EXHIBIT 10.1
MASTER TRANSACTION AGREEMENT
BY AND AMONG
INFONAUTICS, INC.
INFONAUTICS CORPORATION,
BELL & HOWELL COMPANY
AND
BELL & HOWELL INFORMATION AND LEARNING COMPANY
DATED JULY 8, 1999
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS............................................................2
ARTICLE II RELATED AGREEMENTS AND CLOSING.........................................2
2.1 Organizational Documents...................................................2
2.2 Capitalization Agreements..................................................2
2.3 BHIL Services Agreement....................................................3
2.4 EDCO Services Agreement....................................................4
2.5 INFO Transition Support Services...........................................4
2.6 BHIL License Agreements....................................................4
2.7 EDCO and INFO License Agreements...........................................4
2.8 Online Publishing Asset Purchase Agreement.................................4
2.9 Covenant Not to Compete....................................................5
2.10 Other Documents............................................................5
2.11 Definitive Agreements......................................................6
2.12 Closing....................................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF INFO.................................6
3.1 Authority..................................................................6
3.2 Validity...................................................................7
3.3 Due Organization...........................................................8
3.4 Financial Information......................................................8
3.5 Brokers and Finders........................................................8
3.6 Opinion of Financial Advisor...............................................8
3.7 Information for Proxy Statement............................................9
3.8 Board Approval.............................................................9
3.9 Representations and Warranties.............................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BHW AND BHIL.........................9
4.1 Authority.................................................................10
4.2 Validity..................................................................10
ii
4.3 Due Organization..........................................................11
4.4 Financial Information.....................................................11
4.5 Brokers and Finders.......................................................11
4.6 Information Supplied for Proxy Statement..................................11
4.7 Representations and Warranties............................................12
ARTICLE V INTERIM AGREEMENTS....................................................12
5.1 Interim Conduct of the Contributed Business...............................12
5.2 Access....................................................................15
5.3 Corporate Approval........................................................17
5.4 Agreements To Cooperate...................................................17
5.5 Public Statements.........................................................17
5.6 Notifications.............................................................18
5.7 Proxy Statement; Shareholders Meeting.....................................18
5.8 Alternative Proposals.....................................................18
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF INFO...........................20
6.1 Shareholder Approval......................................................20
6.2 Accuracy of Warranties and Performance of Covenants.......................20
6.3 No Pending Action.........................................................20
6.4 Consents..................................................................21
6.5 Regulatory Approvals......................................................21
6.6 Litigation................................................................21
6.7 Audited Financial Statements..............................................21
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS
OF BHW AND BHIL.......................................................21
7.1 Shareholder Approval......................................................22
7.2 Accuracy of Warranties and Performance of Covenants.......................22
7.3 No Pending Action.........................................................22
7.4 Consents..................................................................22
7.5 Regulatory Approvals......................................................22
iii
7.6 Litigation................................................................23
7.7 Audited Financial Statements..............................................23
ARTICLE VIII TERMINATION BY PARTIES PRIOR TO CLOSING...............................23
8.1 Termination...............................................................23
8.2 Termination Fees..........................................................25
8.3 Effect of Termination.....................................................25
ARTICLE IX POST CLOSING AGREEMENTS...............................................26
9.1 Working Capital...........................................................26
9.2 Confidentiality...........................................................26
9.3 EDCO Board of Directors...................................................27
9.4 INFO End-User Business....................................................27
9.5 Employees.................................................................28
9.6 Records and Documents.....................................................29
ARTICLE X DISSOLUTION OF ALLIANCE...............................................29
10.1 BHW Call..................................................................29
10.2 INFO Put..................................................................29
10.3 Right of First Offer......................................................30
ARTICLE XI GENERAL PROVISIONS....................................................31
11.1 Amendments and Waiver.....................................................31
11.2 Notices...................................................................31
11.3 Expenses..................................................................33
11.4 Counterparts..............................................................34
11.5 Captions..................................................................34
11.6 Successors and Assigns....................................................34
11.7 Entire Transaction........................................................34
11.8 Applicable Law............................................................34
11.9 Other Rules of Construction...............................................35
11.10 Partial Invalidity........................................................35
11.11 Authorship................................................................35
iv
EXHIBITS
Exhibits Name Section
- -------- ---- -------
A Certificate of Incorporation of EDCO Inc. 2.1.1
B Bylaws of EDCO Inc. 2.1.1
C Form of Bill of Sale, Assignment and 2.2.1
Assumption and Indemnity Agreement
D-1 BHIL Technical Services Agreement 2.3.1
D-2 BHIL Non-Technical Support Services 2.3.2
Agreement
D-3 Representation Agreement 2.3.3
E-1 EDCO Technical Services Agreement 2.6
E-2 EDCO Non-Technical Support Services
F BHIL Content License Agreement 2.5
G BHIL Software License 2.6
H EDCO Content License Agreement 2.7.2
I EDCO Software and Technology License 2.8
J-1 Online Publishing License Agreement 2.9.3
J-2 INFO Sleuth Software and Technology
License
L INFO Noncompetition Agreement 9.1.1
M EDCO Noncompetition Agreement 9.1.2
N BHIL Noncompetition Agreement 9.1.1
v
O Online Noncompetition Agreement
P Form of Services Agreement
Q Form of License Agreement
SCHEDULES
Schedules Name Section
- --------- ---- -------
BHW1 BHIL Contributed Assets 2.2.1(a)(i)
BHW2 BHIL Transferred Contracts 2.2.1(b)(i)
BHW3 BHIL Transferred Liabilities and Other 2.2.1(c)(i)
Obligations
INFO1 INFO Contributed Assets 2.2.1(a)(i)
INFO2 INFO Transferred Contracts 2.2.1(b)(ii)
INFO3 INFO Transferred Liabilities and Other 2.2.19c)(iii)
Obligations
OPB1 OPB Assets 2.9
OPB2 OPB Contracts 2.9
OPB3 OPB Liabilities and Other Obligations 2.9
ANNEX
Annex Name Section
- ----- ---- -------
A Glossary 1
vi
MASTER TRANSACTION AGREEMENT*/
This Master Transaction Agreement is made and entered into this 8th day of July,
1999 by and among INFONAUTICS, INC., a Pennsylvania corporation ("INFO"),
INFONAUTICS CORPORATION, a Pennsylvania corporation ("INFO Corporation"), BELL &
HOWELL COMPANY, a Delaware corporation ("BHW") and BELL & HOWELL INFORMATION AND
LEARNING COMPANY, a Delaware corporation ("BHIL").
WHEREAS, upon the terms and subject to the conditions set forth herein, EDCO
will engage in the business, operations and activities incident to the
development and operation of the EDCO Business as contemplated by this Master
Transaction Agreement and the Exhibits hereto (the "Related Agreements");
WHEREAS, upon the terms and subject to the conditions set forth herein and in
the Related Agreements, EDCO will acquire:
(i) from BHIL, the BHIL Contributed Business pursuant to the
Bill of Sale, Assignment and Assumption and Indemnity
Agreement to be entered into by and between EDCO and
BHIL (the "BHIL Capitalization Agreement"); and
(ii) from INFO, the INFO Contributed Business pursuant to the
Bill of Sale, Assignment and Assumption and Indemnity
Agreement to be entered into by and between EDCO and
INFO Corporation (the "INFO Capitalization Agreement"),
WHEREAS, upon the terms and subject to the conditions set forth herein and in
the Related Agreements, BHIL will acquire from INFO the INFO Online Publishing
Business; and
WHEREAS, the parties desire to make certain representations and warranties to
one another and provide for the coordination of the closing of all the
transactions contemplated by this Master Transaction Agreement and the Related
Agreements;
NOW, THEREFORE, in consideration of the premises, representations and promises
herein contained, the parties mutually agree as set forth below:
- --------
*/Certain portions of this Exhibit 10.1 have been omitted based upon the
Company's request for confidential treatment. These omitted portions will be
separately filed with the Securities and Exchange Commission.
1
ARTICLE I
DEFINITIONS
For purposes of this Master Transaction Agreement, unless the
language or context clearly indicates that a different meaning is intended, the
words, terms and phrases used with initial capital letters shall have the
meanings set forth in the Glossary attached as Annex A which definitions are
incorporated herein by reference.
ARTICLE II
RELATED AGREEMENTS AND CLOSING
2.1 ORGANIZATIONAL DOCUMENTS.
2.1.1 BHW will cause BHIL to organize a new entity called EDCO, Inc., the
Certificate of Incorporation and Bylaws of which are attached hereto as Exhibit
A and B, respectively. Notwithstanding the foregoing, the parties may determine
to form EDCO as a limited liability company or as another type of entity. The
parties agree that if they decide to use another type of entity for EDCO, the
parties will use their reasonable best efforts to create and execute
organizational documents that are substantially equivalent to the Certificate of
Incorporation and Bylaws attached hereto as Exhibits A and B. The parties
currently intend EDCO to be a limited liability company organized pursuant to
the Laws of the State of Delaware. Upon the organization of EDCO, BHW or BHIL
and INFO shall cause EDCO to ratify and accept this Master Transaction Agreement
and the Related Agreements and perform the duties and obligations set forth
therein.
2.1.2 In exchange for $16.5 million cash and contributing the BHIL Contributed
Business to EDCO, BHIL will receive seven thousand three hundred (7,300) shares
of the Stock of EDCO.
2.1.3 In exchange for contributing the INFO Contributed Business to EDCO, INFO
will receive from EDCO a cash payment of $20 million and two thousand seven
hundred (2,700) shares of the Stock of EDCO. The cash payment shall be by wire
transfer of immediately available funds to a bank account designated by INFO in
writing.
2.2 CAPITALIZATION AGREEMENTS.
2.2.1 The INFO Capitalization Agreement and the BHIL Capitalization Agreement
shall be executed and delivered at Closing by, in the case of the INFO
Capitalization Agreement, INFO and EDCO and, in the case of the BHIL
Capitalization Agreement, by BHIL and EDCO. Each of the Capitalization
Agreements shall be substantially in the form of the Bill of Sale, Assignment
and
2
Assumption and Indemnity Agreement, a form of which is attached hereto Exhibit
C, and which shall be referred to as the Capitalization Agreements when
completed as appropriate with the name of the proper parties and when the
appropriate Schedules, as contemplated by this Subsection 2.2.1, are attached
thereto. The Capitalization Agreements shall provide for:
(a) the transfer of assets to EDCO listed:
(i) in the case of assets to be contributed by BHIL, on
Schedule BHW1 hereto, and
(ii) in the case of assets to be contributed by INFO, on
Schedule INFO1 hereto; and
(b) the assignment to EDCO and assumption by EDCO of the contracts and
related obligations listed:
(i) in the case of contracts and related obligations to be
transferred to EDCO by BHIL, on Schedule BHW2 hereto,
and
(ii) in the case of contracts and related obligations to be
transferred to EDCO by INFO, on Schedule INFO2 hereto;
and
(c) the assignment to EDCO and assumption by EDCO of the liabilities
and other obligations listed:
(i) in the case of liabilities and other obligations to be
assumed by EDCO from BHIL, on Schedule BHW3 hereto, and
(ii) in the case of liabilities and other obligations to be
assumed by EDCO from INFO, on Schedule INFO3 hereto.
2.3 BHIL SERVICES AGREEMENT.
2.3.1 At Closing, BHW will cause BHIL to enter into a BHIL Technical Services
Agreement with EDCO containing the terms set forth in Exhibit D-1 and in
substantially the form set forth in Exhibit P.
2.3.2 At Closing, BHW will cause BHIL to enter into a BHIL Non-Technical Support
Services Agreement with EDCO containing the terms set forth on Exhibit D-2 and
in substantially the form set forth in Exhibit P.
2.3.3 At Closing, BHW will cause BHIL to enter into a Representation Agreement
with EDCO
3
containing the terms set forth on Exhibit D-3 and in substantially the form set
forth in Exhibit P.
2.4 EDCO SERVICES AGREEMENT.
2.4.1 At Closing, EDCO will enter into the EDCO Technical Services Agreement
with INFO containing the terms set forth on Exhibit E-1 and in substantially the
form set forth in Exhibit P.
2.4.2 At Closing, EDCO will enter into an EDCO Non-Technical Support Services
Agreement containing the terms set forth in Exhibit E-2, in substantially the
form set forth in Exhibit P.
2.4.3 At Closing, EDCO will enter into a Service Agreement with BHIL pursuant to
which EDCO will perform all services required under the customer contracts
transferred to EDCO by BHIL and BHIL in exchange will pay EDCO $3.5 Million for
such services.
2.5 INFO TRANSITION SUPPORT SERVICES.
For a period of six months following Closing, EDCO and INFO will provide certain
support services at no charge for up to six (6) months on terms set forth in
Exhibit E-2 hereto. It is expected that INFO will establish its own support
functions that are separate and independent from EDCO, BHIL and BHW. In a
similar manner, it is expected EDCO will establish its own support functions
that are separate and independent from BHW and BHIL.
2.6 BHIL LICENSE AGREEMENTS.
At Closing, BHW will cause BHIL to license to EDCO, pursuant to the BHIL Content
License Agreement and the BHIL Software License Agreement containing the terms
set forth in Exhibits F and G and in substantially the form set forth in Exhibit
Q.
2.7 EDCO AND INFO LICENSE AGREEMENTS.
2.7.1 At Closing, EDCO will enter into the EDCO Content License Agreement and
the EDCO Software and Technology License Agreement with INFO containing the
terms of Exhibits H and I and in substantially the form set forth in Exhibit Q.
2.7.2 At Closing, INFO will enter into the INFO Sleuth Software and Technology
License with BHIL and EDCO, containing the terms of Exhibit J-2 and in
substantially the form set forth in Exhibit Q.
2.8 ONLINE PUBLISHING ASSET PURCHASE AGREEMENT.
2.8.1 At Closing, BHW will cause BHIL to purchase all of the assets owned or
used in the INFO
4
Online Publishing Business and assume select liabilities and obligations of the
INFO Online Publishing Business, including but not limited to accounts
receivable, customer contracts, customer data bases, domain names, trade names
and trademarks or intellectual property and software, hardware, patents, process
and know-how, employee records, sales orders, supplies, inventories, fixed
assets, software development processes, training procedures, vendor records,
prepaid amounts, customer deposits, service contracts, and any other rights or
arrangements, and normal trade payables which relate exclusively to or arise
from INFO Online Publishing Business pursuant to a Bill of Sale, Assignment and
Assumption and Indemnity Agreement in the form of Exhibit C. The assets,
contracts and other obligations and liabilities to be transferred will include
those listed on Schedules OPB1, OPB2 and OPB3, respectively.
2.8.2 If required by BHIL, INFO will use reasonable best efforts to cause a
sufficient number of its employees join BHIL so that the INFO Online Publishing
Business can continue to operate in the ordinary course. BHIL will provide
appropriate compensation, benefit, and incentive package offers to the INFO
employees subject to this paragraph.
2.8.3 BHIL will license to INFO and EDCO the Online Publishing software and
related technology pursuant to the Online Publishing License Agreement
containing the terms set forth in Exhibit J-1 and in substantially the form
attached hereto as Exhibit Q.
2.8.4 In addition to the consideration set forth in Section 2.1.2 BHW will cause
BHIL to pay INFO $2 million at closing for the INFO Online Publishing Business.
The cash payment shall be by wire transfer of immediately available funds to a
bank account designated by INFO in writing.
2.9 COVENANT NOT TO COMPETE.
2.9.1 At Closing, each of BHIL and INFO will enter into Noncompetition
Agreements in the form of Exhibits N and L.
2.9.2 At Closing, EDCO will enter into a Noncompetition Agreement with each of
BHIL and INFO in the form of Exhibit M and EDCO and INFO will enter into a
Noncompetition Agreement with BHIL in the form of Exhibit O hereto.
2.10 OTHER DOCUMENTS.
At Closing, the parties will execute and deliver all of the other
documents and agreements required to be delivered on or prior to Closing
pursuant to this Master Transaction Agreement and the Related Agreements.
5
2.11 DEFINITIVE AGREEMENTS.
Immediately following the execution of this Master Transaction
Agreement and continuing until the earlier of the agreement by the Parties of
the form of all Related Agreements or the Closing, the Parties agree to
negotiate in good faith the final definitive form of all Related Agreements. In
the event, however, that the Parties have been unable to agree on the definitive
form of one or more of the Related Agreements prior to Closing, the Closing will
occur notwithstanding such fact and the terms set forth on the respective
Exhibits hereto shall be deemed to be the definitive form of such agreement and
any court or arbitrators construing the terms of the contractual commitments set
forth on such Exhibits are deemed to contain commercially reasonable terms for
any provision not set forth specifically on the respective Exhibits which is
necessary for a complete understanding of the contractual commitments
represented thereby.
2.12 CLOSING.
The contribution of assets to, and the assumption of liabilities
by, EDCO and the issuance of the Stock to INFO and BHW contemplated by this
Master Transaction Agreement (the "Closing") shall take place at the offices of
McDermott, Will & Emery on the later of September 1, 1999 or the fifth Business
Day following the satisfaction or waiver of all conditions to the obligations of
the Parties contemplated hereby commencing at 10:00 a.m., local time on such
date, or at such other date or time or other place as the parties may mutually
agree upon in writing, such date being hereinafter referred to as the "Closing
Date." Notwithstanding the foregoing, if all of the conditions to Closing as set
forth in Articles VI and VII have been satisfied or waived, the Closing shall
occur no later than December 31, 1999. Upon consummation, the Closing shall be
deemed to take place as of the opening of business on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INFO
INFO and INFO Corporation, jointly and severally, hereby represent
and warrant to BHW as of the date hereof as set forth below. The representations
and warranties set forth below shall survive the Closing.
3.1 AUTHORITY.
INFO has full capacity, right, corporate power and authority
without the consent of any other Person, to execute and deliver this Master
Transaction Agreement and the Related
6
Agreements and to carry out the transactions contemplated hereby and thereby,
including the right to sell the INFO Online Publishing Business to BHIL. INFO
Corporation has full capacity, right, corporate power and authority, without the
consent of any other Person other than INFO (which consent has been given), to
execute and deliver:
(a) this Master Transaction Agreement,
(b) the INFO Capitalization Agreement, and
(c) any other agreement to which it is a party as contemplated by this
Master Transaction Agreement.
(collectively, the "INFO Related Agreements"), and to carry out
the transactions contemplated hereby and thereby and to acquire, own and hold of
record and beneficially 27% of the Stock. Except with respect to the approval of
the shareholders of INFO, all corporate and other acts or proceedings required
to be taken by INFO and INFO Corporation to authorize the execution, delivery
and performance of this Master Transaction Agreement, the INFO Related
Agreements and the documents to be delivered at Closing and all transactions
contemplated hereby and thereby have been duly and properly taken.
3.2 VALIDITY.
3.2.1 Subject to Section 2.11, this Master Transaction Agreement and the INFO
Related Agreements have been, and the documents to be delivered at Closing will
be, duly executed and delivered by each of INFO and INFO Corporation, as
appropriate, and constitute lawful, valid and legally binding obligations of
each of them, enforceable in accordance with their respective terms.
3.2.2 The execution and delivery of this Master Transaction Agreement and the
INFO Related Agreements and the consummation of the transactions contemplated
hereby and thereby will not result in the creation of any lien, charge or
encumbrance of any kind or the termination or acceleration of any indebtedness
or other obligation of INFO or INFO Corporation and are not prohibited by, do
not violate or conflict with any provision of, do not constitute a default under
or a breach of and do not impair the rights under:
(a) the Certificate of Incorporation or By-laws of INFO or INFO
Corporation,
(b) any Contract,
(c) any order, writ, injunction, decree or judgment of any court or
governmental agency, or
7
(d) any Law applicable to INFO or INFO Corporation.
3.2.3 Except for filings required by the Hart-Scott-Rodino Act and the
Securities Act, no approval, authorization, consent or other order or action of
or filing with any court, administrative agency or other governmental authority
is required for the execution and delivery by INFO or INFO Corporation, as
appropriate, of this Master Transaction Agreement and the INFO Related
Agreements or the consummation by INFO or INFO Corporation of the transactions
contemplated hereby and thereby.
3.3 DUE ORGANIZATION.
INFO and INFO Corporation are each corporations duly organized,
validly existing and in good standing under the Laws of the Commonwealth of
Pennsylvania, and has full corporate power and authority and all requisite
licenses, permits and franchises to own, lease and operate its assets and to
carry on its business.
3.4 FINANCIAL INFORMATION.
The financial information provided to BHW is accurate and complete
in all material respects, in accordance with the books of accounts and records
of INFO and prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby.
3.5 BROKERS AND FINDERS.
Except for the fees and expenses payable to Allen & Company, which
fees are reflected in its agreement with INFO, neither INFO nor INFO Corporation
has entered into any contract, arrangement or understanding with any person or
firm which may result in the obligation of INFO or INFO Corporation to pay any
finder's fees, brokerage or agent commissions or other like payments in
connection with the transactions contemplated hereby. Except for the fees and
expenses paid or payable to Allen & Company, there is no claim for payment by
INFO or INFO Corporation of any investment banking fees, finder's fees,
brokerage or agent commissions or other like payments in connection with the
negotiations related to this Master Transaction Agreement or the consummation of
the transactions contemplated hereby.
3.6 OPINION OF FINANCIAL ADVISOR.
The financial advisor of INFO, Allen & Company, has rendered an
opinion to the Board of Directors of INFO to the effect that, as of the date
thereof, the consideration to be received by INFO in connection with the
transactions contemplated hereby is fair from a financial point of view to INFO.
8
3.7 INFORMATION FOR PROXY STATEMENT.
None of the information concerning INFO included in or
incorporated by reference into the Proxy Statement to be filed with the SEC by
INFO in connection with the shareholder meeting of INFO to be held in connection
with this Master Transaction Agreement and the transactions contemplated hereby
will, at the date mailed to shareholders, or at the time of such meetings,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Proxy Statement will, as of its mailing date, comply as to form
in all material respects with all Laws, including the Exchange Act and the rules
and regulations promulgated thereunder, except that no representation is made by
INFO with respect to information supplied by BHW for inclusion therein.
3.8 BOARD APPROVAL.
3.8.1 The Board of Directors of INFO has taken affirmative action to consider
and analyze a long-term strategy for INFO, taking into account the fairness
opinion of their investment banker made pursuant to Section 3.6, and has
concluded that the best interest of INFO's shareholders are best served by
pursuing a long-term strategic alliance with BHW as set forth in Article 2 of
this Master Transaction Agreement; provided, however, that INFO shall remain
free to pursue the sale of any portion of its remaining assets as long as such
sale does not negatively impact INFO's ability to perform the agreements
contemplated herein.
3.9 REPRESENTATIONS AND WARRANTIES
The representations and warranties of INFO Corporation which will
be set forth in the INFO Capitalization Agreement shall be true and correct;
provided, however, that following the Closing Date, the remedies for breach of
such representations and warranties shall be governed by the INFO Capitalization
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BHW AND BHIL
BHW and BHIL, jointly and severally, hereby represent and warrant to INFO as of
the date hereof as set forth below. The representations and warranties set forth
below shall survive the Closing.
9
4.1 AUTHORITY.
BHW and BHIL have full capacity, right, corporate power and
authority, without the consent of any other Person, to execute and deliver this
Master Transaction Agreement. BHIL has full capacity, right, corporate power and
authority, without the consent of any Person other than BHW (which consent has
been given) to execute and deliver:
(a) the BHIL Capitalization Agreement,
(b) the BHIL Services Agreement, and
(c) any other agreement to which BHIL is a party contemplated by this
Master Transaction Agreement
(collectively, the "BHW Related Agreements"), and to carry out the transactions
contemplated hereby and thereby and to acquire, own and hold of record and
beneficially 73% of the Stock. All corporate and other acts or proceedings
required to be taken by BHW or BHIL to authorize the execution, delivery and
performance of this Master Transaction Agreement, the BHW Related Agreements and
the documents to be delivered at Closing and all transactions contemplated
hereby and thereby have been duly and properly taken.
4.2 VALIDITY.
4.2.1 Subject to Section 2.11, this Master Transaction Agreement and the BHW
Related Agreements have been, and the documents to be delivered at Closing will
be, duly executed and delivered by BHW or BHIL, as appropriate, and constitute
lawful, valid and legally binding obligations of BHW or BHIL, as appropriate,
enforceable in accordance with their respective terms.
4.2.2 The execution and delivery of this Master Transaction Agreement and the
BHW Related Agreements and the consummation of the transactions contemplated
hereby and thereby will not result in the creation of any lien, charge or
encumbrance of any kind or the termination or acceleration of any indebtedness
or other obligation of BHW or BHIL and are not prohibited by, do not violate or
conflict with any provision of, do not constitute a default under or a breach of
and do not impair the rights under:
(a) the Certificate of Incorporation or By-laws of BHW or BHIL,
(b) any Contract,
(c) any order, writ, injunction, decree or judgment of any court or
governmental agency, or
10
(d) any Law applicable to BHW or BHIL.
4.2.3 Except for filings required by the Hart-Scott-Rodino Act and the
Securities Act, no approval, authorization, consent or other order or action of
or filing with any court, administrative agency or other governmental authority
is required for the execution and delivery by BHW or BHIL, as appropriate, of
this Master Transaction Agreement and the BHW Related Agreements or the
consummation by BHW or BHIL of the transactions contemplated hereby and thereby.
4.3 DUE ORGANIZATION.
BHW and BHIL are each corporations duly organized, validly
existing and in good standing under the Laws of the State of Delaware, and each
has full corporate power and authority and all requisite licenses, permits and
franchises to own, lease and operate its respective assets and to carry on its
respective business.
4.4 FINANCIAL INFORMATION.
The financial information provided to INFO is accurate and
complete in all material respects, in accordance with the books of account and
records of BHIL and prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby.
4.5 BROKERS AND FINDERS.
Except for the fees and expenses payable to BT Wolfenson which
fees are reflected in its agreement with BHW, neither BHW nor BHIL has entered
into any contract, arrangement or understanding with any person or firm which
may result in the obligation of BHW or BHIL to pay any finder's fees, brokerage
or agent commissions or other like payments in connection with the transactions
contemplated hereby. Except for the fees and expenses paid or payable to BT
Wolfenson there is no claim for payment by BHW or BHIL of any investment banking
fees, finder's fees, brokerage or agent commissions or other like payments in
connection with the negotiations related to this Master Transaction Agreement or
the consummation of the transactions contemplated hereby.
4.6 INFORMATION SUPPLIED FOR PROXY STATEMENT.
None of the information supplied or to be supplied by BHW for
inclusion or incorporation by reference in the Proxy Statement to be filed with
the SEC by INFO in connection with the shareholder meeting of INFO to be held in
connection with this Master Transaction Agreement and the transactions
contemplated hereby will, at the date mailed to shareholders, or at the time of
such meetings, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the
11
statements therein, in the light of the circumstances under which they are made,
not misleading.
4.7 REPRESENTATIONS AND WARRANTIES
The representations and warranties of BHIL which will be set forth
in the BHIL Capitalization Agreement shall be true and correct; provided,
however, that following the Closing Date, the remedies for breach of such
representations and warranties shall be governed by the BHIL Capitalization
Agreement.
ARTICLE V
INTERIM AGREEMENTS
5.1 INTERIM CONDUCT OF THE CONTRIBUTED BUSINESS.
5.1.1 From the date hereof until the Closing, each of INFO, BHIL and BHW shall
preserve, protect and maintain their respective Contributed Business consistent
with current practice and in the ordinary course of business. Without limiting
the generality of the foregoing, from the date hereof until the Closing, except
for transactions specifically contemplated hereby or expressly approved in
writing by the other party, INFO, BHIL and BHW shall, with respect to their
respective Contributed Business:
(a) maintain the properties of their respective Contributed Business
and Contributed Assets in good repair, order and condition,
reasonable wear and tear excepted;
(b) maintain and keep in full force and effect all insurance on assets
and property or for the benefit of employees of their respective
Contributed Business, all liability and other casualty insurance,
and all bonds on personnel of the Contributed Business, presently
carried;
(c) not sell, lease or otherwise dispose of or agree to sell, lease,
license or otherwise dispose of, or restrict, or grant an option
with respect to, any of their respective Contributed Business'
assets, properties, rights or claims, except for inventory and
other assets sold in the ordinary course of business;
(d) preserve intact the organization and reputation of their
respective Contributed Business and use its reasonable commercial
efforts to keep available the services of the present executives,
employees and agents of their respective Contributed Business and
preserve the good will of suppliers, customers and others having
business relationships with such Contributed Business;
12
(e) pay accounts payable and other obligations of their respective
Contributed Business when they become due and payable in the
ordinary course of business consistent with prior practice;
(f) not grant any security interest, lien, charge, encumbrance or
claim on any assets of the Contributed Business, except in the
ordinary course of business and consistent with prior practice;
(g) maintain the Contributed Business' books, accounts and records in
the usual, regular and ordinary manner on a basis consistent with
prior years;
(h) not enter into, amend or terminate, or agree to enter into, amend
or terminate any Contract; provided, however, that the foregoing
shall not prohibit the termination, extension or any amendment
(which is not material) of any Contract necessary to the
Contributed Business arising in the ordinary course of business
and consistent with past practice;
(i) perform in all material respects all of its obligations under all
Contracts and other agreements and instruments relating to or
affecting the Contributed Business or its assets, and comply in
all material respects with all Laws applicable to the Contributed
Assets, except where non-performance or non-compliance would not
have a Material Adverse Effect;
(j) not enter into, amend or terminate any employment, bonus,
severance or retirement contract or arrangement, nor increase any
salary or other form of compensation payable or to become payable
to any executives or employees of the Contributed Business other
than in the ordinary course of business or any material change in
the employee benefits of the Contributed Business;
(k) not take any action or intentionally omit to take any action,
which action or omission would result in a breach of any of the
representations and warranties set forth under the BHIL
Capitalization Agreement or the INFO Capitalization Agreement, as
the case may be, or in the failure or inability of the parties to
consummate the transactions contemplated hereby; or
(l) not incur or become subject to, nor agree to incur or become
subject to, any debt, obligation or liability, contingent or
otherwise, except for borrowings under or refinancing of, the
existing credit facilities of INFO, BHW or BHIL, as the case may
be, or current liabilities and contractual obligations in the
ordinary course.
5.1.2 From the date hereof until the Closing, INFO shall preserve, protect and
maintain the INFO
13
Online Publishing Business, consistent with current practice and in the ordinary
course of business. Without limiting the generality of the foregoing, from the
date hereof until the Closing, except for transactions specifically contemplated
hereby or expressly approved in writing by BHW, INFO shall, with respect to the
INFO Online Publishing Business:
(a) maintain the properties of INFO Online Publishing Business and
assets related thereto in good repair, order and condition,
reasonable wear and tear excepted;
(b) maintain and keep in full force and effect all insurance on assets
and property or for the benefit of employees of INFO Online
Publishing Business, all liability and other casualty insurance,
and all bonds on personnel of the INFO Online Publishing Business,
presently carried;
(c) not sell, lease or otherwise dispose of or agree to sell, lease,
license or otherwise dispose of, or restrict, or grant an option
with respect to, any of the INFO Online Publishing Business'
assets, properties, rights or claims, except for inventory and
other assets sold in the ordinary course of business;
(d) preserve intact the organization and reputation of the INFO Online
Publishing Business and use its reasonable commercial efforts to
keep available the services of the present executives, employees
and agents of the INFO Online Publishing Business and preserve the
good will of suppliers, customers and others having business
relationships with the INFO Online Publishing Business;
(e) pay accounts payable and other obligations of the INFO Online
Publishing Business when they become due and payable in the
ordinary course of business consistent with prior practice;
(f) not grant any security interest, lien, charge, encumbrance or
claim on any assets of the INFO Online Publishing Business, except
in the ordinary course of business and consistent with prior
practice;
(g) maintain the INFO Online Publishing Business' books, accounts and
records in the usual, regular and ordinary manner on a basis
consistent with prior years;
(h) not enter into, amend or terminate, or agree to enter into, amend
or terminate any Contract; provided, however, that the foregoing
shall not prohibit the termination, extension or any amendment
(which is not material) of any Contract necessary to the INFO
Online Publishing Business arising in the ordinary course of
business and consistent with past practice;
14
(i) perform in all material respects all of its obligations under all
Contracts and other agreements and instruments relating to or
affecting the INFO Online Publishing Business or its assets, and
comply in all material respects with all Laws applicable to the
assets of the INFO Online Publishing Business, except where
non-performance or non-compliance would not have a Material
Adverse Effect;
(j) not enter into, amend or terminate any employment, bonus,
severance or retirement contract or arrangement, nor increase any
salary or other form of compensation payable or to become payable
to any executives or employees of the INFO Online Publishing
Business other than in the ordinary course of business or any
material change in the employee benefits of the INFO Online
Publishing Business;
(k) not take any action or intentionally omit to take any action,
which action or omission would result in a breach of any of the
representations and warranties set forth under the INFO Online
Publishing Bill of Sale, Assignment and Assumption and Indemnity
Agreement or in the failure or inability of the parties to
consummate the transactions contemplated hereby; or
(l) not incur or become subject to, nor agree to incur or become
subject to, any debt, obligation or liability, contingent or
otherwise, except for borrowings under or refinancing of, the
existing credit facilities of INFO or current liabilities and
contractual obligations in the ordinary course.
5.1.3 Nothing contained in this Master Transaction Agreement shall give INFO,
directly or indirectly, rights to control or direct the BHIL Contributed
Business. Prior to the Closing Date, BHIL shall exercise, consistent with the
terms and conditions of this Master Transaction Agreement, complete control and
supervision of its Contributed Business and EDCO.
5.1.4 Nothing contained in this Master Transaction Agreement shall give BHIL,
directly or indirectly, rights to control or direct INFO's Contributed Business
or the INFO Online Publishing Business. Prior to the Closing Date, INFO shall
exercise, consistent with the terms and conditions of this Master Transaction
Agreement, complete control and supervision of its Contributed Business and the
INFO Online Publishing Business.
5.2 ACCESS.
5.2.1 Subject to applicable Law, BHW and BHIL shall afford to INFO and its
accountants, counsel, financial advisors and other representatives (the "INFO
Representatives") and INFO shall afford to BHW and BHIL and its accountants,
counsel, financial advisors and other representatives (the "BHW
Representatives") full access during normal business hours with reasonable
notice throughout the period prior to the Closing Date to all of their
respective properties, books, contracts,
15
commitments and records and, during such period, shall furnish promptly to one
another:
(a) a copy of each report, schedule and other document filed with or
received by any of them from the SEC in connection with the
transactions contemplated by this Master Transaction Agreement,
and
(b) such other information concerning their respective businesses,
properties and personnel as INFO, BHIL or BHW, as the case may be,
shall reasonably request, including all information necessary for
either party to make any required filings with the SEC; provided,
however, that no investigation pursuant to this Section 5.2 shall
amend or modify any representations or warranties made herein or
in the Related Agreements or the conditions to the obligations of
the respective parties to consummate the transactions contemplated
hereby and thereby.
5.2.2 INFO shall hold and shall use its reasonable commercial efforts to cause
the INFO Representatives to hold, and BHW and BHIL shall hold and shall use its
reasonable commercial efforts to cause BHW Representatives to hold, in strict
confidence all non-public documents and information furnished to INFO or to BHW
or BHIL, as the case may be, in connection with the transactions contemplated by
this Master Transaction Agreement, except that:
(a) INFO, BHIL and BHW may disclose such information as may be
necessary in connection with seeking any required approvals or
consents, and
(b) each of INFO, BHIL and BHW may disclose any information that it is
required by Law or judicial or administrative order to disclose.
5.2.3 Neither INFO nor BHW nor BHIL shall use or knowingly permit the use of
such non-public information or other confidential or proprietary knowledge of
the other party for any purpose other than in connection with the transactions
contemplated hereby without the prior consent of the other parties hereto;
provided, that any information that is otherwise publicly available, without
breach of this provision, or has been obtained from a third party without a
breach of such third party's duties, shall not be subject to this Section 5.2.
5.2.4 In the event that this Master Transaction Agreement is terminated in
accordance with its terms, each party shall promptly redeliver to the other all
non-public written material provided pursuant to this Section 5.2 and shall not
retain any copies, extracts or other reproductions in whole or in part of such
written material. In such event, all documents, memoranda, notes and other
writings prepared by INFO, BHIL or BHW based on the information in such material
shall be destroyed (and INFO, BHIL and BHW shall use their respective reasonable
commercial efforts to cause their advisors and representatives to similarly
destroy their documents, memoranda and notes), and such destruction (and
reasonable commercial efforts) shall be certified in writing by an authorized
officer
16
supervising such destruction. The provisions of Subsections 5.2.2, 5.2.3 and
5.2.4 shall survive any termination of this Master Transaction Agreement.
5.3 CORPORATE APPROVAL.
5.3.1 Subject to Section 5.8, the Board of Directors of INFO shall not take any
action to amend or modify the resolutions of the INFO Board of Directors related
to the subject matter set forth in Section 3.8.
5.3.2 If INFO determines to seek shareholder approval for the transactions
contemplated by the Master Transaction Agreement, INFO shall, as promptly as
practicable, submit the transactions contemplated by this Master Transaction
Agreement and the INFO Related Agreements for the approval of its shareholders
at a meeting of shareholders and shall use its reasonable best efforts to obtain
shareholder approval and adoption of the transactions contemplated by this
Master Transaction Agreement and the INFO Agreements. Such meeting of
shareholders shall be held as soon as practicable. INFO shall use its best
efforts to cause the Proxy Statement to be mailed to its shareholders at the
earliest practicable date. INFO shall, through its Board of Directors, recommend
to its shareholders approval of the transactions contemplated by this Master
Transaction Agreement.
5.4 AGREEMENTS TO COOPERATE.
Subject to the terms and conditions herein provided, each of the parties hereto
shall use best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws to consummate and make effective the transactions contemplated by this
Master Transaction Agreement, including using its best efforts to obtain all
necessary or appropriate waivers, consents or approvals of third parties
required in order to preserve material contractual relationships of INFO and BHW
and their respective Affiliates, all necessary or appropriate waivers, consents
and approvals to effect all necessary filings and submissions and to lift any
injunction or other legal bar to the transactions contemplated hereby and
contemplated by the Related Agreements. Each party agrees to use all reasonable
efforts to comply with each of their respective covenants and agreements
contained in the Related Agreements.
5.5 PUBLIC STATEMENTS.
The parties shall consult with each other prior to issuing any
press release or any written public statement with respect to this Master
Transaction Agreement or the transactions contemplated hereby and shall not
issue any such press release or written public statement without the prior
written approval of the other party, which approval shall not be unreasonably
withheld.
17
5.6 NOTIFICATIONS.
5.6.1 Each party shall notify the other party and keep it advised as to:
(a) any litigation or administrative proceeding that is either pending
or, to its knowledge, threatened against such party which
challenges the transactions contemplated hereby;
(b) any material damage to or destruction of its Contributed Business;
(c) any breach of its own representations and warranties set forth
herein or in any of the Related Agreements; and
(d) any fact of which such party has knowledge that indicates that any
condition to Closing is reasonably likely not to be satisfied in a
timely fashion.
5.6.2 No disclosure by any party pursuant to this Section 5.6, however shall be
deemed to amend or supplement any schedules or to prevent or cure any
misrepresentations, breach of warranty or breach of covenant contained herein or
in the Related Agreements.
5.7 PROXY STATEMENT; SHAREHOLDERS MEETING.
INFO shall promptly prepare and file with the SEC the Proxy
Statement in preliminary form. INFO shall use its best efforts to respond to any
comments of the SEC staff with respect thereto, in order to permit mailing to
shareholders of the definitive Proxy Statement as promptly as practicable. More
specifically, INFO shall (a) file with the SEC the Proxy Statement in
preliminary form within three (3) business days or as soon as reasonably
practical, but in no event within seven (7) business days of all required
financial statements being finalized, and (b) respond to the SEC in writing
regarding any comments from the SEC with respect to the Proxy Statement within
three (3) business days or as soon as reasonably practical, but in no event
within seven (7) business days of the receipt of such comments. Prior to the
date of approval of the transactions contemplated hereby by the INFO
shareholders, each of INFO and BHW shall correct promptly any information
provided by it used in the Proxy Statement that shall have become false or
misleading in any material respect and INFO shall take all steps necessary to
file with the SEC and have cleared by the SEC any amendment or supplement to the
Proxy Statement so as to correct the same and to cause the Proxy Statement as so
corrected to be disseminated to the shareholders of INFO to the extent required
by applicable Law.
5.8 ALTERNATIVE PROPOSALS.
5.8.1 INFO hereby agrees that after the date hereof and prior to the Closing
Date or earlier
18
termination of this Master Transaction Agreement, INFO shall not, and shall not
permit any of its Affiliates to, and such party shall, and shall cause each of
its Affiliates to, cause each officer, director and employee of such party and
its Affiliates, and each attorney, accountant, investment banker, financial
advisor and other agent retained by them, not to, directly or indirectly:
(a) initiate or solicit any discussion in relation to or any inquiries
or the submission of any proposal or offer relating to a Change of
Control of INFO, whether by merger, share exchange, purchase of
stock, purchase of assets, tender offer, joint venture or
otherwise, and whether for cash, securities or any other
consideration or combination thereof that is inconsistent with or
provides a competitive impediment to the transactions contemplated
hereby and the ongoing operations and prospects of EDCO as
determined by BHW (any such inconsistent or competitive
transaction being referred to herein as an "Alternative
Transaction"), or
(b) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, the making
of any proposal that constitutes, or may reasonably be expected to
or lead to, any Alternative Transaction;
provided, HOWEVER, that prior to the vote of shareholders of INFO for approval
and adoption of the transactions contemplated by this Master
Transaction Agreement, INFO may take any actions described in the
foregoing clause (b) to the extent that the Board of Directors of INFO
determines, in good faith after consultation with INFO's investment
bankers and outside counsel, that the Alternative Transaction, taken
as a whole, is superior to the transactions contemplated by this
Master Transaction Agreement.
5.8.2 INFO will immediately cease and cause to be terminated any existing
initiation, solicitation, encouragement, discussions or negotiations with
parties other than BHW with respect to Alternative Transactions.
5.8.3 If the Board of Directors of INFO receives an Alternative Transaction
that, taken as a whole, it determines to be superior to the transactions
contemplated by this Master Transaction Agreement, as determined in good faith
after consultation with INFO's investment bankers and outside counsel, the Board
of Directors may withdraw or modify its approval or recommendation of this
Master Transaction Agreement and may (subject to the following sentence)
terminate this Master Transaction Agreement, in each case at any time after the
fifth business day following BHW's receipt of written notice advising BHW that
the Board of Directors of INFO has received an Alternative Transaction that it
has determined to be a superior proposal, specifying the principal terms and
conditions of such superior proposal and identifying the person making such
superior proposal. INFO may terminate this Master Transaction Agreement pursuant
to the preceding sentence only if the shareholders of INFO shall not yet have
voted upon the Master Transaction Agreement and INFO shall have paid to BHW a
termination fee pursuant to Section 8.2.1. In
19
addition to the obligations of INFO set forth in this Section 5.8.3, INFO shall
promptly advise BHW orally and in writing of any negotiations or discussions
entered into in reliance on the proviso to the first sentence of Section 5.8.1.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF INFO
Each and all of the obligations of INFO to consummate the transactions
contemplated by this Master Transaction Agreement and the Related Agreements are
subject to fulfillment prior to or at the Closing of the following conditions
(which conditions may be waived by INFO in its sole and arbitrary discretion):
6.1 SHAREHOLDER APPROVAL.
The transactions contemplated by this Master Transaction Agreement
and the Related Agreements shall have been approved and adopted by the requisite
vote of the shareholders of INFO under applicable Law.
6.2 ACCURACY OF WARRANTIES AND PERFORMANCE OF COVENANTS.
The representations and warranties of BHW or BHIL, as applicable
contained herein and in the Related Agreements shall be true, correct and
accurate in all respects (in the case of any representation or warranty
containing any materiality qualification) or in all material respects (in the
case of any representation or warranty without any materiality qualification) as
if made on and as of the Closing Date. EDCO, BHIL and BHW shall have performed
all of the obligations and complied in all material respects with each and all
of the covenants, agreements and conditions required to be performed or complied
with on or prior to the Closing pursuant to this Master Transaction Agreement
and the BHW Related Agreements.
6.3 NO PENDING ACTION.
No court of competent jurisdiction or governmental, regulatory
or administrative agency or commission shall have issued an order, decree or
ruling or taken any other action (which order, decree or ruling BHW, BHIL and
INFO shall use their commercially reasonable efforts to lift), in each case
temporarily or permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Master Transaction Agreement and the Related
Agreements.
20
6.4 CONSENTS.
All consents by third parties that are required for the
consummation of the transactions contemplated hereby, or that are required in
order to prevent a breach of or a default under or a termination of any
Contract, shall have been obtained or provided for, except where the failure to
obtain the same would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on EDCO following the Closing Date.
6.5 REGULATORY APPROVALS.
All regulatory agencies shall have taken such action as may be
required to permit the consummation of the transactions contemplated hereby and
such actions shall remain in full force and effect and shall be reasonably
satisfactory in form and substance to INFO and its counsel.
6.6 LITIGATION.
None of BHW, BHIL, INFO, EDCO and any of the Contributed Assets
shall have been made a party or subject to any litigation related to the Master
Transaction Agreement or the transactions contemplated hereby, which is
reasonably expected to have a Material Adverse Effect.
6.7 AUDITED FINANCIAL STATEMENTS.
The audited financial statements of the BHIL Contributed Business for the three
years ended December 31, 1998 shall have been completed and shall not be
materially different using the same accounting methodologies with respect to
revenues from the unaudited financial statements of the BHIL Contributed
Business for the three-year period ended December 31, 1998, which unaudited
financial statements have been provided to INFO.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BHW AND BHIL
Each and all of the obligations of BHW or BHIL, as applicable, to
consummate the transactions contemplated by this Master Transaction Agreement
and the Related Agreements are subject to fulfillment prior to or at the Closing
of the following conditions (which conditions may be waived by BHW in its sole
and arbitrary discretion):
21
7.1 SHAREHOLDER APPROVAL.
The transactions contemplated by this Master Transaction Agreement
and the Related Agreements shall have been approved and adopted by the requisite
vote of the shareholders of INFO under applicable Law.
7.2 ACCURACY OF WARRANTIES AND PERFORMANCE OF COVENANTS.
The representations and warranties of INFO contained herein and in
the Related Agreements shall be true, correct and accurate in all respects (in
the case of any representation or warranty containing any materiality
qualification) or in all material respects (in the case of any representation or
warranty without any materiality qualification) as if made on and as of the
Closing Date. EDCO and INFO shall have performed all of the obligations and
complied in all material respects with each and all of the covenants, agreements
and conditions required to be performed or complied with on or prior to the
Closing pursuant to this Master Transaction Agreement and the INFO Related
Agreements.
7.3 NO PENDING ACTION.
No court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action (which order, decree or ruling BHW, BHIL and INFO
shall use their commercially reasonable efforts to lift), in each case
temporarily or permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Master Transaction Agreement and the Related
Agreements.
7.4 CONSENTS.
All consents by third parties that are required for the
consummation of the transactions contemplated hereby, or that are required in
order to prevent a breach of or a default under or a termination of any
Contract, shall have been obtained or provided for, except where the failure to
obtain the same would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on EDCO or the INFO Online
Publishing Business following the Closing Date.
7.5 REGULATORY APPROVALS.
All regulatory agencies shall have taken such action as may be
required to permit the consummation of the transactions contemplated hereby and
such actions shall remain in full force and effect and shall be reasonably
satisfactory in form and substance to BHW and its counsel.
22
7.6 LITIGATION.
None of INFO, BHIL, BHW, EDCO and any of the Contributed Assets
shall have been made a party or subject to any litigation related to this Master
Transaction Agreement or the transactions contemplated hereby, which is
reasonably expected to have a Material Adverse Effect.
7.7 AUDITED FINANCIAL STATEMENTS.
The audited financial statements of the INFO Contributed Business
for the three years ended December 31, 1998 shall have been completed and shall
not be materially different with respect to revenues from the unaudited
financial statements of the INFO Contributed Business for the three-year period
ended December 31, 1998, which unaudited financial statements have been provided
to BHW.
ARTICLE VIII
TERMINATION BY PARTIES PRIOR TO CLOSING
8.1 TERMINATION.
This Master Transaction Agreement and the Related Agreements may
be terminated and the transactions contemplated herein and therein may be
abandoned at any time prior to the Closing:
(a) by mutual written consent of the parties hereto;
(b) by either INFO or BHW in the event that the Closing does not occur
for any reason on or before December 31, 1999; provided, however,
that if the Closing does not occur due to the act or omission of
one of the parties or, in the case of INFO, the failure of the
conditions set forth in Article VII to be satisfied and in the
case of BHW, the failure of the conditions set forth in Article VI
to be satisfied, that party may not terminate this Master
Transaction Agreement pursuant to the provisions of this
paragraph (b);
(c) by INFO, upon material breach by BHW of this Master Transaction
Agreement which breach is not cured within 30 days of notice
thereof;
(d) by BHW, upon material breach by INFO of this Master Transaction
Agreement which breach is not cured within 30 days of notice
thereof;
23
(e) by BHW, if the INFO Board of Directors or committee thereof shall:
(i) have resolved to accept or recommend to the INFO
shareholders an Alternative Proposal, or
(ii) have withdrawn or adversely modified or taken a public
position materially inconsistent with its approval or
recommendation to the shareholders of INFO of the
transactions contemplated hereby, or
(iii) not have submitted this Master Transaction Agreement and
the transactions contemplated hereby for the approval of
its shareholders at a meeting of shareholders to be held
on or prior to October 31, 1999 (or such other later
date as mutually agreed to in writing by the parties as
a result of action or inaction by the SEC solely and
exclusively with respect to the transactions
contemplated hereby) and used its reasonable best
efforts to obtain such shareholder approval;
(f) by BHW, if:
(i) a Change of Control of INFO shall have occurred, or
(ii) a tender offer or exchange offer shall have been
commenced or publicly announced that, if consummated,
would have the effect of a Change of Control of INFO; or
(g) by INFO, if:
(i) a Change of Control of BHW shall have occurred, or
(ii) a tender offer or exchange offer shall have been
commenced or publicly announced that, if consummated,
would have the effect of a Change of Control of BHW; and
(h) by INFO or BHW, if the approval of the shareholders of INFO
contemplated by Section 5.3 is not obtained at the applicable
shareholders meeting, including adjournments thereof, prior to
November 1, 1999.
Any right of termination set forth above shall be exercised by written notice
from the terminating party to the other party.
24
8.2 TERMINATION FEES.
8.2.1 If this Master Transaction Agreement is terminated by BHW pursuant to
Section 8.1(e), then INFO shall pay BHW a fee of $4.0 million. If the Master
Transaction Agreement is terminated (i) by BHW pursuant to Section 8.1(b), (d)
or (h) or (ii) by INFO pursuant to Section 8.1(h), and within 120 days of any
such termination by either party, as applicable, INFO enters into or announces
an agreement or an intent to enter into an agreement for the sale, assignment or
transfer of all or substantially all of the INFO Contributed Business with a
third Person, then INFO shall pay to BHW a fee of $4.0 Million. Any such amount
shall be paid in cash by wire transfer in immediately available funds not later
than five (5) Business Days after the obligation to make such payment arises. In
the event that INFO is not in a position to make the $4.0 million payment in
full because of a lack of available funds as evidenced by the appropriate
corporate records of INFO, the parties will agree to a payment schedule
including interest on the amount of any unpaid fee at the publicly announced
prime rate of Citibank, N.A. plus five (5) percentage points (500 basis points)
from the date such fee was required to be paid. Any remaining unpaid amount
shall become immediately due and payable in full upon the closing of any sale,
assignment or transfer of all or substantially all of the INFO Contributed
Business. If INFO fails to promptly pay to BHW any fee when due under this
Section 8.2, then INFO shall pay the costs and expenses (including reasonable
legal fees and expenses) in connection with any action, including the filing of
any lawsuit or other legal action, taken to collect payment, together with
interest on the amount of any unpaid fee at the publicly announced prime rate of
Citibank, N.A. plus five (5) percentage points (500 basis points) from the date
such fee was required to be paid.
8.2.2 This Section 8.2 is the sole and exclusive remedy with respect to a
termination of this Master Transaction Agreement and the transactions
contemplated hereby pursuant to Section 8.1. In the event this Master
Transaction Agreement is terminated and the termination fee is paid pursuant to
Section 8.2, no claim for breach of contract and representation and warranty and
failure to perform or satisfy any covenant, agreement or other obligation
contained in this Master Transaction Agreement or the Related Agreements shall
survive.
8.3 EFFECT OF TERMINATION.
In the event of any termination of this Master Transaction Agreement as provided
above, this Master Transaction Agreement shall forthwith become wholly void and
of no further force and effect and there shall be no liability on the part of
any party, its Affiliates or their respective officers or directors; provided,
however, that upon any such termination the obligations of the parties with
respect to this Article VIII (including Section 8.2), Subsections 5.2.2, 5.2.3,
5.2.4, Sections 3.5, 3.7, 4.5, 4.6, 9.2 and 11.3 and the Mutual Confidentiality
and Nondisclosure Agreement previously entered into by and between INFO and BHIL
shall remain in full force and effect and provided, further, that subject to the
provisions of Subsection 8.2.2, nothing herein will relieve any party from
liability for damages for any breach of covenants or representations and
warranties of this Master
25
Transaction Agreement prior to Closing.
ARTICLE IX
POST CLOSING AGREEMENTS
9.1 WORKING CAPITAL.
9.1.1 Working Capital is expected to be funded by EDCO on a stand-alone basis if
possible. If not possible, the respective shareholders of EDCO will have the
option and right to lend cash to EDCO on a pro rata basis to support EDCO in the
short term (less than one year) at market rates.
9.1.2 If one of the respective shareholders of EDCO elects not to lend cash
(short or long-term) on a pro rata basis, then the other shareholders may at
their option provide the financing, which may be convertible into equity
ownership (based on the then current capital structure of EDCO, utilizing a
similar valuation methodology as the one driving the transactions contemplated
hereby) thereby increasing the ownership position of that shareholder in EDCO.
The amount and duration (i.e., short or long-term) will be approved by the EDCO
Board of Directors. For purposes of this paragraph, pro rata means the then
current equity ownership positions of the respective shareholders.
9.2 CONFIDENTIALITY.
9.2.1 INFO shall hold and shall use its reasonable commercial efforts to cause
the INFO Representatives to hold, and BHW and BHIL shall hold and shall use
their reasonable commercial efforts to cause BHW Representatives to hold, in
strict confidence all non-public documents and information furnished to INFO or
to BHW or BHIL, as the case may be, in connection with the ownership, governance
or operation of EDCO except that each of INFO, BHIL and BHW may disclose any
information that it is required by Law or judicial or administrative order to
disclose.
9.2.2 Neither INFO, BHIL nor BHW shall use or knowingly permit the use of such
non-public information or other confidential or proprietary knowledge of EDCO
for any purpose other than in connection with the strategic alliance
contemplated hereby without the prior consent of the other parties hereto;
provided, that any information that is otherwise publicly available, without
breach of this provision, or has been obtained from a third party without a
breach of such third party's duties, shall not be subject to this Section 9.2.
9.2.3 In the event that either party ceases to be a shareholder of EDCO, such
party shall promptly deliver to EDCO all non-public written material provided
and shall not retain any copies, extracts or other reproductions in whole or in
part of such written material. In such event, all documents, memoranda, notes
and other writings prepared by INFO, BHIL or BHW based on the information in
such material shall be destroyed (and INFO, BHIL and BHW shall use their
respective reasonable
26
commercial efforts to cause their advisors and representatives to similarly
destroy their documents, memoranda and notes), and such destruction (and
reasonable commercial efforts) shall be certified in writing by an authorized
officer supervising such destruction. The provisions of Subsections 9.2.1, 9.2.2
and 9.2.3 shall survive any termination of this Master Transaction Agreement.
9.3 EDCO BOARD OF DIRECTORS.
BHIL anticipates the EDCO Board of Directors will consist of eight
(8) members, six (6) to be named by BHW and two (2) to be named by INFO. The
Chairman of the Board will be James P. Roemer, BHW's Chairman, CEO & President.
Other members will likely be Joseph Reynolds, BHIL CEO, and Nils Johansson, BHW
Executive Vice President & CFO. It is also expected that Van Morris, INFO CEO &
President will serve as EDCO CEO & President, at least on an interim basis. In
order to facilitate a smooth transition of the INFO Contributed Business and
BHIL Contributed Business into EDCO, BHW and BHIL agree that Mr. Morris will not
be terminated from his position as CEO & President of EDCO or a position
responsible for a smooth transition of the INFO Contributed Business and BHIL
Contributed Business into EDCO for six (6) months from the date he assumes such
position, termination for cause excepted. The headquarters of EDCO shall be
initially located in Wayne, Pennsylvania.
9.4 INFO END-USER BUSINESS.
9.4.1 As of the Closing Date, INFO grants to EDCO a right of first refusal to
acquire the INFO End-user Business but only for the acquisition of such business
by itself as a stand alone business or asset and not as part of a Change of
Control of INFO. For a period of two (2) years from the Closing Date, INFO may
not effect, cause to be effected or permit any Transfer of the INFO End-User
Business, except in accordance with the provisions set forth in this Agreement.
Any Transfer not complying with the provisions of this Agreement shall not be
effective for any purpose and any purported transferee of such a Transfer shall
not acquire any right or interest in the INFO End-User Business.
(a) INFO may Transfer the INFO End-User Business pursuant to a
third-party offer which INFO reasonably establishes is bona fide
(the "OFFER"), provided that (x) INFO gives EDCO prior written
notice (the "ORIGINAL NOTICE"), (y) the rights of first refusal
granted hereunder are not exercised and (z) all other conditions
of this Section 9.4.1 are met.
(b) The Original Notice shall state the terms and conditions of the
proposed sale (including the purchase price for the INFO End-User
Business to be Transferred, and the name, business and residential
address of the proposed Transferee) and shall have attached any
documentation related to the Offer and the proposed sale. The
Original Notice shall include the names and addresses of the
following: if the proposed
27
Transferee is (A) a corporation, the officers and directors of the
corporation; (B) a partnership, any limited partners and general
partners of the partnership; (C) a limited liability company, all
members of the limited liability company and (D) a trust, the
trustee and beneficiaries.
(c) Within thirty (30) days after the date of the Original Notice,
EDCO may elect to purchase the INFO End-User Business at the price
specified in the Original Notice. Neither INFO nor any of the
directors elected by INFO may be involved in any capacity in
EDCO's election. EDCO shall evidence its election to purchase by
written notice to INFO. Unless otherwise agreed upon, the closing
of the sale for the INFO End-User Business shall be within sixty
(60) days from the date the written notice is delivered to INFO.
(d) If EDCO does not elect to purchase the INFO End-User Business
within thirty (30) days after the date of Original Notice, then
the INFO may Transfer the INFO End- User Business in accordance
with the Offer. If the INFO End-User Business is not then
Transferred within ninety (90) days from the date of the Original
Notice on the same terms set forth in the Original Notice, all
restrictions contained in this Agreement again shall apply to the
INFO End-User Business, and any subsequent Transfer of the INFO
End-User Business shall be made only in compliance with this
Agreement.
9.4.2 For a period of two (2) years after Closing, if the right of first refusal
described above in 9.4.1 has not been exercised, EDCO shall have an exclusive
call option to acquire the INFO End-user Business from INFO. The purchase price
shall be equal to the preceding 12 months net revenue for the INFO End-user
Business multiplied by 2.0 and shall be paid in immediately available funds to
INFO at the closing of the Transfer of the INFO End-User Business to EDCO.
9.5 EMPLOYEES.
9.5.1 INFO will use its reasonable best efforts to ensure that a sufficient
number of its employees join EDCO so that the INFO Contributed Business can
continue to operate in the ordinary course consistent with past practice. EDCO
will provide appropriate compensation, benefit, and incentive package offers to
the INFO employees subject to this paragraph.
9.5.2 BHW will use its reasonable best efforts to ensure that a sufficient
number of BHIL's employees in the areas of sales, marketing, publishing and
product development join EDCO so that these functions can continue to operate in
the ordinary course. EDCO will provide appropriate compensation, benefit, and
incentive package offers to the BHIL employees subject to this paragraph.
28
9.5.3 Between the date hereof and the Closing Date, INFO will not solicit for
employment or employ any employee of BHIL or any of its Affiliates, or request,
induce or advise any employee to leave the employ of BHIL or any of its
Affiliates.
9.5.4 Between the date hereof and the Closing Date, neither BHW nor BHIL will
solicit for employment or employ any employee of INFO or any of its Affiliates,
or request, induce or advise any employee to leave the employ of INFO or any of
its Affiliates.
9.6 RECORDS AND DOCUMENTS.
Subject to the confidentiality provisions contained in this
Article IX, following the Closing Date, EDCO shall grant to each party and its
representatives, at such party's reasonable request, reasonable access to and
the right to make copies at its expense of those records and documents of EDCO's
Business as may be reasonably necessary for litigation, preparation of financial
statements, and tax returns and audits.
ARTICLE X
DISSOLUTION OF ALLIANCE
10.1 BHW CALL.
Commencing on the third anniversary after the Closing Date and
continuing until the earlier to occur of:
(a) the closing of an underwritten public equity offering of EDCO, or
(b) any event which results in either a Change of Control of either
party or a change of more than twenty percent (20%) in the
percentage ownership of either party in EDCO,
BHW will have a Call Option to buy INFO's equity position in EDCO at a valuation
determined by a fair value appraisal (with no discount applied for illiquidity
or minority interest).
10.2 INFO PUT.
Commencing on the third anniversary after the Closing Date and
continuing until the earlier to occur of:
(a) the closing of an underwritten public equity offering of EDCO, or
29
(b) any event which results in either a Change of Control of either
party or a change of more than twenty percent (20%) in the
percentage ownership of either party in EDCO,
INFO will have a Put Option to sell its equity position in EDCO to BHW at a
valuation determined by a fair value appraisal (with no discount applied for
illiquidity or minority interest).
10.3 RIGHT OF FIRST OFFER.
As of the Closing Date and up to the date EDCO becomes a publicly
traded company on the New York Stock Exchange or the Nasdaq Stock Market, INFO
grants BHW a right of first offer to acquire INFO's equity interest in EDCO but
only for the acquisition of such equity interest in EDCO by itself on a stand
alone basis and not as part of a Change of Control of INFO. INFO may not affect,
or cause to be affected any Transfer of its equity interest in EDCO, except in
accordance with the provisions set forth in this Agreement. Any Transfer not
complying with the provisions of this Agreement shall not be effective for any
purpose and any purported transferee of such a Transfer shall not acquire any
right or interest in INFO's equity interest in EDCO:
(a) If INFO desires to Transfer all or any portion of its equity
interest in EDCO, INFO must give BHW written notice of its desire,
setting forth the terms and conditions, including the purchase
price, that INFO is willing to sell its equity interest in EDCO;
(b) Within thirty (30) days after the written notice is received, BHW
may elect to purchase INFO's equity interest in EDCO on the terms
and conditions set forth in the written notice or on such other
terms and conditions as the parties may mutually agree upon. BHW
shall evidence its election to purchase by written notice to INFO.
Unless otherwise agreed upon, the closing of the sale of INFO's
equity interest in EDCO shall be within sixty (60) days from the
date the written notice is delivered to INFO.
(c) If BHW does not elect to purchase INFO's equity interest in EDCO
within thirty (30) days after the receipt of written notice as
provided in subparagraph (a), then INFO may Transfer its equity
interest in EDCO; provided, however, that if the equity interest
in EDCO is not Transferred within ninety (90) days from the date
of the written notice provided in subparagraph (a), all
restrictions contained in this Agreement shall apply to INFO's
equity interest in EDCO, and any subsequent Transfer of INFO's
equity interest in EDCO shall be made only in compliance with this
Agreement.
30
ARTICLE XI
GENERAL PROVISIONS
11.1 AMENDMENTS AND WAIVER.
(a) No amendment, waiver or consent with respect to any provision of
this Master Transaction Agreement shall in any event be effective,
unless the same shall be in writing and signed by the parties
hereto, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
(b) The failure of any party at any time or times to require
performance of any provisions hereof shall in no manner affect
that party's right at a later time to enforce the same. No waiver
by any party of the breach of any term or covenant contained in
this Master Transaction Agreement in any one or more instances
shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Master Transaction Agreement.
11.2 NOTICES.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be, personally delivered or sent by facsimile
transmission with confirming copy sent by overnight courier (such as Express
Mail, Federal Express, etc.) and a delivery receipt obtained and addressed to
the intended recipient as follows:
(a) If to BHW or BHIL:
Bell & Howell Company
5215 Old Orchard Road
Skokie, Illinois 60077
Attention: CEO & President
Telecopy No.: 847-470-7650
31
With a copy to:
Bell & Howell Company
5215 Old Orchard Road
Skokie, Illinois 60077
Attention: General Counsel
Telecopy No.: 847-470-7881
and
McDermott, Will & Emery
227 West Monroe Street
Suite 4400
Chicago, Illinois 60606-5096
Attention: William J. McGrath, P.C.
Telecopy No.: (312) 984-3669
(b) If to INFO or INFO Corporation:
Infonautics, Inc.
900 West Valley Road
Suite 1000
Wayne, Pennsylvania 19087-1830
Attention: Van Morris, CEO & President
Telecopy No.: (610) 971-8850
32
With a copy to:
Infonautics, Inc.
900 West Valley Road
Suite 1000
Wayne, Pennsylvania 19087-1830
Attention: Vice President & General Counsel
Telecopy No.: (610) 971-8850
and
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103-2921
Attention: David R. King
Telecopy No.: (215) 963-5299
Any party may change its address for receiving notice by written notice given to
the others named above. Notices shall be deemed given as of the date of receipt.
11.3 EXPENSES.
Except as otherwise expressly provided herein, each party to this
Master Transaction Agreement shall pay its own costs and expenses in connection
with the transactions
33
contemplated herein, including fees of counsel, investment bankers and
accountants. The provisions of this Section shall survive any termination of
this Master Transaction Agreement.
11.4 COUNTERPARTS.
This Master Transaction Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
11.5 CAPTIONS.
The captions contained in this Master Transaction Agreement are
for convenience of reference only, shall not be given meaning and do not form a
part of this Master Transaction Agreement.
11.6 SUCCESSORS AND ASSIGNS.
This Master Transaction Agreement shall bind and inure to the
benefit of the parties named herein and their respective successors and
permitted assigns. This Master Transaction Agreement shall not be assigned by
either party hereto without the express prior written consent of the other party
and any attempted assignment, without such consents, shall be null and void.
This Master Transaction Agreement does not create any rights, claims or benefits
inuring to any person that is not a party hereto nor create or establish any
third-party beneficiary hereto.
11.7 ENTIRE TRANSACTION.
This Master Transaction Agreement and the agreements and documents
referred to herein contain the entire agreement and understanding among the
parties with respect to the transactions contemplated hereby and supersede all
other agreements, understandings and undertakings among the parties on the
subject matter hereof. All exhibits and schedules hereto are hereby incorporated
by reference and made a part of this Master Transaction Agreement.
11.8 APPLICABLE LAW.
This Master Transaction Agreement shall be governed by and
construed in accordance with the internal substantive Laws of the state of
Delaware, without giving effect to conflict of Laws rules.
34
11.9 OTHER RULES OF CONSTRUCTION.
References in this Master Transaction Agreement to Sections,
Schedules, Annexes and Exhibits are to Sections of, and Schedules, Annexes and
Exhibits to, this Master Transaction Agreement unless otherwise indicated. Words
in the singular include the plural and in the plural include the singular. The
word "or" is not exclusive. The word "including" shall mean including, without
limitation. The term "ordinary course" means the ordinary course of the business
consistent with the past practice of the respective Contributed Business. The
section and other headings contained in this Master Transaction Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Master Transaction Agreement.
11.10 PARTIAL INVALIDITY.
In the event that any provision of this Master Transaction
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
11.11 AUTHORSHIP.
The parties hereto agree that the terms and language of this
Master Transaction Agreement were the result of negotiations between the parties
and, as a result, there shall be no presumption that any ambiguities in this
Master Transaction Agreement shall be resolved against any party. Any
controversy over construction of this Master Transaction Agreement shall be
decided without regard to events of authorship or negotiation.
35
IN WITNESS WHEREOF, the parties hereto have caused this Master Transaction
Agreement to be duly executed as of the date first written above.
INFONAUTICS, INC.
By:/s/Van Morris
----------------------------
Van Morris, President
INFONAUTICS CORPORATION
By:/s/Van Morris
----------------------------
Van Morris, President
BELL & HOWELL COMPANY
By:/s/Nils A. Johansson
----------------------------
Nils A. Johansson
Executive Vice President and
Chief Financial Officer
BELL & HOWELL INFORMATION AND
LEARNING COMPANY
By:/s/Nils A. Johansson
----------------------------
Nils A. Johansson
Executive Vice President and
Chief Financial Officer
36
Exhibit A
CERTIFICATE OF INCORPORATION
OF
EDCO, INC.
FIRST: The name of the corporation is EDCO, Inc.
SECOND: The registered office of the corporation in the State of
Delaware shall be located at ______________________________. The name of its
registered agent shall be Corporation Service Company.
THIRD: The purposes of the corporation are to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have authority to issue is [25,000] shares of Common Stock,
par value $.01 per share.
FIFTH: The name and mailing address of the sole incorporator is as
follows:
John P. Tamisiea 227 West Monroe Street
Suite 3100
Chicago, IL 60606
SIXTH: In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors is expressly
authorized and empowered, in the manner provided in the By-Laws of the
corporation, to make, alter, amend and repeal the By-Laws of the corporation in
any respect not inconsistent with the laws of the State of Delaware or with this
Certificate of Incorporation.
In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon it, the Board of Directors may exercise all such powers
and do all such acts as may be exercised or done by the corporation, subject,
nevertheless, to the provisions of the laws of the State of Delaware, this
Certificate of Incorporation and the By-Laws of the corporation.
1
Any contract, transaction or act of the corporation or of the directors
or of any committee which shall be ratified by the holders of a majority of the
shares of stock of the corporation present in person or by proxy and voting at
any annual meeting, or at any special meeting called for such purpose, shall,
insofar as permitted by law or by this Certificate of Incorporation, be as valid
and as binding as though ratified by every stockholder of the corporation.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code, or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation as the case may be,
and also on this corporation.
EIGHTH: A director of the corporation shall not be personally 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, as the same exists or hereafter may be amended, or (iv) for any transaction
from which the director derived an improper personal benefit.
If the Delaware General Corporation Law hereafter is amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of directors shall be eliminated or limited to the full
extent authorized by the General Corporation Law of the State of Delaware, as so
amended.
Any repeal or modification of this Article shall not adversely affect
any right or protection of a director of the corporation existing at the time of
such repeal or modification.
2
NINTH: The books of the corporation may be kept (subject to any
provision contained in the statutes) 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 By-Laws of the corporation. Election of directors need not be by ballot
unless the By-Laws of the corporation shall so provide.
TENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this certificate, hereby declaring and certifying
that the facts stated are true, and accordingly, have hereunto set my hand this
____ day of ____________, 1999.
John P. Tamisiea
3
Exhibit B
BY-LAWS
OF
EDCO, INC.
ARTICLE I
OFFICES
Section 1.1. REGISTERED OFFICE. The registered office of the
corporation shall be maintained in the City of Wilmington, State of Delaware,
and the registered agent in charge thereof is Corporation Service Company.
Section 1.2. OTHER OFFICES. The corporation may also have an office in
Chicago, Illinois, and also offices at such other places as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
STOCKHOLDERS' MEETINGS
Section 2.1. PLACE OF MEETINGS. All meetings of the stockholders,
whether annual or special, shall be held at the offices of the corporation or at
such other place as may be fixed from time to time by the Board of Directors.
Section 2.2. ANNUAL MEETINGS. An annual meeting of the stockholders,
commencing with the year 1998, shall be held on the second Tuesday in May in
each year, but if a legal holiday then on the next secular day following, at
11:00 A.M., at which they shall elect a Board of Directors, and transact such
other business as may properly be brought before the meeting.
Section 2.3. NOTICE OF MEETING. Written notice of the annual meeting
stating the place, date and hour of the meeting, shall be given not less than
ten nor more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, notice is given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the corporation.
1
Section 2.4. STOCKHOLDERS' LIST. At least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at said
meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each stockholder,
shall be prepared by the Secretary. Such list shall be open to the examination
of any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 2.5. SPECIAL MEETINGS. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Chairman of the Board or by
the President and shall be called by the Secretary at the request of a majority
of the Board of Directors, or at the request in writing of stockholders owning
at least 50% of the number of shares of the corporation issued and outstanding
and entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 2.6. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting, stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting. If mailed, notice is given when deposited in the United
States mail, postage prepaid, directed to the stockholder at his address as it
appears on the records of the corporation.
Section 2.7. QUORUM. The holders of a majority of the shares issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute, by the Certificate of Incorporation or by these By-Laws. If, however,
such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, of the place, date
and hour of the adjourned meeting, until a quorum shall again be present or
represented by proxy. At the adjourned meeting at which a quorum shall be
present or represented by proxy, the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment, a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
2
Section 2.8. VOTING. When a quorum is present at any meeting, and
subject to the provisions of the General Corporation Law of the State of
Delaware, the Certificate of Incorporation or by these By-Laws in respect of the
vote that shall be required for a specified action, the vote of the holders of a
majority of the shares having voting power, present in person or represented by
proxy, shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of the statutes or of the
Certificate of Incorporation or of these By-Laws, a different vote is required
in which case such express provision shall govern and control the decision of
such question. Each stockholder shall have one vote for each share of stock
having voting power registered in his name on the books of the corporation,
except as otherwise provided in the Certificate of Incorporation.
Section 2.9. PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
A stockholder may execute a writing authorizing another person or
persons to act for him as proxy by transmitting or authorizing the transmission
of a telegram, cablegram, or other means of electronic transmission, provided
that the telegram, cablegram or other means of electronic transmission either
sets forth or is submitted with information from which it can be determined that
the telegram, cablegram or other electronic transmission was authorized by the
stockholder.
Section 2.10. MAJORITY CONSENT. Whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in connection with
any corporate action by any provisions of the statutes or of the Certificate of
Incorporation or these By-Laws, the meeting, notice of the meeting, and vote of
stockholders may be dispensed with if stockholders owning stock having not less
than the minimum number of votes which, by statute, the Certificate of
Incorporation or these By-Laws, is required to authorize such action at a
meeting at which all shares entitled to vote thereon were present and voted
shall consent in writing to such corporate action being taken; provided that
prompt notice of the taking of such action must be given to those stockholders
who have not consented in writing.
3
ARTICLE III
DIRECTORS
Section 3.1. GENERAL POWERS. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
which may exercise all such powers of the corporation and do all such acts and
things as are not by the General Corporation Law of the State of Delaware nor by
the Certificate of Incorporation nor by these By-Laws directed or required to be
exercised or done by the stockholders.
Section 3.2. NUMBER OF DIRECTORS. The number of directors which shall
constitute the whole Board shall be eight. The directors shall be elected at the
annual meeting of the stockholders, and each director shall hold office until
his successor is elected and qualified or until his earlier resignation or
removal.
Section 3.3. VACANCIES. If the office of any director or directors
becomes vacant by reason of death, resignation, retirement, disqualification,
removal from office, or otherwise, or a new directorship is created, the holders
of a plurality of shares issued and outstanding and entitled to vote in
elections of directors, shall choose a successor or successors, or a director to
fill the newly created directorship, who shall hold office for the unexpired
term or until the next election of directors.
Section 3.4. PLACE OF MEETINGS. The Board of Directors may hold its
meetings outside of the State of Delaware, at the office of the corporation or
at such other places as they may from time to time determine, or as shall be
fixed in the respective notices or waivers of notice of such meetings.
Section 3.5. COMMITTEES OF DIRECTORS. The Board of Directors may, by
resolution or resolutions passed by a majority of the whole Board, designate one
or more committees, each committee to consist of one or more of the directors of
the corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power of authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amendment to
the By-Laws, of the corporation; and, unless the resolution, By-Laws, or
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to
4
declare a dividend or to authorize the issuance of stock. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. The committees shall keep
regular minutes of their proceedings and report the same to the Board of
Directors when required.
Section 3.6. COMPENSATION OF DIRECTORS. Directors, as such, may receive
such stated salary for their services and/or such fixed sums and expenses of
attendance for attendance at each regular or special meeting of the Board of
Directors as may be established by resolution of the Board; provided that
nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
Section 3.7. ANNUAL MEETING. The annual meeting of the Board of
Directors shall be held within ten days after the annual meeting of the
stockholders in each year. Notice of such meeting, unless waived, shall be given
by mail or telegram to each director elected at such annual meeting, at his
address as the same may appear on the records of the corporation, or in the
absence of such address, at his residence or usual place of business, at least
three days before the day on which such meeting is to be held. Said meeting may
be held at such place as the Board may fix from time to time or as may be
specified or fixed in such notice or waiver thereof.
Section 3.8. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at any time on the call of the Chairman of the Board or
President or at the request in writing of any one director. Notice of any such
meeting, unless waived, shall be given by mail or telegram to each director at
his address as the same appears on the records of the corporation not less than
one day prior to the day on which such meeting is to be held if such notice is
by telegram, and not less than two days prior to the day on which the meeting is
to be held if such notice is by mail. If the Secretary shall fail or refuse to
give such notice, then the notice may be given by the officer or any one of the
directors making the call. Any such meeting may be held at such place as the
Board may fix from time to time or as may be specified or fixed in such notice
or waiver thereof. Any meeting of the Board of Directors shall be a legal
meeting without any notice thereof having been given, if all the directors shall
be present thereat, and no notice of a meeting shall be required to be given to
any director who shall attend such meeting.
Section 3.9. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting, if a
5
written consent to such action is signed by all members of the Board or of such
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors.
Members of the Board of Directors, or any committee designated by the
Board, may participate in a meeting of the Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.
Section 3.10. QUORUM AND MANNER OF ACTING. Except as otherwise provided
in these By-Laws, a majority of the total number of directors as at the time
specified by the By-Laws shall constitute a quorum at any regular or special
meeting of the Board of Directors. Except as otherwise provided by statute, by
the Certificate of Incorporation or by these By-Laws, the vote of a majority of
the directors present at any meeting at which a quorum is present shall be the
act of the Board of Directors. In the absence of a quorum, a majority of the
directors present may adjourn the meeting from time to time until a quorum shall
be present. Notice of any adjourned meeting need not be given, except that
notice shall be given to all directors if the adjournment is for more than
thirty days or if after the adjournment a new record date is fixed for the
adjourned meeting.
ARTICLE IV
OFFICERS
Section 4.1. EXECUTIVE OFFICERS. The executive officers of the
corporation shall be a Chairman of the Board, a Chief Executive Officer, a
President, such number of Vice Presidents, if any, as the Board of Directors may
determine, a Secretary and a Treasurer. One person may hold any number of said
offices.
Section 4.2. ELECTION, TERM OF OFFICE AND ELIGIBILITY. The executive
officers of the corporation shall be elected annually by the Board of Directors
at its annual meeting; provided that new or additional officers may be elected
at any meeting of the Board. Each officer, except such officers as may be
appointed in accordance with the provisions of Section 4.3, shall hold office
until the next annual election of officers or until his death, resignation or
removal. The Chairman of the Board shall be and remain a member of the Board of
Directors. None of the other officers need be members of the Board.
Section 4.3. SUBORDINATE OFFICERS. The Board of Directors may appoint
such Assistant Secretaries, Assistant Treasurers, Controller and other officers,
and such agents as the Board may
6
determine, to hold office for such period and with such authority and to perform
such duties as the Board may from time to time determine. The Board may, by
specific resolution, empower the chief executive officer of the corporation or
the Executive Committee to appoint any such subordinate officers or agents.
Section 4.4. REMOVAL. The Chairman of the Board, the President, any
Vice President, the Secretary and/or the Treasurer may be removed at any time,
either with or without cause, but only by the affirmative vote of the majority
of the total number of directors as at the time specified by the By-Laws. Any
subordinate officer appointed pursuant to Section 4.3 may be removed at any
time, either with or without cause, by the majority vote of the directors
present at any meeting of the Board or by any committee or officer empowered to
appoint such subordinate officers.
Section 4.5. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors; and
in general shall perform all duties incident to the office of the Chairman of
the Board and such other duties as from time to time may be assigned to him by
the Board of Directors.
Section 4.6. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall
be the chief executive officer of the corporation and shall perform such duties
as may from time to time be assigned by the Board of Directors, and in the
absence or disability of the Chairman of the Board, shall perform the duties of
the Chairman of the Board. He shall have executive authority to see that all
orders and resolutions of the Board of Directors are carried into effect, and,
subject to the control vested in the Board of Directors by statute, by the
Certificate of Incorporation, or by these By-Laws, shall administer and be
responsible for the overall management of the business and affairs of the
corporation.
Section 4.7. THE PRESIDENT. The President shall perform such duties as
may from time to time be assigned by the Chief Executive Officer and the Board
of Directors.
Section 4.8. THE VICE PRESIDENTS. In the event of the absence or
disability of the President, each Vice President, in the order designated, or in
the absence of any designation, then in the order of their election, shall
perform the duties of the President. The Vice Presidents shall also perform such
other duties as from time to time may be assigned to them by the Board of
Directors or by the chief executive officer of the corporation.
7
Section 4.9. THE SECRETARY. The Secretary shall:
(a) Keep the minutes of the meetings of the stockholders and of
the Board of Directors;
(b) See that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law;
(c) Be custodian of the records and of the seal of the corporation
and see that the seal or a facsimile or equivalent thereof is affixed
to or reproduced on all documents, the execution of which on behalf of
the corporation under its seal is duly authorized;
(d) Have charge of the stock record books of the corporation; and
(e) In general, perform all duties incident to the office of
Secretary, and such other duties as are provided by these By-Laws and
as from time to time are assigned to him by the Board of Directors or
by the chief executive officer of the corporation.
Section 4.10. THE ASSISTANT SECRETARIES. If one or more Assistant
Secretaries shall be appointed pursuant to the provisions of Section 4.3
respecting subordinate officers, then, at the request of the Secretary, or in
his absence or disability, the Assistant Secretary designated by the Secretary
(or in the absence of such designations, then any one of such Assistant
Secretaries) shall perform the duties of the Secretary and when so acting shall
have all the powers of, and be subject to all the restrictions upon, the
Secretary.
Section 4.11. THE TREASURER. The Treasurer shall:
(a) Receive and be responsible for all funds of and securities
owned or held by the corporation and, in connection therewith, among
other things: keep or cause to be kept full and accurate records and
accounts for the corporation; deposit or cause to be deposited to the
credit of the corporation all moneys, funds and securities so received
in such bank or other depositary as the Board of Directors or an
officer designated by the Board may from time to time establish; and
disburse or supervise the disbursement of the funds of the corporation
as may be properly authorized.
(b) Render to the Board of Directors at any meeting thereof, or
from time to time whenever the Board of Directors or the chief
executive officer of the corporation
8
may require, financial and other appropriate reports on the condition
of the corporation; and
(c) In general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to
him by the Board of Directors or by the chief executive officer of the
corporation.
Section 4.12. THE ASSISTANT TREASURERS. If one or more Assistant
Treasurers shall be appointed pursuant to the provisions of Section 4.3
respecting subordinate officers, then, at the request of the Treasurer, or in
his absence or disability, the Assistant Treasurer designated by the Treasurer
(or in the absence of such designation, then any one of such Assistant
Treasurers) shall perform all the duties of the Treasurer and when so acting
shall have all the powers of and be subject to all the restrictions upon, the
Treasurer.
Section 4.13. SALARIES. The salaries of the officers shall be fixed
from time to time by the Board of Directors, and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the corporation.
Section 4.14. BONDS. If the Board of Directors or the chief executive
officer shall so require, any officer or agent of the corporation shall give
bond to the corporation in such amount and with such surety as the Board of
Directors or the chief executive officer, as the case may be, may deem
sufficient, conditioned upon the faithful performance of their respective duties
and offices.
Section 4.15. DELEGATION OF DUTIES. In case of the absence of any
officer of the corporation or for any other reason which may seem sufficient to
the Board of Directors, the Board of Directors may, for the time being, delegate
his powers and duties, or any of them, to any other officer or to any director.
ARTICLE V
SHARES OF STOCK
Section 5.1. REGULATION. Subject to the terms of any contract of the
corporation, the Board of Directors may make such rules and regulations as it
may deem expedient concerning the issue, transfer, and registration of
certificates for shares of the stock of the corporation, including the issue
9
of new certificates for lost, stolen or destroyed certificates, and including
the appointment of transfer agents and registrars.
Section 5.2. STOCK CERTIFICATES. Certificates for shares of the stock
of the corporation shall be respectively numbered serially for each class of
stock, or series thereof, as they are issued, shall be impressed with the
corporate seal or a facsimile thereof, and shall be signed by the Chairman of
the Board, or the President or a Vice President, and by the Secretary or
Treasurer, or an Assistant Secretary or an Assistant Treasurer, provided that
such signatures may be facsimiles on any certificate countersigned by a transfer
agent other than the corporation or its employee. Each certificate shall exhibit
the name of the corporation, the class (or series of any class) and number of
shares represented thereby, and the name of the holder. Each certificate shall
be otherwise in such form as may be prescribed by the Board of Directors.
Section 5.3. RESTRICTION ON TRANSFER OF SECURITIES. A restriction on
the transfer or registration of transfer of securities of the corporation may be
imposed either by the Certificate of Incorporation or by these By-Laws or by an
agreement among any number of security holders or among such holders and the
corporation. No restriction so imposed shall be binding with respect to
securities issued prior to the adoption of the restriction unless the holders of
the securities are parties to an agreement or voted in favor of the restriction.
A restriction on the transfer of securities of the corporation is
permitted by this Section if it:
(a) Obligates the holder of the restricted securities to offer to
the corporation or to any other holders of securities of the
corporation or to any other person or to any combination of the
foregoing a prior opportunity, to be exercised within a reasonable
time, to acquire the restricted securities; or
(b) Obligates the corporation or any holder of securities of the
corporation or any other person or any combination of the foregoing to
purchase the securities which are the subject of an agreement
respecting the purchase and sale of the restricted securities; or
(c) Requires the corporation or the holders of any class of
securities of the corporation to consent to any proposed transfer of
the restricted securities or to approve the proposed transferee of the
restricted securities; or
(d) Prohibits the transfer of the restricted securities to
designated persons or classes of persons; and such designation is not
manifestly unreasonable; or
10
(e) Restricts transfer or registration of transfer in any other
lawful manner.
Unless noted conspicuously on the security, a restriction, even though
permitted by this Section, is ineffective except against a person with actual
knowledge of the restriction.
Section 5.4. TRANSFER OF SHARES. Subject to the restrictions permitted
by Section 5.3, shares of the capital stock of the corporation shall be
transferable on the books of the corporation by the holder thereof in person or
by his duly authorized attorney, upon the surrender or cancellation of a
certificate or certificates for a like number of shares. As against the
corporation, a transfer of shares can be made only on the books of the
corporation and in the manner hereinabove provided, and the corporation shall be
entitled to treat the registered holder of any share as the owner thereof and
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person, whether or not it shall have express
or other notice thereof, save as expressly provided by the statutes of the State
of Delaware.
Section 5.5. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which
record date shall not be more than sixty nor less than ten days before
the date of such meeting. If no record is fixed by the Board of
Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close
of business on the day immediately preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day
next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the
adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting,
the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors. If no record date has been fixed
by the Board of Directors, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is required by the
General Corporation Law of the
11
State of Delaware, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer
or agent of the corporation having custody of the book in which
proceedings of meetings by stockholders are recorded. Delivery made to
a corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been
fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law of the State of
Delaware, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at
the close of business on the day on which the Board of Directors adopts
the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or
for the purpose of any other lawful action, the Board of Directors may
fix a record date, which record date shall not precede the date upon
which the resolution fixing the record date is adopted, and which
record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on
which the Board of Directors adopts the resolution relating thereto.
Section 5.6. LOST CERTIFICATE. Any stockholder claiming that a
certificate representing shares of stock has been lost, stolen or destroyed may
make an affidavit or affirmation of the fact and, if the Board of Directors so
requires, advertise the same in a manner designated by the Board, and give the
corporation a bond of indemnity in form and with security for an amount
satisfactory to the Board (or an officer or officers designated by the Board),
whereupon a new certificate may be issued of the same tenor and representing the
same number, class and/or series of shares as were represented by the
certificate alleged to have been lost, stolen or destroyed.
ARTICLE VI
BOOKS AND RECORDS
Section 6.1. LOCATION. The books, accounts and records of the
corporation may be kept at such place or places within or without the State of
Delaware as the Board of Directors may from time to time determine.
Section 6.2. INSPECTION. The books, accounts, and records of the
corporation shall be open to inspection by any member of the Board of Directors
at all times; and open to inspection by the
12
stockholders at such times, and subject to such regulations as the Board of
Directors may prescribe, except as otherwise provided by statute.
Section 6.3. CORPORATE SEAL. The corporate seal shall contain two
concentric circles between which shall be the name of the corporation and the
word "Delaware" and in the center shall be inscribed the words "Corporate Seal."
13
ARTICLE VII
DIVIDENDS AND RESERVES
Section 7.1. DIVIDENDS. The Board of Directors of the corporation,
subject to any restrictions contained in the Certificate of Incorporation and
other lawful commitments of the corporation, may declare and pay dividends upon
the shares of its capital stock either out of the surplus of the corporation, as
defined in and computed in accordance with the General Corporation Law of the
State of Delaware, or in case there shall be no such surplus, out of the net
profits of the corporation for the fiscal year in which the dividend is declared
and/or the preceding fiscal year. If the capital of the corporation, computed in
accordance with the General Corporation Law of the State of Delaware, shall have
been diminished by depreciation in the value of its property, or by losses, or
otherwise, to an amount less than the aggregate amount of the capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets, the Board of Directors of the
corporation shall not declare and pay out of such net profits any dividends upon
any shares of any classes of its capital stock until the deficiency in the
amount of capital represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets shall have been repaired.
Section 7.2. RESERVES. The Board of Directors of the corporation may
set apart, out of any of the funds of the corporation available for dividends, a
reserve or reserves for any proper purpose and may abolish any such reserve.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. FISCAL YEAR. The fiscal year of the corporation shall end
on the 31st day of December of each year.
Section 8.2. DEPOSITORIES. The Board of Directors or an officer
designated by the Board shall appoint banks, trust companies, or other
depositories in which shall be deposited from time to time the money or
securities of the corporation.
Section 8.3. CHECKS, DRAFTS AND NOTES. All checks, drafts, or other
orders for the payment of money and all notes or other evidences of indebtedness
issued in the name of the corporation shall be signed by such officer or
officers or agent or agents as shall from time to time be designated by
resolution of the Board of Directors or by an officer appointed by the Board.
14
Section 8.4. CONTRACTS AND OTHER INSTRUMENTS. The Board of Directors
may authorize any officer, agent or agents to enter into any contract or execute
and deliver any instrument in the name and on behalf of the corporation and such
authority may be general or confined to specific instances.
Section 8.5. NOTICES. Whenever under the provisions of the statutes or
of the Certificate of Incorporation or of these By-Laws notice is required to be
given to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, by depositing the same
in a post office or letter box, in a postpaid sealed wrapper, or by delivery to
a telegraph company, addressed to such director or stockholder at such address
as appears on the records of the corporation, or, in default of other address,
to such director or stockholder at the General Post Office in the City of Dover,
Delaware, and such notice shall be deemed to be given at the time when the same
shall be thus mailed or delivered to a telegraph company.
Section 8.6. WAIVERS OF NOTICE. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders, directors or
members of a committee of directors need be specified in any written waiver of
notice.
Section 8.7. STOCK IN OTHER CORPORATIONS. Any shares of stock in any
other corporation which may from time to time be held by this corporation may be
represented and voted at any meeting of shareholders of such corporation by the
President or a Vice President, or by any other person or persons thereunto
authorized by the Board of Directors, or by any proxy designated by written
instrument of appointment executed in the name of this corporation by its
President or a Vice President. Shares of stock belonging to the corporation need
not stand in the name of the corporation, but may be held for the benefit of the
corporation in the individual name of the Treasurer or of any other nominee
designated for the purpose by the Board of Directors. Certificates for shares so
held for the benefit of the corporation shall be endorsed in blank or have
proper stock powers attached so that said certificates are at all times in due
form for transfer, and shall be held for safekeeping in such manner as shall be
determined from time to time by the Board of Directors.
15
Section 8.8. INDEMNIFICATION
(a) Each person who was or is a party or is threatened to be made
a party to or is involved in any pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a
person of whom he is the legal representative, is or was a director or
officer of the corporation or is or was a director or officer of the
corporation who is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, shall be indemnified
and held harmless by the corporation to the fullest extent authorized
by the laws of Delaware as the same now or may hereafter exist (but, in
the case of any change, only to the extent that such change authorizes
the corporation to provide broader indemnification rights than said law
permitted the corporation to provide prior to such change) against all
costs, charges, expenses, liabilities and losses (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of his heirs, executors and administrators.
The right to indemnification conferred in this Section shall be a
contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in
advance of its final disposition upon receipt by the corporation of an
undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that the
director or officer is not entitled to be indemnified under this
Section or otherwise. The corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the
corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
(b) If a claim under subsection (a) of this Section is not paid in
full by the corporation within thirty days after a written claim has
been received by the corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the
claimant shall also be entitled to be paid the expense of prosecuting
such claim. It shall be a defense to any action (other than an action
brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required
undertaking has been tendered to the corporation) that the claimant has
failed to meet a standard of conduct which makes it permissible under
Delaware law for the corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its
Board of Directors, independent legal counsel, or its stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is permissible in the circumstances
because he has met such standard of conduct, nor an actual
determination by the corporation (including its Board of
16
Directors, independent legal counsel, or its stockholders) that the
claimant has not met such standard of conduct, nor the termination of
any proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall be a defense to the
action or create a presumption that the claimant has failed to meet the
required standard of conduct.
(c) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition
conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity
while holding such office.
(d) The corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust
or other enterprise against any expense, liability or loss, whether or
not the corporation would have the power to indemnify such person
against such expense, liability or loss under Delaware law.
(e) To the extent that any director, officer, employee or agent of
the corporation is by reason of such position, or a position with
another entity at the request of the corporation, a witness in any
proceeding, he shall be indemnified against all costs and expenses
actually and reasonably incurred by him or on his behalf in connection
therewith.
(f) The corporation shall have the power to indemnify any person
who is or was a director, officer, employee or agent of a constituent
corporation absorbed in a consolidation or merger with this corporation
or who is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, in the same
manner as hereinabove provided so that such persons will stand in the
same position under this Section 8.8 with respect to this corporation
as he would have stood with respect to such constituent corporation if
its separate existence had continued.
(g) In addition to the foregoing, the corporation shall have the
power, to the full extent provided by law, to indemnify any person for
any act or omission of such person against all loss, cost, damage and
expense (including attorney's fees) if such person is determined to
have acted
17
in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interest of the corporation.
(h) No director shall be personally liable to the corporation or
any stockholder for monetary damages for breach of fiduciary duty as a
director; provided, however, that the foregoing shall not eliminate or
limit the liability of a director (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law; (iii) under Section 174 of the General
Corporation Law of the State of Delaware; or (iv) for any transaction
from which the director derived an improper personal benefit.
(i) Any amendment, repeal or modification of any provision of this
Section by the stockholders or the directors of the corporation shall
not adversely affect any right or protection of a director or officer
of the corporation existing at the time of such amendment, repeal or
modification.
Section 8.9. AMENDMENT OF BY-LAWS. The stockholders, by the affirmative
vote of the holders of a majority of the stock issued and outstanding and having
voting power may, at any annual or special meeting if notice of such alteration
or amendment of the By-Laws is contained in the notice of such meeting, adopt,
amend, or repeal these By-Laws, and alterations or amendments of By-Laws made by
the stockholders shall not be altered or amended by the Board of Directors.
The Board of Directors, by the affirmative vote of a majority of the
whole Board, may adopt, amend, or repeal these By-Laws at any meeting, except as
provided in the above paragraph. By-Laws made by the Board of Directors may be
altered or repealed by the stockholders.
* * *
18
Exhibit C
BILL OF SALE, ASSIGNMENT AND
ASSUMPTION AND INDEMNITY AGREEMENT
This AGREEMENT is dated as of _________, 1999 ("Agreement"), by and between
________________________ a Delaware corporation ("Seller") and
________________________ a Delaware corporation ("Buyer"). Capitalized terms
used in this Agreement shall, unless otherwise defined herein, have the
meanings ascribed to them in the Glossary attached as Annex A hereto.
WHEREAS, Seller is engaged in the ______ Contributed Business;
WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, subject to the assumption of the associated liabilities and
obligations, certain assets, properties and rights used in the ______
Contributed Business upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereto
mutually agree as follows:
ARTICLE I
THE TRANSACTION
1.1. Purchase and Sale of Contributed Assets.
Seller hereby sells, transfers, assigns and delivers to Buyer, and Buyer shall
purchase, accept and receive, all of Seller's right, title and interest in and
to the Contributed Assets (as defined below) as they exist on the date hereof.
1.2. Contributed Assets.
The "Contributed Assets" are all of Seller's right, title and interest in and to
the following :
(a) all accounts and notes receivable of the ______ Contributed
Business;
(b) the assets listed on Schedule _________1;
(c) customer databases of the ______ Contributed Business;
(d) all Intellectual Property (as defined below) listed
specifically on Schedule _______1;
(e) the customer files and all lists of customers, suppliers and
vendors of the ______ Contributed Business;
(f) all rights and claims under lease, management or sale
contracts, customer orders, service agreements and other
similar commitments of the ______ Contributed Business as set
forth on Schedule ______2;
1
(g) the software listed specifically on Schedule _____1;
(h) documents and records directly and solely relating to the
Contributed Assets, including accounts receivable and accounts
payable ledgers, records and files; and
(i) to the extent assignable and transferable to Buyer, permits
and licenses (and pending applications for any thereof)
related to the operation of the ______ Contributed Business
or the Contributed Assets;
provided, however, that the definition of Contributed Assets shall not include
any items defined as Excluded Assets in Section 1.3 below.
1.3. Excluded Assets.
Seller will retain and not transfer, and Buyer will not acquire any assets of
Seller, other than the Contributed Assets, (collectively, the "Excluded
Assets"), including, the following assets which shall not be sold or
transferred to Buyer:
(a) all cash and cash equivalents, including cash on hand or in
bank accounts;
(b) the name, marks and other designations, including any
derivations thereof listed on Schedule 1.3;
(c) corporate accounting journals and corporate books of account
which comprise Seller's or any Affiliate's permanent
accounting or tax records;
(d) corporate minute books, stock records and corporate seals of
Seller;
(e) refunds pertaining to any Tax obligations of Seller or any of
its Affiliates;
(f) software and information systems, including the software
listed on Schedule 1.3, but excluding the software listed on
Schedule _____1;
(g) the assets listed on Schedule 1.3; and
(h) items sold, transferred, disposed of or consumed in the
ordinary course prior to the date hereof;
provided, however, that the definition of Excluded Assets shall not include any
items defined as Contributed Assets in Section 1.2.
1.4. Assumed Liabilities and Obligations.
Buyer hereby assumes and agrees to discharge promptly as they become due any and
all liabilities and obligations and agreements related to or arising from the
operation of ______ Contributed Business or the ownership of the Contributed
Assets, including all contracts and obligations which constitute Contributed
Assets or to which the Contributed Assets are subject or
2
by which they are bound, all of which liabilities and obligations are set forth
on Schedule _____3 (the "Assumed Liabilities"); provided, however, that
notwithstanding the foregoing, none of the Excluded Liabilities (as defined
below) shall be included as Assumed Liabilities. Buyer shall forever defend,
indemnify and hold harmless Seller from and against any and all liabilities,
obligations, claims, damages, costs and expenses (including court costs and
reasonable attorneys' fees) related to or arising from Buyer's failure to fully
perform and discharge the responsibilities of Seller with respect to the Assumed
Liabilities. Buyer further agrees to pay and discharge all such liabilities and
obligations as they become due.
1.5. Excluded Liabilities and Obligations.
Buyer shall not assume any liabilities or obligations of Seller, any of its
Affiliates or the ______ Contributed Business for Federal, state or local
taxes on income for all periods prior to the date hereof and any obligation
or liability to pay benefits under Seller's employee benefit plans to the
Transferred Employees for all periods ending prior to the date hereof (the
"Excluded Liabilities"). Seller shall forever defend, indemnify and hold
harmless Buyer from and against any and all liabilities, obligations, claims,
damages, costs and expenses (including court costs and reasonable attorneys'
fees) related to or arising from Seller's failure to fully perform and
discharge the Excluded Liabilities. Seller further agrees to pay and
discharge all such liabilities and obligations as they become due.
1.6. Assignment of Contracts.
Anything contained in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign the right, title or
interest of Seller in, to or under any contract or any claim or right of any
benefit arising thereunder or resulting therefrom if any attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof or in any way adversely affect the rights of Buyer or Seller thereunder
or if by its nature such contract cannot be assigned. Seller shall use its
reasonable commercial efforts to obtain, and Buyer agrees to cooperate with
Seller in its efforts to obtain, the consent of each such third party to the
assignment or transfer thereof to Buyer in all cases in which such consent is
required for assignment or transfer. If such consent is not obtained, Seller and
Buyer shall cooperate in any reasonable arrangements on mutually acceptable
terms designed to provide Buyer the obligations and benefits thereunder such as,
by example, entering into a subcontract, management agreement, or other similar
relationship. Notwithstanding the foregoing, the obligations of Seller under
this Section shall not include any obligation to make any unreimbursed payment
or incur any economic burden.
ARTICLE II
CONSIDERATION
2.1. Consideration.
The consideration to be paid by Buyer for the Contributed Assets shall be
_____ shares of Common Stock of Buyer as provided for in the Master
Transaction Agreement.
3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1. Absence of Certain Changes.
Except as set forth in Schedule 4.1 of the Disclosure Annex and for trends
which may affect the economy or the information industry as a whole, since
December 31, 1998 (the "Balance Sheet Date") the ______ Contributed Business
has not suffered any adverse change in the operation or financial condition
thereof, except such changes which, in the aggregate, are not reasonably
likely to have a Material Adverse Effect.
3.2. Title to Tangible Assets.
Seller has good title to the Contributed Assets which it purports to own, free
and clear of any [Liens], except for:
(a) Liens for current taxes not yet due and payable;
(b) Liens which would not, in the aggregate, have a Material
Adverse Effect;
(c) mechanics', carriers', workers' and other similar Liens
arising or incurred in the ordinary course of business
consistent with past practice;
(d) in the case of properties or assets acquired after the Balance
Sheet Date, Liens securing all or a part of the purchase price
thereof; and
(e) Liens in favor of Seller's creditors which are being released
as of the date hereof.
The Contributed Assets will furnish Buyer with all of the capacity and rights
to produce, develop, use, sell, distribute, install and service the products
and to perform the same services in the same manner as presently being
provided or performed by Seller with respect to the ______ Contributed Business.
3.3. Intellectual Property.
3.3.1. Schedule 3.3 of the Disclosure Annex sets forth a list of all of the
following which are owned or licensed by Seller or any of its
Affiliates and which are primarily used by or licensed to the ______
Contributed Business:
(a) trademark, servicemark and trade name registrations and
applications and all material unregistered trademarks, trade
names and service marks and domain names;
(b) registered and applied for copyrights;
(c) patents and patent applications; and
(d) material trademark, copyright and patent license agreements,
in each case currently used in connection with the ______
Contributed Business.
4
3.3.2. The foregoing items and their respective rights under any license
agreement relating thereto (whether as licensee or licensor
thereunder), are referred to herein as the "Intellectual Property."
3.3.3. Upon consummation of the transactions contemplated hereby, Buyer has
adequate and customary rights to use all of the Intellectual Property
including all trade secrets to conduct the ______ Contributed Business
as currently conducted by Seller, except where the failure to have
such rights would not, in the aggregate, have a Material Adverse
Effect.
3.3.4. All proprietary information in the nature of trade secrets, including
Software:
(a) is accessible, readily available and evidenced by
Documentation adequate and customary for use in the ______
Contributed Business (i.e., in the case of Software,
is sufficient in scope, content and level of detail to enable
a person with relevant programming experience to modify and
maintain the Software) and such Documentation, including
relevant source code, is in the possession of Seller and its
Affiliates (or appropriate Software escrows) under customary
security conditions; and
(b) has been the subject of reasonable efforts to maintain it in
confidence by the Seller, except for those instances which,
in the aggregate, would not be reasonably expected to have a
Material Adverse Effect.
3.3.5. Except as set forth in Schedule 3.3 of the Disclosure Annex, no claim
is pending or, to the Knowledge of Seller, threatened against Seller
or any Affiliate to the effect that the rights of Seller or any
Affiliate in or to any Intellectual Property are invalid or
unenforceable or that the use by the ______ Contributed Business of the
Intellectual Property infringes on the rights of any third party, or
which challenges Seller's or any Affiliate's ownership of the
Intellectual Property, except for such claims as would not reasonably
be expected to, in the aggregate, have a Material Adverse Effect.
3.4. Material Contracts.
3.4.1. Each of the following Commitments to which, as of the date hereof, the
______ Contributed Business is a party or by which it is bound, is
referred to herein as a Material Commitment:
(a) Notes, bonds, mortgages, and other obligations for borrowed
money;
(b) Employment, severance, management, consulting, and other
agreements involving compensation for services rendered or to
be rendered, in each case involving payments of more than
[$200,000] per year;
5
(c) Contracts relating to the licensing of Intellectual Property
(whether Seller and any Affiliate is the licensor or the
licensee thereunder) other than licenses which are not
material;
(d) Leases relating to real property; and
(e) Other contracts involving annual payments in excess of
[$200,000] unless cancelable on 60 days or less notice for a
nominal payment.
3.4.2. Seller has made available to Buyer true and complete copies of all such
Material Commitments or representative forms thereof. Such Material
Commitments are valid and binding obligations of Seller or any
Affiliate and, to the Knowledge of Seller, the other party thereto.
None of the members of the ______ Contributed Business nor, to the
Knowledge of Seller, the other party thereto is in material breach of
any such Material Commitment, except for such breaches as would not
reasonably be expected to have a Material Adverse Effect.
3.5. Contracts with Affiliates.
Except as set forth in Schedule 3.5 of the Disclosure Annex, there are no
Commitments between the ______ Contributed Business and Seller or any of
Seller's other Affiliates.
3.6. Litigation.
Except as set forth on Schedule 3.6 of the Disclosure Annex, there is no
Proceeding, or to the Knowledge of Seller, threatened involving the ______
Contributed Business, at law or in equity, or before any governmental entity,
which in the aggregate would reasonably be expected to have a Material
Adverse Effect. The ______ Contributed Business as conducted by the Seller is
not being conducted in violation of any applicable law, ordinance, rule,
regulation, decree or order of any domestic or foreign court or governmental
entity, except for violations which in the aggregate would reasonably be
expected to have a Material Adverse Effect.
3.7. Employee Benefit Plans.
3.7.1. Schedule 3.7 of the Disclosure Annex lists each Employee Benefit Plan
covering Transferred Employees. Except as set forth in Schedule 3.7 of
the Disclosure Annex:
(a) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) substantially complies in form
and in operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(b) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, and Summary Plan
Descriptions) have been filed or distributed appropriately
with respect to each such Employee Benefit Plan. The
requirements of Part 6 of Subtitle B of Title I of ERISA and
of Code Sec. 4980B have been substantially satisfied with
respect to each such Employee
6
Benefit Plan which is an Employee Welfare Benefit Plan.
(c) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an
Employee Pension Benefit Plan and all contributions for any
period ending on or before the date hereof which are not yet
due have been paid to each such Employee Pension Benefit Plan
or accrued in accordance with the past custom and practice of
the Seller. All premiums or other payments for all periods
ending on or before the date hereof have been paid with
respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(d) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and which is described on Schedule 3.7 of the
Disclosure Annex as meeting the requirements of Code Sec.
401(a), meets the requirements of a "qualified plan" under
Code Sec. 401(a) and has within the last two years, either
received a favorable determination letter from the IRS
or has requested such a letter within the remedial amendment
period of Code Sec. 401(b).
(e) Seller has delivered to the Buyer correct copies of the plan
documents and Summary Plan Descriptions, the most recent
determination letter received from the IRS, the most recent
Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which
implement each such Employee Benefit Plan.
3.7.2. With respect to each Employee Benefit Plan that Seller, and the
[Controlled Group of Corporations] which includes Seller maintains or
ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:
(a) No such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a
[Reportable Event] as to which notices would be required to be
filed with the PBGC. No proceeding by the PBGC to terminate
any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or threatened.
(b) To the Knowledge of Seller, there have been no Prohibited
Transactions with respect to any such Employee Benefit Plan,
and no fiduciary has incurred 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 such Employee Benefit Plan. To the Knowledge of Seller,
no action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets
of any such Employee Benefit Plan (other than routine claims
for benefits) is pending or threatened.
(c) Seller has not incurred any Liability to the PBGC (other
than PBGC
7
premium payments) or otherwise under Title IV of ERISA
(including any withdrawal Liability) or under the Code with
respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
3.7.3. Except as set forth on SCHEDULE 3.7 of the Disclosure Annex, none of
Seller, its Affiliates, and the other members of the Controlled Group
of Corporations that includes the Seller contributes to, ever has
contributed to, or ever has been required to contribute to any
[Multiemployer Plan] or has any [Liability] (including withdrawal
Liability) under any Multiemployer Plan.
3.7.4. Except as set forth on SCHEDULE 3.7 of the Disclosure Annex, Seller
does not maintain or contribute to any Employee Welfare Benefit Plan
providing medical, health, or life insurance or other welfare-type
benefits for current or future retired or terminated employees, their
spouses, or their dependents (other than in accordance with Code Sec.
4980B).
3.8. ENVIRONMENTAL MATTERS.
Except as set forth in Schedule 3.8 of the Disclosure Annex or in the Phase I
Studies:
(a) Seller and its Affiliates hold, and are in compliance with,
all permits, licenses and government authorizations required
for the ______ Contributed Business to hold its assets and to
conduct the ______ Contributed Business under any
Environmental Law, except where the failure to be in such
compliance would not have a Material Adverse Effect;
(b) Seller and its Affiliates are in compliance with all
applicable Environmental Laws, except where the failure to be
in compliance would not have a Material Adverse Effect;
(c) Seller and its Affiliates have not received any written
request for information, or has been notified that it is a
potentially responsible party, under the federal Comprehensive
Environmental Response, Compensation, and Liability Act or any
similar local, state or foreign law with respect to any
on-site or off-site location;
(d) Seller and its Affiliates have not entered into or agreed to
any consent decree or order, and is not subject to any
judgment, decree or judicial order relating to compliance
with, or the cleanup of regulated substances under, any
applicable Environmental Law.
3.9. LABOR RELATIONS.
3.9.1. No member of the ______ Contributed Business is a party to any
collective bargaining agreement.
8
3.9.2. There is no unfair labor practice complaint or other proceeding against
the ______ Contributed Business pending before the National Labor
Relations Board which, if adversely decided, is reasonably likely to
have a Material Adverse Effect. There is no labor strike, work stoppage
or arbitration proceeding pending or involving or, to the Knowledge of
Seller, threatened against Seller or any Affiliate which is reasonably
likely to have a Material Adverse Effect. To the Knowledge of Seller,
there are no organizing efforts by any union or other group seeking to
represent the employees of the Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that the following statements are
true and correct in all material respects:
4.1. CORPORATE ORGANIZATION; ETC.
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to have such power or
authority is not, in the aggregate, reasonably likely to have a Material Adverse
Effect.
4.2. AUTHORITY RELATIVE TO THIS AGREEMENT.
Buyer has all requisite corporate authority and power to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Buyer have been duly and validly
authorized by all required corporate action on the part of Buyer and no other
corporate proceedings on the part of Buyer are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer and,
assuming this Agreement has been duly authorized, executed and delivered by
Seller, constitutes a valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms.
4.3. CONSENTS AND APPROVALS; NO VIOLATIONS.
4.3.1. No filing with, and no permit, authorization, Consent or approval of,
any Government Authority is necessary for the consummation by Buyer
of the transactions contemplated by this Agreement.
4.3.2. Neither the execution and delivery of this Agreement by Buyer nor the
consummation by Buyer of the transactions contemplated hereby nor
compliance by Buyer with any of the provisions hereof will:
9
(a) conflict with or result in any breach of any provision of the
charter or by-laws of Buyer,
(b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both), a default (or
give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which
Buyer or any of its Subsidiaries is a party or by which any of
them or any of their properties or assets may be bound, or
(c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer, any of its Subsidiaries or any
of their properties or assets,
except, in the case of (b) and (c) for violations, breaches or defaults which
are not in the aggregate reasonably likely to have a Material Adverse Effect or
prevent or delay the consummation of the transactions contemplated hereby.
ARTICLE V
SURVIVAL AND INDEMNIFICATION
5.1. SURVIVAL PERIODS.
5.1.1. All representations and warranties of the parties contained in this
Agreement shall survive the consummation of the transactions
contemplated hereby until 12 months after the date hereof.
5.1.2. The covenants and agreements of the parties hereto shall survive the
consummation of the transactions contemplated hereby in accordance with
their terms.
5.1.3. From and after the date hereof, Seller hereby agrees to indemnify and
hold harmless Buyer, and Buyer hereby agrees to indemnify and hold
harmless Seller, against certain liabilities, in accordance with the
terms of this Article V.
5.1.4. No party providing indemnification pursuant to this Article V (an
"Indemnifying Party") shall be obligated to provide such
indemnification with respect to representations and warranties to the
other party (the "Indemnified Party") unless the Indemnifying Party
shall have received written notice within 12 months after the date
hereof.
5.2. INDEMNIFICATION.
Subject to the other provisions of this Article V, from and after the date
hereof, the Indemnifying Party shall indemnify and hold harmless the Indemnified
Party from and against any Damages to the extent they are the result of any
breach of any representation or warranty or failure to perform
10
any covenant or agreement made by the Indemnifying Party under this Agreement.
5.3. INDEMNIFICATION AMOUNTS.
Notwithstanding any provision to the contrary contained in this Agreement, the
Indemnifying Party shall not be obligated to indemnify the Indemnified Party for
any Damages with respect to representations and warranties:
(a) unless and until the amount of all such Damages shall equal in
the aggregate an amount equal to $100,000, and then only to
the extent of such excess, and
(b) to the extent that the amount of all such payments by Seller
would exceed Twenty Million Dollars ($20,000,000).
5.4. CLAIMS.
5.4.1. If an Indemnified Party intends to seek indemnification pursuant to
this Article V, such Indemnified Party shall promptly give the
Indemnifying Party a Notice of Claim describing such Claim in
reasonable detail; provided, that the failure to provide such notice
shall not affect the obligations of the Indemnifying Party unless it is
actually prejudiced thereby, subject, however, to the time periods
specified in Section 5.1 hereof. In the event that such Claim involves
a claim by a third party against the Indemnified Party, the
Indemnifying Party shall have 30 days after receipt of such notice to
decide whether it will undertake, conduct and control, through counsel
of its own choosing and at its own expense, the settlement or defense
thereof, and if it so decides, the Indemnified Party shall cooperate
with it in connection therewith; provided, that the Indemnified Party
may participate in such settlement or defense through counsel chosen by
it; and provided further, that the fees and expenses of such counsel
shall be borne by the Indemnified Party.
5.4.2. The Indemnifying Party shall not, without the written consent of the
Indemnified Party, settle or compromise any action in any manner that
would materially and adversely affect the Indemnified Party, other than
as a result of money damages or other money payments.
5.4.3. If the Indemnifying Party does not notify the Indemnified Party within
30 days after the receipt of the Indemnified Party's Notice of a Claim
of indemnity hereunder that it elects to undertake the defense thereof,
the Indemnified Party shall have the right to contest, settle or
compromise the Claim but shall not thereby waive any right to indemnity
therefor pursuant to this Agreement.
5.4.4. As long as the Indemnifying Party is contesting any such Claim in good
faith, the Indemnified Party shall not pay or settle any such Claim.
Notwithstanding the foregoing, the Indemnified Party shall have the
right to pay or settle any such Claim; provided, that:
(a) as long as the Indemnifying Party is contesting such Claim in
good faith, any
11
such settlement shall include as an unconditional term thereof
the delivery by the Claimant or plaintiff to the Indemnifying
Party of a duly executed written release of the Indemnifying
Party from all liability and obligation in respect of such
action;
(b) in such event Indemnified Party shall waive any right to
indemnity therefor by the Indemnifying Party; and
(c) that the Indemnified Party shall provide the Indemnifying
Party reasonable advance notice of any proposed settlement or
payment and shall not pay or settle any Claim if the
Indemnifying Party shall reasonably object.
5.4.5. The Indemnified Party shall cooperate fully in all aspects of any
investigation, defense, pretrial activities, trial, compromise,
settlement or discharge of any Claim in respect of which indemnity is
sought pursuant to Article V, including, but not limited to, by
providing the other party with reasonable access to employees and
officers (including as witnesses) and other information.
5.5. EXCLUSIVE REMEDY.
5.5.1. The indemnification provisions of this Article V shall be the exclusive
remedy following the date hereof for any breaches or alleged breaches
of any representation, warranty or other provision of this Agreement
or the transactions contemplated hereby. Buyer shall have the right to
set-off against any dividends, distributions or other payments to be
made by Buyer pursuant to this Agreement or otherwise.
5.5.2. Each of the parties hereto, on behalf of itself and its officers,
directors, employees, shareholders, partners, affiliates, agents or
representatives (collectively, such party's "Representatives") agrees
not to bring any actions or proceedings, at law, equity or otherwise,
against any other party or its Representatives, in respect of any
breaches or alleged breaches of any representation, warranty or other
provision of this Agreement, except pursuant to the express provisions
of this Article V.
5.5.3. The parties hereby agree that no party has made any representations and
warranties, express or implied, with respect to this Agreement or the
matters contemplated hereby, except as explicitly set forth in this
Agreement.
5.6. TAX AND INSURANCE OFFSETS.
The amount of any Damages suffered by an Indemnified Party shall be reduced
by any Tax Benefit, insurance or other benefits which are available to such
party or its Representatives in respect of or as a result of such Damages or
the facts or circumstances relating thereto. If any Damages for which
indemnification is made hereunder are subsequently reduced by any Tax
Benefit, insurance payment or other recovery from a third party, the value of
such Tax Benefit or other benefit or the amount of such payment or other
recovery shall be remitted to the Indemnifying Party.
12
ARTICLE VI
GENERAL PROVISIONS
6.1. AMENDMENTS AND WAIVER.
(a) No amendment, waiver or consent with respect to any provision
of this Agreement shall in any event be effective, unless the
same shall be in writing and signed by the parties hereto, and
then such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for
which given.
(b) The failure of any party at any time or times to require
performance of any provisions hereof shall in no manner affect
that party's right at a later time to enforce the same. No
waiver by any party of the breach of any term or covenant
contained in this Agreement in any one or more instances shall
be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any
other term or covenant contained in this Agreement.
6.2. NOTICES.
All notices, requests, demands and other communications hereunder shall be in
writing and shall be, personally delivered or sent by facsimile transmission
with confirming copy sent by overnight courier (such as Express Mail, Federal
Express, etc.) and a delivery receipt obtained and addressed to the intended
recipient as follows:
(c) If to Seller:
Attention:
Telecopy No.:
With a copy to:
Attention:
Telecopy No.:
13
and
Attention:
Telecopy No.:
(d) If to Buyer:
---------------------
---------------------
---------------------
Attention:
Telecopy No.:
With a copy to:
Any party may change its address for receiving notice by written notice given to
the others named above. Notices shall be deemed given as of the date of receipt.
6.3. EXPENSES.
Except as otherwise expressly provided herein, each party to this Agreement
shall pay its own costs and expenses in connection with the transactions
contemplated herein, including fees of counsel, investment bankers and
accountants. The provisions of this Section shall survive any termination of
this Agreement.
6.4. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
6.5. CAPTIONS.
The captions contained in this Agreement are for convenience of reference only,
shall not be given meaning and do not form a part of this Agreement.
14
6.6. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the parties named herein
and their respective successors and permitted assigns. This Agreement shall not
be assigned by either party hereto without the express prior written consent of
the other party and any attempted assignment, without such consents, shall be
null and void. This Agreement does not create any rights, claims or benefits
inuring to any person that is not a party hereto nor create or establish any
third-party beneficiary hereto.
6.7. ENTIRE TRANSACTION.
This Agreement and the agreements and documents referred to herein contain the
entire agreement and understanding among the parties with respect to the
transactions contemplated hereby and supersede all other agreements,
understandings and undertakings among the parties on the subject matter hereof.
All exhibits and schedules hereto are hereby incorporated by reference and made
a part of this Agreement.
6.8. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with the
internal substantive laws of the state of Delaware, without giving effect to
conflict of laws rules.
6.9. OTHER RULES OF CONSTRUCTION.
References in this Agreement to Sections, Schedules, Annexes and Exhibits are
to Sections of, and Schedules, Annexes and Exhibits to, this Agreement unless
otherwise indicated. Words in the singular include the plural and in the
plural include the singular. The word "or" is not exclusive. The word
"including" shall mean including, without limitation. The term "ordinary
course" means the ordinary course of the ______ Contributed Business
consistent with the past practice of the ______ Contributed Business. The
section and other headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
6.10. PARTIAL INVALIDITY.
In the event that any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
6.11. AUTHORSHIP.
The parties hereto agree that the terms and language of this Agreement were the
result of negotiations between the parties and, as a result, there shall be no
presumption that any ambiguities in this Agreement shall be resolved against
either party. Any controversy over construction of this Agreement shall be
decided without regard to events of authorship or negotiation.
15
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
signed by its duly authorized officer as of the date first above written.
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
16
Exhibit D-1
BHIL TECHNICAL SERVICES AGREEMENT (Section 2.3.1)
Parties: BHIL and EDCO.
Term: 36 months, renewable by mutual agreement of
the parties. EDCO can terminate upon 90 days
written notice, provided, however, that if
EDCO wants to use a third Person to provide
the services hereunder:
(i) EDCO shall obtain three bids from
independent third Persons,
(ii) the cost of the third Person must be 90%
or less of the costs charged by BHIL for
the same services, and
(iii) BHIL has not exercised its right of
first refusal to match the costs of the
third Person, which right of first
refusal will not be unreasonably
exercised.
Charges: The Fully Loaded Costs to provide the services
which initially shall equal XXX of EDCO's Net
Revenue from ProQuest for the first 12 months
and thereafter shall be adjusted to the Fully
Loaded Costs incurred during the preceding 12
month period on each anniversary of this
Agreement, subject to a mutually agreed upon
reduction if there is a shift from peak to
non-peak usage by EDCO.
Scope of Services: Data Center and Information Technology Support
services, consisting of the following:
a) BHIL will keep available sufficient
hardware and systems software to support
the use of ProQuest by EDCO's customers in
the K-12 Segment.
b) BHIL will provide the same service level to
EDCO as BHIL provides to the Post Secondary
Education Segment.
c) EDCO may request that BHIL load additional
license material to the "electronic vault"
of BHIL. Loading such materials shall be at
additional cost and subject to reasonable
scheduling pursuant to a written work order
executed by BHIL and EDCO.
d) BHIL will create, manufacture and ship such
ProQuest CD-ROM products as are currently
licensed by BHIL into the K-12 Segment as
long as it is economically reasonable for
BHIL to provide such products and services.
e) The Services are more fully described in
the attached Technical Support Term Sheet
and Data Center Term Sheet. (Attachments 1
and 2 to this Exhibit D-1)
f) BHIL will respond to questions and assist
with implementation as specified in the
Technical Support Term Sheet. (Attachment 1
to this Exhibit D-1).
g) In the event that the Scope of the Services
shall increase materially from the level at
which they exist at the effective date of
this Agreement, and such increases require
BHIL to purchase or lease such hardware and
systems software as necessary to support
such increased usage, the increased costs
will be shared by EDCO and BHIL
proportionately based upon the need for
increased usage. The purchase or lease of
such hardware and systems software shall be
pursuant to a written work order executed
by BHIL and EDCO.
h) In the event that EDCO terminates this
Agreement, it will assume the obligations
of any hardware lease or software license
of BHIL that is used primarily to satisfy
EDCO's system usage (unless BHIL waives
such obligation).
Enhancements: To the extent there are enhancements or
modifications to the BHIL Software that
require
D-2
additional hardware, software or labor, the
parties shall negotiate in good faith an
increase in the cost of this Agreement to EDCO
to compensate BHIL for such increased
hardware, software and/or labor costs. The
enhancements or modifications shall be agreed
to pursuant to a written work order executed
by BHIL and EDCO.
Liaisons: Each party shall designate a primary liaison
for this Agreement who shall be the single
person authorized to agree to changes,
modifications or methods of implementation of
this Agreement.
Miscellaneous: This Agreement shall contain provisions
regarding Warranty, Limitation of Liability,
Confidentiality, Governing Law and other
standard provisions.
D-3
Attachment 1 TO Exhibit D-1
TECHNICAL SUPPORT TERM SHEET (Section 2.3.3)
This sheet describes the terms and conditions under which BHIL will provide
technical support for the software licensed to EDCO under the BHIL Software
License and support under this BHIL Technical Services Agreement.
- - It is expected that EDCO will have questions about the design, functionality
and algorithms utilized in BHIL's software. A BHIL technical resource will
be designated as a point of contact for such questions. An EDCO technical
point of contact should also be designated to facilitate these discussions.
- - Given that the BHIL system is so large, no one person possesses the
knowledge to answer every question. Thus, the BHIL contact person will often
need to identify an expert and allow some time for a response. It is
expected that questions will be answered in no more than a week's time.
- - BHIL will incorporate BHIL's current problem escalation procedure.
- - The BHIL technical point of contact must make the EDCO technical point of
contact aware of BHIL system releases for the purpose of impact analysis.
This should occur no later than a month prior to the BHIL system release.
- - Conversely, the EDCO technical point of contact must make the BHIL technical
point of contact aware of EDCO system releases for the purpose of impact
analysis. This should occur no later than a month prior to the EDCO system
release.
- - No work will be initiated for EDCO without a written work order signed by
EDCO and BHIL.
D-4
Attachment 2 TO Exhibit D-1
DATA CENTER TERM SHEET (Section 2.3.2)
The following points describe the terms, means and manner in which the BHIL data
center services may be utilized by EDCO.
- - PROQUEST: The term "BHIL ProQuest Systems" refers to the data center
resources running in BHIL's Ann Arbor location as well as BHIL's systems
remotely hosted by EMC in Hopkinton, MA, or any other location necessary to
provide the ProQuest service. BHIL data manufacturing systems are also
utilized to produce CD-ROMs.
- - SYSTEM AVAILABILITY: Until 8/1/1999, BHIL's online systems are unavailable
from 2-3.a.m. weekdays and 10:00 p.m. Saturday - 10:00 a.m. Sunday. After
8/1/99, BHIL's systems are targeted to be available 24 hours a day, 7 days a
week, with possible exceptions several times a quarter for hardware
maintenance or major changes. This is barring Acts of God or situations
beyond our control.
- - ACCESS: EDCO customers will access BHIL online services and content via
existing (or presently under development) External Interfaces (Z39.50,
ProQuest Direct, KidQuest, JuniorQuest, ClassMate, Site Builder). Additional
methods of access will require development and will be considered
incremental product development.
- - AUTHENTICATION: Authentication will generally be performed based upon the
EDCO customers entering a valid PQD User Account ID and Password. In some
cases authentication may be skipped if access comes from a list of specified
IP addresses.
- - SEARCH RESPONSE TIMES: Provided Search Response times for EDCO customers
will be the same as those provided to BHIL PQD customers; this is currently
10 seconds.
- - DATA COLLECTIONS: BHIL will maintain complete, correct and current data
content collections of the material chosen to be accessible by EDCO
customers. BHIL content is generally not searchable until the day after it
has been loaded into the content warehouse.
- - NETWORK: Any incremental network costs (such as telecommunications lines,
routers, switches or firewalls, as well as monthly charges) necessary to
provide functionality between EDCO systems and BHIL systems will be supplied
by BHIL at cost pursuant to a written work order executed by BHIL and EDCO.
- - SYSTEM CAPACITY: BHIL will supply the system capacity resources (Network,
Hardware, software) to service EDCO customers within its data center. EDCO
will provide BHIL with a forecast (updated quarterly) of its capacity needs
for the next twelve months. This will be expressed as numbers of customers
(total and / or concurrent), numbers of searches, time of day, numbers of
content retrievals and other meaningful metrics as mutually agreed to by the
parties.
D-5
- - TIME of SYSTEM USAGE: The BHIL systems will monitor and provide the means
for reporting the times when EDCO customers' usage occurred, in categories
of "Peak," during the weekday, or "Off-Peak."
- - EDCO BRANDING & DOMAIN NAMES: EDCO will reimburse BHIL for any costs
incurred in the event EDCO wishes to establish its own product brand and /
or unique domain names for their products. The scope of this includes any
domain name registration fees, network engineering changes, hardware, third
party web server software or BHIL software modifications. EDCO will not be
obligated to pay for any costs hereunder without a signed work order from
EDCO.
D-6
Exhibit D-2
BHIL NON-TECHNICAL SUPPORT SERVICES AGREEMENT (Section 2.5)
PARTIES: BHIL and EDCO
TERM: 6 months.
COST: a) Customer Support - free
b) Billing and Accounting Support - free
c) Human Resources - free
d) Office Space - market rate
e) Office Equipment - market rate (depreciated
value remaining - includes computer
hardware, software, and office furniture
and fixtures) (other than the office
equipment included as a Contributed Asset).
f) Trade Show and Promotional Materials -
actual cost
Scope of Services: BHIL will provide EDCO:
a) Customer Support
b) Billing and Accounting Support
c) Human Resources
d) Office Space
e) Office Equipment
f) Trade Show and Promotional Materials
g) Other services as required
All services shall be provided on same basis
as currently provided by bhil for the bhil
contributed business.
D-7
Liaisons: Each party shall designate a primary liaison
for this agreement who shall be the single
person authorized to agree to changes,
modifications or methods of implementation of
this Agreement.
Miscellaneous: This Agreement shall contain provision
regarding Warranty, Limitation of Liability,
Confidentiality, Governing Law and other
standard provisions.
D-8
Exhibit D-3
REPRESENTATION AGREEMENT (2.3.3)
Parties: EDCO and BHIL
Term: 36 months
Cost: On terms to be mutually agreed upon.
Scope of Services: a) Upon EDCO's request, BHIL will act as a
sales agent for the sale of EDCO products
into the Excluded Segments and in all
market segments outside of North America.
The terms of such arrangement to be subject
to mutual agreement. If EDCO intends to
Distribute ProQuest through a third Person
in market segments outside of North
America, BHIL has a right of first refusal
to Distribute ProQuest on the same terms
and conditions as such third Person
intended to do so.
b) In bids to consortia that span the Excluded
Segments and the K-12 Segment:
(i) BHIL and EDCO will cooperate with
each other in making joint bids,
including revenue allocation and
pricing, and in the performance of
any contracts resulting therefrom.
EDCO and BHIL can only make joint
bids with each other and no other
third Person with respect to the
products and services provided by
EDCO or BHIL, as the case may be. If
the parties do not make a joint bid,
either party can make an independent
bid to such consortia with respect
to the market segment served by such
party.
(ii) BHIL retains the right to include
the Excluded BHIL Products in bids
to library or other consortia that
span the
D-9
Excluded Segments and the EDCO
Segment in bids with EDCO or
independent bids by BHIL alone.
(iii) With respect to the Public Library
Segment, (i) if ProQuest is used in
the joint bid, BHIL shall determine
the terms and conditions, including
pricing, (ii) if Electric Library is
used in the joint bid, EDCO shall
determine the terms and conditions,
including pricing and (iii) if the
parties cannot agree, either party
can make an independent bid to such
consortia with respect to the market
served by such party.
c) The existing INFO contracts with the Post
Secondary Education Segment shall be
transferred to EDCO; provided, however,
that EDCO will not renew such contracts on
the renewal date and will use its best
efforts to cause the customer of the Post
Secondary Education Segment to use BHIL's
ProQuest products and services.
Miscellaneous: This Agreement shall contain provisions
regarding Indemnification, Proprietary Rights,
Warranty, Limitation of Liability,
Confidentiality, Governing Law and other
standard provisions.
D-10
Exhibit E-1
EDCO TECHNICAL SERVICES AGREEMENT
Parties: INFO and EDCO.
Term: 36 months, renewable by mutual agreement of
the parties. INFO can terminate upon 90 days
written notice, provided, however, that if
INFO wants to use a third Person to provide
the services hereunder:
(i) INFO shall obtain three bids from
independent third parties,
(ii) the cost of the third Person must be 90%
or less of the costs charged by EDCO for
the same services, and
(iii) EDCO has not exercised its right of
first refusal to match the costs of the
third Person which right of first
refusal will not be unreasonably
exercised.
Charges: The Fully Loaded Costs to provide Services
which initially shall equal XXX of INFO's Net
Revenue from Electric Library Technology for
the first 12 months and thereafter shall be
adjusted to the Fully Loaded Costs incurred
during the preceding 12 month period on each
anniversary of this Agreement, subject to a
mutually agreed upon reduction if there is a
shift from peak to non-peak usage by INFO.
Scope of Services: Data Center and Information Technology Support
services, consisting of the following:
a) EDCO will keep available sufficient
hardware and systems software to support
the use of the Electric Library by INFO's
customers in the INFO End-User Business.
b) EDCO will provide the same service level to
INFO as EDCO provides to the EDCO Segment.
c) INFO may request that EDCO load additional
license material specific to EDCO's needs.
Loading such materials shall be at
additional cost and subject to reasonable
scheduling pursuant to a written work order
signed by INFO and EDCO.
d) The Services are more fully described in
the attached Technical Support Term Sheet
and Data Center Term Sheet. (Attachments 1
and 2 to this Exhibit E-1)
e) EDCO will respond to questions and assist
with implementation as specified in the
Technical Support Term Sheet. (Attachment 1
to this Exhibit E-1).
f) In the event that the Scope of the Services
shall increase materially from the level at
which they exist at the effective date of
this Agreement, and such increases requires
EDCO to purchase or lease such hardware and
systems software as necessary to support
such increased usage, the increased costs
will be shared by EDCO and INFO
proportionately based upon the need for
increased usage. The purchase or lease of
such hardware and systems software shall be
pursuant to a written work order executed
by INFO and EDCO.
g) In the event that INFO terminates this
Agreement, it will assume the obligations
of any hardware lease or software license
of EDCO that is used primarily to satisfy
INFO's system usage (unless EDCO waives
such obligation).
Enhancements: To the extent there are enhancements or
modifications to the INFO Software that
require additional hardware, software or
labor, the parties shall negotiate in good
faith an increase in the cost of this
Agreement to INFO to compensate EDCO for such
increased hardware, software and/or labor
costs. The enhancements or modifications shall
be
E-2
agreed to pursuant to a written work order
signed by INFO and EDCO.
Liaisons: Each party shall designate a primary liaison
for this Agreement who shall be the single
person authorized to agree to changes,
modifications or methods of implementation of
this Agreement.
Miscellaneous: This Agreement shall contain provisions
regarding Warranty, Limitation of Liability,
Confidentiality, Governing Law and other
standard provisions.
E-3
Attachment 1 TO Exhibit E-1
TECHNICAL SUPPORT TERM SHEET
This sheet describes the terms and conditions under which EDCO will provide
technical support for the software licensed to INFO under the EDCO Software and
Technology License and support under this EDCO Technical Services Agreement.
- - It is expected that INFO will have questions about the design, functionality
and algorithms utilized in EDCO's software. An EDCO technical resource will
be designated as a point of contact for such questions. An INFO technical
point of contact should also be designated to facilitate these discussions.
- - Given that the EDCO system is so large, no one person possesses the
knowledge to answer every question. Thus, the EDCO contact person will often
need to identify an expert and allow some time for a response. It is
expected that questions will be answered in no more than a week's time.
- - EDCO will incorporate EDCO's current problem escalation procedure.
- - The EDCO technical point of contact must make the INFO technical point of
contact aware of EDCO system releases for the purpose of impact analysis.
This should occur no later than a month prior to the EDCO system release.
- - Conversely, the INFO technical point of contact must make the EDCO technical
point of contact aware of INFO system releases for the purpose of impact
analysis. This should occur no later than a month prior to the INFO system
release.
- - No work will be initiated for INFO without a written work order signed by
INFO and EDCO.
E-4
Attachment 2 TO Exhibit E-1
DATA CENTER TERM SHEET
The following points describe the terms, means and manner in
which the EDCO data center services may be utilized by INFO.
- - ELECTRIC LIBRARy: The term "Electric Library" refers to the data center
resources running in EDCO's Wayne, Pennsylvania location or any other
location necessary to provide the Electric Library Service.
- - SYSTEM AVAILABILITY: EDCO's systems are available 24 hours a day, 7 days a
week, with scheduled exceptions several times a quarter for hardware
maintenance or major changes. This is barring Acts of God or situations
beyond our control.
- - ACCESS: INFO customers will access Electric Library and EDCO and BHIL
content via existing (or presently under development) External Interfaces.
Additional methods of access may require development and will be considered
incremental product development.
- - AUTHENTICATION: Authentication will generally be performed based upon the
INFO customers entering a valid Electric Library User Account ID and
Password. In some cases authentication may be skipped if access comes from a
list of specified IP addresses.
- - SEARCH RESPONSE TIMES: Provided Search Response times for INFO customers
will be the same as those provided to EDCO Library Users.
- - DATA COLLECTIONS: EDCO will maintain complete, correct and current data
content collections of the material chosen to be accessible by INFO
customers. BHIL and EDCO content is generally not searchable until the day
after it has been loaded into the content warehouse.
- - NETWORK: Any incremental network costs (such as telecommunications lines,
routers, switches or firewalls, as well as monthly charges) necessary to
provide functionality between INFO systems and EDCO systems will be supplied
by EDCO at cost pursuant to a written work order executed by INFO and EDCO.
- - SYSTEM CAPACITY: EDCO will supply the system capacity resources (Network,
Hardware, software) to service INFO customers within its data center. INFO
will provide EDCO with a forecast (updated quarterly) of its capacity needs
for the next twelve months. This will be expressed as numbers of customers
(total and / or concurrent), numbers of searches, time of day, numbers of
content retrievals and other meaningful metrics as mutually agreed to by the
parties.
- - TIME of SYSTEM USAGE: The EDCO systems will monitor and provide the means
for reporting the times when INFO customers' usage occurred, in categories
of "Peak", during the weekday, or "Off-Peak".
E-5
- - INFO BRANDING & DOMAIN NAMES: INFO will reimburse EDCO for any costs
incurred in the event INFO wishes to establish its own product brand and /
or unique domain names for their products. The scope of this includes any
domain name registration fees, network engineering changes, hardware, third
party web server software or EDCO software modifications. INFO will not be
obligated to pay for any costs hereunder without a signed work order from
INFO.
E-6
Exhibit E-2
EDCO NON-TECHNICAL SUPPORT SERVICES AGREEMENT
Parties: INFO and EDCO
Term: 6 months.
Cost: a) Customer Support - free
b) Billing and Accounting Support - free
c) Human Resources - free
d) Office Space - market rate
e) Office Equipment - market rate (depreciated
value remaining - includes computer
hardware, software, and office furniture
and fixtures) (other than the office
equipment included as a Contributed Asset).
f) Trade Show and Promotional Materials -
actual cost
Scope of Services: EDCO will provide INFO and INFO will provide
EDCO:
a) Customer Support
b) Billing and Accounting Support
c) Human Resources
d) Office Space
e) Office Equipment
f) Other services as required
All services shall be provided on same basis
as INFO currently provides to the INFO
Contributed Business.
E-7
Liaisons: Each party shall designate a primary liaison
for this Agreement who shall be the single
person authorized to agree to changes,
modifications or methods of implementation of
this Agreement.
Miscellaneous: This Agreement shall contain provision
regarding Warranty, Limitation of Liability,
Confidentiality, Governing Law and other
standard provisions.
E-8
Exhibit F
BHIL CONTENT LICENSE AGREEMENT (Section 2.6.1)
Parties: BHIL (licensor) and EDCO (licensee).
Licensed Materials: a) All materials currently included in BHIL
K-12 Products to the extent the content of
such BHIL K-12 Products can be licensed to
EDCO, currently estimated by BHIL to be
approximately 2000 titles.
b) The license to the Licensed Materials shall
be limited to the EDCO Segment and as
provided for in the EDCO Content License
Agreement and shall not include the
Excluded Segments.
c) BHIL shall be the exclusive provider of the
type of content contained in BHIL K-12
Products. BHIL shall have the right of
first offer if EDCO desires to obtain
rights to content not contained in the
Licensed Materials.
Term: 5 years.
Cost: a) For the first 12 months of the term of this
Agreement, the license fee shall be XXX of
Net Revenues of EDCO derived from the
Licensed Materials, calculated as follows:
i) Royalties equal to XXX of the Net
Revenues of EDCO derived from the
Licensed Materials. To the extent
that actual royalties paid by BHIL
to the licensors of the Licensed
Materials exceeds an average of XXX,
BHIL shall increase the cost to EDCO
hereunder for the following year by
a proportionate amount. To the
extent that actual royalties paid by
BHIL to the licensors of the
Licensed Materials is less than an
average of XXX, BHIL shall decrease
the cost to EDCO hereunder for the
following year by a
proportionate amount. The
adjustments shall be calculated
annually on the anniversary date
hereof based upon the preceding
twelve month royalties; and
ii) BHIL shall receive as a royalty XX
of Net Revenues of EDCO derived from
the Licensed Materials, in addition
to the publisher royalty referred to
in the preceding paragraph. The XX
fee is for content preparation,
content loading and publisher
relations.
Scope of Use: a) EDCO may request that BHIL acquire rights
to additional Licensed Materials.
Acquisition of such rights shall be at
additional cost and subject to a work order
signed by EDCO and BHIL.
b) Except as provided in the EDCO Content
License Agreement, EDCO can only sublicense
to customers of the EDCO Segment.
c) EDCO will have the right to license the
Licensed Material, in whole or in part, to
the EDCO Segment.
Modifications and Termination
of Publisher Rights: To the extent that BHIL's rights to license
the Licensed Materials to EDCO are modified or
terminated by the licensor, they shall be
removed or modified from this license
accordingly.
Liaisons: Each party shall designate a primary liaison
for this Agreement who shall be the single
person authorized to agree to changes,
modifications or methods of implementation of
this Agreement.
Miscellaneous: This Agreement shall contain provision
regarding Indemnification, Proprietary Rights,
Warranty, Limitation of Liability,
Confidentiality, Governing Law and other
standard provisions.
F-2
Exhibit G
BHIL SOFTWARE LICENSE (Section 2.6.1(C))
Parties: BHIL and EDCO
Licensed Software: BHIL license to EDCO:
a) ProQuest, including applications
such as SiteBuilder and ClassMate,
including reasonable specifications.
b) ProQuest Searchware for Windows and DOS
including reasonable specifications.
c) The license is not transferable.
Maintenance: a) Corrections ("bug fixes") and
modifications.
b) Updates, upgrades, new releases and
enhancements.
Term: Perpetual license. BHIL has the right to
terminate this Agreement upon a Change of
Control of EDCO.
Cost: Free.
Scope of Use: a) Use and Distribution of Licensed Software
(including document linking software) shall
be limited to the K-12 Segment.
b) A trademark license for a period of 12
months to use the ProQuest family of
trademarks and the domain names registered
to BHIL that are currently used in the EDCO
Segment. EDCO may continue to use the
ProQuest family of trademarks after the
12-month period in the K-12 Segment only
provided the use of the ProQuest trademarks
and domain names in such K-12 Segment do
not create confusion to BHIL customers. If
confusion does occur, the parties agree to
use reasonable efforts to remedy such
confusion.
c) All rights not specifically granted to EDCO
are retained by BHIL.
d) BHIL's integrated systems utilize several
third party software products, such as
Oracle. BHIL cannot license these products
to EDCO; if EDCO wishes to run the
integrated software, it would have to
obtain its own licenses. (A list of such
third party software shall be included in
the specifications to the Licensed
Software.)
e) Upon termination of the BHIL Technical
Services Agreement, EDCO will be given
possession of the source code of the
Licensed Software and BHIL will discontinue
maintenance and technical support of the
Licensed Software.
f) The Licensed Software will be licensed to
End- Users pursuant to the form of license
agreement provided by BHIL, which form will
not be altered by EDCO without BHIL's
written consent.
Enhancements: a) EDCO may request enhancements or
modifications to the Licensed Software
during the period of maintenance and BHIL
will develop such enhancements subject to
mutually-agreed specifications, costs,
expenses, schedules and level of effort all
of which shall be documented in a work
order executed by BHIL and EDCO.
b) EDCO's request for system modifications to
the Licensed Software in order to provide
new functionality or product/content
offerings will be written and provided to
the BHIL point of contact. Within three
weeks, the BHIL point of contact will
provide EDCO and BHIL management with:
G-2
(i) A concept-level estimate of the
effort involved (stated in a measure
such as person-months);
(ii) An expectation of a target date for
completion. This date will be
determined by many factors, such as
resource availability and other
concurrent development
projects/releases.
c) Modifications requiring up to two weeks of
development may be handled by BHIL
sustaining resources.
d) Modifications requiring more than two weeks
should be presented to BHIL's Project
Resource Team (PRT) for approval and
prioritization. It is expected the PRT will
be supported with the information necessary
to make a business decision about the
project.
Liaisons: Each party shall designate a primary liaison
for this Agreement who shall be the single
person authorized to agree to changes,
modifications or methods of implementation of
this Agreement.
Miscellaneous: This Agreement shall contain provision
regarding Warranty, Limitation of Liability,
Confidentiality, Governing Law and other
standard provisions.
G-3
Exhibit H
EDCO CONTENT LICENSE AGREEMENT (Section 2.7.2)
Parties: EDCO (licensor) and INFO (licensee)
Licensed Materials: a) EDCO will license INFO all materials
currently included in the INFO End-User
Business and Slueth-type applications as
well as all licensed materials made
available to EDCO under the BHIL content
agreement as set forth in Exhibit F to
which EDCO holds sublicensing rights and to
which EDCO may license in connection with
the Electric Library Technology.
b) The license to the Licensed Materials shall
be limited to the INFO End-User Business
Slueth- type products, and any new INFO
products, subject to the Scope of Use
below.
c) EDCO shall be the preferred provider of the
type of content contained in the Electric
Library and BHIL K-12 Products. EDCO shall
have the right of first refusal if INFO
intends to obtain content similar to the
content contained in the Electric Library
and BHIL K-12 Products, on the same terms
and conditions to be provided by such third
Person.
Term: 5 years.
Cost: a) License fee for content provided by BHIL
and provided by EDCO to INFO pursuant to
this EDCO Content License Agreement shall
be calculated as follows:
i) For the first 12 months of the term
of this Agreement, the license fee
shall be XXX (calculated pursuant to
(a) (ii) and (a) (iii) below) of
sales of Electric Library, publisher
royalty to be paid on Net Revenue to
INFO for the Licensed Materials
sublicensed by EDCO to INFO.
ii) To the extent that actual royalties
paid by EDCO to BHIL for any year
exceeds an average of XXX, EDCO
shall increase the cost to INFO
hereunder for the following year by
a proportionate amount. To the
extent that actual royalties paid by
EDCO to BHIL is less than an average
of XXX for any year, EDCO shall
decrease the cost to INFO hereunder
for the following year by a
proportionate amount. The
adjustments shall be calculated
annually on the anniversary date
hereof based upon the preceding
twelve month royalties.
iii) In any event, EDCO shall receive as
a royalty XX of the sales by INFO
of the Electric Library and
BHIL K-12 Products and/or publisher
royalty referred to in the preceding
paragraph. The XX fee is for
content preparation, content
loading and publisher relations.
(b) License fee for content provided to EDCO
by INFO shall be calculated as follows:
i) For the first 12 months of the term
of this Agreement, the license fee
shall be XXX (calculated pursuant to
(b)(ii) and (b)(iii) below) of sales
of Electric Library, publisher
royalty to be paid on Net Revenue to
INFO for the Licensed Materials
sublicensed by EDCO to INFO.
ii) To the extent that actual royalties
paid by EDCO for any year exceeds an
average of XXX, EDCO shall increase
the cost to INFO hereunder for the
following year by a proportionate
amount. To the extent that actual
H-2
royalties paid by EDCO for any year
is less than an average of XXX for
any year, EDCO shall decrease the
cost to INFO hereunder for the
following year by a proportionate
amount. The adjustments shall be
calculated annually on the
anniversary date hereof based upon
the proceeding twelve months
royalties.
iii) In any event, EDCO shall receive as
a royalty equal to XX of the sales
by INFO of the Electric Library
Technology and BHIL K-12 Products
and/or publisher royalty referred to
in the preceding paragraph. The XXX
fee is for content preparation,
content loading and publisher
relations.
(c) In the event EDCO has the opportunity to
provide the same Licensed Materials to
INFO from either BHIL provided content or
INFO provided content, EDCO will use
commercially reasonable efforts to provide
such Licensed Materials to INFO at the
lowest cost to INFO.
Scope of Use: INFO can only use the content hereunder in
the INFO End-User Business, but such business
shall not be limited to the Electric Library
Technology. Notwithstanding the foregoing, the
content hereunder may only be used, if and
only if, all of the following conditions are
met:
(a) such Licensed Materials are Distributed
directly to End-Users and not to or
through or in cooperation with any school,
library or other institution or
organization in the EDCO Segment;
(b) such Licensed Materials are Distributed
only in connection with a discrete product
or service on a stand alone basis, having
its own separately stated fee or charge
for such product or service;
H-3
(c) such Licensed Materials are Distributed to
such End-User not as part of or pursuant
to a marketing effort directed toward the
EDCO Segment;
(d) such Licensed Materials are not
Distributed under or in connection with
the endorsement or recommendation or
cooperation of any Person who is marketing
to or participating in the K-12 Segment;
and
(e) the Licensed Materials are not Distributed
to or through a Person who redistributes
the Licensed Materials to the EDCO Segment
or Post Secondary Education Segment.
Modifications and Termination
of Publisher Rights: To the extent that EDCO's rights to license
the Licensed Materials to INFO are modified or
terminated by the licensor, they shall be
removed or modified from this license
accordingly.
Liaisons: Each party shall designate a primary liaison
for this Agreement who shall be the single
person authorized to agree to changes,
modifications or methods of implementation of
this Agreement.
Miscellaneous: This Agreement shall contain provision
regarding Indemnification, Proprietary Rights,
Warranty, Limitation of Liability,
Confidentiality, Governing Law and other
standard provisions.
H-4
Exhibit I
EDCO SOFTWARE AND TECHNOLOGY LICENSE (Section 2.8)
Parties: EDCO (licensor) and INFO (licensee)
Licensed Software & Technology: EDCO license to INFO:
a) U.S. Patent Nos.: 5,873,076
5,742,816
5,737,734
5,721,902
5,675,788
5,659,742
09/088,188
b) Oracle (as customized);
Excalibur/Retrievalware (as customized);
BFS (as customized);
Internal reporting software;
Web Manager, session manager, data base
dispatcher, query dispatcher;
Customizations to off-the-shelf software;
Project "Retriever";
Project "Pointer";
All software or technology used in the INFO
Contributed Business.
c) Electric Library client software for
Windows and DOS including reasonable
specifications.
d) The license is not transferable.
Maintenance: a) Corrections ("bug fixes") and
modifications.
b) Updates, upgrades, new releases and
enhancements.
Term: Perpetual license. EDCO has the right to
terminate this License upon a Change of
Control of INFO.
Cost: Free.
Scope of Use: a) Use and Distribution of Licensed Software
and Technology shall be limited to the INFO
End-
User Business, Sleuth-type products, and
any new INFO products, subject to Scope of
Use below.
b) A trademark license for a period that lasts
as long as INFO makes such Electric Library
products or services available in the INFO
End-User Business to use the Electric
Library family of trademarks and the domain
names registered to EDCO that are currently
used in the EDCO Segment.
c) All rights not specifically granted to INFO
are retained by EDCO.
d) EDCO's integrated systems utilize several
third party software products, such as
Oracle. EDCO may not be able to license
these products to INFO; if INFO wishes to
run the integrated software, it would have
to obtain its own licenses.
e) Upon termination of the EDCO Technical
Services Agreement, INFO will be given
possession of the source code of the
Licensed Software & Technology and EDCO
will discontinue maintenance and technical
support of the Licensed Software &
Technology.
f) INFO shall have full rights under all U.S.
patents of the Licensed Software &
Technology to make, use, and sell the
inventions disclosed and claimed in such
patents, subject to the INFO
non-competition agreement.
g) INFO shall have full rights to use the
Licensed Software and Technology as set
forth in items b) or c) in the Licensed
Software and Technology section hereof, in
the INFO End-User Business but such
business shall not be limited to the
Electric Library Technology.
Enhancements: a) INFO may request enhancements or
modifications to the Licensed Software &
Technology during the period of maintenance
J-2
and EDCO will develop such enhancements
subject to mutually-agreed specifications,
costs, expenses, schedules and level of
effort, and a work order executed by both
INFO and EDCO.
b) INFO's request for system modifications to
the EDCO software in order to provide new
functionality or product/content offerings
will be written and provided to the EDCO
point of contact. Within three weeks, the
EDCO point of contact will provide INFO and
EDCO management with:
(i) A concept-level estimate of the
effort involved (stated in a measure
such as person-months);
(ii) An expectation of a target date for
completion. This date will be
determined by many factors, such as
resource availability and other
concurrent development
projects/releases.
c) Modifications requiring up to two weeks of
development may be handled by EDCO
sustaining resources.
d) Modifications requiring more than two weeks
should be presented to EDCO's liaison for
approval and prioritization. It is expected
the liaison will be supported with the
information necessary to make a business
decision about the project.
Liaisons: Each party shall designate a primary liaison
for this Agreement who shall be the single
person authorized to agree to changes,
modifications or methods of implementation of
this Agreement.
Miscellaneous: This Agreement shall contain provision
regarding Warranty, Limitation of Liability,
Confidentiality, Governing Law and other
standard provisions.
J-3
Exhibit J-1
ONLINE PUBLISHING LICENSE AGREEMENT (Section 2.9.3)
Parties: BHIL, INFO and EDCO
Licensed Software: BHIL will license to INFO and EDCO the Online
Publishing Software as set forth on Schedules
OPB1, OPB2 and OPB3.
Term: Perpetual.
Cost: Free.
Scope of Use: a) Neither INFO nor EDCO may use the Online
Publishing Software to provide Online
Publishing services.
b) Source code and documentation delivered
within 60 days following Closing.
Enhancements: As reasonably requested by INFO or EDCO and
subject to BHIL's written agreement.
Miscellaneous: This Agreement shall contain provision
regarding Warranty, Limitation of Liability,
Confidentiality, Governing Law and other
standard provisions.
Online Publishing Services: Shall mean the provision of publishing or
hosting services to a third Person for such
third Person's publication.
Exhibit J-2
INFO SLEUTH SOFTWARE AND TECHNOLOGY LICENSE
Parties: INFO (licensor) and BHIL and EDCO (licensees)
Licensed Software & Technology: a) INFO licenses the proprietary software and
technology related to INFO's "Sleuth"
products, including reasonable
specifications.
b) The license is not transferable.
Maintenance: a) Corrections ("bug fixes") and
modifications.
b) Updates, upgrades, new releases and
enhancements.
Term: Perpetual license. INFO has the right to
terminate this License upon a Change of
Control of EDCO or BHIL, respectively.
Cost: Free.
Scope of Use: a) Use and Distribution of Licensed Software
and Technology by EDCO shall be limited to
the EDCO Segment.
b) Use and Distribution of Licensed Software
and Technology by BHIL shall be limited to
the Online Publishing Business and Post
Secondary Education Segment.
c) All rights not specifically granted by INFO
are retained by INFO.
d) The Licensed Software & Technology utilize
several third party software products, such
as Statistic Server, Cold Fusion, Oracle,
Survey Site, and Microsoft Internet
Information Service. INFO cannot license
these products to EDCO and BHIL; if EDCO
and/or BHIL wish to run the Licensed
Software & Technology, they would each have
to obtain licenses themselves. (A list of
such third party software
J-2
shall be included in the specifications to
the Licensed Software & Technology.)
Liaisons: Each party shall designate a primary liaison
for this agreement who shall be the single
person authorized to agree to changes,
modifications or methods of implementation of
this agreement.
Miscellaneous: This Agreement shall contain provision
regarding Warranty, Limitation of Liability,
Confidentiality, Governing Law and other
standard provisions.
J-3
Exhibit L
INFO NONCOMPETITION AGREEMENT
1. RESTRICTED ACTIVITIES.
For a period of three (3) years from the Closing Date (the "Restricted Term"),
INFO shall not, without the prior written consent of EDCO:
(i) engage in any INFO Restricted Activities anywhere in the
world;
(ii) own, manage, operate, be compensated by, participate in,
render advice to, have any right to or interest in any other
business directly or indirectly engaged in the INFO
Restricted Activities, with the exception of INFO ownership
interest (10% or less as of the date of the Master
Transaction Agreement) in Electric Schoolhouse, LLC or its
successor;
(iii) divulge, communicate, use or disclose any nonpublic
information concerning EDCO or any of its Affiliates, their
personnel, business and affairs;
(iv) interfere with the business relationships or disparage the
good name or reputation of EDCO or any of its Affiliates or
take any action which brings EDCO or any of its Affiliates or
its business into public ridicule or disrepute; or
(v) solicit for employment or employ any employee of EDCO or any
of its Affiliates, or request, induce or advise any employee
to leave the employ of EDCO or any of its Affiliates.
The ownership of less than one-tenth of one percent (.1%) of a publicly
traded corporation engaged in INFO Restricted Activities shall not in and
of itself be deemed to be a violation of this covenant.
2. TOLLING OF RESTRICTED TERM.
If INFO violates the provisions of Section 1, EDCO shall not, as a result
of the time involved in obtaining relief, be deprived of the benefit of the
full period of the restrictive covenant. Accordingly,
1
the restrictive covenant of Section 1 shall be deemed to have the duration
specified in Section 1, computed from the date the relief is granted, but
reduced by the time between the period when the restriction began to run and
the date of the first violation of the covenant by INFO.
3. ACCOUNTING.
INFO agrees that, if INFO shall be determined by an appropriate judicial
process to have violated any of the provisions of this Agreement, EDCO shall
be entitled to an accounting and repayment of all profits, compensation,
commission, remuneration or other benefits that INFO, directly or
indirectly, may realize arising from or related to any such violation. These
remedies shall be in addition to, and not in limitation of, any injunctive
relief or other rights to which EDCO may be entitled.
4. REFORMATION OF PROVISIONS.
The parties agree and acknowledge that the duration, scope and geographic
areas applicable to the covenant not to compete described in this Agreement
are fair, reasonable and necessary, that adequate compensation has been
received by INFO for such obligations. If, however, for any reason any
court determines that the restrictions in this Agreement are not reasonable
or that consideration is inadequate such restrictions shall be interpreted,
modified or rewritten to include as much of the duration, scope and
geographic area identified in this Agreement as will render such restrictions
valid and enforceable.
5. INJUNCTION RELIEF.
INFO hereby waives any requirement of proof that such breach will cause
serious or irreparable injury to EDCO, or that there is an adequate remedy at
law. In any proceeding, either at law or in equity, between the parties
hereto, INFO hereby agrees that INFO shall not raise as a defense:
(i) that the duration, scope or geographical area in which
INFO is prohibited from competition is unfair, unnecessary
or unreasonable,
(ii) that this Agreement is in restraint of trade,
(iii) lack of irreparable injury to EDCO, or
(iv) lack of any protectable business interest of EDCO.
2
Further, the existence of any claim or cause of action of INFO against EDCO or
any of its Affiliates, whether or not predicated on the terms of this Agreement,
shall not constitute a defense to the enforcement of INFO obligations under
this Agreement. INFO shall pay or reimburse EDCO for all costs and expenses,
including court costs, amounts paid in settlement, judgments, reasonable
attorneys', legal assistants', and experts' fees incurred or paid by EDCO in
protecting or enforcing its rights and remedies hereunder.
6. INDIVIDUAL END-USER CARVE OUT.
Notwithstanding the restriction set forth in Section 1, INFO shall be entitled
to engage in INFO Restricted Activities if, and only if, all of the following
conditions are met:
(a) such product or service is Distributed directly to End-Users
and not to or through or in cooperation with any school,
library or other institution or organization in the EDCO
Segment;
(b) such product or service is Distributed only as a discrete
product or service on a stand alone basis, having its own
separately stated fee or charge for such product or service;
(c) such product or service is Distributed to such End-User not
as part of or pursuant to a marketing effort directed toward
the EDCO Segment;
(d) such product or service is not Distributed under or in
connection with the endorsement or recommendation or
cooperation of any Person who is marketing to or
participating in the K-12 Segment; and
(e) the product or service is not Distributed to or through a
Person who redistributes the product or service to the EDCO
Segment or Post Secondary Education Segment.
3
Exhibit M
EDCO NONCOMPETITION AGREEMENT
1. RESTRICTED ACTIVITIES.
For a period of three (3) years from the Closing Date (the "Restricted Term"),
EDCO shall not, without the prior written consent of both BHIL and INFO:
(i) engage in any EDCO Restricted Activities anywhere in the
world;
(ii) own, manage, operate, be compensated by, participate in,
render advice to, have any right to or interest in any other
business directly or indirectly engaged in the EDCO
Restricted Activities;
(iii) divulge, communicate, use or disclose any nonpublic
information concerning BHIL or INFO or any of its
Affiliates, their personnel, business and affairs;
(iv) interfere with the business relationships or disparage the
good name or reputation of BHIL or INFO or any of their
Affiliates or take any action which brings BHIL or INFO or
any of their Affiliates or their businesses into public
ridicule or disrepute; or
(v) solicit for employment or employ any employee of BHIL or
INFO or any of their Affiliates, or request, induce or
advise any employee to leave the employ of BHIL or INFO
or any of their Affiliates.
The ownership of less than one-tenth of one percent (.1%) of a publicly traded
corporation engaged in EDCO Restricted Activities shall not in and of itself be
deemed to be a violation of this covenant.
2. TOLLING OF RESTRICTED TERM.
If EDCO violates the provisions of Section 1, EDCO shall not, as a result of the
time involved in obtaining relief, be deprived of the benefit of the full period
of the restrictive covenant. Accordingly, the restrictive covenant of Section 1
shall be deemed to have the duration specified in Section 1,
1
computed from the date the relief is granted, but reduced by the time between
the period when the restriction began to run and the date of the first violation
of the covenant by EDCO.
3. ACCOUNTING.
EDCO agrees that, if EDCO shall be determined by an appropriate judicial
process to have violated any of the provisions of this Agreement, BHIL and
INFO shall be entitled to an accounting and repayment of all profits,
compensation, commission, remuneration or other benefits that EDCO, directly
or indirectly, may realize arising from or related to any such violation.
These remedies shall be in addition to, and not in limitation of, any
injunctive relief or other rights to which BHIL and INFO may be entitled.
4. REFORMATION OF PROVISIONS.
The parties agree and acknowledge that the duration, scope and geographic areas
applicable to the covenant not to compete described in this Agreement are fair,
reasonable and necessary, that adequate compensation has been received by EDCO
for such obligations. If, however, for any reason any court determines that the
restrictions in this Agreement are not reasonable or that consideration is
inadequate such restrictions shall be interpreted, modified or rewritten to
include as much of the duration, scope and geographic area identified in this
Agreement as will render such restrictions valid and enforceable.
5. INJUNCTION RELIEF.
EDCO hereby waives any requirement of proof that such breach will cause serious
or irreparable injury to BHIL and INFO, or that there is an adequate remedy at
law. In any proceeding, either at law or in equity, between the parties hereto,
EDCO hereby agrees that EDCO shall not raise as a defense:
(i) that the duration, scope or geographical area in which EDCO
is prohibited from competition is unfair, unnecessary or
unreasonable,
(ii) that this Agreement is in restraint of trade,
(iii) lack of irreparable injury to BHIL or INFO, or
(iv) lack of any protectable business interest of BHIL or INFO.
2
Further, the existence of any claim or cause of action of EDCO against BHIL
or INFO or any of their Affiliates, whether or not predicated on the terms
of this Agreement, shall not constitute a defense to the enforcement of
EDCO's obligations under this Agreement. EDCO shall pay or reimburse BHIL and
INFO for all costs and expenses, including court costs, amounts paid in
settlement, judgments, reasonable attorneys', legal assistants', and experts'
fees incurred or paid by BHIL or INFO, respectively, in protecting or
enforcing its rights and remedies hereunder.
3
Exhibit N
BHIL NONCOMPETITION AGREEMENT
1. RESTRICTED ACTIVITIES.
For a period of three (3) years from the Closing Date (the "Restricted Term"),
BHIL shall not, without the prior written consent of EDCO:
(i) engage in any BHIL Restricted Activities anywhere in the
world;
(ii) own, manage, operate, be compensated by, participate in,
render advice to, have any right to or interest in any other
business directly or indirectly engaged in the BHIL
Restricted Activities;
(iii) divulge, communicate, use or disclose any nonpublic
information concerning EDCO or any of its Affiliates, their
personnel, business and affairs;
(iv) interfere with the business relationships or disparage the
good name or reputation of EDCO or any of its Affiliates or
take any action which brings EDCO or any of its Affiliates or
its business into public ridicule or disrepute; or
(v) solicit for employment or employ any employee of EDCO or any
of its Affiliates, or request, induce or advise any employee
to leave the employ of EDCO or any of its Affiliates.
The ownership of less than one-tenth of one percent (.1%) of a publicly traded
corporation engaged in BHIL Restricted Activities shall not in and of itself be
deemed to be a violation of this covenant.
2. TOLLING OF RESTRICTED TERM.
If BHIL violates the provisions of Section 1, EDCO shall not, as a result of the
time involved in obtaining relief, be deprived of the benefit of the full period
of the restrictive covenant. Accordingly, the restrictive covenant of Section 1
shall be deemed to have the duration specified in Section 1,
1
computed from the date the relief is granted, but reduced by the time between
the period when the restriction began to run and the date of the first violation
of the covenant by BHIL.
3. ACCOUNTING.
BHIL agrees that, if BHIL shall be determined by an appropriate judicial process
to have violated any of the provisions of this Agreement, EDCO shall be entitled
to an accounting and repayment of all profits, compensation, commission,
remuneration or other benefits that BHIL, directly or indirectly, may realize
arising from or related to any such violation. These remedies shall be in
addition to, and not in limitation of, any injunctive relief or other rights to
which EDCO may be entitled.
4. REFORMATION OF PROVISIONS.
The parties agree and acknowledge that the duration, scope and geographic areas
applicable to the covenant not to compete described in this Agreement are fair,
reasonable and necessary, that adequate compensation has been received by BHIL
for such obligations. If, however, for any reason any court determines that the
restrictions in this Agreement are not reasonable or that consideration is
inadequate such restrictions shall be interpreted, modified or rewritten to
include as much of the duration, scope and geographic area identified in this
Agreement as will render such restrictions valid and enforceable.
5. INJUNCTION RELIEF.
BHIL hereby waives any requirement of proof that such breach will cause serious
or irreparable injury to EDCO, or that there is an adequate remedy at law. In
any proceeding, either at law or in equity, between the parties hereto, BHIL
hereby agrees that BHIL shall not raise as a defense:
(i) that the duration, scope or geographical area in which BHIL
is prohibited from competition is unfair, unnecessary or
unreasonable,
(ii) that this Agreement is in restraint of trade,
(iii) lack of irreparable injury to EDCO, or
(iv) lack of any protectable business interest of EDCO.
Further, the existence of any claim or cause of action of BHIL against EDCO or
any of its Affiliates, whether or not predicated on the terms of this Agreement,
shall not constitute a defense to the enforcement of BHIL's obligations under
this Agreement. BHIL shall pay or reimburse EDCO for all
2
costs and expenses, including court costs, amounts paid in settlement,
judgments, reasonable attorneys', legal assistants', and experts' fees incurred
or paid by EDCO in protecting or enforcing its rights and remedies hereunder.
6. CONSORTIA CARVE OUT.
Notwithstanding the restrictions set forth in Section 1, BHIL shall be entitled
to engage in BHIL Restricted Activities in connection with consortia bids as set
forth in the BHIL Representation Agreement.
3
Exhibit O
ONLINE NONCOMPETITION AGREEMENT
1. RESTRICTED ACTIVITIES.
For a period of three (3) years from the Closing Date (the "Restricted Term"),
INFO and EDCO shall not, without the prior written consent of BHIL:
(i) engage in any Online Publishing services anywhere in the
world;
(ii) own, manage, operate, be compensated by, participate in,
render advice to, have any right to or interest in any other
business directly or indirectly engaged in Online Publishing
services;
(iii) divulge, communicate, use or disclose any nonpublic
information concerning BHIL or any of its Affiliates, their
personnel, business and affairs;
(iv) interfere with the business relationships or disparage the
good name or reputation of BHIL or any of its Affiliates or
take any action which brings BHIL or any of its Affiliates or
its business into public ridicule or disrepute; or
(v) solicit for employment or employ any employee of BHIL or any
of its Affiliates, or request, induce or advise any employee
to leave the employ of BHIL or any of its Affiliates.
The ownership of less than one-tenth of one percent (.1%) of a publicly traded
corporation engaged in EDCO Restricted Activities shall not in and of itself be
deemed to be a violation of this covenant.
2. TOLLING OF RESTRICTED TERM.
If EDCO or INFO violates the provisions of Section 1, BHIL shall not, as a
result of the time involved in obtaining relief, be deprived of the benefit of
the full period of the restrictive covenant. Accordingly, the restrictive
covenant of Section 1 shall be deemed to have the duration specified in Section
1, computed from the date the relief is granted, but reduced by the
1
time between the period when the restriction began to run and the date of the
first violation of the covenant by EDCO or INFO, respectively.
3. ACCOUNTING.
EDCO and INFO each agrees that, if EDCO or INFO shall be determined by an
appropriate judicial process to have violated any of the provisions of this
Agreement, BHIL shall be entitled to an accounting and repayment of all profits,
compensation, commission, remuneration or other benefits that EDCO or INFO,
directly or indirectly, may realize arising from or related to any such
violation. These remedies shall be in addition to, and not in limitation of, any
injunctive relief or other rights to which BHIL may be entitled.
4. REFORMATION OF PROVISIONS.
The parties agree and acknowledge that the duration, scope and geographic
areas applicable to the covenant not to compete described in this Agreement
are fair, reasonable and necessary, that adequate compensation has been
received by EDCO and INFO for such obligations. If, however, for any reason
any court determines that the restrictions in this Agreement are not
reasonable or that consideration is inadequate such restrictions shall be
interpreted, modified or rewritten to include as much of the duration, scope
and geographic area identified in this Agreement as will render such
restrictions valid and enforceable.
5. INJUNCTION RELIEF.
EDCO and INFO hereby waive any requirement of proof that such breach will
cause serious or irreparable injury to BHIL, or that there is an adequate
remedy at law. In any proceeding, either at law or in equity, between the
parties hereto, EDCO and INFO EACH hereby agrees that EDCO and INFO shall
not raise as a defense:
(i) that the duration, scope or geographical area in which is
prohibited from competition is unfair, unnecessary or
unreasonable,
(ii) that this Agreement is in restraint of trade,
(iii) lack of irreparable injury to BHIL, or
(iv) lack of any protectable business interest of BHIL.
2
Further, the existence of any claim or cause of action against BHIL or any of
their Affiliates, whether or not predicated on the terms of this Agreement,
shall not constitute a defense to the enforcement of the obligations under
this Agreement. EDCO and INFO, respectively, shall pay or reimburse BHIL
for all costs and expenses, including court costs, amounts paid in
settlement, judgments, reasonable attorneys', legal assistants', and experts'
fees incurred or paid by BHIL, in protecting or enforcing its rights and
remedies hereunder.
3
Exhibit P
SERVICE AGREEMENT
THIS SERVICE AGREEMENT (the "Agreement") is made effective as of the ____ day of
_____________, 1999, by and between ___________________, a Delaware corporation
("Contractor") and ____________, a Delaware corporation ("Company").
RECITALS:
WHEREAS, Company has limited resources in the areas of certain important
functions which are important to its business; and
WHEREAS, Contractor has extensive experience in the performance of the Services
described in Section 3;
NOW, THEREFORE, in consideration of the promises and covenants contained herein,
Contractor and Company hereby enter into this Services Agreement and mutually
agree as follows:
1. ENGAGEMENT.
Company agrees to and does hereby engage Contractor to provide to Company the
Services described in Section 3 in connection with its operations and Contractor
hereby accepts this appointment and agrees to provide Company with such Services
as are more particularly provided for in Section 3 of this Agreement.
2. TERM.
The Term of this Agreement shall commence effective as of the Closing Date
described in the Master Transaction Agreement to which Contractor and Company
are parties, and shall continue until the close of business on ____________.
Thereafter, the Term of the Agreement shall continue from _____ to ______ unless
terminated by written notice provided by either party to the other at least 90
days prior to the date of termination.
3. SERVICES.
Contractor shall provide to Company the Services described on Schedule ___1
hereto.
1
4. COMPENSATION.
As compensation for all Services to be rendered hereunder by Contractor and its
personnel in connection with the provisions of the Services described above,
Company shall pay Contractor the fee specified on Schedule ____2.
5. INDEMNITY.
5.1 Except as set forth in Section 5.2, Company shall indemnify Contractor and
its principals, agents or employees and shall hold each of them harmless from
liability for any acts or decisions made by them in good faith while performing
Services for Company. Company will pay all expenses including attorneys' fees
actually and reasonably incurred by Contractor in connection with the defense of
any act, suit or proceeding and in connection with any appeal thereof, including
the cost of out-of-court settlements.
5.2 Contractor shall indemnify Company and its principals, agents or employees
and shall hold each of them harmless from liability for any acts or decisions
made by them in good faith while performing Services for Contractor. Contractor
will pay all expenses including attorneys' fees actually and reasonably incurred
by Company in connection with the defense of any act, suit or proceeding and in
connection with any appeal thereof, including the cost of out-of-court
settlements.
6. REPRESENTATIONS AND WARRANTIES OF COMPANY.
Company expressly represents and warrants to Contractor as follows:
(a) Company is a corporation duly organized and existing in good
standing under the laws of the State of Delaware with full
power and authority, corporate or otherwise, to own its
properties and to carry on its business as currently
conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of the
business conducted by it makes such qualification necessary.
(b) Execution and delivery of this Agreement has been authorized
and approved by the Board of Directors of Company.
7. REPRESENTATIONS AND WARRANTIES OF CONTRACTOR
Contractor expressly represents and warrants to Company as follows:
(a) Contractor is a corporation duly organized and existing in
good standing under the laws of the State of Delaware with
full power and authority, corporate or otherwise, to own its
2
properties and to carry on its business as currently
conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of the
business conducted by it makes such qualification necessary.
(b) Execution and delivery of this Agreement has been authorized
and approved by the Board of Directors of Contractor.
8. LIMITATION OF LIABILITY
Except as set forth in Section 5, the liability of Contractor and Company
arising out of this Agreement shall be limited to $1,000,000. In no event shall
Contractor or Company be liable to the other for any special, consequential,
incidental, or indirect damages, however caused, on any theory of liability, and
whether or not Contractor has been advised of the possibility of such damages.
These limitations shall apply notwithstanding any failure of essential purpose
of any limited remedy.
9. NOTICES.
All notices, requests, demands or other communications provided for by this
Agreement shall be in writing and shall be addressed to the address of the
respective parties stated below or to such changed address as such party may
have affixed by notice:
To: Contractor:
To: Company:
10. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon Contractor and
Company, their successors and assigns, including, without limitation, any
corporation that may acquire all or substantially all of their assets or
business or with which Company or Contractor may be consolidated or merged. The
obligations of Contractor hereunder may not be assigned without the prior
written consent of Company; provided, however, that the obligations of
Contractor hereunder may be assigned without the prior written consent of
Company to an affiliate of Contractor.
11. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of _________.
3
12. ENTIRE AGREEMENT.
This Agreement supersedes all prior understandings and agreements between the
parties concerning the Services and may not be amended orally, but only by a
writing signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers duly authorized effective as of the date and year first above
written.
4
CONTRACTOR:
By:
Name:
Title:
COMPANY:
By:
Name:
Title:
5
Exhibit Q
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made effective as of the ____ day of
_____________, 1999, by and between ___________________, a Delaware corporation
("Licensor") and ____________, a Delaware corporation ("Company").
RECITALS:
WHEREAS, Company has need of certain technology and/or content which are
important to its business and
WHEREAS, Licensor has certain technology and/or content described in Schedule 1
which Company desires to use within the scope of the terms of this License
Agreement.
NOW, THEREFORE, in consideration of the promises and covenants contained herein,
intending to be legally bound, Licensor and Company hereby enter into this
License Agreement and mutually agree as follows:
1. LICENSE GRANT.
Licensor hereby grants to Company the nonexclusive, nonassignable right and
license to use the technology and/or content defined and described in Section 3
("Licensed Materials") in connection with its operations, but only in the
Territory described on Schedule 2 in accordance with the terms and conditions of
this Agreement. Company hereby accepts this license and agrees not to use, copy,
sell, lease, assign, sublicense or otherwise transfer or disclose or distribute
the Licensed Materials except in accordance with the terms and conditions of
this Agreement. All copies of the LICENSED Materials must contain all
proprietary marks, legends and copyright notices that appear on the original
copies delivered to Company by Licensor. [If the applicable Exhibit provides for
specific use limitations, they should be added here.]
2. TERM.
The Term of this License shall commence effective as of the Closing Date
described in the Master Transaction Agreement to which Licensor and Company are
parties, and shall continue for a period of ______ months ("Initial Term").
Thereafter, the Term of this Agreement shall be automatically renewed for
consecutive additional _______ terms ("Renewal Terms") unless
1
this Agreement is terminated by written notice provided by either party to the
other at least 90 days prior to the date of EXPIRATION of the Initial Term or
any Renewal Term.
3. LICENSED MATERIALS.
Licensor shall provide to Company the Licensed Materials described on Schedule 1
attached hereto.
4. LICENSE FEES.
As compensation for the License to be granted hereunder by Licensor, Company
shall pay Licensor the license fees and other consideration specified on
Schedule 2.
5. INDEMNITY.
5.1 Except as set forth in Section 5.2, Company shall indemnify Licensor and its
principals, agents or employees and shall hold each of them harmless from
liability for any Claims by third parties arising from the use by Company of the
Licensed Materials. Company will pay all expenses including attorneys' fees
actually and reasonably incurred by Licensor in connection with the defense of
any act, suit or proceeding and in connection with any appeal thereof, including
the cost of out-of-court settlements.
5.2 Licensor shall indemnify Company and its principals, agents or employees and
shall hold each of them harmless from liability for any Claims by third parties
that the Licensed Materials infringes any proprietary rights owned by such third
parties. LICENSOR will pay all expenses including attorneys' fees actually and
reasonably incurred by COMPANY in connection with the defense of any act, suit
or proceeding and in connection with any appeal thereof, including the cost of
out-of-court settlements.
6. REPRESENTATIONS AND WARRANTIES OF COMPANY.
Company expressly represents and warrants to Licensor as follows:
(a) Company is a corporation duly organized and existing in good
standing under the laws of the State of Delaware with full
power and authority, corporate or otherwise, to own its
properties and to carry on its business as currently
conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of the
business conducted by it makes such qualification necessary.
2
Execution and delivery of this Agreement has been authorized
and approved by the Board of Directors of Company.
7. REPRESENTATIONS AND WARRANTIES OF LICENSOR
Licensor expressly represents and warrants to Company as follows:
(a) Licensor is a corporation duly organized and existing in good
standing under the laws of the State of Delaware with full
power and authority, corporate or otherwise, to own its
properties and to carry on its business as currently
conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of the
business conducted by it makes such qualification necessary.
Execution and delivery of this Agreement has been
authorized and approved by the Board of Directors of
Licensor.
Licensor warrants that it has a right to grant a license
to use the Licensed Materials in accordance with the terms
of this Agreement.
Licensor warrants that to the Knowledge of Licensor, the
Licensed Materials do not infringe any proprietary rights
owned by any third parties.
8. LIMITATION OF LIABILITY
Except as set forth in Section 5, the liability of Licensor and Company arising
out of this Agreement shall be limited to $1,000,000. In no event shall Licensor
or Company be liable to the other for any special, consequential, incidental, or
indirect damages, however caused, on any theory of liability, and whether or not
Licensor has been advised of the possibility of such damages. These limitations
shall apply notwithstanding any failure of essential purpose of any limited
remedy.
9. CERTAIN OBLIGATIONS OF LICENSOR.
During the Term, Licensor agrees to perform the following obligations:
[If the applicable Exhibit provides for specific obligations, they should be
added here.]
10. CERTAIN OBLIGATIONS OF COMPANY.
During the Term, Company agrees to perform the following obligations:
[If the applicable Exhibit provides for specific use limitations, they should be
added here.]
3
11. NOTICES.
All notices, requests, demands or other communications provided for by this
Agreement shall be in writing and shall be addressed to the address of the
respective parties stated below or to such changed address as such party may
have affixed by notice:
To: Licensor:
To: Company:
12. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon Licensor and
Company, their successors and assigns, including, without limitation, any
corporation that may acquire all or substantially all of their assets or
business or with which Company or Licensor may be consolidated or merged. The
obligations of Licensor OR COMPANY hereunder may not be assigned without the
prior written consent of THE OTHER PARTY; provided, however, that the
obligations of Licensor hereunder may be assigned without the prior written
consent of Company to an affiliate of Licensor.
13 APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of _________.
14. ENTIRE AGREEMENT.
This Agreement supersedes all prior understandings and agreements between the
parties concerning the LICENSED MATERIALS and may be amended only by a writing
signed by each of the parties hereto.
4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers duly authorized effective as of the date and year first above
written.
LICENSOR:
By:
Name:
Title:
COMPANY:
By:
Name:
Title:
5
Annex A
GLOSSARY OF TERMS
Affiliate: Affiliate of any Person shall mean any
Person which, directly or indirectly,
controls, is controlled by or is under
common control with such Person (excluding
any trustee under, or any committee with
responsibility for administering, any ERISA
Plan).
Agreement: The Master Transaction Agreement by and
among BHW, BHIL, INFO and INFO Corporation
dated July 8, 1999, including the Annexes,
Schedules and Attachments thereto.
Alternative Proposal: Any proposal for an Alternative Transaction.
Alternative Transaction: As defined in Section 5.8.1 of the Master
Transaction Agreement.
BHIL: Bell & Howell Information and Learning
Company, a Delaware corporation and
wholly-owned subsidiary of BHW.
BHIL Capitalization Agreement: The Bill of Sale, Assignment and Assumption
and Indemnity Agreement to be entered into
by and between BHIL and EDCO in the form
attached to the Master Transaction Agreement
as Exhibit C.
BHIL Content License: License between BHIL and EDCO containing the
terms set forth on Exhibit F to the Master
Transaction Agreement.
BHIL Contributed Business: Accounts receivable, customer contracts,
customer data bases, sales orders, trade
payables, vendor records, obligations to
customers, employee records and other assets
and liabilities of BHIL which relate
exclusively to or arise from sales to the
K-12 Segment and shall include all assets,
contracts, obligations and liabilities
listed on Schedules BHW1, BHW2
1
and BHW3.
BHIL K-12 Products: ProQuest Direct and ProQuest CDROM and tape
product currently sold by BHIL to the K-12
Segment and new products and product
enhancements of the K-12 Products.
BHIL Noncompetition Agreement: Noncompetiton Agreement attached to the
Agreement as Exhibit L.
BHIL Restricted Activities: The Distribution, whether alone or with the
cooperation or support or through a third
Person, of products or services which are
delivered either electronically or in
machine readable format to the K-12 Segment.
BHIL Services Agreement: BHIL Services Agreement between BHIL and
EDCO containing the terms set forth on
Exhibit D to the Master Transaction
Agreement and the BHIL Non-Technical Support
Services Agreement between BHIL and EDCO
containing the terms set forth on Exhibit
D-2 to the Master Transaction Agreement.
BHW: Bell & Howell Company, a Delaware
corporation.
BHW Related Agreements: The BHIL Capitalization Agreement and any
other agreement to which BHW or BHIL is a
party as contemplated by the Master
Transaction Agreement.
BHW Representatives: BHW, its accountants, counsel, financial
advisors and other representatives.
Business Day: Any day excluding Saturday, Sunday and any
other day which banks in Chicago are
permitted or authorized to close.
Call Option: BHW's right to purchase INFO's equity
position in EDCO pursuant to Section 10.1 of
the Master Transaction Agreement.
Capitalization Agreements: The BHW Capitalization Agreement and the
INFO Capitalization Agreement.
2
Change of Control: "Change of Control" shall mean with respect
to a party the occurrence of any of the
following events:
(i) an acquisition (whether directly
from such party or otherwise) of
any voting securities of such
party by any Person immediately
after which such Person has or
would have Beneficial Ownership
(within the meaning of Rule
13d-3 promulgated under the
Exchange Act) of fifty percent
(50%) or more of the combined
voting power of such party's
then outstanding Voting
Securities;
(ii) the consummation of, or
agreement to consummate:
(A) a merger, consolidation,
share exchange or reorganization of such
party in which the stockholders of such
party, as a group, cease to hold a majority
equity interest in the surviving entity;
(B) a liquidation or dissolution
of or appointment of a receiver,
rehabilitator, conservator or similar person
for, such party; or
(C) the sale or other
disposition of all or substantially all of
the assets of such party to any Person
(other than a transfer to a subsidiary); or
(iii) any other change in "control"
(as defined in Rule 405
promulgated pursuant to the
Securities Act) of such Party.
Classmate: BHIL's proprietary software which is
marketed under the name "ProQuest
Classmate", including any successor or
modified products thereto.
3
Closing: The contribution of assets to, and the
assumption of liabilities by EDCO and the
issuance of the stock to INFO and BHW
contemplated by the Master Transaction
Agreement.
Closing Date: The fifth Business Day following the
satisfaction or waiver of all conditions to
the obligations of the Parties contemplated
by the Master Transaction Agreement.
Contract: Any contract, agreement, instrument, lease,
license, guarantee or other evidence of an
obligation of any Person.
Contributed Assets: Those assets listed on Schedules BHW1, BHW2,
INFO1 and INFO2 to the Agreement.
Contributed Businesses: The BHIL Contributed Business and the INFO
Contributed Business.
Damages: Actual, out-of-pocket losses, fines and
other damages (excluding incidental and
consequential damages) together with related
costs and expenses (including court costs,
reasonable attorneys' fees and expenses,
including those related to investigation and
expert assistance, and amounts paid in
settlement).
Distribution: The marketing, promotion, sale, license,
distribution, lease, transfer, electronic
transmission or other distribution, directly
or indirectly, of a product or service and
the subscription rights thereto (and when
used as a verb, the act of doing any of the
foregoing).
EDCO: EDCO, Inc., a Delaware corporation in the
process of formation as a subsidiary of
BHIL.
EDCO Business: The business, operations and activities
incident to the
4
development and operation of an internet
portal for the EDCO Segment, including the
acquisition and development of research and
reference tools and services and curricular
and extracurricular materials and the
Distribution thereof, either electronically
or in machine readable format, on a
worldwide basis to the EDCO Segment as
contemplated by the Master Transaction
Agreement and the Related Agreements.
EDCO Noncompetition Agreements: Noncompetition Agreement from EDCO to each
of BHIL and INFO containing the terms set
forth on Exhibit L to the Master Transaction
Agreement.
EDCO Restricted Activities: The Distribution, whether alone or with the
cooperation or support or through a third
Person, of products or services which are
either:
(i) Distributed to the Post
Secondary Education Segment, or
(ii) targeted primarily for
Distribution to the Post
Secondary Education Segment.
EDCO Segment: The K-12 Segment and Public Library Segment.
EDCO Services Agreement: Services Agreement between EDCO and
INFO containing the terms set forth
on Exhibit E to the Master
Transaction Agreement.
Electric Library Technology: INFO's proprietary software and
content distributed under the
trademark "Electric Library",
including any successor or modified
products thereto.
End-Users: Customers that are actual users of the
products, both Individuals and corporations
that are not schools, libraries or other
institutions in the EDCO Segment or
resellers.
5
Exchange Act: The Securities Exchange Act of 1934, as
amended.
Excluded BHIL Products: BHIL's Digital Vault products, Post
Secondary Education Segment and corporate
market databases, i.e., all versions of
ABI/INFORM, Periodical Abstracts, Newspaper
Abstracts, Newsstand and Business Dateline
and Product Course Packs, Case Studies and
Academic Edition; provided, however, that
BHIL will not modify or create derivatives
of such products specifically for the K-12
Segment.
Excluded Segments: All customers for information products or
services not included in the EDCO Segment,
including without limitation corporate, "at
home" customers for business materials and
Post Secondary Education Segment.
Fully Loaded Cost: All elements of cost, including allocable
share of interest, depreciation,
amortization and corporate overhead.
GAAP: Generally accepted accounting principles.
Glossary: This Glossary of Terms incorporated by
reference as Annex A to the Master
Transaction Agreement and each of the
Related Agreements.
Hart-Scott-Rodino Act: Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the applicable
rules and regulations thereunder.
Individual: Persons who are natural persons in their
capacity as retail customers and who are not
commercial resellers or Persons who are
institutions, schools, libraries or
educational or cultural organizations,
institutions or service providers.
6
INFO: Infonautics, Inc., a Pennsylvania
corporation.
INFO Capitalization Agreement: The Bill of Sale, Assignment and Assumption
and Indemnity Agreement to be entered into
by and between EDCO and INFO in the form
attached to the Master Transaction Agreement
as Exhibit C.
INFO Contributed Business: All accounts receivable, customer contracts,
customer data bases, domain names, trade
names and trade marks (i.e., Electric
Library, Researchpaper.com) and intellectual
property, software, hardware, patents,
processes and know-how, employee records,
sales orders, supplies, inventories, fixed
assets, software development processes,
Electric Library Technology, training
procedures, vendor records, prepaid amounts,
service contracts, and any other rights or
arrangements, and normal trade payables and
customer obligations, including deferred
revenues which relate exclusively to or
arise from the Electric Library Technology
(but excluding the deferred revenues,
customer contracts and customer obligations
directly related to the INFO End-User
Business) and shall include all assets,
contracts, obligations and liabilities
listed on Schedules INFO1, INFO2 and INFO3.
INFO Corporation: Infonautics Corporation, a Pennsylvania
corporation and a wholly-owned subsidiary of
INFO.
INFO/EDCO Remarketing and
License Agreement: Remarketing and License Agreement to be
entered into between INFO and EDCO
containing the terms set forth on Exhibit G
to the Master Transaction Agreement.
INFO End-User Business: The Distribution of Electric Library
Technology to End- Users in the Excluded
Segments excluding the Post-
7
Secondary Education Segment.
INFO Noncompetition Agreement: Noncompetition Agreement attached to the
Agreement as Exhibit K.
INFO Online Publishing Business: Accounts receivable, customer contracts,
customer data bases, sales orders, trade
payables, vendor records, obligations to
customers, employee records and other assets
and liabilities of INFO which relate to or
arise from INFO's Online Publishing Business
and shall include all assets, contracts,
obligations and liabilities listed on
Attachments 1 and 2 to Exhibit J.
INFO Related Agreements: The INFO Capitalization Agreement and any
other agreement to which it is a party as
contemplated by the Master Transaction
Agreement.
INFO Representatives: INFO, its accountants, counsel, financial
advisors and other representatives.
INFO Restricted Activities: The Distribution, whether alone or with the
cooperation or support or through a third
Person, of products or services which are
delivered either electronically or in
machine readable format and which are
either:
(i) Distributed to the EDCO Segment
or Post Secondary Education
Segment, or
(ii) are targeted primarily for
Distribution to customers in the
EDCO Segment or Post Secondary
Education Segment.
K-12 Products: Products and services targeted primarily for
Distribution to the K-12 Segment.
8
K-12 Segment: Customers who are a:
(a) public and private preschool, kindergarten, primary,
middle and secondary schools and home school K-12
programs,
(b) teachers and administrators of the K-12 institutions as
set forth in (a) above in their capacity as such; and
(c) students and parents of students of such K-12
institutions who are targeted through such K-12
institutions for at home use.
Laws: Any federal, state, local or foreign law,
rule, regulation, judgment, code, ruling,
statute, order or ordinance or other
requirement.
Material Adverse Effect: A material adverse effect on the BHW
Contributed Business or the INFO Contributed
Business, as the case may be, as conducted
at Closing, taken as a whole.
Net Revenue: Gross revenues from Distribution of products
or services less credits for returns and
allowances calculated in accordance with
GAAP.
Noncompetition Agreement: Noncompetition Agreement attached to the
Agreement as Exhibit I.
Offer: Third-party offer to purchase the INFO
End-User Business which INFO reasonably
establishes is bona fide.
Online Publishing Business: The provision of publishing or hosting
services to a third Person for such third
Person's publication.
Online Publishing License
Agreement: Online Publishing License Agreement in the
form attached to the Agreement as Exhibit J.
9
Original Notice: Notice of an Offer given by INFO to EDCO.
Person: Any individual, partnership, corporation,
association, firm, trust or any other
entity, group or organization as used in
Sections 13(d) and 14(d) of the Exchange
Act.
Post Secondary Education Segment: Public and private educational institutions
and programs suited for students who have
completed secondary education or its
equivalent, including colleges,
universities, professional schools and trade
schools.
ProQuest: BHIL proprietary software Distributed under
the tradename "ProQuest", including any
successor or modified products thereto.
Proxy Statement: INFO's proxy statement to be prepared in
accordance with Section 5.7 of the
Agreement.
Public Library Segment: Customers for K-12 Products which are
publicly owned and governmentally funded
libraries.
Put Option: INFO's right to sell its Stock to BHW
pursuant to Section 10.2 of the Agreement.
Related Agreements: The agreements contemplated by Article II of
the Master Transaction Agreement and
referenced as Exhibits to the Master
Transaction Agreement.
Researchpaper.com: INFO's proprietary website Distributed under
the tradename "Researchpaper.com, including
any successor or modified product thereto."
SEC: Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended.
Site Builder: BHIL's proprietary software Distributed
under the
10
tradename "Site Builder", including any
successor or modified products thereto.
Sleuth technology: INFO's proprietary software Distributed
under the tradename "Sleuth", including any
successor or modified product thereto.
Stock: The common stock (or equivalent equity
interest thereof) of EDCO.
Subsidiary: A corporation of which a Person and/or their
respective Subsidiaries, as the case may be,
own directly or indirectly, such number of
shares as have more than 50% of the ordinary
voting power for the election of directors.
Transfer: Any:
(a) sale, assignment or transfer of any
right, title or interest in any or all of a
business and any assets related thereto,
(b) pledge or hypothecation of any right,
title or interest in any or all of a
business or any assets related thereto
(other than a pledge or hypothecation to a
bank or recognized financial institution,
provided the pledgee agrees in writing at
the time of any foreclosure by such bank or
financial institution that the business and
its assets (in whole or in part) shall
continue to be subject to the terms of the
Master Transaction Agreement as if such bank
or financial institution were the original
party to the Master Transaction Agreement
who made the pledge); and
(c) any other direct or indirect, voluntary
or involuntary, sale, assignment or transfer
of the business or any of its
11
assets (in whole or in part).
Transferee: The proposed purchaser of the INFO End-User
Business.
Working Capital: The current assets less the current
liabilities of EDCO.
12