Dow
Xxxxx & Company, Inc., a Delaware corporation ("Dow Xxxxx"), and
Bridge Information Systems, Inc., a Missouri corporation (the
"Purchaser").
W I T N E S S E T H :
WHEREAS, Dow Xxxxx owns all the issued and outstanding shares of
common stock, par value $.01 per share (the "Shares"), of Dow Xxxxx Markets
Holdings, Inc. ("DJMH," and, together with the Subsidiaries (defined
below), "DJM"); and
WHEREAS, Dow Xxxxx wishes to sell to the Purchaser, and the
Purchaser wishes to purchase from Dow Xxxxx, the Shares, upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements and covenants hereinafter set forth, the Purchaser and
Dow Xxxxx hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement,
the following terms have the following meanings:
"Action" means any claim, action, suit, investigation or
proceeding by or before any Governmental Authority.
"Affiliate" means, when used with respect to a specified Person,
another Person that, either directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control
with the Person specified.
"Agreement" means this Stock Purchase Agreement (including the
Exhibits hereto, the Dow Xxxxx Schedule and the Purchaser Schedule) and all
amendments hereto made in accordance with Section 11.09.
"Alternate Preferred Stock" is defined below under "Preferred
Stock."
"Ancillary Documents" means, collectively, (i) the News
Distribution Agreement, (ii) the Transitional Services Agreement, (iii) the
Certificate of Designation for the Preferred Stock, (iv) the Stockholders
Agreement Amendment, (v) the Registration Rights Agreement Amendment, and
(vi) if applicable, the Subordinated Note.
"Balance Sheet" means the unaudited consolidated balance sheet of
DJM as of the Balance Sheet Date, a copy of which is included in Section
3.06 of the Dow Xxxxx Schedule.
"Balance Sheet Date" means December 31, 1997.
"BHC Act" means the Bank Holding Company Act, as amended from
time to time, and the rules and regulations thereunder.
"Books and Records" means all books of account and other
financial records of DJM.
"Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in
the City of New York.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Company Financial Statements" means (i) the unaudited
consolidated balance sheets of DJM at December 31, 1996 and 1997 and (ii)
the unaudited consolidated statements of income and cash flows of DJM for
the twelve months ended December 31, 1996 and 1997, respectively.
"Confidentiality Agreement" means the letter agreement dated as
of December 15, 1997 between Dow Xxxxx and the Purchaser.
"Contract" means any contract, agreement, indenture, note, bond,
loan, instrument, lease, conditional sales contract, mortgage, license,
franchise agreement, insurance policy, binding commitment or other
agreement, other than purchase orders.
"Dow Xxxxx Schedule" means the schedules, dated as of the date of
this Agreement, delivered to the Purchaser by Dow Xxxxx.
"Encumbrance" means any security interest, pledge, mortgage,
lien, charge, adverse claim of ownership or use, or other encumbrance of
any kind which impairs the relevant Person's right, title or interest in,
or the value, use or enjoyment of, the asset subject thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means each business or entity which is a member
of a controlled group of corporations, under common control or an
affiliated service group with the Company within the meaning of Sections
414(b), (c) or (m) of the Code, or required to be aggregated with the
Company under Section 414(o) of the Code, or is under common control with
the Company, within the meaning of Section 4001(a)(14) of ERISA.
"Fully Diluted Shares" means, as of any date, (i) the number of
shares of Purchaser Class A Common Stock issued and outstanding as of such
date and (ii) the maximum number of shares of Purchaser Class A Common
Stock issuable (x) upon the exercise of any then outstanding options,
warrants or similar instruments and (y) upon the conversion or exchange of
all convertible or exchangeable securities, including the Purchaser Class B
Common Stock and the Preferred Stock, in each case whether such options,
warrants, instruments or securities are then exercisable, convertible or
exchangeable.
"GAAP" means generally accepted accounting principles in the
United States.
"Governmental Authority" means any government, any governmental
entity, regulatory authority, department, commission, board, agency or
instrumentality, and any court, arbitrator, tribunal, or judicial, body,
whether foreign, federal, state or local.
"Governmental Order" means any order, judgment, injunction,
decree, stipulation or determination entered by or with any Governmental
Authority.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.
"Income Tax" or "Income Taxes" means all federal, state, local or
foreign Taxes based on or measured by net income, including all franchise
Taxes whether or not such franchise Taxes are based on or measured by net
income.
"Income Tax Return" means any Tax Return relating to Income
Taxes.
"IRS" means the United States Internal Revenue Service.
"Knowledge" or "known" means, with respect to any matter in
question, the actual knowledge of such matter of the executive officers of
Dow Xxxxx listed in Section 1.01(a) of the Dow Xxxxx Schedule.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code or order.
"Leased Real Property" means the real property leased by DJMH or
any of the Subsidiaries as tenant.
"Leases" means the leases for the Leased Real Property.
"Licenses" means the licenses, permits and other governmental
authorizations required for the operation of the business of DJM as
conducted as of the date of this Agreement.
"Losses" of a Person means any and all losses, liabilities,
damages, claims, awards, judgments, costs and expenses (including, without
limitation, reasonable attorneys' fees) actually suffered or incurred by
such Person, but excluding any and all losses, liabilities, damages,
claims, awards, judgments, costs and expenses (including, without
limitation, reasonable attorneys' fees) resulting from consequential,
punitive, special or similar damages.
"Material Adverse Effect" means any change or effect that is
materially adverse to the operations, business, financial condition or
results of operations of DJM taken as a whole, except for any such changes
or effects resulting from (i) general economic, regulatory, political or
industry-wide conditions or (ii) this Agreement or the Ancillary Documents,
or the transactions contemplated hereby or thereby, or the announcement
hereof or thereof.
"News Distribution Agreement" means the News Distribution
Agreement, to be entered into as of the Closing, reflecting the terms set
forth as Exhibit A hereto.
"Ordinary Course" means in accordance with the monthly budget
attached as Exhibit B hereto (it being acknowledged and agreed that Dow
Xxxxx makes no representations, warranties, covenants or guarantees with
respect to the revenues set forth thereon).
"Owned Real Property" means the real property owned by DJMH or
any of the Subsidiaries.
"Permitted Encumbrances" means (i) Encumbrances for inchoate
mechanics' and materialmen's liens for construction in progress and
workmen's, repairmen's, warehousemen's and carriers' liens arising in the
ordinary course of the Business, (ii) Encumbrances for Taxes not yet
payable and for Taxes being contested in good faith, (iii) Encumbrances
arising out of, under or in connection with this Agreement and (iv)
Encumbrances and imperfections of title the existence of which would not
materially adversely affect the use of the property subject thereto.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity.
"Preferred Stock" means the Series E Convertible Preferred Stock,
par value $1.00 per share, of the Purchaser with the designations, powers,
preferences and rights set forth in the form of Certificate of Designation
attached as Exhibit C hereto (and, in the event that the Preferred Stock
Consent has not been obtained prior to the Closing, then, the Preferred
Stock shall instead have the powers, preferences and rights described in
the introductory paragraph on Exhibit C hereto, and such Preferred Stock is
sometimes referred to herein, to expressly distinguish it from the
Preferred Stock, as the "Alternate Preferred Stock").
"Purchaser Class A Common Stock" means the shares of Class A
Common Stock, par value $.01 per share, of the Purchaser.
"Purchaser Class B Common Stock" means the shares of Class B
Common Stock, par value $.01 per share, of the Purchaser.
"Purchaser Schedule" means the schedules to this Agreement, dated
as of the date of this Agreement, delivered to Dow Xxxxx by the Purchaser.
"Purchaser Material Adverse Effect" means any change or effect
that is materially adverse to the operations, business, financial condition
or results of operations of the Purchaser and its subsidiaries, taken as a
whole, except for any such changes or effects resulting from general
economic, regulatory, political or industry-wide conditions.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 13, 1995, by and among the Purchaser and the
other parties, as amended.
"Registration Rights Agreement Amendment" means Amendment No. 6
to the Registration Rights Agreement, to be entered into as of the Closing,
in the form attached hereto as Exhibit D.
"Stockholders Agreement" means the Stockholders Agreement, dated
as of August 11, 1995, by and among the Purchaser and the other parties
thereto, as amended.
"Stockholders Agreement Amendment" means Amendment No. 3 to the
Stockholders Agreement, to be entered into as of the Closing, in the form
attached hereto as Exhibit E.
"Subsidiary" means each corporation or other entity with respect
to which DJMH, directly or indirectly, owns or controls more than 50% of
its issued and outstanding voting securities.
"Tax" or "Taxes" means all United States federal, state, local or
foreign net income, alternative or add-on minimum, gross income, value
added, transfer, excise, withholding, gross receipts, sales, use,
employment, franchise, profits, property or other taxes, fees, stamp taxes
and duties, assessments or charges of any kind whatsoever (whether payable
directly or by withholding), together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority with
respect thereto.
"Tax Return" means any return, declaration, report, letter,
notice, claim for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and including any
amendment thereto, required to filed with any taxing authority.
"Transitional Services Agreement" means the Transitional Services
Agreement, to be entered into as of the Closing, reflecting the terms set
forth as Exhibit F hereto.
SECTION 1.02. Other Defined Terms. The following terms have the
meanings defined for such terms in the Sections set forth below:
Term Section
---- -------
Account Balances 6.03(b)
Adjustment Amount 2.04(b)
Banks 2.03(g)
Bank Consent 8.02(g)
Bank Consent Condition 8.02(g)
Benefit Arrangements 6.01(d)
Business 6.01(a)
Cash Consideration 2.02
Closing 2.03(a)
Closing Balance Sheet 2.04(c)
Closing Date 2.03(a)
Closing Election 2.03(e)
COBRA 3.16(f)
Company Benefit Plans 6.01(c)
Consideration 2.02
Dow Xxxxx Refunds 7.01(c)
Employees 6.01(b)
Equity Consideration 2.02
Evercore 3.20
Xxxxxxx Sachs 3.20
HIPAA 3.14(f)
Indemnified Party 9.04
Indemnifying Party 9.04
Investment Plan 6.03(a)
Investment Plan Participants 6.03(a)
Listed Contracts 3.16(a)
Note Consideration 2.03(e)
Plans 3.14
Pre-Closing Taxes 7.01(c)
Preferred Stock Consent 5.03(f)
Purchase Price 2.02
Purchaser's Benefit Plans 6.04
Purchaser's Investment Plan 6.03(a)
Purchaser's Taxes 7.01(f)
Retained Employees 6.01(e)
Retained Names and Marks 5.04
Seller Refunds 7.03
Straddle Period 7.01(a)
Subordinated Note 2.03(e)
Tax Attribute 7.01(f)
Tax Matter 7.01(e)
Third Party Claim 9.04
Valuation Date 6.03(b)
WCAS VII 2.03(f)
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale. Upon the terms and subject to
the conditions set forth in this Agreement, Dow Xxxxx agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from Dow Xxxxx, the Shares.
SECTION 2.02. Purchase Price. In consideration of the sale of the
Shares at the Closing, the Purchaser shall (i) pay to Dow Xxxxx cash in the
amount of $360,000,000 (the "Cash Consideration") and (ii) issue to Dow
Xxxxx such number of shares of Preferred Stock that would be convertible
immediately after the Closing into 10% of the Fully Diluted Shares (the
"Equity Consideration", and together with the Cash Consideration, the
"Consideration").
SECTION 2.03. Closing. (a) Subject to the terms and conditions of
this Agreement, the sale and purchase of the Shares and the payment and
delivery of the Consideration as contemplated hereby shall take place at a
closing (the "Closing") to be held at 10:00 a.m., local time, on the third
Business Day following the satisfaction or waiver of all conditions to the
obligations of the parties set forth in Article VIII (other than conditions
which are contemplated to be satisfied simultaneously with the Closing and
are capable of being so satisfied), at the offices of Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx, One New York Plaza, New York, New York, or at such
other time or on such other date or at such other place as Dow Xxxxx and
the Purchaser may mutually agree upon in writing (the day on which the
Closing takes place (whether pursuant to this Section 2.03(a) or Section
2.03(e)) being the "Closing Date").
(b) At the Closing, Dow Xxxxx shall deliver or cause to be
delivered to the Purchaser (i) stock certificates evidencing the Shares,
duly endorsed in blank or accompanied by stock powers duly executed in
blank, and (ii) resignations of the officers and directors of DJMH and its
Subsidiaries as requested by the Purchaser.
(c) At the Closing, the Purchaser shall (i) pay to Dow Xxxxx the
Cash Consideration by wire transfer of immediately available funds to a
bank account specified in writing by Dow Xxxxx at least two days prior to
the Closing Date; and (ii) issue and deliver to Dow Xxxxx certificates
representing the shares of Preferred Stock comprising the Equity
Consideration.
(d) On or prior to the Closing Date, Dow Xxxxx shall have
consummated the pre-closing transactions described in Section 2.03 of the
Disclosure Schedule, subject to any required consents therefor having been
obtained.
(e) If at any date all of the conditions to the obligations of
the parties set forth in Article VIII have been satisfied or waived (or are
contemplated to be and are capable of being satisfied simultaneously with
the Closing), with the sole exception of the condition set forth in Section
8.02(f) (the "Financing Condition"), then, notwithstanding Sections 2.02
and 2.03(a), at Dow Xxxxx' election, by written notice to the Purchaser
(the "Closing Election"), the Closing shall take place at 10:00 a.m., local
time, on the third Business Day following receipt by the Purchaser of such
notice, at the place set forth in Section 2.03(a). If Dow Xxxxx exercises
the Closing Election and the Financing Condition has not been satisfied,
then, (i) the Cash Consideration shall instead be $100,000,000, (ii) the
Equity Consideration shall be unchanged, and (iii) the Purchaser shall
issue to Dow Xxxxx a senior subordinated note (the "Subordinated Note") in
the principal amount of $260,000,000, with the terms set forth in Exhibit G
attached hereto (the "Note Consideration"). In such event, at the Closing
on the Closing Date as set forth in this Section 2.03(e), in addition to
the payment of the Cash Consideration and the issuance and delivery of the
Equity Consideration as set forth in Section 2.03(c), the Purchaser shall
issue and deliver to Dow Xxxxx the Subordinated Note.
(f) If the Preferred Stock Consent has not been obtained prior
to the Closing, then, the Equity Consideration shall be comprised of the
Alternate Preferred Stock in lieu of the Preferred Stock.
(g) Welsh, Carson, Xxxxxxxx & Xxxxx VII, L.P. ("WCASVII") will
provide to Dow Xxxxx, simultaneously with execution hereof, a binding
commitment to provide to the Purchaser $100,000,000 in cash, to be used by
the Purchaser either (i) in connection with its efforts to satisfy the
Financing Condition or (ii) to pay the Cash Consideration as set forth in
Section 2.03(e), in the event that the Financing Condition is not satisfied
and Dow Xxxxx exercises the Closing Election. The Purchaser will provide to
Dow Xxxxx, simultaneously with execution hereof, a letter from Xxxxxx Bank
and the Bank of Montreal (together, the "Banks") with respect to their
interest in providing financing to satisfy the Financing Condition.
(h) The Purchaser believes, based on discussions with the Banks,
that the terms of the Subordinated Note as set forth on Exhibit G hereto
will be acceptable to the Banks in connection with the Bank Consent.
SECTION 2.04. Adjustments to the Consideration. The Consideration
shall be subject to adjustment as follows:
(a) Net Working Capital Adjustment. In the event that Closing Net
Working Capital is less than $0, the Consideration shall be reduced by an
amount equal to the amount by which Closing Net Working Capital is less
than $0.
(b) Net Worth Adjustment. In the event that Closing Net Worth
shall be less than Minimum Net Worth, the Consideration will be reduced by
an amount equal to the amount by which Closing Net Worth is less than
Minimum Net Worth (the aggregate amount pursuant to which the Consideration
shall be reduced pursuant to paragraphs (a) and (b) of this Section 2.04
being referred to herein as the "Adjustment Amount").
(c) Determination of Closing Net Working Capital and Closing Net
Worth. As promptly as practicable but in no event later than 180 days after
the Closing Date, the Purchaser shall deliver to Dow Xxxxx:
(i) a consolidated balance sheet of DJM as of the close of
business on the Closing Date (the "Closing Balance Sheet"), prepared in
accordance with GAAP applied in a manner consistent with the accounting
policies applied in connection with the preparation of the Balance Sheet;
(ii) a calculation of Closing Net Working Capital and
Closing Net Worth based on the Closing Balance Sheet; and
(iii) a report signed by Deloitte & Touche, the independent
public accountants retained by the Purchaser, stating that the Closing
Balance Sheet presents fairly, in all material respects, the financial
position of DJM as of the Closing Date, in accordance with the provisions
of this Agreement, and that Purchaser's calculation of Closing Net Working
Capital and Closing Net Worth has been made in accordance with the
provisions of the Agreement.
(d) For purposes of the Agreement, the term "Closing Net Working
Capital" means the total consolidated current assets of DJM as shown on the
Closing Balance Sheet, less the total consolidated current liabilities of
DJM as shown on the Closing Balance Sheet.
(e) For purposes of this Agreement, (i) the term "Closing Net
Worth" means (x) the sum of the total assets of DJM as shown on the Closing
Balance Sheet minus (y) the sum of the total liabilities of DJM as shown on
the Closing Balance Sheet (such amount to be appropriately adjusted to
exclude the effects of net losses not in excess of net losses set forth in
the budget attached as Exhibit B hereto and net losses attributable to
actions of DJM prior to the Closing which are consented to by the
Purchaser) and (ii) the term "Minimum Net Worth" means (x) the total assets
of DJM as shown on the Balance Sheet, minus (y) the total liabilities of
DJM on the Balance Sheet.
(f) Promptly following receipt of the Closing Balance Sheet and
the Purchaser's calculation of Closing Net Working Capital and Closing Net
Worth, Dow Xxxxx shall review the same and, within 30 days after such
receipt, Dow Xxxxx shall deliver to the Purchaser a certificate setting
forth its acceptance of, or objections to, the Closing Balance Sheet and
the calculation of Closing Net Working Capital and Closing Net Worth,
together with a summary of the reasons therefor and adjustments which, in
its view, are necessary to eliminate such objections.
(g) If Dow Xxxxx accepts the Closing Balance Sheet and the
Purchaser's calculation of Closing Net Working Capital and Closing Net
Worth (or does not so object within such 30-day period), the determination
of Closing Net Working Capital and Closing Net Worth by the Purchaser shall
be deemed final and binding as of such thirtieth day.
(h) If and to the extent Dow Xxxxx objects within such 30-day
period to the Closing Balance Sheet and/or the Purchaser's calculation of
Closing Net Working Capital and/or Closing Net Worth, the Purchaser and Dow
Xxxxx shall use reasonable efforts during the following 30-day period to
resolve any such objections. If the Purchaser and Dow Xxxxx resolve all
such differences and each signs a certificate to that effect, the Closing
Balance Sheet, as so adjusted, and the determination of Closing Net Working
Capital and Closing Net Worth derived therefrom, shall be deemed final and
binding for purposes of this Agreement. If the Purchaser and Dow Xxxxx do
not resolve all of such differences, the items, if any, as to which the
parties have agreed shall be final and binding for purposes of this
Agreement and the remaining items shall be determined as provided in
Section 2.05 hereof.
SECTION 2.05. Resolution of Differences. (a) To resolve those
differences that are not resolved pursuant to Section 2.04, the Purchaser
and Dow Xxxxx shall jointly retain an independent accounting firm, acting
through one or more audit partners knowledgeable in businesses comparable
to that of DJM, and using such dispute resolution procedures as the parties
may agree (or, in the absence of such agreement, as such accounting firm
shall determine in its discretion), to review and resolve any remaining
differences and to deliver a written report to the Purchaser and Dow Xxxxx
setting forth:
(i) its determination of such remaining differences;
(ii) the remaining adjustments, if any, to the Closing
Balance Sheet (in addition to any adjustments agreed by the parties),
necessary to reflect such determination; and
(iii) its determination of Closing Net Working Capital
and/or Closing Net Worth, as applicable, after giving effect to any
adjustments agreed by the parties and to the remaining adjustments, if any,
made pursuant to clause (ii) above.
Said firm shall be instructed by both the Purchaser and Dow Xxxxx to
deliver its written report not later than 30 days after expiration of the
second 30-day period referred to in paragraph 2.04(h).
(b) The Closing Balance Sheet, after giving effect to such
further adjustments, if any, set forth in such written report, and the
determination of Closing Net Working Capital and Closing Net Worth derived
therefrom, shall be deemed final and binding as of the date such written
report is provided to the parties by such accounting firm.
(c) The parties shall make available to each other and their
respective accountants, and if applicable, said additional accounting firm,
such books, records and other information (including work papers) as any of
them may reasonably request to conduct the audits or reviews described
herein. The fees and expenses of each party's accountants related to the
determinations to be made pursuant to this Section 2.05 shall be borne by
such party and the fees and expenses of the accounting firm mutually
selected pursuant to paragraph (a) above, if any, shall be borne equally by
the Purchaser and Dow Xxxxx.
SECTION 2.06. Payment of Consideration Adjustment. In the event
that the Adjustment Amount as finally determined in accordance with the
provisions of Sections 2.04 and 2.05 hereof exceeds zero, then, within five
Business Days after the date of such final determination, Dow Xxxxx shall
deliver by wire transfer of immediately available funds, to an account
designated by the Purchaser in writing at least two days prior to such
date, cash in the amount of the Adjustment Amount.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DOW XXXXX
Dow Xxxxx represents and warrants to the Purchaser as follows:
SECTION 3.01. Incorporation and Authority of Dow Xxxxx. Dow Xxxxx
is a corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all
necessary corporate power and authority to enter into this Agreement and
the Ancillary Documents to be executed and delivered by Dow Xxxxx (the "Dow
Xxxxx Ancillary Documents"), to carry out its obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Dow Xxxxx
Ancillary Documents by Dow Xxxxx, the performance by Dow Xxxxx of its
obligations hereunder and thereunder, and the consummation by Dow Xxxxx of
the transactions contemplated hereby and thereby, have been duly authorized
by all requisite corporate action on the part of Dow Xxxxx. This Agreement
has been, and the Dow Xxxxx Ancillary Documents will be, duly executed and
delivered by Dow Xxxxx, and (assuming due authorization, execution and
delivery by the Purchaser) this Agreement constitutes, and the Dow Xxxxx
Ancillary Documents will constitute, legal, valid and binding obligations
of Dow Xxxxx, enforceable against Dow Xxxxx in accordance with their terms,
subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 3.02. Incorporation and Qualification of DJM. DJMH, and
each of the Subsidiaries, is a corporation or partnership duly incorporated
or organized, as applicable, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization and has the
requisite corporate or partnership power and authority to own, operate or
lease the properties and assets now owned, operated or leased by it and to
carry on its business in all material respects as currently conducted by
it. DJMH, and each of the Subsidiaries, is duly qualified as a foreign
corporation or partnership to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, operated or
leased or the nature of its activities makes such qualification necessary,
except for such failures which, individually or in the aggregate, would not
have a Material Adverse Effect. True and complete copies of the Certificate
of Incorporation and By-laws (or equivalent constitutional documents) of
DJMH, and of each of the Subsidiaries, have been made available for review
by the Purchaser.
SECTION 3.03. Capital Stock of DJMH. Section 3.03 of the Dow
Xxxxx Schedule sets forth the number of shares of authorized capital stock
of each class of DJMH. The Shares constitute all the issued and outstanding
shares of capital stock of DJMH. The Shares have been duly authorized and
validly issued and are fully paid and nonassessable and were not issued in
violation of any pre-emptive rights. There are no options, warrants or
rights of conversion or other rights, agreements, arrangements or
commitments relating to the capital stock of DJMH obligating DJMH or Dow
Xxxxx to issue or sell any of shares of capital stock of DJMH. Dow Xxxxx
owns the Shares free and clear of all Encumbrances, except for any
Encumbrances arising out of, under or in connection with this Agreement and
the Ancillary Documents. Other than this Agreement, there are no voting
trusts, stockholder agreements, proxies or other agreements in effect with
respect to the voting or transfer of the Shares. The delivery by Dow Xxxxx
of a certificate evidencing the Shares, duly endorsed for transfer or
accompanied by stock transfer powers duly endorsed in blank, to the
Purchaser pursuant to Section 2.03(b) hereof, in exchange for the
Consideration payable pursuant to Section 2.02(c) hereof, will transfer
valid title to said Shares to the Purchaser, free and clear of any and all
Encumbrances.
SECTION 3.04. Subsidiaries. Except as set forth in Section 3.04
of the Dow Xxxxx Schedule, there are no corporations, partnerships, joint
ventures, associations or other entities in which DJMH owns, of record or
beneficially, any direct or indirect equity interest or any right
(contingent or otherwise) to acquire the same.
SECTION 3.05. No Conflict. Except as set forth in Section 3.05 of
the Dow Xxxxx Schedule, the execution, delivery and performance of this
Agreement and the Dow Xxxxx Ancillary Documents by Dow Xxxxx do not and
will not: (a) violate or conflict with the Certificate of Incorporation or
By-laws (or equivalent constitutional documents) of Dow Xxxxx, DJMH or any
of the Subsidiaries, (b) conflict with or violate any Law or Governmental
Order applicable to Dow Xxxxx, DJMH or any of the Subsidiaries or (c)
result in any breach of, or constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on the Shares
or on any of the assets or properties of DJMH, Dow Xxxxx or any of the
Subsidiaries pursuant to, any Contract to which Dow Xxxxx, DJMH or any of
the Subsidiaries is a party or by which any of such assets or properties is
bound or affected, except, in the case of clauses (b) and (c), as would
not, individually or in the aggregate, have a Material Adverse Effect or
prevent Dow Xxxxx from consummating the transactions contemplated by this
Agreement and the Ancillary Documents.
SECTION 3.06. Financial Statements. Dow Xxxxx has caused to be
delivered to the Purchaser the Company Financial Statements, copies of
which are included in Section 3.06 of the Dow Xxxxx Schedule. The Company
Financial Statements have been prepared in accordance with GAAP, and
present fairly, in all material respects, the financial position, results
of operations and cash flows of DJM at the dates and for the periods
indicated, except that the Company Financial Statement omit footnotes which
may be required by GAAP.
SECTION 3.07. Labor Matters. Except as set forth in Section 3.07
of the Dow Xxxxx Schedule, DJM is not a party to any labor agreement with
respect to its employees with any labor organization, group or association.
Except as set forth in Section 3.07 of the Dow Xxxxx Schedule or as would
not, individually or in the aggregate, have a Material Adverse Effect, as
of the date of this Agreement, (a) there is no unfair labor practice charge
or complaint against DJM pending before the National Labor Relations Board
or any comparable state agency, (b) there is no complaint, charge or claim
pending or, to the Knowledge of Dow Xxxxx, threatened against DJM with any
Governmental Authority, arising out of, in connection with, or otherwise
relating to the employment by DJM of any individual, and (c) there is no
labor strike or work stoppage pending against DJM. Dow Xxxxx, its
Subsidiaries and their ERISA Affiliates have complied with all laws
relating to the hiring and retention of all employees, leased employees and
independent contractors relating to wages, hours, Plans, equal opportunity,
collective bargaining and the payment of social security and other taxes
except where failure to so comply would not have a Material Adverse Effect.
SECTION 3.08. Absence of Certain Changes or Events. Except as set
forth in Section 3.08 of the Dow Xxxxx Schedule or as contemplated by this
Agreement, since the Balance Sheet Date, the business of DJM has been
conducted in all material respects in the Ordinary Course. Except as set
forth in Section 3.08 of the Dow Xxxxx Schedule or as contemplated by this
Agreement, to the Knowledge of Dow Xxxxx, since the Balance Sheet Date, DJM
has not taken any action that, if taken after the date of this Agreement,
would constitute a breach of any of the covenants set forth in Section
5.01(b).
SECTION 3.09. Absence of Litigation. Except as set forth in
Section 3.09 of the Dow Xxxxx Schedule, (a) there are no Actions pending
or, to the Knowledge of Dow Xxxxx, threatened in writing, against Dow
Xxxxx, DJMH or any of the Subsidiaries, or with respect to any of the
assets or properties of any of them, and (b) none of Dow Xxxxx, DJMH nor
any of the Subsidiaries, nor their respective assets and properties, are
subject to any Governmental Orders, that, in the case of (a) or (b),
individually or in the aggregate, would have a Material Adverse Effect or
would prevent Dow Xxxxx from consummating the transactions contemplated by
this Agreement and the Ancillary Documents.
SECTION 3.10. Compliance with Laws. (i) DJMH and the Subsidiaries
are in compliance with all applicable Laws, and (ii) none of Dow Xxxxx,
DJMH nor any of the Subsidiaries has received any written notice to the
effect that DJMH or the Subsidiaries are not in compliance with any
applicable Laws, except, in the case of each of (i) and (ii), (a) as set
forth in Section 3.10 of the Dow Xxxxx Schedule or (b) where the failure to
comply would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.11. Consents, Approvals, Licenses, Etc. No consent,
approval, authorization, license, order or permit of, or declaration,
filing or registration with, or notification to, any Governmental Authority
is required to be made or obtained by Dow Xxxxx or its Affiliates in
connection with the execution, delivery and performance of this Agreement
and the Dow Xxxxx Ancillary Documents, or the consummation of the
transactions contemplated hereby or thereby, except: (a) as set forth in
Section 3.11 of the Dow Xxxxx Schedule; (b) applicable requirements of the
HSR Act and the BHC Act or any law, rule or regulation having similar
effect as the HSR Act in any jurisdiction outside the United States; (c)
where the failure to obtain such consents, approvals, authorizations,
licenses, orders or permits, or to make such declarations, filings,
registrations or notifications, would not, individually or in the
aggregate, have a Material Adverse Effect or prevent Dow Xxxxx from
consummating the transactions contemplated by this Agreement and the
Ancillary Documents; or (d) as may be necessary as a result of any facts or
circumstances relating solely to the Purchaser or its Affiliates. All of
the Licenses of DJMH and the Subsidiaries are in full force and effect and
DJMH and the Subsidiaries are in compliance with each such License, except
as would not, individually or in the aggregate, have a Material Adverse
Effect and, as of the date of this Agreement, there is no action pending
or, to the Knowledge of Dow Xxxxx, threatened against DJM to terminate the
rights of DJM under any such License.
SECTION 3.12. [Intentionally Omitted]
SECTION 3.13. Real Property. (a) Section 3.13(a) of the Dow Xxxxx
Schedule lists all Owned Real Property. With respect to each such parcel of
Owned Real Property, the Company indicated in Section 3.13(a) of the Dow
Xxxxx Schedule as the owner thereof has good and marketable title thereto,
subject only to the Permitted Encumbrances and Encumbrances reflected on
the Company Financial Statements, except where such failure to have such
good and marketable title would not, individually or in the aggregate, have
a Material Adverse Effect.
(b) Section 3.13(b) of the Dow Xxxxx Schedule lists all Leased
Real Property. Dow Xxxxx has made available to the Purchaser a correct and
complete copy of the leases and subleases listed in Section 3.13(b) of the
Dow Xxxxx Schedule. To the Knowledge of Dow Xxxxx, Dow Xxxxx has not
received any notice of any violation of any applicable zoning or building
regulation, ordinance or other law, order, regulation, or requirement
relating to the respective real estate operations or assets of DJM and, to
the Knowledge of Dow Xxxxx, there are no such violations that would,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.14. Employee Benefit Matters. (a) A "Plan" shall mean
each material Foreign Employee Benefit Plan and each material employee
benefit plan within the meaning of Section 3(3) of ERISA which is
maintained by Dow Xxxxx or DJM or to which Dow Xxxxx or DJM contributes or
is required to contribute and in which any employee of DJM participates. As
used herein, "Foreign Employee Benefit Plan" means any employee benefit
plan that is structured like an employee benefit plan described in Section
3(3) of ERISA which is maintained outside the United States primarily for
the benefit of persons substantially all of whom are nonresident aliens and
who are employees of Dow Xxxxx or any of its ERISA Affiliates and is not
covered by ERISA pursuant to Section 4(b)(4) of ERISA. Dow Xxxxx has
complied and currently is in compliance, both as to form and operation,
with the provisions of ERISA and the Code applicable to each Plan, except
where failure to so comply would not have a Material Adverse Effect.
(b) Each of the Plans which is intended to qualify under Section
401(a) of the Code is the subject of favorable and unrevoked determination
letters from the IRS.
(c) DJM has not maintained, contributed to or been required to
contribute to, and the United States employees of DJM do not participate
in, a multiemployer plan (as defined in Section 3(37) of ERISA) or a
defined benefit plan (as defined in Section 3(35) of ERISA). No amount is
due or owing from DJM on account of a multiemployer plan or on account of
any withdrawal therefrom.
(d) Notwithstanding anything else set forth herein, DJM has not
incurred any material liability with respect to any Plan under ERISA
(including without limitation, Title I or Title IV of ERISA), the Code or
other applicable law, which has not been satisfied in full, and no event
has occurred, and there exists no condition or set of circumstances which
is reasonably likely to result in the imposition of any material liability
under ERISA (including, without limitation, Title I or Title IV of ERISA),
the Code or other applicable law with respect to any of the Plans.
(e) Except as otherwise set forth in this Agreement, to the
Knowledge of Dow Xxxxx, the consummation of the transactions contemplated
by this Agreement will not (i) entitle any current or former employee or
officer of DJM to severance pay, unemployment compensation or any other
payment, or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or officer.
(f) Each plan which is subject to the requirements of the
Consolidated Omnibus Budget Reconciliation of 1985 ("COBRA") and the Health
Insurance Portability and Accountability Act ("HIPAA") has been maintained
in compliance with COBRA and HIPAA, including all notice requirements, and
no tax payable on account of Section 4980B or any other section of the Code
has been or is expected to be incurred except where failure to so comply
would not have a Material Adverse Effect.
(g) To Dow Xxxxx' Knowledge, all reporting and disclosure
obligations imposed under ERISA and the Code have been satisfied with
respect to each Plan;
(h) To Dow Xxxxx' Knowledge, each Foreign Employee Benefit Plan
has been maintained in good standing with the applicable Government
Authority;
(i) To Dow Xxxxx' Knowledge, all contributions required by
applicable law have been made with respect to all Foreign Employee Benefit
Plans on a timely basis;
(j) To Dow Xxxxx' Knowledge, neither Dow Xxxxx nor any ERISA
Affiliate has incurred any obligation in connection with the termination of
or withdrawal from any Foreign Employee Benefit plan;
(k) To Dow Xxxxx' Knowledge, the present value of the accrued
benefit liabilities (whether vested or not) under each funded Foreign
Employee Benefit Plan that is a pension plan, determined as of the end of
Dow Xxxxx' most recently ended fiscal year on the basis of the actuarial
assumptions used by Dow Xxxxx for purposes of FAS 87 with respect to such
Foreign Employee Benefit Plan, did not exceed the current value of the
assets of such Foreign Plan allocable to such benefit liabilities; and
(l) Dow Xxxxx has made or will, as soon as practicable after the
date hereof, make available to the Purchaser (i) copies (or, in the case of
Foreign Employee Benefit Plans, copies or summaries) of all documents
embodying or relating to each Plan and any trust agreement relating to any
Plan; (ii) copies of the two (2) most recent annual actuarial valuations,
if any, prepared for each Plan; (iii) copies of the two (2) most recent
annual reports (Series 5500 and all schedules thereto), if any, required
under ERISA in connection with each Plan or related trust; (iv) the most
recent determination letter received from the IRS, if any, for each Plan
and related trust which is intended to satisfy the requirements of Section
401(a) of the Code; and (v) the most recent summary plan description
together with the most recent summary of material modifications, if any,
required under ERISA with respect to each Plan.
SECTION 3.15. Taxes. (a) Except as would not have a Material
Adverse Effect or as set forth in Section 3.15(a) of the Dow Xxxxx
Schedule, (i) all Tax Returns required to have been filed by or which
relate to DJMH or any of the Subsidiaries for any period (or portion
thereof) ending on or before the Closing Date have been filed (taking into
account any extension of time to file), (ii) with respect to Income Tax
Returns, all Income Taxes shown thereon that are required to have been paid
have been paid, (iii) with respect to all Taxes other than Income Taxes,
for any period (or portion thereof) ending on or before Closing Date, DJMH
and each of the Subsidiaries have paid all such Taxes which are due,
whether or not shown to be due on a Tax Return (and where payment is not
yet due, have established, to the extent consistent with past practice and
in accordance with GAAP, a reserve on its books and records for such
payment), and (iv) no deficiency or adjustment for any Taxes has been
asserted or assessed by any competent taxing authority against DJMH or any
of the Subsidiaries which remains unpaid.
(b) Except as would not have a Material Adverse Effect or as set
forth in Section 3.15(b) of the Dow Xxxxx Schedule, with respect to DJMH or
any of the Subsidiaries, to Dow Xxxxx' Knowledge, (i) no waivers or
consents extending statutes of limitations have been given with respect to
any Taxes or Tax Returns, which waivers or consents are in effect as of the
date hereof, and no request for any such waiver or consent is pending as of
the date hereof, and (ii) no requests for ruling or determination letters
or competent authority relief with respect to DJMH or any of the
Subsidiaries is pending with any taxing authority with respect to any
Taxes. Section 3.15(b) of the Dow Xxxxx identifies all Tax Returns of DJMH
or any of the Subsidiaries with respect to which DJMH or any of the
Subsidiaries has been notified that a federal, state, local or foreign
audit, administrative proceeding or court proceeding is in progress or is
pending as of the date hereof.
(c) Except as would not have a Material Adverse Effect or as set
forth on Schedule 3.15(c) of the Dow Xxxxx Schedule, to Dow Xxxxx'
Knowledge, neither DJMH nor any of its Subsidiaries has agreed to make any
adjustment to its income or deductions pursuant to Section 481(a) or
Section 7121 of the Code (or similar provision of state, local or foreign
law) that would be effective for a period ending after the Closing Date.
(d) Except as set forth in Schedule 3.15(d) of the Dow Xxxxx
Schedule, to Dow Xxxxx' Knowledge, neither DJMH nor any Subsidiary is a
party to any agreement, contract or arrangement that would result, by
reason of the consummation of any of the transactions contemplated herein,
separately or in the aggregate, in the payment of any "excess parachute
payment" within the meaning of Section 280G of the Code.
(e) Except as set forth in Schedule 3.15(e) of the Dow Xxxxx
Schedule, to Dow Xxxxx' Knowledge, neither DJMH nor any of its Subsidiaries
has made any payments, is obligated to make any payments or is a party to
any agreement that could obligate it to make any payments that would
constitute compensation in excess of the limitation on deductibility set
forth in Section 162(m) of the Code.
(f) Neither DJMH nor any of the Subsidiaries has participated in,
or cooperated with, an international boycott within the meaning of Section
999 of the Code.
(g) Dow Xxxxx Markets International Co. qualifies as a
partnership for U.S. federal Income Tax purposes.
(h) This Section 3.15 is the only provision of Article III that
applies with respect to Taxes.
SECTION 3.16. Contracts. (a) Section 3.16(a) of the Dow Xxxxx
Schedule lists the following Contracts (other than Contracts between DJMH
or its Subsidiaries, on the one hand and any other Subsidiary on the other
hand) (collectively, with the Leases listed on Section 3.13(b) of the
Disclosure Schedule, the "Listed Contracts") in effect as of the date of
this Agreement to which DJMH or any of the Subsidiaries is a party:
(i) each Contract (other than the Leases listed on Section
3.13(b) of the Dow Xxxxx Schedule) that Dow Xxxxx reasonably anticipates
will, in accordance with its terms, involve aggregate payments by DJM of
more than $500,000 within the 12 month period following the date of this
Agreement that is not cancelable without liability within 60 days;
(ii) each employment agreement involving annual payments by
DJM in excess of $100,000 that is not cancelable without liability within
60 days;
(iii) each joint venture agreement;
(iv) each Contract relating to indebtedness for borrowed
money or capitalized leases, or other Contract in respect of which DJM is
obligated to provide funds in respect of, or to guarantee or assume, any
debt of any Person, in each case, in excess of $250,000, other than with
respect to intercompany indebtedness;
(v) each indemnity arrangement arising in connection with
any sale or disposition of assets (other than sales of assets in the
ordinary course of business);
(vi) each Contract containing non-competition covenants of
DJMH or any of its Subsidiaries; and
(vii) each Contract that Dow Xxxxx reasonably anticipates
will, in accordance with its terms, involve aggregate payments to DJM of
more than $500,000 within the 12-month period following the date of this
Agreement.
(b) Except as set forth in Section 3.16(b) of the Dow Xxxxx
Schedule, DJM is not (and, to the Knowledge of Dow Xxxxx, no other party
is), in breach or violation of, or default under, any of the Listed
Contracts, which breach, violation or default would, individually or in the
aggregate, have a Material Adverse Effect. To the Knowledge of Dow Xxxxx,
Dow Xxxxx has not been notified of any claim that any Listed Contract is
not valid and enforceable in accordance with its terms for the periods
stated therein, or that there is under any such Listed Contract any
existing defaults or events of default or events which with notice or lapse
of time or both would constitute such defaults which, individually or in
the aggregate, would result in a Material Adverse Effect. Each Listed
Contract is, as of the date of this Agreement, a valid agreement of DJM,
enforceable against DJM in accordance with its terms and, to the Knowledge
of Dow Xxxxx, is a valid agreement of each other party thereto, enforceable
against such party in accordance with its terms, except in each case where
enforceability may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally and except where enforceability
is subject to the application of equitable principles or remedies, or as
would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.17. Transactions with Affiliates. Except as set forth
in Section 3.17 of the Dow Xxxxx Schedule there are no material
transactions, agreements or arrangements (other than Listed Contracts or
employment arrangements entered into in the ordinary course of business)
between DJM, on the one hand, and (i) Dow Xxxxx or any of its Affiliates or
(ii) any director, officer or employee of Dow Xxxxx or any of its
Affiliates, on the other.
SECTION 3.18. Insurance. Section 3.18 of the Dow Xxxxx Schedule
contains a list as of the date hereof of all material insurance policies
maintained by or for the benefit of DJM. All such policies are in full
force and effect, all premiums with respect thereto covering all periods up
to and including the Closing Date have been paid, and no notice of
cancellation or termination has been received with respect to any such
policy. Dow Xxxxx and DJM have complied in all material respects with the
terms and provisions of such policies.
SECTION 3.19. Brokers. Except for Evercore Partners Inc.
("Evercore"), and Xxxxxxx, Sachs & Co. ("Xxxxxxx Xxxxx"), no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this
Agreement and the Ancillary Documents based upon arrangements made by or on
behalf of Dow Xxxxx or its affiliates. Dow Xxxxx is solely responsible for
the fees and expenses of Evercore and Xxxxxxx Sachs.
SECTION 3.20. Environmental Matters. (a) Except as would not have
a Material Adverse Effect, (i) neither the business or operations of DJMH
or any Subsidiary nor any of the Leased Real Property violates any
applicable Environmental Law, (ii) neither DJMH or any Subsidiary has
stored or used any pollutants, contaminants or hazardous or toxic wastes,
substances or materials in violation of any Environmental Law on or at the
Leased Real Property, (iii) DJMH has no Knowledge of any written notice
received from any Governmental Authority advising it that the Leased Real
Property or the operation of DJMH's or any Subsidiary's business is in
violation of any Environmental Law or any applicable Environmental Permit
or that it is responsible (or potentially responsible) for the cleanup of
any pollutants, contaminants or hazardous or toxic wastes, substances or
materials at, on or beneath the Leased Real Property or at, on or beneath
any land adjacent thereto, (iv) neither DJMH or any Subsidiary is party to
any government or private litigation or proceedings involving a demand for
damages or other potential liability pursuant to any Environmental Laws or
Common Law Environmental Principles, (v) to the Knowledge of Dow Xxxxx,
neither DJMH or any Subsidiary, or any director, officer or shareholder of
DJMH or any Subsidiary has buried, dumped, disposed, spilled or released
any pollutants, contaminants or hazardous or toxic wastes, substances or
materials on, beneath or about the Leased Real Property in violation of
applicable Environmental Laws, and (vi) to the Knowledge of Dow Xxxxx,
there is no condition or circumstance at, on or beneath the premises at
which DJMH or any Subsidiary (or any predecessor of DJMH or any Subsidiary)
is conducting (or has conducted) business, or at, on or beneath any
property at which wastes of DJMH or any Subsidiary have been deposited or
disposed by or at the behest or direction of DJMH or any Subsidiary that
(x) requires abatement or correction by DJMH or any Subsidiary under any
Environmental Law or Common Law Environmental Principles or (y) gives rise
to any civil or criminal liability of DJMH or any Subsidiary under any
Environmental Law or Common Law Environmental Principle. DJMH and all
Subsidiaries have timely filed all reports required to be filed by them
under applicable Environmental Laws with respect to the Leased Real
Property and the operation of their business, and DJMH and all Subsidiaries
have generated and maintained, in all material respects, all data,
documentation and records required to be generated or maintained under any
applicable Environmental Laws with respect thereto, in each case except as
would not have a Material Adverse Effect.
(b) For the purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Common Law Environmental Principles" means any principles
of common law under which a person or entity may be held liable for the
release or discharge of any pollutants, contaminants or hazardous or toxic
wastes, substances or materials into the environment.
"Environmental Law" shall mean any law, statute, regulation,
rule, order, consent decree, settlement agreement or governmental
requirement of any governmental authority, as in effect on the date of this
Agreement, which relates to or otherwise imposes liability or standards of
conduct concerning discharges or releases of any pollutants, contaminants
or hazardous or toxic wastes, substances or materials into ambient air,
water or land, or otherwise relating to the manufacture, processing,
generation, distribution, use, treatment, storage, disposal, cleanup,
transport or handling of pollutants, contaminants or hazardous or toxic
wastes, substances or materials.
"Environmental Permit" shall mean any licenses, permits,
variances, approvals or other authorizations required by or pursuant to any
applicable Environmental Law.
SECTION 3.21. Intellectual Property. (a) To the Knowledge of Dow
Xxxxx, DJMH and its Subsidiaries own or have the right to use all
Intellectual Property and all Technology used or held for use in the
conduct of the business of DJMH and its Subsidiaries taken as a whole, as
presently conducted, without any conflict with the rights of others, in
each case with such exceptions as would not have, in the aggregate, a
Material Adverse Effect and subject to limitations contained in any
applicable license agreement. The term "Intellectual Property" shall mean
all trademarks, trade names, service marks, service names, patents,
copyrights, applications therefor and licenses or other rights in respect
thereof. The term "Technology" shall mean all trade secrets, proprietary
information, software and computer programs and source code data relating
thereto (including all current and historical data bases), research
records, test information, market surveys, marketing know-how, inventions,
know-how, processes and procedures.
(b) With such exceptions as would not have, in the aggregate, a
Material Adverse Effect, since January 1, 1997, to the Knowledge of Dow
Xxxxx, neither DJMH nor any Subsidiary has received any notice from any
person challenging the right of DJMH or any Subsidiary to use any
Intellectual Property or Technology owned or used by or licensed to DJMH or
any Subsidiary. With such exceptions as would not have, in the aggregate, a
Material Adverse Effect, neither DJMH nor any Subsidiary has made any claim
that any person has violated or infringed its respective rights with
respect to any Intellectual Property or Technology owned or used by or
licensed to DJMH or any Subsidiary and there is no basis for the making of
any such claim.
(c) Except as would not have a Material Adverse Effect, upon
consummation of the transactions contemplated by this Agreement, DJMH and
its Subsidiaries will continue to own all software programs and databases
owned to the extent owned prior to such consummation, free and clear of all
Encumbrances.
SECTION 3.22. Investment Representations. (a) Dow Xxxxx will be
acquiring the Equity Consideration (and, if applicable, the Note
Consideration) for its own account, for investment, and not with a view
toward the resale or distribution thereof in violation of applicable law.
(b) Dow Xxxxx understands that it must bear the economic risk of
the Equity Consideration (and, if applicable, the Note Consideration) for
an indefinite period of time because the Preferred Stock (and, if
applicable, the Subordinated Note) is not registered under the US
Securities Act of 1933, as amended (the "Securities Act"), or any
applicable state securities laws, and may not be resold unless subsequently
registered under the Securities Act and such other laws or unless an
exemption from such registration is available. Dow Xxxxx also understands
that, except pursuant to the Registration Rights Agreement, it is not
contemplated that any registration will be made under the Securities Act or
that the Purchaser will take steps which will make the provisions of Rule
144 under the Securities Act available to permit resale of the Equity
Consideration (or, if applicable, the Note Consideration). Dow Xxxxx hereby
agrees and covenants that it will not transfer, convey or otherwise dispose
of the Equity Consideration (or, if applicable, the Note Consideration)
except in a transaction that either (i) is the subject of an effective
registration statement under the Securities Act and any applicable state
securities laws, or (ii) as to which the Purchaser shall receive an opinion
of counsel to the effect that such registration is not required (which
opinion and counsel shall be reasonably satisfactory to the Purchaser, and
may be relied on by the Purchaser in making such determination).
(c) Dow Xxxxx is able to fend for itself in the transactions
contemplated by this Agreement and Dow Xxxxx has the ability to bear the
economic risks of its investment in the Equity Consideration (and, if
applicable, the Note Consideration). Dow Xxxxx has had the opportunity to
ask questions of, and receive answers from, officers of the Purchaser with
respect to the business and financial condition of the Purchaser and the
terms and conditions of the Equity Consideration (and, if applicable, the
Note Consideration) and to obtain additional information necessary to
verify such information or can acquire it without unreasonable effort or
expense.
(d) Dow Xxxxx has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
its investment in the Equity Consideration (and, if applicable, the Note
Consideration).
Dow Xxxxx makes to the Purchaser only the representations and
warranties set forth in this Agreement and no others.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to Dow Xxxxx as follows:
SECTION 4.01. Organization, Authority and Qualification. The
Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of Missouri and has all necessary corporate power
and authority to enter into this Agreement and the Ancillary Documents, to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Ancillary Documents by the Purchaser, the
performance by the Purchaser of its obligations hereunder and thereunder,
including the issuance to Dow Xxxxx of the Equity Consideration, and the
consummation by the Purchaser of the transactions contemplated hereby and
thereby, have been duly authorized by all requisite corporate action on the
part of the Purchaser, except that, as of the date hereof the Purchaser has
not obtained shareholder approval necessary for the issuance of the Equity
Consideration. This Agreement has been, and the Ancillary Documents will
be, duly executed and delivered by the Purchaser, and (assuming due
authorization, execution and delivery by Dow Xxxxx) this Agreement
constitutes, and the Ancillary Documents will constitute, legal, valid and
binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with their terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to
the effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Each
Subsidiary of the Company is a corporation, or, in the case of EJV
Partners, L.P. ("EJV"), a limited partnership, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, as the case may be. The Company and its
Subsidiaries are duly authorized to conduct business and are in good
standing under the laws of each jurisdiction where such qualification is
required, except where the failure to be in good standing or to be so
qualified would not have a Purchaser Material Adverse Effect. The Company
and each of its Subsidiaries has full corporate (or, in the case of EJV,
partnership) power and authority to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it.
SECTION 4.02. Capitalization; New Shares. (a) As of the date
hereof, the authorized capital stock of the Purchaser consists of (i)
85,000,000 shares of Purchaser Class A Common Stock, $.01 par value, (ii)
10,000,000 shares of Purchaser Class B Common Stock, $.01 par value, and
(iii) 1,950,000 shares of Series D Preferred Stock, $1.00 par value. As of
the date hereof, (w) 32,879,031 shares of Purchaser Class A Common Stock
are issued and outstanding, (x) no shares of Purchaser Class B Common Stock
are issued and outstanding, (y) 1,950,000 shares of Series D Preferred
Stock, par value $1.00 per share, are issued and outstanding and (z) no
other shares of capital stock of the Purchaser are issued and outstanding.
All of the issued and outstanding shares of capital stock of the Purchaser
have been duly authorized and are validly issued, fully paid and
nonassessable.
(b) Except as otherwise set forth in Section 4.02(b) of the
Purchaser Schedule, (i) no subscription, warrant, option, convertible
security or other right (contingent or other) to purchase or acquire any
shares of any class of capital stock of the Purchaser is authorized or
outstanding and (ii) there is not any commitment of the Purchaser to issue
any shares, warrants, options or other such rights or to distribute to
holders of any class of the Purchaser's capital stock any evidences of
indebtedness or any assets. There are no outstanding stock appreciation,
phantom stock, profit participation or similar rights with respect to the
Purchaser. Except as set forth in the Certificate of Designation, and in
the Certificate of Designation (as amended) with respect to the Series D
Preferred Stock, par value $.01 per share, and in the Purchaser's
Certificate of Incorporation with respect to the Purchaser Class B Common
Stock, the Purchaser has no obligation (contingent or other) to purchase,
redeem or otherwise acquire any shares of its capital stock or any interest
therein or to pay any dividend or make any other distribution in respect
thereof.
(c) The issuance and delivery of the Equity Consideration will
not be subject to any preemptive rights of shareholders of the Purchaser or
to any right of first refusal or other similar right in favor of any person
that have not been duly and validly waived.
(d) As of the Closing Date, the Preferred Stock will have been
duly authorized by the Purchaser and, when issued, free and clear of any
Encumbrances, other than the Encumbrances represented by the Registration
Rights Agreement and the Stockholders Agreement, fully paid and
nonassessable. The shares of Purchaser Class A Common Stock issuable upon
conversion of the Preferred Stock will be at Closing duly reserved for
issuance upon such conversion and, when issued, free and clear of any
Encumbrances, other than the Encumbrances represented by the Registration
Rights Agreement and the Stockholders Agreement, and will be validly
issued, fully paid and nonassessable.
(e) The Equity Consideration will, immediately following the
Closing, be convertible into 10% of the Fully Diluted Shares.
(f) Other than this Agreement, the Stockholders Agreement and the
Registration Rights Agreement, there are no voting trusts, stockholder
agreements, proxies or other agreements in effect with respect to the
voting or transfer of the capital stock of the Purchaser. The Purchaser has
provided to Dow Xxxxx true, complete and correct copies of the Purchaser's
Certificate of Incorporation and Bylaws, the Stockholder Agreement and the
Registration Rights Agreement, as currently in effect.
SECTION 4.03. [Intentionally Omitted]
SECTION 4.04. No Conflict. Except as set forth on Section 4.04 of
the Purchaser Schedule, the execution, delivery and performance of this
Agreement and the Ancillary Documents by the Purchaser do not and will not:
(a) violate or conflict with the Certificate of Incorporation or By-laws
(or equivalent constitutional documents) of the Purchaser or any of its
Affiliates; (b) conflict with or violate any Law or Governmental Order
applicable to the Purchaser or its Affiliates; or (c) result in any breach
of, or constitute a default (or event which with the giving of notice or
lapse of time, or both, would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
Contract to which the Purchaser or any of its Affiliates is a party except,
in the case of clauses (b) and (c), as would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect or prevent the
Purchaser from consummating the transactions contemplated by this Agreement
or the Ancillary Documents.
SECTION 4.05. Consents, Approvals, Licenses, Etc. No consent,
approval, authorization, license, order or permit of, or declaration,
filing or registration with, or notification to, any Governmental Authority
is required to be made or obtained by the Purchaser or any of its
Affiliates in connection with the execution, delivery and performance of
this Agreement or the Ancillary Documents, or the consummation of the
transactions contemplated hereby or thereby, except: (a) as set forth on
Section 4.03 of the Purchaser Schedule, (b) applicable requirements of the
HSR Act and the BHC Act, (c) where the failure to obtain such consents,
approvals, authorizations or licenses, orders or permits, or to make such
declarations, filings, registrations, or notifications, would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect
or prevent the Purchaser from consummating the transactions contemplated by
this Agreement or the Ancillary Documents, or (d) as may be necessary as a
result of any facts or circumstances relating solely to Dow Xxxxx or its
Affiliates. All of the Licenses of the Purchaser and its Subsidiaries are
in full force and effect and the Purchaser and the Subsidiaries are in
compliance with each such License except as would not, individually or in
the aggregate, have a Purchaser Material Adverse Effect and, as of the date
of this Agreement, there is no action pending or, to the knowledge of the
Purchaser, threatened against the Purchaser or any of its Subsidiaries to
terminate the rights of the Purchaser or any of its Subsidiaries under any
such License.
SECTION 4.06. Absence of Litigation. Except as set forth in
Section 4.05 of the Purchaser Schedule, (a) there are no Actions pending
or, to the knowledge of the Purchaser, threatened in writing, against the
Purchaser or any of its Affiliates, and (b) neither the Purchaser nor any
of its Affiliates is subject to any Governmental Order, in each case that
would, individually or in the aggregate, have a Purchaser Material Adverse
Effect or prevent the Purchaser from consummating the transactions
contemplated by this Agreement and the Ancillary Documents.
SECTION 4.07. Financial Statements. The Purchaser has furnished
or made available to Dow Xxxxx (i) the audited consolidated balance sheet
of the Purchaser and its Subsidiaries as of December 31, 1996, and the
related audited consolidated statements of operations, stockholders' equity
and cash flows for the fiscal year then ended, in each case certified by
Deloitte & Touche LLP, the Purchaser's independent auditors, (ii) the
unaudited consolidated balance sheet of the Purchaser and its Subsidiaries
as of December 31, 1997, and the related unaudited consolidated statements
of operations, stockholders' equity and cash flows for the fiscal year then
ended. The financial statements referred to in clauses (i) and (ii) above,
together with the notes thereto, are complete and correct in all material
respects, are in accordance with the books and records of the Purchaser,
have been prepared in accordance with GAAP and fairly present the
consolidated financial position of the Purchaser and its Subsidiaries as of
such respective dates and the consolidated results of their operations for
the respective periods then ended, subject, in the case of the December 31,
1997 financial statements to the fact that such financial statements lack
notes thereto.
SECTION 4.08. Absence of Undisclosed Liabilities. Neither the
Purchaser nor any of its Subsidiaries has any obligation or liability
(whether accrued, absolute, contingent, unliquidated or otherwise) other
than: (i) liabilities reflected in the financial statements referred to in
Section 4.06 hereof (including the notes thereto), (ii) liabilities not
required to be reflected in the financial statements referred to in Section
4.06 hereof (including the notes thereto) in accordance with GAAP and (iii)
liabilities and obligations that have arisen subsequent to December 31,
1997 in the ordinary course of business.
SECTION 4.09. Compliance with Laws. (i) The Purchaser and the
Subsidiaries are in compliance with all applicable Laws, and (ii) none of
the Purchaser nor any of the Subsidiaries has received any written notice
to the effect that the Purchaser or the Subsidiaries are not in compliance
with any applicable Laws, except, in the case of each of (i) and (ii), (a)
as set forth in Section 4.10 of the Purchaser Disclosure Schedule or (b)
where the failure to comply would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 4.10. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement and the
Ancillary Documents based upon arrangements made by or on behalf of the
Purchaser or its Affiliates.
The Purchaser makes to Dow Xxxxx only the representations and
warranties set forth in this Agreement and no others.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing. (a)
Unless the Purchaser otherwise agrees in writing (such agreement not to be
unreasonably withheld or delayed), and except as contemplated by this
Agreement (or an agreement or plan disclosed in the Disclosure Schedule) or
as otherwise set forth in the Disclosure Schedule, between the date of this
Agreement and the Closing Date, Dow Xxxxx will cause DJM (i) to operate in
all material respects only in the Ordinary Course; (ii) to use reasonable
efforts to preserve the current relationships of DJM with its customers,
suppliers, distributors, officers and other key employees and other persons
with which DJM has significant business relationships; (iii) to use
reasonable efforts to maintain its tangible assets and properties in their
current condition, normal wear and tear excepted; and (iv) to maintain its
books, accounts and records in the usual, regular and ordinary manner, on a
basis consistent with past practice.
(b) Unless the Purchaser otherwise agrees in writing (such
agreement not to be unreasonably withheld or delayed), and except as
contemplated by this Agreement (or an agreement or plan disclosed in the
Dow Xxxxx Schedule) or as otherwise set forth in the Dow Xxxxx Schedule,
between the date of this Agreement and the Closing Date, Dow Xxxxx will
cause DJM not to (a) (i) sell, lease, transfer or dispose of any of its
assets, (ii) mortgage, pledge or otherwise encumber any of its assets,
(iii) amend, modify, transfer, assign or cancel any Listed Contract, (iv)
acquire (by merger, consolidation, or acquisition of stock or assets) any
corporation, partnership or other business organization or division
thereof, (v) increase the rate of compensation payable to any of its
employees or agents, or enter into any new, or amend in any material
respect any existing, employment agreement, (vi) incur or guarantee any
indebtedness for borrowed money, or (vii) enter into any Contract meeting
the criteria set forth in Section 3.16, except, in the case of each of (i)
through (vii) hereof, in the Ordinary Course; (b) (i) amend its Certificate
of Incorporation or By-laws, or (ii) issue any shares of capital stock; or
(c) enter into any agreement to do any of the things described in (a) or
(b) above.
SECTION 5.02. Access to Information. (a) From the date of this
Agreement until the Closing, upon reasonable notice, Dow Xxxxx shall, and
shall cause the officers, employees, auditors and agents of DJM to, (i)
afford the officers, employees and authorized agents and representatives of
the Purchaser reasonable access, during normal business hours, to the Books
and Records and (ii) furnish to the officers, employees and authorized
agents and representatives of the Purchaser such additional financial and
operating data and other information regarding DJM as the Purchaser may
from time to time reasonably request in order to assist the Purchaser in
fulfilling its obligations under this Agreement and to facilitate the
consummation of the transactions contemplated hereby; provided, however,
that the Purchaser shall not unreasonably interfere with the business or
operations of DJM. Any information provided by Dow Xxxxx or DJM pursuant
hereto shall be subject to the provisions of the Confidentiality Agreement
until the Closing.
(b) The Purchaser agrees that it shall preserve and keep all
Books and Records in the Purchaser's possession for a period of at least
eight years from the Closing Date. After such eight-year period, before the
Purchaser shall dispose of any of such Books and Records, at least 90
calendar days' prior written notice to such effect shall be given by the
Purchaser to the Chief Financial Officer of Dow Xxxxx, and Dow Xxxxx shall
be given an opportunity, at its cost and expense, to remove and retain all
or any part of such Books and Records as Dow Xxxxx may select.
(c) Each party agrees that it will cooperate with and make
available to the other party, during normal business hours, all Books and
Records, information and employees (without substantial disruption of
employment) retained and remaining in existence or in its employ after the
Closing Date which are necessary or useful in connection with preparation
of financial statements, any Tax inquiry, audit, investigation or dispute,
any audit by exchanges or data providers, any litigation or investigation
or any other matter requiring any such Books and Records, information or
employees for any reasonable business purpose. The party requesting any
such Books and Records, information or employees shall bear all of the
out-of-pocket costs and expenses (including, without limitation, attorneys'
fees, but excluding reimbursement for salaries and employee benefits)
reasonably incurred in connection with providing such Books and Records,
information or employees and shall keep all such information confidential.
Dow Xxxxx may require certain financial information relating to DJM for
periods prior to the Closing Date for the purpose of preparing financial
statements, filing federal, state, local and foreign Tax returns and other
governmental reports, and the Purchaser agrees to furnish such information
to Dow Xxxxx at Dow Xxxxx'x request and expense.
SECTION 5.02A. Certain Financial Statements. (a) Dow Xxxxx shall
provide the Purchaser with all financial information held by DJM, and data
reasonably necessary to enable its independent accountants to prepare,
review and report on the audited consolidated balance sheets of DJM as of
December 31, 1997, 1996 and 1995 and the related statements of income,
stockholders' equity and cash flows for the year then ended.
(b) Dow Xxxxx agrees that, if requested by the Purchaser as being
necessary to prepare the audited financial statements as contemplated by
paragraph (a) above, Dow Xxxxx shall provide to the Purchaser's independent
public accountants a management representation letter in a form reasonably
acceptable to Dow Xxxxx covering the periods referred to above.
SECTION 5.03. Efforts; Consents; Guarantees, Etc. (a) Each party
hereto shall use reasonable efforts to take, or cause to be taken, all
appropriate action, and to, or cause to be done, all things necessary,
proper or advisable to consummate promptly and make effective the
transactions contemplated by this Agreement and the Ancillary Documents.
(b) Dow Xxxxx shall use reasonable efforts to obtain the consents
set forth in Section 5.03(b) of the Dow Xxxxx' Schedule. The Purchaser
shall fully cooperate with Dow Xxxxx in Dow Xxxxx' efforts to obtain such
consents but shall not be obligated to provide guarantees, letters of
credit or similar undertakings with respect thereto from any shareholders
or third parties. Neither the Purchaser nor Dow Xxxxx shall have any
obligation to make any payments in order to obtain any such consents. In
the event that any such consents are not obtained by Dow Xxxxx, Dow Xxxxx
shall, at the Purchaser's request and expense, cooperate with the Purchaser
in any reasonable arrangement to provide the Purchaser the benefit which
would have been provided if such consents had been obtained.
(c) The Purchaser shall use best efforts to obtain all required
consents for the issuance of the Preferred Stock (and not the Alternate
Preferred Stock).
(d) Each party hereto shall use reasonable efforts to obtain all
authorizations, consents, orders and approvals of, and to give all notices
to and make all filings with, all Governmental Authorities that may be or
become necessary for its execution and delivery of, and the performance of
its obligations pursuant to, this Agreement and the Ancillary Documents.
Each party will cooperate fully with the other in obtaining such consents,
giving such notices and making such filings. Each party hereto agrees to
make appropriate filings pursuant to the BHC Act and/or the HSR Act, as
applicable, with respect to the transactions contemplated by this
Agreement, within ten Business Days after the date hereof, and promptly to
supply any additional information and documentary material that may be
requested pursuant to such Acts.
(e) The Purchaser will use reasonable efforts to enter into
arrangements pursuant to which Dow Xxxxx and its Affiliates will be
released from any guarantees of or relating to DJM with respect to which
Dow Xxxxx or any of its Affiliates could have any liability after the
Closing, including without limitation the guarantees listed in Section
5.03(e) of the Dow Xxxxx Schedule, provided, however, that the Purchaser
shall not be obligated to provide guarantees, letters of credit or similar
undertakings with respect thereto from any shareholders or third parties.
In the event that any such releases are not obtained by the Purchaser, the
Purchaser shall indemnify and hold harmless Dow Xxxxx and its Affiliates
from and against any and all Losses based upon, arising out of or resulting
from (i) any breach after the Closing by the Purchaser or its Affiliates
(including DJM) of any agreement to which any such guarantee relates or
(ii) any payments made by Dow Xxxxx or its Affiliates under any such
guarantees.
(f) The Purchaser shall use all commercially reasonable best
efforts (i) to obtain, prior to April 3, 1998, the Bank Consent and to
satisfy the Bank Consent Condition, (ii) if the Bank Consent is not
obtained by April 3, 1998, then, prior to Closing, to obtain the Bank
Consent and to satisfy the Bank Consent Condition (iii) prior to the
Closing, to obtain and to satisfy the Bank Consent Condition, the financing
necessary to pay the Cash Consideration and to satisfy the Financing
Condition, and (iv) prior to Closing, to obtain all consents necessary to
the issuance of the Preferred Stock (the "Preferred Stock Consent") (but
shall not be obligated to provide guarantees, letters of credit or similar
undertakings with respect thereto from any shareholders or third parties).
The Purchaser shall promptly deliver to Dow Xxxxx copies of any
commitments, consents or other similar letters relating to the foregoing.
(g) Each party hereto agrees to cooperate and to use reasonable
efforts vigorously to contest and resist any action, and to have vacated,
lifted or overturned any Governmental Order that becomes in effect, that
would prevent consummation of the transactions contemplated by this
Agreement and the Ancillary Documents.
SECTION 5.04. No Use of Dow Xxxxx Names. No interest in or right
to use the name "Dow Xxxxx" or "Dow Xxxxx Markets" or any derivation
thereof or any logo, trademark or trade name incorporating Dow Xxxxx or Dow
Xxxxx Markets (collectively, the "Retained Names and Marks") is being
transferred to the Purchaser pursuant to the transactions contemplated
hereby and such rights of DJM shall terminate as of the Closing Date. The
Purchaser will, immediately following the Closing Date, cause (i) DJM to
change its corporate name to remove the name "Dow Xxxxx Markets" and (ii)
DJM to remove or obliterate all the Retained Names and Marks from its
signs, purchase orders, invoices, sales orders, labels, letterheads,
shipping documents, and other items and materials, and not to put into use
after the Closing Date any such items and materials not in existence on the
Closing Date that bear any Retained Name or Xxxx or any name, xxxx or logo
similar thereto. Notwithstanding the foregoing, DJM may, for a period of
120 calendar days following the Closing Date (or, to the extent that
changes are required at individual customer locations, for a period of up
to one year following the Closing Date), use any purchase orders, invoices,
sales orders, labels, letterheads, or shipping documents existing on the
Closing Date that bear any Retained Name or Xxxx or any name, xxxx or logo
similar thereto, where the removal of any Retained Name or Xxxx or any such
similar name, xxxx or logo would be impractical; provided, that the
Purchaser shall place, or cause to be placed, a xxxxx, xxxx or other
notation on any such item that identifies DJM as an affiliate or business
of the Purchaser (and not of Dow Xxxxx). The Purchaser agrees that Dow
Xxxxx shall have no responsibility for claims by third parties arising out
of, or relating to, the use by the Purchaser, DJM or any Affiliate thereof
of any Retained Name or Xxxx or the operations of DJM after the Closing
Date, and the Purchaser agrees to indemnify and hold harmless Dow Xxxxx
from any and all claims that may result therefrom or that may arise out of
the use thereof by the Purchaser, DJM or any Affiliate thereof.
SECTION 5.05. Ancillary Documents; Etc. (a) The Purchaser
acknowledges and agrees that, except as expressly provided in the Ancillary
Documents, DJM shall have no ownership or other rights, and Dow Xxxxx alone
shall retain all ownership and other rights, in respect of the items set
forth in Section 5.05(a) of the Disclosure Schedule.
(b) At the Closing, Dow Xxxxx and the Purchaser will enter into
the News Distribution Agreement.
(c) At the Closing, Dow Xxxxx and the Purchaser will enter into a
Transitional Services Agreement.
(d) At the Closing, Dow Xxxxx and the Purchaser will enter into
the Stockholders Agreement Amendment.
(e) At the Closing, Dow Xxxxx and the Purchaser will enter into
the Registration Rights Agreement Amendment.
(f) Prior to the Closing, the Purchaser shall use its best
efforts to take all action necessary to cause its Certificate of
Incorporation to be amended to provide for authorization of the Preferred
Stock.
(g) If the Note Consideration is issued at the Closing, the
Purchaser will use all commercially reasonable efforts after the Closing
Date to refinance the Note Consideration with financing on terms
substantially equivalent to or more favorable to the Purchaser than the
terms comprising the Note Consideration, and to prepay the Subordinated
Note simultaneously with obtaining such refinancing (but shall not be
obligated to provide guarantees, letters of credit or similar undertakings
with respect thereto from any shareholders or third parties). So long as
the Subordinated Note remains outstanding, not less than every six months
(commencing with the date which is six months after the Closing Date), the
Purchaser shall deliver to Dow Xxxxx a statement certifying that the
Purchaser has used its efforts as required by this Section 5.05(h) and
that, notwithstanding such efforts, the Purchaser has been unable to obtain
financing or terms substantially equivalent to or more favorable to the
Purchaser.
SECTION 5.06. Notification of Certain Matters. Each of Dow Xxxxx
and the Purchaser shall give prompt notice to the other of any notice or
other communication from any third party alleging that the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement and the Ancillary Documents.
SECTION 5.07. Intercompany Debt. Notwithstanding any provision of
this Agreement to the contrary, all intercompany accounts and obligations
between DJM, on the one hand, and Dow Xxxxx or any of its Affiliates, on
the other hand, shall be capitalized, settled or otherwise eliminated on or
prior to the Closing Date.
SECTION 5.08. Covenant Not to Compete. (a) Dow Xxxxx covenants
and agrees that, if the Closing is consummated and except as permitted
under this Section 5.08, for a period of three years after the Closing
Date, it will not, and will cause its Subsidiaries not to, engage in the
Purchaser Business in any location in which the Purchaser or any subsidiary
of the Purchaser (including DJM after the Closing Date) engages in such
business as of the day before the Closing Date; provided, however, that
nothing herein shall be construed to prevent Dow Xxxxx or any of its
subsidiaries from holding the Equity Consideration (or, if applicable, the
Note Consideration) or from owning as a passive investor (x) with respect
to any existing investments up to 20% of the stock or equity and (y) with
respect to any future investments, up to 10%, in any person that primarily
engages in the Purchaser Business. It is the desire and intent of the
parties that the provisions of this Section 5.08 shall be enforced to the
fullest extent permitted under the laws and public polices of each
jurisdiction in which enforcement is sought. If any court determines that
any provision of this Section 5.08 is unenforceable, such court shall have
the power to reduce the duration or scope of such provision, as the case
may be, or terminate such provision and, in reduced form, such provision
shall be enforceable; it is the intention of the parties that the foregoing
restrictions shall not be terminated, unless so terminated by a court, but
shall be deemed amended to the extent required to render them valid and
enforceable, such amendment to only apply with respect to the operation of
this Section 5.08 in the jurisdiction of the court that has made the
adjudication. For purposes of this Agreement, "Purchaser Business" means
the business of providing dynamically updating real-time price information
on financial instruments, through products aimed primarily at professional
traders, but excluding products that have a significant news component, and
excluding specifically the business of compiling, calculating,
distributing, and publishing financial indexes, and the Dow Xxxxx
Interactive Publishing business of Dow Xxxxx.
(b) Dow Xxxxx covenants and agrees that, if the Closing is
consummated, for a period of five years after the Closing Date, it will
not, and will cause its Subsidiaries not to, directly or indirectly,
solicit for employment, either as an employee or consultant, any employee
or independent contractor of the Purchaser or any of its subsidiaries to
become an employer or consultant or otherwise provide services to Dow Xxxxx
or any of its Subsidiaries; provided, however, that nothing in this
paragraph (b) shall be construed as prohibiting Dow Xxxxx or any of its
subsidiaries from conducting any general solicitation (including by placing
advertisements in any form or method not targeted at employees or
independent contractors of the Purchaser and its subsidiaries).
(c) The parties acknowledge and agree that the restrictions
contained in this Section 5.08 are a reasonable and necessary protection of
the immediate interest of the Purchaser, and any violation of these
restrictions would cause substantial injury to the Purchaser and the
Purchaser would not have entered into this Agreement without receiving the
additional consideration offered by Dow Xxxxx in binding itself to these
restrictions. In the event of a breach or a threatened breach by Dow Xxxxx
or any of its subsidiaries of these restrictions, the Purchaser shall be
entitled to apply to any court of competent jurisdiction for an injunction
restraining such person from such breach or threatened breach (without the
necessity of providing the inadequacy of money damages as a remedy);
provided, however, that the right to apply for injunctive relief shall not
be construed as prohibiting the Purchaser from pursuing any other available
remedies for such breach or threatened breach.
ARTICLE VI
EMPLOYMENT AND EMPLOYEE BENEFIT ARRANGEMENTS
SECTION 6.01. Definitions. (a) The term "Employees" shall mean
the employees of DJM (including those on layoff, disability or leave of
absence, whether paid or unpaid, but excluding Retained Employees, former
employees and retired employees of DJM) and those employees or groups of
employees of Dow Xxxxx listed on Section 6.01(a) of the Dow Xxxxx Schedule,
and the term Employee shall mean any of the Employees.
(b) The term "Retained Employees" shall mean the employees or
groups of employees listed in Section 6.01(b) of the Dow Xxxxx Schedule,
each of whom will cease to be an employee of DJM as of the Closing Date.
(c) The term "Dow Xxxxx Plans" shall mean each and all employee
benefit plans as defined in Section 3(3) of ERISA, maintained or sponsored
by Dow Xxxxx which provides benefits to Employees or their spouses or
covered dependents, including (i) any such plans that are employee welfare
benefit plans as defined in Section 3(1) of ERISA and (ii) any such plans
that are employee pension benefit plans as defined in Section 3(2) of
ERISA.
SECTION 6.02. Employment. Immediately after the Closing Date and
subject to the other provisions of this Article VI, Purchaser shall cause
each Employee to continue to be employed in his or her respective position
with DJM, whether or not the Employee is subject to a written employment
agreement, at substantially the same salary and wages and on substantially
the same terms and conditions as those in effect immediately prior to the
Closing Date, subject to the further terms and conditions of this Article
VI. Nothing herein shall require the Purchase after the Closing Date to
retain any Employee for any specified period of time.
SECTION 6.03. Pension and Other Plans. (a) 401(k) Plan. (i) As of
the Closing Date, DJM shall cease to be a participating employer under the
Dow Xxxxx Profit Sharing Retirement Plan (the "Investment Plan") and Dow
Xxxxx shall take, or cause to be taken, all such action as may be necessary
to effect such cessation of participation. As soon as practicable after the
Closing Date, the Purchaser shall, or shall cause DJM to, establish or
designate, and maintain, a defined contribution plan (the "Purchaser's
Investment Plan") to provide benefits to the Employees who, on the Closing
Date, are participants in the Investment Plan ("Investment Plan
Participants") such benefits to be equivalent to the benefits provided to
other employees of the Purchaser. The Purchaser's Investment Plan shall be
qualified under Sections 401(a) and 401(k) of the Code and shall provide
the Investment Plan Participants credit for service with Dow Xxxxx and its
Affiliates (including DJM) and their respective predecessors prior to the
Closing Date for all purposes for which service was recognized under the
Investment Plan.
(ii) (A) As soon as practicable after the receipt by Dow
Xxxxx of the opinion or determination letter described in subparagraph (B)
below, Dow Xxxxx shall cause the trustee of the Investment Plan to transfer
to the trust forming a part of the Purchaser's Investment Plan cash (or
with respect to participant loans granted prior to the Closing Date, if
any, such loans and any promissory notes or other documents evidencing such
loans) in an amount equal to the account balances of Investment Plan
Participants as of a valuation date (the "Valuation Date") not more than 60
days preceding the date of transfer, increased by any contributions due for
periods prior to the Closing Date and not made as of the Valuation Date and
reduced by any benefits paid during the period following such Valuation
Date to the date of transfer (the "Account Balances").
(B) Within 60 days after the Closing Date, the
Purchaser shall either (1) provide Dow Xxxxx with an opinion letter of
counsel reasonably acceptable to Dow Xxxxx that the Purchaser's Investment
Plan and related trust satisfy the requirements for qualification under
Sections 401(a) and 401(k) of the Code as of the later of its effective
date or the Closing Date or (2) deliver to Dow Xxxxx a favorable
determination letter issued by the IRS that the Purchaser's Investment Plan
and related trust satisfy the requirements for qualification under Sections
401(a) and 401(k) of the Code as of the later of its effective date or the
Closing Date. No transfer shall be made unless the Purchaser provides Dow
Xxxxx with the opinion letter or determination letter referred to in this
subparagraph (B).
(iii) In consideration for the provisions contained in this
Section 6.03(a) for the transfer by the Investment Plan of the Account
Balances to the trust forming a part of the Purchaser's Investment Plan,
Purchaser shall, effective as of the Closing Date, assume all of the
liabilities and obligations of Dow Xxxxx and its Affiliates in respect of
the administration and investment of Account Balances on behalf of
Employees who are Investment Plan Participants and their beneficiaries
under the Investment Plan, and Dow Xxxxx and its affiliates and the
Investment Plan shall be relieved of all liabilities and obligations to the
Investment Plan Participants and their beneficiaries arising out of the
Investment Plan.
(b) International Pension Plans.
(i) Effective as of the Closing Date, (A) DJM shall cease
to be a participating employer under each pension plan, scheme or other
arrangement, whether of a defined benefit or defined contribution nature,
that is sponsored by Dow Xxxxx or any of its Affiliates and that covers
either employees of Dow Xxxxx and its Affiliates (excluding DJM) or
Employees in each case which are domiciled outside of the United States and
(B) Dow Xxxxx shall become, or cause one of its Affiliates (excluding DJM)
to become, the successor sponsor of each pension plan, scheme or other
arrangement, whether of a defined benefit or defined contribution nature,
that is sponsored by DJM as of the Closing Date and that covers both
employees of Dow Xxxxx and its Affiliates (excluding DJM) and Employees in
each case which are domiciled outside of the United States (collectively,
the "International Pension Plans"). Each of Dow Xxxxx and DJM shall take,
or cause to be taken, all such action as may be necessary to effect the
foregoing cessation of participation and change of sponsorship.
(ii) With respect to each International Pension Plan, to
the extent permitted by applicable law and the terms of the International
Pension Plan, Dow Xxxxx shall, as soon as practicable after the Closing
Date, transfer, or cause to be transferred, to the pension plan, scheme or
other arrangement designated by Purchaser ("Purchaser's International
Pension Plans") (or trust forming a part thereof) (A) in the case of an
International Pension Plan that is a funded defined contribution plan, cash
or property in an amount equal to the account balances of Employees who are
participants in such International Pension Plan valued as of the most
reasonably practicable date prior to such transfer and (B) in the case of
an International Pension Plan that is a defined benefit plan, cash or
property in such amount as Dow Xxxxx and Purchaser shall reasonably agree,
after taking into account any underfunding with respect to such plans (in
either case, the "International Pension Plan Assets"); provided, however,
that in the event Dow Xxxxx and Purchaser do not reasonably agree, within
120 days of Closing, as to the amount of cash and property to be
transferred under clause (B) above with respect to an International Pension
Plan, no such transfer shall occur with respect to such plan.
(iii) With respect to each International Pension Plan for
which International Pension Plan Assets are transferred to the Purchaser's
International Pension Plan under this Section 6.03(b), in consideration for
such transfer, Purchaser shall, effective as of the Closing Date, assume
all of the liabilities and obligations of Dow Xxxxx and its affiliates in
respect of the administration and investment of such assets on behalf of
Employees who are participants in such International Pension Plan and their
beneficiaries, and Dow Xxxxx and its Affiliates shall be relieved of all
such liabilities and obligations to such participants and their
beneficiaries arising out of such International Pension Plan.
(iv) With respect to each International Pension Plan for
which the transfer of International Pension Plan Assets is (A) prohibited
by applicable law or the terms of such plan or (B) not completed for the
reason discussed in the proviso to Section 6.03(b)(ii)(B), Dow Xxxxx shall
not transfer such assets to the Purchaser's International Pension Plan, and
Dow Xxxxx shall retain all of the liabilities and obligations in respect of
the participants in such International Pension Plan and their
beneficiaries. With respect to each International Pension Plan to which
this Section 6.03(b)(iv) applies, Dow Xxxxx shall make distributions to the
participants in such plan and their beneficiaries in accordance with
applicable law and the terms of such plan.
(v) With respect to each International Pension Plan that
is not a funded plan (whether a defined contribution plan or defined
benefit plan) Dow Xxxxx shall retain all liabilities and obligations with
respect to Employees who are participants in such International Pension
Plan.
SECTION 6.04. Other Benefit Plans. (a) Effective as of the
Closing Date, all Employees shall cease to be active participants in all
Dow Xxxxx Plans, and Dow Xxxxx shall take all necessary measures to cause
such cessation of participation.
(b) Purchaser (i) shall establish and maintain, or shall cause
DJM to establish and maintain, as of the Closing Date, for all Employees
domiciled in the United States, such employee benefit plans, programs and
policies and fringe benefits that would provide benefits to such Employees
that, in the aggregate, are substantially equivalent, to those provided to
current United States employees of Purchaser and (ii) shall use reasonable
efforts to establish and maintain, or to cause DJM to establish and
maintain, as of the Closing Date, for all Employees domiciled outside of
the United States, employee benefit plans, programs and policies and fringe
benefits that on a country by country basis would provide benefits to such
Employees that, in the aggregate, are substantially equivalent to those
provided to current employees of Purchaser domiciled outside of the United
States (the "Purchaser's Benefit Plans"); provided, however, that with
respect to Purchaser's Benefit Plans, the Purchaser shall, and shall cause
DJM to, grant all Employees after the Closing Date credit for all service
with Dow Xxxxx and its Affiliates (including DJM) and their respective
predecessors prior to the Closing Date for all purposes for which such
service was recognized by Dow Xxxxx and its Affiliates (including DJM);
provided further, however, with respect to Purchaser's Benefit Plans that
provide medical or dental welfare benefits, the Purchaser shall cause all
pre-existing condition exclusions and actively at work requirements to be
waived for the Employees and their covered dependents and the Purchaser
shall provide that any expenses incurred on or before the applicable
Closing Date shall be taken into account under the Purchaser's Benefit
Plans for purposes of satisfying the applicable deductible, coinsurance and
maximum out-of-pocket provisions for the Employees and their covered
dependents.
(c) Except as provided in Sections 6.03 and 6.05, Purchaser shall
not assume any assets, liabilities or obligations with respect to any Dow
Xxxxx Plan or Dow Xxxxx International Plan. Dow Xxxxx shall retain all
liabilities and obligations under all Dow Xxxxx Plans and Dow Xxxxx
International Plans for the payment of vested benefits accrued and, in the
case of medical, dental and hospitalization plans, expenses actually
incurred prior to the Closing Date.
(d) If the Purchaser complies with Section 6.04(b), Dow Xxxxx
shall retain all liabilities and obligations for Losses incurred or
suffered by Purchaser or DJM resulting from any claim made by an Employee
for benefits provided under a Dow Xxxxx Plan or other arrangement with an
Employee which exceed the benefits provided under the Purchaser's
agreements, plans and policies for such Employee, including, however, with
respect to claims relating to post-retirement health and life insurance
benefits, only with respect to (i) all persons who are retired as of the
Closing Date and (ii) Employees who are eligible to retire and receive any
such benefit as of the Closing Date; provided, however, the foregoing shall
not be construed to give any Employee any greater rights with respect to
such benefits that he or she may have had prior to the date hereof,
provided further, Purchaser shall not be obligated to offer any
post-retirement health or life insurance benefits.
SECTION 6.05. Severance and Retention Benefits. (a) The Purchaser
agrees to provide, or cause DJM to provide, severance pay and other benefit
entitlements which may be owing to any Employee whose employment is
terminated by the Purchaser or DJM after the Closing Date. Such severance
pay and benefit entitlements shall be determined (on an Employee by
Employee basis) in accordance with the severance and other policies of
Purchaser applicable to such Employee; provided, however, that in
calculating such severance pay or benefit entitlement, Purchaser shall
grant credit to such Employee for all service on or prior to the Closing
Date with DJM and its Affiliates and their respective predecessors.
(b) Dow Xxxxx shall retain all liabilities and obligations (i)
for payment of bonuses or similar payments payable to Employees pursuant to
retention agreements with DJM, or (ii) for payment of termination or change
of control or similar payments payable to Employees pursuant to employment
agreements with change of control provisions with DJM, in each case
existing as of the Closing Date.
SECTION 6.06. Unions. Except as required by applicable law,
Purchaser shall not assume any obligation under union contracts, including,
without limitation, union contracts in respect of Employees domiciled
outside of the United States, entered into by Dow Xxxxx or any of its
Affiliates (including DJM).
SECTION 6.07. Indemnity. Provided that the Purchaser or DJM (as
applicable) provides severance benefits to the Employees as required by any
applicable law and in accordance with the severance benefits provided to
similarly situated employees of Purchaser, Dow Xxxxx shall indemnify DJM
and Purchaser and hold each of them harmless from and against any Losses
incurred or suffered by either of them resulting from any claim made by any
Employee terminated by Purchaser or DJM following the Closing that he or
she is entitled to that amount of severance pay or other compensation or
benefit entitlements by reason of such termination under the Dow Xxxxx
Plans in effect as of the Closing Date.
ARTICLE VII
TAX MATTERS
SECTION 7.01. Tax Returns and Payments. (a) (1) The Purchaser
shall cause DJMH and each Subsidiary to consent to join, for all taxable
periods of each such company ending on or before the Closing Date for which
it is eligible to do so, in any consolidated or combined Income Tax
Returns, which Dow Xxxxx shall request it to join. Dow Xxxxx shall cause to
be prepared and filed all such consolidated or combined Income Tax Returns.
Each such Return shall be prepared on a basis consistent with the last
previous such Return filed by Dow Xxxxx, except as may be required by
intervening changes in applicable law. The Purchaser agrees to cooperate
with Dow Xxxxx and its affiliates in the preparation of the portions of
such returns pertaining to DJMH or any Subsidiary, and hereby agrees to
take no positions inconsistent with any such company being a member of the
consolidated or combined groups of which Dow Xxxxx is a member as reported
on such Returns. Dow Xxxxx shall cause to be timely paid all Taxes to which
such Returns relate for all periods covered by such Returns.
(2) Dow Xxxxx shall cause to be prepared and the Purchaser shall
cause to be timely filed all required Income Tax Returns of DJMH and each
Subsidiary (other than those to be filed by Dow Xxxxx pursuant to Section
7.01(a)(1)) for any period which ends on or before or includes the Closing
Date, for which returns have not been filed as of the Closing Date. Each
Return referred to in this Section 7.01(a)(2) shall be prepared on a basis
consistent with the last previous such Return filed by Dow Xxxxx, except as
may be required by intervening changes in applicable law.
(3) The Purchaser shall timely cause to be paid all Income Taxes
for the periods to which Income Tax Returns to be caused to be filed by the
Purchaser pursuant to Section 7.01(a)(2) relate. Such Income Taxes to be
caused to be paid by the Purchaser to the extent attributable to any period
or portion of a period ending on or before the Closing Date (excluding
items arising on the Closing Date after the Closing to the extent arising
from operation of the DJM business other than in the ordinary course) shall
be referred to herein as "Pre-Closing Taxes" and any such period or portion
thereof shall be referred to herein as a "Pre-Closing Period". Dow Xxxxx
will pay to the Purchaser an amount equal to the Pre-Closing Taxes due with
respect to any such returns caused to be filed by the Purchaser (after
taking into account any estimated Income Taxes previously paid and any
amounts collected or withheld in respect of Income Taxes and net of any Tax
benefits to the Purchaser or any of its affiliates, including DJM,
including the creditability or deductibility of such Taxes or payments with
respect thereto but excluding basis adjustments that are made as a result
thereof). Where the Pre-Closing Taxes with respect to DJMH or any
Subsidiary involve a period which begins before and ends after the Closing
Date (a "Straddle Period"), such Pre-Closing Taxes shall be calculated on
the basis of the actual operations of such company during the portion of
such period ending on and including the Closing Date, determined as though
such company's books closed at the close of business on the Closing Date
(other than Taxes resulting from transactions occurring on the Closing Date
after the Closing that are not in the ordinary course of business);
provided, however, that in the case of a franchise Tax not based on income,
Pre-Closing Taxes shall be equal to the amount of such Tax for the taxable
year multiplied by a fraction, the numerator of which shall be the number
of days from the beginning of the taxable year through and including the
Closing Date and the denominator of which shall be the number of days in
the taxable year. Any amounts owed by Dow Xxxxx to the Purchaser pursuant
to this paragraph (3) shall be paid by Dow Xxxxx within the later of ten
days of the Purchaser's request therefor or ten days prior to the date on
which the Purchaser is required to cause to be paid the related Tax
liability.
(b) Indemnification. Subject to the Purchaser's fulfilling its
obligations under this Section 7.01, Dow Xxxxx will indemnify and hold
harmless the Purchaser, DJMH and each Subsidiary at Dow Xxxxx' sole cost
and expense against any and all liability (including, without limitation,
interest, additions to Tax and penalties, but net of any Tax benefits to
the Purchaser, DJM or any of their affiliates including the creditability
or deductibility of Taxes or payments with respect thereto but excluding
basis adjustments that are made as a result thereof) for (i) all Income
Taxes assessed against or incurred by DJMH or any of its Subsidiaries with
respect to all taxable periods ending on or prior to the Closing Date,
other than any Purchaser's Taxes (as defined in Section 7.01(f) ), (ii)
Pre-Closing Taxes that relate to a Straddle Period, and (iii) Income Taxes
of any member of any affiliated group of which Dow Xxxxx is a member (other
than DJM) assessed against DJMH or any Subsidiary for any taxable period
ending on or prior to the Closing Date by reason of such company being
severally liable for the entire Tax of such affiliated group pursuant to
Income Tax Regulations ss. 1.1502-6 or any analogous state or local Tax
provision.
(c) Refunds. Any refunds or credits of Income Taxes (including
any interest thereon) received by or credited to DJMH or any Subsidiary
attributable to periods ending on or prior to the Closing Date, or
attributable to periods which include the Closing Date that were not borne
by the Purchaser pursuant to Section 7.01(a)(3) (collectively, "Dow Xxxxx
Refunds"), shall be for the benefit of Dow Xxxxx, and the Purchaser shall
file or cause to be filed any refund claim if requested to do so and shall
permit Dow Xxxxx to pursue and contest such refund claim (including, if
requested, the granting of powers of attorney to Dow Xxxxx or its
representative), such contest to be at Dow Xxxxx' sole cost and expense,
and shall cause DJM to pay over to Dow Xxxxx any Dow Xxxxx Refunds, net of
any reasonable expenses incurred by DJMH, any of the Subsidiaries or the
Purchaser in connection with obtaining such refund, promptly upon receipt
thereof. In addition, if the Pre-Closing Taxes with respect to a Straddle
Period of DJMH or any Subsidiary are less than the payments previously made
(or deemed made) by Dow Xxxxx with respect to such Straddle Period, the
Purchaser shall cause DJM to pay to Dow Xxxxx the excess of such previous
payments over such Pre-Closing Taxes promptly upon DJM's receiving the
benefit of such excess payments through a reduction in, or credit or
set-off of, any Tax payment otherwise required to be made by DJMH or any
Subsidiary but for such overpayment (or through the creation or increase in
any refund allowable to DJMH or any Subsidiary) after the Closing.
(d) Cooperation. After the Closing Date, the Purchaser and Dow
Xxxxx shall make available to the other, as reasonably requested, and to
any taxing authority, all information, records or documents relating to Tax
liabilities or potential Tax liabilities of DJMH or any Subsidiary for all
periods prior to or including the Closing Date and shall preserve all such
information, records and documents until the expiration of any applicable
statute of limitations or extensions thereof. The Purchaser shall prepare
and provide to Dow Xxxxx such federal, state, local and foreign Tax
information packages as Dow Xxxxx shall request, prepared on a basis
consistent with its prior Return preparation practices, for its use in
preparing any Tax Return that relates to DJMH or any Subsidiary. Such Tax
information packages shall be completed by the Purchaser and provided to
Dow Xxxxx within 45 days after its request therefor. The party requesting
any information, records or documents pursuant to this Section 7.01(d)
shall reimburse the party providing any such items for reasonable
out-of-pocket costs incurred by it in providing any such items (other than
expenses compensable through indemnification hereunder).
(e) Audits. The Purchaser shall promptly notify Dow Xxxxx in
writing upon receipt by the Purchaser or any affiliate of the Purchaser
(including DJM) of notice of any pending or threatened Tax audits or
assessments which may affect the Tax liabilities of DJM for which Dow Xxxxx
would be liable under Section 7.01(b). Dow Xxxxx shall have the sole right
to represent the interests of DJMH or any Subsidiary in any Tax matter,
including any audit or administrative or judicial proceeding or the filing
of any amended return (a "Tax Matter"), involving a Tax liability or
potential Tax liability for which Dow Xxxxx would be liable under Section
7.01(b), and to employ counsel of its choice at its expense. The Purchaser
agrees that it will cooperate fully with Dow Xxxxx and its counsel in the
defense or compromise of any Tax Matter, including the granting of powers
of attorney to Dow Xxxxx or its representatives if requested.
(f) Purchaser's Taxes. It is understood by the parties hereto
that the Purchaser shall pay, or cause to be paid, and the Purchaser and
DJM shall jointly and severally indemnify Dow Xxxxx and its affiliates
against and hold them harmless from any liability for Taxes or related
detriment (net of any related Tax benefit realized by Dow Xxxxx or its
affiliates including the creditability or deductibility of such Taxes or
payments with respect thereto but excluding basis adjustments that are made
as a result thereof) arising from any action or failure to act by the
Purchaser or any affiliate of the Purchaser (including DJM) from and after
the Closing (including the Closing Date), including without limitation, an
election or deemed election under Section 338 of the Code, and any sale or
other disposition of assets by DJM after the Closing ("Purchaser's Taxes").
The Purchaser and DJM shall not make any election or deemed election under
Section 338(h)(10) of the Code. The Purchaser and Dow Xxxxx both agree that
for all Income Tax purposes neither shall treat the transactions
contemplated by this Agreement as anything other than the sale by Dow Xxxxx
to the Purchaser of all the issued and outstanding capital stock of DJM.
With respect to any net operating loss or any other Income Tax attribute (a
"Tax Attribute") generated by DJMH or any Subsidiary in a taxable period
ending after the Closing Date, which Tax Attribute could otherwise be
carried back to a period including the Closing Date or prior period, the
Purchaser shall make, or cause to be made, the election described in
Section 172(b)(3) of the Code (and any similar election under any other
relevant Code Section or any similar law, regulation or rule of any other
taxing jurisdiction) to forego the carryback period with respect to such
Tax Attribute. If a carryback of a Tax Attribute to a period including the
Closing Date or prior period is required by law (a "Purchaser Carryback"),
upon the request of Purchaser, but subject to the consent of Dow Xxxxx
(which consent shall not be unreasonably withheld or delayed), Dow Xxxxx
and its affiliates shall take all necessary or appropriate actions to file
a refund claim that arises with respect to any Taxes attributable to the
activities of DJMH or its Subsidiaries prior to the Closing Date as a
result of the carryback of such Tax Attribute. Upon receipt of any such
refund by Dow Xxxxx or its affiliates, such refund shall be promptly
remitted to the Purchaser, net of any reasonable expenses incurred in
obtaining such refund, provided, however, that in determining the amount to
be remitted to Purchaser, only that portion of such refund payment that
would not have been received by Dow Xxxxx, were it not for such Purchaser
Carryback, after taking into account Dow Xxxxx' Tax Attributes, including
any capital losses or other Tax Attributes generated by the transactions
contemplated by this Agreement, shall be remitted to the Purchaser. Such
determination shall be made in writing by the accounting firm of Coopers &
Xxxxxxx (or any successor firm thereto), which determination shall be final
and not reviewable by the Purchaser. Upon any subsequent written
determination by Coopers & Xxxxxxx (or any successor firm thereto) that the
amount of such payment made pursuant to the preceding was overstated or
understated, Dow Xxxxx, or the Purchaser, as the case may be, shall pay to
the other party the amount of such overstatement or understatement. In the
event that as a result of an audit of any period ending on or prior to the
Closing (or with respect to Taxes of a Straddle Period for which Dow Xxxxx
is liable), DJMH or its Subsidiaries is required by law to carry forward a
Tax Attribute to any period or portion thereof which ends after the Closing
Date, the Purchaser shall be obligated to file a refund claim with respect
to such Tax Attribute and pay over such refund to the same extent and on
the same terms and conditions as Dow Xxxxx is required to do with respect
to Purchaser Carrybacks.
(g) Conveyance Taxes. Dow Xxxxx and the Purchaser agree to share
liability for, and to each pay 50% of, all sales, transfer, stamp, stock
transfer, real property transfer or gains and similar Taxes incurred as a
result of the sale of the Shares contemplated hereby.
(h) Amended Returns. Purchaser shall not file or cause to be
filed any amended Income Tax Returns with respect to a period ending on or
before the Closing Date except to the extent instructed to do so by Dow
Xxxxx. Neither party shall file or cause to be filed any amended Income Tax
Return with respect to a Straddle Period without the consent of the other
party, which consent shall not be unreasonably withheld or delayed. Dow
Xxxxx shall not file an amended Income Tax Return with respect to a
Pre-Closing Period if it is reasonably anticipated by the Purchaser that
such filing would have a Purchaser Material Adverse Effect, without the
consent of Purchaser, which consent shall not be unreasonably withheld or
delayed, unless such filing (i) is required by law, (ii) does not relate to
DJMH or any of its Subsidiaries, (iii) is necessary to recoup, mitigate or
diminish any Losses for which Dow Xxxxx is liable hereunder or (iv) is
necessary to carry over a Tax Attribute to a Pre-Closing Period.
(i) Loss Reattribution. Neither Dow Xxxxx nor any of its
affiliates shall at any time file an election pursuant to Treasury
Regulations Section 1.1502-20(g) (or pursuant to any similar provision of
state, local or foreign law) to reattribute any of the net operating loss
carryovers or net capital loss carryovers attributable to DJMH or any
Subsidiary without the prior written consent of the Purchaser.
(j) Tax Sharing Agreements. Any and all tax sharing or allocation
agreements in effect as of the date hereof or as of the Closing Date as
between Dow Xxxxx or its affiliates, on the one hand, and DJMH and/or any
of its Subsidiaries, on the other hand, for any Taxes, shall be terminated
as of the Closing Date, regardless of the period for which such Taxes are
imposed, and as of the Closing Date Dow Xxxxx and its affiliates and DJMH
and the Subsidiaries shall be released from any obligation with respect to
such agreements.
(k) Miscellaneous. (1) Except as otherwise required by law,
including any contrary determination (within the meaning of Section 1313(a)
of the Code), the parties agree to treat all payments made under this
Article VII or Article IX as adjustments to the Purchase Price for Tax
purposes.
(2) This Article VII shall supersede Section 9.04 of this
Agreement with respect to Income Taxes.
(3) The covenants and agreements of the parties hereto
contained in this Article VII shall survive the Closing and shall remain in
full force and effect until the expiration of all statutes of limitations
(including any extensions or waivers thereof consented to by Dow Xxxxx)
with respect to any Taxes that would be indemnifiable by Dow Xxxxx or
Purchaser under this Article VII.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of Dow Xxxxx. The
obligations of Dow Xxxxx to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver, at or prior
to the Closing, of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct as of the Closing, with the same force and effect as if made as of
the Closing (or, in the case of representations and warranties of the
Purchaser which address matters only as of a particular date, as of such
date), except where the failure of such representations and warranties to
be true would not, individually or in the aggregate, have a Purchaser
Material Adverse Effect or prevent the sale or purchase of the Shares or
the delivery of the Consideration;
(b) Covenants. The covenants and agreements contained in this
Agreement to be complied with by the Purchaser at or prior to the Closing
shall have been complied with in all material respects;
(c) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other Governmental Order which is in effect and has the
effect of prohibiting the sale or purchase of the Shares or the delivery of
the Consideration;
(d) HSR Act and BHC Act. The applicable waiting period under the
HSR Act and the BHC Act (and any law, rule or regulation having similar
effect as the HSR Act in any jurisdiction outside the United States unless
the failure to have such waiting period expire or terminate would not have
a Material Adverse Effect) shall have expired or been terminated;
(e) Preferred Stock. The Purchaser shall have authorized and
shall be able to issue the preferred Stock (or the Alternate Preferred
Stock) comprising the Equity Consideration.
(f) Ancillary Documents. The Purchaser shall have duly executed
and delivered each of the Ancillary Documents; and
(g) Legal Opinion. Dow Xxxxx shall have received a legal opinion,
dated the Closing Date, from counsel to the Purchaser, covering matters
customarily covered in transactions of this type, in form and substance
reasonably satisfactory to Dow Xxxxx.
SECTION 8.02. Conditions to Obligations of the Purchaser. The
obligations of the Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver, at or prior
to the Closing, of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Dow Xxxxx contained in this Agreement shall be true and
correct as of the Closing, with the same force and effect as if made as of
the Closing (or, in the case of representations and warranties of Dow Xxxxx
which address matters only as of a particular date, as of such date),
except where the failure of such representations and warranties to be true
would not, individually or in the aggregate, have a Material Adverse Effect
or prevent the sale or purchase of the Shares;
(b) Covenants. The covenants and agreements contained in this
Agreement to be complied with by Dow Xxxxx at or prior to the Closing shall
have been complied with in all material respects;
(c) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other Governmental Order which is in effect and has the
effect of prohibiting the sale or purchase of the Shares;
(d) HSR Act and BHC Act. The applicable waiting period under the
HSR Act and the BHC Act (and any law, rule or regulation having similar
effect as the HSR Act in any jurisdiction outside the United States unless
the failure to have such waiting period expire or terminate would not have
a Material Adverse Effect) shall have expired or been terminated;
(e) Ancillary Documents. Dow Xxxxx shall have duly executed and
delivered each of the Ancillary Documents to be executed and delivered by
it;
(f) Financing. The Purchaser shall have obtained additional
senior bank financing in the amount of $450,000,000, on terms reasonably
satisfactory to the Purchaser;
(g) Bank Consent. The Purchaser shall have obtained the consent
of the Banks (the "Bank Consent") required under the Purchaser's existing
senior bank agreement for the Purchaser (i) to purchase the Shares, (ii) to
issue the Subordinated Note (if required) and (iii) to issue equity to WCAS
VII in connection with the financing of the purchase of the Shares without
having to use the proceeds thereof to prepay the Banks (the "Bank Consent
Condition");
(h) Legal Opinion. The Purchaser shall have received a legal
opinion, dated the Closing Date, from the General Counsel of Dow Xxxxx,
covering matters customarily covered in transaction of this type in form
and substance reasonably satisfactory to the Purchaser; and
(i) Material Adverse Change. There shall not be, as of the
Closing Date, a Material Adverse Change. "Material Adverse Change" means an
Annualized Revenue Reduction between December 31, 1997 and the Closing Date
of more than $180,000,000.
"Annualized Revenue Reduction" means the amount by which the sum
of (a) Annualized Terminated Customer Revenue and (b) Annualized
Unauthorized Customer Revenue, exceeds Annualized New Customer Revenue.
"Annualized Terminated Customer Revenue" means the annualized
revenue of DJM from any customer contract that has been Terminated by the
customer between December 31, 1997 and the Closing Date; provided, that no
contract shall give rise to Annualized Terminated Customer Revenue if the
customer has entered into a contract approved by the Purchaser prior to the
Closing Date. DJM Management represents that it will work with the
Purchaser in a manner intended to preserve all existing client revenue and
to mitigate future revenue losses. To accomplish this purpose DJM
Management will work with the Purchaser to implement procedures intended to
involve the Purchaser in those notices of disconnect given by DJM
customers, and those significant price concessions offered to DJM
customers, so as to allow the Purchaser the opportunity to work with DJM to
meet the goals of this section.
"Annualized Unauthorized Customer Revenue Reductions" means the
annualized revenue of DJM from any customer contract with respect to which
the rates have been reduced by DJM between December 31, 1997 and the
Closing Date, other than rate reductions which (a) have been approved by
the Purchaser (such approval not to be unreasonably withheld), or (b) have
resulted from a customer reducing the number of screens covered by a
contract by reason of the customer's need to use fewer screens in its
business by reason of consolidation with another DJM customer.
"Annualized New Customer Revenue" means the annualized revenue of
DJM with respect to any new customer contract entered into between December
31, 1997 and the Closing Date, at reasonable rates consistent with industry
standards.
"Terminated" means a written termination of services by the
customer unless the customer has continued to pay for such services for a
period subsequent to such termination.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival. Except as otherwise set forth in this
Section 9.01, the representations and warranties of Dow Xxxxx made in this
Agreement shall survive the Closing and remain in full force and effect for
a period of eighteen months after the Closing Date, and the corresponding
obligation to indemnify under Section 9.02(a) shall expire at such time
unless a claim has been made in reasonable detail prior thereto.
SECTION 9.02. Indemnification by Dow Xxxxx. Subject to Section
9.05 and except as otherwise set forth in Section 9.02 of the Dow Xxxxx
Schedule, Dow Xxxxx shall indemnify and hold harmless the Purchaser, its
Affiliates, and their respective officers, directors, employees and agents,
from and against any and all Losses (net of (x) any Tax benefits and (y)
insurance payments actually received in connection therewith, less costs of
collection), based upon, arising out of, or resulting from, any of the
following:
(a) breach by Dow Xxxxx of the representations and warranties
made by Dow Xxxxx in this Agreement (it being understood that,
notwithstanding anything to the contrary contained in the Agreement, to
determine if there had been a breach of a representation or warranty and
the Losses arising from such breach, such representation or warranty shall
be read as if it were not qualified by materiality, including
qualifications indicating accuracy "in all material respects," or accuracy
except to the extent the inaccuracy will not have a "Material Adverse
Effect");
(b) failure by Dow Xxxxx to perform its covenants or agreements
contained in this Agreement; or
(c) failure by DJM to pay all amounts due and payable by DJM
prior to the Closing Date under any agreements with exchanges and other
information providers (except to the extent reflected on the Closing
Balance Sheet).
SECTION 9.03. Indemnification by Purchaser. Subject to Section
9.05(b) and except as otherwise set forth in Section 9.02 of the Dow Xxxxx
Schedule, the Purchaser shall indemnify and hold harmless Dow Xxxxx and its
Affiliates, and their respective officers, directors, employees and agents,
from and against any and all Losses (net of (x) any Tax benefits and (y)
insurance payments actually received in connection therewith, less costs of
collection) based upon, resulting from or arising out of any of the
following:
(a) breach by the Purchaser of the representations and warranties
made by the Purchaser in this Agreement;
(b) failure by the Purchaser to perform its covenants or
agreements contained in this Agreement; or
(c) any liability or obligation relating to the operation and
ownership of the business of DJM after the Closing.
SECTION 9.04. Claims. When a party seeking indemnification under
Section 9.02 or 9.03 (the "Indemnified Party") receives notice of any
claims made by third parties (individually, a "Third Party Claim" and
collectively, "Third Party Claims") or has any other claim for
indemnification other than a Third Party Claim, which is to be the basis
for a claim for indemnification hereunder, the "Indemnified Party" shall
give prompt written notice thereof within 30 days to the other party (the
"Indemnifying Party") reasonably indicating (to the extent known) the
nature of such claims and the basis thereof; provided, however, that
failure of the Indemnified Party to give the Indemnifying Party such notice
as provided herein shall not (subject to Section 9.01) relieve the
Indemnifying Party of any of its obligations hereunder unless and only to
the extent that the Indemnifying Party shall have been prejudiced thereby.
Upon notice from the Indemnified Party, the Indemnifying Party may, but
shall not be required to, assume the defense of any such Third Party Claim,
including its compromise or settlement, and the Indemnifying Party shall
pay all reasonable costs and expenses thereof and shall be fully
responsible for the outcome thereof; provided, however, that in such case,
the Indemnifying Party shall have no obligation to pay any further costs or
expenses of legal counsel of the Indemnified Party thereafter incurred in
connection with such defense other than reasonable costs of investigation.
No compromise or settlement in respect of any Third Party Claims may be
effected by the Indemnifying Party without the Indemnified Party's prior
written consent (which consent shall not be unreasonably withheld or
delayed), unless the sole relief is monetary damages that are paid in full
by the Indemnifying Party. The Indemnifying Party shall give notice to the
Indemnified Party as to its intention to assume the defense of any such
Third Party Claim within thirty (30) days after the date of receipt of the
Indemnified Party's notice in respect of such Third Party Claim. If the
Indemnifying Party does not, within thirty (30) days after the Indemnified
Party's notice is given, give notice to the Indemnified Party of its
assumption of the defense of the Third Party Claim, the Indemnifying Party
shall be deemed to have waived its rights to control the defense thereof.
If the Indemnified Party assumes the defense of any Third Party Claim
because of the failure of the Indemnifying Party to do so in accordance
with this Section 9.04, it may do so in such reasonable manner as it may
deem appropriate, and the Indemnifying Party shall pay all reasonable costs
and expenses of such defense. The Indemnifying Party shall have no
liability with respect to any compromise or settlement thereof effected
without its prior written consent (which consent shall not be unreasonably
withheld or delayed), unless the sole relief granted was equitable relief
for which it would have no liability or to which it would not be subject.
SECTION 9.05. Limitations on Indemnification. (a) The provisions
for indemnity herein shall be effective (i) only when the aggregate amount
of all Losses for which indemnification is sought from Dow Xxxxx under
Section 9.02 exceeds $25,000,000 (in which case the Purchaser shall be
entitled to indemnification of its Losses in excess thereof), and (ii) only
until the dollar amount paid by Dow Xxxxx in respect of the Losses
indemnified against under such Section 9.02 aggregates to an amount equal
to $100,000,000 (and in no event shall Dow Xxxxx have any liability
hereunder in excess thereof).
(b) The provisions of Sections 6.07 and 7.01(b) shall apply
without giving effect to Section 9.05(a)(i). Dow Jone's indemnification
obligation under Section 9.02(c) for any and all amounts payable by DJM or
Dow Xxxxx pursuant to audits conducted for Cantor Xxxxxxxxxx and for Market
Data Corporation under the Agreement between Telerate, Inc. and Cantor
Xxxxxxxxxx Securities Corp. dated February 23, 1990, and the Agreement
between Market Data Corporation and Telerate, Inc. dated February 23, 1990,
in respect of periods prior to the Closing, shall apply without giving
effect to Section 9.05(a)(i).
(c) Each of the parties hereto acknowledges and agrees that, from
and after the Closing, its sole and exclusive remedy with respect to any
and all claims relating to the breach of representations, warranties and
covenants contained in this Agreement (other than any claims for fraud)
shall be pursuant to the indemnification provisions set forth in this
Article IX; provided, however, that this sentence shall not limit the
rights of the parties hereto to seek specific performance of any provision
of this Agreement. In furtherance of the foregoing, each of the parties
hereto hereby waives, to the fullest extent permitted under applicable law,
any and all other rights, claims and causes of action it may have, from and
after the Closing, against the other party or their respective officers,
directors, employees, agents, representatives and Affiliates relating to
the breach of representations, warranties and covenants contained in this
Agreement.
(d) The Indemnified Party shall take all commercially reasonable
steps to mitigate damages in respect of any claim for which it is seeking
indemnification, including, without limitation, using commercially
reasonable efforts to effect recovery of available insurance claims in
connection with such claim, and shall use commercially reasonable efforts
to avoid any costs or expenses associated with such claim and, if such
costs and expenses cannot be avoided, to minimize the amount thereof.
(e) All indemnity obligations hereunder shall be paid in cash,
and, if the Subordinated Note is issued, neither the Purchaser nor Dow
Xxxxx shall offset against the principal amount or any other amounts due
under the Subordinated Note any indemnification obligation of Dow Xxxxx
under this Agreement (unless and until the amount thereof is determined by
a final nonappealable judgment is not paid within 30 days thereafter).
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual written consent of Dow Xxxxx and the Purchaser;
(b) by either Dow Xxxxx or the Purchaser if any Governmental
Authority with jurisdiction over such matters shall have issued a
Governmental Order restraining, enjoining or otherwise prohibiting the sale
or purchase of the Shares hereunder and such order, decree, ruling or other
action shall have become final and unappealable; provided, however, that
the provisions of this Section 10.01(b) shall not be available to any party
unless such party shall have used its best efforts to oppose any such
Governmental Order or to have such Governmental Order vacated or made
inapplicable to the transactions contemplated by this Agreement;
(c) by either Dow Xxxxx or the Purchaser if the Closing shall not
have occurred prior to 120 days from date of this Agreement (the
"Termination Date"); provided, however, that (i) no party hereto shall have
the right to terminate this Agreement under this Section 10.01(c) if such
party's failure to fulfill any obligation under this Agreement shall have
been the cause of, or shall have resulted in, the failure of the Closing to
occur prior to the Termination Date, and (ii) if the only conditions not
satisfied (or capable of being satisfied) or waived as of the Termination
Date are the Financing Condition, the Preferred Consent Condition and/or
the Bank Consent Condition, then, Dow Xxxxx may, at its sole election,
extend this Agreement, by written notice to the Purchaser, for up to an
additional 120 days after the Termination Date (which extension may be
revoked at any time); or
(d) by Dow Xxxxx if the Bank Consent has not been obtained by the
Purchaser by April 3, 1998.
SECTION 10.02. Effect of Termination. In the event of termination
of this Agreement as provided in Section 10.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any
party hereto except that (a) the last sentence of Section 5.02(a), Sections
11.01, 11.02 and 11.03, the parenthetical clause of Section 11.07, and
Section 11.12, shall survive any termination of this Agreement and (b)
nothing herein shall relieve either party from liability for breaches this
Agreement.
SECTION 10.03. Waiver. At any time prior to the Closing, either
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto or (c) waive compliance with any of
the agreements or conditions contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the
party to be bound thereby.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses. Unless otherwise expressly provided
herein, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the Ancillary Documents and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred.
SECTION 11.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given
or made (and shall be deemed to have been duly given or made upon receipt)
by delivery in person, by courier service, by cable, by telecopy, by
telegram, by telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 11.02):
(a) if to Dow Xxxxx:
Dow Xxxxx & Company, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx, General Counsel
Telecopier: (000) 000-0000
with copies to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx
Telecopier: (000) 000-0000
(b) if to the Purchaser:
Bridge Information Systems, Inc.
000 Xxxxxx Xxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Chairman, President and Chief Executive Officer
Telecopier: (000) 000-0000
with a copy to:
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Attention: Xxxx X. Xxxxxxxxx
Telecopier: (000) 000-0000
SECTION 11.03. Public Announcements. Unless otherwise required by
applicable Law or stock exchange requirements, no party to this Agreement
shall make any public announcements in respect of this Agreement or the
Ancillary Documents or the transactions contemplated hereby or thereby, nor
shall otherwise communicate with any news media, without the prior written
consent of the other party (which consent shall not be unreasonably
withheld). If a public statement is required to be made pursuant to the
foregoing sentence, the parties shall consult with each other, to the
extent reasonably practicable, in advance as to the contents and timing
thereof.
SECTION 11.04. Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
SECTION 11.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the
greatest extent possible.
SECTION 11.06. Entire Agreement. This Agreement (including the
Dow Xxxxx Schedule, the Purchaser Schedule, and the Exhibits hereto) and
the Ancillary Documents constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral (other than the
Confidentiality Agreement, which shall survive until the Closing and, if
this Agreement is terminated prior to consummation of the Closing, then the
Confidentiality Agreement shall survive such termination in accordance with
the terms of the Confidentiality Agreement), between Dow Xxxxx and the
Purchaser with respect to the subject matter hereof and except as otherwise
expressly provided herein.
SECTION 11.07. Assignment. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by any party hereto without
the prior written consent of the other parties hereto, except that the
Purchaser may pledge, or otherwise grant a security interest with respect
to, its rights under this Agreement for the benefit of any bank with an
outstanding loan to the Purchaser.
SECTION 11.08. No Third-Party Beneficiaries. Except as provided
in Articles VI and IX (and, in the case of Article IX, solely with respect
to parties indemnified thereunder), this Agreement is for the sole benefit
of the parties hereto and their permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any other person or
entity any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
SECTION 11.09. Waivers and Amendments. This Agreement may be
amended or modified, and the terms and conditions hereof may be waived,
only by a written instrument signed by the parties hereto or, in the case
of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any
right, power or privilege hereunder, nor any single or partial exercise of
any other right, power or privilege hereunder, preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege hereunder. The rights and remedies herein provided are cumulative
and are not exclusive of any rights or remedies which any party may
otherwise have at Law or in equity.
SECTION 11.10. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this
Agreement required to be performed prior to the Closing was not performed
in accordance with the terms hereof and that, prior to the Closing, the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at Law or in equity.
SECTION 11.11. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall
be heard and determined in a New York state or federal court sitting in the
City of New York, and the parties hereto hereby irrevocably submit to the
exclusive jurisdiction of such courts in any such action or proceeding and
irrevocably waive the defense of an inconvenient forum to the maintenance
of any such action or proceeding.
SECTION 11.12. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, Dow Xxxxx and the Purchaser have caused this
Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
DOW XXXXX & COMPANY, INC.
By /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
Title: Chairman and
Chief Executive Officer
BRIDGE INFORMATION SYSTEMS, INC.
By /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman, President and
Chief Executive Officer
