Exhibit 10.13
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GALLARUS MEDIA HOLDINGS, INC.,
GMH HOLDING COMPANY,
GMH ACQUISITION CORP.
AND
ABRY PARTNERS, LLC
(IN THE LIMITED CAPACITY PROVIDED HEREIN)
DECEMBER 23, 2004
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER...................................................... 1
SECTION 1.1. The Merger.............................................. 1
SECTION 1.2. Closing................................................. 2
SECTION 1.3. Effective Time.......................................... 2
SECTION 1.4. Effect of the Merger.................................... 2
SECTION 1.5. Certificate of Incorporation; Bylaws.................... 2
SECTION 1.6. Directors and Officers.................................. 3
SECTION 1.7. Subsequent Actions...................................... 3
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES............. 3
SECTION 2.1. Effect of Merger on Capital Stock of Merger Sub......... 3
SECTION 2.2. Effect on Capital Stock of the Company.................. 3
SECTION 2.3. Merger Consideration.................................... 4
SECTION 2.4. Calculation of Merger Consideration..................... 4
SECTION 2.5. Payment; Escrow; Payment Procedures..................... 4
SECTION 2.6. Stock Transfer Books.................................... 4
SECTION 2.7. Dissenting Shares....................................... 4
SECTION 2.8. Repayment of Certain Company Indebtedness............... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 4
SECTION 3.1. Organization and Qualification; Subsidiaries............ 4
SECTION 3.2. Certificate of Incorporation and Bylaws................. 4
SECTION 3.3. Capitalization.......................................... 4
SECTION 3.4. Authority............................................... 4
SECTION 3.5. No Conflict; Required Filings and Consents.............. 4
SECTION 3.6. Company Financial Statements; Liabilities............... 4
SECTION 3.7. Absence of Certain Changes or Events.................... 4
SECTION 3.8. Absence of Litigation................................... 4
SECTION 3.9. Licenses and Permits; Compliance with Laws.............. 4
SECTION 3.10. Taxes................................................... 4
SECTION 3.1l. Intellectual Property................................... 4
SECTION 3.12. Material Contracts...................................... 4
SECTION 3.13. Employee Benefit Plans.................................. 4
SECTION 3.14. Properties; Assets...................................... 4
SECTION 3.15. Employees; Labor Relations.............................. 4
SECTION 3.16. Environmental Matters................................... 4
SECTION 3.17. Insurance............................................... 4
SECTION 3.18. Affiliate Transactions.................................. 4
SECTION 3.19. Board Approval; Vote Required........................... 4
SECTION 3.20. Books and Records....................................... 4
SECTION 3.21. Brokers................................................. 4
-i-
SECTION 3.22. Disclaimer of Other Representations and Warranties...... 4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MERGER SUB................... 4
SECTION 4.1. Organization and Qualification.......................... 4
SECTION 4.2. Certificate of Incorporation and Bylaws................. 4
SECTION 4.3. Authority............................................... 4
SECTION 4.4. No Conflict; Required Filings and Consents.............. 4
SECTION 4.5. Absence of Litigation................................... 4
SECTION 4.6. Brokers................................................. 4
SECTION 4.7. Vote Required........................................... 4
SECTION 4.8. Disclaimer of Other Representations and Warranties...... 4
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT........................ 4
SECTION 5.1. Organization and Qualification; Subsidiaries............ 4
SECTION 5.2. Authority............................................... 4
SECTION 5.3. No Conflict; Required Filings and Consents.............. 4
SECTION 5.4. Sponsor Commitment...................................... 4
SECTION 5.5. Absence of Litigation................................... 4
SECTION 5.6. Brokers................................................. 4
SECTION 5.7. Solvency................................................ 4
SECTION 5.8. Disclaimer of Other Representations and Warranties...... 4
ARTICLE VI COVENANTS...................................................... 4
SECTION 6.1. Affirmative Covenants of the Company.................... 4
SECTION 6.2. Negative Covenants of the Company....................... 4
ARTICLE VII ADDITIONAL AGREEMENTS......................................... 4
SECTION 7.1. Access and Information.................................. 4
SECTION 7.2. Confidentiality......................................... 4
SECTION 7.3. Further Action; Commercially Reasonable Efforts......... 4
SECTION 7.4. Public Announcements.................................... 4
SECTION 7.5. Actions under Company Credit Agreement.................. 4
SECTION 7.6. Employee Benefits Matters............................... 4
SECTION 7.7. Labor Matters; WARN..................................... 4
SECTION 7.8. Information, Etc........................................ 4
SECTION 7.9. Notification............................................ 4
SECTION 7.10. Exclusivity............................................. 4
SECTION 7.11. Contacts with Suppliers, Customers and Other Parties.... 4
SECTION 7.12. Tax Matters............................................. 4
ARTICLE VIII CLOSING CONDITIONS........................................... 4
SECTION 8.1. Conditions to Obligations of Parent, Merger Sub and
the Company............................................. 4
SECTION 8.2. Additional Conditions to Obligations of Parent and
Merger Sub.............................................. 4
SECTION 8.3. Additional Conditions to Obligations of the Company..... 4
ARTICLE IX INDEMNIFICATION................................................ 4
SECTION 9.1. Indemnification of Parent............................... 4
-ii-
SECTION 9.2. Indemnification of Junior Stockholders.................. 4
SECTION 9.3. Notice of Claim......................................... 4
SECTION 9.4. Defense of Third-Party Claims........................... 4
SECTION 9.5. Resolution of Notice of Claim........................... 4
SECTION 9.6. Survival of Covenants, Representations and Warranties... 4
SECTION 9.7. Exclusive Remedy; Non-Recourse.......................... 4
SECTION 9.8. Appointment of Stockholder Representative............... 4
SECTION 9.9. Payment of Dissenting Shares............................ 4
ARTICLE X TERMINATION, AMENDMENT AND WAIVER............................... 4
SECTION 10.1. Termination............................................. 4
SECTION 10.2. Effect of Termination................................... 4
SECTION 10.3. Waiver.................................................. 4
ARTICLE XI GENERAL PROVISIONS............................................. 4
SECTION 11.1. Notices................................................. 4
SECTION 11.2. Certain Definitions..................................... 4
SECTION 11.3. Headings; Interpretation................................ 4
SECTION 11.4. Severability............................................ 4
SECTION 11.5. Entire Agreement........................................ 4
SECTION 11.6. Assignment.............................................. 4
SECTION 11.7. Third Party Beneficiaries............................... 4
SECTION 11.8. Expenses................................................ 4
SECTION 11.9. Specific Performance.................................... 4
SECTION 11.10. Amendments.............................................. 4
SECTION 11.11. Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial................................................... 4
SECTION 11.12. No Recourse............................................. 4
SECTION 11.13. Time of Essence......................................... 4
SECTION 11.14. Counterparts............................................ 4
-iii-
EXHIBITS
Exhibit A Selling Stockholders Agreement
Exhibit B Pre-Closing Escrow Agreement
Exhibit C Certificate of Incorporation of the Surviving Corporation
Exhibit D Bylaws of the Surviving Corporation
Exhibit E Post-Closing Escrow Agreement
Exhibit F Form of Transmittal Letter
Exhibit G Capitalization
Exhibit H Sponsor Commitment Letter
Exhibit I Series C Preferred Stock Redemption Premium
SCHEDULES
3.1 List of Subsidiaries
3.3(b) Company Capitalization
3.3(c) Proxies; Voting Agreements
3.3(d) Company Subsidiary Capitalization; Encumbrances
3.5(b) Required Filings and Consents
3.6(a) Financial Statements; Indebtedness
3.6(b) Certain Liabilities
3.7 Absence of Certain Changes or Events
3.8 Litigation
3.10(a) Taxes
3.10(b) Tax Notices
3.10(c) Tax Sharing
3.10(e) Certain Stock Distributions
3.11(a) Intellectual Property
3.11(d) Intellectual Property
3.12(a) Material Contracts
3.12(b) Material Contract Enforceability
3.13 Employee Benefit Plans
3.14(a) Properties; Assets
3.14(b) Leased Real Property
3.15(a) Highly Compensated Employees
3.15(b) Labor Relations
3.15(d) Non-Competition Agreements With Employees
3.16 Environmental Matters
3.17 Insurance
3.18 Affiliate Transactions
6.1 Affirmative Covenants of the Company
6.2 Negative Covenants of the Company
8.2(c)(iii) Certain Consents
-iv-
Index of Defined Terms
Section
--------
AAA ................................................ 9.5(c)
ABRY Parties ....................................... 7.1(b)
Additional Funds ................................... 2.5(a)
Adjustment Time .................................... 11.2(a)
Affiliate .......................................... 11.2(b)
Agreement .......................................... Preamble
Annual Reporting Period ............................ 11.2(c)
Applicable Per Share Amount ........................ 2.2(b)
Appraisal Demands .................................. 9.9
Appraised Value .................................... 2.7
Balance Sheet Date ................................. 3.6(a)
Basket ............................................. 9.1(c)
Benefit Plans ...................................... 3.13(a)
Business Day ....................................... 11.2(d)
Certificate of Merger .............................. 1.3
Certificates ....................................... 2.5(d)
Claim .............................................. 9.3(a)
Class A Common Stock ............................... 11.2(e)
Class B Common Stock ............................... ll.2(f)
Closing ............................................ 1.2
Closing Balance Sheet .............................. 2.4(b)
Closing Cash ....................................... ll.2(g)
Closing Date ....................................... 1.2
Closing Indebtedness ............................... 11.2(h)
Closing Statement .................................. 2.4(b)
Closing Working Capital ............................ ll.2(i)
COBRA .............................................. 3.13(l)
Code ............................................... 3.13(a)
Common Stock ....................................... ll-2(j)
Company ............................................ Preamble
Company Breaches ................................... 9.1(a)
Company Charter .................................... 11.2(k)
Company Credit Agreement ........................... 11.2(l)
Company Credit Documents ........................... 11.2(m)
Company Financial Statements ....................... 3.6(a)
Company Hedging Agreements ......................... 11.2(n)
Company Indebtedness ............................... 11.2(o)
Company Indemnified Persons ........................ 9.2
Company Material Adverse Effect .................... 3.1(a)
Company Subsidiary and Company Subsidiaries ........ 3.1(a)
Company Transaction Expenses ....................... 11.2(p)
Confidentiality Agreement .......................... 7.2
Contested Claim .................................... 9.5(b)
Control, controlled by, under common control with .. 11.2(q)
-v-
Section
--------
Conversion Shares .................................. 2.2(a)
Damages ............................................ 9.1(a)
Default Notice ..................................... 10.2(c)
DGCL ............................................... Recitals
Dispute Notice ..................................... 2.4(c)
Disputed Items ..................................... 2.4(c)
Dissenting Shares .................................. 2.7
Dissenting Shares Amount ........................... 2.5(a)
Effective Time ..................................... 1.3
EGTRRA ............................................. 3.13(f)
Encumbrances ....................................... 3.3(d)
Environmental Law .................................. 3.16(b)(i)
ERISA .............................................. 3.13(a)
ERISA Affiliate .................................... 3.13(a)
ERISA Plan ......................................... 3.13(a)
Escrow Termination Date ............................ 2.5(b)
Estimated Merger Consideration ..................... 2.4(e)
Excluded Representations ........................... 9.1(b)
Excluded Shares .................................... 2.2(c)
Final Award ........................................ 9.5(f)
GAAP ............................................... 3.6(a)
Governmental Entity ................................ 3.5(b)
GUST ............................................... 3.13(f)
Hazardous Substance ................................ 3.16(b)(ii)
Holdback Consideration ............................. 11.2(r)
HSR Act ............................................ 3.5(b)
ID Buyout .......................................... 11.2(s)
Indemnitee ......................................... 9.3(a)
Indemnitor ......................................... 9.3(a)
Independent Accountants ............................ 2.4(d)
Initial Payment Fund ............................... 2.5(a)
Intellectual Property .............................. 3.11(e)
J.A.M.S ............................................ 9.5(c)
Junior Certificates ................................ 2.5(d)
Junior Stock ....................................... 11.2(t)
Junior Stockholders ................................ 2.2(b)
Knowledge of the Company ........................... 11.2(u)
Law ................................................ 3.5(a)
Lease .............................................. 3.14(b)
Leased Real Property ............................... 3.14(b)
Liquidation Preference ............................. ll.2(v)
Litigation Conditions .............................. 9.4(b)
Material Contracts ................................. 3.12(a)
Merger ............................................. Recitals
Merger Consideration ............................... 2.3(a)
Merger Sub. ........................................ Preamble
-vi-
Section
--------
Monthly Reporting Period ........................... 11.2(w)
NCI ................................................ 11.2(x)
Notice of Claim .................................... 9.3(a)
Order .............................................. 3.16(b)(iii)
Parent ............................................. Preamble
Parent Indemnified Person(s) ....................... 9.1(a)
Payment Fund ....................................... 2.5(a)
Pending Claim Amount ............................... 2.5(b)(ii)
Permits ............................................ 3.9
Permitted Encumbrances ............................. 3.14(a)
Person ............................................. 11.2(y)
Post-Closing Escrow Agent .......................... 2.5(b)
Post-Closing Escrow Agreement ...................... 2.5(b)
Post-Closing Escrow Fund ........................... 2.5(b)
Pre-Closing Escrow Agent ........................... Recitals
Pre-Closing Escrow Agreement ....................... Recitals
Pre-Closing Escrow Fund ............................ Recitals
Pre-Closing Period ................................. 7.12(a)
Preferred Certificates ............................. 2.5(d)
Price Certificate .................................. 2.4(a)
Release Date ....................................... 9.6
Representative Expenses ............................ 9.8(a)
Reserve Account .................................... 2.5(c)
Reserve Amount ..................................... 2.5(c)
Selling Stockholders Agreement ..................... Recitals
Series A Preferred Certificate of Designations ..... 11.2(aa)
Series A Preferred Stock ........................... 11.2(z)
Series A-l Preferred Stock ......................... 11.2(aa)
Series A-2 Preferred Stock ......................... 11.2(cc)
Series A-3 Preferred Stock ......................... 11.2(dd)
Series C Preferred Certificate of Designations ..... 11.2(ee)
Series C Preferred Stock ........................... 11.2(ff)
Series C Preferred Per Share Amount ................ 2.2(a)
Series C Preferred Redemption Amount ............... 11.2(gg)
Sponsor ............................................ 5.4
Sponsor Commitment Letter .......................... 5.4
Stockholder Representative ......................... 9.8(a)
Subsidiary ......................................... 3.1(b)
Surviving Corporation .............................. 1.1
Target Working Capital ............................. 2.3(b)
Tax and Taxes ...................................... 3.10(f)
Tax Return ......................................... 3.10(f)
Termination Date ................................... 10.1(d)
Third Party Acquisition ............................ 7.10
Third-Party Claim .................................. 9.3(a)(ii)
Transmittal Letter ................................. 2.5(d)(i)
-vii-
Section
--------
Unresolved Items ................................... 2.4(d)
WARN Act ........................................... 7.7(a)
-viii-
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into this
23rd day of December 2004, by and among GALLARUS MEDIA HOLDINGS, INC., a
Delaware corporation (the "Company"), GMH HOLDING COMPANY, a Delaware
corporation ("Parent"), GMH ACQUISITION CORP., a Delaware corporation ("Merger
Sub"), and ABRY Partners, LLC, a Delaware limited liability company, solely in
its capacity as the Stockholder Representative hereunder and solely with respect
to Sections 2.4, 2.5, 2.7, 7.1(b), 7.3(a), 7.12(a), 7.12(d), Article IX and
Article XI of this Agreement.
WHEREAS, the boards of directors of the Company, Parent and Merger Sub have
each determined that it is advisable for, and in the best interests of their
respective stockholders that, Merger Sub, a wholly-owned subsidiary of Parent,
merge with and into the Company (the "Merger"), pursuant to and subject to the
terms and conditions of this Agreement and the Delaware General Corporation Law
(the "DGCL");
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent and Merger Sub to enter into this Agreement, holders of the
Company's outstanding voting securities have entered into an agreement in the
form attached hereto as Exhibit A and dated as of the date hereof (as amended,
restated or otherwise modified from time to time, the "Selling Stockholders
Agreement"), pursuant to which, among other things, such holders have approved
and adopted this Agreement and the Merger; and
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to the Company to enter into this Agreement and the Junior
Stockholders to enter into the Selling Stockholders Agreement, Parent has
deposited a cash amount of $15,000,000 (together with any interest or other
earnings thereon, the "Pre-Closing Escrow Fund") in a segregated account
established and maintained by SunTrust Bank, as escrow agent (the "Pre-Closing
Escrow Agent"), to be held and disbursed by the Pre-Closing Escrow Agent
pursuant to the terms of this Agreement and an escrow agreement entered into on
the date hereof among Parent, the Company and the Pre-Closing Escrow Agent in
the form attached hereto as Exhibit B (as amended, restated or otherwise
modified from time to time, the "Pre-Closing Escrow Agreement").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER.
Upon the terms and subject to the conditions set forth in this Agreement,
and in accordance with the DGCL, at the Effective Time, Merger Sub shall be
merged with and into the Company. As a result of the Merger, the separate
corporate existence of Merger Sub shall cease and the Company shall continue as
the surviving corporation of the Merger (the "Surviving
Corporation") and a wholly-owned subsidiary of Parent. The name of the
Surviving Corporation shall be Gallarus Media Holdings, Inc.
SECTION 1.2. CLOSING.
Upon the terms and subject to the conditions of this Agreement, the closing
of the transactions contemplated by this Agreement (the "Closing") will take
place not later than the third (3rd) Business Day following the date on which
the condition precedent to the obligations of the Company, Parent and Merger Sub
set forth in Section 8.l(b) has been satisfied (provided that (i) as of such
date all of the other conditions precedent to the obligations of the Company,
Parent and Merger Sub set forth in Article VIII (other than those conditions
which, by their nature, can only be satisfied at the Closing) have been
satisfied and (ii) in no event shall the Closing take place prior to January 10,
2005) at the offices of Xxxxxxxx & Xxxxx LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX
00000, unless another date or place is agreed to in writing by the parties
hereto. The date on which the Closing is held is referred to herein as the
"Closing Date".
SECTION 1.3. EFFECTIVE TIME.
Prior to the Closing, the parties hereto shall prepare, and on the Closing
Date shall cause the Merger to be consummated by the filing of, a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in the form required by, and executed in accordance with the relevant
provisions of, the DGCL and in a form approved by the Company and Parent prior
to such filing (the date and time of the filing of the Certificate of Merger or
the time specified therein as the effective time of the Merger being the
"Effective Time"), and the Company, Parent and Merger Sub shall make all other
recordings or filings required under the DGCL or any other applicable Law as may
be required to consummate the transactions contemplated by this Agreement.
SECTION 1.4. EFFECT OF THE MERGER.
At the Effective Time, the effect of the Merger shall be as provided in the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, except as otherwise
provided herein, all the rights, privileges, powers and franchises of Merger Sub
and the Company shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Merger Sub and the Company shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 1.5. CERTIFICATE OF INCORPORATION; BYLAWS.
At the Effective Time, (a) the certificate of incorporation of the Company,
as in effect immediately prior to the Effective Time, shall be amended in the
Merger so as to read in its entirety as set forth in Exhibit C hereto, and, as
so amended, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended in accordance with the
provisions thereof and the DGCL, and (b) the bylaws set forth in Exhibit D
hereto shall be the bylaws of the Surviving Corporation until thereafter changed
or amended in accordance with the provisions of the Surviving Corporation's
certificate of incorporation and the DGCL.
-2-
SECTION 1.6. DIRECTORS AND OFFICERS.
The directors of Merger Sub shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation; and the officers of the
Company shall be the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified,
as the case may be.
SECTION 1.7. SUBSEQUENT ACTIONS.
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary to continue in, vest, perfect or
confirm of record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties, privileges, franchises
or assets of either of its constituent corporations acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger
or otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be directed and authorized to execute and deliver,
in the name and on behalf of either of such constituent corporations, all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of each of such constituent corporations or otherwise, all such
other actions and things as may be necessary to continue in, vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties, privileges, franchises or assets in the Surviving Corporation or
otherwise to carry out this Agreement.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. EFFECT OF MERGER ON CAPITAL STOCK OF MERGER SUB.
Each issued and outstanding share of capital stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall at the Effective Time
by virtue of the Merger and without any action on the part of Parent or Merger
Sub be converted into and become one fully paid and nonassessable share of
common stock, par value $0,001 per share, of the Surviving Corporation.
SECTION 2.2. EFFECT ON CAPITAL STOCK OF THE COMPANY.
At the Effective Time, by virtue of the Merger and without any action on
the part of Parent, Merger Sub, the Company or the holders of any shares of
capital stock of the Company or Merger Sub:
(a) Series C Preferred Stock. Each share of Series C Preferred Stock issued
and outstanding immediately prior to the Effective Time shall be converted into
the right to receive: (i) an amount in cash (the "Series C Preferred Per Share
Amount"), without interest, equal to the Series C Preferred Redemption Amount
divided by the aggregate number of shares of Series C Preferred Stock issued and
outstanding at the Effective Time, payable in accordance with and subject to
this Article II; and (ii) the right to receive payment pursuant to Section
2.2(b) for the
-3-
number of shares of Series A-2 Preferred Stock into which such share of Series C
Preferred Stock is then convertible in accordance with Section 6 of the Series C
Preferred Certificate of Designations in effect immediately prior to the
Effective Time (the "Conversion Shares"), as if such shares were issued and
outstanding immediately prior to the Effective Time for purposes of this Article
II. All such shares of Series C Preferred Stock that are issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding and shall
automatically be canceled and retired and shall, as of the Effective Time, cease
to exist, and each certificate previously evidencing any such shares shall
thereafter represent only the right to receive the Series C Preferred Per Share
Amount and the portion of the Merger Consideration that is payable in respect of
the Conversion Shares, in each case payable in accordance with and subject to
this Article II. The holders of shares of Series C Preferred Stock issued and
outstanding immediately prior to the Effective Time shall from and after the
Effective Time cease to have any rights with respect to such shares of Series C
Preferred Stock, except as otherwise provided herein or by the DGCL.
(b) Junior Stock. Each share of Junior Stock issued and outstanding
immediately prior to the Effective Time (including the Conversion Shares but
excluding any shares described in Section 2.2(c) and any Dissenting Shares)
shall be converted into the right to receive an amount in cash, without
interest, equal to the amount to which the holder of such share would be
entitled if immediately prior to the Effective Time the Company were to
liquidate and distribute the aggregate Merger Consideration to the holders of
Junior Stock in accordance with the terms of the Company Charter as in effect at
such time (such amount, with respect to any share of Junior Stock, the
"Applicable Per Share Amount"), payable in accordance with and subject to this
Article II. All such shares of Junior Stock that are issued and outstanding
immediately prior to the Effective Time shall, as of the Effective Time, cease
to be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each certificate previously evidencing any such shares shall
thereafter represent only the right to receive the Applicable Per Share Amount,
payable in accordance with and subject to adjustment as provided in this Article
II. The holders of shares of Junior Stock (such holders other than Parent and
its Affiliates being the "Junior Stockholders") issued and outstanding
immediately prior to the Effective Time shall from and after the Effective Time
cease to have any rights with respect to such shares of Common Stock, except as
otherwise provided herein or by the DGCL.
(c) Treasury Stock; Junior Stock held by Parent. Any shares of capital
stock of the Company held in the treasury of the Company or by Parent or Merger
Sub immediately prior to the Effective Time (collectively, the "Excluded
Shares") shall be canceled and extinguished without any conversion thereof and
no cash or other property shall be delivered or deliverable in exchange
therefor.
SECTION 2.3. MERGER CONSIDERATION.
(a) The aggregate amount of consideration to be paid to the Junior
Stockholders pursuant to this Article II (the "Merger Consideration") shall be
$380,000,000 plus Closing Cash, minus Closing Indebtedness minus Company
Transaction Expenses minus the Series C Preferred Redemption Amount, subject to
adjustment in accordance with Section 2.3(b) and Article IX.
-4-
(b) The Merger Consideration shall be increased by the amount by which
Closing Working Capital is greater than $3,300,000 ("Target Working Capital") or
decreased by the amount by which Target Working Capital is greater than Closing
Working Capital, in each case as provided in Section 2.4.
SECTION 2.4. CALCULATION OF MERGER CONSIDERATION.
(a) Not fewer than five Business Days prior to the Closing, the president
or chief financial officer of the Company shall deliver to Parent a certificate
setting forth the Company's good faith estimates of the amounts of Closing
Working Capital, Closing Cash, Closing Indebtedness, the Series C Preferred
Redemption Amount, Company Transaction Expenses and the adjustment to be made
pursuant to Section 2.3(b), together with an estimated consolidated balance
sheet of the Company and the Company Subsidiaries as of the Adjustment Time, and
a calculation of the Merger Consideration based on the foregoing estimates (the
"Price Certificate"). The Price Certificate shall also include the Company's
determination of the Series C Preferred Per Share Amount and the Applicable Per
Share Amount for each class and series of Junior Stock based on the foregoing
estimate of the Merger Consideration. The Company will prepare the Price
Certificate (including making the estimated determinations included therein)
utilizing the principles set forth in Section 2.4(f).
(b) No later than the 90th day after the Closing Date, Parent will prepare
and deliver to the Stockholder Representative a consolidated balance sheet of
the Company and the Company Subsidiaries as of the Adjustment Time (the "Closing
Balance Sheet"), together with a statement (the "Closing Statement") setting
forth Parent's determination of the amount of the Merger Consideration, which
shall include Parent's determinations of Closing Working Capital, Closing Cash,
Closing Indebtedness and Company Transaction Expenses. Parent will prepare the
Closing Balance Sheet and the Closing Statement (including making the
determinations included therein) utilizing the principles set forth in Section
2.4(f).
(c) During the 60-day period immediately following the Stockholder
Representative's receipt of the Closing Balance Sheet and the Closing Statement,
the Stockholder Representative and its advisors and representatives (i) will be
permitted to review, during normal business hours and upon reasonable notice,
the Surviving Corporation's and the Company Subsidiaries' books and records and
the working papers related to the preparation of the Closing Balance Sheet and
the Closing Statement (including the determinations included therein and the
audit performed on the Closing Balance Sheet), and (ii) will be given reasonable
access, during normal business hours and upon reasonable notice, to
knowledgeable employees and accounting professionals of Parent in order to
facilitate the Stockholder Representative's review of the Closing Balance Sheet
and the Closing Statement; provided that the review and access described in
clauses (i) and (ii) will be conducted at times and in a manner that does not
unreasonably interfere with the operation of Parent's, the Surviving
Corporation's or the Company Subsidiaries' respective businesses. The Closing
Balance Sheet and the Closing Statement (including the determinations included
therein) will become final, binding and conclusive upon Parent and the Junior
Stockholders (A) on the 60th day following the Stockholder Representative's
receipt thereof, unless Parent receives from the Stockholder Representative
prior to such 60th day written notice (a "Dispute Notice") of the Stockholder
Representative's objection to any account or determination set forth in the
Closing Balance Sheet or the Closing Statement (the magnitude of
-5-
which the Stockholder Representative will use reasonable efforts to quantify) or
(B) on such earlier date as the Stockholder Representative notifies Parent that
it does not dispute the Closing Balance Sheet and Closing Statement. Any Dispute
Notice will specify in reasonable detail the nature and dollar amount of any
disagreement so asserted (collectively, the "Disputed Items"). The Stockholder
Representative may dispute any amounts reflected on the Closing Balance Sheet or
Closing Statement, but only to correct mathematical errors or on the basis that
such amounts were not determined in accordance with Section 2.4(f) hereof. Any
account or determination set forth or reflected on the Closing Balance Sheet or
the Closing Statement that is not specifically objected to in the Dispute Notice
will be deemed final, binding and conclusive upon Parent, the Junior
Stockholders, and the Stockholder Representative upon delivery of the Dispute
Notice. If the Stockholder Representative timely delivers a Dispute Notice, then
the determination of the Merger Consideration will become final, binding and
conclusive upon Parent, the Junior Stockholders and the Stockholder
Representative on the first to occur of (x) the date on which Parent and the
Stockholder Representative resolve in writing all differences they have with
respect to the Disputed Items or (y) the date on which all of the Disputed Items
that are not resolved by Parent and the Stockholder Representative in writing
are finally resolved in writing by the Independent Accountants in accordance
with Section 2.4(d).
(d) During the 30 days following delivery of a Dispute Notice, Parent and
the Stockholder Representative will seek in good faith to resolve in writing any
differences which they have with respect to the Disputed Items. Any Disputed
Item resolved in writing by Parent and the Stockholder Representative will be
deemed final, binding and conclusive on Parent, the Junior Stockholders and the
Stockholder Representative. If Parent and the Stockholder Representative do not
reach agreement on all of the Disputed Items during such 30-day period (or such
longer period as they shall mutually agree), then at the end of such 30-day (or
longer) period Parent and the Stockholder Representative shall submit all
unresolved Disputed Items (collectively, the "Unresolved Items") to a nationally
recognized firm of independent certified public accountants with a nationwide
audit and accounting practice and that is selected by mutual agreement of Parent
and the Stockholder Representative) (the "Independent Accountants") to review
and resolve such matters. The Independent Accountants will determine each
Unresolved Item (the amount of which may not be more favorable to Parent than
the related amount reflected in the Closing Statement nor more favorable to the
Stockholder Representative and the Junior Stockholders than the related amount
set forth in the Dispute Notice) in accordance with this Section 2.4(d) and
Section 2.4(f) as promptly as may be reasonably practicable, and Parent and the
Stockholder Representative will instruct the Independent Accountants to endeavor
to complete such process within a period of no more than 45 days. The
Independent Accountants may conduct such proceedings as the Independent
Accountants believe, in their sole discretion, will assist in the determination
of the Unresolved Items; provided that, except as Parent and the Stockholder
Representative may otherwise agree in writing, all communications between Parent
and the Stockholder Representative or any of their respective representatives,
on the one hand, and the Independent Accountants, on the other hand, will be in
writing with copies simultaneously delivered to the non-communicating party. The
Independent Accountants' determination of the Unresolved Items will be final,
binding and conclusive on Parent, the Junior Stockholders and the Stockholder
Representative, effective as of the date the Independent Accountants' written
determination is received by Parent and the Stockholder Representative. The fees
and expenses of the Independent Accountants will be borne one-half by Parent and
one-half by the Stockholder Representative (for the account of the Junior
Stockholders), and
-6-
each of Parent and the Stockholder Representative (for the account of the Junior
Stockholders) will bear its own legal, accounting and other fees and expenses of
participating in such dispute resolution procedure.
(e) Upon final determination of the Merger Consideration pursuant to
Section 2.4(c) or Section 2.4(d), an adjustment will be determined and paid as
follows:
(i) If the estimated amount of the Merger Consideration as set forth
in the Price Certificate (the "Estimated Merger Consideration") exceeds the
Merger Consideration as finally determined pursuant to Section 2.4(c) or
Section 2.4(d) hereof, the Stockholder Representative and Parent shall
within five (5) Business Days of the final determination of the Merger
Consideration issue joint written instructions directing the Post-Closing
Escrow Agent to pay to Parent the amount of such excess out of the
Post-Closing Escrow Fund by wire transfer of immediately available funds to
the account specified by Parent.
(ii) If the Merger Consideration, as finally determined pursuant to
Section 2.4(c) or Section 2.4(d) hereof, exceeds the Estimated Merger
Consideration, Parent will pay to the Stockholder Representative (on behalf
of the Junior Stockholders) the amount of such excess. Any amount payable
by Parent pursuant to this Section 2.4(e)(ii) will be paid within five (5)
Business Days of the final determination of the Merger Consideration by
wire transfer of immediately available funds to the account specified by
the Stockholder Representative.
(f) For the purposes of Section 2.3 and this Section 2.4, each accounting
term used herein will have the meaning that is applied thereto in accordance
with GAAP as in effect on the Balance Sheet Date and, to the extent consistent
with GAAP as in effect on the Balance Sheet Date, the accounting principles,
policies, procedures and methodologies applied in preparing the Interim Balance
Sheet and the accompanying statement of income. Each account included in the
Price Certificate, the Closing Statement and the Closing Balance Sheet will be
(A) calculated in accordance with GAAP as in effect on the Balance Sheet Date,
and, to the extent consistent with GAAP as in effect on the Balance Sheet Date,
utilizing the accounting principles, policies, procedures and methodologies
applied in preparing the Company Financial Statements (without regard to
materiality), including with respect to the nature or classification of
accounts, and determining levels of reserves or levels of accruals; and (B)
consistent with the books and records of the Company and the Company
Subsidiaries and the definitions herein; provided, that in determining current
assets and liabilities hereunder, (i) all accounting entries shall be taken into
account regardless of their amount and all known errors and omissions shall be
corrected, (ii) all known proper adjustments shall be made, (iii) appropriate
reserves for all known and quantifiable liabilities and obligations for which
reserves are appropriate in accordance with GAAP as in effect on the Balance
Sheet Date shall be included, and (iv) such reserves may not be reversed or
reduced except to reflect changes in facts and circumstances after the date
hereof.
SECTION 2.5. PAYMENT; ESCROW; PAYMENT PROCEDURES.
(a) Initial Payment Fund. On the Closing Date, (i) Parent shall pay to the
Stockholder Representative (on behalf of the Junior Stockholders) an amount in
cash equal to
-7-
(A) the Estimated Merger Consideration plus (B) the estimated amount of Company
Transaction Expenses, plus (C) the Series C Preferred Redemption Amount less (E)
the Holdback Consideration, less (F) the amount of the Pre-Closing Escrow Fund,
and less (G) an amount (the "Dissenting Shares Amount") equal to the product of
the total number of Dissenting Shares and the Applicable Per Share Amount (based
on the Estimated Merger Consideration) of such Dissenting Shares, and (ii)
Parent and the Company shall cause the Pre-Closing Escrow Agent to pay to the
Stockholder Representative the entire amount of the Pre-Closing Escrow Fund, in
each case, by wire transfer of immediately available funds to the account
specified by the Stockholder Representative. The amount paid to the Stockholder
Representative pursuant to this Section 2.5(a) (the "Initial Payment Fund"),
together with amounts paid to the Stockholder Representative by Parent or the
Post-Closing Escrow Agent pursuant to Section 2.4(e), Section 2.5(b) or Section
7.12(a) ("Additional Funds" and together with the Initial Payment Fund and all
interest or other earnings thereon, the "Payment Fund"), shall be held and
disbursed by the Stockholder Representative strictly in accordance with this
Article II. The Stockholder Representative will acknowledge in writing to Parent
the receipt of the Initial Payment Fund promptly following receipt thereof.
(b) Escrow Fund.
(i) Pursuant to an escrow agreement entered into on the Closing Date
by and among Parent, the Stockholder Representative and SunTrust Bank, as
escrow agent (in such capacity, the "Post- Closing Escrow Agent") in
substantially the form attached hereto as Exhibit E (as amended, restated
or otherwise modified from time to time, the "Post- Closing Escrow
Agreement"), Parent and the Stockholder Representative will appoint the
Post-Closing Escrow Agent to hold and disburse the Post-Closing Escrow Fund
as provided below. At the Closing, Parent shall deposit with the
Post-Closing Escrow Agent (on behalf of the Junior Stockholders) an amount
in cash equal to the Holdback Consideration (together with all interest or
other earnings thereon, the "Post-Closing Escrow Fund"), by wire transfer
of immediately available funds. The Post-Closing Escrow Fund shall be held
by the Post-Closing Escrow Agent in a segregated account to serve as the
sole source of payment of any adjustment to the Estimated Merger
Consideration required by Section 2.4(e)(i), any indemnification obligation
of the Junior Stockholders set forth in Article IX of this Agreement
(except as otherwise specifically provided in Article IX), and any payment
required to be made to Parent pursuant to Section 7.12(a) for Taxes
attributable to any Pre-Closing Period.
(ii) Subject to the terms and conditions of the Post-Closing Escrow
Agreement, the Post-Closing Escrow Fund shall be disbursed by the
Post-Closing Escrow Agent as follows: (A) from time to time prior to the
Release Date, the Escrow Fund shall be disbursed by the Post-Closing Escrow
Agent to the Parent to the extent required to pay an adjustment to the
Estimated Merger Consideration under Section 2.4(e)(i) or an
indemnification obligation of the Junior Stockholders under Article IX or
to satisfy certain obligations for Taxes attributable to Pre-Closing
Periods pursuant to Section 7.12(a); provided that such disbursement shall
be made by Post-Closing Escrow Agent only upon receipt of (x) joint written
instructions executed by Parent and the Stockholder Representative, (y) in
the case of a disbursement requested with respect to an indemnification
claim under Article IX, a Final Award certified as such by Parent (a copy
-8-
of which shall be contemporaneously delivered to the Stockholder
Representative), in each case directing the Post-Closing Escrow Agent to
make such disbursement or (z) in the case of a disbursement requested with
respect to an adjustment to the Estimated Merger Consideration under
Section 2.4(e)(i), a copy of the Independent Accountants' written final
determination of the Unresolved Items in favor of Parent; (B) on the
Release Date, the entire balance of the Escrow Fund (less any amount
thereof subject to unresolved indemnification claims hereunder (each such
amount, a "Pending Claim Amount") shall be disbursed by the Post-Closing
Escrow Agent to the Stockholder Representative (on behalf of the Junior
Stockholders); and (C) after the Release Date, each Pending Claim Amount
shall be paid by the Post-Closing Escrow Agent to Parent or the Stockholder
Representative (on behalf of the Junior Stockholders), as the case may be,
upon receipt by the Post-Closing Escrow Agent of (x) joint written
instructions executed by Parent and the Stockholder Representative or (y) a
Final Award certified as such by the Parent or the Stockholder
Representative (a copy of which shall be contemporaneously delivered to the
non-certifying party), in each case directing the Post-Closing Escrow Agent
to make such disbursement. As used herein, the date as of which all amounts
in the Post-Closing Escrow Fund have been paid out by the Post-Closing
Escrow Agent is referred to as the "Escrow Termination Date".
(c) Use and Disbursement of Payment Fund. The Stockholder Representative
shall hold the Payment Fund in a segregated account on behalf of the Junior
Stockholders and use such funds for the sole purposes of (i) paying Company
Transaction Expenses, (ii) paying the Series C Preferred Redemption Amount to
the holders of Series C Preferred Stock in accordance with this Section 2.5,
(iii) delivery of the Merger Consideration to the Junior Stockholders in
accordance with the terms hereof, and (iv) establishing (by withholding from the
Merger Consideration) a reserve account (the "Reserve Account"), in any amount
determined by the Stockholder Representative in its sole discretion (the amount
so established, the "Reserve Amount"), to pay costs, fees and expenses incurred
by or for the benefit of the Junior Stockholders on or after the Closing in
connection with the transactions contemplated by this Agreement. The Stockholder
Representative shall have sole and exclusive authority to disburse and pay
amounts placed into the Reserve Account consistent with the provisions of this
Agreement.
(d) Payment Procedures.
(i) Each record holder of a certificate evidencing shares of Series C
Preferred Stock (a "Preferred Certificate") or a certificate evidencing
shares of Junior Stock (a "Junior Certificate," and together with a
Preferred Certificate, a "Certificate") shall be provided by the Company
with a form of letter of transmittal (the "Transmittal Letter") and
instructions for the use thereof to surrender such Certificate to the
Stockholder Representative for payment pursuant to this Section 2.5. The
Transmittal Letter shall be in the form substantially as attached as
Exhibit F hereto and shall specify that delivery shall be effected, and
risk of loss and title to the Certificate shall pass, only upon proper
delivery of the Certificate (or an appropriate, in the Stockholder
Representative's and the Parent's reasonable judgment, affidavit of loss in
respect thereof) to the Stockholder Representative in accordance with the
terms of delivery specified in the Transmittal Letter and the instructions
for the use thereof in surrendering Certificate(s).
-9-
(ii) Each holder of Series C Preferred Stock immediately prior to the
Effective Time shall be entitled to receive, upon surrender to the
Stockholder Representative for cancellation of the Preferred Certificates
representing such Series C Preferred Stock and a duly executed Transmittal
Letter, and subject to any required withholding of Taxes (as determined in
good faith by the Stockholder Representative), (i) the Series C Preferred
Per Share Amount for such Series C Preferred Stock and (ii) the Applicable
Per Share Amount payable under Section 2.5(d)(iii) with respect to the
Conversion Shares. If a holder of Series C Preferred Stock delivers his,
her or its Preferred Certificate(s), a properly completed Transmittal
Letter and payment instructions (including wire transfer instructions if
applicable) to the Stockholder Representative at least three (3) Business
Days prior to the Closing Date, the Series C Preferred Per Share Amount and
the amount described in clause (i) above in respect of the related Series C
Preferred Stock will be paid to such holder promptly following the
Effective Time and in no event later than the second Business Day following
the Effective Time. From and after the Effective Time until surrendered to
the Stockholder Representative, each Preferred Certificate shall be deemed
for all corporate purposes to evidence only the right to receive, in
accordance with the terms of this Agreement, the Series C Preferred Per
Share Amount for the Series C Preferred Stock previously represented
thereby and the Merger Consideration payable under Section 2.5(d)(iii) in
respect of the Conversion Shares. No interest will accrue or be paid on any
amount payable to the holder of any outstanding Series C Preferred Stock
pursuant to this Agreement.
(iii) Each holder of Junior Stock outstanding immediately prior to the
Effective Time (excluding the Excluded Shares and Dissenting Shares) shall
be entitled to receive, upon surrender to the Stockholder Representative
for cancellation of the Junior Certificates representing such Common Stock
and a duly executed Transmittal Letter, and subject to any required
withholding of Taxes (as determined in good faith by the Stockholder
Representative), the Applicable Per Share Amount payable with respect to
such Common Stock (determined as if the Estimated Merger Consideration were
reduced by (A) the Holdback Consideration and (B) the initial Reserve
Amount). If a Junior Stockholder delivers his, her or its Junior
Certificate(s), a properly completed Transmittal Letter and payment
instructions (including wire transfer instructions if applicable) to the
Stockholder Representative at least three (3) Business Days prior to the
Closing Date, the Applicable Per Share Amount, less the aforesaid
reductions, will be paid to such Junior Stockholder promptly following the
Effective Time and in no event later than the second Business Day following
the Effective Time. From and after the Effective Time until surrendered to
the Stockholder Representative, each Junior Certificate shall be deemed for
all corporate purposes to evidence only the right to receive, in accordance
with the terms of this Agreement, the Allocable Per Share Amount into which
the Junior Stock previously represented thereby shall have been converted
in the Merger. No interest will accrue or be paid on any amount payable to
the holder of any outstanding Junior Stock pursuant to this Agreement.
(iv) If any Additional Funds are received by the Stockholder
Representative from Parent pursuant to Section 2.4(e) or from the
Post-Closing Escrow Agent pursuant to Section 2.5(b), the Stockholder
Representative shall, (A) at its option, use all or any portion of such
Additional Funds to increase the Reserve Amount or pay any expenses
-10-
not paid from the Reserve Account and (B) pay to each Junior Stockholder
who has delivered his, her or its Certificate(s), a properly completed
Transmittal Letter and payment instructions (including wire transfer
instructions if applicable) to the Stockholder Representative, such Junior
Stockholder's allocable share of such Additional Funds (less any amount by
which the Reserved Account is increased pursuant to clause (A) above) as
determined by the Stockholder Representative by recomputing the Allocable
Per Share Amounts of the Junior Stock in accordance with the Company
Charter as in effect immediately prior to the Effective Time as if such
amounts were received on the Closing Date as part of the Initial Payment
Fund.
(v) To the extent amounts placed in the Reserve Account are not used,
or in the good faith judgment of the Stockholder Representative are not
expected to be used, to pay fees and expenses incurred in connection with
the transactions contemplated by this Agreement including costs associated
with any indemnification claims, the Stockholder Representative shall pay
to each Junior Stockholder who has delivered his, her or its
Certificate(s), a properly completed Transmittal Letter and payment
instructions (including wire transfer instructions if applicable) to the
Stockholder Representative, such Junior Stockholder's allocable share of
such amounts as determined by the Stockholder Representative by recomputing
the Allocable Per Share Amounts of the Junior Stock in accordance with the
Company Charter as in effect immediately prior to the Effective Time as if
such amounts were received on the Closing Date as part of the Initial
Payment Fund.
(e) No Further Rights. All cash paid upon conversion of the shares of
Series C Preferred Stock and Junior Stock in accordance with the terms of this
Article II, and all cash paid pursuant to Section 2.5 to or for the benefit of
Junior Stockholders, shall be deemed to have been paid in full satisfaction of
all rights pertaining to such shares of Series C Preferred Stock and Junior
Stock. By approval of the Merger and their execution of the Selling Stockholders
Agreement, each holder of capital stock of the Company shall be deemed to have
irrevocably authorized Parent to pay the aggregate Merger Consideration and the
Series C Preferred Redemption Amount to the Stockholder Representative in
accordance with the terms of this Article II, and shall further be deemed to
have agreed that following such payment by Parent to the Stockholder
Representative none of Parent, Merger Sub, the Company or the Surviving
Corporation shall have any further liability to such holders with respect to,
and such holders shall only look to the Stockholder Representative for
disbursements of, and any liability for, such amounts.
(f) Lost, Stolen or Destroyed Stock Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit setting forth that fact by the Person claiming such lost, stolen or
destroyed Certificate(s) and granting adequate (in the Stockholder
Representative's and the Parent's reasonable judgment) indemnity against any
claim that may be made against the Surviving Corporation, Parent or the
Stockholder Representative with respect to such Certificate(s), the Stockholder
Representative shall pay the applicable amount required to be paid hereunder
with respect to each share evidenced by such lost, stolen or destroyed
Certificate(s).
-11-
SECTION 2.6. STOCK TRANSFER BOOKS.
At the Effective Time, the stock transfer books of the Company with respect
to all shares of capital stock of the Company shall be closed and no further
registration of transfers of such shares of capital stock shall thereafter be
made on the records of the Company.
SECTION 2.7. DISSENTING SHARES.
Notwithstanding any other provisions of this Agreement to the contrary,
shares of Common Stock that are issued and outstanding immediately prior to the
Effective Time and that are held by a Person who shall not have voted in favor
of the Merger or consented thereto in writing and who shall have demanded
properly in writing appraisal for such shares in accordance with Section 262 of
Delaware Law (collectively, the "Dissenting Shares") shall not be converted into
or represent the right to receive the Applicable Per Share Amount of such
shares. The holders of Dissenting Shares shall be entitled to receive from the
Surviving Corporation payment of the appraised value of such shares of Common
Stock held by them in accordance with the provisions of such Section 262 (the
"Appraised Value"), except that (i) all Dissenting Shares held by a Person who
shall have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such shares of Common Stock under such Section 262
shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Applicable Per Share Amount of such shares, upon
surrender, payable in the manner and subject to the adjustments provided for in
Section 2.5, of the certificate or certificates that formerly evidenced such
shares of Common Stock, and (ii) in such case, the Surviving Corporation shall
promptly deliver the Dissenting Shares Amount to the Stockholder Representative
by wire transfer of immediately available funds to an account designated by the
Stockholder Representative.
SECTION 2.8. REPAYMENT OF CERTAIN COMPANY INDEBTEDNESS.
Simultaneously with the Closing, Parent shall repay, or cause to be repaid,
on behalf of the Company and the Company Subsidiaries, all Company Indebtedness
then outstanding under the Company Credit Documents by wire transfer of
immediately available funds as directed by the holders of such indebtedness.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
SECTION 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company and each Subsidiary of the Company (each a "Company
Subsidiary" and collectively, the "Company Subsidiaries") is a corporation,
limited liability company or other entity duly organized, validly existing and
in good standing (to the extent such concept applies in the applicable
jurisdiction) under the Laws of the jurisdiction of its organization. Except as
set forth on Schedule 3.1, the Company and each Company Subsidiary is duly
qualified to conduct its business, and is in good standing, in each jurisdiction
where the
-12-
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to so qualify in
the aggregate could not reasonably be expected to have a Company Material
Adverse Effect. The Company and each Company Subsidiary has the requisite power
and authority to own, operate, lease and otherwise to hold and operate its
assets and properties and to carry on the businesses as now being conducted. The
Company has no Subsidiaries or any equity or similar interest in any entity
other than those listed on Schedule 3.1, nor does it have any obligation to
purchase any equity or other similar interest in any other entity. As used
herein, the term "Company Material Adverse Effect" means any effect or change
that would be materially adverse to the business, assets, condition (financial
or otherwise), earning power or prospects of the Company and the Company
Subsidiaries, taken as a whole, or on the ability of the Company to consummate
timely the transactions contemplated hereby; provided that none of the following
shall be deemed to constitute, and none of the following shall be taken into
account in determining whether there has been, a Company Material Adverse
Effect: (a) any adverse change, event, development or effect arising from or
relating to (i) general business, economic or political conditions in the United
States, including such conditions related to the industry in which the Company
and the Company Subsidiaries operate, but only which, in each case, does not
have a materially disproportionate effect on the Company and the Company
Subsidiaries, taken as a whole, (ii) national or international political or
social conditions, including the engagement by the United States in hostilities,
whether or not pursuant to the declaration of a national emergency or war, or
the occurrence of any military or terrorist attack upon anywhere in the world,
(iii) financial, banking, or securities markets (including any disruption
thereof and any decline in the price of any security or any market index) or
(iv) changes in United States generally accepted accounting principles and (b)
any adverse change in or effect on the business of the Company and the Company
Subsidiaries that is cured before the earlier of (i) the Closing Date and (ii)
the date on which this Agreement is terminated pursuant to Article X hereof.
(b) For purposes of this Agreement, a "Subsidiary" of any Person means any
corporation, limited liability company, partnership, joint venture or other
legal entity of which such Person (either alone or through or together with any
Subsidiary) (i) owns, directly or indirectly, fifty percent (50%) or more of the
stock, limited liability company interests, partnership interests or other
equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation,
limited liability company, partnership, joint venture or other legal entity; or
(ii) possesses, directly or indirectly, Control over the direction of management
or policies of such corporation, limited liability company, partnership, joint
venture or other legal entity (whether through ownership of voting securities,
by agreement or otherwise).
SECTION 3.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
The Company has heretofore made available to Parent a complete and correct
copy of the certificate of incorporation and bylaws (or similar governing
documents) of the Company and each Company Subsidiary, each as amended to date.
Each such certificate of incorporation or bylaws (or similar governing document)
is in full force and effect. Neither the Company nor any Company Subsidiary is
in violation, taking into consideration the consents granted in the Selling
Stockholders Agreement, of any of the provisions of its certificate of
incorporation or bylaws (or similar governing document).
-13-
SECTION 3.3. CAPITALIZATION.
(a) As of the date of this Agreement, the authorized capital stock of the
Company consists of 580,000 shares, which is comprised of: (a) 237,500 shares of
common stock, par value $.001 per share, of which (i) 167,500 shares are
designated as Class A Common Stock (of which no shares are issued and
outstanding as of the date hereof), and (ii) 70,000 shares are designated as
Class B Common Stock (of which 5,502.486 shares are issued and outstanding as of
the date hereof); and (b) 342,500 shares of preferred stock, par value $.001 per
share, of which (i) 20,000 shares are designated as Series C Preferred Stock (of
which 20,000 shares are issued and outstanding as of the date hereof), (ii)
155,000 shares are designated as Series B Preferred Stock (of which no shares
are issued and outstanding as of the date hereof), and (iii) 142,500 shares are
designated as Series A Preferred Stock (of which 51,000 shares are issued and
outstanding as of the date hereof). The Series A Preferred Stock is further
subdivided into (A) 125,000 shares of Series A-l Preferred Stock (of which
50,700 shares are issued and outstanding as of the date hereof), (B) 15,000
shares of Series A-2 Preferred Stock (of which no shares are issued and
outstanding as of the date hereof), and (C) 2,500 shares of Series A-3 Preferred
Stock (of which 300 shares are issued and outstanding as of the date hereof).
Except as described above, no class or series of capital stock of the Company is
issued or outstanding. All of the issued and outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable.
(b) As of the date hereof, there are (i) 155,000 shares of Series B
Preferred Stock reserved for issuance upon conversion of the outstanding Series
C Preferred Stock, (ii) 4,479.446 shares of Series A-2 Preferred Stock reserved
for issuance upon conversion of the outstanding Series C Preferred Stock, and
(iii) 55,479.446 shares of Class A Common Stock reserved for issuance upon
conversion of the outstanding Series A Preferred Stock. As of the date hereof,
the Company has 162.714 shares of Class B Common Stock that are held as treasury
stock. Except as set forth above, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or any Company Subsidiary or
obligating the Company or any Company Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in the Company or any Company
Subsidiary, including pursuant to any preemptive rights or upon the exchange or
conversion of any Indebtedness or security. Except as set forth on Schedule
3.3(b), there are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of its capital stock or make
any material investment (in the form of a loan, capital contribution or
otherwise) in any other Person. No shares of capital stock have been issued by
the Company at any time in violation of the preemptive rights of any stockholder
of the Company. All shares of capital stock of the Company and all securities
convertible or exercisable into shares of capital stock of the Company currently
outstanding were offered, issued and sold in compliance in all material respects
with all applicable federal and state securities laws and regulations.
(c) Exhibit G attached hereto sets forth each record holder of the
outstanding capital stock of the Company, and the number of shares of each class
or series of the Company's capital stock held by each such record holder, in
each case, as of the date hereof. Except as set forth on Schedule 3.3(c) there
are no proxies, agreements or understandings with respect to the voting or
transfer of the capital stock of the Company to which the Company is a party or,
to the Knowledge of the Company, to which any other person is a party.
-14-
(d) Except as set forth on Schedule 3.3(d), with respect to each Company
Subsidiary that is a corporation, all of the outstanding shares of capital stock
of such Company Subsidiary have been duly authorized, validly issued and are
fully paid and nonassessable and are owned by the Company or a wholly-owned
Company Subsidiary. Except as set forth on Schedule 3.3(d), with respect to each
Company Subsidiary that is a limited liability company, all of the outstanding
limited liability company interests of such Company Subsidiary are owned by the
Company or another wholly-owned Company Subsidiary. Except as set forth on
Schedule 3.3(d), all of the outstanding shares of capital stock or limited
liability company interests of each Company Subsidiary owned by the Company or
another wholly-owned Company Subsidiary are owned by the Company or such Company
Subsidiary free and clear of any liens, security interests, pledges or
encumbrances (the "Encumbrances").
SECTION 3.4. AUTHORITY.
The Company has the necessary corporate power and authority to enter into
this Agreement and, subject to obtaining any necessary stockholder approval of
the Merger, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby, other than the approval of this Agreement by the Junior
Stockholders in accordance with the DGCL. This Agreement has been duly executed
and delivered by the Company and, assuming its due authorization, execution and
delivery by Parent and Merger Sub, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar Laws of general
applicability relating to or affecting creditors' rights generally and by the
application of general principles of equity.
SECTION 3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company do not, and
the performance by the Company of its obligations under this Agreement
(including the consummation of the Merger) will not, (i) conflict with or
violate, result in a breach of, or constitute a default under the certificate or
articles of incorporation, certificate of formation, bylaws, limited liability
company agreement or other organizational document of the Company or any Company
Subsidiary, (ii) subject to compliance with the requirements described in
Section 3.5(b) below, conflict with or violate any federal, state, or local law
or statute or governmental ordinance, rule, regulation, order, judgment or
decree ("Law") applicable to the Company or any Company Subsidiary or by which
any of their respective properties is bound or affected, or (iii) except for
consents required under agreements listed on Schedule 3.12, result in any breach
of or constitute a default (or an event which with 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 an
Encumbrance on any of the properties or assets of the Company or any Company
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Company Subsidiary is a party or by which the
-15-
Company, any Company Subsidiary or any of their respective properties or assets
is bound, except, in the case of clause (iii) above for any such conflicts,
violations, breaches, defaults or other accelerations or occurrences that either
individually or in the aggregate could not reasonably be expected to have a
Company Material Adverse Effect or prevent consummation of the Merger or delay
the same, or otherwise prevent the Company from performing its obligations under
this Agreement.
(b) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign (each a
"Governmental Entity"') except (i) for (A) applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as amended (the "HSR Act"),
(B) applicable requirements, if any, of the consents, approvals, authorizations
or permits identified in Schedule 3.5(b), (C) filing and recordation of
appropriate merger documents as required by the DGCL and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, either individually or in the aggregate could not
reasonably be expected to have a Company Material Adverse Effect or prevent the
consummation of the Merger or delay the same, or otherwise prevent the Company
from performing its obligations under this Agreement.
SECTION 3.6. COMPANY FINANCIAL STATEMENTS; LIABILITIES.
(a) The Company has delivered to Parent as attachments to Schedule 3.6(a):
(i) the audited consolidated balance sheets of the Parent and its Subsidiaries
as of March 28, 2004 (the "Balance Sheet Date") and March 30, 2003, and the
related audited consolidated statements of income and of cash flow for the
Annual Reporting Periods ended on the Balance Sheet Date and March 30, 2003, and
(ii) the unaudited consolidated balance sheet of NCI and its Subsidiaries (other
than Network Publications Canada Inc.) as of October 10, 2004 (the "Interim
Balance Sheet") and the related unaudited consolidated statements of income for
the seven (7) consecutive Monthly Reporting Periods then ended (all of the
foregoing financial statements and any notes thereto are hereinafter
collectively referred to as the "Company Financial Statements"). The Company
Financial Statements: (i) are derived from and reflect the books and records of
the Parent or NCI (as applicable) and its Subsidiaries (other than Network
Publications Canada Inc., in the case of any unaudited financial statement);
(ii) fairly present in all material respects the financial condition of NCI and
NCI's Subsidiaries (other than Network Publications Canada Inc., in the case of
any unaudited financial statement) at the dates therein indicated and the
results of operations for the periods therein specified; and (iii) have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a basis consistent with prior periods except,
with respect to the unaudited Company Financial Statements, for any absence of
required footnotes and subject to the Company's customary year-end adjustments,
none of which are likely to be material. The Company and the Company
Subsidiaries have no indebtedness, liabilities or obligations of the type
required to be reflected on a consolidated balance sheet prepared in accordance
with GAAP, applied on a basis consistent with the method used in preparation of
the Company's audited financial statements for the Annual Reporting Period ended
on the Balance Sheet Date except for (a) the indebtedness, liabilities and
obligations shown on the Interim Balance Sheet (including any notes thereto),
(b) current liabilities that have been incurred by the Company and the Company
Subsidiaries after
-16-
the Balance Sheet Date in the ordinary course of their business consistent with
past practice, (c) indebtedness, liabilities and obligations set forth on
Schedule 3.6(a) and (d) Company Transaction Expenses.
(b) The Company conducts no business operations, has no liabilities (other
than as set forth on Schedule 3.6(b)), and owns no assets (other than the
capital stock of NCI).
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since the date of the Interim Balance Sheet, except as set forth on
Schedule 3.7, (a) there has not been any changes in the business, operations,
assets, financial condition or cash flow of the Company or any of the Company
Subsidiaries, which either individually or in the aggregate has had, or could
reasonably be expected to have, a Company Material Adverse Effect, and the
Company and the Company Subsidiaries have conducted their respective businesses
in the ordinary course consistent with their past practices and (b) neither the
Company nor any Company Subsidiary has taken any action that would have been
prohibited by Section 6.2 hereof if such Section had been in effect as of and at
all times since the date of the Interim Balance Sheet.
SECTION 3.8. ABSENCE OF LITIGATION.
Except as set forth on Schedule 3.8, there are (a) no actions, suits,
investigations, or proceedings pending or, to the Knowledge of the Company,
threatened against the Company or any of the Company Subsidiaries before any
court, administrative, governmental, arbitration, mediation or regulatory
authority or body, domestic or foreign, that either individually or in the
aggregate could reasonably be expected to result in a Company Material Adverse
Effect, or challenge or seek to prevent, enjoin, alter or materially delay the
transactions contemplated hereby, (b) no judgments, decrees, injunctions or
orders of any Governmental Entity or arbitrator outstanding against the Company
or any Company Subsidiary, and (c) to the Knowledge of the Company, no actions,
suits, investigations, or proceedings pending or threatened against any of the
officers or directors of the Company or any Company Subsidiary for which the
Company or any Company Subsidiary may have an obligation to provide
indemnification.
SECTION 3.9. LICENSES AND PERMITS; COMPLIANCE WITH LAWS.
The Company and the Company Subsidiaries hold all permits, licenses,
approvals, certificates, accreditations and other authorizations from all
Governmental Entities (collectively, the "Permits") necessary for the Company
and the Company Subsidiaries to own, lease and operate their respective
properties and to carry on their respective businesses as now being conducted,
except for Permits the failure of which to obtain either individually or in the
aggregate could not reasonably be expected to have a Company Material Adverse
Effect. The businesses of the Company and the Company Subsidiaries are being
conducted in all material respects in compliance with, and not in violation in
any material respect of, all applicable Laws (other than Environmental Laws,
which are addressed in Section 3.16; and ERISA and Laws related to employee
matters, which are addressed in Section 3.13 and Section 3.15), Permits and
other authorizations of Governmental Entities. As of the date hereof, no notices
have been
-17-
received by, and no claims have been filed against, the Company or any Company
Subsidiary alleging a violation of such Laws.
SECTION 3.10. TAXES.
(a) Except as set forth on Schedule 3.lO(a), the Company and the Company
Subsidiaries have prepared and filed with all appropriate Governmental Entities
all material Tax Returns by the date such returns were required to be filed
(after giving effect to extensions timely filed), and all such returns are
correct and complete in all material respects. Neither the Company nor any
Company Subsidiary has participated in or acted as a "material adviser" to any
transaction required to be disclosed under Treasury Regulation Section 1.6011-4.
Except as set forth on Schedule 3.10(a), the Company and the Company
Subsidiaries have paid in full all Taxes due prior to the date hereof, will pay
all Taxes due after the date hereof and prior to the Effective Time and, in the
case of Taxes accruing on or before the Effective Time that are not due on or
before the Effective Time, the Company has or will make adequate provision in
accordance with GAAP in its books and records for such payment. Except as set
forth on Schedule 3.10(a), the Company and the Company Subsidiaries have
withheld from each payment made to any of its present or former employees,
officers, directors, stockholders and creditors all amounts required by Law to
be withheld and have, where required, remitted such amounts within the
applicable periods allowed by Law to the appropriate Governmental Entities. In
addition, except as set forth on Schedule 3.lO(a), (a) no assessments for Taxes
have been issued against the Company or any Company Subsidiary by a Governmental
Entity that remain outstanding and unpaid; (b) within the past three (3) years
no Governmental Entity has conducted an audit of the Company or any Company
Subsidiary in respect of Taxes; and (c) neither the Company nor any Company
Subsidiary has executed or filed any agreement extending the period for the
assessment or collection of any Taxes.
(b) Except as set forth on Schedule 3.10(b), prior to the date hereof
neither the Company nor any Company Subsidiary has received from any foreign,
federal, state, or local taxing authority (including jurisdictions where the
Company or any Company Subsidiary has not filed Tax Returns) any (i) notice
indicating an intent to open an audit or other review, or (ii) notice of
deficiency or proposed adjustment for any amount of Tax proposed, asserted, or
assessed by any taxing authority against the Company or any Company Subsidiary
(excluding any such notices related to Tax matters paid or otherwise resolved
prior to the Balance Sheet Date). Except as set forth on Schedule 3.lO(b), no
claim has ever been made by a Governmental Entity in a jurisdiction where the
Company or any Company Subsidiary does not file Tax Returns that such Company or
Company Subsidiary is or may be subject to taxation by that jurisdiction. There
are no Liens for Taxes (other than Taxes not yet due and payable) upon any of
the assets of the Company or any Company Subsidiary.
(c) Neither the Company nor any Company Subsidiary has filed a consent
under Code Section 341(f) concerning collapsible corporations. Neither the
Company nor any Company Subsidiary has been (a) a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(l)(A)(ii), (b) a personal
holding company within the meaning of Code Section 542, (c) a passive foreign
investment company within the meaning of Code Section 1297 or (d) a foreign
personal holding company within the meaning of Code Section 552. Except as set
forth on Schedule 3.10(c), neither the Company nor any
-18-
Company Subsidiary is a party to or bound by any Tax allocation or sharing
agreement. Neither the Company nor any Company Subsidiary (a) has been a member
of an affiliated group filing a consolidated federal income Tax Return (other
than a group the common parent of which was the Company) or (b) has any
liability for the Taxes of any Person under Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign Law), as a transferee or
successor, by contract, or otherwise.
(d) Neither the Company nor any Company Subsidiary will be required to
include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any: (a) change in method of accounting for a taxable period
ending on or prior to the Closing Date; (b) "closing agreement" as described in
Code Section 7121 (or any corresponding or similar provision of state, local or
foreign income Tax Law) executed on or prior to the Closing Date; (c)
intercompany transaction or excess loss account described in Treasury
Regulations under Code Section 1502 (or any corresponding or similar provision
of state, local or foreign income Tax Law); (d) installment sale or open
transaction disposition made on or prior to the Closing Date; or (e) prepaid
amount received on or prior to the Closing Date.
(e) Neither the Company nor any Company Subsidiary owns any interest in any
entity or venture that is treated as a partnership for Tax purposes. Except as
set forth on Schedule 3.10(e), neither the Company nor any Company Subsidiary
has distributed stock of another corporation, or had its stock distributed by
another corporation, in a transaction that was purported or intended to be
governed in whole or in part by Code Sections 355 or 361. Neither the Company
nor any Company Subsidiary (i) has ever been required to make adjustments to its
income pursuant to Code Section 482, (ii) is required to make any adjustments to
its income for any period after the Closing Date pursuant to Code Section 481,
or (iii) is the subject of a ruling from the Internal Revenue Service or other
taxing authority that will have continuing effect after the Effective Time.
(f) For the purpose of this Agreement, the term "Tax" and "Taxes" shall
mean (i) any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium,
environmental (including taxes under Code Section 59A), capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer, value added
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not, (ii) any liability for an amount
described in (i) by reason of being a member of any combined, consolidated,
affiliated, unitary or other group and (iii) any liability for an amount
described in (i) or (ii) by contract, as a successor in interest or otherwise.
For purposes of this Agreement, the term "Tax Return" means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
SECTION 3.11. INTELLECTUAL PROPERTY.
(a) Schedule 3.11(a) contains a complete and accurate list of all (i)
patented or registered Intellectual Property owned by the Company or any Company
Subsidiary, (ii) pending patent applications and applications for other
registrations of Intellectual Property filed by or on
-19-
behalf of the Company or any Company Subsidiary, and (iii) material unregistered
Intellectual Property owned or used by the Company or any Company Subsidiary,
other than "shrink-wrapped" or "off-the-shelf software licenses licensed to the
Company or any Company Subsidiary on standard terms for less than ten thousand
dollars ($10,000) per annum for any such license. Schedule 3.11(a) also
contains a complete and accurate list of all licenses, royalty agreements, and
other rights granted by the Company or any Company Subsidiary to any third party
with respect to any Intellectual Property owned by the Company or a Company
Subsidiary and all licenses, agreements, and other rights granted by any third
party to the Company with respect to any Intellectual Property (other than
"shrink-wrapped" or "off-the-shelf software licenses licensed to the Company or
a Company Subsidiary) on terms the Company believes are customary for less than
ten thousand dollars ($10,000) per annum for any such license), in each case
identifying the subject Intellectual Property. All Intellectual Property owned
by the Company and the Company Subsidiaries is free and clear of all
Encumbrances (other than Permitted Encumbrances).
(b) The Company or one of the Company Subsidiaries owns and possesses, or
has the right to use pursuant to a valid license, all Intellectual Property
necessary to or currently used in the operation of its business as presently
conducted. To the Knowledge of the Company, neither the Company nor any Company
Subsidiary is currently utilizing any Intellectual Property of any of its
employees developed, invented or made prior to their employment by the Company
or any Company Subsidiary except for any such Intellectual Property that have
previously been assigned to the Company or any Company Subsidiary.
(c) No loss, abandonment, or expiration of any item(s) of Intellectual
Property owned or used by the Company or any Company Subsidiary has occurred
which has had or could reasonably be expected to have a Company Material Adverse
Effect, and no such loss, abandonment or expiration of any Intellectual Property
is pending or, to the Knowledge of the Company, threatened. All Intellectual
Property owned by the Company or a Company Subsidiary is valid, subsisting and
enforceable and, to the Knowledge of the Company, all Intellectual Property used
(but not owned) by the Company or a Company Subsidiary is valid, subsisting and
enforceable.
(d) Except as set forth on Schedule 3.11(d), there have been no claims made
or, to the Knowledge of the Company, threatened against the Company or any
Company Subsidiary asserting (i) the invalidity, misuse or unenforceability of
any of the Intellectual Property owned or used by the Company or any Company
Subsidiary in the operation of its business, or (ii) that the operation of the
business of the Company or any Company Subsidiary infringes or otherwise
conflicts with any Intellectual Property of any third party (including any
demand or request that the Company or a Company Subsidiary license any rights
from a third party), and neither the Company nor any Company Subsidiary has
received written notice alleging any such infringement or conflict. Except as
set forth on Schedule 3.1l(d), to the Knowledge of the Company, no Person has
infringed upon or otherwise conflicted with or is currently infringing upon or
otherwise conflicting with any Intellectual Property owned by the Company or any
Company Subsidiary. The transactions contemplated by this Agreement will not
have a material adverse effect on the Company's or any Company Subsidiary's
right, title or interest in and to the Intellectual Property owned or used by
the Company or any Company Subsidiary, and all of
-20-
such Intellectual Property will be owned or available for use by the Company or
the applicable Company Subsidiary immediately after the Closing.
(e) As used in this Agreement, "Intellectual Property" means all (i)
patents, patent applications, patent disclosures and inventions, whether foreign
or domestic, including all reissues, continuations, divisions, continuations in
part and renewals and extensions thereof, (ii) internet domain names,
trademarks, service marks, trade dress, trade names, slogans, logos and
corporate names and registrations and applications for registration of any of
the foregoing, (iii) registered copyrights, copyrightable works and
registrations and applications for registration thereof, (iv) computer software
(including both source and object code), data, data bases and documentation, (v)
trade secret rights and (vi) copies and tangible embodiments of any of the
foregoing (in whatever form or medium).
SECTION 3.12. MATERIAL CONTRACTS.
(a) Schedule 3.12 sets forth a complete and correct list, as of the date of
this Agreement, of all agreements of the following types to which the Company or
a Company Subsidiary is a party or is bound (collectively, the "Material
Contracts"): (i) any contract, agreement or legally binding commitment
(including any lease of real property or any license or agreement involving
Intellectual Property) providing for payments by or to the Company or a Company
Subsidiary in excess of $250,000 at any time or in the aggregate during any year
(other than purchase orders entered into in the ordinary course of business) or
that is material to the business or operations of the Company or any Company
Subsidiary; (ii) employment, severance, termination and consulting agreements
(excluding agreements with at will employees and agreements that may be
terminated by the Company or a Company Subsidiary without penalty other than
customary severance) involving payments by the Company or a Company Subsidiary
in excess of $50,000 at any time or in the aggregate during any year; (iii) loan
agreements, indentures, reimbursement agreements for letters of credit,
mortgages, notes and other debt instruments evidencing indebtedness in excess of
$250,000 or which grant any Encumbrances (other than any Permitted
Encumbrances); (iv) agreements which contain any provisions requiring consent in
the event of a "change of control"; (v) non-solicitation and non-compete
agreements by which the Company or any Company Subsidiary is bound and (vi)
other material agreements with any director, officer, or Junior Stockholder.
(b) Except as set forth on Schedule 3.12, each of the Material Contracts is
valid and binding and as of the date hereof is in full force and effect and, to
the Knowledge of the Company, is enforceable by the Company or Company
Subsidiary that is a party thereto (except (i) as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
Laws of general applicability relating to or affecting creditors' rights
generally and by the application of general principles of equity and (ii) with
respect to any non-compete or non-solicitation agreement). Neither the Company
nor any Company Subsidiary has violated any provision of, or committed or failed
to perform any act which is required to be performed under such Material
Contract; no event has occurred which with or without notice, lapse of time or
both would constitute a default, breach or event of noncompliance under the
provisions of, any Material Contract, except for violations and defaults which
either individually or in the aggregate could not reasonably be expected to have
a Company Material Adverse Effect; and neither the Company nor any Company
Subsidiary has received any notice of, and to the
-21-
Knowledge of the Company there does not exist, any material breach,
cancellation, or intention not to renew, or any anticipated material breach,
cancellation, or intention not to renew, by the other parties to any Material
Contract. True and complete copies of all Material Contracts have been delivered
to Parent or made available for inspection.
SECTION 3.13. EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.13 sets forth a true and complete list of each "employee
benefit plan" (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), and each other retirement,
profit sharing, deferred compensation, incentive compensation, bonus, stock
option, restricted stock or other equity compensation, stock purchase, severance
pay, termination or change of control, unemployment benefit, vacation pay,
health, life or other insurance, Section 125 cafeteria plan or flexible benefit
arrangement, fringe benefit or other employee benefit plan, program, agreement
or arrangement that is sponsored by, maintained or contributed or required to be
contributed to as of the date of this Agreement by the Company or any Company
Subsidiary, or any entity which together with the Company would be deemed a
"single employer" within the meaning of Sections 414(b), (c) or (m) of the
Internal Revenue Code of 1986, as amended (the "Code") or Section 4001 of ERISA
("ERISA Affiliate") or under which the Company, or any Company Subsidiary has
any liability or a reasonable possibility of a potential liability
(collectively, the "Benefit Plans"). Any of the Benefit Plans which is an
"employee pension benefit plan" as defined in Section 3(2) of ERISA is referred
to herein as an "ERISA Plan".
(b) The Company has furnished or made available to Parent complete and
correct copies of each of the Benefit Plans (or a summary thereof) and all
related documents, including but not limited to, (i) the plan document and
summary plan description; (2) the most recent determination letter from the
Internal Revenue Service (if applicable) for such Benefit Plan; (3) the most
recent annual report (Form 5500 series) required for each Benefit Plan; and (4)
all related trust agreements, insurance contracts or other funding arrangements
that implement Benefit Plan.
(c) None of the Company, any Company Subsidiary, or any of the Benefit
Plans, or any trust created thereunder or any trustee or administrator thereof,
has engaged in any transaction as a result of which the Company or any Company
Subsidiary would be subject to any material liability pursuant to Sections 406
and 409 of ERISA or to either a civil penalty assessed pursuant to Section
502(i) or (1) of ERISA or a Tax imposed pursuant to Section 4975 of the Code. No
fiduciary of any Benefit Plan who is an employee of the Company or a Company
Subsidiary has any liability for breach of fiduciary duty or any other failure
to act or comply in connection with the administration or investment of the
assets of any Benefit Plan. All required reports and descriptions (including
Form 5500 annual reports, summary annual reports, and summary plan descriptions)
have been timely filed and/or distributed in accordance with the applicable
requirements of ERISA and the Code with respect to each Benefit Plan.
(d) None of the Benefit Plans is a plan subject to Title IV of ERISA, the
minimum funding requirements of Section 302 of ERISA or Section 412 of the Code.
None of the Company, any Company Subsidiary or any ERISA Affiliate has incurred
any liability under Title
-22-
IV of ERISA and no events have occurred and no circumstances exist that would
reasonably be expected to result in such liability to the Company or any Company
Subsidiary.
(e) Each Benefit Plan (and each related trust, insurance contract, or fund)
has been operated, funded and administered in all material respects in
compliance with its governing documents and with all provisions of all
applicable Laws, including, but not limited to, ERISA and the Code.
(f) Each ERISA Plan that is intended to be "qualified" within the meaning
of Section 401(a) of the Code has been determined by the IRS to be so qualified
by issuance and receipt of a favorable determination letter or reliance upon an
opinion letter which states that the ERISA Plan meets all requirements under the
Code and that any trust(s) associated with such ERISA Plan is Tax exempt under
Section 501(a) of the Code. Each such ERISA Plan has filed an application for a
favorable determination letter from the IRS which covers recent Tax Law changes
commonly known as "GUST" within the GUST remedial amendment period and has been
timely amended for the Tax Law changes commonly known as "EGTRRA". To the
Knowledge of the Company, no event has occurred since the date of the most
recent determination (other than the effective date of certain amendments to the
Code the remedial amendment period for which has not expired) that would
adversely affect the qualified status of such ERISA Plan.
(g) As of the date hereof, there are no claims (other than routine claims
for benefits), proceedings, hearings, actions or lawsuits pending, or to the
Knowledge of the Company, threatened, with respect to any Benefit Plan or the
Company or any Company Subsidiary in connection with any Benefit Plan or the
fiduciaries responsible for such Benefit Plans. As of the date hereof, there are
no audits, investigations or examinations with respect to any Benefit Plan by
the IRS, the Department of Labor, the PBGC or any other governmental agency
(other than a review associated with the application for a determination letter
that has been filed with the IRS) and to the Knowledge of the Company, no such
audit, investigation or examination is threatened or pending.
(h) None of the Company, any Company Subsidiary, or any ERISA Affiliate
maintains, contributes to, or has any obligation to contribute to or has any
liability or the reasonable possibility of a potential liability with respect to
a "multiemployer plan" as that term is defined in Section 3(37) of ERISA.
(i) All contributions (including all employer contributions and employee
salary reduction contributions) that are due with respect to any Benefit Plan
have been made within the time periods prescribed by ERISA and the Code to each
such Benefit Plan and all contributions for any period ending on or before the
Effective Time which are not yet due have been made to each such Benefit Plan or
accrued in accordance with the past custom and practice of the Company and the
Company Subsidiaries. All premiums or other payments for all periods ending on
or before the Effective Time have been paid with respect to each Benefit Plan.
(j) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will (i) result
in a material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise)
-23-
becoming due from the Company or any Company Subsidiary under any Benefit Plan;
(ii) materially increase any benefit otherwise payable under any Benefit Plan;
or (iii) accelerate the time of payment or vesting, or increase the amount of,
any compensation due to any individual.
(k) There are no agreements to which the Company or any Company Subsidiary
is a party which will provide payments to any officer, employee or highly
compensated individual which will be "parachute payments" under Section 280G or
Section 4999 of the Code for which Parent or the Company or any Company
Subsidiary will have withholding liability or that will result in loss of Tax
deductions under Section 280G of the Code.
(l) None of the Company, any Company Subsidiary, or any ERISA Affiliate has
any obligation to provide life insurance, medical or health benefit coverage on
or after retirement or other termination of employment to any individual other
than continuation coverage as required by Section 4980B of the Code, Sections
601-608 of ERISA ("COBRA") or applicable state continuation of coverage
statutes. The Company, the Company Subsidiaries and each ERISA Affiliate have
complied in all material respects with COBRA.
(m) For all purposes under all applicable Laws, including ERISA and the
Code, and all Employee Benefit Plans, and for all other relevant purposes: (i)
all individuals who presently render services or in the past have rendered
services to the Company or any Company Subsidiary are and were correctly treated
by the Company or such Company Subsidiary as either employees or independent
contractors, as the case may be; (ii) all independent contractors who are or at
any time have been engaged by the Company or any Company Subsidiary are or were
bona fide independent contractors and not employees of the Company or any
Company Subsidiary during the period they were treated as such by the Company or
such Company Subsidiary; and (iii) all leased employees who are or at any time
have been utilized by the Company or any Company Subsidiary are or were
employees of the leasing agency and not employees of the Company or any Company
Subsidiary during the period they were treated as such by the Company or such
Company Subsidiary.
SECTION 3.14. PROPERTIES; ASSETS.
(a) Except as set forth in Schedule 3.14(a), the Company or one of the
Company Subsidiaries has good title to all the properties and assets reflected
in the Interim Balance Sheet, as being owned by the Company or one of the
Company Subsidiaries (except assets and properties sold or otherwise disposed of
since the date thereof in the ordinary course of business), or acquired after
the date thereof which are material to the Company's business on a consolidated
basis, free and clear of all Encumbrances except (i) Encumbrances related to
statutory liens securing payments not yet due (provided that if the related
liabilities were required under GAAP to have been reserved for on the Interim
Balance Sheet, then only to the extent such liabilities are actually reserved
for on such balance sheet), (ii) Encumbrances arising pursuant to Company
Indebtedness, (iii) Encumbrances arising pursuant to capital leases, (iv)
Encumbrances not related to indebtedness for borrowed money which do not,
individually or in the aggregate, materially interfere with the use, occupancy
or operation of the real property leased by the Company and its Subsidiaries and
(v) statutory Encumbrances incurred or deposits made in the ordinary course of
business in connection with workers' compensation, employment insurance and
other social security legislation (the Encumbrances referred to in clauses
(i)-(v), the
-24-
"Permitted Encumbrances"). The Company and the Company Subsidiaries collectively
own, or have the right to use pursuant to valid and binding agreements, assets
that are sufficient to operate their businesses as currently conducted.
(b) Schedule 3.14(b) sets forth the address of each material leasehold or
subleasehold estate and other rights to use or occupy any land, buildings,
structures, improvements, fixtures or other interest in real property held by
the Company or any Company Subsidiary (the "Leased Real Property"), and a list
of all material leases (including all amendments, extensions, renewals,
guaranties and other agreements with respect thereto) for each such Leased Real
Property (each a "Lease"). The Company has made available to Parent a true and
complete copy of each such Lease or, in the case of any oral Lease, a written
summary of the material terms of such Lease. Except as set forth in Schedule
3.14(b), with respect to each Lease: (i) such Lease is legal, valid, binding,
enforceable and in full force and effect and creates a valid leasehold interest
to the leasehold estate conveyed by such Lease; (ii) the transactions
contemplated hereunder do not require the consent of any other party to such
Lease, will not result in a breach of or default under such Lease, or otherwise
cause such Lease to cease to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the Closing; (iii) neither the
Company, any Company Subsidiary nor, to the Knowledge of the Company, any other
party to such Lease is in breach or default under such Lease, and no event has
occurred or circumstance exists which, with the delivery of notice, the passage
of time or both, would constitute such a breach or default by the Company or any
Company Subsidiary thereunder, or permit the termination, modification or
acceleration of rent under such Lease; (iv) neither the Company nor any Company
Subsidiary owes, or will owe in the future, any brokerage commissions or
finder's fees with respect to such Lease; (v) neither the Company nor any
Company Subsidiary has subleased, licensed or otherwise granted any Person the
right to use or occupy such Leased Real Property or any portion thereof; and
(vi) there are no Encumbrances on the estate or interest created by such Lease.
Neither the Company nor any Company Subsidiary owns any real property.
SECTION 3.15. EMPLOYEES; LABOR RELATIONS.
(a) Schedule 3.15(a) lists each current employee of the Company or any
Company Subsidiary (i) who received from the Company and the Company
Subsidiaries during the Annual Reporting Period ended on the Balance Sheet Date,
or (ii) who is anticipated to receive from the Company and the Company
Subsidiaries during the Annual Reporting Period ending March 27, 2005 salary,
wages and/or cash bonuses in excess of $200,000 in the aggregate and the amount
of such compensation.
(b) Neither the Company nor any Company Subsidiary is a party to any
collective bargaining agreement or other contract or agreement with any labor
organization or other collective bargaining representative of any of the
employees of the Company or any Company Subsidiary. Except as set forth in
Schedule 3.15(b), the Company and each Company Subsidiary is in compliance with
all Laws relating to the employment or the workplace, including, without
limitation, provisions relating to wages, hours, collective bargaining, safety
and health, work authorization, equal employment opportunity, immigration,
unemployment compensation, worker's compensation, employee privacy and right to
know and social security contributions,
-25-
except for such noncompliance which either individually or in the aggregate is
not reasonably likely to have a Company Material Adverse Effect.
(c) To the Knowledge of the Company, the Company and each Company
Subsidiary has properly classified for all purposes (including, without
limitation, for all Tax purposes and for purposes of determining eligibility to
participate in any employee benefit plan) all employees, leased employees,
consultants and independent contractors, and has withheld and paid all
applicable Taxes and made all appropriate filings in connection with services
provided by such persons to the Company and each Company Subsidiary.
(d) Except as set forth on Schedule 3.15(d), to the Knowledge of the
Company, no officer of the Company or any Company Subsidiary is bound by any
contract or commitment that restricts him or her from engaging in any activity
competitive with the Company's or any Company Subsidiary's business or competing
with any Person other than as contained in his or her employment agreement with
the Company or Company Subsidiary.
SECTION 3.16. ENVIRONMENTAL MATTERS.
(a) Except as set forth on Schedule 3.16, the Company and each Company
Subsidiary (i) have been since June 28, 2002 (and to the Knowledge of the
Company, at all times prior to such date) in compliance with applicable
Environmental Laws and permits required under Environmental Laws necessary for
the Company and the Company Subsidiaries to own and operate their respective
properties and carry on their respective businesses as now being conducted,
except, in each case, where the failure to so comply could not reasonably be
expected to have a Company Material Adverse Effect, (ii) have not received since
June 28, 2002 (and to the Knowledge of the Company, at any time prior to such
date) any written notices from any Governmental Entity alleging the violation of
or liability under any applicable Environmental Law, (iii) are not the subject
of any Order arising under any Environmental Law, and (iv) have not since June
28, 2002 (and to the Knowledge of the Company, at any time prior to such date)
generated, emitted, discharged or disposed of any Hazardous Substance except as
would not give rise to any material liability under Environmental Laws.
Notwithstanding any other provision of this Agreement, this Section 3.16
constitutes the sole representation and warranty of the Company with respect to
any matters covered by representations and warranties in this Section. Neither
the Company nor any Company Subsidiary has since June 28, 2002 (and to the
Knowledge of the Company, at any time prior to such date) manufactured, treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled or released, or permitted persons to be exposed to, any Hazardous
Substance, noise, odor or radiation, or owned or operated any property or
facility, in a manner that has given or will give rise to material liabilities
for damages or injuries to persons, property, natural resources or the
environment under Environmental Law; to the Knowledge of the Company, there are
no Hazardous Substances present at any facility or property now or, to the
Knowledge of the Company, previously owned, leased or operated by the Company or
any Company Subsidiary or any of their respective predecessors or affiliates
that have given or will give rise to material liabilities for damages or
injuries to persons, property, natural resources or the environment under
Environmental Laws.
-26-
(b) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Environmental Law" means any Law, including common law, or Order
of any Governmental Entity or Permit relating to the protection of the
environment (including air, water, soil, and natural resources) or the use,
storage, handling, release, exposure to or disposal of any Hazardous
Substance, noise, odor, or radiation as in effect on the date hereof.
(ii) "Hazardous Substance" means any substance that is hazardous,
toxic or radioactive, including petroleum and any derivative or by products
thereof, asbestos or asbestos containing materials and any other
environmental contaminant, pollutant, waste, or pesticide.
(iii) "Order" means any injunction, judgment, ruling, assessment,
order or decree of any Governmental Entity having competent jurisdiction.
(c) The Company and each Company Subsidiary has provided to Parent and
Merger Sub true and correct copies of all material environmental inspections,
investigations, studies, audits, tests, reviews or other analysis conducted
either (i) by (or on behalf of), the Company or any Company Subsidiary since
June 28, 2002 or (ii) which, to the Knowledge of the Company, was conducted by
(or on behalf of) any other Person or which was conducted prior to June 28,
2002, in relation to the Company, the current or former Company Subsidiaries or
any of their respective businesses and any property now or formerly owned,
operated or leased by the Company, a Company Subsidiary or any of their
respective predecessors, which inspections, investigations, studies, audits,
tests, reviews or other analysis are in the possession or control of the
Company, any of the Company Subsidiaries or their respective advisors.
SECTION 3.17. INSURANCE.
Schedule 3.17 contains a list of all policies of title, property, fire,
casualty, liability, life, "key-man", workmen's compensation, and other forms of
insurance in force at the date thereof with respect to the Company and the
Company Subsidiaries. All such insurance policies: (a) are in full force and
effect and (b) to the Knowledge of the Company are valid and enforceable. The
premiums due and payable under such insurance policies have been paid. Neither
the Company nor any of the Company Subsidiaries has received or given notice of
cancellation with respect to any of the material insurance policies. Neither the
Company nor any Company Subsidiary is in material default with respect to such
insurance policies, and, to the Knowledge of the Company, neither the Company
nor any Company Subsidiary has failed to give any notice or present any claim
under any such insurance policies that exists in due and timely fashion. Neither
the Company nor any Company Subsidiary has any material disputed claim with any
insurance provider relating to any material claim for insurance under any such
insurance policy. Except as set forth in Schedule 3.17, the Company and the
Company Subsidiaries have been covered at all times since June 28, 2002 by
insurance in scope and amount customary and reasonable for the businesses in
which they have engaged and the nature and amount of the liabilities they have
incurred during the aforementioned period.
-27-
SECTION 3.18. AFFILIATE TRANSACTIONS.
Except as set forth in Schedule 3.18, there are no agreements, liabilities
or obligations between the Company or any Company Subsidiary, on the one hand,
and any current or former officer, director, 5% or greater stockholder,
affiliate of the Company or any Company Subsidiary or any affiliate of any such
officer, director, 5% or greater stockholder or affiliate, on the other hand,
other than as set forth in their respective employment contracts. Except as set
forth in Schedule 3.18, the Company and Company Subsidiaries do not provide or
cause to be provided any loans, assets, services or facilities to any such
current or former officer, director, stockholder or affiliate.
SECTION 3.19. BOARD APPROVAL; VOTE REQUIRED.
The board of directors of the Company has determined that the transactions
contemplated by this Agreement are in the best interests of the Company and the
Junior Stockholders and has resolved to recommend to such Junior Stockholders
that they vote in favor thereof. The affirmative vote or written consent of the
Junior Stockholders holding capital stock of the Company entitled to cast a
majority of the votes entitled to be cast by the Junior Stockholders (which
written consent has been obtained as of the date hereof) is the only vote of any
class or series of capital stock of the Company necessary to approve the Merger
and the other transactions contemplated by this Agreement.
SECTION 3.20. BOOKS AND RECORDS. The Company and the Company Subsidiaries
have maintained complete and correct copies of: (a) the Certificate of
Incorporation and Bylaws and other organizational documents of such company and
all amendments thereto; (b) the stock records of such company; and (c) the
minutes and other records of the meetings and other proceedings of the
stockholders and directors of such company. True and complete copies of the
documents referred to in the preceding sentence have been delivered to or have
been made available for inspections by Parent and Merger Sub.
SECTION 3.21. 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 based upon arrangements made by or on behalf of
the Company or any of its Affiliates.
SECTION 3.22. DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE III AND IN THE SELLING
STOCKHOLDERS AGREEMENT, NEITHER THE COMPANY NOR ANY OF ITS AFFILIATES OR
REPRESENTATIVES MAKES ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AT
LAW OR IN EQUITY IN RESPECT OF THE COMPANY OR THE COMPANY SUBSIDIARIES, OR ANY
OF THEIR RESPECTIVE ASSETS, LIABILITIES, BUSINESSES OR OPERATIONS, INCLUDING
WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY
SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
-28-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGER SUB
Merger Sub represents and warrants to the Company as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION.
Merger Sub is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware. Merger Sub was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement.
As of the date of this Agreement, except for obligations or liabilities incurred
in connection with its incorporation or organization and the transactions
contemplated by this Agreement, Merger Sub has not incurred, directly or
indirectly, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any Person.
SECTION 4.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
Merger Sub has heretofore made available to the Company a complete and
correct copy of the certificate of incorporation and the bylaws of Merger Sub,
each as amended to date. Such certificate of incorporation and bylaws are in
full force and effect. Merger Sub is not in violation of any of the provisions
of its certificate of incorporation or bylaws.
SECTION 4.3. AUTHORITY.
Merger Sub has the necessary corporate power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Merger Sub and the consummation by Merger Sub of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Merger Sub
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Merger Sub and, assuming its due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Merger Sub,
enforceable against Merger Sub in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar Laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
SECTION 4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Merger Sub do not, and
the performance by Merger Sub of its obligations under this Agreement will not,
(i) conflict with or, result in a breach of, constitute a default under, or
violate the certificate of incorporation or bylaws of Merger Sub, (ii) subject
to compliance with the requirements set forth in Section 4.4(b) below, conflict
with or violate any Law applicable to Merger Sub or by which any of its
properties is bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with 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
-29-
Encumbrance on any of the properties or assets of Merger Sub pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, Permit,
franchise or other instrument or obligation to which Merger Sub is a party or by
which Merger Sub or any of its properties or assets is bound, except, in the
case of clauses (ii) and (iii) above for any such conflicts, violations,
breaches, defaults, accelerations or occurrences that would not prevent the
consummation of the Merger or delay same in any material respect or otherwise
prevent Merger Sub from performing its obligations under this Agreement.
(b) The execution and delivery of this Agreement by Merger Sub does not,
and the performance of this Agreement by Merger Sub will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for applicable requirements of the HSR
Act and state blue sky Laws, and filing and recordation of appropriate merger
documents as required by the DGCL and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent the consummation of the Merger or delay the
same in any material respect or otherwise prevent Merger Sub from performing its
obligations under this Agreement.
SECTION 4.5. ABSENCE OF LITIGATION.
There are (a) no actions, suits, investigations, or proceedings pending or,
to Merger Sub's knowledge, threatened against Merger Sub or any of its
properties or assets before any court, administrative, governmental, arbitral,
mediation or regulatory authority or body, domestic or foreign, that challenge
or seek to prevent, enjoin, alter or materially delay the transactions
contemplated hereby, and (b) no judgments, decrees, injunctions or orders of any
Governmental Entity or arbitrator outstanding against Merger Sub that would
prevent the consummation of the transactions contemplated hereby or delay the
same in any material respect or otherwise prevent Merger Sub from performing its
obligations under the Agreement.
SECTION 4.6. BROKERS.
Except for XxXxxxx & Xxxxxxxx, 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 based upon arrangements
made by or on behalf of Merger Sub.
SECTION 4.7. VOTE REQUIRED.
The affirmative vote of Parent, the sole stockholder of Merger Sub, is the
only vote of the holders of any class or series of Merger Sub capital stock
necessary to approve any of the transactions contemplated hereby and Parent has
obtained a written consent approving Merger Sub's execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
SECTION 4.8. DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE IV, MERGER SUB MAKES NO
REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AT LAW OR IN EQUITY IN RESPECT
OF MERGER SUB OR PARENT, OR ANY OF THEIR RESPECTIVE ASSETS, LIABILITIES OR
OPERATIONS, INCLUDING WITH RESPECT
-30-
TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER
REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
SECTION 5.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
Parent is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation. Parent is duly
qualified to conduct its 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. Parent has the requisite
corporate power and authority and any necessary governmental authority,
franchise, license or permit to own, operate, lease and otherwise to hold and
operate its assets and properties and to carry on the business as now being
conducted.
SECTION 5.2. AUTHORITY.
Parent has the necessary corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and the consummation by Parent of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of Parent are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Parent and, assuming its due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of Parent, enforceable against Parent in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar Laws of general
applicability relating to or affecting creditors' rights generally and by the
application of general principles of equity.
SECTION 5.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent do not, and the
performance by Parent of its obligations under this Agreement will not, (i)
conflict with or violate, result in a breach of, constitute a default under, or
the certificate of incorporation or bylaws of Parent, (ii) subject to compliance
with the requirements set forth in Section 5.3(b) below, conflict with or
violate any Law applicable to Parent or by which any of its properties is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event which with 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 an Encumbrance on any of the
properties or assets of Parent pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, Permit, franchise or other instrument or
obligation to which Parent is a party or by which Parent or any of its
properties or assets is bound except, in
-31-
the case of clauses (ii) and (iii) above for any such conflicts, violations,
breaches, defaults, accelerations or occurrences that in the aggregate would not
and would not reasonably be expected to prevent the consummation of the Merger,
delay the same in any material respect, otherwise prevent Parent from performing
its obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent does not, and
the performance of this Agreement by Parent will not, require any consent,
approval, authorization or permit of, or along with or notification to, any
Governmental Entity, except (i) for applicable requirements, if any, of the HSR
Act and state blue sky Laws, and filing and recordation of appropriate merger
documents as required by the DGCL, and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent the consummation of the Merger, delay the same
in any material respect, otherwise prevent Parent from performing its
obligations under this Agreement.
SECTION 5.4. SPONSOR COMMITMENT.
Attached as Exhibit H hereto is a true and complete copy of a binding
commitment letter from Citigroup Venture Capital Equity Partners, L.P. and/or
one or more of its Affiliates (collectively, the "Sponsor"), dated as of the
date hereof and addressed to Parent (the "Sponsor Commitment Letter"), pursuant
to which the Sponsor has agreed to provide up to $380,000,000 (less the amount
of the Pre-Closing Escrow Fund) to pay all cash amounts required to be paid by
Parent pursuant to Article II hereof, including to refinance any indebtedness or
other obligation of the Company and the Company Subsidiaries which may become
due as a result of this Agreement and to pay all related fees and expenses. The
Sponsor Commitment Letter is in full force and effect and has not been amended,
supplemented or modified in any way.
SECTION 5.5. ABSENCE OF LITIGATION.
There are (a) no actions, suits, investigations, or proceedings pending or,
to Parent's knowledge, threatened against Parent or any of its properties or
assets before any court, administrative, governmental, arbitral, mediation or
regulatory authority or body, domestic or foreign, that challenge or seek to
prevent, enjoin, alter or materially delay the transactions contemplated hereby,
and (b) no judgments, decrees, injunctions or orders of any Governmental Entity
or arbitrator outstanding against Parent that would prevent the consummation of
the transactions contemplated hereby, delay the same in any material respect,
otherwise prevent Merger Sub from performing its obligations under this
Agreement.
SECTION 5.6. BROKERS.
Except for XxXxxxx & Xxxxxxxx, 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 based upon arrangements
made by or on behalf of Parent.
SECTION 5.7. SOLVENCY.
On the Closing Date, after giving effect to the Merger and the other
transactions contemplated by this Agreement, Parent and Merger Sub, on a
consolidated basis, is and will be
-32-
solvent, will be able to pay its debts as such debts become due, will have and
continue to have funds and capital sufficient to carry out its business as now
contemplated.
SECTION 5.8. DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE V, PARENT MAKES NO
REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AT LAW OR IN EQUITY IN RESPECT
OF MERGER SUB OR PARENT, OR ANY OF THEIR RESPECTIVE ASSETS, LIABILITIES OR
OPERATIONS, INCLUDING WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED.
ARTICLE VI
COVENANTS
SECTION 6.1. AFFIRMATIVE COVENANTS OF THE COMPANY.
The Company hereby covenants and agrees that, prior to the Effective Time,
except as set forth in Schedule 6.1 or as otherwise expressly contemplated by
this Agreement or consented to in writing by Parent, the Company shall, and
shall cause each Company Subsidiary to, (a) operate its business in the usual
and ordinary course consistent with past practices; (b) use commercially
reasonable efforts to preserve substantially intact its business organization,
maintain its rights and franchises, retain the services of its respective
principal officers and key employees and maintain its relationship with its
respective principal customers, suppliers and independent contractors; (c) use
its commercially reasonable efforts to maintain and keep its properties and
assets in as good repair and condition as at present, ordinary wear and tear
excepted, and replace any material item of equipment which shall be worn out,
broken, lost, stolen or destroyed, to the extent such equipment would have been
replaced in the ordinary course or business consistent with past practices; and
(d) keep in full force and effect insurance comparable in amount and scope of
coverage to that currently maintained by it; provided, that in the event the
Company or any of the Company Subsidiaries deems it necessary to take certain
actions that would otherwise be prohibited by clauses (a)-(d) of this Section
6.1, the Company shall consult with Parent and Parent shall consider in good
faith the Company's request to take such action and not unreasonably withhold or
delay its consent to such action.
SECTION 6.2. NEGATIVE COVENANTS OF THE COMPANY.
Except as expressly contemplated by this Agreement or as set forth on
Schedule 6.2 or otherwise consented to in writing by Parent, from the date
hereof until the Effective Time the Company shall not, and shall cause each
Company Subsidiary to not, do any of the following:
(a) (i) increase the compensation payable to or to become payable to any of
its directors, officers or employees except for increases in salary, wages,
bonuses or commissions payable or to become payable pursuant to existing
contracts or increases payable or to become payable in the ordinary course of
business; (ii) grant any severance or termination pay (other than pursuant to
existing severance agreements and arrangements or policies or in the ordinary
-33-
course of business) to, or enter into any new employment (other than the hiring
of at will employees in the ordinary course of business) or severance agreement
(or amend or modify any such existing agreement) with, any of its directors,
officers or employees; (iii) adopt any new employee benefit plan, benefit
arrangement or other pension, profit sharing, deferred compensation or similar
policy, except as may be required by applicable Law or (iv) enter into any
collective bargaining agreement;
(b) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of its capital stock except dividends and
distributions by Company Subsidiaries to the Company or to another Company
Subsidiary;
(c) (i) redeem, repurchase or otherwise reacquire any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock, or any options, warrants or conversion or other
rights to acquire any shares of its capital stock or any such securities or
obligations (except for any repurchase of Class B Common Stock held by former
employees of the Company or the Company Subsidiaries at or following the
termination of employment of a Person holding such shares of Class B Common
Stock); (ii) effect any dissolution, reorganization or recapitalization; or
(iii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of, or in substitution for, shares of its capital stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale of, any shares of its capital stock
(including shares held in treasury), any securities convertible into or
exercisable or exchangeable for any such shares, or any rights, warrants or
options to acquire, any such shares; or (ii) amend or otherwise modify the terms
of any such outstanding rights the effect of which shall be to make such terms
more favorable to the holders thereof;
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a material portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof of any other Person other than
(i) the acquisition of assets in the ordinary course of business and consistent
with past practice, (ii) any ID Buyout and (iii) the acquisition of assets for
an aggregate purchase price of up to $5,000,000; or make or commit to make any
capital expenditures other than capital expenditures in the ordinary course of
business;
(f) sell, lease, exchange, transfer, license, mortgage, pledge or impose a
security interest on or otherwise dispose of, or agree to sell, lease, exchange,
transfer, license, mortgage, pledge or impose a security interest on or
otherwise dispose of any of its material assets including, without limitation,
any material Intellectual Property owned or used by the Company and the Company
Subsidiaries; provided that the foregoing shall not be deemed to restrict the
sale, lease, exchange, transfer, license or other disposition of assets in the
ordinary course of business consistent with past practice at a price equal to
fair market value;
(g) adopt any amendments to its certificate of incorporation or, as to its
bylaws or limited liability company agreement, as the case may be, any
amendments that would have an
-34-
adverse impact on the consummation of the transactions contemplated by this
Agreement or would be adverse to Parent's interests;
(h) (i) change any of its methods of accounting in effect at the Balance
Sheet Date, (ii) settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes
(except where the amount of such settlements or controversies, individually or
in the aggregate, does not exceed $1,000,000), or change any of its methods of
reporting income or deductions for federal income Tax purposes from those
employed in the preparation of the federal income Tax returns for the taxable
year ending on the Balance Sheet Date, or (iii) make, change or revoke any
material tax election, except, in the case of clauses (i), (ii) or (iii) above,
as may be required by Law or GAAP;
(i) incur any Company Indebtedness whether or not evidenced by a note,
bond, debenture or similar instrument, except amounts that can be borrowed
pursuant to the Company Credit Documents and up to $2,000,000 in other
indebtedness for borrowed money;
(j) enter into, or become obligated under, any individual contract,
agreement, arrangement or commitment involving consideration in excess of
$250,000 at any time or during any year, or terminate or otherwise change, amend
or modify in any material respect any Material Contract;
(k) enter into any contract with any Affiliate of the Company or amend or
modify any such contract, or engage in any new transaction outside of the
ordinary course of business consistent with past practices or not on an
arms-length basis with any Affiliate of the Company;
(l) make any capital expenditures or commitments for additions to plant,
property or equipment constituting capital assets unless (i) such expenditures
are paid in full (in cash) prior to the Closing Date or (ii) such expenditures
or commitments would be included in Closing Working Capital or Closing
Indebtedness;
(m) enter into any contract or agreement that would require the consent of
the other party thereto to consummate the transactions contemplated hereby;
(n) take or agree to take any action that reasonably would be expected to
cause any of the representations and warranties of the Company contained herein
to no longer be true and correct in any material respect; or
(o) agree in writing or otherwise to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. ACCESS AND INFORMATION.
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause the Company Subsidiaries to, afford to Parent and its officers,
employees, accountants, consultants, legal counsel, financing sources and other
representatives, upon reasonable prior
-35-
notice, reasonable access during normal business hours to (i) the management and
key employees of the Company and Company Subsidiaries and (ii) all information
concerning the business, properties, contracts, records and personnel of the
Company and the Company Subsidiaries as Parent may reasonably request to conduct
such examination and investigation of the business and business assets,
including environmental matters, as is reasonably necessary for the purpose of
consummating the transactions contemplated by this Agreement (including any
financing transactions of Parent with respect to the transactions contemplated
by this Agreement); provided that that such examination and investigation will
be conducted at times and in a manner that does not unreasonably interfere with
the operation of the Company's or the Company Subsidiaries' respective
businesses.
(b) Following the Effective Time, for so long as such information is
retained by Parent or the Surviving Corporation (which shall be for a period of
at least five (5) years), Parent shall permit the Stockholder Representative and
its Affiliates and representatives (collectively, the "ABRY Parties") to have
reasonable access and duplicating rights during normal business hours, upon
reasonable prior notice to Parent, to the books, records and personnel relating
to the business of the Company, to the extent that such access may be reasonably
required in connection with (i) the preparation of any Junior Stockholder's Tax
returns or with any audit thereof, (ii) any suit, claim, action, proceeding or
investigation relating to the operation of the business of the Company and the
Company Subsidiaries prior to the Effective Time or (iii) any regulatory filing
or matter; provided that any such ABRY Parties shall reimburse Parent or the
Surviving Corporation promptly for all reasonable out-of-pocket costs and
expenses incurred by Parent or the Surviving Corporation in connection with any
such request and neither Parent nor the Surviving Corporation will be required
to take any such action unless it has received reasonable assurance that such
reimbursement will be paid. Parent and the Surviving Corporation, as applicable,
shall attempt in good faith to maintain such books and records in an easily
accessible format and at accessible locations.
(c) Following the Effective Time, Parent shall, and shall instruct its and
the Surviving Corporation's employees to, at any Junior Stockholder's reasonable
request, cooperate with such Junior Stockholder as may be reasonably required in
connection with the investigation and defense of any suit, claim, action,
proceeding or investigation relating to the business of the Company that is
brought against such Junior Stockholder or any of its Affiliates at any time
after the Effective Time; provided, that such Junior Stockholder shall reimburse
Parent or the Surviving Corporation promptly for all reasonable out-of-pocket
costs and expenses incurred by Parent or the Surviving Corporation in connection
with any such request and neither Parent nor the Surviving Corporation will be
required to take any such action unless it has received reasonable assurance
that such reimbursement will be paid.
(d) Notwithstanding anything to the contrary contained in this Section 7.1,
the access to books and records contemplated by Section 7.1(b) and Section
7.1(c) hereof (i) shall be subject to the terms of the confidentiality agreement
set forth in the Selling Stockholders Agreement, (ii) in the case of materials
that are privileged under laws concerning evidence, shall be subject to such
agreements as may be reasonably requested by the Surviving Corporation in order
to preserve and maintain any such privilege, and (iii) subject to Section
9.4(c), shall not extend to materials primarily related to any matter that is
the subject of a claim for indemnification pursuant to Article IX hereof.
-36-
SECTION 7.2. CONFIDENTIALITY.
Parent acknowledges and agrees that all information received from or on
behalf of the Company or any of the Company Subsidiaries in connection with the
Merger shall be deemed received pursuant to the confidentiality agreement, dated
as of October 28, 2004, between NCI and Citicorp Venture Capital Ltd. (the
"Confidentiality Agreement") and Parent shall, and shall cause its officers,
directors, employees, Affiliates, financial advisors and agents, to comply with
the provisions of the Confidentiality Agreement with respect to such information
and the provisions of the Confidentiality Agreement are hereby incorporated
herein by reference with the same effect as if fully set forth herein.
SECTION 7.3. FURTHER ACTION; COMMERCIALLY REASONABLE EFFORTS.
(a) Each of the parties shall use commercially reasonable efforts to take,
or cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable Laws or otherwise to
consummate and make effective the transactions contemplated by this Agreement as
promptly as practicable, including, without limitation, using its commercially
reasonable efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities and parties
to contracts with the Company, the Company Subsidiaries and Parent as are
necessary for the transactions contemplated herein. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use commercially reasonable efforts to take all such action
including taking any actions that may be necessary to obtain any required
consents under the Company Credit Documents.
(b) From the date of this Agreement until the Effective Time, each of the
parties shall promptly notify the other in writing of any action, proceeding or
investigation by any Governmental Entity or any other Person that is, to the
knowledge of such party, pending or threatened that (i) challenges or seeks
damages in connection with the Merger or (ii) seeks to restrain or prohibit the
consummation of the Merger or otherwise limit the right of Parent to own or
operate all or any portion of the business or assets of the Company.
(c) In connection with the transactions contemplated by this Agreement and
to the extent not done prior to the execution of this Agreement, the parties
shall comply promptly with the notification and reporting requirements of the
HSR Act and use all commercially reasonable best efforts to obtain early
termination of the waiting period under the HSR Act. The Parties shall
substantially comply with any additional requests for information, including
requests for production of documents and production of witnesses for interviews
or depositions, by any antitrust authority. In the event that this Agreement is
terminated pursuant to Section 10.1 prior to the expiration or early termination
of the waiting period under the HSR Act, each party hereto shall withdraw any
filing made by such party pursuant to the HSR Act.
SECTION 7.4. PUBLIC ANNOUNCEMENTS.
Prior to the Effective Time, Parent and the Company shall consult with each
other prior to issuing any press release or otherwise making any public
statements with respect to the
-37-
Merger and neither party shall issue any such press release or make any such
public statement without the other party's written approval, except as may be
required by Law, in which case the other party shall be advised and the parties
shall use reasonable efforts to cause a mutually agreeable release or
announcement to be issued to the extent practicable.
SECTION 7.5. ACTIONS UNDER COMPANY CREDIT AGREEMENT.
With respect to the LIBOR Advance outstanding under the Company Credit
Agreement on the date hereof and having a Payment Date of January 4, 2005, the
Company shall send a Notice of Conversion to the Administrative Agent pursuant
to Section 2.2(c)(ii) of the Company Credit Agreement specifying that the entire
amount of such LIBOR Advance is to be converted on such Payment Date into a Base
Rate Advance. With respect to the LIBOR Advance outstanding under the Company
Credit Agreement on the date hereof and having a Payment Date of January 28,
2005, the Company shall send a Notice of Conversion to the Administrative Agent
pursuant to Section 2.2(c)(ii) of the Company Credit Agreement specifying that
the entire amount of such LIBOR Advance shall promptly be converted into a Base
Rate Advance. The Company shall deliver the notices described in this Section
7.5 in accordance with the Company Credit Agreement not later than 11:00 a.m.
(EST) on December 29, 2004. Capitalized terms used in this Section 7.5 but not
otherwise defined in this Agreement shall have the meanings ascribed to such
terms in the Company Credit Agreement.
SECTION 7.6. EMPLOYEE BENEFITS MATTERS.
For a period of one year after the Effective Time, Parent shall cause the
Surviving Corporation and its Subsidiaries to provide employee benefits under
plans, programs and arrangements, other than equity compensation plans, which,
in the aggregate will provide benefits to the employees of the Company and the
Company Subsidiaries which, taken together, are not materially less favorable to
the employees than those provided pursuant to the plans, programs and
arrangements of the Company in effect and disclosed to Parent on the date
hereof; provided, that nothing herein shall interfere with the Surviving
Corporation's right or obligation to make such changes to such plans, programs
or arrangements as are necessary to conform with applicable Law.
SECTION 7.7. LABOR MATTERS; WARN.
(a) Parent shall not, and shall cause the Surviving Corporation and all of
the Company Subsidiaries not to, at any time prior to the 61st day following the
Closing Date, without fully complying with the notice and other requirements of
the Worker Adjustment and Retraining Notification Act of 1988 ("WARN Act"),
effectuate (i) a "plant closing" (as defined in the WARN Act) affecting any site
of employment or one or more facilities or operating units within any site of
employment of the Surviving Corporation or any of the Company Subsidiaries, or
(ii) a "mass layoff" (as defined in the WARN Act) affecting any site of
employment of the Surviving Corporation or any of the Company Subsidiaries.
(b) If Parent takes any action within 180 days after the Closing Date which
independently, or in connection with any reduction in the size of the Surviving
Corporation's or any of the Company Subsidiaries' work force occurring within
the ninety day period prior to the
-38-
Closing Date, could be construed as a "plant closing" or "mass layoff," as those
terms are defined in the WARN Act, Parent shall be solely responsible for
providing any notice required by the WARN Act and for making payments, if any,
and paying all penalties and costs, if any, which may result from any failure to
provide such notice.
SECTION 7.8. INFORMATION, ETC.
Parent acknowledges and agrees that neither the Company nor its Affiliates
or representatives have made any representation or warranty, expressed or
implied, as to the Company or any Company Subsidiary or as to the accuracy or
completeness of any information regarding the Company or any Company Subsidiary
furnished or made available to Parent and its representatives, except as
expressly set forth in this Agreement (including the Schedules and Exhibits
attached hereto), and the Company shall not have or be subject to any liability
to Parent or any other Person resulting from the distribution to Parent, or
Parent's use of or reliance on, any such information or any information,
documents or material made available to Parent in any data room, presentations
or in any other form in expectation of, or in connection with, the transactions
contemplated hereby.
SECTION 7.9. NOTIFICATION.
Between the date of this Agreement and the Closing Date, the Company will
promptly notify Parent in writing if the Company becomes aware of any fact or
condition that causes or constitutes a breach of any of the Company's
representations and warranties as of the date of this Agreement, or if the
Company becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition.
SECTION 7.10. EXCLUSIVITY.
The Company shall not, and shall not authorize or permit any of its
stockholders, officers, directors, affiliates, representatives or advisors to,
take, directly or indirectly, any action with respect to the Company to
initiate, assist, solicit, negotiate, encourage, accept or otherwise pursue any
offer or inquiry from any person or entity (i) to engage in any Third Party
Acquisition other than the transactions contemplated hereby or (ii) to reach any
agreement or understanding (whether or not such agreement or understanding is
absolute, revocable, contingent or conditional) for, or otherwise attempt to
consummate, any Third Party Acquisition other than the transactions contemplated
hereby. For purposes hereof, "Third Party Acquisition" means any (A) merger,
consolidation, business combination or similar transaction to which the Company
or any of its Affiliates is a party relating to the Company, its assets or any
interest therein, (B) any sale or other disposition, directly or indirectly
through the sale of any direct or indirect subsidiary of the Company, of any
stock or other equity interests in the Company or in any of its subsidiaries or
any sale, dividend or other disposition of 5% or more of the assets and
properties of any or all of the Company or any of its subsidiaries in a single
transaction or a series of related transactions or (C) any commercial or other
agreement or commitment which would prevent, impede or delay the Company from
consummating the Merger.
-39-
SECTION 7.11. CONTACTS WITH SUPPLIERS, CUSTOMERS AND OTHER PARTIES.
Without the prior written consent of the Company (which consent shall not
be unreasonably withheld), prior to the Effective Time, Parent shall not, and
shall cause Merger Sub and the representatives of Parent and Merger Sub not to,
contact any suppliers or independent contractors to, or customers of, the
Company or any of the Company Subsidiaries, or counterparties to any contracts
to which the Company or any Company Subsidiary is party, or any Governmental
Entity (other than in connection with any filings made under the HSR Act or in
connection with other consents, approvals or waivers required to be obtained by
Parent from Governmental Entities in connection with the transactions
contemplated hereby or as required by applicable Law) in connection with or
pertaining to the transactions contemplated by this Agreement.
SECTION 7.12. TAX MATTERS.
(a) The Parent shall cause the Subsidiaries to file all Tax Returns that
are required to be filed after the Closing Date. To the extent that any income
Tax Return is to be filed with respect to a taxable period of the Company or any
Company Subsidiary that ends before or includes the Closing Date (each period
ending before the Closing Date, and the portion of any such period that includes
the Closing Date, a "Pre-Closing Period"), the Parent shall provide such income
Tax Return to the Stockholder Representative for the Stockholder
Representative's review at least thirty (30) days prior to the deadline for
filing such Tax Return (including all applicable extensions thereto) and shall
make any changes to such Tax Return as are reasonably requested by Stockholder
Representative. The Junior Stockholders shall reimburse the Parent for income
Taxes attributable to any Pre-Closing Period (determined in the manner set forth
in Section 7.12(b)), to the extent exceeding (i) payments of estimated or
similar Tax payments made in respect thereof by the Company or any Company
Subsidiary on or prior to the Closing Date plus (ii) any refunds for a different
Pre-Closing Period that are attributable to any audits or other adjustments
giving rise to such claim for Pre-Closing Period income Taxes, by causing a
payment to be made from the Post-Closing Escrow Fund at least ten (10) days
prior to the deadline for payment of such Taxes. If and to the extent that
income Taxes attributable to the final Pre-Closing Period (determined in the
manner set forth in Section 7.12(b)) that are reflected on any such Tax Return
are less than amounts paid by the Company or any Company Subsidiary in respect
of such Taxes as estimates or similar Tax payments (without double-counting any
estimate in computing the Tax reflected on such Tax Return), on or prior to the
Closing Date, then Parent shall pay or cause the Surviving Corporation to pay to
the Stockholder Representative (on behalf of the Junior Stockholders) the amount
of any refund attributable to such deficiency promptly (but in no event later
than five Business Days) after the receipt of any such refund. For the avoidance
of doubt, the parties intend that any deductions arising from the repayment of
Company Indebtedness on the Closing Date pursuant to Section 2.8 of this
Agreement will be included in the income Tax Returns to be prepared with respect
to the final Pre-Closing Period. In the event any final Pre-Closing Period Tax
Return reports a net operating loss for such period, the Surviving Corporation
or the relevant Company Subsidiary shall carry the net operating loss back to an
earlier Pre-Closing Period and obtain any available remaining refund that would
result from the repayment contemplated by the preceding sentence. Parent shall
pay or cause the Surviving Corporation to pay to the Stockholder Representative
(on behalf
-40-
of the Junior Stockholders) the amount of any such refund promptly (but in no
event later than five Business Days) after the receipt thereof.
(b) Taxes shall be allocated between the Parent and the Junior Stockholders
as follows:
(i) For federal income Tax purposes, the taxable year of the Company
and each Company Subsidiary shall end as of the close of the Closing Date
and, with respect to all other Taxes, the Parent and the Junior
Stockholders shall, unless prohibited by applicable law, cause the taxable
period of the Company and each Company Subsidiary to close as of the close
of the Closing Date. Neither the Parent nor the Junior Stockholders shall
take any position inconsistent with the preceding sentence on any Tax
Return.
(ii) Any allocation of income or deductions required to determine any
Taxes attributable to the various portions of any taxable period of the
Company or any Company Subsidiary that does not close on the Closing Date
shall be made by means of an interim closing of the books and records of
such company as of the close of the applicable date, provided that
exemptions, allowances, deductions (including depreciation and amortization
deductions), and any Taxes (such as property, sales, or similar Taxes) that
are calculated on an annual or periodic basis shall be allocated pro rata
among the days in such taxable period. Any disagreements regarding the
allocations shall be promptly resolved in an arbitration conducted by the
Independent Accountants.
(c) [INTENTIONALLY OMITTED.]
(d) Parent shall promptly notify the Stockholder Representative of any
proposed audit, adjustment or assessment of Taxes that relates to a Pre-Closing
Period. The provisions of Section 9.4 shall apply to Stockholder
Representative's right to control the defense of any such proceeding relating to
a Pre-Closing Period as if such proceeding were a Third-Party Claim.
ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.1. CONDITIONS TO OBLIGATIONS OF PARENT, MERGER SUB AND THE
COMPANY.
The respective obligations of Parent, Merger Sub and the Company to effect
the Merger and the other transactions contemplated herein shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived, in whole or in part, to the extent permitted
by applicable Law:
(a) No Order. No Governmental Entity or federal or state court of competent
jurisdiction shall have pending or have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, executive order, decree, judgment,
injunction or other order (whether temporary, preliminary or permanent), in any
case which is in effect and which prevents or prohibits consummation of the
Merger or any other material transaction contemplated in this
-41-
Agreement or would cause any material liability to be imposed on Parent or the
Surviving Corporation if the Merger or any transaction contemplated by this
Agreement were consummated, nor shall any action in which any of the foregoing
is sought be pending.
(b) HSR Act. Any waiting period and any extensions thereof under the HSR
Act shall have expired or been terminated and, in the case of any early
termination of such waiting period, the parties shall have received written
notice of such termination.
SECTION 8.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to effect the Merger and the other
transactions contemplated in this Agreement are also subject to the following
conditions, any or all of which may be waived, in whole or in part, by Parent
and Merger Sub to the extent permitted by applicable Law:
(a) Representations and Warranties of Company. The representations and
warranties of the Company set forth in Article III that are qualified as to
materiality shall be true and correct, and the representations and warranties of
the Company set forth in Article III that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Effective Time as though made on and as of such date and time
(except to the extent that any such representation and warranty expressly speaks
as of an earlier date, in which case such representation and warranty shall be
true and correct as of such earlier date).
(b) Agreements and Covenants of Company. The agreements and covenants of
the Company required to be performed on or before the Effective Time shall have
been performed in all material respects.
(c) Deliveries. The Company shall have delivered or caused to be delivered
each of the following:
(i) a certificate signed by an authorized officer of the Company dated
the Closing Date, stating that the conditions specified in Section 8.2(a),
Section 8.2(b) and Section 8.2(d) have been satisfied;
(ii) a Certificate of Merger in the form required by the DGCL, duly
executed by the Company;
(iii) reasonable evidence that the Company has obtained the consents
required under those Material Contracts identified on Schedule 8.2(c)(iii);
(iv) resignations of the directors of the Company and the Company
Subsidiaries (other than any directors identified by Parent in writing);
(v) a certificate of good standing of the Company from Delaware dated
within ten (10) days of the Closing Date;
-42-
(vi) certified copies of the resolutions duly adopted by the Company's
board of directors authorizing its execution, delivery and performance of
this Agreement and the other agreements contemplated hereby to which it is
a party and the consummation of all transactions contemplated hereby and
thereby;
(vii) the opinion of Xxxxxxxx & Xxxxx LLP, dated as of the Closing
Date, opining on matters customary for a merger transaction of this nature,
in form and substance reasonably acceptable to Parent;
(viii) the Price Certificate, duly executed by the president or chief
financial officer of the Company;
(ix) the Post-Closing Escrow Agreement duly executed by the Company;
and
(x) a certificate, in form and substance reasonably satisfactory to
Parent, and issued pursuant to Treasury Regulation Section 1.897.2(h), that
stock of the Company is not a "United States real property interest" (as
that term is defined in Section 897 of the Code and the Treasury
Regulations thereunder).
(d) No Material Adverse Effect. Since the date of this Agreement, there
shall have not been a change, event or condition which has had or would
reasonably be expected to have a Company Material Adverse Effect.
(e) Stockholder Approval. The approval by the Junior Stockholders of the
Merger and the transactions contemplated by this Agreement shall have been
obtained.
(f) Dissenting Shares. The Dissenting Shares shall not constitute more than
one percent (1.0%) of all shares of Junior Stock outstanding immediately prior
to the Effective Time.
If the Closing occurs, all closing conditions set forth in this Section 8.2
which have not been fully satisfied as of the Closing shall be deemed to have
been fully waived by Parent and Merger Sub; provided that such waiver will not
affect any right to indemnification pursuant to Article IX in respect of any
inaccuracy in any certification made pursuant to Section 8.2(c)(i).
SECTION 8.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to effect the Merger and the other
transactions contemplated in this Agreement are also subject to the following
conditions any or all of which may be waived, in whole or in part, by the
Company to the extent permitted by applicable Law:
(a) Representations and Warranties of Parent and Merger Sub. The
representations and warranties of the Merger Sub in Article IV and Parent in
Article V that are qualified as to materiality shall be true and correct, and
the representations and warranties of the Merger Sub in Article IV and Parent in
Article V that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement, and as of the Effective
Time as though made on and as of such date and time (except to the extent that
any such representation and warranty expressly speaks as of an earlier date, in
which case such representation and warranty shall be true and correct as of such
earlier date).
-43-
(b) Agreements and Covenants of Parent and Merger Sub. The agreements and
covenants of Parent and Merger Sub required to be performed on or before the
Effective Time shall have been performed in all material respects.
(c) Delivery of Consideration. Parent shall have delivered (i) to the
Pre-Closing Escrow Agent, duly executed written instructions to pay the entire
amount of the Pre-Closing Escrow Fund to the Stockholder Representative in
accordance with the provisions of Section 2.5(b), (ii) to the Post-Closing
Escrow Agent, the entire amount of the Holdback Consideration in accordance with
the provisions of Section 2.5(a) and (iii) to the Stockholder Representative,
the cash amount described in clause (i) of Section 2.5(a) in accordance with the
provisions of such Section.
(d) Release of Pre-Closing Escrow Fund. The Pre-Closing Escrow Agent shall
have paid the entire amount of the Pre-Closing Escrow Fund to the Stockholder
Representative as contemplated by Section 2.5(a).
(e) Other Deliveries. Parent shall have delivered or caused to be delivered
to the Company each of the following:
(i) a certificate signed by an authorized officer of both Parent and
Merger Sub dated the Closing Date stating that the conditions specified in
Section 8.3(a) and Section 8.3(b) have been satisfied;
(ii) certified copies of the resolutions duly adopted by each of
Parent and Merger Sub's board of directors or equivalent governing body
authorizing its execution, delivery and performance under this Agreement
and the other agreements contemplated hereby to which it is a party, and
the consummation of all transactions contemplated hereby and thereby;
(iii) a Certificate of Merger in the form required by the DGCL duly
executed by Merger Sub;
(iv) the Post-Closing Escrow Agreement duly executed by Parent;
(v) evidence reasonably satisfactory to the Company that all Company
Indebtedness outstanding under the Company Credit Documents shall have been
repaid in full contemporaneously with the Closing; and
(vi) the opinion of Dechert LLP, dated as of the Closing Date, opining
on matters customary for a merger transaction of this nature, in form and
substance reasonably acceptable to Stockholder Representative.
If the Closing occurs, all closing conditions set forth in this Section 8.3
which have not been fully satisfied as of the Closing shall be deemed to have
been fully waived by the Company; provided that such waiver will not affect any
right to indemnification pursuant to Article IX in respect of any inaccuracy in
any certification made pursuant to Section 8.3(e)(i).
-44-
ARTICLE IX
INDEMNIFICATION
SECTION 9.1. INDEMNIFICATION OF PARENT.
(a) The Company agrees that, after the Effective Time, Parent and the
Surviving Corporation and their respective officers, directors, agents and
representatives (each hereinafter referred to individually as a "Parent
Indemnified Person" and collectively as "Parent Indemnified Persons"), shall be
indemnified and held harmless from and against, any and all claims, demands,
suits, actions, causes of actions, losses, costs, damages, liabilities and
out-of-pocket expenses incurred or paid, including reasonable attorneys' fees,
costs of investigation or settlement, other professionals' and experts' fees,
and court or arbitration costs but specifically excluding consequential damages,
lost profits, indirect damages, punitive damages and exemplary damages;
provided, that the foregoing exclusion shall not apply to (i) amounts paid to
third parties in respect of an indemnifiable claim hereunder or (ii) damages
measured based on the difference in value of the Company as represented in this
Agreement and the actual value of the Company as a result of any Company
Breaches (as hereinafter defined) (hereinafter collectively referred to as
"Damages") (but only to the extent provided in Section 9.1(c)), to the extent
such Damages are determined by a Final Award, a final order of a court of
competent jurisdiction or agreement of Parent and the Stockholder Representative
to have arisen out of or to have resulted from, in connection with, or by virtue
of facts or circumstances which constitute an inaccuracy, misrepresentation,
breach of, default in, or failure to perform, any of the representations,
warranties or covenants given or made by the Company in this Agreement or in the
certificate delivered pursuant to Section 8.2(c)(i), as qualified by the
Schedules hereto as updated from time to time in accordance with the terms of
this Agreement, or any Company Transaction Expense to the extent it is not
actually reflected in the Company Transaction Expenses used to determine the
final Merger Consideration (collectively, "Company Breaches"); provided that if
any representation or warranty is qualified in any respect by materiality or
reference to Company Material Adverse Effect, for purposes of this paragraph
such materiality or Company Material Adverse Effect qualification will in all
respects be ignored. For the avoidance of doubt, no Parent Indemnified Person
will be entitled to be indemnified pursuant to this Section 9.1 for any
liability to the extent (but only to the extent) the Stockholder Representative
can demonstrate that the amount of such liability is actually reflected in the
Closing Indebtedness, Company Transaction Expenses or Closing Working Capital
used to determine the final Merger Consideration or is provided for pursuant to
Section 7.12.
(b) Any claim for indemnification made by a Parent Indemnified Person under
this Section 9.1 must be raised in a writing delivered to the Stockholder
Representative by no later than the Release Date and, if raised by such date,
such claim shall survive the Release Date until final resolution thereof;
provided that a Parent Indemnified Party may bring a claim for indemnification
under this Section 9.1 after the Release Date if such claim is based solely on a
Company Breach of the representations and warranties set forth in the first
sentence of Section 3.1(a), Section 3.4 or Section 3.19 (collectively, the
"Excluded Representations").
(c) The aggregate liability on account of Company Breaches pursuant to
Section 9.1 or otherwise shall be limited to the Post-Closing Escrow Fund and
claims for Damages, whether
-45-
under this Article IX or otherwise, shall be satisfied solely from and to the
extent of funds on deposit in the Post-Closing Escrow Fund, except in the case
of Damages arising solely from (i) a Company Breach of an Excluded
Representation, in which case the Parent Indemnified Persons shall be entitled
to seek amounts in excess of the Post-Closing Escrow Fund from the Junior
Stockholders pursuant to the Selling Stockholders Agreement or (ii) fraud on the
part of any Junior Stockholder, in which case the Parent Indemnified Persons
shall be entitled to seek amounts in excess of the Post-Closing Escrow Fund from
such Junior Stockholder pursuant to the Selling Stockholders Agreement.
Notwithstanding the foregoing provisions of this Section 9.1, the
indemnification provided for in this Section 9.1 shall not apply unless and
until the aggregate Damages so determined to be due for which one or more Parent
Indemnified Persons seeks or has sought indemnification hereunder exceeds a
cumulative aggregate of $4,000,000 (the "Basket"), in which event Parent
Indemnified Persons shall, subject to the other limitations herein, be
indemnified for all such Damages in excess of the Basket; provided, that the
Basket shall not apply to a breach of the Excluded Representations or a breach
of any covenant of the Company set forth in this Agreement.
(d) The amount to which a Parent Indemnified Person may become entitled
under this Article IX shall be net of (i) any actual recovery (whether by way of
payment, discount, credit, off-set, counterclaim or otherwise) received from a
third party (including any insurer) less any cost associated with receiving such
recovery in respect of a claim and (ii) any amount that would have been
recoverable pursuant to an insurance policy maintained by the Company or a
Company Subsidiary as of the date of this Agreement, had such policy been in
effect for the applicable period after the Closing. To the extent that
insurance, "pass-through" warranty coverage from a manufacturer or other form of
recovery or reimbursement from a third party is available to any Parent
Indemnified Person to cover any item for which indemnification may be sought
hereunder, the Parent will, or will cause the Parent Indemnified Person to, on a
timely and expeditious basis, use commercially reasonable efforts to effect
recovery under applicable insurance policies and warranties and otherwise pursue
to conclusion available remedies or causes of action to recover the amount of
its claim as may be available from such other party; provided the availability
of a potential recovery against such a third party shall not affect Parent's
right to make a claim against the Post-Closing Escrow Account pursuant to this
Section 9.1. To the extent any Parent Indemnified Person is indemnified and paid
the full amount of any claim out of the Post-Closing Escrow Account on any claim
referred to in the previous sentence, the Parent will assign, and the Parent
will cause the Parent Indemnified Person to assign, to the Stockholder
Representative, to the fullest extent allowable, its claim against such
insurance, warranty coverage or third-party claim, or in the event assignment is
not permissible, but Parent or the Parent Indemnified Person in question is
nonetheless permitted to pursue such claim on the Stockholder Representative's
or the Junior Stockholders' behalf, the Parent shall pursue, or shall cause the
Parent Indemnified Person to pursue, such claim, at the Stockholder
Representative's direction and expense and without additional out-of-pocket
expense to any Parent Indemnified Person, with any recovery thereon to be
transmitted promptly to the Post-Closing Escrow Account (or if after the Release
Date, to the Stockholder Representative for distribution to the Junior
Stockholders) upon receipt. To the extent that any Parent Indemnified Person has
not been indemnified out of the Post-Closing Escrow Fund on account of any such
claim, any Parent Indemnified Person may pursue recovery against such insurance
warranty coverage or third party and will be entitled to retain all recoveries
made as a result of any such action. The Stockholder Representative shall have
the right, at mutually agreeable times during
-46-
normal business hours, after reasonable notice (which may be oral) to Parent and
without undue disruption to their normal business activities, to inspect the
assets and properties of Parent and the Surviving Corporation and its
Subsidiaries and to inspect and make abstracts and reproductions of all books
and records of Parent and the Surviving Corporation and its Subsidiaries
relating to any such claims. Parent shall, and shall cause the Surviving
Corporation to furnish the Stockholder Representative with such information
respecting the assets, business and financial records of Parent and the
Surviving Corporation and its Subsidiaries relating to any such claims as the
Stockholder Representative may, from time to time, reasonably request and at the
sole cost and expense of the Stockholder Representative.
(e) Each Parent Indemnified Party shall be responsible for taking or
causing to be taken all reasonable steps to mitigate its Damages upon and after
becoming aware of any event that could reasonably be expected to give rise to
Damages that may be indemnifiable under this Article IX.
SECTION 9.2. INDEMNIFICATION OF JUNIOR STOCKHOLDERS.
Parent agrees that, after the Effective Time, Parent and the Surviving
Corporation shall indemnify, defend and hold harmless the Junior Stockholders
and their respective heirs, successors and assigns (the "Company Indemnified
Persons"), from and against any and all Damages arising out of or resulting from
any breach of any representation, warranty or covenant made by Parent in this
Agreement or in any of the certificates or other instruments or documents
furnished by Parent pursuant to this Agreement at or prior to the Effective
Time.
SECTION 9.3. NOTICE OF CLAIM.
(a) As used herein, the term "Claim" means a claim for indemnification by
Parent or any other Parent Indemnified Person or any Company Indemnified Person,
as the case may be, for Damages under this Article IX (such Person making a
Claim, an "Indemnitee"). An Indemnitee may give notice of a Claim under this
Agreement, whether for its own Damages or for Damages incurred by any other
Parent Indemnified Person or Company Indemnified Person, as applicable, pursuant
to written notice of such Claim executed by an officer of Parent or the
Stockholder Representative, as applicable (a "Notice of Claim"), and delivered
to the Stockholder Representative or Parent, as applicable (such receiving
party, the "Indemnitor"), promptly after such Indemnitee becomes aware of the
existence of any potential claim by such Indemnitee for indemnification under
this Article IX arising out of or resulting from:
(i) any item subject to indemnification pursuant to the terms of
Section 9.1;
or
(ii) the assertion, whether orally or in writing, against any
Indemnitee of a claim, demand, suit, action, arbitration, investigation,
inquiry or proceeding brought by a third party against any Indemnitee (in
each such case, a "Third-Party Claim") that arises out of or results from
any item subject to indemnification pursuant to the terms of Section 9.1.
(b) Each Notice of Claim by an Indemnitee shall contain the following
information:
-47-
(i) that Indemnitee has incurred or paid or, in good faith, believes
it shall have to incur or pay, Damages in an aggregate stated amount (where
practicable) arising from such Claim (which amount may be the amount of
damages claimed by a third party in an action brought against any
Indemnitee based on alleged facts, which if true, would give rise to
liability for Damages to such Indemnitee under this Article IX); and
(ii) a brief description, in reasonable detail (to the extent
reasonably available to Indemnitee), of the facts, circumstances or events
giving rise to the alleged Damages based on Indemnitee's good faith belief
thereof, including the identity and address of any third-party claimant (to
the extent reasonably available to Indemnitee). Following delivery of the
Notice of Claim (or at the same time if the Indemnitee so elects) the
Indemnitee shall deliver copies of any demand or complaint, the amount of
Damages, the date each such item was incurred or paid, or the basis for
such anticipated liability, and the specific nature of the breach to which
such item is related.
SECTION 9.4. DEFENSE OF THIRD-PARTY CLAIMS.
(a) Subject to the provisions hereof, the Indemnitor on behalf of the
Indemnitee shall have the right to elect to defend any Third-Party Claim, and,
notwithstanding the outcome of such Third-Party Claim, the costs and expenses
incurred by the Indemnitor in connection with such defense (including attorneys'
fees, other professionals' and experts' fees and court or arbitration costs)
shall be paid by the Indemnitor. The Indemnitee may participate, through counsel
of its own choice, in the defense of any Third-Party Claim.
(b) Indemnitee shall give prompt written notice of any Third-Party Claim to
the Indemnitor; provided, that so long as such notice is given on or prior to
the Release Date the failure timely to give such notice shall not limit or
reduce the Indemnitee's right to indemnity hereunder unless (and then only to
the extent that) the Indemnitor is (or the Junior Stockholders are, in the case
of a Notice of Claim on behalf of a Parent Indemnified Person) prejudiced
thereby. The Indemnitor shall be entitled to assume the defense thereof
utilizing legal counsel reasonably acceptable to the Indemnitee; provided that
the Indemnitor shall not be entitled to assume control of such defense and shall
pay the fees and expenses of counsel retained by the Indemnitee if (i) the claim
for indemnification relates to or arises in connection with any criminal
proceeding, action, indictment, allegation or investigation, (ii) the claim
seeks an injunction or equitable relief against the Indemnitee (or against
Parent, the Surviving Corporation or any Company Subsidiary), if the Indemnitee
is a Parent Indemnified Person) or (iii) in the event the Indemnitee is a Parent
Indemnified Person, the aggregate amount of all pending Claims exceeds 200% of
the balance of the Post-Closing Escrow Fund (the foregoing, collectively, the
"Litigation Conditions"); provided, that the Indemnitor shall forfeit the right
to control the defense or settlement of any such claim, if, at any time after
assuming the defense or settlement thereof, the Indemnitor no longer satisfies
the Litigation Conditions.
(c) If the Indemnitor has the right to and does elect to defend any
Third-Party Claim, the Indemnitor shall: (i) conduct the defense of such
Third-Party Claim actively and diligently and keep the Indemnitee fully informed
of material developments in the Third-Party Claim at all stages thereof; (ii)
promptly submit to the Indemnitee copies of all pleadings, responsive pleadings,
motions and other similar legal documents and papers received or filed in
connection
-48-
therewith; (iii) permit the Indemnitee and its counsel to confer on the conduct
of the defense thereof; and (iv) permit the Indemnitee and its counsel an
opportunity to review all legal papers to be submitted prior to their
submission. Parent and the Stockholder Representative will make available to
each other and each other's counsel and accountants, without charge, all of its
or their books and records relating to the Third-Party Claim, and each party
will render to the other party such assistance as may be reasonably required in
order to insure the proper and adequate defense thereof and shall furnish such
records, information and testimony and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested by the
other party in connection therewith.
(d) If the Indemnitor has the right to and does elect to defend any
Third-Party Claim, the Indemnitor shall have the right to enter into any
settlement of a Third-Party Claim without the consent of the Indemnitee;
provided that (i) if the Indemnitee is a Parent Indemnified Person, the amount
of such settlement does not exceed the balance of the Post-Closing Escrow Fund,
(ii) such settlement does not involve any injunctive or other equitable relief
binding upon the Surviving Corporation or any of its Affiliates, and (iii) such
settlement expressly and unconditionally releases the Indemnitee from all
liabilities and obligations with respect to such claim, without prejudice;
provided, further, that no settlement by the Stockholder Representative of a
Third-Party Claim shall limit or reduce the right of Parent Indemnified Persons
to indemnity hereunder for all Damages they may incur arising out of or
resulting from the Third-Party Claim to the extent indemnified in this Article
IX.
SECTION 9.5. RESOLUTION OF NOTICE OF CLAIM.
Each Notice of Claim given by an Indemnitee shall be resolved as follows:
(a) Admitted Claims. If, within 20 Business Days after a Notice of Claim is
delivered to the Indemnitor, the Indemnitor agrees in writing that liability for
such Claim is indemnified under Section 9.1 or Section 9.2, as applicable, the
full amount of the Damages specified in the Notice of Claim is agreed to, and
that such Notice of Claim is timely, the Indemnitor (on behalf of the Junior
Stockholders in the case where the Stockholder Representative or any Junior
Stockholder is the Indemnitor) shall be conclusively deemed to have consented to
the recovery by the Indemnitee of the full amount of Damages specified in the
Notice of Claim in accordance with this Article IX, including, in the event that
the Stockholder Representative is the Indemnitor, the forfeiture of a portion of
the Post-Closing Escrow Fund equal to such Damages, and Parent shall be
authorized to deliver such agreement to the Post-Closing Escrow Agent
instructing the Post-Closing Escrow Agent to make a wire transfer to Parent in
the amount of such Damages.
(b) Contested Claims. If the Indemnitor does not agree in writing to such
Notice of Claim or gives the other party written notice contesting all or any
portion of a Notice of Claim (a "Contested Claim") within the 20 Business Day
period specified in Section 9.5(a), then such Contested Claim shall be resolved
by either (i) a written settlement agreement executed by Parent and the
Stockholder Representative or (ii) in the absence of such a written settlement
agreement within 45 Business Days of such notice or such longer period as is
mutually agreed upon by the parties, by binding arbitration between Parent and
the Stockholder Representative in accordance with the provisions of this Section
9.5.
-49-
(c) Arbitration of Contested Claims. Any Contested Claim which is not
settled by the parties as set forth in Section 9.5(b) shall be submitted to
mandatory, final and binding arbitration before J.A.M.S./ENDISPUTE or its
successor ("J.A.M.S.") pursuant to the United States Arbitration Act, 9 U.S.C.,
Section 1 et seq., and that any such arbitration shall be conducted in Boston,
Massachusetts. If J.A.M.S. ceases to provide arbitration service, then the term
"J.A.M.S." shall thereafter mean and refer to the American Arbitration
Association ("AAA"). Either Parent or the Stockholder Representative may
commence the arbitration process called for by this Agreement by filing a
written demand for arbitration with J.A.M.S. and giving a copy of such demand to
each of the other parties to this Agreement. The arbitration shall be conducted
in accordance with the provisions of J.A.M.S' Streamlined Arbitration Rules and
Procedures in effect at the time of filing of the demand for arbitration (or, if
J.A.M.S. then means the AAA, the commercial arbitration rules of the AAA then in
effect), subject to the provisions of this Section 9.5(c). The parties shall
cooperate with J.A.M.S. and with each other in promptly selecting an arbitrator
from J.A.M.S.' panel of neutrals and in scheduling the arbitration proceedings
in order to fulfill the provisions, purposes and intent of this Agreement. The
parties covenant that they shall participate in the arbitration in good faith
and that they shall share in its costs in accordance with this Agreement. The
provisions of this Section 9.5(c) may be enforced by any court of competent
jurisdiction, and the party seeking enforcement shall be entitled to an award of
all costs, fees and expenses, including attorneys' fees, to be paid by the party
against whom enforcement is ordered. Judgment upon the award rendered by the
arbitrator may be entered in any court having competent jurisdiction.
(d) Payment of Costs. Parent, on the one hand, and the Junior Stockholders
(through the Stockholder Representative), on the other hand, shall bear the
expense of deposits and advances required by the arbitrator in equal
proportions, but either party may advance such amounts, subject to recovery as
an addition or offset to any award. For the avoidance of doubt, the monetary
recovery owed to the prevailing party to the arbitration proceeding shall
include reimbursement of such advances.
(e) Burden of Proof. Except as may be otherwise expressly provided herein,
for any Contested Claim submitted to arbitration, the burden of proof shall be
as it would be if the claim were litigated in a judicial proceeding governed
exclusively by the internal Laws of the State of Delaware applicable to
contracts executed and entered into within the State of Delaware, without regard
to the principles of choice of law or conflicts of law of any jurisdiction.
(f) Award. Upon the conclusion of any arbitration proceedings hereunder,
the arbitrator shall render findings of fact and conclusions of law and a final
written arbitration award setting forth the basis and reasons for any decision
reached (the "Final Award") and shall deliver such documents to the Stockholder
Representative and Parent, together with a signed copy of the Final Award.
Subject to the provisions of this Agreement, the Final Award shall constitute a
conclusive determination of all issues in question, binding upon the Junior
Stockholders, the Stockholder Representative and Parent, and shall include an
affirmative statement to such effect.
(g) Timing. The Stockholder Representative, Parent and the arbitrator shall
conclude each arbitration pursuant to this Section 9.5 as promptly as possible
for the Contested Claim being arbitrated.
-50-
(h) Terms of Arbitration. The arbitrator chosen in accordance with these
provisions shall not have the power to alter, amend or otherwise affect the
terms of these arbitration provisions or the provisions of this Agreement.
(i) Exclusive Remedy. Following the Effective Time, except as specifically
otherwise provided in this Agreement, arbitration conducted in accordance with
this Agreement shall be the sole and exclusive remedy of the parties for any
Claim made pursuant to this Article IX; provided that this sentence shall not be
deemed a waiver by any party of its right to seek specific performance or
injunctive relief in the case of another party's failure to comply with the
covenants made by such other party.
(j) Payment to Parent. If any Parent Indemnified Person is entitled to the
recovery of Damages pursuant to any Claim that is agreed to pursuant to Section
9.5(a), or a Contested Claim that is resolved pursuant to Section 9.5(c). Parent
and the Stockholder Representative shall promptly take such actions as may be
required to cause the Post-Closing Escrow Agent to make a disbursement from the
Post-Closing Escrow Fund to Parent, including executing and delivering the
appropriate joint disbursement instructions.
SECTION 9.6. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES.
All representations and warranties of the Company contained in this
Agreement, as qualified by the Schedules hereto as updated from time to time in
accordance with the terms of this Agreement, shall remain operative and in full
force and effect until that date which is the earlier of (a) the termination of
this Agreement in accordance with Article IX and (b) the eighteen (18) month
anniversary of the Closing Date (the "Release Date"); provided that the Excluded
Representations shall survive indefinitely. All representations and warranties
of Parent contained in this Agreement and the other agreements, certificates and
documents contemplated hereby shall remain operative and in full force and
effect, until that date which is the earlier of (a) the termination of this
Agreement in accordance with Article IX and (b) the Release Date. All covenants
of the parties shall survive according to their respective terms.
SECTION 9.7. EXCLUSIVE REMEDY; NON-RECOURSE.
(a) After the Effective Time the indemnification rights set forth in this
Article IX and in the Selling Stockholders Agreement are and shall be the sole
and exclusive remedies of Parent, Parent Indemnified Persons, the Stockholder
Representative, the Surviving Corporation and the Junior Stockholders with
respect to this Agreement and the Merger contemplated hereby; provided that this
sentence shall not be deemed a waiver by any party of its right to seek specific
performance or injunctive relief in the case of another party's failure to
comply with the covenants made by such other party.
(b) Parent, for itself, its successors and assigns including the Surviving
Corporation and Parent Indemnified Persons, acknowledges and agrees that this
Agreement and the transactions contemplated hereby are non-recourse as to the
Stockholder Representative and the Junior Stockholders and that they shall have
no recourse against the Stockholder Representative or the Junior Stockholders
for or on account of any matter, cause, claim or thing of or relating to this
Agreement or the Merger or other transactions contemplated hereby, excepting
only against
-51-
and to the extent of the Post-Closing Escrow Amount and as provided in this
Agreement and the Selling Stockholders Agreement.
(c) In furtherance of the foregoing, Parent for itself, its successors and
assigns (including the Surviving Corporation), and Parent Indemnified Persons,
covenant and agree that neither Parent, the Surviving Corporation nor Parent
Indemnified Persons (or any of them) shall xxx or initiate or maintain any
action, suit or cause of action against the Stockholder Representative or the
Junior Stockholders (in their capacity as such) or any of them as a result of
this Agreement or the transactions contemplated hereby, except as contemplated
by this Agreement and the Selling Stockholders Agreement.
(d) The provisions of Article IX were specifically bargained for and
reflected in the amounts payable to the Junior Stockholders in connection with
the Merger pursuant to Article II.
SECTION 9.8. APPOINTMENT OF STOCKHOLDER REPRESENTATIVE.
(a) Pursuant to the Selling Stockholders Agreement, and by voting in favor
of or consenting to the Merger and/or by virtue of the approval of the Merger,
the Junior Stockholders shall be deemed to have approved the designation of ABRY
Partners, LLC (in such capacity the "Stockholder Representative") as, the
attorney-in-fact and agent for and on behalf of each Junior Stockholder and
their respective heirs, successors and assigns with respect to the post-Closing
adjustments contemplated by Section 2.4(e), claims for indemnification under
this Article IX or the Selling Stockholders Agreement and the taking by the
Stockholder Representative of any and all actions and the making of any
decisions required or permitted to be taken by the Stockholder Representative
under this Agreement, the Selling Stockholders Agreement and the Post-Closing
Escrow Agreement, including the exercise of the power to: (a) authorize the
release or delivery to Parent of all or any portion of the Post-Closing Escrow
Fund or the Reserve Fund in satisfaction of the obligations (if any) with
respect to the post-Closing adjustments contemplated by Section 2.4 and
indemnification claims by Parent or any other Parent Indemnified Person pursuant
to this Article IX; (b) agree to, negotiate, enter into settlements and
compromises of, and comply with orders of courts with respect to, such
indemnification claims; (c) litigate, arbitrate, resolve, settle or compromise
any claim for indemnification made pursuant to this Article IX; (d) establish
the Reserve Account and pay such amounts therefrom as the Stockholder
Representative deems necessary or appropriate in its good faith judgment; and
(e) take all actions necessary in the judgment of the Stockholder's
Representative for the accomplishment of the foregoing. The Stockholder
Representative shall have no authority or power to act on behalf of the Company,
Parent or Surviving Corporation. The Stockholder Representative shall have
authority and power to act on behalf of the Junior Stockholders with respect to
the disposition, settlement or other handling of the adjustments contemplated by
Section 2.4 and all claims under this Article IX and the Selling Stockholders
Agreement and all rights or obligations arising under Section 2.4, this Article
IX and the Selling Stockholders Agreement. The Junior Stockholders shall be
bound by all actions taken and documents executed by the Stockholder
Representative in connection with Section 2.4, this Article IX and the Selling
Stockholders Agreement, and Parent shall be entitled to rely on any action or
decision of the Stockholder Representative. In performing the functions
specified in this Agreement, the Stockholder Representative may act upon any
instrument or other writing believed by the Stockholder Representative in good
faith to be genuine and to be signed or presented by the
-52-
proper Person and shall not be liable in connection with the performance by it
of its duties pursuant to the provisions of this Agreement, the Post-Closing
Escrow Agreement and the Selling Stockholders Agreement in the absence of gross
negligence or willful misconduct on the part of the Stockholder Representative.
By approval of the Merger and pursuant to the Selling Stockholders Agreement,
the Junior Stockholders hereby agree severally, and not jointly, to indemnify
and hold harmless the Stockholder Representative (out of funds that otherwise
are to be distributed from the Post-Closing Escrow Fund or the Reserve Fund to
the Junior Stockholders, if any, as described in the following sentence) from
and against any loss, liability or expense incurred without gross negligence or
willful misconduct on the part of the Stockholder Representative and arising out
of or in connection with the acceptance or administration of its duties
hereunder. Any liability for any such loss, liability or expense will be borne
by the Junior Stockholders pro rata based upon the respective portions of the
Merger Consideration received by such Junior Stockholders. Any out-of-pocket
costs and expenses incurred by the Stockholder Representative in connection with
actions taken by the Stockholder Representative pursuant to the terms of Section
2.4, this Article IX or the Selling Stockholders Agreement (including the hiring
of legal counsel and the incurring of legal fees and costs, "Representative
Expenses") shall be the responsibility of the Junior Stockholders. Without
limiting the generality of the foregoing, the Stockholder Representative shall
have full power and authority to interpret all the terms and provisions of this
Agreement, the Post-Closing Escrow Agreement and the Selling Stockholders
Agreement, and to consent to any amendment hereof or thereof, on behalf of all
the Junior Stockholders and their respective heirs, successors and assigns.
(b) By approval of the Merger and their execution of the Selling
Stockholders Agreement, the Junior Stockholders hereby appoint and constitute
the Stockholder Representative the true and lawful attorney-in-fact of the
Junior Stockholders, with full power in their name and on their behalf to act
according to the terms of this Agreement, the Post-Closing Escrow Agreement and
the Selling Stockholders Agreement in the absolute discretion of the Stockholder
Representative; and in general to do all things and to perform all acts
including, without limitation, executing and delivering the Post-Closing Escrow
Agreement and any other agreements, certificates, receipts, instructions,
notices or instruments contemplated by or deemed advisable in connection with
the Post-Closing Escrow Agreement and the Selling Stockholders Agreement. This
power of attorney and all authority hereby conferred is granted and shall be
irrevocable and shall not be terminated by any act of any Junior Stockholder, by
operation of law, whether by such person's death, disability, protective
supervision or any other event. Without limiting the foregoing, this power of
attorney is to ensure the performance of a special obligation and, accordingly,
by approval of the Merger and executing the Selling Stockholders Agreement, each
Junior Stockholder shall be deemed to have waived and renounced its, his or her
right to renounce this power of attorney unilaterally any time before the day
following the Escrow Termination Date. By approval of the Merger and executing
the Selling Stockholders Agreement, each Junior Stockholder shall be deemed to
have waived any and all defenses that may be available to contest, negate or
disaffirm the action of the Stockholder Representative taken in good faith under
the Post-Closing Escrow Agreement or the Selling Stockholders Agreement.
Notwithstanding the power of attorney granted in this Section 9.8, no agreement,
instrument, acknowledgement or other act or document shall be ineffective solely
by reason of a Junior Stockholder (instead of the Stockholder Representative)
having signed or given the same directly.
-53-
(c) Notwithstanding anything to the contrary contained herein, the Company
shall act on its own behalf at all times prior to the Effective Time, shall sign
on its own behalf and shall not appoint any Person as its lawful
attorney-in-fact.
SECTION 9.9. PAYMENT OF DISSENTING SHARES.
Notwithstanding any other provision of this Agreement (including, for the
avoidance of doubt, the applicability of the provision which limits the amount
of indemnification payments to the Indemnification Escrow Amount and the
applicability of the Basket set forth in Section 9.1(c)), in the event there are
holders of Dissenting Shares, the Stockholder Representative shall pay the
Surviving Corporation, on behalf of the Junior Stockholders, from the Reserve
Amount or from other funds within its control, (i) an amount equal to the
product of (x) the amount by which (A) the Appraised Value paid by the Surviving
Corporation to any holder of Dissenting Shares exceeds (B) the Dissenting Shares
Amount, and (ii) all other out-of-pocket costs and expenses of the Surviving
Corporation reasonably incurred (including reasonable attorneys' fees) paid in
connection with demands for appraisal by holders of Common Stock pursuant to
Section 262 of Delaware Law ("Appraisal Demands") and the determination of the
Appraised Value thereof. All such amounts shall be paid to the Surviving
Corporation by the Stockholder Representative as and when paid by the Surviving
Corporation to the holders of Dissenting Shares. The Stockholder Representative
shall have the right to defend against all matters related to or arising from
Appraisal Demands and the determination of Appraised Value in accordance with
Section 9.4 as if such Appraisal Demands were Third Party Claims.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.1. TERMINATION.
This Agreement may be terminated at any time prior to the Effective Time:
(a) by written consent of each of Parent, Merger Sub and the Company;
(b) by either the Company, on the one hand, or Parent and Merger Sub, on
the other hand, if (i) the other shall have breached, or failed to comply with,
in any material respect any of its or their obligations under this Agreement or
(ii) any representation or warranty made by such other party shall have been
incorrect when made or shall have since ceased to be true and correct, and such
breach, failure or misrepresentation is not cured within five (5) days in the
case of clause (i) or twenty (20) days in the case of clause (ii) after written
notice thereof is delivered to the breaching party or parties and either (x)
such breaches, failures or misrepresentations, results or is likely to render
the closing conditions of the non-breaching party incapable of being satisfied
or (y) such breach or failure is a failure or refusal to consummate the Merger
as required pursuant to Section 1.2;
(c) by either Parent or the Company if any decree, permanent injunction,
judgment, order or other action by any court of competent jurisdiction or any
Governmental Entity preventing or prohibiting consummation of the Merger shall
have become final and nonappealable;
-54-
(d) by the Company or the Parent if the Merger shall not have been
consummated on or before January 31, 2005 (the "Termination Date"); provided,
that the right to terminate this Agreement under this Section 10.1(d) shall not
be available to any party if such party's failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date.
A party seeking to terminate this Agreement in accordance with this Section
10.1 shall deliver written notice thereof as provided under Section 11.1.
Notwithstanding the provisions of Section 10.1(b), Section 10.1(c), or Section
10.1(d), no party may terminate this Agreement if such party is in material
violation or breach of a representation, warranty, covenant or agreement set
forth in this Agreement.
SECTION 10.2. EFFECT OF TERMINATION.
(a) If this Agreement is terminated under Section 10.1 (a) Section 10.1(c)
or Section 10.1(d) at a time when no party is in material violation or breach of
a representation, warranty, covenant or agreement then, subject to Section
10.2(c), all further liabilities and obligations of the Company to Parent and
Merger Sub and of Parent and Merger Sub to the Company will terminate without
further liability of any party hereto.
(b) If this Agreement is terminated under Section 10.1 (other than under
Section 10.1 (a)) at a time when one or more of the parties is in material
violation or breach of a representation, warranty, covenant or agreement, then
the liabilities and obligations of the party or parties not in such violation or
breach shall terminate and the party or parties which are in violation or breach
of this Agreement shall remain liable therefor and nothing in this Agreement
shall be deemed to limit the remedies available against such party or parties
other than the limitations described in Section 10.2(c) below.
(c) If the Company terminates this Agreement pursuant to Section 10.1(b),
or if the Company terminates this Agreement pursuant to Section 10.l(d) and all
of the conditions precedent to the obligations of the Company, Parent and Merger
Sub set forth in Article VIII (except for any such condition (i) the
satisfaction of which requires the payment of the Estimated Merger Consideration
or another action to be taken by Parent, the Merger Sub or any of their
respective officers, directors or shareholders at or prior to the Closing, (ii)
that has not been satisfied as a result of Parent's or Merger Sub's breach of
this Agreement, or (iii) that has not been satisfied as a result of a breach or
inaccuracy of a representation, warranty or certification made by Parent or
Merger Sub in this Agreement or in any certificate delivered pursuant to Section
8.3(e)(i) of this Agreement) have been satisfied or waived, then the Company
shall be entitled to receive the entire amount of the Pre-Closing Escrow Fund,
by wire transfer of immediately available funds. In such event, Parent shall
promptly take all such actions as may be required to cause the Pre-Closing
Escrow Agent to pay the Pre-Closing Escrow Fund to the Company, including
executing and delivering the appropriate joint disbursement instructions to the
Pre-Closing Escrow Agent. The payment to the Company of the Pre-Closing Escrow
Fund shall serve as full liquidated damages (and not as a penalty) under
applicable Law, and neither Parent nor Merger Sub shall have any further
liability under this Agreement. Payment of such liquidated damages shall
constitute the sole and exclusive remedy under such circumstances for the
Company and the Junior Stockholders, each of whom shall be deemed to have waived
and
-55-
released any right to xxx Parent or Merger Sub for specific performance of this
Agreement or to recover any damages or other amounts in excess of the
Pre-Closing Escrow Fund plus the Breakage Costs under such circumstances, except
for any breach by Parent or Merger Sub that occurs after the date of the
termination of this Agreement of any provision of this Agreement that survives
the termination of this Agreement.
(d) If this Agreement terminates other than under the circumstances
described in Section 10.2(c) then Parent and the Company will take such action
as may be required to cause the Pre-Closing Escrow Agent to return the
Pre-Closing Escrow Fund to the Sponsor, including executing and delivering the
appropriate joint disbursement instructions.
(e) If the Agreement is terminated as provided in Section 10.1 the parties
shall use commercially reasonable efforts to cause, to the extent practicable,
all filings, applications and other submissions made pursuant to this Agreement
to be withdrawn from the agency or other Person to which they were made.
SECTION 10.3. WAIVER.
At any time prior to the Effective Time, the parties may (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement and (c) waive compliance by the other party with any of the agreements
or conditions contained in this Agreement. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1. NOTICES.
All notices and other communications given or made pursuant hereto shall be
in writing and shall be deemed to have been duly given or made as of the date
delivered, mailed or transmitted, and shall be effective upon receipt, if
delivered during normal business hours personally or Federal Express (or other
reputable overnight courier), mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like changes of
address) or sent during normal business hours by electronic transmission to the
telecopier number specified below:
(a) If to the Company or the Stockholder Representative:
ABRY Partners, LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxx
-56-
With a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
(b) If to Parent or Merger Sub:
Citicorp Venture Capital Equity Partners, L.P.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxx Xxxxxx
With a copy (which shall not constitute notice) to:
Dechert LLP
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
SECTION 11.2. CERTAIN DEFINITIONS.
For purposes of this Agreement, the term:
(a) "Adjustment Time" means 12:01 a.m., New York time, on the Closing Date.
(b) "Affiliate" means a Person that directly or indirectly, through one or
more intermediaries, Controls, is controlled by, or is under common control
with, the first mentioned Person.
(c) "Annual Reporting Period" means a fiscal period consisting of thirteen
(13) consecutive Monthly Reporting Periods ending on the last Sunday of March of
each calendar year.
(d) "Business Day" shall mean any day other than a day on which banks in
the Commonwealth of Massachusetts or the State of New York are authorized or
obligated to be closed.
(e) "Class A Common Stock" means the Class A Common Stock of the Company,
par value $.001 per share.
(f) "Class B Common Stock" means the Class B Common Stock of the Company,
par value $.001 per share.
-57-
(g) "Closing Cash" means all cash and cash equivalents held by or for the
account of the Company and the Company Subsidiaries as of the Adjustment Time,
determined in accordance with GAAP. For clarity, Closing Cash shall (1) be
calculated net of issued but uncleared checks and drafts, and (2) include checks
and drafts received by the Company and the Company Subsidiaries as of the
Adjustment Time but not yet deposited.
(h) "Closing Indebtedness" means Company Indebtedness as of the Adjustment
Time.
(i) "Closing Working Capital" means the aggregate amount of the current
assets of the Company and the Company Subsidiaries (exclusive of Closing Cash,
deferred tax benefits and income Tax refunds receivable) less the aggregate
amount of the current liabilities of the Company and the Company Subsidiaries
(exclusive of the current portion of any amount included in Closing
Indebtedness, Company Transaction Expenses, deferred Tax liabilities and income
Taxes payable), in each case determined as of the Adjustment Time but after
giving effect to the transactions contemplated by this Agreement (including the
repayment of Closing Indebtedness and the termination of any Company Hedging
Agreement pursuant to Section 2.8) and in accordance with Section 2.4.
(j) "Common Stock" means the Class A Common Stock and the Class B Common
Stock.
(k) "Company Charter" means the Company's Amended and Restated Certificate
of Incorporation, as modified and supplemented by the Series C Certificate of
Designations and Series A Certificate of Designations, as in effect from time to
time.
(l) "Company Credit Agreement" means that certain Amended and Restated Loan
Agreement among NCI, the Company, the Financial Institutions whose names appear
as Lenders on the signature pages thereof and Toronto Dominion (Texas), Inc., as
Administrative Agent for the Lenders with TD Securities (USA), Inc. as Lead
Arranger and Book Runner, and National City Bank, as Syndication Agent, dated as
of June 24, 2004, as the same may be amended from time to time.
(m) "Company Credit Documents" means the Company Credit Agreement together
with the Company Hedging Agreements.
(n) "Company Hedging Agreements" means any interest rate protection
agreements (including interest rate swaps, caps, floors and collars) to which
the Company or a Company Subsidiary is party.
(o) "Company Indebtedness" means, without duplication, (A) all indebtedness
of the Company and the Company Subsidiaries for borrowed money (including all
principal, interest, premiums, penalties, and breakage fees), including under
the Company Credit Documents, (B) all obligations of the Company and the Company
Subsidiaries evidenced by notes, bonds, debentures or similar instruments or
pursuant to any guaranty and (C) obligations under capital leases or for
deferred purchase price of property or services. For the avoidance of doubt,
"Closing Indebtedness" shall not include the Series C Preferred Stock Redemption
Amount.
-58-
(p) "Company Transaction Expenses" means the fees and expenses incurred on
or before the Closing Date (whether or not invoiced) and payable by the Company
and the Company Subsidiaries related to or arising out of the transactions
contemplated by this Agreement, including travel, legal, accounting, investment
banking and other professional fees and expenses.
(q) "Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise.
(r) "Holdback Consideration" means a cash amount equal to $15,000,000.
(s) "ID Buyout" has the meaning set forth in the Company Credit Agreement.
(t) "Junior Stock" means, collectively, the Series A Preferred Stock and
the Common Stock.
(u) "Knowledge of the Company" means the actual knowledge of Xxxxxx Xxxxxx
or Xxxxxx X. XxXxxxxx.
(v) "Liquidation Preference" with respect to any share of Series C
Preferred Stock has the meaning set forth in the Series C Preferred Certificate
of Designations.
(w) "Monthly Reporting Period" means any of the initial twelve (12) four
(4) consecutive week reporting periods during an Annual Reporting Period or the
final four (4) or five (5) consecutive week reporting periods during such Annual
Reporting Period.
(x) "NCI" means Network Communications, Inc., a Georgia corporation.
(y) "Person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group.
(z) "Series A Preferred Stock" means, collectively, the Series A-l
Preferred Stock, the Series A-2 Preferred Stock and the Series A-3 Preferred
Stock.
(aa) "Series A Preferred Certificate of Designations" means the Company's
Amended and Restated Certificate of Designations, Preferences and Rights of
Series A Convertible Preferred Stock, as in effect from time to time.
(bb) "Series A-l Preferred Stock" means the Company's Series A-l
Convertible Preferred Stock, par value $.001 per share.
(cc) "Series A-2 Preferred Stock" means the Company's Series A-2
Convertible Preferred Stock, par value $.001 per share.
(dd) "Series A-3 Preferred Stock" means the Company's Series A-3
Convertible Preferred Stock, par value $.001 per share.
-59-
(ee) "Series C Preferred Certificate of Designations" means the Company's
Amended and Restated Certificate of Designations, Preferences and Rights of
Series B Redeemable Preferred Stock and Series C Convertible Preferred Stock, as
in effect from time to time.
(ff) "Series C Preferred Stock" means the Company's Series C Convertible
Preferred Stock, par value $.001 per share.
(gg) "Series C Preferred Redemption Amount" means the amount specified on
Exhibit I attached hereto as being applicable to the Closing Date.
SECTION 11.3. HEADINGS; INTERPRETATION.
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.
As all parties to this Agreement have participated in the drafting of this
Agreement, no ambiguity shall be construed against any party as the drafter. The
use of the word "including" herein shall mean "including without limitation."
The terms "Company" and "Company Subsidiary" herein shall also refer to the
Surviving Corporation and its Subsidiaries following the Effective Time. For
purposes of analyzing whether any state of facts, change, development, affect,
condition or occurrence constitutes a "Company Material Adverse Effect," the
parties agree that the words of the definition of "Company Material Adverse
Effect" are intended to be read literally and do not include any requirement
that a material adverse effect be "durationally significant" or measured over a
period of years rather than months. The inclusion of any information on any
schedule attached hereto shall not (i) be deemed to be an admission or
acknowledgement by the Company, in and of itself, that such information is
material to or outside the ordinary course of the business of the Company or any
of the Company Subsidiaries or (ii) constitute an admission to any Person not a
party to this Agreement that a violation, right of termination, default,
liability or other obligation of any kind exists with respect to any matter
disclosed on such schedule, but rather is intended solely to qualify certain
representations and warranties in this Agreement and to set forth other
information required to be disclosed by this Agreement.
SECTION 11.4. 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 materially 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 an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 11.5. ENTIRE AGREEMENT.
This Agreement (together with the Exhibits, the Schedules and the other
documents delivered pursuant hereto, including the Selling Stockholders
Agreement) and the Confidentiality Agreement constitute the entire agreement of
the parties and supersede all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the
-60-
subject matter hereof and, except as otherwise expressly provided herein, are
not intended to confer upon any other Person any rights or remedies hereunder.
SECTION 11.6. ASSIGNMENT.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties;
provided that Parent may assign this Agreement and its rights and obligations
hereunder (a) prior to the Effective Time, to one of its Affiliates and (b)
after the Effective Time, to any Person or Persons, without the consent of any
Person (provided that, in either case, no such assignment shall relieve Parent
from its obligations hereunder). Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
SECTION 11.7. THIRD PARTY BENEFICIARIES.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
SECTION 11.8. EXPENSES.
Except as otherwise expressly provided herein, all expenses incurred by the
parties hereto shall be borne solely by the party that has incurred such
expenses. For the avoidance of doubt, all fees and expenses payable to XxXxxxx &
Xxxxxxxx as a result of the transactions contemplated by this Agreement shall be
borne and paid by the Parent.
SECTION 11.9. SPECIFIC PERFORMANCE.
Each party agrees that irreparable damage would occur and that the parties
would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that each of
the parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any Federal court located in the State of New York or in
New York state court, this being in addition to any other remedy to which they
are entitled at law or in equity.
SECTION 11.10. AMENDMENTS.
This Agreement may be amended by the parties hereto by action taken by or
on behalf of their respective Boards of Directors at any time prior to the
Effective Time; provided that no amendment may be made which would reduce the
amount or change the type of consideration into which each share of Junior Stock
shall be converted pursuant to this Agreement upon consummation of the Merger
unless such amendment shall have been approved by the holders of a majority of
the authorized Junior Stock. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
-61-
SECTION 11.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL.
(a) Governing Law; Consent to Jurisdiction. THE RIGHTS OF THE HOLDERS OF
SHARES OF CAPITAL STOCK OF THE COMPANY ARISING OUT OF OR RELATING TO THEIR
OWNERSHIP OF SUCH SHARES OR THE MERGER SHALL BE GOVERNED BY THE DGCL. ALL OTHER
ISSUES AND QUESTIONS CONCERNING THE APPLICATION, CONSTRUCTION, VALIDITY,
INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES
TO THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK. SUBJECT TO SECTION 9.4 AND THE
TERMS OF THE PRE-CLOSING ESCROW AGREEMENT AND THE POST-CLOSING ESCROW AGREEMENT,
EACH PARTY HERETO, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, IRREVOCABLY AGREES
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
MAY BE INSTITUTED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK, UNITED STATES OF AMERICA OR IN THE ABSENCE OF JURISDICTION, THE
STATE COURTS LOCATED IN NEW YORK, NEW YORK, AND GENERALLY AND UNCONDITIONALLY
ACCEPTS AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT
RENDERED THEREBY FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE IN
CONNECTION WITH THIS AGREEMENT. EACH PARTY, FOR ITSELF AND ITS SUCCESSORS AND
ASSIGNS, IRREVOCABLY WAIVES ANY OBJECTION IT MAY HAVE NOW OR HEREAFTER TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION BASED ON THE GROUNDS OF FORUM NON CONVENIENS, IN THE
AFORESAID COURTS. EACH OF THE PARTIES, FOR ITSELF AND ITS SUCCESSORS AND
ASSIGNS, IRREVOCABLY AGREES THAT ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH
COURT MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL
(OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO IT AT ITS
ADDRESS SET FORTH IN SECTION 11.1 HEREOF OR AT SUCH OTHER ADDRESS OF WHICH THE
OTHER PARTIES SHALL HAVE BEEN NOTIFIED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 11.1 HEREOF, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE PARTIES TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(b) WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT
WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF
ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE) INQUIRY, PROCEEDING OR
INVESTIGATION
-62-
ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED
HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY
HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT
THIS SECTION ll.ll(b) CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE
RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.11(b) WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO
TRIAL BY JURY.
SECTION 11.12. NO RECOURSE.
Except for any liability of any Junior Stockholder under this Agreement or
the Selling Stockholders Agreement, Parent and Merger Sub agree and acknowledge
that no recourse under this Agreement or any documents or instruments delivered
in connection with this Agreement shall be had against any current or future
director, officer, employee, general or limited partner or member of any Junior
Stockholder or of any Affiliate or assignee thereof, as such, whether by the
enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any statute, regulation or other applicable Law, it being expressly
agreed and acknowledged that, except for any liability of any Junior Stockholder
under this Agreement or the Selling Stockholders Agreement, no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by
any current or future officer, agent or employee of any Junior Stockholder or
any current or future member of any Junior Stockholder or any current or future
director, officer, employee, partner or member of any Junior Stockholder or of
any Affiliate or assignee thereof, as such, for any obligation of any Junior
Stockholder under this Agreement or any documents or instruments delivered in
connection with this Agreement for any claim based on, in respect of or by
reason of such obligations or their creation.
SECTION 11.13. TIME OF ESSENCE.
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
SECTION 11.14. COUNTERPARTS.
This Agreement may be executed and delivered in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
-63-
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT AND PLAN
OF MERGER to be executed and delivered as of the date first written above.
GALLARUS MEDIA HOLDING, INC.
By: /s/ Xxxxxx XxXxxxxx
------------------------------------
Name: Xxxxxx XxXxxxxx
Title:
---------------------------------
GMH HOLDING COMPANY
By: /s/ Xxx X. Xxxxxx
------------------------------------
Name: XXX X. XXXXXX
Title:
---------------------------------
GMH ACQUISITION CORP.
By: /s/ Xxx X. Xxxxxx
------------------------------------
Name: XXX X. XXXXXX
Title:
---------------------------------
ABRY PARTNERS, LLC,
solely in its capacity as the
Stockholder Representative hereunder
and solely with respect to Sections
2.4, 2.5, 2.7, 7.1(b), 7.3(a),
7.12(a), 7.12(d), Article IX and
Article XI of this Agreement
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT A
SELLING STOCKHOLDERS AGREEMENT
(see attached)
EXECUTION COPY
AGREEMENT
This AGREEMENT (this "Agreement") is entered into this 23rd day of December
2004, by and among GMH Holding Company, a Delaware corporation (the
"Purchaser"). GMH Acquisition Corp., a Delaware corporation ("Merger Sub"), ABRY
Partners, LLC, a Delaware limited liability company ("ABRY"), and the
stockholders of Gallarus Media Holdings, Inc., a Delaware corporation (the
"Company"), whose names appear on the signature pages hereto (collectively, the
"Stockholders"). Capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement (as defined below).
WHEREAS, the Stockholders are the record holders of the outstanding capital
stock of the Company identified on Exhibit A hereto (the "Subject Shares"), and
are parties to a Stockholders Agreement dated as of June 28, 2002, by and among
the Company and the Stockholders (as in effect on the date hereof, "Stockholders
Agreement");
WHEREAS, concurrently with the execution of this Agreement, the Purchaser,
the Company, Merger Sub and ABRY (solely in its capacity as the Stockholder
Representative) have entered into an Agreement and Plan of Merger (as the same
may be amended, restated or otherwise modified from time to time, the "Merger
Agreement") pursuant to which, among other things, the Purchaser will acquire
all of the outstanding capital stock of the Company through the merger of Merger
Sub with and into the Company (the "Merger"); and
WHEREAS, this Agreement is being entered into as an inducement to the
Purchaser and Merger Sub to enter into the Merger Agreement, and constitutes the
"Selling Stockholders Agreement" defined therein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
SECTION 1. STOCKHOLDER APPROVALS; WAIVER OF APPRAISAL RIGHTS; WAIVER OF
CERTAIN TRANSFER RESTRICTIONS.
(a) Merger and Merger Agreement. The Stockholders, who together
constitute the holders of a majority of the outstanding securities of the
Company entitled to vote, in lieu of holding a special meeting of the
stockholders of the Company, hereby irrevocably (i) adopt and approve the form,
terms and provisions of the Merger Agreement and (ii) approve the Merger on the
terms and conditions set forth therein. The actions taken by this Section 1(a)
are made pursuant to Sections 228, 242 and 251 of the DGCL and shall have the
same force and effect as if taken at a special meeting of the stockholders of
the Company duly called and constituted pursuant to the bylaws of the Company
and the DGCL.
(b) Payment Procedures. Each of the Stockholders acknowledges and
irrevocably agrees that ABRY will act as paying agent under Article II of the
Merger Agreement (in such capacity, the "Paying Agent") and will be solely
responsible for disbursing amounts owing by the Purchaser or the Surviving
Corporation to the Stockholders in respect of the Series
C Preferred Stock and the Junior Stock pursuant to Article II of the Merger
Agreement. Each of the Stockholders hereby irrevocably authorizes the Purchaser
to pay the aggregate Merger Consideration and Series C Preferred Redemption
Amount to ABRY Partners, LLC in accordance with the terms of the Merger
Agreement, and agrees that following such payment none of the Purchaser, Merger
Sub, the Company or the Surviving Corporation shall have any further liability
to any of the Stockholders with respect to, and the Stockholders shall only look
to the Paying Agent for disbursements of, such amounts. All amounts paid to the
Paying Agent by the Purchaser pursuant to Article II of the Merger Agreement
shall be held and distributed by the Paying Agent in a manner consistent with
Article II of the Merger Agreement and, subject to Section 1(d) below, in
accordance with the terms of the Company Charter and Stockholders Agreement.
(c) Stockholder Representative. Each of the Stockholders acknowledges
and irrevocably agrees that ABRY will act as the "Stockholder Representative"
pursuant to and in accordance with Section 9.8 of the Merger Agreement. Each
Stockholder irrevocably consents to the appointment of the Stockholder
Representative on the terms specified in Section 9.8 of the Merger Agreement, a
copy of which is attached hereto as Exhibit B and is incorporated herein by
reference.
(d) Series C Preferred Redemption Amount. The undersigned holders of
Series C Preferred Stock irrevocably agree that notwithstanding anything to the
contrary set forth in the Series C Preferred Certificate of Desigations, the
Series C Preferred Redemption Amount shall be calculated in accordance with the
definition of such term in the Merger Agreement, and the only amounts payable to
such holders in respect of their shares of Series C Preferred Stock as a result
of the Merger shall be as set forth in Section 2.2 of the Merger Agreement.
(e) Waiver of Appraisal Rights. Each Stockholder expressly
acknowledges that it is obligated under Section 4 of the Stockholders Agreement
to approve the Merger and waive any dissenters rights, appraisal rights or
similar rights applicable to the Merger under applicable law. In performance of
such obligation, each Stockholder hereby irrevocably waives any such rights and
expressly acknowledges that upon execution of this Agreement such Stockholder
will be ineligible to exercise any such rights under applicable law.
(f) Waiver of Certain Transfer Restrictions. The Company and each
Stockholder hereby expressly waive any restriction on transfer under Section 1
of the Stockholders Agreement to the extent, but only to the extent, necessary
to permit any Junior Stockholder to roll-over all or any portion of the Subject
Shares held by such Junior Stockholder for capital stock of the Purchaser as
contemplated by the Merger Agreement.
SECTION 2. INDEMNIFICATION BY JUNIOR STOCKHOLDERS.
(a) Indemnity. From and after the Effective Time, the Junior
Stockholders severally, and not jointly, shall indemnify and hold harmless each
Purchaser Indemnified Person from and against any and all Damages, to the extent
such Damages are determined by a Final Award, a final order of a court of
competent jurisdiction or a written agreement of the Purchaser and the
Stockholder Representative to have arisen solely from (i) a Company Breach of an
Excluded Representation, in which case such Purchaser Indemnified Person shall
be entitled to
-2-
seek amounts in excess of the Post-Closing Escrow Fund from any Junior
Stockholder, whether before or after the Release Date, or (ii) fraud on the part
of any Junior Stockholder, in which case such Purchaser Indemnified Person shall
be entitled to seek amounts in excess of the Post-Closing Escrow Fund from such
Junior Stockholder, whether before or after the Release Date. No Purchaser
Indemnified Person shall be entitled to indemnification under this Section 2 for
any liability to the extent (but only to the extent) the amount of such
liability (A) has been (or may be) satisfied by disbursements of the
Post-Closing Escrow Fund or (B) is demonstrated to have been actually reflected
in the Company Indebtedness, Transaction Expenses or Closing Working Capital
used to determine the Final Merger Consideration.
(b) Limitations. No Junior Stockholder shall be liable under this
Section 2 (or Section 3 below) for any Damages in excess of (i) such Junior
Stockholder's Pro Rata Share (as defined in Section 2(d) below) of such Damages
or (ii) the Merger Consideration received by such Junior Stockholder in
accordance with the Merger Agreement. The amount to which a Purchaser
Indemnified Person may become entitled under this Section 2 shall be net of any
actual recovery received from the Post-Closing Escrow Fund, less any cost
associated with receiving such recovery in respect of a claim.
(c) Procedure. As used herein, the term "Claim" means a claim for
indemnification by the Purchaser or any other Purchaser Indemnified Person for
Damages under this Section 2 (such Person making a Claim, an "Indemnitee"). An
Indemnitee may give notice of a Claim under this Agreement, whether for its own
Damages or for Damages incurred by any other Purchaser Indemnified Person, as
applicable, pursuant to written notice of such Claim executed by an officer of
the Purchaser (a "Notice of Claim") and delivered to the Stockholder
Representative on behalf of the Junior Stockholders (each Junior Stockholder, in
its capacity as an indemnifying person hereunder, an "Indemnitor"), promptly
after such Indemnitee becomes aware of the existence of any potential claim by
such Indemnitee for indemnification under this Section 2 arising out of or
resulting from (i) any item subject to indemnification pursuant to the terms of
Section 2(a), or (ii) the assertion, whether orally or in writing, against any
Indemnitee of a Third-Party Claim that arises out of or results from any item
subject to indemnification pursuant to the terms of Section 2(a). Each Notice of
Claim shall contain the information required to be included in a "Notice of
Claim" delivered under Article IX of the Merger Agreement. The provisions of
Sections 9.l(d), 9.1(e), 9.4, 9.5, 9.6 and 9.7 are hereby incorporated by
reference in their entirety and shall apply to this Agreement and each Claim and
Notice of Claim mutatis mutandis without further reference thereto.
(d) Definition of Pro Rata Share. As used herein, the term "Pro Rata
Share" shall mean, with respect to any Damages and any particular Junior
Stockholder, an amount determined by the Stockholder Representative in
accordance with the Stockholders Agreement as being the amount of such Damages
required to be paid by such Junior Stockholder so that subsequent to such Junior
Stockholder's payment, the net portion of the aggregate Merger Consideration
received by such Junior Stockholder pursuant to the Merger Agreement is equal to
the amount that such Junior Stockholder would have received if the Company had
paid such Damages on the Closing Date and the aggregate Merger Consideration
received by all Junior Stockholders in the Merger, net of all such Damages, had
been paid in accordance with Article II of the Merger Agreement.
-3-
SECTION 3. CONTRIBUTION.
Subject to Section 2(b), if any Junior Stockholder pays more than its
Pro Rata Share of any Damages, then each other Junior Stockholder (who paid less
than its Pro Rata Share of such Damages) shall promptly contribute to such
Junior Stockholder an amount such that, after giving effect to such
contribution, such contributing Junior Stockholder shall have, in the aggregate,
paid its Pro Rata Share of such Damages.
SECTION 4. RESTRICTION ON CERTAIN INVESTMENTS BY ABRY.
ABRY agrees that, prior to the 18-month anniversary of the Closing
Date (the "Release Date"), neither it nor its Affiliates will invest in the real
estate or apartment guide assets of Xxxx Publishing Companies, Inc., Trader
Publishing Company or Homes & Land Publishing; provided that the foregoing
restriction (i) shall not apply to any Person in which the aggregate percentage
of voting ownership by ABRY and its Affiliates is less than 50%, and (ii) shall
not prohibit any mezzanine fund managed by ABRY or its Affiliates from making a
bona fide non-controlling investment in any Person. The restrictions contained
in this Section 4 shall automatically terminate without further action of the
parties at the close of business on the Release Date.
SECTION 5. CONFIDENTIALITY.
Each Stockholder acknowledges that it is entitled to receive
information concerning the business and affairs of the Company and the Company
Subsidiaries (the "Confidential Information") pursuant to the terms and subject
to the conditions contained in the Merger Agreement. Each Stockholder agrees to
treat and hold as confidential any such Confidential Information; provided that
(i) Confidential Information shall not include information that is or becomes
generally publicly available other than as a result of a breach of this
Agreement by any Stockholder, or is independently acquired or developed by such
Stockholder without violating any of its obligations under this Section 5 or is
obtained from a third party not, to the knowledge of such Stockholder, in
violation of a duty of confidentiality to the Company or the Company
Subsidiaries, and (ii) any Stockholder may disclose Confidential Information (A)
to its affiliates, partners and advisors and (B) to the extent required by
applicable law, legal requirements or legal process. Notwithstanding the
foregoing, in the event that any Stockholder is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, such Person shall notify the Surviving
Corporation reasonably promptly of the request or requirement so that the
Surviving Corporation may seek (at its sole cost) an appropriate protective
order or waive compliance with the provisions of this Section 5. If, in the
absence of a protective order or the receipt of a waiver hereunder, any
Stockholder required to disclose any Confidential Information by applicable law,
legal requirements or legal process, such Person may disclose the Confidential
Information to the extent so required; provided that such disclosing Person
shall use commercially reasonable efforts to obtain, at the request (and sole
cost) of the Surviving Corporation, an order or other assurance that
confidential treatment shall be accorded to such portion of the Confidential
Information required to be disclosed as the Surviving Corporation shall
reasonably designate.
-4-
SECTION 6. REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER.
Each Stockholder hereby severally and not jointly represents and
warrants to Purchaser, as to itself only, as follows:
(a) Authority; Execution and Delivery; Enforceability. Such
Stockholder has the legal capacity, power and authority to enter into this
Agreement, to perform such Stockholder's obligations hereunder and to consummate
the transactions contemplated hereby. If such Stockholder is a corporation or
other legal entity, the execution and delivery of this Agreement by such
Stockholder and the consummation by such Stockholder of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate, limited liability company or other action and no other corporate,
limited liability company or other proceedings on the part of such Stockholder
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by such
Stockholder and, assuming its due authorization, execution and delivery by
Purchaser and Merger Sub, constitutes a legal, valid and binding obligation of
such Stockholder, enforceable against such Stockholder in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar Laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity.
(b) (i) The execution and delivery of this Agreement by such
Stockholder does not, and the performance by such Stockholder of its obligations
under this Agreement will not, (x) to the extent applicable, conflict with or
violate, result in a breach of, constitute a default under, the certificate of
incorporation, bylaws or other organizational document of such Stockholder, (y)
subject to compliance with the requirements set forth in Section 6(b)(ii) below,
conflict with or violate any Law applicable to such Stockholder or by which any
of his, her or its properties is bound or affected, or (z) result in any breach
of or constitute a default (or an event which with 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 an
Encumbrance on any of the properties or assets of such Stockholder pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
Permit, franchise or other instrument or obligation to which such Stockholder is
a party or by which such Stockholder or any of his, her or its properties or
assets is bound except, in the case of clauses (y) and (z) above for any such
conflicts, violations, breaches, defaults, accelerations or occurrences that in
the aggregate would not and would not reasonably be expected to prevent the
consummation of the Merger, delay the same in any material respect, or otherwise
prevent such Stockholder from performing his, her or its obligations under this
Agreement.
(ii) The execution and delivery of this Agreement by such
Stockholder does not, and the performance of this Agreement by such
Stockholder will not, require any consent, approval, authorization or
permit of, or the giving of notice to, any Governmental Entity, except (x)
for applicable requirements, if any, of the HSR Act and state blue sky
Laws, and filing and recordation of appropriate merger documents as
required by the DGCL, and (y) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent the consummation of the Merger, delay the
same in any material respect, or otherwise
-5-
prevent such Stockholder from performing his, her or its obligations under
this Agreement.
(c) Ownership. Such Stockholder is the record and beneficial owner of,
and has good and marketable title to, the Subject Shares set forth opposite such
Stockholder's name on Exhibit A hereto, free and clear of any Encumbrances. As
of the date hereof, other than the Subject Shares, such Stockholder does not own
(of record or beneficially) any shares of capital stock of, or any other voting
securities or interests of, the Company. Such Stockholder has the sole right to
transfer and vote the Subject Shares, and none of the Subject Shares owned by
such Stockholder are subject to any voting trust or other agreement, arrangement
or restriction with respect to the transfer or the voting of such Subject
Shares, except as set forth in this Agreement and the Stockholders Agreement.
SECTION 7. RESTRICTION ON TRANSFER.
Other than pursuant to the Merger Agreement or this Agreement, such
Stockholder shall not (i) sell, transfer, pledge, assign, tender or otherwise
dispose of (including by gift) (collectively, "Transfer"), or consent to or
permit any Transfer of, any Subject Shares, of such Stockholder or any interest
therein, or enter into any contract, option or other arrangement (including any
profit sharing arrangement) with respect to the Transfer of, or the creation or
offer of any derivative security in respect of, any Subject Shares of such
Stockholder (or any interest therein), to or with any person or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, with
respect to any Subject Shares of such Stockholder, and shall not commit or
agree to take any of the foregoing actions. Such Stockholder shall not, nor
shall such Stockholder permit any entity under such Stockholder's control to,
deposit any Subject. Shares of such Stockholder in a voting trust. The
provisions of this Section 7(a) shall survive for a period of eighteen months
following the termination of this Agreement.
SECTION 8. GRANT OF PROXY; APPOINTMENT OF PROXY.
(a) Without limiting or otherwise affecting the effectiveness of the
Stockholder consent granted in Section 1(a); each Stockholder hereby irrevocably
grants to, and appoints, Purchaser and Citigroup Venture Capital Equity
Partners, L.P., in its capacity as designee of Purchaser, and each of them
individually, such Stockholder's proxy and attorney-in- fact (with full power of
substitution), for and in the name, place and stead of such Stockholder, solely
to vote all of such Stockholder's Subject Shares (owned of record or
beneficially), or grant a consent or approval in respect of such Subject Shares
with voting power, in favor of the adoption of the Merger Agreement and the
approval of the terms thereof and of the Merger and each of the other
transactions contemplated by the Merger Agreement.
(b) Each Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Subject Shares are not irrevocable, and that all
such proxies are hereby revoked.
(c) Each Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 8 is given in connection with the execution of the Merger
Agreement and that such irrevocable proxy is given to secure the performance of
the duties of such Stockholder under this
-6-
Agreement. Each Stockholder hereby further affirms that the irrevocable proxy
set forth in this Section 8 is coupled with an interest and may under no
circumstances be revoked, except that such proxy shall be revoked and shall
automatically terminate without further action of the parties upon the
termination of this Agreement in accordance with Section 10 of this Agreement.
Each Stockholder hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof.
SECTION 9. TERMINATION OF STOCKHOLDERS AGREEMENT.
Each Stockholder hereby agrees that as of the Effective Time, the
Stockholders Agreement shall terminate with respect to the Company and shall be
of no further force and effect on the Company.
SECTION 10. TERMINATION.
Except as otherwise expressly provided herein, this Agreement shall
terminate upon the earlier to occur of (i) the termination of the Merger
Agreement and (ii) the written consent of each of the Purchaser, Merger Sub and
the Stockholder Representative.
SECTION 11. WAIVER.
At any time prior to the Effective Time, the parties may (i) extend
the time for the performance of any of the obligations or other acts of the
other party, (ii) waive any inaccuracies in the representations and warranties
contained in the Merger Agreement or in any document delivered pursuant to this
Agreement and (iii) waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of the Purchaser or the Stockholder Representative (on behalf of the
Junior Stockholders).
SECTION 12. GENERAL PROVISIONS.
(a) Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally or Federal Express (or other reputable
overnight courier), mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like changes of address) or
sent by electronic transmission to the telecopier number specified below:
(i) If to ABRY or the Stockholder Representative:
ABRY Partners, LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxx
-7-
With a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
(ii) If to the Purchaser or any Indemnitee:
Citicorp Venture Capital Equity Partners
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxx Xxxxxx
With a copy (which shall not constitute notice) to:
Dechert LLP
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
(iii) If to any Stockholder (other than ABRY), then to the address set
forth for such Stockholder in Section 9(i) of the Stockholders
Agreement or to such other address or to the attention of such
other person as such Stockholder has specified by prior written
notice to the sending party.
(b) Headings; Interpretation. 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. As all parties to this Agreement have
participated in the drafting of this Agreement, no ambiguity shall be construed
against any party as the drafter. The use of the word "including" herein shall
mean "including without limitation."
(c) 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 materially
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 an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
(d) Entire Agreement. This Agreement and the Merger Agreement
(together, with the Exhibits, the Schedules and the other documents delivered
pursuant thereto) constitute
-8-
the entire agreement of the parties and supersede all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof and, except as otherwise expressly provided
herein, are not intended to confer upon any other Person any rights or remedies
hereunder.
(e) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties; provided that the Purchaser may assign this
Agreement and its rights and obligations hereunder (i) prior to the Effective
Time, to one of its Affiliates and (ii) after the Effective Time, to any Person
or Persons, without the consent of any Person. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
(f) Third Party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement except for the Purchaser Indemnified Parties.
(g) Expenses. Except as otherwise expressly provided herein, all
expenses incurred by the parties hereto shall be borne solely by the party that
has incurred such expenses.
(h) Specific Performance. Each of the Purchaser and ABRY agrees that
irreparable damage would occur and that the parties would not have any adequate
remedy at law in the event that Section 4 or Section 5 of this Agreement was not
performed in accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the Purchaser shall be entitled to seek an injunction or
injunctions to prevent breaches of Section 4 or Section 5 of this Agreement and
to enforce specifically the terms and provisions of Section 4 and Section 5 in
any Federal court located in the State of New York or in New York state court,
this being in addition to any other remedy to which they are entitled at law or
in equity.
(i) Amendments. This Agreement may be amended by the Purchaser and the
Stockholder Representative (on behalf of the Junior Stockholders); provided,
however, that no amendment may be made that would increase the liability of any
Junior Stockholder hereunder unless such amendment shall have been approved by
such Junior Stockholder. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
(j) Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
(i) Governing Law; Consent to Jurisdiction. This Agreement shall
be governed by, and construed in accordance with, the Laws of the State of
Delaware, regardless of the Laws that might otherwise govern under
applicable principles of conflicts of law. Each party hereto, for itself
and its successors and assigns, irrevocably agrees that any suit, action or
proceeding arising out of or relating to this Agreement may be instituted
in the United States District Court for the Southern District of New York,
United States of America or in the absence of jurisdiction, the state
courts located in New
-9-
York, New York, and generally and unconditionally accepts and irrevocably
submits to the non-exclusive jurisdiction of the aforesaid courts and
irrevocably agrees to be bound by any final judgment rendered thereby from
which no appeal has been taken or is available in connection with this
Agreement. Each party, for itself and its successors and assigns,
irrevocably waives any objection it may have now or hereafter to the laying
of the venue of any such suit, action or proceeding, including, without
limitation, any objection based on the grounds of forum non conveniens, in
the aforesaid courts. Each of the parties, for itself and its successors
and assigns, irrevocably agrees that all process in any such proceedings in
any such court may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to it at its address set forth in Section 12(a) hereof or at such
other address of which the other parties shall have been notified in
accordance with the provisions of Section 12(a) hereof, such service being
hereby acknowledged by the parties to be effective and binding service in
every respect. Nothing herein shall affect the right to serve process in
any other manner permitted by law.
(ii) WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE
OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE)
INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES
THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION
12(j) CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND
WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 12(j) WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS
RIGHT TO TRIAL BY JURY.
(k) No Recourse. Except for any liability of any Junior Stockholder
under this Agreement or the Merger Agreement, the Purchaser and Merger Sub agree
and acknowledge that no recourse under this Agreement or any documents or
instruments delivered in connection with this Agreement shall be had against any
current or future director, officer, employee, general or limited partner or
member of any Junior Stockholder or of any Affiliate or assignee thereof, as
such, whether by the enforcement of any assessment or by any legal or equitable
proceeding, or by virtue of any statute, regulation or other applicable Law, it
being expressly agreed and acknowledged that, except for any liability of any
Junior Stockholder under this Agreement or the Merger Agreement, no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by
any current or future officer, agent or employee of any Junior Stockholder or
any current or future member of any Junior Stockholder or any current or future
director, officer, employee, partner or member of any Junior Stockholder or of
any
-10-
Affiliate or assignee thereof, as such, for any obligation of any Junior
Stockholder under this Agreement or the Merger Agreement or any documents or
instruments delivered in connection with this Agreement or the Merger Agreement
for any claim based on, in respect of or by reason of such obligations or their
creation.
(l) Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
(m) Counterparts. This Agreement may be executed and delivered in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
(n) Effectiveness. This Agreement shall be effective among each party
who executes this Agreement regardless of whether every other party identified
on the signature pages hereto actually executes this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
-11-
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be
executed and delivered as of the date first written above.
GMH HOLDING COMPANY
By: /s/ Xxx X. Xxxxxx
------------------------------------
Name: Xxx X. Xxxxxx
----------------------------------
Title:
---------------------------------
GMH ACQUISITION CORP.
By: /s/ Xxx X. Xxxxxx
------------------------------------
Name: Xxx Xxxxxx
----------------------------------
Title:
---------------------------------
ABRY PARTNERS, LLC
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
----------------------------------
Title:
---------------------------------
STOCKHOLDER SIGNATURE PAGE
ABRY PARTNERS IV, L.P.
By: ABRY Capital Partners, L.P.,
its general partner
By: ABRY Capital Partners, LLC,
its general partner
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
----------------------------------
Title:
---------------------------------
ABRY INVESTMENT PARTNERSHIP, L.P.
By: ABRY Investment GP, L.P.,
its general partner
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
----------------------------------
Title:
---------------------------------
ABRY MEZZANINE PARTNERS, L.P.
By: ABRY Mezzanine Investors, L.P.,
its general partner
By: ABRY Mezzanine Holdings, LLC,
its general partner
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
----------------------------------
Title:
---------------------------------
NEW YORK LIFE CAPITAL PARTNERS II, L.P.
By: NYLCAP Manager LLC,
its Investment Manager
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxx
----------------------------------
Title: Executive VP & COO
---------------------------------
STOCKHOLDER SIGNATURE PAGE
/s/ Xxxxxx X. XxXxxxxx
-------------------------------------
Xxxxxx X. XxXxxxxx
/s/ Xxxxxx Xxxxxx
-------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxx Xxxxx
-------------------------------------
Xxxxx Xxxxx
/s/ Xxxxxx Xxxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxxx
/s/ Xxxxxx Xxxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxxx
/s/ Xxxxx Xxxx
-------------------------------------
Xxxxx Xxxx
/s/ Xxxxx Xxxxx
-------------------------------------
Xxxxx Xxxxx
/s/ Xxxxxx Xxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxx
EXHBIT A
Ownership of Capital Stock of Gallarus Media Holdings, Inc.
(see attached)
OWNERSHIP OF OUTSTANDING CAPITAL STOCK OF GALLARUS MEDIA HOLDINGS, INC.
NUMBER OF
STOCKHOLDER CLASS OR SERIES SHARES
----------- -------------------------------------- ----------
SERIES C CONVERTIBLE PREFERRED STOCK
New York Life Capital Partners Series C Convertible Preferred Stock 10,000.000
ABRY Mezzanine Partners, L.P. Series C Convertible Preferred Stock 10,000.000
----------
TOTAL 20,000.000
SERIES A CONVERTIBLE PREFERRED STOCK
ABRY Partners IV, L.P. Series A-1 Convertible Preferred Stock 50,676.385
ABRY Investment Partnership, L.P. Series A-1 Convertible Preferred Stock 23.615
X. XxXxxxxx Series A-3 Convertible Preferred Stock 200.000
X. Xxxxxx Series A-3 Convertible Preferred Stock 100.000
----------
TOTAL 51,000.000
CLASS B COMMON STOCK
Xxxxxx X. XxXxxxxx Class B Common Stock 3,769.180
Xxxxxx Xxxxxx Class B Common Stock 698.268
Xxxxx Xxxxx Class B Common Stock 232.448
Xxxxxx Xxxxxxxxx Class B Common Stock 232.448
Xxxxxx Xxxxxxxxx Class B Common Stock 162.714
Xxxxx Xxxx Class B Common Stock 162.714
Xxxxx Xxxxxx (a) Class B Common Stock 92.979
Xxxxx Xxxxx Class B Common Stock 69.735
Xxxxxx Xxxxxxxx Class B Common Stock 82.000
----------
TOTAL 5,502.486
(a) Only 27.894 shares of the Class B Common Stock owned by Xxxxx Xxxxxx Will
be vested as of the Effective Time.
EXHIBIT B
Section 9.8 of the Merger Agreement
SECTION 9.8 APPOINTMENT OF STOCKHOLDER REPRESENTATIVE.
(a) Pursuant to the Selling Stockholders Agreement, and by voting in favor
of or consenting to the Merger and/or by virtue of the approval of the Merger,
the Junior Stockholders shall be deemed to have approved the designation of ABRY
Partners, LLC (in such capacity the "Stockholder Representative") as, the
attorney-in-fact and agent for and on behalf of each Junior Stockholder and
their respective heirs, successors and assigns with respect to the post-Closing
adjustments contemplated by Section 2.4(e), claims for indemnification under
this Article IX or the Selling Stockholders Agreement and the taking by the
Stockholder Representative of any and all actions and the making of any
decisions required or permitted to be taken by the Stockholder Representative
under this Agreement, the Selling Stockholders Agreement and the Post-Closing
Escrow Agreement, including the exercise of the power to: (a) authorize the
release or delivery to Parent of all or any portion of the Post-Closing Escrow
Fund or the Reserve Fund in satisfaction of the obligations (if any) with
respect to the post-Closing adjustments contemplated by Section 2.4 and
indemnification claims by Parent or any other Parent Indemnified Person pursuant
to this Article IX; (b) agree to, negotiate, enter into settlements and
compromises of, and comply with orders of courts with respect to, such
indemnification claims; (c) litigate, arbitrate, resolve, settle or compromise
any claim for indemnification made pursuant to this Article IX; (d) establish
the Reserve Account and pay such amounts therefrom as the Stockholder
Representative deems necessary or appropriate in its good faith judgment; and
(e) take all actions necessary in the judgment of the Stockholder's
Representative for the accomplishment of the foregoing. The Stockholder
Representative shall have no authority or power to act on behalf of the Company,
Parent or Surviving Corporation. The Stockholder Representative shall have
authority and power to act on behalf of the Junior Stockholders with respect to
the disposition, settlement or other handling of the adjustments contemplated by
Section 2.4 and all claims under this Article IX and the Selling Stockholders
Agreement and all rights or obligations arising under Section 2.4, this Article
IX and the Selling Stockholders Agreement. The Junior Stockholders shall be
bound by all actions taken and documents executed by the Stockholder
Representative in connection with Section 2.4, this Article IX and the Selling
Stockholders Agreement, and Parent shall be entitled to rely on any action or
decision of the Stockholder Representative. In performing the functions
specified in this Agreement, the Stockholder Representative may act upon any
instrument or other writing believed by the Stockholder Representative in good
faith to be genuine and to be signed or presented by the proper Person and shall
not be liable in connection with the performance by it of its duties pursuant to
the provisions of this Agreement, the Post-Closing Escrow Agreement and the
Selling Stockholders Agreement in the absence of gross negligence or willful
misconduct on the part of the Stockholder Representative. By approval of the
Merger and pursuant to the Selling Stockholders Agreement, the Junior
Stockholders hereby agree severally, and not jointly, to indemnify and hold
harmless the Stockholder Representative (out of funds that otherwise are to be
distributed from the Post-Closing Escrow Fund or the Reserve Fund to the Junior
Stockholders, if any, as described in the following sentence) from and against
any loss, liability or expense incurred without gross negligence or willful
misconduct on the part of the Stockholder Representative and arising out of or
in connection with the acceptance or
administration of its duties hereunder. Any liability for any such loss,
liability or expense will be borne by the Junior Stockholders pro rata based
upon the respective portions of the Merger Consideration received by such Junior
Stockholders. Any out-of-pocket costs and expenses incurred by the Stockholder
Representative in connection with actions taken by the Stockholder
Representative pursuant to the terms of Section 2.4, this Article IX or the
Selling Stockholders Agreement (including the hiring of legal counsel and the
incurring of legal fees and costs, "Representative Expenses") shall be the
responsibility of the Junior Stockholders. Without limiting the generality of
the foregoing, the Stockholder Representative shall have full power and
authority to interpret all the terms and provisions of this Agreement, the
Post-Closing Escrow Agreement and the Selling Stockholders Agreement, and to
consent to any amendment hereof or thereof, on behalf of all the Junior
Stockholders and their respective heirs, successors and assigns.
(b) By approval of the Merger and their execution of the Selling
Stockholders Agreement, the Junior Stockholders hereby appoint and constitute
the Stockholder Representative the true and lawful attorney-in-fact of the
Junior Stockholders, with full power in their name and on their behalf to act
according to the terms of this Agreement, the Post-Closing Escrow Agreement and
the Selling Stockholders Agreement in the absolute discretion of the Stockholder
Representative; and in general to do all things and to perform all acts
including, without limitation, executing and delivering the Post-Closing Escrow
Agreement and any other agreements, certificates, receipts, instructions,
notices or instruments contemplated by or deemed advisable in connection with
the Post-Closing Escrow Agreement and the Selling Stockholders Agreement. This
power of attorney and all authority hereby conferred is granted and shall be
irrevocable and shall not be terminated by any act of any Junior Stockholder, by
operation of law, whether by such person's death, disability, protective
supervision or any other event. Without limiting the foregoing, this power of
attorney is to ensure the performance of a special obligation and, accordingly,
by approval of the Merger and executing the Selling Stockholders Agreement, each
Junior Stockholder shall be deemed to have waived and renounced its, his or her
right to renounce this power of attorney unilaterally any time before the day
following the Escrow Termination Date. By approval of the Merger and executing
the Selling Stockholders Agreement, each Junior Stockholder shall be deemed to
have waived any and all defenses that may be available to contest, negate or
disaffirm the action of the Stockholder Representative taken in good faith under
the Post-Closing Escrow Agreement or the Selling Stockholders Agreement.
Notwithstanding the power of attorney granted in this Section 9.8, no agreement,
instrument, acknowledgement or other act or document shall be ineffective solely
by reason of a Junior Stockholder (instead of the Stockholder Representative)
having signed or given the same directly.
(c) Notwithstanding anything to the contrary contained herein, the Company
shall act on its own behalf at all times prior to the Effective Time, shall sign
on its own behalf and shall not appoint any Person as its lawful
attorney-in-fact.
17
EXHIBIT B
PRE-CLOSING ESCROW AGREEMENT
(see attached)
EXECUTION COPY
PRE-CLOSING ESCROW AGREEMENT
This PRE-CLOSING ESCROW AGREEMENT (this "Agreement"), dated as of
December 23, 2004, is made by and among GMH Holding Company, a Delaware
corporation ("Parent"), Gallarus Media Holdings, Inc., a Delaware corporation
(the "Company"), and SunTrust Bank, a Georgia banking corporation ("Sun
Trust"), solely in its capacity as escrow agent and not in its individual
corporate capacity (the "Escrow Agent").
WHEREAS, pursuant to that certain Agreement and Plan of Merger (as the
same may be amended, restated or otherwise modified from time to time, the
"Merger Agreement"), dated as of December 23, 2004, by and among Parent, GMH
Acquisition Corp., a Delaware corporation ("Merger Sub"), the Company and ABRY
Partners, LLC (in its capacity as Stockholder Representative thereunder), Parent
will acquire all of the outstanding capital stock of the Company through the
merger of Merger Sub with and into the Company (the "Merger"); and
WHEREAS, this Agreement is being entered into pursuant to the Merger
Agreement and as an inducement to the Company to enter into the Merger
Agreement, and constitutes the "Pre-Closing Escrow Agreement" described therein.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement and intending to be legally bound, the parties
hereto do hereby agree as follows:
1. Appointment of the Escrow Agent. Each of the Company and Parent
hereby appoints SunTrust to act as the Escrow Agent in accordance with the terms
hereof, and SunTrust hereby accepts such appointment and agrees to act as the
Escrow Agent under the terms and conditions of this Agreement. The Escrow Agent
shall have all the rights, powers, duties and obligations provided herein.
2. Establishment of Escrow Fund and the Escrow Account. The Merger
Agreement contemplates that Parent deliver to the Escrow Agent, on the date
hereof, cash in immediately available funds in an aggregate amount equal to
$15,000,000, as security for certain of Parent's and Merger Sub's obligations
under the Merger Agreement. The Escrow Agent agrees to hold and administer the
same, together with any investment income or interest earned thereon or on the
proceeds thereof (collectively, the "Escrow Fund"). The Escrow Agent shall
establish and maintain an account, designated as the "Gallarus Media Holdings,
Inc. Pre-Closing Escrow Account", which account shall be segregated from all
other accounts of the Escrow Agent (the "Escrow Account"). The Escrow Fund shall
be deposited in, and credited to, the Escrow Account. The Escrow Agent shall
maintain the Escrow Account in accordance with applicable law and customary
industry practice. The Escrow Agent shall provide the Company and Parent with
Escrow Account statements not less than monthly.
3. Investments.
3.1. The Escrow Agent shall invest and reinvest any cash which
may from time to time be held in the Escrow Fund in marketable direct
obligations having a term not in excess of thirty (30) days issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States or in the STI Classic U.S. Treasury
Securities Money Market Fund. Unless instructed otherwise in writing executed
jointly by Parent and the Company, the Escrow Agent shall invest all funds in
the Escrow Account in the STI Classic U.S. Treasury Securities Money Market
Fund. The Escrow Agent shall (to the extent permitted by the terms of the
applicable investment) sell or redeem any such investment as necessary to make
any payments required pursuant to this Agreement and shall not be responsible
for any losses or penalties incurred as a result of any such sale or redemption.
The Escrow Agent shall not be responsible or liable for any loss accruing from
any investment made in accordance herewith. All earnings received from the
investment of the Escrow Fund shall be credited to, and shall become a part of,
the Escrow Fund (and any losses on such investments shall be debited to the
Escrow Fund). The Escrow Agent shall have no liability for any investment losses
resulting from investments made by the Escrow Agent in accordance with the terms
of this Agreement, including any losses on any investment required to be
liquidated prior to maturity in order to make a payment required hereunder.
4. Disbursements from the Escrow Fund. The Escrow Agent shall disburse
and pay over the Escrow Fund as follows:
4.1. Consummation of the Merger. On the Closing Date (as defined
in the Merger Agreement), contemporaneously with the closing of the Merger, the
Escrow Agent shall disburse the entire amount of the Escrow Fund to ABRY
Partners, LLC, a Delaware limited liability company, in its capacity as
Stockholder Representative under the Merger Agreement, in accordance with joint
written disbursement directions executed by Parent and the Company.
4.2. Termination of the Merger Agreement. Upon termination of the
Merger Agreement, the Escrow Agent shall make disbursements from the Escrow
Fund, in accordance with any joint written disbursement directions executed by
Parent and the Company.
4.3. Other Instructed Disbursements. Following receipt by the
Escrow Agent at any time and from time to time of joint written disbursement
directions executed by Parent and the Company, the Escrow Agent shall disburse
all or a portion of the Escrow Fund in accordance with the terms of such
directions.
4.4. Timing of Disbursements. The Escrow Agent shall make
disbursements from the Escrow Fund, in accordance with any joint written
disbursement directions executed by Parent and the Company pursuant to this
Section 4, within two (2) Business Days after receipt of such directions or at
any later time specified in such directions.
5. Termination. The escrow provided for hereunder shall terminate upon
the disbursement in full of the Escrow Fund in accordance with Section 4 above.
2
6. Escrow Agent.
6.1. Escrow Agent Qualifications. The Escrow Agent shall at all
times be a bank, savings and loan association or trust company in good standing,
organized and doing business under the laws of the United States or a state of
the United States or a United States branch of a foreign bank, shall have (or,
in the case of a corporation included in a bank holding company system, the
related bank holding company shall have) a combined capital and surplus of at
least fifty million dollars ($50,000,000) as set forth in its (or its related
bank holding company's) most recent published annual report of condition, shall
be authorized under the laws governing its organization to exercise corporate
trust powers, and shall be authorized under such laws to enter into and perform
this Agreement. If the Escrow Agent shall at any time cease to have the
foregoing qualifications, the Escrow Agent shall give written notice of
resignation to the Company and Parent as provided in Section 6.3, and the
Company and Parent agree to promptly appoint a qualified successor escrow agent
in accordance with Section 6.4.
6.2. In taking any action hereunder, the Escrow Agent shall in no
event be liable for any act performed or omitted to be performed by it hereunder
in the absence of gross negligence or willful misconduct in breach of the terms
of this Agreement; and it shall be under no obligation to institute or to defend
any action, suit or legal proceeding in connection herewith or to take any other
action likely to involve it in expense unless first indemnified to its
satisfaction by the party or parties that desire it to take such action.
6.3. The Escrow Agent (or any successor) may at any time during
the term hereof resign its position hereunder by giving thirty (30) days' prior
written notice of its intention to resign to the Company and Parent. Such
resignation shall be effective upon the appointment of a successor escrow agent
reasonably acceptable to the Company and Parent who shall have agreed to serve
in accordance with the terms hereof. The Escrow Agent may be removed by the
joint action of the Company and Parent, with or without cause, at any time upon
thirty (30) days' prior written notice to the Escrow Agent, which notice may be
waived by the Escrow Agent. The Company and Parent shall promptly take the
necessary action to appoint a successor escrow agent in accordance with Section
6.4 below. Notwithstanding anything to the contrary herein provided, in the
event the Escrow Agent resigns as Escrow Agent hereunder and no successor Escrow
Agent has been designated and accepted appointment as successor Escrow Agent
within forty-five (45) days following the date of the Escrow Agent's notice of
resignation, the Escrow Agent shall have the right to deposit all property held
pursuant to this Agreement into the registry of any court of competent
jurisdiction and notify the parties hereto of such deposit, and thereupon the
Escrow Agent shall be discharged from all further duties and responsibilities as
Escrow Agent under this Agreement.
6.4. Appointment of Successor Escrow Agent. If at any time the
Escrow Agent shall resign, be removed or otherwise become incapable of acting as
escrow agent pursuant to this Agreement, or if at any time a vacancy shall occur
in the office of the Escrow Agent for any other cause, a successor escrow agent
that meets the qualifications set forth in Section 6.1 shall be appointed by the
Company, with the written consent of Parent, which consent may not be
unreasonably withheld, by a written instrument delivered to the successor escrow
agent. If no successor escrow agent has been appointed at the effective date of
resignation or removal of the Escrow Agent or within thirty (30) days after the
time the Escrow
3
Agent became incapable of acting or a vacancy occurred in the office of escrow
agent, any party hereto may petition a court of competent jurisdiction for an
appointment of a successor escrow agent. Upon the appointment and acceptance of
any successor escrow agent hereunder, the Escrow Agent shall transfer the Escrow
Fund to its successor. Upon receipt by the successor escrow agent of the Escrow
Fund, the Escrow Agent shall be discharged from any continuing duties or
obligations under this Agreement, but such discharge shall not relieve the
Escrow Agent from any liability incurred prior to such event, and the successor
escrow agent shall be vested with all rights, powers, duties and obligations of
the Escrow Agent under this Agreement.
6.5. Liability.
(a) Each of the Company and Parent acknowledges and agrees
that the Escrow Agent (i) shall not be required to take notice of or take any
action pursuant to the Merger Agreement, or for determining or compelling
compliance therewith, and shall not otherwise be bound thereby, (ii) shall be
obligated only for the performance of such duties as are expressly and
specifically set forth in this Agreement on its part to be performed, each of
which are ministerial (and shall not be construed to be fiduciary) in nature,
and no implied duties or obligations of any kind shall be read into this
Agreement against or on the part of the Escrow Agent, (iii) shall not be
obligated to take any legal or other action hereunder which might in its
judgment involve or cause it to incur any expense or liability unless it shall
have been furnished with acceptable indemnification, (iv) may rely on and shall
be protected in acting or refraining from acting upon any written notice,
instruction (including, without limitation, wire transfer instructions, whether
incorporated herein or provided in a separate written instruction), instrument,
statement, certificate, request or other document furnished to it hereunder and
believed by it to be genuine and to have been signed or presented by the proper
person, and shall have no responsibility for determining the accuracy thereof,
and (v) may consult counsel satisfactory to it, including in-house counsel, and
the written opinion or advice of such counsel in any instance shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with the written
opinion or advice of such counsel.
(b) In no event shall the Escrow Agent be liable for
indirect, punitive, special or consequential damage or loss (including but not
limited to lost profits) whatsoever, even if the Escrow Agent has been informed
of the likelihood of such loss or damage and regardless of the form of action.
(c) The Escrow Agent shall have no more or less
responsibility or liability on account of any action or omission of any
book-entry depository, securities intermediary or other subescrow agent employed
by the Escrow Agent with the consent of the Company and Parent than any such
book-entry depository, securities intermediary or other subescrow agent has to
the Escrow Agent, except to the extent that such action or omission of any
book-entry depository, securities intermediary or other subescrow agent was
caused by the Escrow Agent's own gross negligence, bad faith or willful
misconduct.
(d) The Escrow Agent may act in reliance upon any written
directions or instructions signed by (i) the Company (in the case of a Default
Notice) or (ii) the Company and Parent, in any case, believed by it to be
genuine, and may assume that any person
4
who gives any written instructions, notice or receipt, or makes any statements
in connection with the provisions hereof, has been duly authorized to do so. The
Escrow Agent shall have no duty to make inquiry as to the genuineness, accuracy
or validity of any statements or instructions or any signatures on statements or
instructions, however, upon receipt of any instruction or notice from either the
Company or Parent, the Escrow Agent shall promptly provide the other party with
a copy thereof.
6.6. Fees and Expenses.
(a) The Company and Parent shall, jointly and severally, pay
or reimburse the Escrow Agent for its reasonable attorney's fees and expenses
incurred in connection with the preparation of this Agreement which shall be
initially invoiced to both and, as between the Company and Parent, paid half by
each upon funding of the Escrow Account.
(b) The Escrow Agent shall be entitled to receive
compensation for its services as the Escrow Agent hereunder in accordance with
the Fee Schedule attached hereto for which the Company and Parent shall be
jointly and severally liable. Such compensation shall be paid as between the
Company and Parent fifty percent (50%) by the Company and fifty percent (50%) by
the Parent. The Company and Parent shall, jointly and severally, reimburse the
Escrow Agent on demand for all costs and expenses incurred in connection with
the administration of this Agreement or the escrow created hereby or the
performance or observance of its duties hereunder which are in excess of its
compensation for normal services hereunder, including without limitation,
payment of any reasonable legal fees and reasonable expenses incurred by the
Escrow Agent in connection with resolution of any claim by any party hereunder.
(c) Each of the Company and Parent shall, jointly and
severally, indemnify the Escrow Agent (and each of its directors, officers,
agents and employees) and hold it (and each of such directors, officers agents
and employees) harmless from and against any loss, liability, damage, cost and
expense of any nature incurred by the Escrow Agent (or by any such person)
arising directly or indirectly out of or in connection with this Agreement or
with the administration of the Escrow Agent's duties hereunder, including but
not limited to attorney's fees and other costs and expenses of defending or
preparing to defend against any claim of liability unless and except to the
extent such loss, liability, damage, cost and expense shall be caused by the
Escrow Agent's gross negligence, bad faith, or willful misconduct. The foregoing
indemnification and agreement to hold harmless shall survive the termination of
this Agreement and any resignation or removal of the Escrow Agent.
(d) Each of the Company and Parent agrees in relation to any
payment made to the Escrow Agent pursuant to this Section 6.6 that, to the
extent any amount is paid, if for any reason the Company, on the one hand, or
Parent, on the other hand, should pay an amount greater than fifty percent of
the amount due to the Escrow Agent thereunder, the other party shall, within
five (5) Business Days of notification of such discrepancy, contribute to the
other party such an amount as results in the Company and Parent sharing equally
the payment of any amount paid to the Escrow Agent pursuant to this Section 6.6.
5
6.7. Tax Reporting. Parent and the Company agree that, for tax
reporting purposes, all interest or other income earned from the investment of
the Escrow Fund in any tax year shall (i) to the extent such interest or other
income is distributed by the Escrow Agent to any person or entity pursuant to
the terms of this Agreement during such tax year, be allocated to such person or
entity, and (ii) otherwise shall be allocated evenly between Parent and the
Company. The tax identification number for each of Parent and the Company are
set forth on Schedule I attached hereto.
6.8. Certification of Taxpayer Identification Number. Each of
Parent and the Company agrees to provide the Escrow Agent with a certified tax
identification number by signing and returning a Form W9 to the Escrow Agent
prior to the date on which any income earned on the investment of the Escrow
Fund is credited to the Escrow Account. Each of Parent and the Company
understands that, in the event its tax identification number is not certified to
the Escrow Agent, the Internal Revenue Code, as amended from time to time, may
require withholding of a portion of any interest or other income earned on the
investment of the Escrow Fund. Notwithstanding anything to the contrary herein
provided, the Escrow Agent shall have no duty to prepare or file any Federal or
state tax report or return with respect to the Escrow Account or any income
earned thereon.
7. Notices; Wire Transfer Instructions.
(a) All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given (i) on
the date of personal delivery to an officer of the other party, or (ii) when
sent by telecopy or facsimile machine to the number shown below on the date of
such confirmed facsimile or telecopy transmission (provided that a confirming
copy is sent via first class United States mail), or (iii) when properly
deposited for delivery by a nationally-recognized commercial overnight delivery
service, prepaid, or by deposit in the United States mail, certified or
registered mail, postage prepaid, return receipt requested on the date set forth
in the records of such delivery service, in each case, addressed as follows:
If to the Company, to:
Gallarus Media Holdings, Inc.
c/o ABRY Partners, LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxx
With a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
6
If to Parent, to:
GMH Holding Company
c/o Citicorp Venture Capital Equity Partners, L.P.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxx Xxxxxx
With a copy (which shall not constitute notice) to:
Dechert LLP
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
If to the Escrow Agent, to:
Sun Trust Bank
Corporate Trust Department
00 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Fax No.: (000) 000-0000
Attn: Xxxx X. Xxxxxx
Any party may change his, her or its address or facsimile number for receipt of
notice by giving notice of such change to the other parties in accordance with
this Section 7(a).
(b) Wiring Instructions. Any funds to be paid to the Escrow
Agent hereunder shall be sent by wire transfer of immediately available funds
pursuant to the following wire instructions:
Bank: SunTrust Bank
ABA: 000000000
Corporate Trust Department Center: 008
Attn: Xxxx Xxxxxx
A/C: 9088000008
Ref: Gallarus Media Holdings, Inc. Pre-Closing Escrow
Account #0000000
Any funds to be paid by the Escrow Agent hereunder shall be sent by wire
transfer of immediately available funds to the account or accounts specified in
the Default Notice or joint written disbursement directions, as applicable,
delivered to the Escrow Agent pursuant to Section 4 of this Agreement.
7
8. Benefit; Assignment. This Agreement shall be binding upon and shall
inure to the benefit of and shall be enforceable by Parent and the Company and
their respective proper successors and assigns. No party may assign or delegate
this Agreement (or any of his, her or its rights, obligations or liabilities
hereunder) in whole or in part without the prior written consent of the other
parties to this Agreement. Any assignee of any obligations or liabilities
hereunder shall fully assume the obligations and liabilities assigned to such
assignee by the assigning party, and no assignment or delegation of any
obligations or liabilities hereunder shall relieve the assigning of any such
obligation or liability.
9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE OF THE STATE OF NEW YORK OR
ANY OTHER JURISDICTION. IT IS THE INTENTION OF THE PARTIES HERETO THAT THE SITUS
OF THE ESCROW ACCOUNT IS AND SHALL BE ADMINISTERED IN THE STATE IN WHICH THE
PRINCIPAL OFFICE OF THE ESCROW AGENT FROM TIME TO TIME ACTING HEREUNDER IS
LOCATED.
10. Resolution of Disputes. It is understood and agreed that should
any dispute arise with respect to the delivery, ownership, right of possession,
and/or disposition of the Escrow Fund, or should any claim be made upon the
Escrow Agent or the Escrow Fund or Escrow Account by a third party, the Escrow
Agent upon receipt of notice of such dispute or claim is authorized and shall be
entitled (at its sole option and election) to retain in its possession without
liability to anyone, all or any of said Escrow Fund until such dispute or claim
shall have been settled either by the mutual written agreement of the parties
involved or by a final order, decree or judgment of a court of competent
jurisdiction. The Escrow Agent may, but shall be under no duty whatsoever to,
institute or defend any legal proceedings which relate to the Escrow Fund or the
Escrow Account. The Escrow Agent shall provide Parent and the Company with
prompt written notice of any such dispute or claim. In case of any dispute or
disagreement relating to this Agreement or concerning the duties of the Escrow
Agent hereunder, the Escrow Agent may refrain from taking any further action
pursuant to this Agreement until the Escrow Agent shall have received either (i)
joint written instructions from the parties hereto, or (ii) a binding order or
decision of a court of competent jurisdiction, upon which the Escrow Agent shall
be entitled to rely, directing the Escrow Agent to take such further action. In
addition, in the event of any dispute or disagreement relating to this Agreement
or concerning the duties of the Escrow Agent hereunder, the Escrow Agent shall
have the right to deposit all property held under this Agreement into title
registry of any court of competent jurisdiction and notify the parties hereto of
such deposit, and thereupon the Escrow Agent shall be discharged from all
further duties and responsibilities as Escrow Agent under this Agreement.
11. Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT, AGREEMENT, INSTRUMENT OR
CERTIFICATE EXECUTED AND DELIVERED IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS
OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE ENFORCEMENT OR PERFORMANCE OF SUCH
RIGHTS OR OBLIGATIONS. EACH OF THE COMPANY AND PARENT
8
ACKNOWLEDGES THAT THE OTHER SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE WAIVER CONTAINED IN THIS SECTION 11.
12. Counterparts; Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Agreement. This Agreement may be
executed and delivered in counterpart signature pages executed and delivered via
facsimile transmission, and any such counterpart executed and delivered via
facsimile transmission shall be deemed an original for all intents and purposes.
The Article and Section headings in this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
13. Entire Agreement; Amendment; Waiver. This Agreement (as among
Parent, the Company and the Escrow Agent), and this Agreement and the Merger
Agreement (as between Parent and the Company) constitute the entire agreement
between the parties pertaining to the subject matter hereof, and supersede all
prior and contemporaneous agreements, understandings, negotiations and
discussions of the parties, whether oral or written, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein. No amendment, supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision of this Agreement, whether or
not similar, unless otherwise expressly provided.
14. Severability. If any provision, clause or part of this Agreement
or the application thereof under certain circumstances is held invalid or
unenforceable, the remainder of this Agreement, or the application of such
provision, clause or part under other circumstances, shall not be affected
thereby.
15. Judicial Interpretation. Should any provision of this Agreement
require judicial interpretation, the parties hereto agree that the court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against one party by reason of the rule
of construction that a document is to be construed more strictly against the
party which itself or through its agent prepared the same, it being agreed that
the agents of each party have participated in the preparation hereof.
*****
9
IN WITNESS WHEREOF, the parties hereto have executed this Pre-Closing
Escrow Agreement as of the day and year first written above.
GALLARUS MEDIA HOLDINGS, INC.
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
GMH HOLDING COMPANY
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
SUNTRUST BANK, as Escrow Agent
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
FEE SCHEDULE
The annual administration fee of $2,500.00 for administering this Escrow
Agreement is payable in advance at the time of closing and if applicable, will
be invoiced each year to the appropriate party(ies) on the anniversary date of
the closing of the Escrow Agreement. Also, a one-time legal review fee of
$500.00 is payable in advance at the time of closing.
Out of pocket expenses such as, but not limited to postage, courier, overnight
mail, insurance, money wire transfer, long distance telephone charges,
facsimile, stationery, travel, legal or accounting, etc., will be billed at
cost.
These fees do not include extraordinary services which will be priced according
to time and scope of duties. The fees shall be deemed earned in full upon
receipt by the Escrow Agent, and no portion shall be refundable for any reason,
including without limitation, termination of the Escrow Agreement.
It is acknowledged that the schedule of fees shown above are acceptable for the
services mutually agreed upon.
Note: This fee schedule is based on the assumption that the escrowed funds will
be invested in SunTrust's cash sweep account, STI Classic Fund.
SCHEDULE I
TAX IDENTIFICATION NUMBERS
Company: 00-0000000
Parent: 00-0000000
EXHIBIT C
CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION
(see attached)
CERTIFICATE OF INCORPORATION
OF
GALLARUS MEDIA HOLDINGS, INC.
1. Name. The name of the Corporation is Gallarus Media Holdings, Inc.
2. Registered Office and Agent. The name and address of the
Corporation's registered agent are The Corporation Trust Company, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
3. Purpose. The purposes for which the Corporation is formed are to
engage in any lawful act or activity for which corporations may be organized
under the Delaware General Corporation Law (the "DGCL") and to possess and
exercise all of the powers and privileges granted by such law and any other law
of Delaware.
4. Authorized Capital. The aggregate number of shares of stock which
the Corporation shall have authority to issue is 100 shares, all of which are of
one class and are designated as Common Stock and each of which has a par value
of one tenth of one cent ($0,001).
5. Bylaws. The board of directors of the Corporation is authorized to
adopt, amend or repeal the bylaws of the Corporation, except as otherwise
specifically provided therein.
6. Elections of Directors. Elections of directors need not be by
written ballot unless the bylaws of the Corporation shall so provide.
7. Right to Amend. The Corporation reserves the right to amend any
provision contained in this Certificate as the same may from time to time be in
effect in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders or others hereunder are subject to such reservation.
9. Written Consent Authorized. Any action required to be taken, or
which may be taken, at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
shares of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares of stock entitled to vote thereon were present and voted and shall be
delivered to the Corporation by delivery to its registered office in Delaware,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded; provided, however, that notice of the taking of corporate action by
less than unanimous written consent shall be given to the stockholders who have
not consented in writing in the manner provided by the Delaware General
Corporation Law.
10. Limitation on Liability. The directors of the Corporation shall be
entitled to the benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
no director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. Any repeal or
modification of this Section 10 shall be prospective only, and shall not affect,
to the detriment of any director, any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
11. Miscellaneous. Subject to the provision of the DGCL, the books of
the Corporation may be kept inside or outside the State of Delaware at such
place or places as may be designated from time to time by the Board of Directors
or in the bylaws of the Corporation.
-2-
EXHIBIT D
BYLAWS OF THE SURVIVING CORPORATION
(see attached)
BYLAWS
OF
GALLARUS MEDIA HOLDINGS, INC.
ARTICLE I
STOCKHOLDERS
1.1. MEETINGS.
1.1.1. PLACE. Meetings of the stockholders shall be held at such place
as may be designated by the board of directors.
1.1.2. ANNUAL MEETING. An annual meeting of the stockholders for the
election of directors and for other business shall be held on such date and at
such time as may be fixed by the board of directors.
1.1.3. SPECIAL MEETINGS. Special meetings of the stockholders may be
called at any time by the president, or the board of directors, or the holders
of a majority of the outstanding shares of stock of the Company entitled to vote
at the meeting.
1.1.4. QUORUM. The presence, in person or by proxy, of the holders of
a majority of the outstanding shares of stock of the Company entitled to vote on
a particular matter shall constitute a quorum for the purpose of considering
such matter.
1.1.5. VOTING RIGHTS. Except as otherwise provided herein, in the
certificate of incorporation or by law, every stockholder shall have the right
at every meeting of stockholders to one vote for every share standing in the
name of such stockholder on the books of the Company which is entitled to vote
at such meeting. Every stockholder may vote either in person or by proxy. Any
action required or permitted to be taken at a meeting of the stockholders may be
taken without a meeting (1) if one or more written consents setting forth the
action so taken shall be signed by all of the stockholders entitled to vote with
respect to the subject matter thereof, or (2) if so provided in the articles of
incorporation, by persons who would be entitled to vote at a meeting shares
having voting power to cast not less than the minimum number (or numbers, in the
case of voting by groups) of votes that would be necessary to authorize or take
the action at a meeting at which all stockholders entitled to vote were present
and voted.
ARTICLE II
DIRECTORS
2.1. NUMBER AND TERM. The board of directors shall have authority to (i)
determine the number of directors to constitute the board and (ii) fix the terms
of office of the directors.
2.2. MEETINGS.
2.2.1. PLACE. Meetings of the board of directors .shall be held at
such place as may be designated by the board or in the notice of the meeting.
2.2.2. REGULAR MEETINGS. Regular meetings of the board of directors
shall be held at such times as the board may designate. Notice of regular
meetings need not be given.
2.2.3. SPECIAL MEETINGS. Special meetings of the board may be called
by direction of the president or any two members of the board on three days'
notice to each director, either personally or by mail, telegram or facsimile
transmission.
2.2.4. QUORUM. A majority of all the directors in office shall
constitute a quorum for the transaction of business at any meeting.
2.2.5. VOTING. Except as otherwise provided herein, in the certificate
of incorporation or by law, the vote of a majority of the directors present at
any meeting at which a quorum is present shall constitute the act of the board
of directors.
2.2.6. COMMITTEES. The board of directors may, by resolution adopted
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more directors and such alternate members (also
directors) as may be designated by the board. Unless otherwise provided herein,
in the absence or disqualification of any member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not such member or members constitute a quorum, may unanimously appoint
another director to act at the meeting in the place of any such absent or
disqualified member. Except as otherwise provided herein, in the certificate of
incorporation or by law, any such committee shall have and may exercise the
powers of the full board of directors to the extent provided in the resolution
of the board directing the committee.
ARTICLE III
OFFICERS
3.1. ELECTION. At its first meeting after each annual meeting of the
stockholders, the board of directors shall elect a president, treasurer,
secretary and such other officers as it deems advisable.
3.2. AUTHORITY, DUTIES AND COMPENSATION. The officers shall have such
authority, perform such duties and serve for such compensation as may be
determined by resolution of the board of directors. Except as otherwise provided
by board resolution, (i) the president shall be the chief executive officer of
the Company, shall have general supervision over the business and operations of
the Company, may perform any act and execute any instrument for the conduct of
such business and operations and shall preside at all meetings of the board and
stockholders, (ii) the other officers shall have the duties customarily related
to their respective offices, and (iii)
2
any vice president, or vice presidents in the order determined by the board,
shall in the absence of the president have the authority and perform the duties
of the president.
ARTICLE IV
INDEMNIFICATION
4.1. RIGHT TO INDEMNIFICATION. The Company shall indemnify any person who
was or is party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (a "proceeding"), by reason of the fact that such person is or
was a director or officer of the Company, or is or was serving at the request of
the Company, as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or is or was a director or officer of the
Company serving at its request as an administrator, trustee or other fiduciary
of one or more of the employee benefit plans of the Company or other enterprise,
against expenses (including attorneys' fees), liability and loss actually and
reasonably incurred or suffered by such person in connection with such
proceeding, whether or not the indemnified liability arises or arose from any
threatened, pending or completed proceeding by or in the right of the Company,
except to the extent that such indemnification is prohibited by applicable law.
4.2. ADVANCE OF EXPENSES. Expenses incurred by a director or officer of the
Company in defending a proceeding shall be paid by the Company in advance of the
final disposition of such proceeding subject to the provisions of any applicable
statute.
4.3. PROCEDURE FOR DETERMINING PERMISSIBILITY. To determine whether any
indemnification or advance of expenses under this Article IV is permissible, the
board of directors by a majority vote of a quorum consisting of directors not
parties to such proceeding may, and on request of any person seeking
indemnification or advance of expenses shall be required to, determine in each
case whether the applicable standards in any applicable statute have been met,
or such determination shall be made by independent legal counsel if such quorum
is not obtainable, or, even if obtainable, a majority vote of a quorum of
disinterested directors so directs, provided that, if there has been a change in
control of the Company between the time of the action or failure to act giving
rise to the claim for indemnification or advance of expenses and the time such
claim is made, at the option of the person seeking indemnification or advance of
expenses, the permissibility of indemnification or advance of expenses shall be
determined by independent legal counsel. The reasonable expenses of any director
or officer in prosecuting a successful claim for indemnification, and the fees
and expenses of any special legal counsel engaged to determine permissibility of
indemnification or advance of expenses, shall be borne by the Company.
4.4. CONTRACTUAL OBLIGATION. The obligations of the Company to indemnify a
director or officer under this Article IV, including the duty to advance
expenses, shall be considered a contract between the Company and such director
or officer, and no modification or repeal of any provision of this Article IV
shall affect, to the detriment of the director or officer, such obligations of
the Company in connection with a claim based on any act or failure to act
occurring before such modification or repeal.
3
4.5. INDEMNIFICATION NOT EXCLUSIVE; INURING OF BENEFIT. The indemnification
and advance of expenses provided by this Article IV shall not be deemed
exclusive of any other right to which one indemnified may be entitled under any
statute, provision of the certificate of incorporation, these bylaws, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity while
holding such office, and shall inure to the benefit of the heirs, executors and
administrators of any such person.
4.6. INSURANCE AND OTHER INDEMNIFICATION. The board of directors shall have
the power to (i) authorize the Company to purchase and maintain, at the
Company's expense, insurance on behalf of the Company and on behalf of others to
the extent that power to do so has not been prohibited by statute, (ii) create
any fund of any nature, whether or not under the control of a trustee, or
otherwise secure any of its indemnification obligations, and (iii) give other
indemnification to the extent permitted by statute.
ARTICLE V
TRANSFER OF SHARE CERTIFICATES
Transfers of share certificates and the shares represented thereby shall be
made on the books of the Company only by the registered holder or by duly
authorized attorney. Transfers shall be made only on surrender of the share
certificate or certificates.
ARTICLE VI
AMENDMENTS
These bylaws may be amended or repealed at any regular or special meeting
of the board of directors by vote of a majority of all directors in office or at
any annual or special meeting of stockholders by vote of holders of a majority
of the outstanding stock entitled to vote. Notice of any such annual or special
meeting of stockholders shall set forth the proposed change or a summary
thereof.
4
EXHIBIT E
POST-CLOSING ESCROW AGREEMENT
FINAL FORM
POST-CLOSING ESCROW AGREEMENT
This POST-CLOSING ESCROW AGREEMENT (this "Agreement"), dated as of
January [__], 2005, is made by and among GMH Holding Company, a Delaware
corporation ("Parent"), ABRY Partners, LLC, a Delaware limited liability
company, in its capacity as the Stockholder Representative under the Merger
Agreement (as hereinafter defined) ("Stockholder Representative"), and SunTrust
Bank, a Georgia banking corporation ("Sun Trust"), solely in its capacity as
escrow agent and not in its individual corporate capacity (the "Escrow Agent").
Parent and Stockholder Representative are sometimes referred to herein,
collectively, as the "Interested Parties."
WHEREAS, pursuant to that certain Agreement and Plan of Merger (as the
same may be amended, restated or otherwise modified from time to time, the
"Merger Agreement"), dated as of December 23, 2004, by and among Parent, GMH
Acquisition Corp., a Delaware corporation ("Merger Sub"), Gallarus Media
Holdings, Inc., a Delaware corporation (the "Company"), and ABRY Partners, LLC
(in its capacity as Stockholder Representative thereunder), Parent will acquire
all of the outstanding capital sock of the Company through the merger of Merger
Sub with and into the Company; and
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Merger Agreement that Parent and Stockholder
Representative execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement and intending to be legally bound, the parties
hereto do hereby agree as follows:
1. Appointment of the Escrow Agent. Each of Parent and Stockholder
Representative hereby appoints SunTrust to act as the Escrow Agent in accordance
with the terms hereof, and SunTrust hereby accepts such appointment and agrees
to act as the Escrow Agent under the terms and conditions of this Agreement. The
Escrow Agent shall have all the rights, powers, duties and obligations provided
herein.
2. Establishment of Escrow Fund and the Escrow Account. The Merger
Agreement contemplates that Parent deliver to the Escrow Agent, on the date
hereof, cash in immediately available funds in an aggregate amount equal to
fifteen million dollars ($15,000,000), representing a portion of the Merger
Consideration as defined in the Merger Agreement. The Escrow Agent agrees to
hold and administer the same, together with any investment income or interest
earned thereon or on the proceeds thereof (collectively, the "Escrow Fund"). The
Escrow Agent shall establish and maintain an account, designated as the
"Gallarus Media Holdings, Inc. Post-Closing Escrow Account", which account shall
be segregated from all other accounts of the Escrow Agent (the "Escrow
Account"). The Escrow Fund shall be deposited in, and credited to, the Escrow
Account. The Escrow Agent shall maintain the Escrow Account in accordance with
applicable law and customary industry
practice. The Escrow Agent shall provide the Interested Parties with Escrow
Account statements not less than monthly.
3. Investments.
3.1. The Escrow Agent shall invest and reinvest any cash which
may from time to time be held in the Escrow Fund in marketable direct
obligations having a term not in excess of thirty (30) days issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States or in the STI Classic U.S. Treasury
Securities Money Market Fund. Unless instructed otherwise in writing executed
jointly by Parent and Stockholder Representative, the Escrow Agent shall invest
all funds in the Escrow Account in the STI Classic U.S. Treasury Securities
Money Market Fund. The Escrow Agent shall (to the extent permitted by the terms
of the applicable investment) sell or redeem any such investment as necessary to
make any payments required pursuant to this Agreement and shall not be
responsible for any losses or penalties incurred as a result of any such sale or
redemption. The Escrow Agent shall not be responsible or liable for any loss
accruing from any investment made in accordance herewith. All earnings received
from the investment of the Escrow Fund shall be credited to, and shall become a
part of, the Escrow Fund (and any losses on such investments shall be debited to
the Escrow Fund). The Escrow Agent shall have no liability for any investment
losses resulting from investments made by the Escrow Agent in accordance with
the terms of this Agreement, including any losses on any investment required to
be liquidated prior to maturity in order to make a payment required hereunder.
4. Disbursements from the Escrow Fund. The Escrow Agent shall disburse
and pay over the Escrow Fund as follows:
4.1. Joint Written Disbursement Directions. Following receipt by
the Escrow Agent at any time and from time to time of joint written disbursement
directions from Parent and Stockholder Representative, the Escrow Agent shall
disburse all or a portion of the Escrow Fund in accordance with the terms of
such directions.
4.2. Disbursements in Respect of Adjustments to the Merger
Consideration. Parent may request a disbursement from the Escrow Fund in respect
of a final determination of the Merger Consideration (as defined in the Merger
Agreement) by sending written notice to the Stockholder Representative and to
the Escrow Agent (a "Parent Adjustment Demand"). Each Parent Adjustment Demand
shall (i) acknowledge that such notice is being delivered in accordance with
Sections 2.4(e)(i) and Section 2.5(b)(ii) of the Merger Agreement and that
attached thereto is the final written determination of the Independent
Accountants (as defined in the Merger Agreement) with respect to the Unresolved
Items (as defined in the Merger Agreement) and (ii) state the basis for the
claim and the total amount of the Escrow Fund requested to be disbursed to
Parent. Each Parent Adjustment Demand shall be accompanied by evidence that a
copy of such Parent Adjustment Demand has been given to the Stockholder
Representative. The Escrow Agent shall be entitled to assume conclusively that
any Parent Adjustment Demand delivered to the Escrow Agent conforms to the
requirements of the Merger Agreement.
2
4.3. Disbursements in Respect of Certain Tax Obligations.
Following receipt by the Escrow Agent at any time and from time to time of
written disbursement directions from Stockholder Representative in which
Stockholder Representative acknowledges that such directions are being delivered
pursuant to Section 7.12(a) of the Merger Agreement in respect of certain income
tax liabilities attributable to a Pre-Closing Period (as defined in the Merger
Agreement), the Escrow Agent shall disburse to Parent all or a portion of the
amount of the Escrow Fund in accordance with the terms of such directions.
4.4. Parent Request for Disbursements in Respect of
Indemnification Claims. Parent may request a disbursement from the Escrow Fund
(whether before or after the Release Date (as defined below)) in respect of any
claim for indemnification pursuant to Article IX of the Merger Agreement by
sending written notice to the Stockholder Representative and to the Escrow Agent
(a "Parent Indemnification Demand"). Each Parent Indemnification Demand shall
(i) acknowledge that such notice is being delivered in accordance with Sections
2.5(b)(ii) and Section 9.5(j) of the Merger Agreement and that attached thereto
is a Final Award (as defined in the Merger Agreement) and (ii) state the basis
for the claim and the total amount of the Escrow Fund requested to be disbursed
to Parent. Each Parent Indemnification Demand shall be accompanied by evidence
that a copy of such Parent Indemnification Demand has been given to the
Stockholder Representative. The Escrow Agent shall be entitled to assume
conclusively that any Parent Indemnification Demand delivered to the Escrow
Agent conforms to the requirements of the Merger Agreement.
4.5. Stockholder Representative Request for Disbursement. At any
time following the Release Date (as defined below), Stockholder Representative
may request a disbursement from the Escrow Fund in respect of any Outstanding
Claims Amount (as defined below) by sending written notice to Parent and to the
Escrow Agent (a "Stockholder Representative Demand"). Each Stockholder
Representative Demand shall (i) acknowledge that such notice is being delivered
in accordance with Sections 2.5(b)(ii) of the Merger Agreement and that attached
thereto is a Final Award (as defined in the Merger Agreement) and (ii) state the
basis for the claim and the total amount of the Escrow Fund requested to be
disbursed to Stockholder Representative. Each Stockholder Representative Demand
shall be accompanied by evidence that a copy of such Stockholder Representative
Demand has been given to Parent. The Escrow Agent shall be entitled to assume
conclusively that any Stockholder Representative Demand delivered to the Escrow
Agent conforms to the requirements of the Merger Agreement.
4.6. Timing of Disbursements. The Escrow Agent shall make
disbursements from the Escrow Fund, in accordance with any joint written
disbursement directions which are executed by Parent and Stockholder
Representative or any written disbursement directions delivered pursuant to
Section 4.3 hereof, within two (2) Business Days after receipt of such
directions or at any later time specified in such directions. The Escrow Agent
shall make disbursements from the Escrow Fund, in accordance with any written
disbursement directions delivered pursuant to Section 4.2, Section 4.4 or
Section 4.5 hereof, on the fifth (5) Business Day after receipt of such
directions.
5. Release of the Escrow Fund. On the date eighteen (18) months from
the date hereof (the "Release Date"), the Escrow Agent shall pay to Stockholder
Representative (on behalf of the Stockholders) the full amount of the Escrow
Fund less the aggregate Pending Claim
3
Amounts (as defined in the Merger Agreement), which amount shall be specified in
writing to the Escrow Agent jointly signed by Parent and Stockholder
Representative (the "Outstanding Claims Amount").
6. Termination. The escrow provided for hereunder shall terminate upon
the earlier of the following dates: (i) the Release Date, if the Outstanding
Claims Amount equals zero on the Release Date, or, if the Outstanding Claims
Amount is greater than zero on the Release Date, the first date after the
Release Date on which the Outstanding Claims Amount equals zero, and (ii) the
date on which both Parent and Stockholder Representative have jointly notified
the Escrow Agent in writing that Parent and Stockholder Representative have
mutually agreed to terminate the escrow, which writing shall include joint
written disbursement instructions from Parent and Stockholder Representative
regarding final disbursement of the Escrow Fund.
7. Escrow Agent
7.1. Escrow Agent Qualifications. The Escrow Agent shall at all
times be a bank, savings and loan association or trust company in good standing,
organized and doing business under the laws of the United States or a state of
the United States or a United States branch of a foreign bank, shall have (or,
in the case of a corporation included in a bank holding company system, the
related bank holding company shall have) a combined capital and surplus of at
least fifty million dollars ($50,000,000) as set forth in its (or its related
bank holding company's) most recent published annual report of condition, shall
be authorized under the laws governing its organization to exercise corporate
trust powers, and shall be authorized under such laws to enter into and perform
this Agreement. If the Escrow Agent shall at any time cease to have the
foregoing qualifications, the Escrow Agent shall give written notice of
resignation to Parent and Stockholder Representative as provided in Section 7.3,
and Parent and Stockholder Representative agree to promptly appoint a qualified
successor escrow agent in accordance with Section 7.4.
7.2. In taking any action hereunder, the Escrow Agent shall in no
event be liable for any act performed or omitted to be performed by it hereunder
in the absence of gross negligence or willful misconduct in breach of the terms
of this Agreement; and it shall be under no obligation to institute or to defend
any action, suit or legal proceeding in connection herewith or to take any other
action likely to involve it in expense unless first indemnified to its
satisfaction by the party or parties that desire it to take such action.
7.3. The Escrow Agent (or any successor) may at any time during
the term hereof resign its position hereunder by giving thirty (30) days' prior
written notice of its intention to resign to Parent and Stockholder
Representative. Such resignation shall be effective upon the appointment of a
successor escrow agent reasonably acceptable to Parent and Stockholder
Representative who shall have agreed to serve in accordance with the terms
hereof. The Escrow Agent may be removed by the joint action of Parent and
Stockholder Representative, with or without cause, at any time upon thirty (30)
days' prior written notice to the Escrow Agent, which notice may be waived by
Escrow Agent. Parent and Stockholder Representative shall promptly take the
necessary action to appoint a successor escrow agent in accordance with Section
7.4 below. Notwithstanding anything to the contrary herein provided,
4
in the event the Escrow Agent resigns as Escrow Agent hereunder and no successor
Escrow Agent has been designated and accepted appointment as successor Escrow
Agent within forty-five (45) days following the date of the Escrow Agent's
notice of resignation, the Escrow Agent shall have the right to deposit all
property held pursuant to this Agreement into the registry of any court of
competent jurisdiction and notify the parties hereto of such deposit, and
thereupon the Escrow Agent shall be discharged from all further duties and
responsibilities as Escrow Agent under this Agreement.
7.4. Appointment of Successor Escrow Agent. If at any time the
Escrow Agent shall resign, be removed or otherwise become incapable of acting as
escrow agent pursuant to this Agreement, or if at any time a vacancy shall occur
in the office of the Escrow Agent for any other cause, a successor escrow agent
that meets the qualifications set forth in Section 7.1 shall be appointed by
Parent, with the written consent of Stockholder Representative, which consent
may not be unreasonably withheld, by a written instrument delivered to the
successor escrow agent. If no successor escrow agent has been appointed at the
effective date of resignation or removal of the Escrow Agent or within thirty
(30) days after the time the Escrow Agent became incapable of acting or a
vacancy occurred in the office of escrow agent, any party hereto may petition a
court of competent jurisdiction for an appointment of a successor escrow agent.
Upon the appointment and acceptance of any successor escrow agent hereunder, the
Escrow Agent shall transfer the Escrow Fund to its successor. Upon receipt by
the successor escrow agent of the Escrow Fund, the Escrow Agent shall be
discharged from any continuing duties or obligations under this Agreement, but
such discharge shall not relieve the Escrow Agent from any liability incurred
prior to such event, and the successor escrow agent shall be vested with all
rights, powers, duties and obligations of the Escrow Agent under this Agreement.
7.5. Liability.
(a) Each Interested Party acknowledges and agrees that the
Escrow Agent (i) shall not be required to take notice of or take any action
pursuant to the Merger Agreement, or for determining or compelling compliance
therewith, and shall not otherwise be bound thereby, (ii) shall be obligated
only for the performance of such duties as are expressly and specifically set
forth in this Agreement on its part to be performed, each of which are
ministerial (and shall not be construed to be fiduciary) in nature, and no
implied duties or obligations of any kind shall be read into this Agreement
against or on the part of the Escrow Agent, (iii) shall not be obligated to take
any legal or other action hereunder which might in its judgment involve or cause
it to incur any expense or liability unless it shall have been furnished with
acceptable indemnification, (iv) may rely on and shall be protected in acting or
refraining from acting upon any written notice, instruction (including, without
limitation, wire transfer instructions, whether incorporated herein or provided
in a separate written instruction), instrument, statement, certificate, request
or other document furnished to it hereunder and believed by it to be genuine and
to have been signed or presented by the proper person, and shall have no
responsibility for determining the accuracy thereof, and (v) may consult counsel
satisfactory to it, including in-house counsel, and the written opinion or
advice of such counsel in any instance shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the written opinion or advice of
such counsel.
5
(b) In no event shall the Escrow Agent be liable for
indirect, punitive, special or consequential damage or loss (including but not
limited to lost profits) whatsoever, even if the Escrow Agent has been informed
of the likelihood of such loss or damage and regardless of the form of action.
(c) The Escrow Agent shall have no more or less
responsibility or liability on account of any action or omission of any
book-entry depository, securities intermediary or other subescrow agent employed
by the Escrow Agent with the consent of Parent and Stockholder Representative
than any such book-entry depository, securities intermediary or other subescrow
agent has to the Escrow Agent, except to the extent that such action or omission
of any book-entry depository, securities intermediary or other subescrow agent
was caused by the Escrow Agent's own gross negligence, bad faith or willful
misconduct.
(d) The Escrow Agent may act in reliance upon any
instructions signed by Parent or Stockholder Representative believed by it to be
genuine, and may assume that any person who gives any written instructions,
notice or receipt, or makes any statements in connection with the provisions
hereof, has been duly authorized to do so. The Escrow Agent shall have no duty
to make inquiry as to the genuineness, accuracy or validity of any statements or
instructions or any signatures on statements or instructions, however, upon
receipt of any instruction or notice from an Interested Party, the Escrow Agent
shall promptly provide the other Interested Party with a copy thereof.
7.6. Fees and Expenses.
(a) Parent and Stockholder Representative shall, jointly and
severally, pay or reimburse the Escrow Agent for its reasonable attorney's fees
and expenses incurred in connection with the preparation of this Agreement which
shall be initially invoiced to both and paid, as between Parent and Stockholder
Representative, half by each upon funding of the Escrow Account.
(b) The Escrow Agent shall be entitled to receive
compensation for its services as the Escrow Agent hereunder in accordance with
the Fee Schedule attached hereto for which Parent and Stockholder Representative
shall be jointly and severally liable. Such compensation shall as between Parent
and Stockholder Representative be paid fifty percent (50%) by Parent and fifty
percent (50%) by Stockholder Representative (on behalf of the Stockholders)
pursuant to Section 7.6(d). Parent and Stockholder Representative shall, jointly
and severally, reimburse the Escrow Agent on demand for all costs and expenses
incurred in connection with the administration of this Agreement or the escrow
created hereby or the performance or observance of its duties hereunder which
are in excess of its compensation for normal services hereunder, including
without limitation, payment of any reasonable legal fees and reasonable expenses
incurred by the Escrow Agent in connection with resolution of any claim by any
party hereunder.
(c) Parent and Stockholder Representative shall, jointly and
severally, indemnify the Escrow Agent (and each of its directors, officers,
agents and employees) and hold it (and each of such directors, officers, agents
and employees) harmless from and against any loss, liability, damage, cost and
expense of any nature incurred by the Escrow Agent
6
(or any such person) arising directly or indirectly out of or in connection with
this Agreement or with the administration of the Escrow Agent's duties
hereunder, including but not limited to attorney's fees and other costs and
expenses of defending or preparing to defend against any claim of liability
unless and except to the extent such loss, liability, damage, cost and expense
shall be caused by the Escrow Agent's gross negligence, bad faith, or willful
misconduct. The foregoing indemnification and agreement to hold harmless shall
survive the termination of this Agreement and any resignation or removal of the
Escrow Agent.
(d) The Interested Parties agree in relation to any payment
made to the Escrow Agent pursuant to this Section 7.6 that, to the extent any
amount is paid, if for any reason Parent, on the one hand, or Stockholder
Representative, on the other hand, should pay an amount greater than fifty
percent of the amount due to. the Escrow Agent thereunder, the other Interested
Party (as applicable) shall, within five (5) Business Days of notification of
such discrepancy, contribute to the other Interested Party such an amount as
results in Parent and Stockholder Representative sharing equally the payment of
any amount paid to the Escrow Agent pursuant to this Section 7.6.
7.7. Tax Reporting. The Interested Parties agree that, for tax
reporting purposes, all interest or other income earned from the investment of
the Escrow Fund in any tax year shall (i) to the extent such interest or other
income is distributed by the Escrow Agent to Parent pursuant to the terms of
this Agreement during such tax year, be allocated to Parent, and (ii) otherwise
shall be allocated to the Stockholders in accordance with the percentages set
forth on Schedule A attached hereto.
7.8. Certification of Taxpayer Identification Number. Each
Interested Party agrees to provide the Escrow Agent with a certified tax
identification number by signing and returning a Form W9 to the Escrow Agent
prior to the date on which any income earned on the investment of the Escrow
Fund is credited to the Escrow Account. Each Interested Party understands that,
in the event its tax identification number is not certified to the Escrow Agent,
the Internal Revenue Code, as amended from time to time, may require withholding
of a portion of any interest or other income earned on the investment of the
Escrow Fund. Notwithstanding anything to the contrary herein provided, the
Escrow Agent shall have no duty to prepare or file any Federal or state tax
report or return with respect to the Escrow Account or any income earned
thereon.
8. Notices; Wire Transfer Instructions.
(a) All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given (i) on
the date of personal delivery to an officer of the other party, or (ii) when
sent by telecopy or facsimile machine to the number shown below on the date of
such confirmed facsimile or telecopy transmission (provided that a confirming
copy is sent via first class United States mail), or (iii) when properly
deposited for delivery by a nationally-recognized commercial overnight delivery
service, prepaid, or by deposit in the United States mail, certified or
registered mail, postage prepaid, return receipt requested on the date set forth
in the records of such delivery service, in each case, addressed as follows:
7
If to Stockholder Representative, to:
ABRY Partners, LLC
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxxx
With a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
If to Parent, to:
GMH Holding Company
c/o Citicorp Venture Capital Equity Partners, L.P.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
Attention: Xxx Xxxxxx
With a copy (which shall not constitute notice) to:
Dechert LLP
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
If to the Escrow Agent, to:
SunTrust Bank
Corporate Trust Department
00 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Fax No.: (000) 000-0000
Attn: Xxxx X. Xxxxxx
Any party may change his, her or its address or facsimile number for receipt of
notice by giving notice of such change to the other parties in accordance with
this Section 8(a).
(b) Wiring Instructions. Any funds to be paid to the Escrow
Agent hereunder shall be sent by wire transfer of immediately available funds
pursuant to the following wire instructions:
8
Bank: SunTrust Bank
ABA: 000000000
Corporate Trust Department Center: 008
Attn: Xxxx Xxxxxx
A/C: 9088000008
Ref: Gallarus Media Holdings, Inc. Post-Closing Escrow
Account#0000000
Any funds to be paid by the Escrow Agent hereunder shall be sent by wire
transfer of immediately available funds to the account or accounts specified in
the written disbursement directions delivered to the Escrow Agent pursuant to
Section 4 of this Agreement.
9. Benefit; Assignment. This Agreement shall be binding upon and shall
inure to the benefit of and shall be enforceable by Parent and Stockholder
Representative and their respective proper successors and assigns. No party may
assign or delegate this Agreement (or any of his, her or its rights, obligations
or liabilities hereunder) in whole or in part without the prior written consent
of the other parties to this Agreement. Any assignee of any obligations or
liabilities hereunder shall fully assume the obligations and liabilities
assigned to such assignee by the assigning party, and no assignment or
delegation of any obligations or liabilities hereunder shall relieve the
assigning of any such obligation or liability.
10. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE OF THE STATE OF NEW YORK OR
ANY OTHER JURISDICTION. IT IS THE INTENTION OF THE PARTIES HERETO THAT THE SITUS
OF THE ESCROW ACCOUNT IS AND SHALL BE ADMINISTERED IN THE STATE IN WHICH THE
PRINCIPAL OFFICE OF THE ESCROW AGENT FROM TIME TO TIME ACTING HEREUNDER IS
LOCATED.
11. Resolution of Disputes. It is understood and agreed that should
any dispute arise with respect to the delivery, ownership, right of possession,
and/or disposition of the Escrow Fund, or should any claim be made upon the
Escrow Agent or the Escrow Fund or Escrow Account by a third party, the Escrow
Agent upon receipt of notice of such dispute or claim is authorized and shall be
entitled (at its sole option and election) to retain in its possession without
liability to anyone, all or any of said Escrow Fund until such dispute or claim
shall have been settled either by the mutual written agreement of the parties
involved or by a final order, decree or judgment of a court of competent
jurisdiction. The Escrow Agent may, but shall be under no duty whatsoever to,
institute or defend any legal proceedings which relate to the Escrow Fund or the
Escrow Account. The Escrow Agent shall provide the Interested Parties with
prompt written notice of any such dispute or claim. In case of any dispute or
disagreement relating to this Agreement or concerning the duties of the Escrow
Agent hereunder, the Escrow Agent may refrain from taking any further action
pursuant to this Agreement until the Escrow Agent shall have received either (i)
joint written instructions from the parties hereto, or (ii) a binding order or
decision of a court of competent jurisdiction, upon which the Escrow Agent shall
be entitled to rely, directing the Escrow Agent to take such further action. In
addition, in
9
the event of any dispute or disagreement relating to this Agreement or
concerning the duties of the Escrow Agent hereunder, the Escrow Agent shall have
the right to deposit all property held under this Agreement into the registry of
any court of competent jurisdiction and notify the parties hereto of such
deposit, and thereupon the Escrow Agent shall be discharged from all further
duties and responsibilities as Escrow Agent under this Agreement.
12. Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT, AGREEMENT, INSTRUMENT OR
CERTIFICATE EXECUTED AND DELIVERED IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS
OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE ENFORCEMENT OR PERFORMANCE OF SUCH
RIGHTS OR OBLIGATIONS. EACH OF PARENT AND STOCKHOLDER REPRESENTATIVE
ACKNOWLEDGES THAT THE OTHER SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE WAIVER CONTAINED IN THIS SECTION 12.
13. Counterparts; Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Agreement. This Agreement may be
executed and delivered in counterpart signature pages executed and delivered via
facsimile transmission, and any such counterpart executed and delivered via
facsimile transmission shall be deemed an original for all intents and purposes.
The Article and Section headings in this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
14. Entire Agreement; Amendment; Waiver. This Agreement (as among
Parent, Stockholder Representative and the Escrow Agent), and this Agreement and
the Merger Agreement (as between Parent and Stockholder Agreement) constitute
the entire agreement between the parties pertaining to the subject matter
hereof, and supersede all prior and contemporaneous agreements, understandings,
negotiations and discussions of the parties, whether oral or written, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein. No amendment, supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision of this Agreement, whether or
not similar, unless otherwise expressly provided.
15. Severabilitv. If any provision, clause or part of this Agreement
or the application thereof under certain circumstances is held invalid or
unenforceable, the remainder of this Agreement, or the application of such
provision, clause or part under other circumstances, shall not be affected
thereby.
16. Judicial Interpretation. Should any provision of this Agreement
require judicial interpretation, the parties hereto agree that the court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against one party by reason of the rule
of construction that a document is to be construed more strictly
10
against the party which itself or through its agent prepared the same, it being
agreed that the agents of each party have participated in the preparation
hereof.
*****
11
IN WITNESS WHEREOF, the parties hereto have executed this Post-Closing
Escrow Agreement as of the day and year first written above.
ABRY PARTNERS, LLC
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
Tax Id. Number:
------------------------
GMH HOLDING COMPANY
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
Tax Id. Number:
------------------------
SUNTRUST BANK, as Escrow Agent
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
FEE SCHEDULE
The annual administration fee of $2,500.00 for administering this Escrow
Agreement is payable in advance at the time of closing and if applicable, will
be invoiced each year to the appropriate party(ies) on the anniversary date of
the closing of the Escrow Agreement. Also, a one-time legal review fee of
$500.00 is payable in advance at the time of closing.
Out of pocket expenses such as, but not limited to postage, courier,
overnight mail, insurance, money wire transfer, long distance telephone charges,
facsimile, stationery, travel, legal or accounting, etc., will be billed at
cost.
These fees do not include extraordinary services which will be priced according
to time and scope of duties. The fees shall be deemed earned in full upon
receipt by the Escrow Agent, and no portion shall be refundable for any reason,
including without limitation, termination of the Escrow Agreement.
It is acknowledged that the schedule of fees shown above are acceptable for the
services mutually agreed upon.
Note: This fee schedule is based on the assumption that the escrowed funds will
be invested in SunTrust's cash sweep account, STI Classic Fund.
SCHEDULE A
ALLOCATION OF TAXABLE INCOME AMONG THE STOCKHOLDERS
[TO COME FROM THE STOCKHOLDER REPRESENTATIVE]
EXHIBIT F
FORM OF TRANSMITTAL LETTER
(see attached)
FINAL FORM
LETTER OF TRANSMITTAL
GALLARUS MEDIA HOLDINGS, INC.
PAYING AGENT:
ABRY PARTNERS, LLC
By Mail, Overnight Courier or Hand
Delivery:
ABRY PARTNERS, LLC
000 XXXXXXXXXX XXXXXX, 00XX XXXXX
XXXXXX, XX 00000
ATTN: X.X. XXXXXXX
FOR INFORMATION CALL: (000) 000-0000
DESCRIPTION OF CERTIFICATES SURRENDERED
CERTIFICATE(S) BEING SURRENDERED (ATTACH
SIGNED ADDITIONAL LIST, IF NECESSARY)
--------------------------------------------
NUMBER OF
CLASS/SERIES GALLARUS SHARES
NAMES(S) AND ADDRESS(ES) OF OF GALLARUS FORMERLY
REGISTERED HOLDER(S) CERTIFICATE SHARES BEING REPRESENTED BY
(PLEASE CORRECT ANY ERRORS) NUMBER(S) SURRENDERED CERTIFICATE(S)
--------------------------- ----------- ------------ ---------------
TOTAL
GALLARUS
SHARES:
DO NOT SEND STOCK CERTIFICATES TO GALLARUS MEDIA HOLDINGS, INC. Delivery of
stock certificates shall be effected, and risk of loss and title to stock
certificates shall pass, only upon proper delivery of stock certificates to the
Paying Agent at the address set forth above and in accordance with the
instructions herein.
PLEASE READ AND FOLLOW THE ACCOMPANYING INSTRUCTIONS:
To ABRY Partners, LLC, as Paying Agent (in its capacity as the Paying Agent
hereunder and the Stockholder Representative under the Merger Agreement, the
"PAYING AGENT"):
Pursuant to an Agreement and Plan of Merger (the "MERGER AGREEMENT"), dated
as of December __, 2004, by and among Gallarus Media Holdings, Inc. (the
"COMPANY"), GMH Holding Company ("PARENT"), GMH Acquisition Corp. ("MERGER SUB")
and solely for the purposes of Sections 2.4, 2.5, 2.7, 7.1(b), 7.3(a), 7.12(a),
7.12(d), Article IX and Article XI of the Merger Agreement, ABRY Partners, LLC,
the undersigned hereby surrenders to you as Paying Agent the certificate(s)
representing all of the undersigned's shares of Series C Preferred Stock, Series
A Preferred Stock, Class A Common Stock and Class B Common Stock (such shares,
collectively, referred hereto as the "GALLARUS SHARES"), each such Gallarus
Share to be exchanged for cash payments (without interest) equal to the Series C
Preferred Per Share Amount or the Applicable Per Share Amount (as applicable)
and each as may be determined, adjusted and reduced pursuant to the Merger
Agreement or the Selling Stockholders Agreement, to be paid as and when provided
herein and in the Merger Agreement or the Selling Stockholders Agreement.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Merger Agreement.
The undersigned hereby represents and warrants to the Paying Agent that:
(i) The undersigned has good and marketable title to, and owns of record
and beneficially, the Gallarus Shares being surrendered with this
Letter of Transmittal, free and clear of any and all Encumbrances,
voting restrictions, restrictions on transfer, charges or claims, and
has full right and power and authority to deliver such Gallarus Shares
as agreed in the Merger Agreement and the Selling Stockholders
Agreement.
(ii) The undersigned has the full right, capacity and authority to, and has
taken all action necessary to, execute and deliver this Letter of
Transmittal and any other agreement or instrument which has been or
will be executed and delivered by the undersigned in connection with
the transactions contemplated by the Merger Agreement or the Selling
Stockholders Agreement (together with the Merger Agreement and the
Selling Stockholders Agreement, collectively the "TRANSACTION
DOCUMENTS" and each a "TRANSACTION DOCUMENT") to which the undersigned
is a party, consummate the transactions contemplated hereby and
thereby and perform the undersigned's obligations hereunder and
thereunder, and no other proceedings on the part of the undersigned
are necessary to authorize the execution, delivery and performance of
this Letter of Transmittal or any such Transaction Document and the
transactions contemplated hereby and thereby. This Letter of
Transmittal and each Transaction Document have been duly executed and
delivered by the undersigned and are legal, valid and binding
obligations of the undersigned, enforceable against the undersigned in
accordance with their terms, except as enforceability thereof may be
limited by (a) applicable bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or similar laws in effect which
affect the enforcement of creditors' rights generally or (b) general
principles of equity, whether considered in a proceeding at law or in
equity;
(iii) If the undersigned is a corporation, partnership, trust or other
entity, it is duly organized, validly existing and in good standing
under the laws of its jurisdiction of formation and it is not in
default under or in violation of any provision of its organizational
documents;
(iv) Neither the execution, delivery and performance of this Letter of
Transmittal or any Transaction Document to which the undersigned is a
party, nor the consummation of the transactions contemplated hereby
and thereby by the undersigned will result in (a) a violation of or a
conflict with any provision of the organizational documents, if
applicable, of the undersigned, (b) a breach of, or a default under,
or the creation of any right of any party to accelerate, terminate or
cancel pursuant to (including, without limitation, by reason of the
failure to obtain a consent or approval under any such contract), any
term or provision of any contract, encumbrance or permit to which the
undersigned is a party or by which any of the undersigned's assets are
bound.
2
(v) There is no action pending or, to the best of the undersigned's
knowledge, threatened (a) against the undersigned or any of the
undersigned's Affiliates with respect to which there is a reasonable
likelihood of a determination which would have a material adverse
effect on the ability of the undersigned to consummate the
transactions contemplated by the Transaction Documents, or (b) which
seeks to enjoin or prevent, or questions the validity or legality of,
the consummation of the transactions contemplated by the Transaction
Documents;
(vi) No consent, waiver, agreement, approval, Permit or authorization of,
or declaration, filing, notice or registration to or with, any
federal, state, local or foreign governmental or regulatory authority
or body or other person or entity is required to be made or obtained
by the undersigned in connection with the execution, delivery and
performance of this Letter of Transmittal or any Transaction Document
to which the undersigned is a party and the consummation of the
transactions contemplated hereby and thereby other than those
consents, waivers, agreements, approvals, authorizations,
declarations, filings, notices or registrations, that have been, or
will be prior to the Closing Date, obtained or made; and
(vii) No representation or warranty by the undersigned contained in this
Letter of Transmittal contains as of the date hereof, any untrue
statement of a material feet or omits to state as of the date hereof
any material fact that is necessary to make the statements contained
therein not misleading.
THE UNDERSIGNED ACKNOWLEDGES AND AGREES THAT A PORTION OF THE MERGER
CONSIDERATION WILL BE USED TO PAY FEES AND EXPENSES INCURRED BY THE PAYING
AGENT. THE UNDERSIGNED ALSO ACKNOWLEDGES AND AGREES THAT A PORTION OF THE MERGER
CONSIDERATION HAS BEEN PLACED IN ESCROW TO SECURE CLAIMS BY PARENT AND ITS
AFFILIATES FOR INDEMNIFICATION FROM THE HOLDERS PURSUANT TO SECTION 7.12 AND
ARTICLE IX OF THE MERGER AGREEMENT AND, THEREFORE, THE UNDERSIGNED MAY NOT
RECEIVE A PORTION OF THE MERGER CONSIDERATION TO THE EXTENT SUCH ESCROW IS
UTILIZED (IN WHOLE OR IN PART) TOWARDS THE PAYMENT OF INDEMNIFICATION CLAIMS
AND/OR THE PAYMENT OF FEES, COSTS, EXPENSES OR OTHER AMOUNTS INCURRED OR
RESERVED AGAINST BY THE PAYING AGENT.
Submission of the certificate(s) described below and payment in exchange
therefor is subject to the terms, conditions and limitations set forth in the
Merger Agreement and in the Instructions included herewith. Delivery of the
certificate(s) shall be effected, and the risk of loss of, and title to, such
certificate(s) shall pass, only upon proper delivery of such certificate(s) to
Paying Agent. Upon the terms and subject to the conditions set forth in this
Letter of Transmittal and in the Merger Agreement, the Paying Agent shall
deliver in exchange for such certificate(s) a wire transfer of immediately
available funds or a check in the amount to which the undersigned is entitled
pursuant to the Merger Agreement in accordance with the Instructions on the
reverse side hereof. All authority herein conferred or agreed to shall survive
the death or incapacity of the undersigned, and all obligations of the
undersigned hereunder shall be binding upon his or her heirs, personal
representatives, successors and assigns. This Letter of Transmittal is not
intended to confer and shall not confer upon any person not a party hereto (or
their successors and assigns) any rights or remedies hereunder, other than as
specifically provided herein.
3
[ ] If any of the certificates representing your Gallarus Shares have been
lost or destroyed, check this box and see Instruction 4. Please fill out
the remainder of this Letter of Transmittal and indicate here the number of
shares of Series C Preferred Stock, Series A Preferred Stock, Class A
Common Stock or Class B Common Stock represented by lost or destroyed
certificates.
________________________________________ (Number of Gallarus Shares represented
by lost or destroyed certificates)
WIRE INSTRUCTIONS
(SEE INSTRUCTION 5)
Bank: _____________________________________________
ABA Routing Number: _______________________________
Account Name: _____________________________________
Account No.: ______________________________________
Instructions: _____________________________________
The undersigned understands that Paying Agent reserves the absolute right
to reject any and all certificates representing the Gallarus Shares or Letters
of Transmittal not in proper form and the right to waive any irregularities or
defects in the surrender of any certificates representing the Gallarus Shares
delivered in connection herewith, and that Paying Agent's interpretation of the
terms and conditions of the Merger Agreement, the Selling Stockholders Agreement
and this Letter of Transmittal with respect to such irregularities and defects
shall be final and binding. All authority herein conferred shall survive the
death or incapacity of the undersigned and all obligations of the undersigned
hereunder shall be binding on the heirs, personal representatives, successors or
assigns of the undersigned. The undersigned will, upon request, execute and
deliver any additional documents deemed by the Paying Agent to be necessary and
desirable to complete the transfer of the Gallarus Shares surrendered hereby.
4
YOU MUST SIGN IN THE BOX BELOW LABELED "SIGNATURE REQUIRED"
Also: Sign and provide your tax I.D. number on Substitute Form W-9
SIGNATURE(S) REQUIRED
Signature(s) of Registered Holder(s) or Agent
(See Instructions 2 and 3)
Must be signed by the registered holders(s) EXACTLY as name(s) appear(s) on
stock certificate(s). If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer for a corporation acting in a fiduciary or
representative capacity, or other person, please set forth full title.
________________________________________________________________________________
Registered Holder
________________________________________________________________________________
Registered Holder
________________________________________________________________________________
Title, if any
Date: _______________________________ Phone No: ________________________________
5
PAYING AGENT'S NAME -- ABRY PARTNERS, LLC
PART 1 -- PLEASE PROVIDE YOUR TIN
SUBSTITUTE IN THE BOX AT RIGHT AND CERTIFY BY
FORM W-9 SIGNING AND DATING BELOW ______________________________
Social Security Number
PART 2-CERTIFICATION-Under
PLEASE FILL IN YOUR NAME AND penalties of perjury, I certify OR
ADDRESS BELOW that:
______________________________
____________________________ (1) the number on this form is my Employer Identification Number
NAME correct Taxpayer
Identification Number (or I
____________________________ have applied for a TIN and am
ADDRESS (NUMBER AND STREET) waiting for a number to be
issued to me) and PART 3-AWAITING TIN [ ]
____________________________ (2) I am not subject to backup
CITY, STATE AND ZIP CODE withholding because (a) I am
exempt from backup PART 4-EXEMPT TIN [ ]
withholding or (b) I have not
been notified by the Internal
Revenue Service ("IRS") that
I am subject to backup
withholding as a result of a
failure to report all
interest or dividends or (c)
the IRS has notified me that
I am no longer subject to
backup withholding.
DEPARTMENT OF THE TREASURY Certification instructions -- You must cross out item(s) above if
INTERNAL REVENUE SERVICE you have been notified by the IRS that you are subject to backup
Withholding because of underreporting interest or dividends on your
tax return. However, if after being notified by the IRS that you
were subject to backup withholding you received another
notification from the IRS stating that you are no longer subject to
backup withholding, do not cross out Part 2, Item (2).
Signature Date
-------------------------- -----------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 28% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO CERTIFICATES SURROUNDED IN
CONNECTION WITH THE MERGER.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalty of perjury that a taxpayer identification number has not
been issued to me, and I have mailed or delivered an application to receive a
taxpayer identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do not
provide a taxpayer identification number by the time of payment, 28% of all
reportable payments made to me thereafter will be withheld, but will be refunded
if I then provide a certified taxpayer identification number within 60 days.
Signature Date
--------------------------- ------------------------
6
INSTRUCTIONS FOR SURRENDERING CERTIFICATES
(PLEASE READ CAREFULLY THE INSTRUCTIONS BELOW)
1. GENERAL. Please DO NOT send your stock certificate(s) directly to
Gallarus Media Holdings, Inc. The certificate(s) for the Gallarus Shares (each,
a "CERTIFICATE" AND collectively, the "CERTIFICATES"), together with this Letter
of Transmittal, properly signed and completed, or a facsimile thereof, and any
supporting documents (see Instruction 2), MUST be mailed in the enclosed
addressed envelope, or otherwise delivered, to the Paying Agent at the address
listed on the front side. The method of transmitting the Certificate(s) is at
your option and risk, but if delivery is by mail, registered mail with return
receipt requested, properly insured, is suggested.
2. SIGNATURES. The signature (or signatures, in the case of certificates
owned by two or more joint holders) on this Letter of Transmittal should
correspond exactly with the name(s) as written on the face of the Certificate(s)
surrendered unless the shares described on this Letter of Transmittal have been
assigned by the registered holder or holders thereof, in which event this Letter
of Transmittal should be signed in exactly the same form as the name(s) of the
last transferee(s) indicated on the transfer attached to or endorsed on the
certificate(s).
If this Letter of Transmittal, or any endorsement or stock power required
by Instruction 3, is signed by a trustee, executor, administrator, guardian,
officer of a corporation, attorney-in-fact or other person acting in a fiduciary
or representative capacity, the person signing must give his or her title in
such capacity and enclose appropriate evidence of his or her authority to so
act. If additional documents are required by the Paying Agent, you will be so
advised by letter.
3. ENDORSEMENT OF CERTIFICATE(S): SIGNATURE GUARANTEE. If any payment is to
be made to an account held in a name different from that of the registered
holder(s), then (i) the Certificate(s) must be duly endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the name(s) of the
registered holder(s) appear(s) on such certificate(s), (ii) the signature of
endorsement for transfer on each certificate or separate stock powers must be
guaranteed by an eligible guarantor institution (bank, stockbroker, savings and
loan association or credit union with membership in an approved signature
guarantee medallion program), pursuant to Rule 17 Ad-15 promulgated under the
Securities Exchange Act of 1934, as amended, and (iii) the person surrendering
such Certificate(s) must remit to the Paying Agent the amount of any transfer or
other taxes payable by reason of the issuance to a person other than the
registered holder(s) of the certificate(s) surrendered, or establish to the
satisfaction of the Paying Agent that such tax has been paid or is not
applicable. In such case the signature(s) on this Letter of Transmittal must be
guaranteed as specified above.
4. LOST OR DESTROYED CERTIFICATES. If any Certificates have been lost,
stolen or destroyed, please check the box on page 4 of this Letter of
Transmittal and fill in the blank to show the number of shares represented by
lost, stolen or destroyed certificates. You will receive further instructions as
to the steps you must take in order to receive a check in lieu of fractional
shares in accordance with the Merger Agreement.
5. WIRE INSTRUCTIONS. Please provide the wire transfer information on page
4 of this Letter of Transmittal.
6. INQUIRIES. All questions regarding appropriate procedures for
surrendering Certificate(s) should be directed to the Paying Agent at the
mailing address set forth on the front side or by telephone at (000) 000-0000.
7. ADDITIONAL COPIES. Additional copies of this Letter of Transmittal may
be obtained from the Paying Agent at the mailing address set forth on the front
side.
8. SUBSTITUTE FORM W-9. Each holder of Gallarus Shares surrendering
certificates for payment is required to provide the Paying Agent with a correct
Taxpayer Identification Number ("TIN") on Substitute Form W-9, and to indicate
whether the holder is subject to backup withholding. Each holder must date and
sign the Substitute Form W-9 in the spaces indicated. Failure to provide the
information on the form may subject the holder to a 28% federal income tax
withholding on any cash payment he or she is otherwise entitled to receive
pursuant to
7
the Merger Agreement. The box in Part III of the form may be checked if the
holder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future. If the box in Part III is checked and the
Paying Agent is not provided with a TIN within 60 days, the Paying Agent will
withhold 28% of the cash payment that the holder is otherwise entitled to
receive until a TIN is provided to the Paying Agent. Please see "Important Tax
Information" below for instructions for completing the substitute W-9.
9. MISCELLANEOUS. The Paying Agent is not under any duty to give
notification of defects in any Letter of Transmittal or facsimile or in any
other required documents and shall not incur any liability for failure to give
such notification. Any and all Letters of Transmittal or facsimiles (including
any other required documents) not in proper form are subject to rejection. The
terms and conditions of the Merger Agreement and the Selling Stockholders
Agreement are incorporated herein by reference and are deemed to form part of
the terms and conditions of this Letter of Transmittal.
IMPORTANT TAX INFORMATION
Under U.S. federal income tax law, a holder whose Gallarus Shares are
surrendered herewith is required to provide the Paying Agent with such holder's
current TIN on Substitute Form W-9. If the Paying Agent does not receive the
holder's correct TIN, it will be required to withhold 28% of any cash the holder
is otherwise entitled to receive under the Merger Agreement. If such holder is
an individual, his or her TIN is his or her social security number. If the
Paying Agent is not provided with the correct TIN, the holder may be subject to
a $50 penalty imposed by the Internal Revenue Service. In addition, any payment
made to such holder in lieu of fractional shares and for other distributions to
which the holder is entitled with respect to shares surrendered in connection
with the Merger may be subject to backup withholding.
Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that holder must submit an applicable Internal Revenue Form W-8,
signed under penalties of perjury, attesting to that individual's exempt status.
Such forms can be obtained from the Paying Agent. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If backup withholding applies, the Paying Agent is required to withhold 28%
of any cash payment made to the holder with respect to shares of Series C
Preferred Stock or the Junior Stock surrendered in connection with the Merger
Agreement. Backup withholding is not an additional tax. Rather, the tax
liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund from the Internal Revenue Service may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on any cash payment made to a holder with
respect to Gallarus Shares surrendered in connection with the Merger Agreement,
the holder is required to notify the Paying Agent of his or her correct TIN by
completing the Substitute Form W-9 certifying that the TIN provided on
Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and that
(i) such holder has not been notified by the Internal Revenue Service that he or
she is subject to backup withholding as a result of a failure to report all
interest or dividends or (ii) the Internal Revenue Service has notified such
holder that such holder is no longer subject to backup withholding. In addition,
the holder must complete Part II of the Substitute Form W-9, check the
appropriate box, and date and sign it as indicated.
WHAT NUMBER TO GIVE THE PAYING AGENT
The holder is required to give the Paying Agent the social security number
or employer identification number of the record owner of the Gallarus Shares
being surrendered for payment in connection with the Merger Agreement. If the
shares are in more than one name or are not in the name of the actual owner,
consult the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional guidance on which number to
report. If the tendering holder has not been issued a TIN and has applied for a
number or
8
intends to apply for a number in the near future, the holder should (1) write
"Applied For" in the space provided for the TIN in Part I, (2) check the
"Awaiting TIN" box in Part 3, (3) sign and date the Substitute Form W-9, and (4)
sign and date the Certificate of Awaiting Taxpayer Identification Number as
required on the Substitute Form W-9. If "Applied For" is written in Part I, the
Paying Agent will reserve 28% of all cash payments to such holder until a TIN is
provided to the Paying Agent. If the Paying Agent is not provided with a TIN
within 60 days, the Paying Agent will withhold 31% of all cash payments to such
holder.
9
GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
TO COMPLETE THE SUBSTITUTE FORM W-9, IF YOU ARE A UNITED STATES PERSON YOU
SHOULD:
1. Fill in your name and address at the top of the form
2. Part 1: Provide the taxpayer identification number ("TIN") of the record
owner of the Units. An individual should provide his social security
number. Joint owners should provide the social security number of the owner
whose name appears first. A trust account should provide the TIN assigned
to the trust. An XXX custodial account should provide the TIN of the
custodian. A custodial account for the benefit of a minor should provide
the social security number of the minor. A corporation, partnership or
other business entity should provide the Employer Identification Number
assigned to that entity.
If you do not have a TIN, please complete Part 3 and contact the
Depositary.
3. Part 2: Check the box if it is true with respect to you. If you ARE subject
to backup withholding, please cross out Part 2.
4. Part 3: Complete only if you do not have a TIN and are awaiting a TIN from
the Internal Revenue Service. Notwithstanding that the certification in
Part 3 is given, if you have not been issued a TIN the Depositary WILL
withhold 28% on all payments made prior to the time a properly certified
TIN is provided to the Depositary.
5. Sign and date the Substitute Form W-9.
10
EXHIBIT G
CAPITALIZATION
(see attached)
OUTSTANDING CAPITAL STOCK OF GALLARUS MEDIA HOLDINGS, INC.
NUMBER OF
STOCKHOLDER CLASS OR SERIES SHARES
----------- --------------- ----------
SERIES C CONVERTIBLE PREFERRED STOCK
New York Life Capital Partners Series C Convertible Preferred Stock 10,000.000
ABRY Mezzanine Partners, L.P. Series C Convertible Preferred Stock 10,000.000
----------
TOTAL 20,000.000
SERIES A CONVERTIBLE PREFERRED STOCK
ABRY Partners IV, L.P. Series A-1 Convertible Preferred Stock 50,676.385
ABRY Investment Partnership, L.P. Series A-1 Convertible Preferred Stock 23.615
X. XxXxxxxx Series A-3 Convertible Preferred Stock 200.000
X. Xxxxxx Series A-3 Convertible Preferred Stock 100.000
----------
TOTAL 51,000.000
CLASS B COMMON STOCK
Xxxxxx X. XxXxxxxx Class B Common Stock 3,769.180
Xxxxxx Xxxxxx Class B Common Stock 698.268
Xxxxx Xxxxx Class B Common Stock 232.448
Xxxxxx Xxxxxxxxx Class B Common Stock 232.448
Xxxxxx Xxxxxxxxx Class B Common Stock 162.714
Xxxxx Xxxx Class B Common Stock 162.714
Xxxxx Xxxxxx (a) Class B Common Stock 92.979
Xxxxx Xxxxx Class B Common Stock 69.735
Xxxxxx Xxxxxxxx Class B Common Stock 82.000
----------
TOTAL 5,502.486
(a) Only 27.894 shares of the Class B Common Stock owned by Xxxxx Xxxxxx will
be vested as of the Effective Time.
EXHIBIT H
SPONSOR COMMITMENT LETTER
(see attached)
CITIGROUP VENTURE CAPITAL EQUITY PARTNERS, L.P.
000 XXXX XXXXXX, 00XX XXXXX
XXX XXXX, XXX XXXX 00000
December __, 2004
GMH HOLDING COMPANY
c/o Citigroup Venture Capital
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxx
Ladies and Gentlemen:
1. Commitment. This letter (the "Letter Agreement") will confirm the
commitment of Citigroup Venture Capital Equity Partners, L.P., a Delaware
limited partnership ("CVC" or "us"), to provide or cause others to provide up to
Three Hundred Sixty-Five Million Dollars ($365,000,000) (the "Committed Amount")
of financing (the "Financing") to GMH Holding Company, a Delaware corporation
("Newco" or "you"), on the terms and conditions set forth herein.
2. Use of Proceeds. The proceeds of the Financing shall be used solely
to pay the Merger Consideration and any other amounts Newco is obligated to pay
in connection with the acquisition of Gallarus Media Holdings, Inc. ("Gallarus")
pursuant to the terms of the Agreement and Plan of Merger dated as of the date
hereof among Newco, GMH Acquisition Corp., Gallarus and ABRY Partners, LLC, as
Stockholder Representative (as the same may be amended from time to time, the
"Merger Agreement"). Capitalized terms used herein and not otherwise defined
shall have the meaning set forth in the Merger Agreement
3. Conditions. CVC's commitment to fund any obligation hereunder is
subject to the simultaneous satisfaction or waiver of the conditions to Newco's
obligations under the Merger Agreement set forth in Article VIII thereof.
4. Indemnification and Expenses. You agree (a) to indemnify and hold
harmless CVC, its affiliates and their respective partners, officers, directors,
employees, advisors, and agents (each an "indemnified person") from and against
any and all losses, claims, damages and liabilities to which any such
indemnified person may become subject arising out of or in connection with this
Letter Agreement, the Merger Agreement, the Financing, the use of the proceeds
thereof, the Merger or any related transaction or any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any indemnified person is a party thereto, and to reimburse each
indemnified person upon demand for any reasonable legal or other expenses
GMH Holding Company
December __, 2004
Page 2 of 4
incurred in connection with investigating or defending any of the foregoing;
provided that Newco shall not be responsible for losses, claims, damages or
liabilities that arise out of acts or omissions of an indemnified person that
are taken in bad faith or constitute gross negligence or willful misconduct as
determined by a final, non-appealable court order; and (b) if the Financing is
provided, to reimburse CVC and its affiliates on demand for all reasonable
expenses (including due diligence expenses, travel expenses, and reasonable
fees, charges and disbursements of counsel, accountants and other professionals)
incurred by or on behalf of CVC in connection with the Financing and any related
documentation (including this Letter Agreement and the Merger Agreement) or the
administration, amendment, modification or waiver thereof.
5. Termination. This commitment is effective as of the date hereof and
will expire, unless otherwise expressly agreed to by CVC in its sole discretion,
on the earlier of (i) the termination of the Merger Agreement in accordance with
the terms thereof and (ii) the consummation of the Financing. The reimbursement,
indemnification and confidentiality provisions contained herein shall remain in
full force and effect regardless of whether definitive financing documentation
shall be executed and delivered and notwithstanding the termination of this
Letter Agreement or CVC's commitment hereunder.
6. Governing Law. This Letter Agreement shall be governed by, and
construed in accordance with, the laws of the state of New York (without regard
to principles of conflicts of laws provisions thereof), including without
limitation as to all matters of construction, validity, enforceability and
performance. Each of Newco and CVC hereby consent to and submit to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, County
of New York, or the U.S. District Court for the Southern District of New York
(and appellate courts from any of the foregoing) in connection with any action,
suit or proceeding arising out of or relating to this Letter Agreement, and
irrevocably waive, to the fullest extent permitted by law, any objection which
it may have to the laying of the venue of any such proceeding brought in such
court and any claim that any such proceeding brought in such court has been
brought in an inconvenient forum.
7. Assignment: Amendment and Waiver. Neither this Letter Agreement nor
any of the rights, interests or obligations hereunder may be assigned by CVC or
Newco without the prior written consent of the other; provided that CVC shall be
entitled to assign its interests and obligations hereunder to any one or more of
its affiliates under common equity ownership without obtaining any such consent
of Newco. Any provisions hereof for the benefit of a party hereto may be waived
by such party (either generally or in particular and either retroactively or
prospectively), only by a written instrument signed by the party waiving
compliance.
8. Notices. All notices, requests, claims, demand and other
communications hereunder shall be in writing and shall be given by hand
delivery, by telex, telecopier, overnight courier or by mail (registered or
certified mail, postage prepaid, return receipt requested) to the respective
parties as follows:
GMH Holding Company
December __, 2004
Page 3 of 4
If to Newco:
GMH HOLDING COMPANY
c/o Citigroup Venture Capital
000 Xxxx Xxxxxx
00xx Xxxxx, Xxxx 0
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice to Newco) to:
Dechert LLP
0000 Xxxx Xxxxxxxx Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
If to CVC:
Citigroup Venture Capital Equity Partners, L.P.
000 Xxxx Xxxxxx
00xx Xxxxx, Xxxx 0
Xxx Xxxx, XX 00000.
Attn: Xxx Xxxxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice to CVC) to:
Dechert LLP
0000 Xxxx Xxxxxxxx Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
or such other address as any party hereto may, from time to time, designate in a
written notice given in like manner.
9. Complete Agreement. This Letter Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
10. No Third Party Beneficiaries. This Letter Agreement is not
intended and shall not be deemed to confer any benefits, rights or remedies upon
any
GMH Holding Company
December __, 2004
Page 4 of 4
person other than the parties hereto and their respective successors and
permitted assigns.
11. Headings. The headings contained in the Letter Agreement are for
reference only and shall not affect in any way the meaning and interpretation of
this Letter Agreement.
12. Confidentiality. Neither Newco, CVC nor any of their respective
representatives or affiliates shall disclose to any third party the terms or
existence of this Letter Agreement without the written consent of the other
parties, except as otherwise required by law or legal process.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof by returning to us executed counterparts
hereof not later than 5:00 p.m., New York City time, on the date hereof. The
commitment agreements herein of CVC will expire at such time in the event CVC
has not received such executed counterparts in accordance with the immediately
preceding sentence.
Very truly yours,
CITIGROUP VENTURE CAPITAL EQUITY
PARTNERS, L.P.
By: CVC PARTNERS LLC, its General
Partner
By:
------------------------------------
Name:
----------------------------------
Title
----------------------------------
Acknowledged and Agreed
as of the Date First Above Written:
GMH HOLDING COMPANY
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT I
SERIES C PREFERRED REDEMPTION AMOUNT
(see attached)
SERIES C PREFERRED STOCK REDEMPTION AMOUNT
12/23/04 $22,317,301.37
12/24/04 $22,323,851.70
12/25/04 $22,330,400.89
12/26/04 $22,336,948.94
12/27/04 $22,343,495.85
12/28/04 $22,350,041.63
12/29/04 $22,356,586.28
12/30/04 $22,363,129.78
12/31/04 $22,369,672.15
1/1/05 $22,376,213.39
1/2/05 $22,382,753.49
1/3/05 $22,389,292.45
1/4/05 $22,395,830.28
1/5/05 $22,402,366.97
1/6/05 $22,408,902.52
1/7/05 $22,415,436.94
1/8/05 $22,421,970.23
1/9/05 $22,428,502.37
1/10/05 $22,435,033.38
1/11/05 $22,441,563.26
1/12/05 $22,448,091.99
1/13/05 $22,454,619.60
1/14/05 $22,461,146.06
1/15/05 $22,467,671.39
1/16/05 $22,474,195.59
1/17/05 $22,480,718.64
1/18/05 $22,487,240.56
1/19/05 $22,493,761.35
1/20/05 $22,500,281.00
1/21/05 $22,506,799.51
1/22/05 $22,513,316.89
1/23/05 $22,519,833.13
1/24/05 $22,526,348.23
1/25/05 $22,532,862.20
1/26/05 $22,539,375.04
1/27/05 $22,545,886.73
1/28/05 $22,552,397.29
1/29/05 $22,558,906.72
1/30/05 $22,565,415.00
1/31/05 $22,571,922.16
2/1/05 $22,578,428.17
2/2/05 $22,584,933.05
2/3/05 $22,591,436.80
2/4/05 $22,597,939.40
2/5/05 $22,604,440.87
2/6/05 $22,610,941.21
2/7/05 $22,617,440.41
2/8/05 $22,623,938.47
2/9/05 $22,630,435.40
2/10/05 $22,636,931.19
2/11/05 $22,643,425.85
2/12/05 $22,649,919.36
2/13/05 $22,656,411.75
2/14/05 $22,662,902.99
2/15/05 $22,669,393.10
Schedule 3.1
Organization; List of Subsidiaries
Qualification
1. Network Communications, Inc. is not in good standing in the State of
Illinois due to its failure to file certain post-merger notification forms
and the related annual report. Network Communications, Inc. is working with
the office of the Secretary of State of the State of Illinois to reinstate
Network Communications, Inc. as a corporation in good standing in the State
of Illinois.
Subsidiaries
2. Network Communications, Inc.
3. Network Publications Canada Inc.
4. NCID, LLC
Schedule 3.3(b)
Company Capitalization
On November 5, 2004, the Company sent a "Notice of Repurchase" to Xxxxx Xxxxxx
pursuant to which the Company gave notice to Xx. Xxxxxx that the Company had
elected to exercise its option to repurchase her Class B Common Stock (of which
27.8937 were vested and 65.0853 were unvested) pursuant to the terms of the
Stock Purchase Agreement referred to in disclosure item 21 on Schedule 3.6(b).
The Company has not received a final response from Xx. Xxxxxx as of the date of
the Agreement.
Schedule 3.3(c)
Proxies; Voting Agreements
1. Agreement, dated December 2004, by and among Parent, Merger Sub, ABRY
Partners, LLC (in its capacity as Stockholder Representative) and the
stockholders named therein (referred to in this Agreement as the Selling
Stockholders Agreement).
2. See disclosure item 10 on Schedule 3.6(b).
Schedule 3.3(d)
Company Subsidiary Capitalization; Encumbrances
The shares of capital stock or limited liability company interests of the
Company Subsidiaries are subject to the security interests, pledges and
Encumbrances arising under the following agreements:
1. Loan Agreement, dated as of June 24, 2004, by and among the Company,
Network Communications, Inc., Toronto Dominion (Texas), Inc. (as
Administrative Agent), TD Securities (USA), Inc. (as Lead Arranger and Book
Runner), National City Bank (as Syndication Agent) and the lenders named
therein.
2. Parent Pledge Agreement, dated as of June 24, 2004, between the Company and
Toronto Dominion (Texas), Inc. whereby the Company pledged 100% of its
shares of Common Stock (100 shares) of Network Communications, Inc.
3. Borrower Pledge Agreement, dated as of June 24, 2004, between Network
Communications, Inc. and Toronto Dominion (Texas), Inc. whereby Network
Communications, Inc. pledged 65% of its shares of Common Stock of network
Publications Canada, Inc. (65 shares) and 100% of its membership interest
in NCID, LLC (1,000 units).
4. Parent Security Agreement, dated as of June 24, 2004, between the Company
and Toronto Dominion (Texas), Inc.
5. Borrower Security Agreement, dated as of June 24, 2004, between Network
Communications, Inc. and Toronto Dominion (Texas), Inc.
6. ISDA Master Agreement, dated as of August 11, 2004, by and between The
Toronto-Dominion Bank and Network Communications, Inc.
Schedule 3.5(b)
Required Filings and Consents
None.
Schedule 3.6(a)
Financial Statements; Indebtedness
Financial Statements
See attached.
1. Financial Statements Period 7 Ended October 10, 2004.
2. Financial Statements Period 13 Ended March 28, 2004.
3. Financial Statements Period 13 Ended March 30, 2003.
Indebtedness: Liabilities and Obligations
4. See Schedule 3.6(b) and all of the disclosure items 87-99 on Schedule
3.12(a).
5. Pursuant to the terms and conditions of the Stock Purchase Agreement, dated
as of May 29, 2002, by and among Network Communications, Inc. (as successor
in interest to Gallarus Media, Inc.), Xxxxxx Holdings, Inc. and the
stockholders of Xxxxxx Holdings, Inc. named therein (the "Stockholders"),
Network Communications, Inc. agreed to indemnify the Stockholders for
certain Losses (as defined therein).
Schedule 3.6(b)
Company Liabilities
The Company has liabilities and obligations under the following agreements,
instruments and documents:
1. Company Charter.
2. This Agreement.
3. Loan Agreement, dated as of June 24, 2004, by and among the Company,
Network Communications, Inc., Toronto Dominion (Texas), Inc. (as
Administrative Agent), TD Securities (USA), Inc. (as Lead Arranger and Book
Runner), National City Bank (as Syndication Agent) and the lenders named
therein.
4. Parent Guaranty, dated as of June 24, 2004, between the Company and Toronto
Dominion (Texas), Inc.
5. Parent Security Agreement, dated as of June 24, 2004, between the Company
and Toronto Dominion (Texas), Inc.
6. Parent Pledge Agreement, dated as of June 24, 2004, between the Company and
Toronto Dominion (Texas), Inc.
7. Purchase Agreement, dated as of June 28, 2002, by and among the Company,
ABRY Partners IV, L.P. and ABRY Investment Partnership, L.P.
8. Purchase Agreement, dated as of June 28, 2002, between the Company and Xxx
XxXxxxxx.
9. Securities Purchase Agreement, dated as of June 28, 2002, by and among the
Company, New York Life Capital Partners II, L.P. and ABRY Mezzanine
Partners, L.P.
10. Stockholders Agreement, dated as of June 28, 2002, by and among the Company
and the stockholders named therein.
11. Registration Rights Agreement, dated as of June 28, 2002, by and among the
Company and the stockholders named therein.
12. Management and Consulting Services Agreement, dated as of June 28, 2002, by
and among ABRY Partners, LLC, the Company and Network Communications, Inc.
(as successor in interest to Gallarus Media, Inc.)
13. Capital Contribution Agreement, dated as of June 28, 2002, by and among the
Company, ABRY Partners, LLC, ABRY Capital Partners, L.P., Network
Communications, Inc. and Toronto Dominion (Texas), Inc.
14. Letter Agreement, dated as of June 28, 2002, between the Company and New
York Life Capital Partners II, L.P. regarding management rights.
15. Employment Agreement, dated as of June 28, 2002, by and among the Company,
Network Communications, Inc. (as successor in interest to Gallarus Media,
Inc.) and Xxx XxXxxxxx.
16. Amendment No. 1, dated as of July 8, 2003, to the Employment Agreement,
dated as of June 28, 2002, by and among the Company, Network
Communications, Inc. (as successor in interest to Gallarus Media, Inc.) and
Xxx XxXxxxxx.
17. Stock Purchase Agreement, dated as of April 18, 2003, between the Company
and Xxxxxx Xxxxxxxxx.
18. Stock Purchase Agreement, dated as of April 18, 2003, between the Company
and Xxxxx Xxxxx.
19. Stock Purchase Agreement, dated as of April 18, 2003, between the Company
and Xxxxxx Xxxxxxxxx.
20. Stock Purchase Agreement, dated as of April 18, 2003, between the Company
and Xxxxx Xxxxx.
21. Stock Purchase Agreement, dated as of April 18, 2003, between the Company
and Xxxxx Xxxxxx.
22. Stock Purchase Agreement, dated as of April 18, 2003, between the Company
and Xxxxx Xxxx.
23. Stock Purchase Agreement, dated as of April 18, 2003, between the Company
and Xxxxxx Xxxxxx.
24. Stock Purchase Agreement, dated as of May 21, 2004, between the Company and
Xxxxxx Xxxxxxxx.
Schedule 3.7
Absence of Certain Changes or Events
1. Network Communications, Inc. cancelled and terminated that certain
Promissory Note, dated as of June 28, 2002, issued to Network
Communications, Inc. (as successor in interest to Gallarus Media, Inc.) by
Xxx XxXxxxxx. All amounts owing by Xx. XxXxxxxx under such Promissory Note
were paid in full prior to such termination.
2. In connection with the cancellation and termination of the Promissory Note
described in disclosure item 1 above, Xxx XxXxxxxx and Network
Communications, Inc. canceled and terminated that certain Executive Stock
Pledge Agreement, dated as of June 28, 2002, between Network
Communications, Inc. (as successor in interest to Gallarus Media, Inc.) and
Xxx XxXxxxxx pursuant to which the capital stock of the Company owned by
Xx. XxXxxxxx had been pledged as security for the repayment in full of all
obligations under such Promissory Note.
3. On December 17, 2004, the Company filed with the Secretary of State of the
State of Delaware (i) Certificate of Correction to the Amended and Restated
Certificate of Incorporation of the Company and (ii) Certificate of
Correction to the Certificate of Amendment to the Certificate of
Designations, Preferences and Rights of Series A Convertible Preferred
Stock of Gallarus Media Holdings, Inc.
Schedule 3.8
Litigation
Litigation Matters
1. Xxxx Xxxxxx v. Network Communications, Inc., U. S. District Court, Colorado
District, Denver, Colorado, Case No. 03-CV-3436, served May 30, 2003.
2. IT Computing Services, Inc. v. Network Communications, Inc., U.S. District
Court, Northern District of Georgia, Atlanta Division, C.A. No. 1 04 CV
2077, filed July of 2004.
3. NCI v. Xxxxxxx Xxxxxxxxx. U.S. District Court, Western District of
Louisiana, Shreveport Division, C.A. No. CV 04 0988 S, filed July of 2004.
4. Xxxxx Xxxxxx v. Xxxxxxx Xxxxxx, XX Xxxxxxx Truck Lines, Network
Communications, Inc., District Court of Bexar County, Texas.
5. Xxxxxx X. Xxxxxxx v. Network Communications. Inc., and Xxxx Xxxxxxx Xxxxxx,
Superior Court of Gwinnett County, Georgia.
6. Homes-NY Fair Housing. State Division of Human Rights, Case No.
7-H-ADFMX-03-7905607H, HUD No. 02-04-0140-8.
7. Network Communications, Inc. d/b/a Xxxxxx Press, Inc. v. Xxxx X. Xxxxx and
Georgia's Best Publications, Inc. State Court, Dekalb County, GA.
8. Xxxxx Xxxx v. Network Communications, Inc., Xxxxxxxx Xxxxx xx Xxxxxxxx
Xxxxxx, Xxxxxxx, 00-X-00000-0, filed December of 2004.
9. Xxxxxxx Xxxxx d/b/a Indy Delivery Service v. Xxxxx Xxxxxx and NCI, Xxxxxx
superior court, Civil Division.
10. Xxxxxxx X. Xxxxxxx, Employee, v. Network Communications, Inc., Employer,
Wisconsin labor and industry Review Commission.
Potential Claims
11. Xxxx Xxxxxxx, who was a part-time consultant for the Decatur Technology
Group, had contacted the Company's counsel regarding Xx. Xxxxxxx'x claim
for the remaining six months contract price for an alleged one year
agreement. The Company believes that the claim amount is approximately
$64,000.
12. The Company has received a letter from X. Xxxxx Xxxxxx, a former insurance
agent of the Company, seeking approximately $160,000 in premiums after X.
Xxxxx Larder's audit revealed allegedly misclassified employees.
13. After an audit by the Ministry of Finance for Ontario, the Ministry
assessed Network Publications Canada Inc. with approximately $360,000 CDN
in additional taxes allegedly owed for the years of 1999-2003. Network
Publications Canada, Inc. has appealed such assessment by filing a Notice
of Objection.
Schedule 3.10(a)
Taxes
1. Network Publications Canada Inc. is commencing publication of books in
certain provinces in Canada, and is required to apply for registration.
Network Publications Canada Inc. has not applied for the requisite
applications in Nova Scotia, Manitoba, New Brunswick and British Columbia
as of the date hereof.
2. Network Publications Canada Inc. has not filed its annual reports due July
2003 and July 2004 in Canada. The Company is actively working to file the
annual report that was due in July 2003 within the 18-month grace period,
which ends in December 2004.
Schedule 3.10(b)
Tax Notices
Revenue Departments for the following states are in the process of conducting
sales tax audits:
1. New York.
2. California.
3. Washington.
4. Georgia.
5. Missouri.
Schedule 3.10(c)
Tax Sharing
Canadian Tax Agreement, dated June 9, 2004, between X. Xxxxx Xxxxxx (as
Stockholders' Representative on behalf of the former stockholders of Xxxxxx
Holdings, Inc. and the Company (as successor to Gallarus Media, Inc.)).
Schedule 3.10(e)
Certain Stock Distributions
None.
Schedule 3.11(a)
Intellectual Property
Registered Intellectual Property
1. Patents.
U.S. PATENT NUMBER DATE ISSUED JURISDICTION TITLE
------------------ ------------------ ------------ --------------------------
D361,684 August 29, 1995** U.S. MAGAZINE DISTRIBUTION RACK
** 14 year term
2. Trademarks.
See attached.
3. Copyrights.
See attached list of copyright registrations and applications. The Company
has registered a copyright for each issue of Black's Guide. The attached
list of copyright registration and applications includes only copyright
registrations for issues of Black's Guide since January 1, 2004. Any
earlier such copyright registration is no longer material to the operation
of the business of the Company or Company Subsidiaries.
4. Internet Domain Names.
See attached.
Pending Applications for Registration of Intellectual Property
5. Patents.
None.
6. Trademarks.
None.
7. Copyrights.
See attached.
Material Unregistered Intellectual Property
8. Unregistered Copyrights
The Company claims a copyright in the "look and feel" of its publications.
9. Unregistered Trademarks.
NET DEL
NETWORK PUBLICATIONS, INC.
ENCLAVE
ULTIMATE HOMES
AMS
10. Other Unregistered Intellectual Property
AMS software application
Licenses and Royalty Agreements
11. As part of the business, the Company and/or Company Subsidiaries enter into
numerous distribution agreements through which the Company and/or Company
Subsidiaries grant a license to various third-party distributors to use
certain trademarks owned by the Company or Company Subsidiary in connection
with certain publications. See attached for list of publications.
12. Each of the disclosure items in item 3.12(a)(i) of Schedule 3.12(a) contain
one or more provision(s) relating to Intellectual Property except for
disclosure items 1, 8, 10, 11, 20, 21, 22 and 82. The subject Intellectual
Property is indicated in parentheses.
ITEM 2 OF SCHEDULE 3.11(A)
U.S. FEDERAL TRADEMARK REGISTRATIONS AND APPLICATIONS
COUNTRY XXXX APP: NO. APP: DATE REG: NO. REG: DATE STATUS
------- ---------------------------------------- --------- --------- -------- --------- ----------
USA APARTMENT BLUE BOOK 75/117953 12-Jun-96 2057413 29-Apr-97 Registered
USA APARTMENT FINDER* 76/580167 10-Mar-04 Pending
USA BLACK'S GUIDE 76/498383 10-Mar-03 Published
USA CORPORATE CHOICES 75/840899 04-Nov-99 2385685 12-Sep-00 Registered
USA INTELLIRENT 75/643163 17-Feb-99 2466966 10-Jul-O1 Registered
USA LIVINGCHOICES 76/499362 11-Mar-03 Pending
USA XXXXXXXXXXXXX.XXX (and design) 76/498424 10-Mar-03 2822675 16-Mar-04 Registered
USA MATURE LIVING CHOICES 76/543997 28-Aug-03 Pending
USA MY REAL ESTATE BOOK (and design) 76/162002 09-Nov-00 2546673 12-Mar-02 Registered
USA XXXXXXXXXXXXX00X.XXX 76/151848 23-Oct-00 2492584 25-Sep-01 Registered
USA N (and globe design) 74/603134 24-Oct-94 2045319 18-Mar-97 Registered
USA NEW HOME FINDER (and design) 76/482497 13-Jan-03 Pending
USA NEW LIVING CHOICES 76/494934 06-Mar-03 Allowed
USA XXXXXXXXXXX00X.XXX 76/151847 23-Oct-00 2492583 25-Sep-01 Registered
USA REALLEADER** 75/412380 30-Dec-97 2205815 24-Nov-98 Registered
USA SENIOR SELECTIONS 75/469707 17-Apr-98 2226263 23-Feb-99 Registered
USA SENIOR SELECTIONS MATURE LIVING CHOICES 75/471064 17-Apr-98 2230807 09-Mar-99 Registered
USA THE REAL ESTATE BOOK 75/562202 30-Sep-98 2292689 16-Nov-99 Registered
USA THE REAL ESTATE BOOK (and design) 73/509250 16-Nov-84 1337896 28-May-85 Registered
USA THE REAL ESTATE BOOK (and design) 74/567128 29-Aug-94 1996435 27-Aug-96 Registered
USA THE REAL ESTATE BOOK ONLINE (and design) 76/162001 09-Nov-00 2552223 26-Mar-02 Registered
USA UNIQUE HOMES 73/377336 29-Jul-82 1241668 07-Jun-83 Registered
USA UNIQUE HOMES (stylized) 74/185753 17-Jul-91 1734744 24-Nov-92 Registered
USA UNIQUE HOMES REFERRAL NETWORK 74/727225 11-Sep-95 2315140 08-Feb-00 Registered
* NCI claims seeks exclusive nationwide use of the trademark APARTMENT FINDER
with the exception of use in the following Colorado counties: Xxxxx,
Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, El Paso,
Gilpin, Jefferson, Park and Teller.
** NCI does not plan to renew this registration and has not made use of this
trademark for at least five (5) years.
ITEM 2 OF SCHEDULE 3.11(A)
U.S. STATE TRADEMARK REGISTRATIONS
STATE TRADEMARK REGISTRATION NUMBER REGISTRATION DATE STATUS
----- ------------------------------ ------------------- ----------------- ----------
Alabama APARTMENT FINDER 109-002 17-Nov-03 Registered
Alabama REAL ESTATE XTRA! (and design) 106-717 18-Apr-96 Registered
Arkansas REAL ESTATE XTRA! (and design)* 66-96 28-Feb-96 Registered
California REAL ESTATE XTRA! (and design) 045999 20-May-96 Registered
Colorado REAL ESTATE XTRA! (and design) 961048099M 08-Apr-96 Registered
Connecticut APARTMENT FINDER 2004-6649 19-Apr-04 Registered
Connecticut REAL ESTATE XTRA! (and design) 9868 27-Mar-96 Registered
Delaware REAL ESTATE XTRA! (and design) N/A 25-Apr-96 Registered
Florida REAL ESTATE XTRA! (and design) T96000000468 30-Apr-96 Registered
Georgia APARTMENT FINDER T-20933 5-Nov-03 Registered
Georgia LIFE ON THE FAIRWAYS T-16060 23-Dec-96 Registered
Georgia REAL ESTATE XTRA! (and design) S-15527 14-Feb-96 Registered
Hawali REAL ESTATE XTRA! (and design) 203019 05-Feb-97 Registered
Idaho REAL ESTATE XTRA! (and design) 15172 12-Feb-96 Registered
Illinois REAL ESTATE XTRA! (and design) 077857 02-Feb-96 Registered
Indiana APARTMENT FINDER 2004-0039 21-Jan-04 Registered
Indiana REAL ESTATE XTRA! (and design) 5010-3670 16-Apr-96 Registered
Iowa REAL ESTATE XTRA! (and design) W00101160 15-Feb-96 Registered
Kansas REAL ESTATE XTRA! (and design) N/A 12-Feb-96 Registered
Kentucky REAL ESTATE XTRA! (and design) 11049 02-Feb-96 Registered
Louisiana REAL ESTATE XTRA! (and design) N/A 09-Feb-96 Registered
Maine REAL ESTATE XTRA! (and design) 19960172M 02-Feb-96 Registered
Maryland REAL ESTATE XTRA! (and design) 1996-S3523 17-Apr-96 Registered
Massachusetts REAL ESTATE XTRA! (and design) 52233 02-Feb-96 Registered
Michigan REAL ESTATE XTRA! (and design) M01-107 27-Aug-96 Registered
Mississippi REAL ESTATE XTRA! (and design) N/A 13-Mar-96 Registered
Missouri REAL ESTATE XTRA! (and design) 13495 20-Feb-96 Registered
Montana REAL ESTATE XTRA! (and design) T018768 12-Feb-96 Registered
Nebraska REAL ESTATE XTRA! (and design) 96-8/Page437 08-Apr-96 Registered
New Hampshire REAL ESTATE XTRA! (and design) RSA 250-A 12-Feb-96 Registered
New Jersey APARTMENT FINDER 21597 22-Jan-04 Registered
New Jersey REAL ESTATE XTRA! (and design) 13872 25-Mar-96 Registered
New York REAL ESTATE XTRA! (and design) S-15044 12-Apr-96 Registered
North Carolina APARTMENT FINDER T-17690 1-Dec-03 Registered
Ohio REAL ESTATE XTRA! (and design) 69486 06-Mar-96 Registered
Oklahoma APARTMENT FINDER 12026822 9-Jan-04 Registered
Oklahoma REAL ESTATE XTRA! (and design) 27787 12-Feb-96 Registered
STATE TRADEMARK REGISTRATION NUMBER REGISTRATION DATE STATUS
----- ------------------------------ ------------------- ----------------- ----------
Oregon REAL ESTATE XTRA! (and desiqn) S-30231 15-Feb-96 Registered
Pennsylvania APARTMENT FINDER 3192185 9-Jan-04 Registered
Pennsylvania MATURE LIVING CHOICES 3185699 1-Dec-04 Registered
Pennsylvania REAL ESTATE XTRA! (and design) 2678747 12-Feb-96 Registered
Rhode Island REAL ESTATE XTRA! (and desiqn) 00-0-0 00-Xxx-00 Xxxxxxxxxx
Xxxxx Xxxxxxxx APARTMENT FINDER N/A 16-Dec-03 Registered
South Carolina REAL ESTATE XTRA! (and desiqn) SM4 23-Feb-96 Registered
South Dakota REAL ESTATE XTRA! (and desiqn) N/A 14-Feb-96 Registered
Tennessee APARTMENT FINDER 363647 1-Dec-03 Registered
Tennessee REAL ESTATE XTRA! (and design) N/A 14-Feb-96 Registered
Texas REAL ESTATE XTRA! (and desiqn) 55603 03-May-96 Registered
Utah REAL ESTATE XTRA! (and design) 036328 08-Apr-96 Registered
Virginia APARTMENT FINDER 6705 8-Jan-04 Registered
Virginia REAL ESTATE XTRA! (and desiqn) 1987 12-Feb-96 Registered
Wisconsin REAL ESTATE XTRA! (and design) N/A 14-Feb-96 Registered
Wyoming REAL ESTATE XTRA! (and design) 307654 12-Feb-96 Registered
ITEM 2 SCHEDULE 3.11(A)
FOREIGN TRADEMARK REGISTRATIONS
COUNTRY XXXX APP. NO. APP. DATE REG. NO. REG. DATE STATUS
------- --------------------------------- -------- --------- -------- --------- ----------
Canada THE REAL ESTATE BOOK (and design) 668638 18-Oct-90 426825 06-May-94 Registered
Canada UNIQUE HOMES 880202 02-Jun-98 533353 25-Sep-00 Registered
Mexico HOUSENOTES 270609 08-Aug-96 530304 30-Aug-96 Registered
Mexico QUICK-LIST CARDS 270610 08-Aug-96 530305 30-Aug-96 Registered
ITEM 3 OF SCHEDULE 3.11(A)
COPYRIGHTS
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
Black's Guide - Atlanta Industrial
(Fall 2004) TX6063598 9/27/04
Black's Guide - Atlanta Industrial
(Summer 2004) TX6011641 7/15/04
Black's Guide - Atlanta Industrial
(Spring 2004) TX5986081 4/16/04
Black's Guide - Atlanta Industrial
(Winter 2003/2004) TX5908605 01/13/04
Black's Guide - Atlanta Industrial
(Summer 2003) TX5791412 6/17/03
Black's Guide - Atlanta Industrial
(Fall 2003) TX5868147 9/17/03
Black's Guide - Atlanta Industrial
(Spring 2003) TX5763303 3/28/03
Black's Guide - Chicago
(Summer 2003) TX5794715 6/17/03
Black's Guide - Chicago
(Winter 2004) TX5924976 2/6/04
Black's Guide - Chicago
(Summer 2004) TX6013292 6/18/04
Black's Guide - Connecticut/New
York Suburbs (Fall 2004) TX6027060 8/3/04
Black's Guide - Connecticut/New
York Suburbs (Spring/Summer 2004) TX5986084 4/16/04
Black's Guide - Connecticut/New
York Suburbs (Fall 2003) TX5795993 8/28/03
Black's Guide - Connecticut/New
York Suburbs (Spring 2003) TX5714720 4/3/03
Black's Guide - Dallas/Fort Worth
Office Market (Summer/Fall 2004) XX0000000 8/3/04
Black's Guide - Dallas/Fort Worth
(Calendar 2004) TX6013290 5/28/04
Black's Guide - Dallas/Fort Worth
Map 0000 Xxxxxxx 000 Xxxx Xxxxxxxx XX0000000 2/12/04
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
Black's Guide - Dallas/Fort Worth
Map 2004 Las Colinas TX5986037 4/16/04
Black's Guide - Dallas/Fort Worth
Industrial Market (Spring/Summer
2004) TX5968329 4/15/04
Black's Guide - Dallas/Fort Worth
Office (Winter/Spring 2004) TX5924977 2/6/04
Black's Guide - Dallas/Fort Worth
Platinum Corr XX0000000 12/3/03
Black's Guide - Dallas Fort Worth
Industrial Market (Fall/Winter
2003) TX5859269 10/27/03
Black's Guide - Dallas/Fort Worth
Office Market (Summer/Fall 2003) TX5814017 8/8/03
Black's Guide - Dallas/Fort Worth
Las Colinas Map TX5713337 4/11/03
Black's Guide - Michigan
(Spring/Summer 2004) TX5990050 5/17/04
Black's Guide - Michigan
(Fall/Winter 2003) XX0000000 11/3/03
Black's Guide - Michigan
(Spring/Summer 2003) TX5782207 6/2/03
Black's Guide - New Jersey Map
2004 TX6025287 6/18/04
Black's Guide - New Jersey Map
2004 - "Where Lift Science Lives" 7X6025286 6/18/04
Black's Guide - New Jersey Office
(Spring/Summer 2004) TX6013220 6/18/04
Black's Guide - New Jersey Office
(Spring 2003) TX5839049 7/7/03
Black's Guide - New Jersey
Industrial (Fall/Winter 2003/2004) TX5899174 1/13/04
Black's Guide - New Jersey
Industrial (Spring/Summer 2003) TX5764093 5/20/03
Black's Guide - Metro Orlando
(Fall/Winter 2004) TX6063696 9/7/04
Black's Guide - Metro Orlando
(Spring/Summer 2004) TX5986083 4/16/04
Black's Guide - Metro Orlando
(Fall/Winger 2003) TX5868148 9/17/03
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
(Fall/Winger 2003)
Black's Guide - Metro Orlando
(Spring/Summer 2003) TX5763289 3/28/03
Black's Guide -
Philadelphia/Subs/Lehigh
Valley/NJ/DE-Office (Spring 2004) TX5986073 5/19/04
Black's Guide -
Philadelphia/Subs/Lehigh
Valley/NJ/DE-Office - The
Directory for Commercial Real
Estate (Fall 2002) XX0000000 11/12/2002
Black's Guide - Philly Office
(Fall 2003) TX5878395 11/28/03
Black's Guide -
Philadelphia/Subs/Lehigh
Valley/NJ/DE-Office (Spring 2003) XX0000000 5/20/2003
Black's Guide - Downtown Dallas
Map 2004 TX6011640 7/15/04
Black's Guide - Dallas/Fort Worth
Downtown Map 2004 TX6011639 7/15/04
Black's Guide - Dallas/Fort Worth
Triple Freeport Exemption XX0000000 7/15/04
Black's Guide - Dallas/Fort Worth
Triple Freeport Exemption Map
2003/2004 TX5897641 10/27/04
Black's Guide - Dallas/Fort Worth
Industrial Market (Spring/Summer
2003) TX5711891 4/17/03
Black's Guide - Denver
Office/Industrial (Summer/Fall
2004) TX6063697 9/7/04
Black's Guide - Downtown Denver
Map 2003 XX0000000 8/4/03
Black's Guide - Denver Office
(Winter/Spring [ ]) TX5923627 1/26/04
Black's Guide - Denver Office
(Summer/Fall 2003) TX5799404 8/4/03
Black's Guide - Denver
(Winter/Spring 2003) TX5687750 1/31/03
Black's Guide - Houston Map 2004
(Uptown Houston) TX6009088 7/30/04
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
Black's Guide - Houston Southwest
Industrial Map 2004 TX6011637 7/15/04
Black's Guide - Houston Map 2004 9
Energy Corridor District XX0000000 4/16/04
Black's Guide - Houston
(Spring/Summer 2004) TX6974857 4/29/04
Black's Guide - Houston Industrial
(Fall/Winter 2003) TX5882679 12/3/03
Black's Guide - Houston Industrial
Map 2004 (Houston Northwest
Industrial) TX5923624 1/26/04
Black's Guide - Houston Map 2003
(Westchase District) TX5882681 12/3/03
Black's Guide - Houston Office
- Fall/Winter 2003 XX0000000 11/17/03
Black's Guide - Houston
(Spring/Summer 2003) TX5711890 4/17/03
Black's Guide - Houston Bi-Annual
Map 2003 XX0000000 4/17/03
Black's Guide - Greater
Jacksonville (Summer/Fall 2004) TX6013222 6/18/04
Black's Guide - Greater
Jacksonville (Winter/Spring 2003/
2004) TX5909757 1/13/04
Black's Guide - Greater
Jacksonville Area (Spring/Fall
2003) XX0000000 6/25/2003
Black's Guide - Los Angeles/Orange
County/Inland Empire
(Winter/Spring 2004) TX5923622 1/26/04
Black's Guide - Los Angeles/Orange
County/Inland Empire (Summer/Fall
2003) TX5775727 6/25/03
Black's Guide - Los Angeles/Orange
County/Inland Empire
(Winter/Spring 2003) TX5687751 1/31/03
Black's Guide - Downtown Dallas
Map 2004 TX6011840 7/15/04
Black's Guide - Dallas/Fort Worth
Downtown Map 2004 TX6011639 7/15/04
Black's Guide - Dallas/Fort Worth
Triple Freeport Exemption XX0000000 7/15/04
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
Triple Freeport Exemption
Black's Guide - Dallas/Fort Worth
Map, Triple Freeport Exemption
2003/2004 TX5897641 10/27/03
Black's Guide - Dallas/Fort Worth
Industrial Market - Spring/Summer
2003 TX5711891 4/17/03
Black's Guide - Denver
Office/Industrial Summer/Fall 2004 TX6063697 9/7/04
Black's Guide - Downtown Denver
Map - 2003 XX0000000 8/4/03
Black's Guide - Denver Office -
Winter/Spring 200_ TX5923627 1/26/04
Black's Guide - Downtown Denver
Map - 2003 XX0000000 8/4/03
Black's Guide - Denver Office
Summer/Fall 2003 TX5799404 8/4/03
Black's Guide - Denver
Winter/Spring 2003 TX5687750 1/31/03
Black's Guide - Houston Map 0000
Xxxxxx Xxxxxxx XX0000000 7/30/04
Black's Guide - Houston Southwest
Industrial Map 2004 TX6011637 7/15/04
Black's Guide - Houston Map 2004 -
Energy Corridor District XX0000000 4/16/04
Black's Guide - Houston
Spring/Summer 2004 TX5974857 4/29/04
Black's Guide Houston Ind F/W 2003 TX5882679 12/3/03
Black's Guide Houston Ind Map 0000
- Xxxxxxx Xxxxxxxxx Xxxxxxxxxx XX0000000 1/26/04
Black's Guide - Houston Map 2003 -
Westchase District TX5882681 12/3/03
Black's Guide - Houston Office -
Fall/Winter 2003 XX0000000 11/17/03
Black's Guide - Houston -
Spring/Summer 2003 TX5711890 4/17/03
Black's Guide - Houston Bi-Annual
Map 2003 XX0000000 4/17/03
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
Black's Guide - Houston Bi-Annual
Map 2003 XX0000000 4/17/03
Black's Guide - Greater
Jacksonville - Summer/Fall 2004 TX6013222 6/18/04
Black's Guide Greater Jacksonville
W/S 2003/2004 TX5909757 1/13/04
Black's Guide - Greater
Jacksonville Area - Summer/Fall
2003 XX0000000 6/25/03
Black's Guide Los Angeles/ Orange
County/ Inland Empire
Winter/Spring 2004 TX5923622 1/26/04
Black's Guide - Los Angeles/
Orange County/Inland Empire
Summer/Fall 2003 TX6776727 6/25/03
Black's Guide - Los Angeles/
Orange County/ Inland Empire TX5687751 1/31/03
Black's Guide - Chicago - Summer
2003 TX6794716 6/17/03
Black's Guide - Chicago Winter
2004 TX5924976 2/6/04
Black's Guide - Chicago Summer
2004 TX6013232 6/18/04
Black's Guide - Connecticut/ New
York Suburbs Fall 2004 TX6027060 7/3/04
Black's Guide Connecticut/ New
York Suburbs - Spring/Summer 2004 TX5986084 4/16/04
Black's Guide - Connecticut/ New
York Suburbs-Fall 2003 TX5795993 8/28/03
Black's Guide - Connecticut/ New
York Suburbs - Fall 2003 TX6795993 8/28/03
Black's Guide - Dallas/ Fort Worth
Office Market Summer/Fall 2004 XX0000000 8/3/04
Black's Guide Dallas/Fort Worth
Calendar 2004 TX6013290 5/28/04
Black's Guide Dallas/Fort Worth
Map 0000 Xxxxxxx 000 Xxxx Xxxxxxxx XX0000000 2/12/04
Black's Guide - Dallas/Fort Worth
Map 2004 Las Colinas TX5986037 4/16/04
Black's Guide - Dallas/Fort Worth
Industrial Market Spring/Summer TX5968329 4/15/04
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
2004
Black's Guide Dallas/Fort Worth
Office Winter/Spring 2004 TX5924977 2/6/04
Black's Guide - Dallas/Fort Worth
Platinum Corr. 2003-2004 TX6882680 12/3/03
Black's Guide - Dallas/Ft. Worth
Industrial Market - Fall/Winter
2003 TX5859269 10/27/03
Black's Guide - Dallas/Ft. Worth
Office Market - Summer/Fall 2003 TX5814017 8/8/03
Black's Guide - Dallas/Ft. Worth
Las Colinas Map 2003-2004 TX6713337 4/11/03
Black's Guide Philadelphia
Subs/Leigh Valley/NJ/DE Industrial
Spring 2004 TX5982749 5/17/04
Black's Guide - The Directory for
Commercial Real Estate -
Industrial Fall 2002 -
Philadelphia/Subs/ Lehigh
Valley/NJ/DE TX5757889 11/12/02
Black's Guide - Philly Ind - Fall
2003 TX5878396 11/28/03
Black's Guide - Philadelphia/
Subs/Lehigh Valley/NJ/DE -
Industrial Spring 200_ TX5764092 5/20/03
Black's Guide - San Francisco
Area/Bay Area/ Sacramento -
Spring/Summer 2003 XX0000000 7/17/03
Black's Guide - South Florida
Office/Flex/Industrial Markets
Fall 2004 TX6053479 9/27/04
Black's Guide - South Florida
Office Market TX6027406 7/15/04
Black's Guide - South Florida
Office Market Spring 2004 TX5968328 4/15/04
Black's Guide - South Florida
Office Market Winter 2004 TX5294975 2/6/04
Black's Guide - South Florida
Office Market - Fall 2003 TX5862810 10/27/03
Black's Guide - South Florida
Office Market - Summer 2003 TX5839044 7/7/03
Black's Guide - South Florida
Office Market - Spring 2003 TX5711892 4/17/03
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
Market - Spring 2003
Black's Guide - South Florida
Flex/industrial Market
Spring/Summer 2004 TX5974856 4/29/04
Black's Guide SFL Ind Winter 2003 XX0000000 12/3/03
Black's Guide South Florida
Flex/Industrial Market - Summer
2003 TX5839047 7/7/03
Black's Guide - South Florida
Flex/Industrial Market - Spring
2003 TX5714715 4/3/03
Black's Guide Tampa Bay/Southwest
Florida Summer/Fall 2004 TX6013221 6/18/04
Black's Guide Tampa Bay Map
2004-2005 TX5940688 1/13/04
Black's Guide Tampa Bay Map
2004-2006 Westshore/Airport TX5924947 2/6/04
Black's Guide Tampa Bay/Southwest
Florida W/S 2003/2004 TX5909758 1/13/04
Black's Guide Tampa Bay/Southwest
Florida - Summer/Fall 2003 TX5839048 7/7/03
Black's Guide - Washington
DC/Metropolitan Area Fall/Winter
2004 TX6058533 9/23/04
Black's Guide - Washington
DC/Metropolitan Area Professional
Directory Summer 2004 TX6011638 7/15/04
Black's Guide - Tyson's Corner Map
2004 TX5986038 4/16/04
Black's Guide Washington
DC/Metropolitan Area Spring 2004 TX5986082 4/16/04
Black's Guide Washington DC Map -
Prince George's County Map 2004 TX5923623 1/26/04
Black's Guide Washington
DC/Metropolitan Area Winter 2004 TX5923628 1/26/04
Black's Guide - Tysons Corner,
Virginia - Commercial Real Estate
Map TX5667932 2/10/03
Black's Guide - Downtown
Washington DC - Commercial Real TX5859256 10/27/03
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
Estate Map
Black's Guide Wahington,
DC/Metropolitan Area Fall 2003 TX5869270 10/27/03
Black's Guide - Washington
DC/Metropolitan Area Summer 2003 TX5838045 7/7/03
Black's Guide - Reston, Virginia
Commercial Real Estate Map TX5839046 7/7/03
Black's Guide - Michigan -
Spring/Summer 2004 TX5990050 5/17/04
Black's Guide - Michigan -
Fall/Winter 2003 TX881286 11/3/03
Black's Guide - Michigan -
Spring/Summer 2003 TX5782207 6/2/03
Black's Guide - New Jersey Map
2004 - Metropolitan TX6025287 6/18/04
Black's Guide - New Jersey Office
Spring/Summer 2004 TX6013220 6/18/04
Black's Guide - New Jersey Office
- Spring 2003 TX5839049 7/7/03
Black's Guide - New Jersey
Industrial Spring/Summer 2004 TX6013223 6/18/04
Black's Guide - New Jersey
Industrial - Fall/Winter 2003/2004 TX5899174 1/13/04
Black's Guide - New Jersey
Industrial - Spring/Summer 2003 TX5764093 5/20/03
Black's Guide - Metro Orlando
Fall/Winter 2004 TX6063696 9/7/04
Black's Guide Metro Orlando -
Spring/Summer 2004 TX5986083 4/16/04
Black's Guide Metro Orlando
Fall/Winter 2003 TX5868148 9/17/03
Black's Guide Metro Orlando -
Spring/Summer 2003 TX5763289 3/28/03
Black's Guide- Philadelphia/
Subs/Lehigh Valley/NJ/DE -
Office Spring 2004 TX5986073 5/19/04
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
Black's Guide - The Directory for
Commercial Real Estate Office-
Philadelphia/ Subs/Lehigh
Valley/NJ/DE Fall 2002 XX0000000 11/12/02
Black's Guide - Philly Office -
Fall 2003 TX5878395 11/28/03
Black's Guide - Philadelphia/
Subs/ Lehigh Valley/NJ/DE - Office
Spring 2003 XX0000000 5/20/03
Black's Guide Atlanta Industrial -
Fall 2004 TX6063598 9/27/04
Black's Guide - Atlanta Industrial
Summer 2004 TX6011641 7/15/04
Black's Guide - Atlanta Industrial
- Spring 2004 TX5986081 4/16/04
Black's Guide - Atlanta Industrial
- Winter 2003/2004 TX5908605 1/13/04
Black's Guide - Atlanta Industrial
Summer 2003 TX6791412 6/17/03
Black's Guide - Atlanta Industrial
- Fall 2003 TX5868147 9/17/03
Black's Guide - Atlanta Industrial
Spring 2003 TX5763303 3/28/03
Black's Guide - Atlanta Office
Summer 2004 TX6011642 7/15/04
Black's Guide - Atlanta Office -
Spring 2004 TX5968330 4/15/04
Black's Guide - Atlanta Office -
Summer 2003 TX5791411 6/17/03
Black's Guide Atlanta Office Fall
2003 TX5841503 9/12/03
Black's Guide - Atlanta Office -
Spring 2003 TX5763304 3/28/03
ITEM 4 OF SCHEDULE 3.11(A)
INTERNET DOMAIN NAMES
DOMAIN NAME EXPIRATION
----------- ----------
xxxxxxxxx.xxx April 2, 2010
xxxxxxxx.xxx January 23, 2011
xxxxxxxxxx.xxx October 8, 2007
xxxxxxxxxxxxxxxxxx.xxx August 18, 2012
xxxxxxxxxxxxxxxxxx.xxx August 19, 2012
xxxxxxxxxxxxxxxxx.xxx April 2, 2008
xxx-xxxxxx.xxx July 6, 2005
xxx-xxxxxx.xxxx July 6, 2005
xxx-xxxxxx.xxx July 6, 2005
xxxxxxxxxxxxxxxxx.xxx December 14, 2005
xxxxxxxxxxxxxxxxx.xxx March 31, 2010
xxxxxxxxxxxxxxxxx.xxxx November 1, 2012
xxxxxxxxx-xxxxxxx.xxx February 9, 2005
xxxxxxxxxxxxxxx.xxx October 5, 2008
xxxxxxxxxxxxxxxxxxxxxxx.xxx March 5, 2006
xxxxxxxxxxxxxxxxxxxx.xxx April 29, 2009
xxxxxxxxxxxxxxxxxxxxxxxxxxxx.xxx March 15, 2011
xxxxxxxxxxxxxxxxxxxxxx.xxx November 6, 2008
xxxxxxxxxxxxxxxxxxxx.xxx August 13, 2008
xxxxxxxxxxxxxxxx.xxx June 8, 2009
xxxxxxxxx.xx April 23, 2009
xxxxxxxxxxxxx.xxx October 15, 2007
xxxxxxxxxxxxx.xxx April 14, 2012
xxxxxx.xxx March 7, 2007
xxxxxxxxxxxxxxxx.xxx March 12, 2006
xxxxxxxxxx.xxx October 8, 2007
xxxxxxxxxxx.xxx March 8, 2008
xxxxxxxxxxxxxx.xxx April 22, 2009
xxxxxxxxxxx.xxx July 22, 2007
xxxxxxxxxxxx.xxx June 2, 2012
xxxxxxxxxxxxxxxxxxxxxxxxxxxx.xxx October 2, 2006
xxxxxxxxxxxxxxx.xxx August 9, 2012
xxxxxxxxxx.xxx October 8, 2007
xxxxxxxxxxxxxxxx.xxx June 3, 2007
xxxxxxxxxxxxxxxxxxxx.xxx May 18, 2012
xxxxxxxxxxxx.xxx April 26, 2006
xxxxxxxxxxxxxxxxxxx.xxx April 14, 2009
xxxxxxxxxxxxxxxxxx.xxx April 14, 2009
xxxxxxxxxxxxxxxx.xxx June 27, 2007
xxxxxx-xxxxxx.xxx July 23, 2012
DOMAIN NAME EXPIRATION
----------- ----------
xxxxxxxxxxxx.xxx July 23, 2012
xxxxxx-xxxxxx.xxx July 23, 2012
xxxxxxxxxxxxxxxxx.xxx April 14, 2009
xxxxxxxxxxxxxxxxxx.xxx May 18, 2012
xxxxxxxxxxx.xxx October 16, 2009
xxxxxxxxxxxx.xxx June 13, 2010
xxxxxxxxxxxx.xxx April 21, 2006
xxxxxxxxxxxxx.xxx April 20, 2006
xxxxxxxxxxxxxx.xxx March 12, 2010
xxxxxxxxxxxxxx.xxx April 21, 2006
xxxxxxxxxxxxxxxx.xxx August 10, 2010
xxxxxxxxxxxxxxxx.xxxx November 1, 2012
xxxxxxxxxxxx.xxx May 20, 2012
xxxxxxxxxxxxxxx.xxx April 19, 2007
xxxxxxxxxxxxxxxxxx.xxx October 12, 2006
xxxxxxxxxxxxxx.xxx January 7, 2007
xxxxxxxxxxxxx.xxx January 6, 2007
xxxxxxxxx.xxx September 22, 2009
xxxxxxxxxx.xxx December 4, 2005
xxxxxxxxxxxxxxx.xxx October 8, 2007
xxxxxxxxxxxx.xxx September 2, 2008
xxxxxxxxxxxxxxxx.xxx January 5, 2007
xxxxxxxxxxxxxxxxx.xxx November 12, 2007
xxxxxxxxxxx.xxx May 10, 2008
xxxxxxxxxxxxxxx.xxx September 8, 2006
xxxxxxxxx.xxx October 6, 2007
xxxx-x-xxxx.xxx October 6, 2007
xxxxxxxxxxxxxxxxxxx.xxx August 9, 2012
xxxxxxxxxx.xxx October 22, 2007
xxxxxxxxxxxxxxxxxxxxxxxxxx.xxx June 12, 2008
xxxxxxxxxxxxxxxxx.xxx March 31, 2012
xxxxxxxxxxxxxxxxxxx.xxx April 14, 2009
xxxxxxxxxxxxxxxxxxxx.xxx May 18, 2012
xxxxxxxxxxxxxxxxxxx.xxx May 18, 2012
xxxxxxxxxxxxxxxxx.xxx April 18, 2008
xxxxxxxxxxxxxxxxx.xxx March 2, 2006
xxxxxxxxxxxxxxxxx.xxx May 18, 2012
xxxxxxxxxxxxxxxxxxx.xxx May 18, 2012
xxxxxxxxxxxxxx.xxx February 9, 2008
xxxxxxxxxxxxx.xxx June 30, 2008
xxxxxxxxxxxxxxx.xxx September 8, 2008
xxxxxxxxxxxxxxxxx.xxx September 8, 2008
xxxx.xxx September 9, 2010
xxxxxxxxxxx.xxx June 17, 2012
DOMAIN NAME EXPIRATION
----------- ----------
xxxxxxxxxxxxxxxxxxxxxx.xxx March 6, 2011
xxxxxxxxxxxxxxxxxxxxxxxxx.xxx September 9, 2008
xxxxxxx.xxx July 6, 2007
xx-xx.xxx September 11, 2008
xxxxxxxxxxxxxxxxx.xxx July 6, 2007
xxxxxxxxxx.xxx October 8, 2007
xxxxxxxxxxxxxxxxxxx.xxx April 23, 2008
xxxxxxxxxxxxxxxxx.xxx April 19, 2008
xxxx-xx-xxx-xxxxxxxx.xxx April 19, 2008
xxxxxxxxxxxxx.xxx December 14, 2005
xxxxxxxxxxxxx.xxx July 26, 2010
xxxxxx-xxxxxxx.xxx July 26, 2012
xxxxxxxxxxxxx.xxxx November 1, 2012
xxxxxxxxxxxxx.xxx July 26, 2012
xxxxxx-xxxxxxx.xxx July 23, 2012
xxxxxxxxxxxxx.xxx November 8, 2005
xxxxxxxxxxxxx.xx April 23, 2009
xxxxxxxxxxxxxxxxxxxxxxx.xxx March 17, 2006
xxxxxxxxxxxxxxxxxx.xxx March 17, 2006
xxxxxxxxxxxxxxxxxxxx.xxx January 22, 2011
xxxxxxxxxxxxxxxxxxxx.xxxx March 7, 2006
xxxxxxxxxxxxxxxxxxxx.xxx April 7, 2007
xxxxxxxxxxxxxxxxxxxx.xx March 16, 2006
xxxxxxxxxxxxxxxxxxxx.xxx November 19, 2006
xxxxxxxxxxxxxxxxxxxx.xxxx November 1, 2012
xxxxxxxxxxxxxx.xxx May 14, 2012
xxxxxxxxxxxxx.xxx August 9, 2012
xxxxxx-xxxxxx.xxx October 11, 2008
xxxxxxxxxxxxxxxxxxx.xxx December 14, 2005
xxxxxxxxxxxxxxxxxxx.xxx June 3, 2009
xxxxxx-xxxxxx-xxxxxxx.xxx October 11, 2008
xxxxxxxxxxxxxxxxxxx.xxxx November 1, 2012
xxxxxxxxxxxxxxxxxxx.xxx October 6, 2008
xxxxxxxxxxxxxxxxxxx.xxx October 11, 2008
xxxxxxxxxxxxxxxxxxx.xx April 23, 2009
xxxxxxxxxxxxxxxxxxxxxxxx.xxx April 29, 2009
xxxxxxxxxxxxxxxxxxxxxxxxx.xxx January 11, 2006
xxxxxxxxxxxxx.xxx December 12, 2005
xxxxxxxxxxx.xxx October 8, 2007
xxxxxxxxxxxxxxxx.xxx July 19, 2009
xxxxxxxxxxxx.xxx August 27, 2005
xxxxxx.xxx October 6, 2009
xxxxxxxx.xxx January 15, 2008
xxxxxxxx.xxx August 15, 2012
DOMAIN NAME EXPIRATION
----------- ----------
xxxxxxxx.xxx August 20, 2012
xxxxxxxxxxxxx.xxx May 28, 2009
xxxxxxxxxxxxx.xxx May 28, 2009
xxxxxxxxxxxxx.xxx May 28, 2009
xxxxxxxxxxxxxxxxxxxxx.xxx December 14, 2005
xxxxxxxxxxxxxxxxxxxxx.xxxx November 1, 2012
xxxxxxxxxxxxxxxx.xxx October 31, 2006
xxxxxxxxxxxxxxxxxxxx.xxx January 11, 2006
xxxxxxxxxxxxx.xxx December 14, 2005
xxxxxxxxxxxxx.xxxx November 1, 2012
xxxxxxxxxxxxx.xxx February 9, 2010
xxxxxxxxxxxxxxxxxx.xxx April 29, 2009
xxxxxxxxxxxxxxxx.xxx January 27, 2006
xxxxxxxxxxxxxxxx.xxx January 28, 2006
xxxxxxxxxxxxxxxx.xxx January 28, 2006
xxxxxxxxxxx.xxx October 8, 2007
xxxxxxxxxxxxxxxxxxx.xxx February 9, 2007
xxxxxxxxxxxxxxxxx.xxx February 9, 2007
xxxxxxxxxxxxxxxxxxx.xxx February 9, 2007
xxxxxxxxxxxxxx.xxx February 9, 2007
xxxxxxxxxxxxxxxxxxxx.xxx February 9, 2007
xxxxxxxxxxxxxxxxxx.xxx February 9, 2007
xxxxxxxxxxxxxxxx.xxx December 7, 2005
xxxxxxxxxxxxxxxxxxx.xxx May 18, 2012
xxxxxxxxxxxxxxx.xxx April 15, 2006
xxxxxxxxxxxxxxxxxxxxx.xxx July 14, 2006
xxxxxxxxxxxxxxxx.xxx February 9, 2008
xxxxxxxxxxxxxxxxxxxxx.xxx August 30, 2007
xxxxxxxxxxxxxx.xxx February 15, 2008
xxxxxxxxxxxxxx.xxx February 9, 2008
xxxxxxxxxxxx.xxx July 9, 2007
xxxxxxxxxxxxxxx.xxx August 30, 2007
xxxxxxxxxxxxxxxxxxxxxxx.xxx December 1, 2005
xxxxxxxxxxxxxx.xxx December 14, 2005
xxxxxxxxxxxxxx.xxx June 20, 2009
xxxxxxxxxxxxxx.xxxx November 1, 2012
xxxxxxxxxxxxxx.xx April 23, 2009
xxxxxxxxxx-xxxxxxx.xxx February 9, 2005
xxxxxxxxxxxxxx.xxx June 14, 2012
xxxxxxxxxx.xxx February 23, 2009
xxxxxxxxxxxxxxxxx.xxx February 2, 2005
xxxxxxxxxxxxxxxxxx.xxx October 25, 2006
xxxxxxxxxx-xxxxxxxx.xxx October 25, 2006
xxxx-xxxxxxxx.xxx October 25, 2006
DOMAIN NAME EXPIRATION
----------- ----------
xxxxxx.xxx October 12, 2007
xxxxxxxxx.xxx November 19, 2006
xxxxxxxxxxxxxxxxxxxx.xxx June 17, 2012
xxxxxxxxxxxxxxxxxxxxxx.xxx June 17, 2012
xxxxxxxxxxxxxxxxxxx.xxx August 9, 2012
xxxxxxxxxxxxxxx.xxx August 9, 2012
xxxxxxxxxxxxxxxxx.xxx May 14, 2012
xxxxxxxxxxxxxxx.xxx March 30, 2007
xxxxxxxxxxxxxxxx.xxx July 19, 2009
xxxxxxxxxxxxxxxx.xxx October 19, 2006
xxxxxxxxxxxxxxxxxxxx.xxx April 14, 2009
xxxxxxxxxxxxxxxxxxxxx.xxx May 18, 2012
xxxxxxxxxxxxxxxxx.xxx May 14, 2012
xxxxxxxxxxxxxxx.xxx January 29, 2011
xxxxxxxxxxxxxxxxxxxx.xxx March 31, 2008
xxxxxxxxxxxxxxxxxxxxxxxx.xxx October 2, 2008
xxxxxxxxxxxxxxxxxx.xxx October 2, 2008
xxxxxxxxxxxxxxxxx.xxx July 11, 2007
xxx-xxxx-xxxxxx-xxxx.xxx July 11, 2007
xxxxxxxxxxxxxxxxxxxxxx.xxx April 29, 2009
xxxxxxxxxxxxxx.xxx August 16, 2007
xxxx.xxx February 7, 2010
xxxxxxxxxxxx.xxx April 12, 2009
xxxxxxxxx.xxx April 12, 2009
xxxxxxxxxxxx.xxx October 8, 2007
xxxxxxxxxxxxxxxxxxx.xxx May 18, 2012
xxxxxxxxxx.xxx October 8, 2007
xxxxxxxxxxxxxxx.xxx March 1, 2011
xxxxxx-xxxx.xxx January 14, 2006
xxxxxxxxxxx.xxx December 14, 2005
xxxxxxxxxxx.xxx May 10, 2008
xxxxxxxxxxx.xxxx November 1, 2012
xxxxxxxxxxxxxxxx.xxx December 14, 2005
xxxxxxxxxxxxxxxx.xxx December 3, 2005
xxxxxxxxxxxxxxxx.xxxx November 1, 2012
xxxxxxxxxx.xxx July 24, 2012
xxxxxxxxxx.xxx April 7, 2006
xxxxxxxxxxx.xxx September 10, 2008
xxxxxxxxxxxx.xxx May 14, 2012
xxxxxxxxxxxxxxxxxxxxxx.xxx May 18, 2012
xxxxxxxxxxxxxxxxxxxxx.xxx August 23, 2006
xxxxxxxxxxxxx.xxx May 22, 2006
xxxxxxxxxxxxx.xxx May 22, 2006
xxxxxxxxxxxxxxxxxxxxxx.xxx May 22, 2006
ITEM 7 OF SCHEDULE 3.11(A)
COPYRIGHT APPLICATIONS
TITLE DATE OF FIRST PUBLICATION STATUS
----- ------------------------- -------
Black's Guide - Atlanta Industrial - Winter December 6, 2004 Pending
2004/2005
Black's Guide - Atlanta Office - Winter December 3, 2004 Pending
2004/2005
Black's Guide - Washington December 1, 2004 Pending
DC/Metropolitan Area - Professional
Director Winter 9/05
Black's Guide - New Jersey November 11, 2004 Pending
Office/Industrial/Flex Fall/Winter
Black's Guide - Tampa Bay/Southwest November 10, 2004 Pending
Florida Winter/Spring 2004-2005
Black's Guide - Downtown Miami/Brickell November 9, 2004 Pending
Area Map
Black's Guide - Dallas/Fort Worth October 12, 2004 Pending
Industrial Market Fall Winter 2004
Black's Guide - Houston Office/Industrial October 11, 2004 Pending
Fall/Winter 2004
Black's Guide - Dallas/Fort Worth Map October 8, 2004 Pending
2004-2005
Black's Guide - Philadelphia October 8, 2004 Pending
Office/Industrial/ Flex Fall 2004
Black's Guide - Uptown Houston Map October 8, 2004 Pending
2004
Black's Guide - Michigan Fall/Winter October 8, 2004 Pending
2004
Black's Guide - Atlanta Office - Fall 2004 September 15, 2004 Pending
Black's Guide - New Jersey Map December 18, 2003 Pending
2003/2004 Exit 8A New Jersey Turnpike
Black's Guide San Francisco Area/Bay December 11, 2003 Pending
Area/ Sacramento Fall Winter 2003
Black's Guide New Jersey Office December 12, 2003 Pending
Fall/Winter 2003/2004
Black's Guide Atlanta Office Winter December 11, 2003 Pending
2003/2004
Black's Guide - Michigan - April 2, 2003 Pending
Spring/Summer 2003
Black's Guide - Chicago - Winter December 6, 2004 Pending
2004/2005
Black's Guide - Greater Jacksonville December 1, 0000 Xxxxxxx
Xxxx and Winter/Spring 2004-2005
Black's Guide - Downtown Washington November 9, 0000 Xxxxxxx
XX Map
ITEM 11 OF SCHEDULE 3.11(A)
LIST OF PUBLICATIONS
AUGUSTA, GA
NORTHEAST HOUSTON, KINGWOOD ATASCOCITA & HUMBLE, TX
SOUTHWEST HOUSTON AND FORT BEND COUNTY, TX
TYLER, TX
CLEAR LAKE/BAY AREA, TX
NW HOUSTON / THE WOODLANDS, TX
WEST HOUSTON, TX
NORTHWEST ARKANSAS
SAN ANTONIO, TX
GALVESTON COUNTY, TX
CONROE, XXXXXXXXXX COUNTY, AND XXXXXX COUNTY, TX
BRAZORIA/MATAGORDA COUNTY, TX
GOLDEN TRIANGLE, TX
LONGVIEW, TX
BAYTOWN AND EAST XXXXXX COUNTY, TX
ABILENE, TX
GREATER AUSTIN, TX
THE HIGHLAND LAKES, TX
METRO WEST AND WORCESTER COUNTY EAST, MA
PRESTIGE PROPERTIES WEST OF BOSTON, MA
SOUTHERN MARYLAND
NORTHERN VIRGINIA
GREATER FAYETTEVILLE, NC
PINEHURST / SOUTHERN PINES AREA, NC
XXXXXXXX XXXXX, XX
XXXXXXX XXXXXXXXXX, XX
GREATER WILMINGTON, NC
XXXXXX COUNTY, MD
SKAGIT, ISLAND AND SAN XXXX COUNTIES, WA
BELLINGHAM / WHATCOM COUNTY, WA
XXX COUNTY / BONITA SPRINGS, FL
NAPLES-MARCO ISLAND-BONITA SPRINGS, FL
SANIBEL - CAPTIVA AND UPPER ISLANDS, FL
MARCO ISLAND, FL
VERO BEACH / INDIAN RIVER COUNTY, FL
GREATER TULSA, OK
LANCASTER COUNTY, PA
YORK, XXXXX AND XXXXXXX COUNTIES, PA
HARRISBURG, PA
LEBANON COUNTY, PA
GREATER BALTIMORE AND HARFORD COUNTY, MD
ITHACA & SURROUNDING AREA, NY
GREATER MINNEAPOLIS, MN
GREATER ST. XXXX, MN
SIOUX EMPIRE, SD
PRINCE GEORGES COUNTY, MD
COEUR d'ALENE AND SURROUNDING AREAS, ID
SPOKANE, XXXXXXX AND PEND OREILLE COUNTIES, WA
Page 1
SANDPOINT, BONNERS FERRY, PRIEST LAKE AND PRIEST RIVER, ID
VENTURA AND NORTHWEST LOS ANGELES COUNTY, CA
SUMMIT COUNTY COLORADO
VAIL VALLEY COLORADO
STEAMBOAT SPRINGS AND NW COLORADO
CEDAR RAPIDS AND THE SURROUNDING AREA, IA
ATHENS, GA
GAINESVILLE/LAKE XXXXXX, GA
MID-COAST MAINE
GREATER BANGOR/XXXXXX, ME
XXXXXXX/WASHINGTON COUNTIES, ME
SOUTHWEST NEW MEXICO
LAS CRUCES, NM
GREATER CAPITAL REGION, NY
OCALA / XXXXXX COUNTY, FL
ALABAMA GULF COAST
BURLINGTON COUNTY, NJ
AMARILLO, TX
LUBBOCK, TX
READING - BERKS COUNTY, PA
CENTRAL AND UPPER MONTGOMERY AND NORTH XXXXXXX COUNTIES, PA
XXXXXXX CITY, ELIZABETHTON AND ERWIN, TN
NORTH KING AND SNOHOMISH COUNTIES, WA
KING COUNTY - EASTSIDE, WA
SOUTH KING COUNTY, WA
MONTEREY COUNTY, CA
LITCHFIELD COUNTY, CT
FLORIDA'S SPACE COAST - BREVARD COUNTY
POCONOS, PA
XXXXXXXX - XXXXXX-BARRE, PA
TALLAHASSEE, FL
MANCHESTER/CONCORD, NH
PORTLAND/SOUTHERN MAINE
SEACOAST OF NEW HAMPSHIRE AND SOUTHERN MAINE
COASTAL CENTRAL MAINE
AUGUSTA / XXXXXXXX / WATERVILLE / WINTHROP, ME
YORK COUNTY/SOUTHERN MAINE
XXXXXXX, XX
XXXX XXXXXX XX XXXXXXX, XX
XXXX XXXXXX XX XXXXXXX, XX
XXXXX XXXXXXXXXX, XX
FLORIDA KEYS AND KEY WEST
SOUTH DADE, FL
NORTH SAN DIEGO, CA
SOUTH CENTRAL ALASKA
XXXXXX & MIDDLESEX COUNTY, NJ
CAMDEN COUNTY, NJ
GREATER XXXXXXX AND DELAWARE COUNTIES, PA
STONE HARBOR, AVALON, SEA ISLE CITY, NJ
GREATER MADISON, WI
WESTERN MASSACHUSETTS
CENTRAL ARKANSAS
Page 2
FARGO - MOORHEAD AREA, ND/MN
XXXXXXX, XX
XXXXXXXX XXXXXX XXX XXXXXXX XXXX XXXXXX, XX
THE XXXXXX VALLEY, CA
FREDERICKSBURG, VA
LONG BEACH, LAKEWOOD, WEST ORANGE COUNTY
HUNTINGTON BEACH, FOUNTAIN VALLEY, COSTA MESA, CA
XXXXXX ISLAND NASSAU COUNTY, FL
FLAGLER COUNTY/PALM COAST, FL
KINGS BAY AREA CAMDEN / CHARLTON COUNTIES, GA
ST. AUGUSTINE / ST. XXXXX COUNTY, FL
GAINESVILLE / ALACHUA COUNTY, FL
JACKSONVILLE, FL
COASTAL GEORGIA
XXXXX XXXXXXX XXXXXXX - XXXX XXXX/XXXX XXX
XXXXXXXX, XX
PONTE VEDRA AND THE BEACHES, FL
BIRMINGHAM - WESTERN AREA HOMES, AL
GREATER ALBANY AREA, GA
DOTHAN, AL
MONMOUTH COUNTY, NJ
GADSDEN, AL
XXXXXXXX COUNTY, AL
GREATER TUCSON AND GREEN VALLEY, AZ
CENTRAL CONTRA COSTA COUNTY, CA
SOUTH CENTRAL PENNSYLVANIA
XXXX XXX XXXX, XX
XXXX XXXXXX, XX
JOPLIN, MO AND SOUTHEAST KANSAS
ST. XXXXXX/CEDAR CITY, UT
SAN XXXX OBISPO COUNTY, CA
XXXX/XXXXXXXXX AND XXXXXX COUNTIES, NC
SANTA CLARITA VALLEY/VALENCIA, CA
THE XXXXXXX AREA, GA
XXXXXX COUNTY, CA
THE FOOTHILLS, GLENDALE, BURBANK, CA
XXXXXX COUNTY AND XXXXXXXXXX ISLAND, FL
NORTH PALM BEACH COUNTY, FL
PALM SPRINGS & THE DESERT CITIES, CA
TEMECULA VALLEY / SOUTH RIVERSIDE COUNTY, CA
KILLEEN, XXXXXX HEIGHTS, COPPERAS COVE, TX
PORTLAND METRO WEST / SOUTHWEST, OR
PORTLAND METRO EAST, OR
SALEM AND NORTHERN WILLAMETTE VALLEY, OR
SOUTHWEST WASHINGTON
MEDFORD/ASHLAND, XXXXXXX COUNTY, OR
NORTHERN AND CENTRAL OREGON COAST
CORVALLIS/ALBANY AND MID-WILLAMETTE VALLEY, OR
TACOMA/XXXXXX COUNTY, WA
CITY OF PORTLAND, OR
XXXXXXX XXXXXX
XXXXXXXXXX XXXXX XXXXXX, XX
Page 3
GRANTS PASS, XXXXXXXXX COUNTY, OR
ROSEBURG/XXXXXXX CO., OR
OKLAHOMA CITY METRO, OK
CRYE-LEIKE HOME BUYERS GUIDE, TN
CRYE-LEIKE NASHVILLE, TN
CHARLESTON, SC
WACO AND McLENNAN COUNTY, TX
FARMINGTON/SAN JUAN COUNTY, NM
LAS VEGAS, NV
COLUMBIA, MO AND SURROUNDING COMMUNITIES
LAKE OF THE OZARKS, MO
SPRINGFIELD, MO
LAKE AND MENDOCINO COUNTIES, CA
GREATER FT. LAUDERDALE, FL
STANISLAUS COUNTY, CA
FRESNO AND MADERA COUNTIES, CA
OLYMPIA AND THURSTON COUNTY, WA
SHASTA / TEHAMA COUNTY, CA
GREATER TAMPA, FL
NORTH PINELLAS COUNTY, FL
SOUTH PINELLAS COUNTY, FL
SANTA FE AND NORTH CENTRAL NEW MEXICO
SEDONA, COTTONWOOD AND THE VERDE VALLEY, AZ
HARRISONBURG, VA
STAUNTON, WAYNESBORO & AUGUSTA CO, VA
ANNE ARUNDEL COUNTY, MD
CHAMPAIGN-URBANA, IL
LEHIGH AND NORTHAMPTON COUNTY, PA
MOBILE AND EASTERN SHORE, AL
THE FOX CITIES, WI
ROANOKE, VA
GREATER BINGHAMTON, NY
ST. LUCIE COUNTY - HUTCHINSON ISLAND, FL
PROVO/OREM, UT
NORTHERN ARIZONA
CENTRAL OHIO/COLUMBUS
NEW ORLEAN'S NORTHSHORE, LA
GREATER AIKEN/NORTH AUGUSTA, SC
FLORENCE AND THE GREATER PEE DEE, SC
HOT SPRINGS AND SURROUNDING AREA, AR
DOWNRIVER, MI
NEW CASTLE COUNTY/WILMINGTON, DE
KENT COUNTY/DOVER, DE
EAST PASCO/EAST HERNANDO, FL
GREATER KINGSPORT, TN
BROOKLYN EAST, NY
THE BRONX, NY
MANHATTAN, 96 ST. NORTH TO INWOOD PARK, NY
BROOKLYN WEST, NY
BRADENTON / MANATEE COUNTY, FL
PUNTA GORDA / PORT CHARLOTTE, FL
VENICE / ENGLEWOOD, FL
Page 4
SARASOTA, FL
WARNER ROBINS/PERRY/BYRON, GA
GREATER MCALLEN AREA, TX
BAKERSFIELD/WESTERN KERN COUNTY, CA
ALBUQUERQUE, NM
MARYLAND'S EASTERN SHORE
EASTERN SHORE RESORTS, MD/DE
SAN FERNANDO VALLEY, CA
DES MOINES AND SURROUNDING AREAS, IA
SALT LAKE SUBURBAN, UT
MISSISSIPPI GULF COAST
KAUAI, HAWAII
GREATER TUSCALOOSA/NORTHPORT, AL
BOISE, NAMPA, CALDWELL AND SURROUNDING AREAS, ID
YAKIMA VALLEY, WA
GREATER PEORIA, IL
SPRINGFIELD, IL
THE OMAHA METROPOLITAN AREA, NE
DOWNEY, NORWALK, WHITTIER & SURROUNDING AREA, CA
SOUTHEASTERN CONNECTICUT
FAIRFIELD COUNTY, CT
LITCHFIELD, PAWLEYS ISLAND AND GEORGETOWN, SC
GREATER GRAND STRAND AREA, SC
METRO CHARLOTTE, NC
GASTON AND LINCOLN, NC
MONROE AND UNION COUNTIES, NC
CABARRUS, STANLY AND ROWAN COUNTIES, NC
BRUNSWICK BEACHES AND ISLANDS, NC
ROCK HILL AND YORK COUNTY, SC
LAKE NORMAN AND STATESVILLE, NC
PENSACOLA, MILTON AND GULF BREEZE, FL
FT. WALTON BEACH/DESTIN/NICEVILLE/CRESTV
THE BEACHES OF SOUTH WALTON, FL
APALACHICOLA, ST. GEORGE'S ISLAND, & PORT ST. JOE, FL
THE SOUTHERN FOOTHILLS OF NC
HAWAII - THE BIG ISLAND
HARTFORD / WEST, CT
HARTFORD / EAST, CT
OGDEN / BOUNTIFUL AND SURROUNDING AREA, UT
ROCHESTER, NY
GREATER NEW BEDFORD, MA
GREATER TAUNTON/ATTLEBORO AREAS, MA
GREATER FALL RIVER, MA AND SOUTHEASTERN RHODE ISLAND
RHODE ISLAND SOUTH
RHODE ISLAND NORTH
MANHATTAN - 96th STREET TO BATTERY PARK, NY
STATEN ISLAND, NY
LANCASTER COUNTY, SC
GREATER SUMTER AREA, SC
INDIANAPOLIS METRO NORTH, IN
INDIANAPOLIS METRO SOUTH, IN
MONTROSE, DELTA, GUNNISON, OURAY & SAN MIGUEL COS., CO
Page 5
GRAND JUNCTION & SURROUNDING AREA, CO
GREATER NEW HAVEN & THE SHORELINE, CT
BERGEN COUNTY, NJ
NORTH CENTRAL AND WESTERN NEW JERSEY
ROCKLAND/ORANGE COUNTIES, NY
NORTHWEST NEW HAVEN COUNTY, CT
HUDSON COUNTY, NJ
THE PENINSULA, VA
WESTERN BRANCH, VA
GREATER LYNCHBURG, VA
VIRGINIA BEACH, CHESAPEAKE, NORFOLK, VA
AMES AND SURROUNDING AREAS, IA
FREDERICK COUNTY, MD
BUTTE/GLENN/COLUSA COUNTIES, CA
CITRUS/WEST HERNANDO/WEST PASCO COUNTIES, FL
GREATER SAN DIEGO, CA
SOUTH BAY/PALOS VERDES PENINSULA, CA
NORTHWEST MONTANA
EASTERN/NORTHERN AREA BIRMINGHAM, AL
OVER THE MOUNTAIN, BIRMINGHAM, AL
KITSAP AND OLYMPIC PENINSULA, WA
MONTGOMERY, AL
PANAMA CITY AND BEACHES, FL
MAMMOTH LAKES/EASTERN SIERRA 395 CORRIDOR,
BIRMINGHAM, BLOOMFIELD, FARMINGTON AND LAKES, MI
WESTERN WAYNE COUNTY, MI
NORTH OAKLAND, TROY, ROCHESTER AND WATERFORD, MI
LIVINGSTON, WEST OAKLAND, MI
DEARBORN / DEARBORN HEIGHTS AREA, MI
SACRAMENTO SOUTH REGION, CA
KANAWHA VALLEY, WV
LOGAN, UT
SOUTHERN FINGER LAKES, NY
DUTCHESS COUNTY, NY
BRIGANTINE TO OCEAN CITY, NJ
MCCALL & THE HEARTLAND OF IDAHO
ONTARIO, OR / PAYETTE, FRUITLAND AND WEISER, ID
NORTH PENN AND EASTERN MONTGOMERY COUNTY
BUCKS COUNTY, PA
JEFFERSON CITY, MO
THE WHITE MOUNTAIN AREA OF ARIZONA
TRI-CITIES AND SURROUNDING AREAS, WA
MERRIMACK VALLEY/NORTHERN MASSACHUSETTS
SOUTHERN NEW HAMPSHIRE GREATER SALEM
SOUTHERN NEW HAMPSHIRE GREATER NASHUA
BOSTON NORTH SHORE, MA
TEMPLE, BELTON & SALADO, TX
MONTGOMERY COUNTY, MD
MID CAPE COD, MA
UPPER CAPE, MA
LOWER CAPE COD, MA
CORPUS CHRISTI, TX
Page 6
SOUTH SHORE NASSAU COUNTY, NY
LONG ISLAND'S NORTH SHORE, NY
QUEENS AND LONG ISLAND, NY
SUFFOLK COUNTY SOUTH SHORE, NY
WESTCHESTER/PUTNAM COUNTIES, NY
SHREVEPORT/BOSSIER, LA
BOSTON SOUTH SHORE, MA
BOSTON METRO SOUTH, MA
N. SANTA BARBARA COUNTY/SANTA MARIA VALLEY, CA
OAKVILLE / BURLINGTON, ON
LONDON/MIDDLESEX REGION, ON
BARRIE AND DISTRICT, ON
YORK REGION, ON
KITCHENER/WATERLOO, ON
GUELPH AND WELLINGTON COUNTY, ON
HALIFAX METRO AND SOUTH SHORE, NS
OTTAWA AND REGION, ON
SUDBURY, ON
CAMBRIDGE, ON
MISSISSAUGA-BRAMPTON/CALEDON, ON
KINGSTON AND AREA, ON
MARKHAM/RICHMOND HILL/THORNHILL, ON
ETOBICOKE, ON
NIAGARA REGION, ON
VANCOUVER, BC
SURREY/WHITE ROCK/LANGLEY, BC
VANCOUVER ISLAND, BC
PRINCE EDWARD ISLAND
MUSKOKA, ON
SAULT STE. MARIE & ALGOMA DISTRICT, ON
FREDERICTON & SURROUNDING AREA, NB
WINDSOR & ESSEX COUNTY, ON
OKANAGAN/THOMPSON/KOOTENAY, BC
GREATER HAMILTON, ONTARIO
WINNIPEG AND DISTRICT, MB
LAKE OCONEE / LAKE SINCLAIR & SURROUNDING AREAS, GA
* Although there is not a contract, we have been printing this since February
1986.
** Although there is not a contract, we have been printing this since March,
2004.
Page 7
Schedule 3.ll(d)
Intellectual Property
1. On May 15, 2002, Network Communications, Inc. received a follow-up letter
to a prior letter sent on April 24, 2002 from Baker Hostetler LLP, attorney
for Apartment Finders International, Inc., claiming that Network
Communications, Inc.'s plans to use the terms APARTMENT FINDERS and
APARTMENT FINDER in connection with its publication and apartment location
and information business would likely cause consumer confusion and infringe
upon Apartment Finders International, Inc.'s trademark rights. Network
Communications, Inc. filed an application to register the trademark
APARTMENT FINDER on March 10, 2004 claiming a first use in commerce date of
October 1971. The application notes that Apartment Finders International,
Inc.'s use in connection with apartment locating services as an exception
to its right to exclusive use and excludes certain counties in Colorado
from its claim to exclusive rights to the registration of APARTMENT FINDER,
App. No. 76/580167. Apartment Finders International, Inc. filed an
application to register the service mark APARTMENT FINDERS INTERNATIONAL,
App. No. 78/383864 on March 12, 2004 claiming a first use in commerce date
of September 25, 1971.
2. NCI entered into a Content Licensing Agreement ("Content License") with
Xxxxx.xxx, Inc. ("Xxxxx.xxx") on July 15, 2003, pursuant to which NCI
granted to Xxxxx.xxx a non-exclusive license to use certain of NCI's real
estate data and information (including customer information) on the
Xxxxx.xxx website. On October 22, 2004, Xxxxx.xxx provided NCI with written
notice of Xxxxx.xxx's intent to terminate the Content License under its
terms after a third party acquired Xxxxx.xxx. NCI recently discovered that
after NCI notified Xxxxx.xxx of its desire to terminate the Content
License, but while the Content License was still in effect, Xxxxx.xxx
contacted several NCI advertisers announcing the termination of its
relationship with NCI and soliciting business from such advertisers. NCI
believes that Xxxx.xxx's use of NCI's customer information and solicitation
of its advertisers constitutes a breach of the Content License and a misuse
or misappropriation of NCI's Intellectual Property. NCI has retained
counsel to investigate this matter and determine what action, if any, it
should take against Xxxxx.xxx.
Schedule 3.12(a)
Material Contracts
3.12(a)(i) (Material Contracts)
1. Lease Agreement, dated June 28, 2002, by and among Pace Converting, Inc.
and Network Communications, Inc, ("NCI") for the Company's principal
offices in Lawrenceville, GA.
2. Agreement with Fain Systems, Inc. (check dated 12/04/03) (software).
3. Agreement with Quark Distribution, Inc. (check dated 9/03/03) (software).
4. Solarcom invoice dated 11/30/04 (software).
5. Master Service Agreement between Creo Americas, Inc. ("Creo") and Network
Communications, Inc. ("NCI") dated 3/5/03 (software).
6. Special Provisions Addendum for Service Order between Creo and NCI dated
3/5/03 (software).
7. Service Order Form between Creo and NCI dated 2/3/04 (software).
8. Customer Supply and Equipment Agreement between Sun Chemical Corporation
and NCI dated 3/1/04.
9. Open Options Contractual Licensing Program Membership Agreement between
Adobe Systems Incorporated and NCI dated 5/11/04.
10. Distribution Agreement between Curtis Circulation Company and NCI dated
5/6/03 (distribution and sales agreement for "Unique Homes").
11. Print Agreement between Banta Publications Group and NCI dated 4/29/03.
12. Master Agreement between AT&T and NCI dated 11/9/04 (support).
13. AT&T Pricing Schedule and Addendum to Comprehensive Service Order
Attachment dated 11/9/04 (support).
14. AT&T Local Services Service Order Attachment dated 11/9/04 (support).
15. AT&T Local Exchange Services Service Order Attachment dated 11/9/04
(support).
16. Proposal for IT consulting between Cincinnati Bell Technology Solutions and
NCI dated 9/17/03 (product support).
17. Master Services Agreement between Cincinnati Bell Technology Solutions and
NCI, including State of Work, dated 9/18/03 (product support).
18. General Conditions of Maintenance Services Agreement between Avaya, Inc.
and NCI dated 9/15/04 (product support).
19. Equipment Purchase Agreement and Security Agreement between Canopy, LLC and
NCI dated 9/20/00 for purchase of Xeikon digital color press (software).
20. Group Contract between Palace Resorts and NCI dated 10/27/04 for annual
sales meeting.
21. Convenience Store Merchandise Purchase Agreement between Exxonmobil Oil
Corporation and NCI dated 6/10/04.
22. NCI Free Publications Program Store List dated 6/04.
23. Software Product License Agreement between Lawson Associates, Inc.
("Lawson") and NCI dated 1/28/98 (software).
24. Addendum to Lawson Software Product License Agreement dated 2/10/98.
25. Addendum to Lawson Software Product License Agreement dated 1/28/98.
26. Addendum to Lawson Software Product License Agreement dated 2/2/00.
27. Addendum to Lawson Software Product License Agreement dated 7/20/99.
28. Addendum to Lawson Software Product License Agreement dated 8/6/99.
29. Addendum to Lawson Software Product License Agreement dated 3/28/01.
30. Addendum to Lawson Software Product License Agreement dated 3/25/03.
31. Addendum to Lawson Software Product License Agreement dated 3/17/03.
32. Addendum to Lawson Software Product License Agreement dated 5/24/02.
33. Lawson Software Early Release Agreement dated 2/8/02 (software).
34. Addendum to Lawson Software Product License Agreement dated 2/8/02.
35. Addendum to Lawson Software Product License Agreement dated 7/27/01.
36. Addendum to Lawson Software Product License Agreement dated 11/22/99.
37. Addendum to Lawson Software Product License Agreement dated 3/28/01.
38. Addendum to Lawson Software Product License Agreement dated 4/9/03.
39. Addendum to Lawson Software Product License Agreement dated 4/10/01.
40. Agreement for Products and Services between Ceridian Corporation and NCI
dated 11/5/04.
41. Customer Support Program Agreement for SunService, a Division of Sun
Microsystems, Inc. and Network Publications, Inc. dated 2/16/96 (software).
42. Development Software License Agreement between Versant Objects Technology
("Versant") and Network Communications, Inc. (f/k/a Nustar International,
Inc.) dated 5/19/94 (software).
43. Amendment #3 to the Development Software License Agreement between Versant
and NCI dated 4/30/03.
44. Amendment #2 as to Development Software License Agreement between Versant
and Nustar dated 9/29/94.
45. Amendment #1 to Development Software License Agreement between Versant and
Nustar dated 5/31/94.
46. End-User License Agreement between Vertex, Inc. and NCI dated 2/11/97
(software).
47. Merant, Inc. Invoice dated 3/26/04 (software).
48. Net IQ Corporation Invoice dated 12/8/03.
49. Maintenance Renewal Invoice dated 10/4/04.
50. DRAFT Self-Provisioning Tracking Agreement between Callsource and NCI dated
12/1/04 (toll free and local call tracking numbers).
51. DRAFT Application Service Provider Agreement between Media Services Group
Limited dated 11/04 (software).
52. Advertising Confirmation Agreement between XxxxXxxxxxXxxxxxx.xxx and dated
October 8, 2004 (advertising, URI links).
53. PENDING letter to Steven Rosenfield from Dow Jones & Company, Inc. dated
October 4, 2004 (content, trademarks).
54. Master Agreement between Builder Homesite, Inc., NCI ("XxxxxxXxxxxxx.xxx")
and SBBnet, Inc. (d/b/a LoanBright) dated January 22, 2004 (content, URI
links, trademarks).
55. Co-Branded XxxxxxxXxxxxxxxXxxxx.Xxx License Agreement between SBBnet, Inc
(d/b/a LoanBright and NCI effective as of 2/05/03 (content, URI links,
trademarks).
56. E-Commerce Agreement between Lycos, Inc. and NCI dated 7/30/03 (content,
URI links, trademarks).
57. Amendment No. 1 to E-Commerce Agreement dated 9/15/04 (content, URI links,
trademarks).
58. Paid Category Results Agreement between IndustryBrains, Inc. and NCI dated
10/21/04 (content, URI links, trademarks).
59. Payment Terms for Linking Agreement between XxxxxxxxxXxxxxx.xxx and NCI
dated December 2004 (content, URI links, trademarks).
60. Co-Branding, Marketing and Distribution Agreement between XxxxxxxxXxxx.Xxx,
Inc. and NCI dated 12/03/03 (content, URI links, trademarks).
61. Distribution Agreement between Move On In, Inc. dba RoomateClick and NCI
dated 7/01/04 (content, URI links, trademarks).
62. Internet Advertising and Mortgage Sponsorship Agreement between Wells Fargo
Home Mortgage, Inc. and NCI dated 9/04/03 (content, URI links, trademarks).
63. Listings Distribution Agreement between XxxxXxxx.xxx, Inc. and NCI dated
August 2004 (content, URI links, trademarks).
64. Internet Content Linking Agreement between BellSouth Telecommunications,
Inc. and NCI dated 12/31/02 (content, URI links, trademarks).
65. Content License Agreement between Yahoo! Inc. and Network Publications,
Inc. dated 12/21/97 (content, URI links, trademarks).
66. Amendment, dated 2/20/98, to Content License Agreement between Yahoo! Inc.
and Network Publications, Inc. (content, URI links, trademarks).
67. Product License & Service Agreement between Silverpop Systems, Inc. and NCI
dated 10/15/04 (software, support).
68. Master Services Agreement between DoubleClick, Inc. and NCI dated 1/01/04
(support, URI links, trademarks, technology).
69. DART Service Attachment for Publishers between DoubleClick, Inc. and NCI
dated 1/01/04 (support, URI links, trademarks, technology).
70. Advantage Enterprise License Agreement between XxxXxxxx.xxx, Inc. and NCI
dated 4/30/04 (support, URI links, trademarks, technology).
71. LoadPro Testing Agreement between Keynote Systems, Inc. and NCI dated
1/15/04 (support, URI links, technology).
72. Master Agreement between XxxXxxxx.xxx, Inc. and NCI dated 6/01/04 (content,
URI links, trademarks).
73. Content License Agreement between LendingTree, Inc. and NCI dated 12/09/03
(content, URI links, trademarks).
74. Website Development Agreement between Builder Homesite, Inc. and NCI dated
9/25/03 (content, trademark, support).
75. Applications Maintenance and Support Agreement (Exhibit F) between Builder
Homesite, Inc. and NCI dated 12/15/03 (content, trademark, support).
76. Amendment to Website Development Agreement between Network Communications,
Inc. and Builder Homesite, Inc. (First Amendment) dated 12/15/03 (content,
trademark, support).
77. Amendment to Website Development Agreement between Network Communications,
Inc. and Builder Homesite, Inc. (Second Amendment) dated 2/06/04 (content,
trademark, support).
78. Amendment to Website Development Agreement between Network Communications,
Inc. and Builder Homesite, Inc. (Third Amendment) dated 8/20/04 (content,
trademark, support).
79. Amendment to Website Development Agreement between Network Communications,
Inc. and Builder Homesite, Inc. (Fourth Amendment) dated 8/20/04 (content,
trademark, support).
80. National Distribution System Development Agreement between Builder
Homesite, Inc. and NCI dated 3/04/04 (software, support, trademarks).
81. DRAFT Content License Agreement between On Board, LLC and NCI dated
11/23/04 (content, URI links, trademarks).
82. DRAFT Preferred Vendor Agreement between Allen Tate Company and NCI
(content, URI links, trademarks).
83. Master Lease Agreement between Dell Financial Services L.P. and NCI dated
11/01/98 (equipment, software, support).
3.12(a)(ii) (Employment, Severance or Consulting Agreements)
84. Employment Letter Agreement, dated as of October 4, 2002, between Network
Communications, Inc. and Gerard Parker (Severance - 6 months salary).
85. Employment Agreement, dated as of June 28, 2002, by and among the Company,
Network Communications, Inc. (as successor in interest to Gallarus Media,
Inc.) and Dan McCarthy. (Severance - 1 year salary).
86. Amendment No. 1, dated as of July 8, 2003, to the Employment Agreement,
dated as of June 28, 2002, by and among the Company, Network
Communications, Inc. (as successor in interest to Gallaras Media, Inc.) and
Dan McCarthy.
3.12(a)(iii) (Agreements creating Indebtedness or Encumbrances)
87. Loan Agreement, dated as of June 24, 2004, by and among the Company,
Network Communications, Inc., Toronto Dominion (Texas), Inc. (as
Administrative Agent), TD Securities (USA), Inc. (as Lead Arranger and Book
Runner), National City Bank (as Syndication Agent) and the lenders named
therein.
88. Parent Guaranty, dated as of June 24, 2004, between the Company and Toronto
Dominion (Texas), Inc.
89. Subsidiary Guaranty, dated as of June 24, 2004, between the NCID, LLC and
Toronto Dominion (Texas), Inc.
90. Borrower Security Agreement, dated as of June 24, 2004, between Network
Communications, Inc. and Toronto Dominion (Texas), Inc.
91. Parent Security Agreement, dated as of June 24, 2004, between the Company
and Toronto Dominion (Texas), Inc.
92. Subsidiary Security Agreement, dated as of June 24, 2004, between NCID, LLC
and Toronto Dominion (Texas), Inc.
93. Borrower Pledge Agreement, dated as of June 24, 2004, between Network
Communications, Inc. and Toronto Dominion (Texas), Inc.
94. Parent Pledge Agreement, dated as of June 24, 2004, between the Company and
Toronto Dominion (Texas), Inc.
95. Subsidiary Pledge Agreement, dated as of June 24, 2004, between NCID, LLC
and Toronto Dominion (Texas), Inc.
96. Trademark Security Agreement, dated as of June 24, 2004, between Network
Communications, Inc. and Toronto Dominion (Texas), Inc.
97. Copyright Security Agreement, dated as of June 24, 2004, between Network
Communications, Inc. and Toronto Dominion (Texas), Inc.
98. Patent Security Agreement, dated as of June 24, 2004, between Network
Communications, Inc. and Toronto Dominion (Texas), Inc.
99. Lockbox and Deposit Account Control Agreement, dated as of July 13, 2004,
by and among Bank of America, N.A., Network Communications, Inc. and
Toronto Dominion (Texas), Inc.
3.12(a)(iv) (Change of Control)
100. See disclosure items 52 and 97 on this Schedule 3.12(a).
101. Lease between Daan Elmhurst, LLC and Network Publications, Inc. dated as of
June 2000, as amended on September 1, 2003.
102. Lease Agreement (Florence, Kentucky location) between Dailey and Fussinger
Properties, LLC and Network Communications, Inc. dated as of August 1,
2004.
103. Lease between East 40th Business Center LLC and Network Communications,
Inc., dated July 15, 2004.
104. Lease between Ming Properties, Inc. and Black's Guide, dated 6/1/99.
3.12(a)(v) (Non-compete and Non-solicitation)
105. See disclosure item 11 on Schedule 3.11 (a).
106. See Schedule 3.15(d).
3.12(a)(vi) (Director, Officer or Stockholder Agreements)
107. See disclosure items 8-13 and 15-24 on Schedule 3.6(b).
108. Termination Agreement, dated as of December 16, 2004, by and between Daniel
R. McCarthy and Network Communications, Inc.
Schedule 3.12(b)
Material Contract Enforceability
Known Violation of a Contract
See disclosure item 2 on Schedule 3.1l(d).
Schedule 3.13
Employee Benefit Plans
1. Network Communications, Inc. Welfare Benefit Plan (a/ka Network
Publications, Inc. Flexible Benefit Plan) (provides medical, life,
accidental, death and dismemberment, short and long term disability,
dental, vision and cancer/intensive care benefits).
2. Network Communications Inc. Section 125 Plan (a/k/a Network Publications,
Inc. Pre-Tax Benefit Plan) (expected to be restated in December 2004 as the
Network Communications, Inc. Flexible Benefits Plan).
3. Network Publications, Inc. Pre-Tax Benefit Plan Section 125 Plan.
4. Workers Compensation.
5. Network Communications, Inc. 401(k) Plan.
6. Vacation.
7. Personal/Sick.
8. Holidays.
9. Family Medical Leave.
10. Personal Leave of Absence.
11. Jury Duty Leave.
12. Military Leave.
13. Bereavement.
14. A number of employees receive commissions on sales or collections, profit
sharing, or other incentive compensation based on performance.
15. Equity incentive share grants pursuant to the stock purchase agreements
referenced in disclosure items 17-24 on Schedule 3.6(b).
16. The Company has no formal severance plan but has offered severance on an ad
hoc basis in exchange for releases.
17. Senior management incentive compensation plan and profit sharing program.
Schedule 3.14(a)
Properties; Assets
The properties and assets of the Company and Company Subsidiaries are subject to
Encumbrances pursuant to the following agreements and documents:
1. Loan Agreement, dated as of June 24, 2004, by and among the Company,
Network Communications, Inc., Toronto Dominion (Texas), Inc. (as
Administrative Agent), TD Securities (USA), Inc. (as Lead Arranger and Book
Runner), National City Bank (as Syndication Agent) and the lenders named
therein.
2. Parent Guaranty, dated as of June 24, 2004, between the Company and Toronto
Dominion (Texas), Inc.
3. Subsidiary Guaranty, dated as of June 24, 2004, between the NCID, LLC and
Toronto Dominion (Texas), Inc.
4. Borrower Security Agreement, dated as of June 24, 2004, between Network
Communications, Inc. and Toronto Dominion (Texas), Inc.
5. Parent Security Agreement, dated as of June 24, 2004, between the Company
and Toronto Dominion (Texas), Inc.
6. Subsidiary Security Agreement, dated as of June 24, 2004, between NCID, LLC
and Toronto Dominion (Texas), Inc.
7. Borrower Pledge Agreement, dated as of June 24, 2004, between Network
Communications, Inc. and Toronto Dominion (Texas), Inc.
8. Parent Pledge Agreement, dated as of June 24, 2004, between the Company and
Toronto Dominion (Texas), Inc.
9. Subsidiary Pledge Agreement, dated as of June 24, 2004, between NCID, LLC
and Toronto Dominion (Texas), Inc.
10. Trademark Security Agreement, dated as of June 24, 2004, between Network
Communications, Inc. and Toronto Dominion (Texas), Inc.
11. Copyright Security Agreement, dated as of June 24, 2004, between Network
Communications, inc. and Toronto Dominion (Texas), Inc.
12. Patent Security Agreement, dated as of June 24, 2004, between Network
Communications, Inc. and Toronto Dominion (Texas), Inc.
13. Lockbox and Deposit Account Control Agreement, dated as of July 13, 2004,
by and among Bank of America, N.A., Network Communications, Inc. and
Toronto Dominion (Texas), Inc.
Schedule 3.14(b)
Leased Real Property
See attached.
Page 1 of 3
NETWORK COMMUNICATIONS, INC.
OFFICE LIST
ACCOUNT LEASOR STATE LEASE ADDRESS INSURANCE
------- ------ ----- ------------- ---------
12/03/01: They do not pay a
lease - they trade out 2
pages of advertising for 1236 Blue Ridge Blvd. $ 15,000
AF/MLC 603143 & 604118 lease space AL Birmingham, AL
3020 Old Ranch Parkway, $ 15,000
Suite 3334, Seal Beach,
TREB 608201 Access Offices, Inc. CA CA
Unique 701025 Unilev Management Corp. CA 720 Wilshire Blvd $ 50,000
#205, Santa Monica, CA
Unique 701025 Koll Santa Monica Assoc CA 2020 Santa Monica Blvd. $ 0
Sublease #460, Santa Monica, CA
603158, 607518, 607516, 607550 East 40th Business Clr LLC CO 10525 E 40th Ave #202 $ 50,000
603158, 607518, 607516, 607550 & 203, Denver, CO
NHF, AF 603158, 607518, 607516, 607550, 607501
Distributor 603158, 607518, 607516, 607550, 607501
TREB 603158, 607518, 607516, 607550, 607501
603158, 607518, 607516, 607550, 607501
AF 603137 Neutamp Properties FL 8411 Sunstate St, $ 15,000
Tampa, FL
Blacks 8070133 Austin Company FL 1411 North Westshore $ 15,000
Suite 209, Tampa FL
FL 3810 Inverrary Blvd; Suite 15000
Blacks 8070133 Ming Properties 304, Lauderhill, FL
FL 371 N Royal Poinclana $ 50,000
Unique 701025 Royal Poincrana Building. Inc. Blvd, Miami Springs, FL
AF, TREB 607617 & 607719 Hooker-Moore Properties FL 649 W. Michigan Ave $ 50,000
NHF MLC 603184 & 604152 Orlando, FL 32809
Blacks 807017 Highwoods Realty Ltd. GA 1770 Century Circle $ 15,000
GA 30345
GA 2304 Newpoint Prkwy,
1001001 Pace Conversion Lawrenceville, GA $ 535,500
GA 2305 Newpoint Prkwy,
1001001 Pace Conversion Lawrenceville, GA $18,435,500
TREB 600602 Plaza 85 GA Norcross, GA 6000 Unity $ 50,000
Dr/Id.
IA Apt 105, 4524 E.P.True $ 15,000
Parkway West Des Moinas,
AF Wellington Apartment Homes IA 50265
IL 790 Frontage Road, Suite
Blacks 807050 Business Network Center 304, Northfield, IL 80083 $ 15,000
IL 747 Church Rd #E4 $ 50,000
TREB 607401 Da Eimhurst LLC Eimhurst, IL
COST PER
MONTHLY NOTICE OF SQUARE NO. OF
TERM OF LEASE PAYMENT DATES OF RATE CHANGE SQ. FEET FOOTAGE EMP.
------------- ------- ------------- --------- -------- -------- -----
AF/MLC No Lease N/P 3
TREB 7/01/04 - 1/30/05 $ 713.00 7/01/04-1/30/05 11/01/04 1
Unique 12/15/04 - 4/30/07 $2,766.00 2/15/04-2/14/05 01/01/05 1,080 $31.20
$2,838.66 2/15/05-2/14/06 01/01/06 1,060 $32.14
$2,923.84 2/15/06-4/30/07 01/01/07 1,080 $33.10 4
Unique 12/15/00 - 12/14/05 $8,514.00 12/14/00-12/15/01
Sublease $8,769.42 12/15/01-12/14/02 3,096
$8,032.50 12/15/02-12/14/03
$9,303.48 12/15/03-12/14/04 11/15/04
$9.582.58 12/15/04-12/14/05 11/15/05
1/16/03 - 8/30/07 $ 861.94 1/16/03-1/31/03
$1,282.50 2/01/03-6/30/03 06/01/03 5,209 $2.95 13
NHF, AF $3,396.87 7/01/03-6/30/04 06/01/04 $7.83
Distributor $3,507.39 7/01/04-6/30/05 06/01/05 $8.08
TREB $3,615.91 7/01/05-6/30/06 04/01/06 $8.33
$3,678.08 7/01/05-6/30/07 04/01/07 $8.47
AF 2/01/04-1/31/07 $1,610.57 2/01/04-1/31/05 11/30/05 2,125 $8.50 5
$1,656.88 2/01/05-1/31/06 11/30/06 2,125 $8.76
$1,708.66 2/01/06-1/31/07 11/30/05 2,125 $9.02
Blacks 7/01/04-12/31/05 $1,018.50 1/01/04-12/31/04 11/01/04 873 $14.00 2
$1,054.88 1/04/05-12/31/05 11/01/05 873 $14.50
Blacks 6/01/02-5/31/05 bartered 6/01/02-5/31/05 04/01/05 1,512 bartered 3
Unique month to month $ 581.50 month to month N/A 400 $17.45 3
AF, TREB 2/1/03-1/31/08 $2,500.00 2/01/03-2/01/04 01/01/04 3,000 $10.00 8
NHF MLC $2,625.00 2/02/04-2/01/05 01/01/05 $10.50
$2,758.00 2/02/05-2/01/08 01/01/06 $11.02
$2,894.00 2/02/06-2/01/07 01/01/07 $11.58
$3,039.00 2/02/07-2/01/08 12/01/07 $12.16
Blacks 11/01/04-10/31/07 $1,088.88 11/01/04-10/31/05 09/01/02 $15.45
$1,121.55 11/01/05-10/31/06 09/01/03 846 $15.91 4
$1,155.20 11/01/06-10/31/07 09/01/04 $16.39
N/A
N/A
TREB 6/01/01-5/31/07 $1,254.17 6/01/04-5/31/05 04/30/05 $7.00
$1,304.33 6/01/05-5/31/06 04/30/06 2,150 $7.28 3
$1,356.20 6/01/06-5/31/07 04/30/07 $7.57
AF
10/1/04-9/30/06 bartered 10/1/04-9/30/06 08/01/06 $0.00 2
Blacks 10/01/03-9/30/04 $ 0.00 10/01/03-9/30/04 08/01/04 225 0
TREB 8/1/03-8/31/06 $2,743.00 6/1/03-8/01/03 2,258 $14.50 9
$ 0.00 9/01/03-9/30/03 08/01/03 $0.00
$2,743.00 10/01/03-8/31/04 08/01/04 $14.58
Page 2 of 3
NETWORK COMMUNICATIONS, INC.
OFFICE LIST
ACCOUNT LEASOR STATE LEASE ADDRESS INSURANCE TERM OF LEASE
-------- ----------------------------- ----- --------------------------- --------- -------------------
KCH&G 750101 Dave Leathers KS 5301 W. 75th Street
Prairie Village, KS 66208 $ 50,000 7/14/03 - 7/31/06
TREB 608101 Dailey & Fussinger Properties KY 4895 Houston Road, Suite
102, Florence, KY 41042 $ 15,000 10/01/04 - 9/30/07
AF 603121 St. Mathews Executive Suites KY 4500 Bowling Boulevard,
Suite 100
Louisville, KY 40207 $ 15,000 11/01/03 - 10/31/06
BLACKS 807001 Butera MO 444 North Fredrick
Ave #240,
Galthersburg, MO $235,000 5/27/98 - 7/31/06
AF 603229,
603290 8401 Westwood Associates MN Westwood Lake Office Park
Suite 330, Bldg. 8401
Minneapolis, MN 55401 $ 15,000 10/01/04 - 1/31/08
AF
W/DIST MGR
FOR AF & TREB 603196 Balias Place, LLC MO 425 N. New Ballas Rd
#215, Creve Coaur, MO $ 15,000 6/1/03 - 5/31/06
TREB 607901 CGM Smith LLC MO 1673 Larkin Williams Road,
Fenton, MO 63026 $ 50,000 9/01/04 - 7/31/07
TREB 607628 Pat O'Mire Properties MS 407 Orchard Park Drive,
Bldg 3, Suite C, Ridgeland,
MS $ 15,000 month to month
TREB 607234 Bollinger Corporation, Inc. NC 7 N Main St #101 & #103,
Granile Falls, NC $ 15,000 1/15/04 - 1/31/08
AF 603117 Brachwood Investments LLC NC 2606 Branchwood Dr,
Greensboro, NC $ 15,000 5/1/02 - 4/30/05
AF. NHF 603217 &
603110 &
607716 &
605115 PimeBrook NC 8334-1 Arrowridge Blvd,
Charlotte, Nc $ 84,000 11/01/00 - 11/01/05
AF 603161 Masonboro Station NC 4037 Masonboro Loop Rd.,
Suite 2-C, Willmington, NC
28412 $ 15,000 4/01/04 - 3/31/05
TREB 607201 Reeder Property Management NC 1206-D E, Mountain St.
Kemersville, NC $ 50,000 8/01/02 - 7/31/05
TREB 607233 Ticon-Thomas Partnership NC 3622 Lyckan ParkwaySuite
3005-D, Building 3000,
Durham, NC 27713 $ 15,000 6/01/03 - 5/31/05
TREB 607232 The Tar Heel Companies of NC NC 7424 Chapel Hill Rd Office
Bldg #100 & 101, Ralergh,
NC $ 15,000 10/01/04 - 9/30/05
UNIQUE 701025 Hillon Reality Co of Priceton NJ 000 Xxxx Xx.
Xxxxxxxxx, XX $ 50,000 1/01/04 - 12/31/08
COST
NOTICE PER
MONTHLY OF SQ SQUARE NO. OF
PAYMENT DATES OF RATE CHANGE FEET FOOTAGE EMP.
---------- ------------------- --------- ----- ------- ------
$ 2,825.00 9/01/04 - 8/31/05 08/01/05 $15.01
$ 2,910.00 9/01/05 - 8/31/06 06/01/06 $15.47
KCH&G $ 4,000.00 7/14/03 - 7/31/04 06/01/04 2,400 $20.00 9
$ 4,320.00 8/01/04 - 7/31/05 06/01/05 $21.60
$ 4,665.00 8/01/05 - 7/31/06 01/01/06 $23.33
TREB $ 2,185.16 10/01/04 - 9/30/05 08/15/05 1,638 $16.03 9
$ 2,253.33 10/01/05 - 9/30/06 08/15/06 $16.53
$ 2,321.50 10/01/06 - 9/30/07 07/01/07 $17.03
AF
$ 500.00 11/01/03 - 10/31/06 08/01/06 2
BLACKS $11,355.64 8/01/02 - 7/31/03 06/01/03
$11,555.00 8/01/03 - 7/31/04 06/01/04 5,601 $23.90 20
$11,901.00 8/01/04 - 7/31/05 06/01/05 $24.62
$12,258.00 8/01/05 - 7/31/06 06/01/06 $25.36
AF
$ 1,398.00 10/1/04 - 9/30/05 08/15/05 1,398 $12.00 4
$ 1,514.50 10/1/05 - 9/30/06 08/15/06 $13.00
$ 1,631.00 10/01/07 - 9/30/07 08/15/07 $14.00
$ 1,669.25 10/01/07 - 1/31/08 10/01/06 $14.50
AF
W/DIST MGR $ 2,101.33 6/1/03 - 5/31/04 04/01/04 1,576 $16.00 9
FOR AF & TREB $ 2,495.33 6/1/04 - 5/31/05 04/01/05 $19.00
$ 2,626.27 6/1/05 - 5/31/06 04/01/06 $20.00
TREB
$ 2,000.00 9/01/04 - 7/31/07 05/01/07 2,000 $12.00 9
TREB
$ 600.00 month to month 500 $14.40 2
TREB
$ 475.00 1/15/04 - 1/31/09 12/04/08 475 $12.00 3
AF
$ 850.00 5/1/02 - 4/30/05 01/30/05 500 $20.40 2
AF. NHF
$ 2,655.00 11/01/00 - 11/01/05 09/01/05 4,860 $ 6.56 7
AF
$ 375.00 4/01/04 - 3/31/05 02/01/05 120 $37.50 1
TREB
$ 1,350.00 8/01/02 - 7/31/05 08/01/05 2,050 $ 7.90 13
TREB
$ 366.13 6/01/03 - 5/31/04 04/01/04 303 $14.50 1
$ 377.11 6/01/04 - 5/31/05 02/01/05 $14.94
TREB
$ 500.00 10/01/04 - 9/30/05 08/01/04 375 $16.00 3
UNIQUE $ 2,519.26 1/01/04 - 12/31/04 12/01/04 3,160 $ 9.57
$ 2,691.77 1/1/05 - 12/31/05 12/01/05 3,160 $10.07
$ 2,783.43 1/1/08 - 12/31/06 12/01/06 3,160 $10.57
$ 2,915.10 1/1/07 - 12/31/07 12/01/07 3,160 $11.07
$ 3,046.77 1/1/08 - 12/31/08 11/01/08 3,160 $11.57 10
Page 3 of 3
NETWORK COMMUNICATIONS, INC.
OFFICE LIST
ACCOUNT XXXXXX STATE LEASE ADDRESS INSURANCE
------- ------ ----- ------------- ---------
AF 603225, 603226, Xxxx X. Xxxxxxxxx NY 00 Xxxxxxx Xxxxxx $50,000
603227, 603228 Spencerport, NY
AF 603231 Regus Business Centres Corp OH 4449 Easton Way, $15,000
Xxxxxxxx, XX
000000 Park on Man OK 0000 Xxxx Xxxx, Xxxxx 000 $15,000
& 104 Xxxxxx, XX 00000
BLACKS 8070212 Xxx Xxxxxxxx PA 0000 Xxxx Xxxxxxx Xxxx, $15,000
2nd Floor, Broomall, PA
AF 603218 Sergeant Jasper Apartments SC 310, Broad St# 7, $15,000
Charleston, SC
TREB 607216 & 607219 Xxxxxx X. Xxxxxxxxxx SC 402-3 (A) Pendetion Rd $15,000
Xxxxxxx, XX 00000
AF 603219, 603146 Xxxxxx X. Xxxxxx/ Xxxx Inc. SC 2800 Xxxx River Rd, # 1B, $15,000
Xxxxxxxx, XX 00000
TREB, AF, 603220, 607220, 607717 Menovan Executive Suites SC 1200 Xxxxxxxx Xx, Stah H- $15,000
25, Greenville, SC
AF, NHF, TREB 607301, 701025, 604119, Kennington Properties TX 4950 Xxxxxx Springs $50,000
UNIQUE 603190, 603195 # 40 Xxxxxxx, XX 00000
BLACKS 000000 Xxxxxxxx Xxxx Xxxxxx XX 00000 Addison Road, Suite $15,000
000, Xxxxxx Xxxxx
UNIQUE 701025 Executive Business Services TX 0000 Xxx Xxxxxx, Xxxxx x00,000
000, Xxxxxxx, XX 00000
BLACKS 8070110 DAP Plaza Limited TX 00 Xxxx Xxxxxx Xxxx, $15,000
Suite 264, Houston, TX
TREB 607318 Xxxxx County Properties LLC TX 0000 Xxx 00 Xxxxx #0000, $15,000
Xxxxxxxxxx, XX 00000
TREB 607217 & 607218 Virginia Real Estate Inc. VA 000-X Xxxxxxxxx Xxxx, $15,000
Richmond, VA
AF 603160 Northwest Investments WA 0000 XX 0xx Xxx # X000, $15,000
A213, X000, Xxxxxxxxx, XX
AF 00000 Xxxxxxx Xxxxxxxx Xxxxxxx XX 00000 X.X. 00xx Xx., Xxxxx x00,000
000, Xxxxxxxx, XX 00000
TREB Xxxx Xxxxxxx Xxxxxx XX Xxxxx 000, 00000 Xxxx $20,000
Xxxxxxx Xxxx, XX 00000
COST PER
MONTHLY NOTICE OF SQUARE NO. OF
TERM OF LEASE PAYMENT DATES OF RATE CHANGE SQ. FEET FOOTAGE EMP.
------------- ------- ------------- ------ -------- ------- ----
AF 4/01/04-3/31/07 $1,100.00 4/01/04-3/31/07 01/01/07 3,300 $ 4.00 10
AF 4/01/04-3/31/06 $1,016.88 4/01/04-3/31/O6 01/01/06 2
9/01/04 - 2/28/04 $1,062.00 9/01/04-2/28/04 12/01/04 3
BLACKS 11/01/97-10/31/00 $ 865.28 month to month 500 $2O.77 2
AF 4/1/02-3/31/03 $ 745.75 4/1/02-3/31/03
4/1/03-3/31/04 $ 783.04 4/1/03-3/31/04 03/31/04 570 $16.49 3
4/1/04-3/31/05 $ 822.19 4/1/04-3/31/05 02/01/05 $17.31
TREB 7/01/02-6/30/05 $ 375.00 7/01/02- 6/30/03
$ 395.00 7/1/03-6/30/04 6/1/2004 400 $11.85 2
$ 415.00 7/1/04-6/30/05 01/01/05 $12.45
AF 12/01/01-11/30/02 $ 550.00 12/01/01-11/30/02 month to month 830 $ 7.95 3
TREB, AF, 12/01/01-12/31/04 $1,428.25 12/01/01-12/31/04 10/01/04 2270 $ 7.54 7
AF, NHF, TREB 7/01/02-6/30/07 $4,155.00 7/01/02-6/30/04 08/01/04 4,225 $11.80 28
UNIQUE $4,245.00 7/01/04-6/30/05 06/01/05 $12.O8
$4,330.00 7/01/05-6/30/07 03/30/07 $12.30
BLACKS 10/01/O1-9/30/04 $ 0.00 10/01/04-10/30/04 01/01/04 990 $16.00 3
$1,320.00 11/01/04-12/30/07 $16.00
UNIQUE 12/1/04-5/31/05 $ 828.00 12/1/04-8/31/05 03/01/05 1
BLACKS 8/01/04-7/31/05 bartered 8/01/04-7/31/05 05/01/05 490 -- 3
TREB 1/1/04-12/31/04 $ 750.00 1/1/04-12/31/04 10/01/04 532 $19.23 3
TREB month to month $ 660.00 month to month Expired 500 $15.84 3
AF 08/25/01-O8/31/06 $ 830.00 08/25/01-08/31/08 03/01/06 453 $21.99 3
AF 4/12/04-3/31/O5 $2,185.00 4/12/04-3/31/05 01/01/05 780 $33.62 5
TREB 8/31/04-3/11/05 $1,OO0.00 5/31/04-3/11/05 02/01/05 3
Schedule 3.15(a)
Highly Compensated Employees
1. Xxxxxx XxXxxxxx
2. Xxxxxx Xxxxxx
3. Xxxxxx Xxxxxxxxx
4. Xxxxx Xxxxx
5. Xxxxxx Xxxxxxxxx
6. Xxxx Xxxxxx
7. Xxxxxxx Xxxxxxx
Schedule 3.15(b)
Labor Relations
None.
Schedule 3.15(d)
Non-Competition Agreements with Employees
The following employees have non-compete provisions contained in their stock
purchase agreements:
1. Xxxxxx Xxxxxx.
2. Xxxxxx Xxxxxxxxx.
3. Xxxxx Xxxxx.
4. Xxxxxx Xxxxxxxxx.
5. Xxxxx Xxxxx.
6. Xxxxx Xxxx.
7. Xxx Xxxxxxxx.
Other Employees
8. Employees of the Company execute customary non-compete and non-solicitation
agreements.
Other Agreements
9. Non-Competition Agreement Exhibit l, dated as of September 2, 2003, between
Network Communications, Inc. and Xxxxx Xxxxxx.
10. Agreement, dated as of August 27, 2004, between Network Communications,
Inc. and Xxxxxx Xxxxxx.
11. Agreement, dated August 5, 1998, between Network Communications, Inc. (as
successor in interest to Network Publications, Inc.).
12. Black's Guide Inc Employee Trade Secrets and Non-Competition Agreement,
dated as of April 24, 2000, between Network Communications and Xxxxx
Xxxxxxx.
Schedule 3.16
Environmental Matters
None.
Schedule 3.17
List of Insurance Policies
1. Director's & Officer's Liability
2. Crime
3. Automobile
4. General Liability
5. Printers
6. Workers Comp
7. Umbrella
8. 401k Bond
9. Property
Schedule 3.18
Affiliate Transactions
See disclosure items 7-13 and 15-24 on Schedule 3.6(b).
See disclosure item 108 on Schedule 3.12(a).
Schedule 6.1
Affirmative Covenants of the Company
None.
Schedule 6.2
Negative Covenants of the Company
1. Prior to December 17, 2004, the Company will enter into a short term
outsourcing agreement with Resources Connection for the temporary placement
of a Human Resources Director.
2. Network Communications, Inc. entered into an Administrative Services
Agreement with Paragon Benefits, Inc. to become effective as of January 1,
2005. Pursuant to such agreement, as of January 1, 2005, Paragon Benefits,
Inc. will administer the Network Communications, Inc. Flexible Benefits
Plan.
Schedule 8.2(c)(iii)
Certain Consents
None.
