EXHIBIT 2.1
FORMATION AGREEMENT
Among
INFORMATION HANDLING SERVICES INC.
And
CERTAIN SHAREHOLDERS OF INTERNATIONAL COMPUTEX, INC.
IDENTIFIED HEREIN
Dated as of January 10, 1999
1
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions and Interpretations
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SECTION 1.01. Definitions..................................... 2
SECTION 1.02. Interpretations................................. 11
ARTICLE II
Repurchase of Warrants and Reimbursement of
-------------------------------------------
Repurchase Price
----------------
and
---
Contributions of Assets and ICI Common Stock
--------------------------------------------
in Exchange for Holdings Common Stock
-------------------------------------
SECTION 2.01. Repurchase, Reimbursement,...................... 11
Contributions and Exchanges
SECTION 2.02. Acquired Assets and Excluded.................... 13
Assets
SECTION 2.03. Assumption of Certain........................... 16
Liabilities
ARTICLE III
The Closing
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SECTION 3.01. Closing Date.................................... 18
SECTION 3.02. Transactions To Be Effected at the
Closing....................................... 18
ARTICLE IV
Representations and Warranties
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2
Page
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SECTION 4.01. Representations and Warranties
of IHS............................................ 19
SECTION 4.02. Representations and Warranties
in respect of Holdings and
Merger Sub........................................ 31
SECTION 4.03. Representations and Warranties of
the Founders...................................... 33
ARTICLE V
Covenants
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SECTION 5.01. Conduct of Business................................. 51
SECTION 5.02. No Solicitation..................................... 56
ARTICLE VI
Additional Agreements
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SECTION 6.01. Access to Information............................... 57
SECTION 6.02. Reasonable Efforts;................................. 58
Notification
SECTION 6.03. Costs and Expenses; Transfer
Taxes............................................. 59
SECTION 6.04. Publicity........................................... 59
SECTION 6.05. Bulk Transfer Laws.................................. 60
SECTION 6.06. Waiver of Certain Defenses.......................... 60
SECTION 6.07. Preparation of Proxy Statement;
Shareholders' Meeting............................. 60
SECTION 6.08. Agreement of Founders To Vote in.................... 60
Favor of Merger
SECTION 6.09. Agreements Not To Compete........................... 61
SECTION 6.10. Agreement to Provide Directors'
and Officers Insurance............................ 63
SECTION 6.11. Tax Matters......................................... 63
SECTION 6.12. Stock Options....................................... 64
ARTICLE VII
Conditions Precedent
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3
Page
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SECTION 7.01. Conditions to the Obligations of
IHS and the Founders............................. 65
SECTION 7.02. Conditions to the Obligations of
IHS.............................................. 66
SECTION 7.03. Conditions to the Obligations of
the Founders..................................... 68
ARTICLE VIII
Termination, Amendment and Waiver
---------------------------------
SECTION 8.01. Termination........................................ 71
SECTION 8.02. Effect of Termination.............................. 73
SECTION 8.03. Amendment.......................................... 73
SECTION 8.04. Extension; Waiver.................................. 73
ARTICLE IX
General Provisions
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SECTION 9.01. Nonsurvival of Representations
and Warranties................................... 74
SECTION 9.02. Notices............................................ 74
SECTION 9.03. Headings........................................... 75
SECTION 9.04. Severability....................................... 75
SECTION 9.05. Counterparts....................................... 75
SECTION 9.06. Entire Agreement; No Third-Party
Beneficiaries.................................... 75
SECTION 9.07. Governing Law...................................... 76
SECTION 9.08. Assignment......................................... 76
SECTION 9.09. Consent to Jurisdiction............................ 76
4
Appendices
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A Founders, Optionholders, Shares of ICI Common Stock, Options To
Purchase Shares of ICI Common Stock and Shares of Holdings Common
Stock
B Products
C Transferred Employees
Exhibits
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A Form of Dahan Employment Agreement
B Form of ▇▇▇▇▇▇ Employment Agreement
C Form of Merger Agreement
D Form of Option Amendment Agreement
E Form of Salem Employment Agreement
F Form of Services Agreement
G Form of Stockholders' Agreement
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FORMATION AGREEMENT dated as of January 10, 1999 (this
"Agreement"), among INFORMATION HANDLING SERVICES INC., a
Delaware corporation ("IHS"), and Certain Shareholders of
International CompuTex, Inc., a Georgia corporation ("ICI"),
identified in Appendix A-1 (the "Founders").
WHEREAS IHS has caused IHS Itemquest Holdings Inc., a Delaware
corporation ("Holdings"), to be incorporated;
WHEREAS IHS intends to contribute to Holdings certain assets and
liabilities related to the CAPSXpert product lines of IHS, 330,000 shares of ICI
Common Stock (as defined below) and cash in exchange for 7,989,877 shares of
Holdings Common Stock (as defined below), resulting in IHS owning an aggregate
of 7,989,977 shares of Holdings Common Stock;
WHEREAS the Founders intend to contribute to Holdings 1,566,153 shares
of ICI Common Stock in exchange for 1,566,153 shares of Holdings Common Stock;
WHEREAS, following the foregoing contributions and exchanges (the
"Formation Transaction"), each outstanding share of ICI Common Stock will be
converted into the right to receive $9.50 in cash in a merger (the "Merger") of
a wholly owned subsidiary of Holdings ("Merger Sub") with and into ICI such that
ICI will be the surviving corporation in the Merger;
WHEREAS, upon the effectiveness of the Merger, the employees (and
certain former employees) of ICI who hold options to purchase shares of ICI
Common Stock and certain directors of ICI who hold options to purchase shares of
ICI Common Stock, which employees (and former employees) and directors are
identified in Appendix A-2 (the "Optionholders"), will, by amendment of the
agreements evidencing their options, receive, for each option identified in
▇▇▇▇▇▇▇▇ ▇-▇, an amount in cash equal to (i) the excess, if any, of (x) the
consideration paid in the Merger in respect of each outstanding share of ICI
Common Stock over (y) the exercise price per share of ICI Common Stock subject
to such option multiplied by (ii) the number of shares of ICI Common Stock
subject to such option; and
6
WHEREAS, as a result of the Formation Transaction and the Merger, (i)
IHS will own 83.611% of the outstanding shares of Holdings Common Stock and the
Founders will collectively own 16.389% of the outstanding shares of Holdings
Common Stock and (ii) ICI, as the surviving corporation in the Merger, will be a
wholly owned subsidiary of Holdings.
NOW, THEREFORE, in consideration of the premises, mutual promises,
representations, warranties and covenants contained in this Agreement, the
parties hereto hereby agree:
ARTICLE I
Definitions and Interpretations
-------------------------------
SECTION 1.01. Definitions. The following terms, as used in this
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Agreement, shall have the following meanings:
"1995 ICI Stock Option Plan" has the meaning set forth in Section
4.03(d).
"1996 ICI Stock Option Plan" has the meaning set forth in Section
4.03(d).
"Acquired Assets" means the assets of IHS that are used, held for use
or intended to be used exclusively in, or that arise exclusively out of, the
conduct of the Business, as more particularly described in Section 2.02(a).
"Administrative Assets" means books, records and other administrative
assets of every kind and nature, including, price lists, correspondence,
mailing lists, lists of customers and potential customers, vendor lists,
production data, sales materials and records, market studies, penetration data,
other market information, sales and marketing plans, programs and strategies,
sales, costs and other financial data, purchasing materials and records,
personnel records, billing records, accounting records, other financial records,
sale order files, blueprints, plant layouts, and trade secrets, know-how, show-
how, designs and proprietary commercial information, methods, practices,
procedures, processes and formulae with respect to any of the foregoing, in each
case, other than such as constitute Intellectual Property, that are used, held
for use or intended to be used exclusively in, or that arise exclusively out of,
the conduct of the Business.
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"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person.
"Agreement" means this Formation Agreement, including all Appendices,
Exhibits and Schedules attached hereto.
"Ancillary Agreements" means the Employment Agreements, the Option
Amendment Agreements, the Merger Agreement, the Services Agreement and the
Stockholders' Agreement.
"Assumed Liabilities" means the liabilities, obligations and
commitments that relate exclusively to, or arise exclusively out of, the
Business, as more particularly described in Section 2.03(a).
"Business" means the CAPSXpert product lines of IHS and any services
offered by IHS that are related exclusively to those product lines.
"Business Accounts Receivable" means all accounts receivable of IHS
arising exclusively out of the conduct of the Business.
"Business Intellectual Property" means all Intellectual Property of
IHS that is used, held for use or intended to be used exclusively in, or that
arises exclusively out of, the conduct of the Business.
"Business Inventory" means all Inventory (including Inventory in
transit, on consignment or in the possession of a third party) of IHS that is
used, held for use or intended to be used exclusively in, or that arises
exclusively out of, the conduct of the Business.
"Business Material Adverse Effect" means a material adverse effect (i)
on the business, assets, condition (financial or otherwise), prospects or
results of operations of the Business or (ii) on the ability of IHS to perform
its obligations under this Agreement or the ability of IHS, Holdings or Merger
Sub to perform its obligations under the Ancillary Agreements to which it is a
party.
"Business Permitted Lien" means (i) any Lien disclosed on Schedule
4.01(e), (ii) any mechanics', carriers', workmen's, repairmen's or other like
Lien arising or incurred in the ordinary course of business, any Lien arising
under any original purchase price conditional sales contract or equipment lease
with a third party entered into in the ordinary course of business and
8
any Lien for Taxes that are not due and payable or that may thereafter be paid
without penalty and (iii) any other imperfection of title or encumbrance, if
any, that does not, individually or in the aggregate, materially impair the
continued use of the assets to which it relates in the conduct of the Business
as presently conducted.
"Business Personal Property" means all Personal Property of IHS that
is used, held for use or intended to be used exclusively in, or that arises
exclusively out of, the conduct of the Business.
"Closing" has the meaning set forth in Section 3.01.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Contracts" means purchase orders, sales agreements, customer
subscriptions, service contracts, distribution agreements, quotations and bids,
product warranty, technical assistance or service agreements, and all other
written or oral contracts, leases, subleases, licenses, sublicenses, indentures
and other commitments, agreements, arrangements and undertakings, and all
amendments thereto.
"Dahan Employment Agreement" means the Employment Agreement to be
entered into by ICI and ▇▇▇▇ ▇. ▇▇▇▇▇, substantially in the form of Exhibit A.
"Debenture Warrants" has the meaning set forth in Section 2.01(a).
"Employment Agreements" means the Dahan Employment Agreement, the
▇▇▇▇▇▇ Employment Agreement and the Salem Employment Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934.
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"Excluded Assets" has the meaning set forth in Section 2.02(b).
"Excluded Liabilities" has the meaning set forth in Section 2.03(b).
"Existing ICI Equity Rights" has the meaning set forth in Section
4.03(d).
"Filed SEC Documents" has the meaning set forth in Section
4.03(l)(ii).
"Financial Statements" has the meaning set forth in Section 4.01(d).
"Formation Transaction" has the meaning set forth in the preamble to
this Agreement.
"Founders" means ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Salem, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ which individuals are identified as
shareholders of ICI in the first column of Appendix A-1.
"Founders Contributed Shares" has the meaning set forth in Section
2.01(c).
"▇▇▇▇▇▇ Employment Agreement" means the Employment Agreement to be
entered into by ICI and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, substantially in the form of Exhibit
B.
"Governmental Entity" means any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality.
"Holdings" means IHS Itemquest Holdings Inc., a Delaware corporation.
"Holdings Common Stock" means the common stock, par value $0.001 per
share, of Holdings.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"ICI" means International CompuTex, Inc., a Georgia corporation.
"ICI Benefit Plans" has the meaning set forth in Section 4.03(m)(i).
10
"ICI Common Stock" means the common stock, par value $0.001 per share,
of ICI.
"ICI Material Adverse Effect" means a material adverse effect (i) on
the business, assets, condition (financial or otherwise), prospects or results
of operations of ICI or (ii) on the ability of ICI to perform its obligations
under the Ancillary Agreements to which it is a party.
"ICI Pension Plans" has the meaning set forth in Section 4.03(m)(i).
"ICI Permitted Lien" means (i) any Lien disclosed on Schedule 4.03(f),
(ii) any mechanics', carriers', workmen's, repairmen's or other like Lien
arising or incurred in the ordinary course of business, any Lien arising under
any original purchase price conditional sales contract or equipment lease with a
third party entered into in the ordinary course of business and any Lien for
Taxes that are not due and payable or that may thereafter be paid without
penalty and (iii) any other imperfection of title or encumbrance, if any, that
does not, individually or in the aggregate, materially impair the continued use
of the assets to which it relates in the conduct of the business of ICI as
presently conducted.
"ICI Takeover Proposal" means any proposal or offer for a merger,
consolidation, dissolution, recapitalization or other business combination
involving ICI, any proposal for the issuance by ICI of a material amount of its
equity securities as consideration for the assets or securities of another
Person or any proposal or offer to acquire in any manner, directly or
indirectly, a material equity interest in, any voting securities of, or a
substantial portion of the assets of, ICI, other than as contemplated by this
Agreement and the Ancillary Agreements.
"IHS" means Information Handling Services Inc., a Delaware
corporation.
"IHS Benefit Plans" means all "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA), bonus, stock option, stock purchase, deferred
compensation plans or arrangements and other employee fringe benefit plans
maintained, or contributed to, by IHS or any of its Affiliates for the benefit
of any officers or employees of the Business (including the IHS Pension Plans).
"IHS Contributed Shares" means 330,000 shares of ICI Common Stock,
which shares are to be contributed by IHS to Holdings at the Closing.
11
"IHS Pension Plans" means any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) maintained, or contributed to, by IHS or any
of its Affiliates for the benefit of any officers or employees of the Business.
"Improvements" means buildings, fixtures and other improvements.
"Intellectual Property" means intellectual and similar intangible
personal property and rights of every kind and nature, including U.S. and
foreign (i) patents and patent applications, inventions, invention disclosures,
which may or may not form the basis of patent applications, and shop rights,
(ii) trademarks, service marks, trade names, business names and brand names, and
all registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the United
States Patent & Trademark Office, any state of the United States or any other
Governmental Entity, all goodwill symbolized thereby or associated therewith and
all extensions and renewals thereof, (iii) copyrights (including all copyrights,
whether registered or unregistered, copyright registrations and applications to
register copyrights), (iv) Software, (v) Technical Documentation and (vi)
licenses and rights with respect to any of the foregoing or property of like
nature, including, but not limited to, confidentiality agreements, invention
assignments or agreements, noncompetition agreements and other intellectual
property agreements.
"Inventory" means raw materials, work-in-process, semi-finished goods,
finished goods, supplies, containers and packaging, and other inventories.
"Lien" means any lien, charge, claim, pledge, security interest,
security agreement, right to purchase, conditional sale agreement or other title
retention agreement, lease, tenancy, right of occupancy, easement, mortgage,
restriction, reservation, reversion, license, option, covenant or other
encumbrance (including the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code of any jurisdiction).
"Merger" means the merger of Merger Sub with and into ICI pursuant to
the terms of the Merger Agreement.
"Merger Agreement" means the Merger Agreement to be entered into by
IHS, Holdings, Merger Sub and ICI, substantially in the form of Exhibit C.
"Merger Sub" means a wholly owned subsidiary of Holdings incorporated
under the laws of the State of Georgia.
12
"Merger Sub Common Stock" means the common stock of Merger Sub.
"Multiemployer Pension Plan" has the meaning set forth in Section
4.03(m)(iv).
"Option Amendment Agreements" means, collectively, each of the
agreements to be entered into by ICI and the individual Optionholders, each
substantially in the form of Exhibit D.
"Optionholders" means the employees (and former employees) of ICI who
hold options to purchase shares of ICI Common Stock and certain of directors of
ICI who hold options to purchase shares of ICI Common Stock, which employees
(and former employees) and directors are identified in the first column of
Appendix A-2.
"Outside Date" has the meaning set forth in Section 8.01.
"Permits" means permits, concessions, grants, franchises, licenses,
consents, certificates, orders and other authorizations and approvals of any
Governmental Entity necessary for the conduct of the Business as presently
conducted or the ownership of the Acquired Assets.
"Person" means any individual, corporation, organization, partnership,
joint venture, trust, firm, association (whether or not incorporated),
Governmental Entity or other entity.
"Personal Property" means tangible personal property (other than
Inventory), including machinery, equipment, tools, business machines, office
furniture and fixtures, vehicles, and other tangible personal property.
"Products" means the products offered by IHS under the CAPSXpert name,
as more particularly described in Appendix B.
"Proxy Statement" has the meaning set forth in Section 4.03(c).
"Real Estate" means real property and interests in real property
including Improvements.
"Salem Employment Agreement" means the Employment Agreement to be
entered into by ICI and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Salem, substantially in the form of
Exhibit E.
13
"SEC Documents" has the meaning set forth in Section 4.03(e).
"Shareholders' Approval" has the meaning set forth in Section
4.03(b)(ii).
"Shareholders' Meeting" has the meaning set forth in Section 4.03(c).
"Securities Act" means the Securities Act of 1933.
"Services Agreement" means the Services Agreement to be entered into
by IHS and Holdings, substantially in the form of Exhibit F.
"Software" means programs, routines, subroutines, translators, object,
source and microcode, operating and related systems, compilers, assemblers, in
each case, that cause a computer to perform in an expected manner and all
documentation related thereto, including flow charts, instructions, end-user
manuals, models and test aids, and any and all updates and modifications
thereto.
"Stockholders' Agreement" means the Stockholders' Agreement to be
entered into by Holdings, IHS and the Founders, substantially in the form of
Exhibit G.
"Tax" means (i) any tax, governmental fee or other like assessment or
charge of any kind whatsoever (including any tax imposed under Subtitle A of the
Code and any net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, value-added, transfer, franchise, profits,
license, withholding tax on amounts paid, payroll, employment, excise,
severance, stamp, capital stock, occupation, property, environmental or windfall
profit tax, premium, custom, duty or other tax), together with any interest,
penalty, addition to tax or additional amount due or imposed by any Governmental
Entity responsible for the imposition of any such tax, (ii) any liability for
the payment of any amount of the type described in clause (i) above as a result
of a party to this Agreement being a member of an affiliated, consolidated or
combined group with any other corporation at any time on or prior to the Closing
Date and (iii) any liability of any Person with respect to the payment of any
amounts of the type described in clause (i) or (ii) above as a result of any
express or implied obligation of such Person to indemnify any other Person.
"Tax Return" means all Federal, state, local, provincial and foreign
Tax returns, declarations, statements,
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reports, schedules, forms and information returns, and any amended Tax Return,
relating to Taxes.
"Technical Documentation" means (i) all proprietary technical
information of every kind and nature, including manuals and documentation,
advertising and promotional material, catalogues, and photographs, (ii) all
trade secrets, confidential and non-confidential know-how, confidential and non-
confidential show-how, designs and proprietary technical information, methods,
practices, procedures, processes and formulae, and (iii) all information
concerning sources of supply, components and services.
"▇▇▇▇▇" means ▇▇▇▇▇ New Ventures Limited, a Bermuda corporation and an
affiliate of IHS.
"Transfer Tax" means any transfer, documentary, sales, use,
registration, value-added and any other similar Tax (including any applicable
real estate transfer tax and real property transfer gains tax) and related
amounts (including any interest, penalty, addition to tax or additional amount
due, or imposed by any Governmental Entity responsible for the imposition of any
such tax).
"Transferred Employees" means, collectively, each of the employees of
IHS identified in Appendix C who will serve as an employee of Holdings or ICI
following the consummation of the transactions contemplated by this Agreement.
"Year 2000 Compliant" means, with respect to a computer system or
software program, that such computer system or program: (i) is capable of
recognizing, processing, managing, representing, interpreting and manipulating
correctly date-related data for dates earlier and later than January 1, 2000;
(ii) provide date recognition for any data element without limitation; (iii) has
the ability to function automatically into and beyond the year 2000 without
human intervention and without any change in operations associated with the
advent of the year 2000; (iv) and time correctly into and beyond the year 2000;
(v) has the ability not to produce noncompliance in existing data, nor otherwise
corrupt such data, into and beyond the year 2000; (vi) has the ability to
process correctly after January 1, 2000, data containing dates before that date;
and (vii) has the ability to recognize all "leap years", including February 29,
2000.
SECTION 1.02. Interpretations. (a) When used in this Agreement, the
----------------
words "include", "includes" and "including" shall be deemed to be followed by
the words "without limitation".
15
(b) Any terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) When used in this Agreement, the word "or" is not exclusive.
(d) All references to Articles, Sections, Appendices, Exhibits and
Schedules shall be deemed references to Articles, Sections, Appendices, Exhibits
and Schedules to this Agreement.
(e) This Agreement shall be deemed drafted jointly by all the parties
hereto and shall not be specifically construed against any party hereto based on
any claim that such party or its counsel drafted this Agreement.
ARTICLE II
Repurchase of Warrants and Reimbursement of Repurchase Price
------------------------------------------------------------
and
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Contributions of Assets and ICI Common Stock
--------------------------------------------
in Exchange for Holdings Common Stock
-------------------------------------
SECTION 2.01. Repurchase, Reimbursement, Contributions and Exchanges.
-------------------------------------------------------
(a) Repurchase by Founders and Reimbursement by IHS. Upon the terms and
------------------------------------------------
subject to the conditions set forth in this Agreement, the Founders shall offer
to repurchase all warrants granted by the Founders to purchase, in the
aggregate, 117,368 shares of ICI Common Stock from the Founders (the "Debenture
Warrants"), and IHS shall pay to the Founders, on a pro rata basis, an amount
equal to $1.90 with respect to each share of ICI Common Stock represented by
each Debenture Warrant repurchased by the Founders (or exercised by the holder
of such Debenture Warrant) prior to the Closing Date, which amount represents,
in the aggregate, $223,000, as partial reimbursement of the amount paid by the
Founders to the holders of the Debenture Warrants. Such payment shall be made
at the Closing with respect to all Debenture Warrants repurchased (or exercised)
prior to the Closing Date and monthly, after the Closing Date, with respect to
Debenture Warrants repurchased (or exercised) during each month. In the event
that at the time of the Closing all the Debenture Warrants shall not have been
repurchased (or exercised), the Founders, on a pro rata basis, and IHS shall
each place in escrow an amount equal to the product of (x) the number of shares
represented by Debenture Warrants not repurchased (or exercised) prior to the
Closing Date and (y) $1.90, unless the Founders and Holdings agree upon an
alternate arrangement.
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(b) Contributions by IHS. Upon the terms and subject to the
---------------------
conditions set forth in this Agreement, at the Closing, IHS shall contribute to
Holdings (or Holdings' designee(s)) (i) all the right, title and interest of IHS
in, to and under the Acquired Assets, (ii) the IHS Contributed Shares and (iii)
cash in an amount that, together with all available cash of ICI, is sufficient
to enable ICI, as the surviving corporation in the Merger, to pay the
consideration to be paid for the shares of ICI Common Stock in the Merger.
(c) Contributions by the Founders. Upon the terms and subject to the
------------------------------
conditions set forth in this Agreement, at the Closing, each Founder shall
contribute to Holdings (or Holdings' designee(s)) all right, title and interest
of such Founder in, to and under the number of shares of ICI Common Stock set
forth opposite the name of such Founder in the third column of Appendix A-1
(collectively, the "Founders Contributed Shares").
(d) Exchanges from Holdings. Upon the terms and subject to the
------------------------
conditions set forth in this Agreement, at the Closing, in consideration of the
contributions made by IHS and the Founders, Holdings shall issue, sell and
deliver (i) to IHS, 7,989,977 shares of Holdings Common Stock and (ii) to each
Founder, the number of shares of Holdings Common Stock set forth opposite the
name of such Founder in the fourth column of Appendix A-1. The shares of
Holdings Common Stock to be issued to IHS and each Founder will be duly
authorized, validly issued, fully paid and non-assessable.
Each certificate representing shares of Holdings Common Stock will,
until the time at which such shares of Holdings Common Stock have been sold
pursuant to an effective registration statement under the Securities Act or,
upon delivery to Holdings of an opinion of counsel reasonably satisfactory to
Holdings, in a transaction that is exempt from, or not subject to, the
registration requirements of the Securities Act and applicable securities laws
of any state or other jurisdiction, bear the following legends:
(i) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT") OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, AND, UNLESS SO REGISTERED, THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION."; and
17
(ii) any legend required by the "blue sky" laws of any state to the
extent such laws are applicable to the shares represented by such
certificate.
SECTION 2.02. Acquired Assets and Excluded Assets. (a) The term
------------------------------------
"Acquired Assets" means the properties, assets, goodwill and rights of whatever
kind and nature, real or personal, tangible or intangible, of IHS existing on
the Closing Date, other than the Excluded Assets, that are used, held for use,
or intended to be used exclusively in, or that arise exclusively out of, the
conduct of the Business, including:
(i) all Business Inventory, including the Business Inventory listed
on Schedule 2.02(a)(i);
(ii) all Business Personal Property, including the Business Personal
Property listed on Schedule 2.02(a)(ii);
(iii) all Business Accounts Receivable;
(iv) all Business Intellectual Property;
(v) all Permits;
(vi) all Contracts to which IHS is a party or by which IHS is bound
that are used, held for use or intended to be used exclusively in, or that
arise exclusively out of, the conduct of the Business;
(vii) all rights in and to Products sold or leased (including
Products returned after the Closing and rights of rescission, replevin and
reclamation) in the conduct of the Business;
(viii) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items that are used, held for use
or intended for use exclusively in, or that arise exclusively out of, the
conduct of the Business;
(ix) all rights, claims and credits relating to any other Acquired
Asset or any Assumed Liability, including any such items arising under
insurance policies, and all guarantees, warranties, indemnities and similar
rights in favor of IHS in respect of any other Acquired Asset or Assumed
Liability;
(x) all Administrative Assets; and
18
(xi) all goodwill generated by, or associated with, the Business.
(b) The term "Excluded Assets" means:
(i) all Real Estate of IHS;
(ii) all cash and cash equivalents of IHS;
(iii) all assets under any IHS Pension Plan;
(iv) all business records, financial records, tax records and
employee records (or copies thereof) reasonably retained by IHS (including
business records, financial records, tax records and employee records
relating to the Business);
(v) all rights of IHS under this Agreement, the Ancillary Agreements
and the agreements, certificates and documents delivered in connection
herewith and therewith;
(vi) all rights, claims and credits related to any other Excluded
Asset or any Excluded Liability, including any such items arising under
insurance policies, and all guarantees, warranties, indemnities and similar
rights in favor of IHS in respect of any other Excluded Asset or Excluded
Liability; and
(vii) all properties, assets, goodwill and rights of whatever kind and
nature, real or personal, tangible or intangible, of IHS that either (i)
relate exclusively to, or arise exclusively out of, the conduct of any
business (or product lines) of IHS other than the Business (or the
CAPSXpert product lines) or (ii) relate to, or arise out of, the conduct of
both the Business and any other business of IHS or both the CAPSXpert
product lines and any other product lines of IHS.
(c) Holdings shall acquire the Acquired Assets free and clear of all
liabilities, obligations and commitments of IHS, other than the Assumed
Liabilities, and free and clear of all Liens, other than Business Permitted
Liens.
(d) Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any asset, or any benefit,
right or claim arising under, or resulting from, such asset, if an attempted
assignment thereof, without the consent of a third party, would constitute a
breach or other contravention of the rights of such third party,
19
would be ineffective with respect to any party to any agreement concerning such
asset or would in any way adversely affect the rights of IHS or, upon
contribution, Holdings, in, to or under such asset. If any assignment by IHS to
Holdings, or any assumption by Holdings, of any right, title or interest in, to
or under, or any liability, obligation or commitment in respect of, any asset
requires the consent of a third party, then such assignment or assumption shall
be made subject to such consent being obtained.
IHS shall (at its own cost and expense) use all reasonable efforts to
obtain any necessary consent to assignment of any right, title or interest in,
to or under, or assumption of any liability, obligation or commitment in respect
of, any Acquired Asset that has not been obtained prior to the Closing;
provided, however, that IHS shall not be required to make any payments or to
-------- -------
forego any benefits to obtain any consent, unless such consent is necessary to
transfer to Holdings ownership of any of the Products. In the event that any
necessary consent to assignment is not obtained within 45 days after the Closing
Date, then IHS shall (at the cost and expense of Holdings, excluding, however,
any payments required to obtain any consent that is necessary to transfer to
Holdings ownership of any of the Products, which payments shall be at the cost
and expense of IHS), for a period of 36 months following the Closing Date,
cooperate in any lawful and reasonable arrangement reasonably proposed by
Holdings under which Holdings shall obtain the economic benefits of any right,
title, or interest in, to or under any Acquired Asset with respect to which such
consent is not obtained in accordance with the terms of this Agreement. To the
extent Holdings obtains such benefits, Holdings shall, on behalf of IHS,
discharge all liabilities, obligations and commitments in respect of such
Acquired Asset, so long as such action of Holdings would not result in any
default thereunder.
(e) In the event that IHS and the Founders reasonably determine that
any of the Acquired Assets remain in the possession of IHS after the Closing,
then IHS shall (at its own cost and expense) promptly deliver such Acquired
Assets to Holdings. In the event that IHS and the Founders reasonably determine
that any assets of IHS other than the Acquired Assets (and the IHS Contributed
Shares) are in the possession of Holdings, then Holdings shall (at its own cost
and expense) promptly deliver such assets to IHS.
SECTION 2.03. Assumption of Certain Liabilities. (a) Upon the terms
----------------------------------
and subject to the conditions set forth in this Agreement, Holdings shall
assume, effective as of the Closing, and from and after the Closing, Holdings
shall pay,
20
perform and discharge when due, all liabilities, obligations and commitments,
whether arising before or after the Closing, and whether known or unknown, fixed
or contingent, express or implied, other than the Excluded Liabilities, that
relate exclusively to, or arise exclusively out of, the conduct of the Business
(such liabilities, obligations and commitments, the "Assumed Liabilities"),
including:
(i) all liabilities, obligations and commitments of IHS in respect
of the Business Intellectual Property, including the liabilities,
obligations and commitments described on Schedule 2.03(a)(i);
(ii) all liabilities, obligations and commitments of IHS in respect
of the Permits ;
(iii) all liabilities, obligations and commitments of IHS in respect
of the Contracts included in the Acquired Assets;
(iv) all liabilities, obligations and commitments of IHS in respect
of any Transferred Employee, including the liabilities, obligations and
commitments described on Schedule 2.03(a)(iv);
(v) all liabilities, obligations and commitments in respect of any
Transferred Employee arising under any IHS Benefit Plan that is not a
Pension Plan, including the liabilities, obligations and commitments
described on Schedule 2.03(a)(v);
(vi) all accounts payable of IHS that relate exclusively to, or
arise exclusively out of, the conduct of the Business;
(vii) all liabilities, obligations and commitments of IHS in respect
of any Product (including liabilities, obligations or commitments arising
out of claims of negligence, strict liability, personal injury, product
damage or breach of warranty, liabilities, obligations and commitments
arising out of any other claims (including workers' compensation and
employer's liability), and liabilities, obligations and commitments related
to promotional obligations and product recalls);
(viii) all liabilities, obligations and commitments of IHS for Taxes
attributable to the Business or the Acquired Assets, other than income
Taxes for any period (or portion thereof) ending on or prior to the Closing
Date; and
21
(ix) all other liabilities, obligations and commitments of IHS that
relate exclusively to, or arise exclusively out of, the conduct of the
Business.
(b) The term "Excluded Liabilities" means:
(i) all liabilities, obligations and commitments in respect of any
Transferred Employee arising under any IHS Pension Plan;
(ii) all liabilities, obligations and commitments for Transfer Taxes
incurred in connection with this Agreement, the Ancillary Agreements or the
transactions as contemplated hereby or thereby;
(iii) all liabilities, obligations and commitments of IHS that relate
exclusively to, or that arise exclusively out of, any Excluded Asset;
(iv) all liabilities, obligations and commitments of IHS, whether
known or unknown, fixed or contingent, express or implied, that relate
exclusively to, or arise exclusively out of, the conduct of any business of
IHS other than the Business; and
(v) all liabilities, obligations and commitments of IHS for income
Taxes attributable to the Business or the Acquired Assets for any period
(or portion thereof) ending on or prior to the Closing Date.
ARTICLE III
The Closing
-----------
SECTION 3.01. Closing Date. The closing (the "Closing") of the
-------------
transactions contemplated by this Agreement shall take place at the offices of
Cravath, Swaine & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00
a.m., New York City time, on the second business day following the satisfaction
(or, to the extent permitted, the waiver) of the conditions set forth in Section
7.01, or if on such day any condition set forth in Section 7.02 or 7.03 has not
been satisfied (or, to the extent permitted, waived by the party entitled to the
benefit thereof), as soon as practicable after all the conditions set forth in
Article VII have been satisfied (or, to the extent permitted, waived by the
parties entitled to the benefits thereof), or at such other place and time as
shall be agreed by IHS and the Founders.
22
SECTION 3.02. Transactions To Be Effected at the Closing. At the
-------------------------------------------
Closing: (a) The Founders shall deliver to IHS evidence reasonably
satisfactory to IHS and its counsel of the repurchase (or exercise) of all
Debenture Warrants that have been repurchased (or exercised) prior to the
Closing Date, and IHS shall deliver to the Founders, by wire transfer in
immediately available funds to the bank account or accounts previously specified
by the Founders, the aggregate amount due in accordance with Section 2.01(a), as
partial reimbursement of the amount paid by the Founders to the holders of the
Debenture Warrants in connection with such repurchases (or exercises).
(b) IHS shall deliver (i) to Holdings, appropriately executed bills
of sale, assignments and other instruments of transfer relating to the Acquired
Assets and assignments and other instruments of transfer relating to the IHS
Contributed Shares, in each case in form and substance reasonably satisfactory
to the Founders and their counsel, (ii) to Holdings, Merger Sub and the
Founders, appropriately executed counterparts of each of the Ancillary
Agreements to which it is a party, (iii) to Holdings, Merger Sub and the
Founders, all other agreements, documents and certificates identified in Section
7.02 and (iv) to Holdings, Merger Sub and the Founders, any additional
agreement, document or certificate reasonably requested by Holdings, Merger Sub
or the Founders, or its or their respective counsel, to demonstrate compliance
with the covenants, and satisfaction of the conditions precedent, set forth in
this Agreement.
(c) Each of the Founders shall deliver (i) to Holdings, appropriately
executed assignments and other instruments of transfer relating to the Founders
Contributed Shares held by such Founder, in each case in form and substance
reasonably satisfactory to IHS and its counsel, (ii) to IHS, Holdings and Merger
Sub, appropriately executed counterparts of each of the Ancillary Agreements to
which such Founder is a party, (iii) to IHS, Holdings and Merger Sub, all other
agreements, documents and certificates identified in Section 7.02 and (iv) to
IHS, Holdings and Merger Sub, any additional agreement, document or certificate
reasonably requested by IHS, Holdings or Merger Sub, or counsel to IHS, to
demonstrate compliance with the covenants, and satisfaction of the conditions
precedent, set forth in this Agreement.
(d) Holdings shall deliver (i) to IHS, 7,989,877 shares of Holdings
Common Stock, (ii) to each of the Founders, the number of shares of Holdings
Common Stock set forth opposite the name of such Founder in the fourth column of
▇▇▇▇▇▇▇▇ ▇-▇, (iii) to IHS, Merger Sub and each of the Founders, appropriately
executed counterparts of each Ancillary Agreement
23
to which it is a party, (iv) to IHS, Merger Sub and each of the Founders, all
other agreements, documents and certificates identified in Section 7.02 and (v)
to IHS, Merger Sub and each of the Founders, any additional agreement, document
or certificate reasonably requested by IHS, Merger Sub or the Founders, or its
or their respective counsel, to demonstrate compliance with the covenants, and
satisfaction of the conditions precedent, set forth in this Agreement.
(e) IHS and each of the Founders shall place in escrow the amounts, if
any, required pursuant to Section 2.01(a), which escrow shall be at the joint
cost and expense of IHS and the Founders.
ARTICLE IV
Representations and Warranties
------------------------------
SECTION 4.01. Representations and Warranties of IHS. IHS hereby
--------------------------------------
represents and warrants to the Founders that, except for any breach of the
following representations and warranties that in the aggregate with all other
breaches of such representations and warranties has not had, and could not
reasonably be expected to have, a Business Material Adverse Effect:
(a) Organization, Standing and Power. IHS is duly organized, validly
---------------------------------
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it to own,
lease or otherwise hold the Acquired Assets and to conduct the Business as
presently conducted. IHS is duly qualified to do business as a foreign
corporation in each jurisdiction in which it is required to qualify.
(b) Authority; Execution and Delivery; Enforceability. IHS has full
--------------------------------------------------
power and authority to execute this Agreement and each of the Ancillary
Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by IHS of this
Agreement and each of the Ancillary Agreements to which it is a party and the
consummation by IHS of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of IHS and no
other corporate proceedings on the part of IHS are necessary to authorize this
Agreement or any of the Ancillary Agreements to which IHS is a party or the
consummation of the transactions contemplated hereby or thereby. IHS has duly
24
executed and delivered this Agreement and, prior to the Closing, IHS will have
duly executed and delivered each Ancillary Agreement to which it is a party.
This Agreement constitutes, and each Ancillary Agreement to which IHS is a party
will, upon the Closing, constitute, a legal, valid and binding obligation of
IHS, enforceable against IHS in accordance with its terms.
(c) No Conflicts; Consents. The execution and delivery by IHS of
-----------------------
this Agreement and each of the Ancillary Agreements to which it is a party do
not, and the consummation of the transactions contemplated hereby and thereby
and the compliance by IHS with the terms hereof and thereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or the loss of a benefit under, or result in the
creation of any Lien upon any of its properties or assets under, any provision
of (i) the Certificate of Incorporation or By-Laws of IHS, (ii) any Contract to
which IHS is a party or by which any of its properties or assets is bound or
(iii) any judgment, order or decree, or statute, law, ordinance, rule or
regulation, applicable to IHS or any of its properties or assets. No consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made by or with respect to IHS in connection with the execution, delivery and
performance of this Agreement and each of the Ancillary Agreements to which it
is a party or the consummation of the transactions contemplated hereby and
thereby, other than (i) compliance with, and filings under, the HSR Act, if
required, (ii) filings with the Commission, including the filing of a statement
on Schedule 13D under the Exchange Act, and (iii) filings with the Secretary of
State of the State of Georgia, including, in connection with the Merger, the
filing of articles or a certificate of merger, and filings with the relevant
authorities of other states of appropriate documents relating to the
qualification to do business.
(d) Financial Statements. Schedule 4.01(d) sets forth (i) the
---------------------
unaudited pro forma balance sheet of the Business as of November 30, 1998 and
(ii) the unaudited pro forma statements of operations of the Business for the
fiscal years ended November 30, 1997 and 1998 (collectively, the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be otherwise indicated on Schedule 4.01(d))
and fairly present in all respects the financial position of the Business as of
the dates thereof and the results of its operations for the periods then ended.
25
(e) Acquired Assets. Except as disclosed on Schedule 4.01(e), IHS
----------------
has good and valid title to all the Acquired Assets it owns, in each case free
and clear of all Liens, except Business Permitted Liens. None of the Acquired
Assets are leased by IHS. This Section 4.01(e) does not relate to the Business
Intellectual Property, which is exclusively the subject of Section 4.01(f).
(f) Intellectual Property.
----------------------
(i) Schedule 4.01(f)(i) sets forth a true and complete list of all
data bases, software and trademarks included in the Business Intellectual
Property. With respect to all Business Intellectual Property that is
registered or subject to an application for registration, Schedule
4.01(f)(i) sets forth a list of all jurisdictions in which such Business
Intellectual Property is registered or an application for registration has
been filed. Except as disclosed on Schedule 4.01(f)(i), (i) all Business
Intellectual Property has been duly registered with, filed with, or issued
by, the appropriate Governmental Entity where such registration, filing or
issuance is necessary or appropriate for the conduct of the Business as
presently conducted, (ii) IHS is the sole and exclusive owner of, and IHS
has the right to use, execute, reproduce, display, perform, modify,
enhance, distribute, prepare derivative works of and sublicense, without
payment to any other Person, all Business Intellectual Property, and the
consummation of the transactions contemplated hereby does not and will not
conflict with, alter or impair any such rights, (iii) since January 1,
1994, IHS has not received any communication from any Person asserting any
ownership interest in any Business Intellectual Property owned by IHS and
(iv) to the knowledge of IHS, no Person is in violation of, in conflict
with, or infringing any rights of IHS relating to the Business Intellectual
Property.
(ii) Except as disclosed on Schedule 4.01(f)(ii), IHS has not granted
any license or other right of any kind relating to any Business
Intellectual Property or the licensing, marketing or distribution thereof,
other than nonexclusive licenses to end-users in the ordinary course of
business. IHS is not bound by, or a party to, any license, option or
agreement of any kind relating to the Intellectual Property of any other
Person for the use of such Intellectual Property in the conduct of the
Business, except as disclosed on Schedule 4.01(f)(ii) and except for so-
called "shrink-wrap" license agreements relating to
26
computer software licensed in the ordinary course of business.
(iii) To the knowledge of IHS, the conduct of the Business as
presently conducted does not violate, conflict with or infringe the
Intellectual Property of any other Person, and since January 1, 1994, IHS
has not received any communication alleging that IHS has, in the conduct of
the Business, violated, conflicted with, or infringed any rights relating
to the Intellectual Property of any Person.
(iv) To the knowledge of IHS, no former or current employee of the
Business, and no consultant or contractor hired by IHS, who has
participated in, or contributed to, the development of any Business
Intellectual Property has any valid claim against IHS in connection with
the involvement of such Person in the development of any Business
Intellectual Property, and since January 1, 1994, IHS has not received any
communication asserting any such claim.
(v) To the knowledge of IHS, none of the Transferred Employees is
obligated under any Contract, or subject to any judgment, order or decree,
or statute, law, ordinance, rule or regulation, that would interfere in any
respect with the use of his or her best efforts to promote the interests of
the Business or that would conflict with the Business as presently
conducted. To the knowledge of IHS, neither the consummation of the
transactions contemplated hereby nor the conduct of the Business as
proposed to be conducted will conflict with, or result in any violation of,
or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination under, any Contract under which any
Transferred Employee is obligated or any judgment, order or decree, or
statute, law, ordinance, rule or regulation, to which any Transferred
Employee is subject.
(vi) Except as disclosed on Schedule 4.01(f)(vi), no Person has been
granted any rights to, and no Person has a copy of, any source code used,
held for use or intended to be used exclusively in, or that arises
exclusively out of, the conduct of the Business.
(g) Contracts.
----------
(i) Except as disclosed on Schedule 4.01(g)(i), and except for
Contracts relating solely to Excluded Assets, IHS is not a party to, or
bound by, any Contract that is used, held for use or intended to be used
exclusively in, or that
27
arises exclusively out of, the conduct of the Business and that is:
(A) a written employment agreement or employment contract with any
Transferred Employee;
(B) a collective bargaining agreement or other Contract with any
labor organization, union or association;
(C) a covenant not to compete;
(D) a Contract with (1) any stockholder of IHS, (2) any Affiliate of
IHS or (3) any officer or employee of IHS or any of its Affiliates
(other than employment agreements and employment contracts described
in clause (A) above);
(E) a lease, sublease or similar Contract with any Person under
which IHS is a lessor or sublessor of, or makes available for use to
any Person, (1) any Real Estate occupied by the Business or (2) any
portion of any premises occupied by the Business;
(F) a lease, sublease or similar Contract with any Person under
which IHS is a lessor or sublessor of, or makes available for use to
any Person, any Business Personal Property;
(G) (1) a continuing contract for the purchase of materials,
supplies or equipment (other than purchase orders for Inventory in the
ordinary course of business consistent with past practice), (2) a
Contract for management, service, consulting or similar services or
(3) a Contract for advertising services;
(H) a license, option, agreement or other Contract relating in whole
or in part to the Business Intellectual Property (including any
license, option, agreement or other Contract under which IHS is
licensee or licensor of any Business Intellectual Property);
(I) (1) a Contract under which the Business has borrowed any money
from, or issued any note, bond, debenture or other evidence of
indebtedness to, any Person or (2) any other note, bond, debenture or
other evidence of indebtedness issued by the Business to any Person;
28
(J) a Contract (including any so-called take-or-pay or keepwell
agreement) under which (1) any Person has, directly or indirectly,
guaranteed indebtedness, liabilities or obligations of the Business or
(2) the Business has, directly or indirectly, guaranteed indebtedness,
liabilities or obligations of any other Person (in each case other
than endorsements for the purpose of collection in the ordinary course
of business);
(K) a Contract under which the Business has, directly or indirectly,
made any advance, loan, extension of credit or capital contribution
to, or other investment in, any Person (other than extensions of trade
credit in the ordinary course of business);
(L) a Contract providing for indemnification of any Person with
respect to liabilities relating to the Business;
(M) a power of attorney (other than a power of attorney given in the
ordinary course of business with respect to routine tax matters);
(N) a Contract not made in the ordinary course of business;
(O) a confidentiality agreement, other than in the ordinary course
of business;
(P) a Contract (including a purchase order) involving payment by the
Business of more than $25,000 or extending for a term more than 180
days from the date of this Agreement, other than purchase orders
entered into in the ordinary course of business prior to the date of
this Agreement and purchase orders entered into in the ordinary course
of business after the date of this Agreement and not in violation of
this Agreement;
(Q) a Contract (including a sales order) involving the obligation of
the Business to deliver Products or services for payment of more than
$25,000 or extending for a term more than 180 days from the date of
this Agreement, other than subscriptions for Products sold in the
ordinary course of business prior to the date of this Agreement and
other than subscription for Products entered into in the ordinary
course of business after
29
the date of this Agreement and not in violation of this Agreement;
(R) a Contract with, or license or Permit granted by or from, any
Governmental Entity;
(S) a Contract providing for the services of any dealer,
distributor, sales representative, franchisee or similar
representative involving the payment by the Business of more than
$25,000;
(T) a Contract granting a Lien upon any of the Acquired Assets,
other than a Business Permitted Lien;
(U) a Contract for the sale of any of the Acquired Assets (other
than sales of Inventory in the ordinary course of business) or the
grant of any preferential rights to purchase any of the Acquired
Assets or requiring the consent of any party to the transfer of any of
the Acquired Assets;
(V) any other Contract that has an aggregate future liability to any
Person (other than IHS) in excess of $25,000 (other than liabilities
arising in connection with the delivery of Products pursuant to
subscriptions for such Products); or
(W) a Contract other than as described above to which the Business
is a party or by which it or any of its properties or assets is bound,
in each case that is material to the Business or the use of any of the
Acquired Assets.
(ii) Except as disclosed on Schedule 4.01(g)(ii), each Contract
identified on Schedule 4.01(g)(ii) is valid, binding and in full force and
effect and is enforceable by IHS or the Business, as applicable, in
accordance with its terms. Except as disclosed on Schedule 4.01(g)(ii),
IHS or the Business, as applicable, has performed all obligations required
to be performed by it under the Contracts included in the Acquired Assets,
and neither IHS nor the Business has taken any actions that are in conflict
with, or that would result in any violation of, or default (with or without
notice or lapse of time, or both) under, any such Contract, and, to the
knowledge of IHS, no other party to any such Contract has taken any action
that is in conflict with, or that would result in any violation of, or
default (with or without notice or lapse of time, or both) under, such
Contract. Neither IHS nor the Business has, except as
30
disclosed on Schedule 4.01(g)(ii), received any written or oral notice of
the intention of any party to terminate any Contract included in the
Acquired Assets. Except as disclosed on Schedule 4.01(g)(ii), to the
knowledge of IHS, the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the compliance
with the terms hereof will not require the consent of any party to any
Contract identified on Schedule 4.01(g)(i) or any material Contract with a
customer for the sale of Products to avoid the invalidity of the transfer
of such Contract, the termination thereof or a breach, violation or default
thereunder. Complete and correct copies of all Contracts listed on Schedule
4.01(g)(i), together with all amendments thereto, have been made available
to the Founders.
(h) Permits.
--------
(i) Schedule 4.01(h) sets forth all Permits issued or granted to IHS
by Governmental Entities that are necessary or desirable for the conduct of
the Business. Except as disclosed on Schedule 4.01(h), (i) to the
knowledge of IHS, all such Permits are validly held by IHS, and IHS has
complied in all respects with all terms and conditions thereof, (ii) since
January 1, 1994, IHS has not received any notice of any suit, action or
proceeding relating to the revocation or modification of any such Permits,
and (iii) to the knowledge of IHS, none of such Permits will be subject to
suspension, modification, revocation or nonrenewal as a result of the
execution and delivery of this Agreement or any of the Ancillary Agreements
to which it is a party or the consummation of the transactions contemplated
hereby and thereby.
(ii) IHS possesses all Permits to own, or hold under lease, and
operate the Acquired Assets and to conduct the Business as currently
conducted.
(i) Sufficiency of Acquired Assets. The Acquired Assets, the
-------------------------------
Excluded Assets set forth on Schedule 4.01(i) and the assets used to provide the
services to be provided to the Business under the Services Agreement comprise
all the properties and assets employed by IHS in connection with the Business.
The Acquired Assets, together with the rights and services to be provided to the
Business under the Employment Agreements and the Services Agreement, are
sufficient for the conduct of Business immediately following the Closing in
substantially the same manner as currently conducted.
31
(j) Insurance. IHS maintains policies of fire and casualty,
----------
liability and other forms of insurance that cover the Business in such amounts,
with such deductibles and against such risks and losses as are, in the judgment
of IHS, reasonable for the Business.
(k) Taxes.
------
(i) IHS has timely filed, or has caused to be timely filed on its
behalf, all Tax Returns required to be filed by it to the extent directly
relating to the Business, and all such Tax Returns are true, complete and
accurate to the extent directly relating to the Business. All Taxes
directly relating to the Business shown to be due on such Tax Returns, or
otherwise owed, have been timely paid.
(ii) The most recent Financial Statements reflect an adequate reserve
for all Taxes payable by IHS directly relating to the Business for all
Taxable periods and portions thereof through the date of such Financial
Statements. No deficiency with respect to any Taxes has been proposed,
asserted or assessed against IHS directly relating to the Business, and no
requests for waivers of the time to assess any such Taxes are pending.
(iii) There are no Liens for Taxes (other than for current Taxes not
yet due and payable) on the Acquired Assets.
(iv) Except as disclosed on Schedule 4.01(k)(iv), (A) none of the
Acquired Assets is "tax exempt use property" within the meaning of Section
168(h) of the Code and (B) none of the Acquired Assets is a lease made
pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954.
(v) At the time of Closing, IHS will have no plan to sell or
otherwise dispose of shares of Holdings Common Stock issued to IHS pursuant
to Section 2.01(d).
(l) Absence of Certain Changes or Events. Except as disclosed on
-------------------------------------
Schedule 4.01(l), from the date of the most recent Financial Statements to the
date of this Agreement, IHS has conducted the Business only in the ordinary
course, and during such period there has not been:
(i) any event, change, effect or development has had or could
reasonably be expected to have an adverse effect related to the Business;
32
(ii) (A) any granting by IHS to any Transferred Employee of any
increase in compensation, except in the ordinary course of business
consistent with past practice or as was required under employment
agreements in effect as of the date of the most recent Financial
Statements, (B) any granting by IHS to any Transferred Employee of any
increase in severance or termination pay, except as was required under any
employment, severance or termination agreements in effect as of the date of
the most recent Financial Statements or (C) any entry by IHS into any
employment, severance or termination agreement with any Transferred
Employee;
(iii) any adoption of, or amendment to, any IHS Benefit Plan by IHS
during the period from the date of the most recent Financial Statements to
the date of this Agreement;
(iv) any change in accounting methods, principles or practices by IHS
materially affecting the properties or assets of the Business, except
insofar as may have been required by a change in generally accepted
accounting principles; or
(v) any elections by IHS with respect to Taxes directly relating to
the Business or settlement or compromise by IHS of any Tax liability or
refund directly relating to the Business.
(m) Proceedings. Except as disclosed on Schedule 4.01(m), there is
------------
no suit, action or proceeding pending or, to the knowledge of IHS, threatened,
against or affecting the Business or the Acquired Assets, nor is there any
judgment, order or decree outstanding against or affecting the Business or the
Acquired Assets. Except as disclosed on Schedule 4.01(m), there are no suits,
actions or proceedings initiated by IHS, or that IHS intends to initiate,
against any other Person arising out of the conduct of the Business. Except as
disclosed on Schedule 4.01(m), to the knowledge of IHS, there is no pending or
threatened investigation of the conduct of the Business or any of the Acquired
Assets.
(n) Compliance with Laws. Except as disclosed on Schedule 4.01(n),
---------------------
the Business is in compliance with all laws, ordinances, rules and regulations,
applicable to the Business or the Acquired Assets, including those laws,
ordinances, rules and regulations relating to occupational health and safety and
the environment. Except as disclosed on Schedule 4.01(n), IHS has not received
any written communication since January 1, 1997 from a Governmental Entity that
alleges that the Business or any of
33
the Acquired Assets is not in compliance in any respect with any law, ordinance,
rule or regulation applicable to the Business or the Acquired Assets. IHS has
not received any written notice that any investigation or review by any
Governmental Entity with respect to the Business or any of the Acquired Asset is
pending or that any such investigation or review is contemplated. This Section
4.01(n) does not relate to matters with respect to Taxes, which are the subject
of Section 4.01(k).
(o) Labor Agreements and Actions. The Business is not bound by, or
----------------------------
subject to (and none of the Acquired Assets is bound by or subject to), any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of IHS,
sought to represent any of the employees, representatives or agents of the
Business. There is no strike or other labor dispute involving the Business
pending, or, to the knowledge of IHS, threatened, nor is IHS aware of any labor
organization activity involving the employees of the Business. IHS is not aware
that any Transferred Employee intends to terminate his or her employment with
IHS, and IHS does not have a present intention to terminate the employment of
any Transferred Employee. The Business has complied with all applicable Federal
and state equal employment opportunity laws and with other laws related to
employment.
(p) Year 2000 Compliance. Except as disclosed on Schedule 4.01(p),
--------------------
IHS expects the computer systems of the Business to be Year 2000 Compliant by
June 30, 1999. To the knowledge of IHS, all Business Inventory that is or uses
computer software is Year 2000 Compliant. To the knowledge of IHS, any failure
on the part of the customers of, and suppliers to, the Business to be Year 2000
Compliant by December 31, 1999, is not expected to have an adverse effect on the
Business.
(q) Brokers. No broker, investment banker, financial advisor or
-------
other Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements based
upon arrangements made by or on behalf of IHS.
(r) IHS Contributed Shares. At the time of the Closing, IHS will
----------------------
have good and valid title to the IHS Contributed Shares, free and clear of all
Liens. Upon delivery to Holdings at the Closing of the certificates
representing the IHS Contributed Shares, duly endorsed by IHS for transfer to
Holdings, good and valid title to the IHS Contributed Shares will pass to
Holdings, free and clear of all Liens. Other than this Agreement and the Common
Stock Purchase Agreement dated as of
34
January 29, 1998, between ICI and ▇▇▇▇▇, the IHS Contributed Shares are not
subject to any voting trust agreement or other contract, agreement, arrangement,
commitment or understanding, including any such agreement, arrangement,
commitment or understanding restricting or otherwise relating to the voting,
dividend rights or disposition of the IHS Contributed Shares.
(s) Information Supplied. None of the information supplied or to be
--------------------
supplied by IHS for inclusion or incorporation by reference in the Proxy
Statement will, at the date it is first mailed to ICI's shareholders or at the
time of the Shareholders' Meeting, contain any untrue statement of a fact or
omit to state any fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement will comply as to form in all
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by IHS with respect to
statements made or incorporated by reference therein based on information
supplied by any Person other than IHS for inclusion or incorporation by
reference in the Proxy Statement.
SECTION 4.02. Representations and Warranties in respect of Holdings
-----------------------------------------------------
and Merger Sub. IHS hereby represents and warrants to the Founders that, except
--------------
for any breach of the following representations and warranties that in the
aggregate with all other breaches of such representations and warranties could
not reasonably be expected to have a Business Material Adverse Effect:
(a) Organization, Standing and Power. Holdings is duly organized,
--------------------------------
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct business as presently
conducted. At the time of the Closing, Merger Sub will be duly organized,
validly existing and in good standing under the laws of the State of Georgia.
(b) Authority; Execution and Delivery; Enforceability. At the time of
-------------------------------------------------
the Closing, each of Holdings and Merger Sub will have full power and authority
to execute each of the Ancillary Agreements to which it is a party and to
consummate the transactions contemplated thereby. At the time of the Closing,
the execution and delivery by each of Holdings and Merger Sub of each of the
Ancillary Agreements to which it is a party and the consummation by each of
Holdings and Merger Sub of the transactions contemplated thereby will have been
duly authorized by all necessary corporate action on the part of each of
Holdings and Merger Sub and no other corporate proceedings on the part of
35
Holdings or Merger Sub will be necessary to authorize any of the Ancillary
Agreements to which it is a party or the consummation of the transactions
contemplated thereby. Prior to the Closing, each of Holdings and Merger Sub will
have duly executed and delivered each Ancillary Agreement to which it is a
party. Each Ancillary Agreement to which Holdings or Merger Sub is a party will,
upon the Closing, constitute a legal, valid and binding obligation of Holdings
or Merger Sub, as the case may be, enforceable against Holdings or Merger Sub,
as the case may be, in accordance with its terms.
(c) No Conflicts; Consents. The execution and delivery by each of
----------------------
Holdings and Merger Sub of each of the Ancillary Agreements to which it is a
party and the consummation of the transactions contemplated thereby and the
compliance by each of Holdings and Merger Sub with the terms thereof will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancelation or acceleration of any obligation or the loss of a benefit under, or
result in the creation of any Lien upon any of its properties or assets under,
any provision of (i) the Certificate of Incorporation or By-Laws of Holdings or
the Articles of Incorporation or By-laws of Merger Sub, (ii) any Contract to
which Holdings or Merger Sub is a party or by which any of its properties or
assets is bound or (iii) any judgment, order or decree, or statute, law,
ordinance, rule or regulation, applicable to Holdings or Merger Sub or any of
its properties or assets. No consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Holdings or
Merger Sub in connection with the execution, delivery and performance of each of
the Ancillary Agreements to which it is a party or the consummation of the
transactions contemplated thereby, other than (i) compliance with, and filings
under, the HSR Act, if required, (ii) filings with the Commission, including the
filing of a statement on Schedule 13D under the Exchange Act, and (iii) filings
with the Secretary of State of the State of Georgia, including, in connection
with the Merger, the filing of articles or a certificate of merger, and filings
with the relevant authorities of other states of appropriate documents relating
to the qualification to do business.
(d) Capitalization.
---------------
(i) Immediately prior to the Closing, the authorized capital of
Holdings will consist of 20,000,000 shares of Holdings Common Stock, of
which 100 shares will be issued and outstanding. Immediately prior to the
Closing, all of
36
the outstanding shares of Holdings Common Stock will have been duly and
validly authorized and issued and will be fully paid and nonassessable and
will have been issued in compliance with applicable Federal and state
securities laws. Immediately prior to the Closing, there will be no
outstanding options, warrants, rights (including conversion or preemptive
rights) or agreements, in writing or oral, for the purchase or acquisition
from Holdings of any shares of its capital stock, other than in respect of
this Agreement and any stock option or similar plan approved by the Board
of Directors of Holdings for the benefit of the directors, officers or
employees of Holdings or Merger Sub. Immediately prior to the Closing,
there will be no rights of first refusal or similar rights in respect of
shares of Holdings' capital stock issued or sold by Holdings.
(ii) Immediately prior to the Closing, the authorized capital of
Merger Sub will consist of 110,000,000 shares of Merger Sub Common Stock,
of which 100,000,000 shares will be issued and outstanding. Immediately
prior to the Closing, all of the outstanding shares of Merger Sub Common
Stock will have been duly and validly authorized and issued and will be
fully paid and nonassessable and will have been issued in compliance with
Federal and state securities laws. Immediately prior to the Closing, there
will be no outstanding options, warrants, rights (including conversion or
preemptive rights) or agreements, in writing or oral, for the purchase or
acquisition from Merger Sub of any shares of its capital stock.
Immediately prior to the Closing there will be no rights of first refusal
or similar rights in respect of shares of Merger Sub's capital stock issued
or sold by Merger Sub.
(e) Issuance of Shares of Holdings Common Stock. The shares of
--------------------------------------------
Holdings Common Stock to be issued to IHS and the Founders pursuant to this
Agreement, when issued, sold and delivered in accordance with the terms of
hereof for the consideration expressed herein, will be (i) duly and validly
issued, fully paid and nonassessable, (ii) free of restrictions on transfer,
other than restrictions on transfer under this Agreement, the Stockholders'
Agreement and applicable Federal and state securities laws and (iii) not subject
to any preemptive rights of others.
(f) Operations of Holdings. Holdings was formed solely for the
-----------------------
purpose of engaging in the transactions contemplated by this Agreement and the
Ancillary Agreements. Holdings has conducted its business as contemplated by
this Agreement and the Ancillary Agreements.
37
SECTION 4.03. Representations and Warranties of the Founders. Each
-----------------------------------------------
of the Founders hereby represents and warrants to IHS that except for any breach
of the following representations and warranties that in the aggregate with all
other breaches of such representations and warranties has not had, and could not
reasonably be expected to have, an ICI Material Adverse Effect:
(a) Organization, Standing and Power. ICI is duly organized, validly
--------------------------------
existing and in good standing under the laws of the State of Georgia and has
full corporate power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it to own,
lease or otherwise hold its properties and assets and to conduct its business as
presently conducted. ICI is duly qualified to do business as a foreign
corporation in each jurisdiction in which it is required to qualify. ICI has
not, since the date of its formation, engaged in any business other than the
provision of software services and applications, and ICI has not, since the date
of its formation, engaged in any activities other than those activities
reasonably related to the business of ICI as presently conducted. There is no
predecessor Person to ICI. ICI has not had, and does not now have, any
subsidiaries. The Founders have delivered to IHS and Holdings true and complete
copies of the Restated Articles of Incorporation of ICI and the By-laws of ICI,
in each case as amended through the date of this Agreement.
(b) Authority; Execution and Delivery; Enforceability.
-------------------------------------------------
(i) Each of the Founders has full power and authority to execute this
Agreement and each of the Ancillary Agreements to which such Founder is a
party and to consummate the transactions contemplated hereby and thereby.
Each of the Founders has duly executed and delivered this Agreement and,
prior to the Closing, will have duly executed and delivered each Ancillary
Agreement to which such Founder is a party. This Agreement constitutes,
and each Ancillary Agreement to which each Founder is a party will, upon
the Closing, constitute, a legal, valid and binding obligation of such
Founder, enforceable against such Founder in accordance with its terms.`
(ii) ICI has full power and authority to execute each of the Ancillary
Agreements to which it is a party and to consummate the transactions
contemplated thereby. The execution and delivery by ICI of each of the
Ancillary Agreements to which it a party and the consummation by ICI of the
transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of
38
ICI and no other corporate proceedings on the part of ICI are necessary to
authorize any of the Ancillary Agreements to which it a party or the
consummation by ICI of the transactions contemplated thereby, subject, in
the case of the Merger Agreement and the Merger, to receipt of the
affirmative vote of holders of shares of ICI Common Stock representing a
majority of the votes entitled to be cast by holders of the outstanding
shares of ICI Common Stock, voting as a single class (the "Shareholders'
Approval"). Prior to the Closing, ICI will have duly executed and delivered
each Ancillary Agreement to which ICI is a party. Each Ancillary Agreement
to which ICI is a party will, upon the Closing, constitute a legal, valid
and binding obligation of ICI, enforceable against ICI in accordance with
its terms.
The Board of Directors of ICI, at a meeting duly called and held, duly
and unanimously adopted resolutions (i) approving the Merger Agreement and
the Merger and each of the other Ancillary Agreements to which ICI is a
party and the transactions contemplated thereby, (ii) determining that the
terms of the Merger are fair to, and in the best interests of, ICI, (iii)
recommending that the holders of ICI Common Stock approve the Merger
Agreement and the Merger, (iv) declaring that Merger Agreement and the
Merger are advisable and (v) adopting the Merger Agreement. Neither Part 2
nor Part 3 of Article 11 of the Georgia Business Corporation Code applies
or purports to apply to ICI, IHS, Holdings or Merger Sub with respect to
this Agreement, the Ancillary Agreements (including the Merger Agreement)
or the transactions contemplated hereby or thereby (including the Merger).
To the knowledge of the Founders, no other state takeover statute or
similar statute or regulation applies or purports to apply to ICI, IHS,
Holdings or Merger Sub with respect to this Agreement, the Ancillary
Agreements (including the Merger Agreement) or the transactions
contemplated hereby or thereby (including the Merger).
The only vote of holders of any class or series of capital stock of
ICI necessary to approve the Merger Agreement and the Merger is the
Shareholders' Approval. The affirmative vote of the holders of ICI Common
Stock, or any of them, is not necessary to approve this Agreement or any
Ancillary Agreement, other than the Merger Agreement, or to consummate any
transactions contemplated hereby or thereby, other than the Merger.
39
(c) No Conflicts; Consents.
----------------------
(i) No consent, approval, license, permit, order or authorization of,
or registration, declaration or filing with, any Governmental Entity is
required to be obtained or made by or with respect to any of the Founders
in connection with the execution, delivery and performance of this
Agreement or any of the Ancillary Agreements to which such Founder is a
party or the consummation of the transactions contemplated hereby or
thereby.
(ii) The execution and delivery by ICI of each of the Ancillary
Agreements to which it is a party will not, and the consummation of the
transactions contemplated thereby and compliance by ICI with the terms
thereof will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancelation or acceleration of any obligation or the
loss of a benefit under, or result in the creation of any Lien upon any of
the properties or assets of ICI under, any provision of (i) the Restated
Articles of Incorporation of ICI or the By-laws of ICI, (ii) any of its
properties or assets is bound or (iii) any judgment, order or decree, or
statute, law, ordinance, rule or regulation, applicable to ICI or any of
its properties or assets. No consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect
to ICI in connection with the execution, delivery and performance of any of
the Ancillary Agreements to which it is a party or the consummation of the
transactions contemplated thereby, other than (i) compliance with, and
filings under, the HSR Act, if required, (ii) filings with the Commission,
including the filing of a proxy statement prepared in connection with a
meeting of the shareholders of ICI (the "Shareholders' Meeting") for the
purpose of obtaining the Shareholders' Approval (the "Proxy Statement") and
filings under Section 13(a) of the Exchange Act, and (iii) filings with the
Secretary of State of the State of Georgia, including, in connection with
the Merger, the filing of articles or a certificate of merger, and filings
with the relevant authorities of other states of appropriate documents
relating to the qualification to do business.
(d) Capitalization. The authorized capital of ICI consists of
--------------
20,000,000 shares of ICI Common Stock, of which 3,578,760 shares are issued and
outstanding. All of the outstanding shares of ICI Common Stock have been duly
and validly
40
authorized and issued and are fully paid and nonassessable and have been issued
in compliance with applicable Federal and state securities laws and are approved
for quotation on the Nasdaq National Market under the symbol "ICIQ".
Except for (i) options issued or issuable for an aggregate of 452,133
shares of ICI Common Stock under the 1995 Restricted Non-qualified Incentive
Stock Option Plan, dated August 1, 1995 (the "1995 ICI Stock Option Plan"), and
the 1996 Stock Option Plan, dated December 20, 1996 (the "1996 ICI Stock Option
Plan"), as amended, and (ii) the Warrant dated May 5, 1997 to purchase 112,500
shares of ICI Common Stock issued pursuant to the Underwriting Agreement dated
April 29, 1997, there are no outstanding options, warrants, rights (including
conversion or preemptive rights) or agreements, in writing or oral, for the
purchase or acquisition from ICI of any shares of its capital stock (the rights
and options in clauses (i) and (ii) above being collectively called the
"Existing ICI Equity Rights"). All shares of ICI Common Stock that may be
issued pursuant to the Existing ICI Equity Rights will be, when issued in
accordance with the terms thereof, duly and validly authorized and issued and
are fully paid and non-assessable. There exist no rights of first refusal or
similar rights in respect of shares of ICI's capital stock issued or sold by
ICI. Schedule 4.02(d) accurately sets forth the outstanding shares of ICI
Common Stock, the options to acquire shares of ICI Common Stock issued or
issuable under the 1995 ICI Stock Option Plan and the 1996 ICI Stock Option Plan
and the exercise prices in respect of such options, in each case, as of January
8, 1998.
(e) Financial Statements. Since becoming registered under the
--------------------
Exchange Act on April 29, 1997, ICI has filed all reports, schedules, forms,
statements, exhibits and other documents required to be filed by it with the
Commission pursuant to the reporting requirements of the Exchange Act (all of
the foregoing, together with Registration Statement No. 333-21647, as amended,
being referred to herein as the "SEC Documents"). As of their respective dates,
the SEC Documents complied in all respects with the applicable requirements of
the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder applicable to such SEC Documents, and, as of
their respective dates, none of the SEC Documents taken as a whole (when read
together with all exhibits included therein and financial statement schedules
thereto and documents (other than exhibits) incorporated by reference therein)
contained any untrue statement of a fact or omitted to state a fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. As of their
41
respective dates, the financial statements of ICI included in the SEC Documents
complied as to form in all respects with applicable accounting requirements and
the published rules and regulations of the Commission with respect thereto.
Such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary statements)
and fairly present in all respects the financial position of ICI as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustment).
(f) Assets other than Real Property. Except as disclosed on Schedule
-------------------------------
4.03(f), ICI has good and valid title to all its Personal Property, in each case
free and clear of all Liens, except ICI Permitted Liens. With respect to
properties and assets that are leased by ICI, ICI is in compliance with such
leases in all material respects and holds a valid leasehold interest in such
properties and assets, in each case free and clear of all Liens, except ICI
Permitted Liens. This Section 4.03(f) does not relate to the Intellectual
Property of ICI, which is exclusively the subject of Section 4.03(g).
(g) Intellectual Property.
---------------------
(i) Schedule 4.03(g)(i) sets forth a true and complete list of all
data bases, software, trademarks and patents and patent applications
included in the Intellectual Property owned by ICI. With respect to all
Intellectual Property owned by ICI that is registered or subject to an
application for registration, Schedule 4.03(g)(i) sets forth a list of all
jurisdictions in which such Intellectual Property is registered or an
application for registration has been filed. Except as disclosed on
Schedule 4.03(g)(i), (i) all Intellectual Property owned by ICI has been
duly registered with, filed with, or issued by, the appropriate
Governmental Entity where such registration, filing or issuance is
necessary or appropriate for the conduct of ICI's business as presently
conducted, (ii) ICI is the sole and exclusive owner of, and ICI has the
right to use, execute, reproduce, display, perform, modify, enhance,
distribute, prepare derivative works of and sublicense, without payment to
any other Person, all the Intellectual Property it owns, and the
consummation of the transactions contemplated hereby does not and will not
conflict with, alter or impair any such
42
rights, (iii) since January 1, 1993, ICI has not received any communication
from any Person asserting any ownership interest in any of the Intellectual
Property it owns and (iv) to the knowledge of the Founders, no Person is in
violation of, in conflict with, or infringing any rights of ICI relating to
the Intellectual Property it owns.
(ii) Except as disclosed on Schedule 4.03(g)(ii), ICI has not granted
any license or other right of any kind relating to any Intellectual
Property that it owns or the licensing, marketing or distribution thereof,
other than nonexclusive licenses to end-users in the ordinary course of
business. ICI is not bound by, or a party to, any license, option or
agreement of any kind relating to the Intellectual Property of any other
Person for the use of such Intellectual Property in the conduct of its
business, except as disclosed on Schedule 4.03(g)(ii) and except for so-
called "shrink-wrap" license agreements relating to computer software
licensed in the ordinary course of business.
(iii) To the knowledge of the Founders, the conduct of its business as
presently conducted does not violate, conflict with or infringe the
Intellectual Property of any other Person, and since January 1, 1993, ICI
has not received any communication alleging that ICI has, in the conduct of
its business, violated, conflicted with, or infringed any rights relating
to the Intellectual Property of any Person.
(iv) To the knowledge of the Founders, no former or current employee
of ICI, and no consultant or contractor hired by ICI, who has participated
in, or contributed to, the development of any Intellectual Property owned
by ICI has any valid claim against ICI in connection with the involvement
of such Person in the development of any such Intellectual Property, and
since January 1, 1993, ICI has not received and communication asserting any
such claim.
(v) To the knowledge of the Founders, none of its employees is
obligated under any Contract, or subject to any judgment, order or decree,
or statute, law, ordinance, rule or regulation, that would interfere in any
respect with the use of his or her best efforts to promote the interests of
its business or that would conflict with its business as presently
conducted. To the knowledge of the Founders, neither the consummation of
the transactions contemplated hereby nor the conduct of its business as
proposed to be conducted will conflict with, or result in any violation of,
43
or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination under, any Contract under which any of
its employees is obligated or any judgment, order or decree, or statute,
law, ordinance, rule or regulation, to which any of its employees is
subject.
(vi) Except as disclosed on Schedule 4.03(g)(vi), no Person has been
granted any rights to, and no Person has a copy of, any source code used,
held for use or intended to be used in, or arising out of, the conduct of
the business of ICI.
(h) Real Property. Schedule 4.03(h) sets forth a true and complete
-------------
list of all Real Estate leased by ICI. ICI has good and valid title to the
leasehold estates in all the Real Estate it leases, in each case free and clear
of all Liens, except (i) Liens disclosed on Schedule 4.03(h), (ii) mechanics',
carriers', workmen's, repairmen's or other like Liens arising or incurred in the
ordinary course of business, Liens arising under original purchase price
conditional sales contracts or equipment leases with third parties entered into
in the ordinary course of business and Liens for Taxes that are not due and
payable or that may thereafter be paid without penalty, (iii) other
imperfections of title or encumbrances, if any, that do not, impair the
continued use of the assets to which they relate in the conduct of the business
of ICI as presently conducted, (iv) leases, sublease or similar agreements set
forth on Schedule 4.03(i), (v) easements, covenants, rights-of-way and other
similar restrictions of record and (vi) (A) zoning, building and other similar
restrictions, (B) Liens that have been placed by any developer, landlord or
other third party on property over which ICI has easement rights or on any
property leased by ICI and subordination or similar agreements relating thereto
and (C) unrecorded easements, covenants, rights-of-way and other similar
restrictions. None of the items set forth in clause (vi) above could reasonably
be expected to impair the continued use and operation of the property to which
they relate in the conduct of the business of ICI as presently conducted. ICI
does not own any Real Estate in fee.
(i) Contracts.
---------
(i) Except as disclosed on Schedule 4.03(i)(i), ICI is not a party
to, or bound by, any Contract that is:
(A) a written employment agreement or employment contract;
44
(B) a collective bargaining agreement or other Contract with any
labor organization, union or association;
(C) a covenant not to compete;
(D) a Contract with (1) any shareholder of ICI, (2) any Affiliate of
ICI or (3) any director, officer or employee of ICI or any of its
Affiliates (other than employment agreements and employment contracts
described in clause (A) above);
(E) a lease, sublease or similar Contract with any Person under
which ICI is a lessor or sublessor of, or makes available for use to
any Person, (1) any Real Estate or (2) any portion of any premises
otherwise occupied by ICI;
(F) a lease, sublease or similar Contract with any Person under
which ICI is a lessor or sublessor of, or makes available for use to
any Person, any Personal Property of ICI;
(G) (1) a continuing Contract for the future purchase of materials,
supplies or equipment (other than purchase orders for Inventory in the
ordinary course of business consistent with past practice), (2) a
Contract for management, service, consulting or similar services or
(3) a Contract for advertising services;
(H) a license, option, agreement or other Contract relating in whole
or in part to any Intellectual Property (including any license,
option, agreement or other Contract under which ICI is licensee or
licensor of any Intellectual Property) of ICI;
(I) (1) a Contract under which ICI has borrowed any money from, or
issued any note, bond, debenture or other evidence of indebtedness to,
any Person or (2) any other note, bond, debenture or other evidence of
indebtedness issued to any Person;
(J) a Contract (including any so-called take-or-pay or keepwell
agreement) under which (1) any Person has, directly or indirectly,
guaranteed indebtedness, liabilities or obligations of ICI or (2) ICI
has, directly or indirectly, guaranteed indebtedness, liabilities or
obligations of any other Person (in each
45
case other than endorsements for the purpose of collection in the
ordinary course of business);
(K) a Contract under which ICI has, directly or indirectly, made any
advance, loan, extension of credit or capital contribution to, or
other investment in, any Person (other than extensions of trade credit
in the ordinary course of business);
(L) a Contract providing for indemnification of any Person with
respect to liabilities relating to the business of ICI;
(M) a power of attorney (other than a power of attorney given in the
ordinary course of business with respect to routine tax matters);
(N) a Contract not made in the ordinary course of business;
(O) a confidentiality agreement, other than in the ordinary course
of business;
(P) a Contract (including a purchase order) involving payment by ICI
of more than $25,000 or extending for a term more than 180 days from
the date of this Agreement, other than purchase orders entered into in
the ordinary course of business prior to the date of this Agreement
and purchase orders entered into in the ordinary course of business
after the date of this Agreement and not in violation of this
Agreement;
(Q) a Contract (including a sales order) involving the obligation of
ICI to deliver products or services for payment of more than $25,000
or extending for a term more than 180 days from the date of this
Agreement, other than sales orders entered into in the ordinary course
of business after the date of this Agreement and not in violation of
this Agreement;
(R) a Contract with, or license or Permit granted by or from, any
Governmental Entity;
(S) a Contract providing for the services of any dealer,
distributor, sales representative, franchisee or similar
representative involving the payment by ICI of more than $25,000;
46
(T) a Contract granting a Lien upon any of the properties or assets
of ICI;
(U) a Contract for the sale of any of the properties or assets of
ICI (other than sales of Inventory in the ordinary course of business)
or the grant of any preferential rights to purchase any properties or
assets of ICI or requiring the consent of any party to the transfer of
any of the properties or assets of ICI;
(V) any other Contract that has an aggregate future liability to any
Person (other than ICI) in excess of $25,000; or
(W) a Contract other than as described above to which ICI is a party
or by which it or any of its properties or assets is bound, in each
case that is material to its business or the use of any of the
properties or assets of ICI.
(ii) Except as disclosed on Schedule 4.03(i)(ii), each Contract
identified on Schedule 4.03(i)(i) is valid, binding and in full force and
effect and is enforceable by ICI in accordance with its terms. Except as
disclosed on Schedule 4.03(i)(ii), ICI has performed all obligations
required to be performed by it under the Contracts to which it is a party
or by which it is bound, and it has not taken any actions that are in
conflict with, or that would result in any violation of, or default (with
or without notice or lapse of time, or both) under, any such Contract, and,
to the knowledge of the Founders, no other party to any such Contract has
taken any action that is in conflict with, or that would result in any
violation of, or default (with or without notice or lapse of time, or both)
under, such Contract. ICI has not, except as disclosed on Schedule
4.03(i)(ii), received any written or oral notice of the intention of any
party to terminate any Contract to which ICI is a party or by which ICI is
bound. Except as disclosed on Schedule 4.03(i)(ii), to the knowledge of the
Founders, the execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby and the compliance with the terms
hereof will not require the consent of any party to any Contract identified
on Schedule 4.01(i)(ii) or any material Contract with a customer for the
sale of any ICI product or service to avoid the invalidity of the transfer
of such Contract, the termination thereof or a breach, violation or default
thereunder. Complete and correct copies of all Contracts
47
listed on Schedule 4.03(i)(i), together with all amendments thereto, have
been made available to IHS.
(j) Permits.
--------
(i) Schedule 4.03(j) sets forth all Permits issued or granted to ICI
by Governmental Entities that are necessary or desirable for the conduct of
its business. Except as disclosed on Schedule 4.03(j), (i) to the
knowledge of the Founders, all such Permits are validly held by ICI, and
ICI has complied in all material respects with all terms and conditions
thereof, (ii) since January 1, 1993, ICI has not received any notice of any
suit, action or proceeding relating to the revocation or modification of
any such Permits and (iii) to the knowledge of the Founders, none of such
Permits will be subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of this Agreement or
any of the Ancillary Agreements to which it is a party or the consummation
of the transactions contemplated hereby and thereby.
(ii) ICI possesses all Permits to own, or hold under lease, and
operate its properties and assets and to conduct its business as currently
conducted.
(k) Insurance. ICI maintains policies of fire and casualty,
----------
liability and other forms of insurance that cover its business in such amounts,
with such deductibles and against such risks and losses as are, in the judgment
of ICI, reasonable for its business.
(l) Taxes.
------
(i) ICI has timely filed, or has caused to be timely filed on its
behalf, all Tax Returns or extensions thereof required to be filed by it,
and all such Tax Returns are true, complete and accurate. All Taxes shown
to be due on such Tax Returns, or otherwise owed, have been timely paid.
(ii) The most recent financial statements included in the SEC
Documents filed and publicly available prior to the date of this Agreement
(the "Filed SEC Documents") reflect an adequate reserve for all Taxes
payable by ICI for all Taxable periods and portions thereof through the
date of such financial statements. No deficiency with respect to any Taxes
has been proposed, asserted or assessed against ICI, and no requests for
waivers of the time to assess any such Taxes are pending.
48
(iii) The Federal income Tax Returns of ICI have not been examined by
the United States Internal Revenue Service.
(iv) There are no Liens for Taxes (other than for current Taxes not
yet due and payable) on the properties or assets of ICI.
(v) Neither ICI nor any of its Affiliates is bound by any agreement
with respect to Taxes.
(vi) (A) Neither ICI nor any of its Affiliates has made, with
respect to ICI, any consent under Section 341 of the Code, (B) none of the
assets of ICI is "tax exempt use property" within the meaning of Section
168(h) of the Code and (C) ICI is not lessor or lessee under a lease made
pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954.
(vii) At the time of Closing, the Founders will have no plan to sell
or otherwise dispose of shares of Holdings Common Stock issued to the
Founders pursuant to Section 2.01(d).
(m) Employee Benefits.
------------------
(i) Schedule 4.03(m)(i) sets forth a list of all "employee pension
benefit plans" (as defined in Section by ICI or any of its Affiliates for
the benefit of any officers or employees of ICI ("ICI Pension Plans") and
all "employee welfare benefit plans" (as defined in Section 3(1) of ERISA),
bonus, stock option, stock purchase, deferred compensation plans or
arrangements and other employee fringe benefit plans maintained, or
contributed to, by ICI or any of its Affiliates for the benefit of any
officers or employees of ICI (all the foregoing, including the ICI Pension
Plans, being herein called "ICI Benefit Plans"). ICI has made available to
IHS true, complete and correct copies of (i) each ICI Benefit Plan (or, in
the case of any unwritten ICI Benefit Plans, descriptions thereof), (ii)
the two most recent annual reports on Form 5500 (including all schedules
and attachments thereto) filed with the Internal Revenue Service with
respect to each ICI Benefit Plan (if any such report was required), (iii)
the most recent summary plan description for each ICI Benefit Plan for
which such a summary plan description is required and (iv) each trust
agreement, group annuity contract or other funding and financing
arrangement relating to any ICI Benefit Plan.
49
(ii) Except as disclosed on Schedule 4.03(m)(ii), each ICI Pension
Plan has been the subject of a determination letter from the Internal
Revenue Service to the effect that such ICI Pension Plan is qualified and
exempt from Federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination letter has been
revoked nor, to the knowledge of the Founders, has revocation been
threatened, nor has any such ICI Pension Plan been amended since the date
of its most recent determination letter or application therefor in any
respect that would adversely affect its qualification or increase its
costs.
(iii) To the knowledge of the Founders, each ICI Benefit Plan has
been administered in all respects in accordance with its terms. To the
knowledge of the Founders, ICI and all ICI Benefit Plans are in compliance
in all respects with the applicable provisions of ERISA, the Code, all
other applicable laws and all applicable collective bargaining agreements.
To the knowledge of the Founders, except as disclosed on Schedule
4.03(m)(iii), all reports, returns and similar documents with respect to
the ICI Benefit Plans required to be filed with any Governmental Entity or
distributed to any participant in any ICI Benefit Plan have been duly and
timely filed or distributed. Except as disclosed on Schedule 4.03(m)(iii),
there are no suits, actions or proceedings pending, or, to the knowledge of
the Founders, threatened, against or involving any ICI Benefit Plan and, to
the knowledge of the Founders, there are no investigations by any
Governmental Entity or other claims (except routine claims for benefits
payable in the normal operation of the ICI Benefit Plans) pending or
threatened against or involving any ICI Benefit Plan or asserting any
rights to benefits under any ICI Benefit Plan.
(iv) Except as disclosed on Schedule 4.03(m)(iv), no ICI Pension
Plan, other than any ICI Pension Plan that is a "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Pension
Plan"), had, as of the respective last annual valuation date for each such
ICI Pension Plan, an "unfunded benefit liability" (as defined in Section
4001(a)(18) of ERISA), based on actuarial assumptions that have been
furnished to IHS. To the knowledge of the Founders, none of the ICI
Pension Plans has an "accumulated funding deficiency" (as defined in
Section 302 of ERISA or Section 412 of the Code), whether or not waived.
None of ICI, any officer of ICI or any of the ICI Benefit Plans that are
subject to ERISA, including the ICI Pension Plans, any trusts created
50
thereunder or any trustee or administrator thereof, has engaged in a
"prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) or any other breach of fiduciary responsibility that
could subject ICI or any officer of ICI to the tax or penalty on prohibited
transactions imposed by, or to any liability under, Section 502(i) or
502(1) of ERISA or Section 4975 of the Code. To the knowledge of the
Founders, none of such ICI Benefit Plans and trusts has been terminated,
nor has there been any "reportable event" (as defined in Section 4043 of
ERISA) with respect to such ICI Benefit Plans or trusts during the last
five years. ICI has not incurred a "complete withdrawal" or a "partial
withdrawal" (as defined in Sections 4203 and 4205, respectively, of ERISA)
since the effective date of such Sections 4203 and 4205 with respect to any
Multiemployer Pension Plan.
(v) With respect to any ICI Benefit Plan that is an employee welfare
benefit plan, except as disclosed on Schedule 4.03(m)(v), (i) no such ICI
Benefit Plan is unfunded or funded through a "welfare benefits fund" (as
defined in Section 419(e) of the Code), (ii) each such ICI Benefit Plan
that is a "group health plan" (as defined in Section 5000(b)(1) of the
Code) complies with the applicable requirements of Section 4980B(f) of the
Code and (iii) each such ICI Benefit Plan (including any such ICI Benefit
Plan covering retirees or other former employees) may be amended or
terminated without material liability to ICI on or at any time after the
Closing.
(vi) Except as disclosed on Schedule 4.03(m)(vi), no employee or
former employee, or officer or former officer, or director or former
director, of ICI will become entitled to any bonus, retirement, severance,
job security or similar benefit or any enhanced benefit solely as a result
of the transactions contemplated by this Agreement and the Ancillary
Agreements. Any amount that may be received (whether in cash or property or
the vesting of property) as a result of the transactions contemplated by
this Agreement and the Ancillary Agreements by any employee, officer or
director of ICI who is a "disqualified individual" (as defined in proposed
Treasury Regulation Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or ICI Benefit Plan
currently in effect would not be characterized as an "excess parachute
payment" (as defined in Section 280G(b)(1) of the Code).
(n) Absence of Certain Changes or Events. Except as disclosed on
-------------------------------------
Schedule 4.03(n), from the date of the most recent
51
financial statements included in the Filed SEC Documents to the date of this
Agreement, ICI has conducted its business only in the ordinary course, and
during such period there has not been:
(i) any event, change, effect or development that has had or could
reasonably be expected to have an adverse effect on the business of ICI;
(ii) (A) any granting by ICI to any director, officer or employee of
ICI of any increase in compensation, except in the ordinary course of
business consistent with past practice or as was required under employment
agreements in effect as of the date of the most recent financial statements
included in the Filed SEC Documents, (B) any granting by ICI to any such
director, officer or employee of any increase in severance or termination
pay, except as was required under any employment, severance or termination
agreements in effect as of the date of the most recent financial statements
included in the Filed SEC Documents or (C) any entry by ICI into any
employment, severance or termination agreement with any such director,
officer or employee;
(iii) any adoption of, or amendment to, any ICI Benefit Plan by ICI
during the period from the date of the most recent financial statements
included in the Filed SEC Documents to the date of this Agreement;
(iv) any change in accounting methods, principles or practices by ICI
affecting the properties or assets of ICI, except insofar as may have been
required by a change in generally accepted accounting principles;
(v) any elections by ICI with respect to Taxes or settlement or
compromise by ICI of any Tax liability or refund; or
(vi) (A) any declaration, setting aside or payment of any dividends,
distributions or other amounts (whether in cash, stock or property) with
respect to any of shares of ICI Common Stock or any other shares of capital
stock of ICI, (B) any split, combination or reclassification of any shares
of ICI Common Stock or any issuance, or authorization to issue, any other
securities in respect of, in lieu of, or in substitution for, shares of ICI
Common Stock or (C) any purchase, redemption or other acquisition for value
of any shares of ICI Common Stock or any other securities of ICI or any
rights, warrants or options to acquire any such shares or other securities.
52
(o) Proceedings. Except as disclosed on Schedule 4.03(o), there is
------------
no suit, action or proceeding pending or, to the knowledge of the Founders,
threatened, against or affecting ICI, its business or its properties or assets,
nor is there any judgment, order or decree outstanding against or affecting ICI,
its business or its properties or assets. Except as disclosed on Schedule
4.03(o), there are no suits, actions or proceedings initiated by ICI, or that
ICI intends to initiate, against any other Person arising out of the conduct of
its business. Except as disclosed on Schedule 4.03(o), to the knowledge of the
Founders, there is no pending or threatened investigation of ICI, the conduct of
its business or its properties or assets.
(p) Compliance with Laws. Except as disclosed on Schedule 4.03(p),
---------------------
ICI is in compliance in all respects with all laws, ordinances, rules and
regulations, applicable to ICI, its business or its properties or assets,
including those laws, ordinances, rules and regulations relating to occupational
health and safety and the environment. Except as disclosed on Schedule 4.03(p),
ICI has not received any written communication since January 1, 1997 from a
Governmental Entity that alleges that ICI, its business or any of its properties
or assets is not in compliance in any respect with any law, ordinance, rule or
regulation applicable to ICI, its business or its properties or assets. ICI has
not received any written notice that any investigation or review by any
Governmental Entity with respect to ICI, its business or its properties or
assets is pending or that any such investigation or review is contemplated. This
Section 4.03(p) does not relate to matters with respect to Taxes, which are the
subject of Section 4.03(l).
(q) Labor Agreements and Actions. ICI is not bound by, or subject to
-----------------------------
(and none of its properties or assets is bound by or subject to), any written or
oral, express or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or, to the knowledge of the Founders,
sought to represent any of the employees, representatives or agents of ICI.
There is no strike or other labor dispute involving ICI pending, or, to the
knowledge of the Founders, threatened, nor is ICI aware of any labor
organization activity involving its employees. ICI is not aware that any officer
or key employee of ICI intends to terminate his or her employment with ICI, and
ICI does not have a present intention to terminate the employment of any officer
or key employee of ICI. ICI has complied in all respects with all applicable
Federal and state equal employment opportunity laws and with other laws related
to employment.
53
(r) Year 2000 Compliance. Except as disclosed on Schedule 4.03(r),
---------------------
ICI expects its computer systems to be Year 2000 Compliant by June 30, 1999. To
the knowledge of the Founders, all Inventory of ICI that is or uses computer
software is Year 2000 Compliant. To the knowledge ICI, any failure on the part
of the customers of, and suppliers to, ICI to be Year 2000 Compliant by December
31, 1999, is not expected to have an adverse effect on the business of ICI.
(s) Brokers. No broker, investment banker, financial advisor or
--------
other Person, other than Interstate/▇▇▇▇▇▇▇ ▇▇▇▇ Corporation and ▇▇▇▇▇ ▇▇▇▇▇▇ &
Associates, Inc., the fees and expenses of which will subject to the limitation
set forth in Section 6.03(a), be paid by ICI, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements based upon arrangements made by or on behalf of the
Founders or ICI.
(t) Founders Contributed Shares. Each of the Founders has good and
----------------------------
valid title to the Founders Contributed Shares owned by such Founder, free and
clear of all Liens. Upon delivery to Holdings at the Closing of the certificates
representing the Founders Contributed Shares owned by such Founder, duly
endorsed by such Founder for transfer to Holdings, good and valid title to the
Founders Contributed Shares owned by such Founder will pass to Holdings, free
and clear of all Liens. Other than this Agreement, the Founders Contributed
Shares are not subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding, including any such
agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting, dividend rights or disposition of the Founders
Contributed Shares.
(u) Information Supplied. None of the information supplied or to be
---------------------
supplied by the Founders or ICI for inclusion or incorporation by reference in
the Proxy Statement will, at the date it is first mailed to ICI's shareholders
or at the time of the Shareholders' Meeting, contain any untrue statement of a
fact or omit to state any fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply as to form in all
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by the Founders with respect
to statements made or incorporated by reference therein based on information
supplied by any Person other than the Founders or ICI for inclusion or
incorporation by reference in the Proxy Statement.
54
ARTICLE V
Covenants
---------
SECTION 5.01. Conduct of Business. (a) Conduct of Business by IHS.
-------------------- ---------------------------
Except for matters set forth on Schedule 5.01(a) or otherwise expressly
permitted by the terms of this Agreement, from the date of this Agreement to the
Closing, IHS shall conduct the Business in the usual, regular or ordinary course
in substantially the same manner as previously conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve the Business, keep
available the services of the Transferred Employees and maintain the
relationships of the Business with suppliers, customers, licensors, licensees,
distributors and others with whom the Business deals to the end that the
Business shall be unimpaired at the Closing. Prior to the Closing, IHS shall
not take any action that would, or that could reasonably be expected to, result
in any of the conditions to the Closing set forth in Article VII not being
satisfied. In addition (and without limiting the generality of the foregoing),
except as set forth on Schedule 5.01(a) or otherwise expressly permitted or
required by the terms of this Agreement, prior to the Closing IHS shall not do
any of the following in connection with the Business without the prior written
consent of the Founders:
(i) grant to any Transferred Employee any increase in compensation
or benefits, except in the ordinary course of business consistent with past
practice or as may be required under employment agreements in effect as of
the date of the most recent Financial Statements;
(ii) renew or amend any collective bargaining agreement or other
Contract with any labor organization, union or association, except in each
case as required by applicable laws;
(iii) incur or assume any liabilities, obligations or indebtedness for
borrowed money or guarantee any such liabilities, obligations or
indebtedness, other than in the ordinary course of business consistent with
past practice;
(iv) cancel any material indebtedness of the Business for borrowed
money (individually or in the aggregate) or waive any claims or rights of
substantial value belonging to the Business;
55
(v) except for intercompany transactions in the ordinary course of
business consistent with past practice, pay, loan or advance any amount to,
or sell, transfer or lease any of the Acquired Assets to, or enter into any
agreement or arrangement with, IHS or any of its Affiliates;
(vi) permit, allow or suffer any Acquired Asset to become subjected to
any Lien of any nature whatsoever that would have been required to be set
forth on Schedule 4.01(e) if existing on the date of this Agreement;
(vii) make or incur any capital expenditure that, individually, is in
excess of $25,000 or make or incur any such expenditures which, in the
aggregate, are in excess of $25,000;
(viii) sell, lease, license or otherwise dispose of any of the
Acquired Assets that are material, individually or in the aggregate, to the
Business, except Inventory sold in the ordinary course of business
consistent with past practice;
(ix) enter into any lease of real property, except any renewals of
existing leases in the ordinary course of business consistent with past
practice;
(x) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any Person or
any business or division of any Person or otherwise acquire any assets
(other than Inventory) that are material, individually or in the aggregate,
to the Business;
(xi) make any change in any method of accounting or accounting
practice or policy other than those required by generally accepted
accounting principles;
(xii) enter into any Contract, or any other commitment, agreement,
arrangement or undertaking, written or oral, or engage in any transaction,
involving any future benefit to the Business or any future liability owned
by the Business in excess of $25,000 or that is otherwise material to the
Business as presently conducted;
(xiii) authorize any of, or commit or agree to do or take, whether in
writing or oral, any of, the foregoing actions.
(b) Conduct of the Business of ICI by the Founders. Except for
-----------------------------------------------
matters set forth on Schedule 5.01(b) or otherwise expressly permitted by the
terms of this Agreement, from the date
56
of this Agreement to the Closing, the Founders shall cause ICI to conduct its
business in the usual, regular or ordinary course in substantially the same
manner as previously conducted and, to the extent consistent therewith, use all
reasonable efforts to preserve its business, keep available the services of its
current employees and maintain its relationships with suppliers, customers,
licensors, licensees, distributors and others with whom it deals to the end that
its business shall be unimpaired at the Closing. Prior to the Closing, the
Founders shall not, and shall not permit ICI to, take any action that would, or
that could reasonably be expected to, result in any of the conditions to the
Closing set forth in Article VII not being satisfied. In addition (and without
limiting the generality of the foregoing), except as set forth on Schedule
5.01(b) or otherwise expressly permitted or required by the terms of this
Agreement, prior to the Merger the Founders shall not, and shall not permit ICI
to, do any of the following without the prior written consent of IHS:
(i) grant to any officer or employee any increase in compensation or
benefits, except in the ordinary course of business consistent with past
practice or as may be required under employment agreements in effect as of
the date of the most recent financial statements included in the Filed SEC
Documents;
(ii) adopt or amend any ICI Benefit Plan (or any plan that would be
an ICI Benefit Plan if adopted) or enter into, adopt, extend (beyond the
Closing Date), renew or amend any collective bargaining agreement or other
Contract with any labor organization, union or association, except in each
case as contemplated by this Agreement or required by applicable laws;
(iii) incur or assume any liabilities, obligations or indebtedness for
borrowed money or guarantee any such liabilities, obligations or
indebtedness, other than in the ordinary course of business consistent with
past practice;
(iv) cancel any material indebtedness for borrowed money
(individually or in the aggregate) or waive any claims or rights of
substantial value;
(v) except for intercompany transactions in the ordinary course of
business consistent with past practice, pay, loan or advance any amount to,
or sell, transfer or lease any of its properties or assets to, or enter
into any agreement or arrangement with, ICI or any of its Affiliates;
57
(vi) permit, allow or suffer any of its properties or assets to
become subjected to any Lien of any nature whatsoever that would have been
required to be set forth on Schedule 4.03(f) if existing on the date of
this Agreement;
(vii) make or incur any capital expenditure that, individually, is in
excess of $25,000 or make or incur any such expenditures which, in the
aggregate, are in excess of $25,000;
(viii) sell, lease, license or otherwise dispose of any of its
properties or assets that, individually or in the aggregate, are material
to ICI, except Inventory sold in the ordinary course of business consistent
with past practice;
(ix) enter into any lease of real property, except any renewals of
existing leases in the ordinary course of business consistent with past
practice;
(x) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any Person or
any business or division of any Person or otherwise acquire any assets
(other than Inventory) that are material, individually or in the aggregate,
to ICI;
(xi) make any change in any method of accounting or accounting
practice or policy other than those required by generally accepted
accounting principles;
(xii) enter into any Contract, or any other commitment, agreement,
arrangement or undertaking, written or oral, or engage in any transaction,
involving any future benefit to ICI or any future liability owed by ICI in
excess of $25,000 or that is otherwise material to the business of ICI as
presently conducted;
(xiii) (A) declare, set aside or pay any dividends, distributions or
other amounts (whether in cash, stock or property) with respect to any of
shares of ICI Common Stock or any other shares of capital stock of ICI, (B)
split, combine or reclassify any shares of ICI Common Stock or issue, or
authorize the issuance of, any other securities in respect of, in lieu of,
or in substitution for, shares of ICI Common Stock or (C) purchase, redeem
or otherwise acquire for value any shares of ICI Common Stock or any other
securities of ICI or any rights, warrants or options to acquire any such
shares or other securities;
58
(xiv) issue, deliver, sell or grant (A) any shares of ICI Common
Stock, (B) any securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any shares of ICI Common Stock,
voting securities or convertible or exchangeable securities, other than
grants of options to acquire not more than 2,000 shares of ICI Common Stock
made to any individual who has not been previously employed by ICI in
connection with the employment of such individual by ICI; provided that
--------
such individual executes and delivers an agreement substantially identical
to the form of Option Amendment Agreement attached hereto as Exhibit E or
(C) any "phantom" stock, "phantom" stock rights, stock appreciation rights
or stock-based performance units, other than the issuance of ICI Common
Stock in respect of options to acquire shares of ICI Common Stock existing
on the date of this Agreement as contemplated by the Ancillary Agreements;
(xv) amend the Restated Articles of ICI or the By-laws of ICI; or
(xvi) authorize any of, or commit or agree to do or take, whether in
writing or oral, any of, the foregoing actions.
(c) Other Actions. IHS shall not, and shall not permit Holdings or
--------------
Merger Sub to, and the Founders shall not, and shall not permit ICI to, take any
action that would, or that could reasonably be expected to, result in (i) any of
the representations and warranties of IHS or the Founders, as applicable, set
forth in this Agreement becoming untrue in any material respect or (ii) except
as otherwise permitted by Section 5.02, any condition to the Closing set forth
in Article VII not being satisfied.
(d) Advice of Changes. IHS and the Founders shall promptly advise
------------------
one another orally and in writing of any change or event having, or which,
insofar as can reasonably be foreseen, would have, a Business Material Adverse
Effect or an ICI Material Adverse Effect, as applicable.
SECTION 5.02. No Solicitation. (a) The Founders shall not (i)
----------------
directly or indirectly, solicit, initiate or encourage the submission of, any
ICI Takeover Proposal, (ii) enter into any agreement with respect to any ICI
Takeover Proposal or (iii) directly or indirectly, participate in any
discussions or negotiations regarding, or furnish to any Person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that
59
constitutes, or may reasonably be expected to lead to, any ICI Takeover
Proposal.
(b) The Founders shall not (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to IHS, the approval or recommendation
by ICI of the Ancillary Agreements to which ICI is a party, (ii) approve any
letter of intent, agreement in principle, acquisition agreement or similar
agreement relating to any ICI Takeover Proposal or (iii) approve or recommend,
or propose to approve or recommend, any ICI Takeover Proposal.
(c) The Founders shall, within five business days after receipt
thereof, advise IHS orally and in writing of any ICI Takeover Proposal or any
inquiry with respect to, or that could reasonably be expected to lead to, any
ICI Takeover Proposal, and the identity of the Person making any such ICI
Takeover Proposal or inquiry (including any change to the material terms of any
such ICI Takeover Proposal or inquiry). The Founders shall (i) keep IHS fully
informed of the status (including any change to the details) of any such ICI
Takeover Proposal or inquiry and (ii) provide to IHS as soon as practicable
after receipt or delivery thereof with copies of all correspondence and other
written material sent or provided to the Founders or ICI from any third party in
connection with any ICI Takeover Proposal or sent or provided by the Founders or
ICI to any third party in connection with any ICI Takeover Proposal.
(d) Notwithstanding any other provision of this Agreement, it is
understood and agreed that any remedies at law would be inadequate in the case
of any breach of the covenants contained in Section 5.02. IHS shall be entitled
to equitable relief, including the remedy of specific performance, with respect
to any breach or attempted breach of the covenants contained in Section 5.02.
ARTICLE VI
Additional Agreements
---------------------
SECTION 6.01. Access to Information. IHS shall afford to the
----------------------
Founders and ICI, and to the officers, employees, accountants, counsel,
financial advisors and other representatives of ICI, reasonable access during
normal business hours during the period prior to the Closing, to all the
properties, assets, books and records of the Business (other than the Excluded
Assets), and, during such period, IHS shall furnish promptly to the Founders and
ICI (a) a copy of each document
60
filed by it during such period pursuant to the requirements of Federal or state
securities laws and (b) all other information concerning the Business as the
Founders or ICI may reasonably request. The Founders shall, and shall cause ICI
to, afford to IHS, and to the officers, employees, accountants, counsel,
financial advisors and other representatives of IHS, reasonable access during
normal business hours during the period prior to the Closing, to all the
properties, assets, books and records of ICI, and, during such period, the
Founders shall, and shall cause ICI to, furnish promptly to IHS (a) a copy of
each document filed by the Founders or ICI during such period pursuant to the
requirements of Federal or state securities laws and (b) all other information
concerning the business, properties or assets of ICI as IHS may reasonably
request.
SECTION 6.02. Reasonable Efforts; Notification. (a) Upon the terms
---------------------------------
and subject to the conditions set forth in this Agreement, each of IHS and the
Founders shall use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with one
another in doing, all things necessary, proper or advisable to consummate, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement and the Ancillary Agreements, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to avoid an action or nonaction by, or to
obtain a waiver, consent or approval from, any Governmental Entity, (ii) the
obtaining of all necessary waivers, consents and approvals from third parties,
(iii) the defending of any suits, actions or proceedings, whether judicial or
administrative, challenging this Agreement or any of the Ancillary Agreements or
the consummation of the transactions contemplated hereby or thereby, including
seeking to have any stay or temporary restraining order entered by any
Governmental Entity vacated or reversed, and (iv) the execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
by this Agreement or the Ancillary Agreement or to fully carry out the purposes
of this Agreement and the Ancillary Agreements. In connection with, and without
limiting, the foregoing, the Founders shall cause ICI and the Board of Directors
of ICI to (i) take all action necessary to ensure that no state takeover statute
or similar statute or regulation is or becomes applicable to the transactions
contemplated by this Agreement or the Ancillary Agreements and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to any
transaction contemplated by this Agreement or the Ancillary Agreements, take all
action
61
necessary to ensure that such transactions may be consummated as promptly
as practicable upon the terms contemplated by this Agreement and the Ancillary
Agreements.
(b) IHS shall give prompt notice to the Founders, and the Founders
shall, or shall cause ICI to, give prompt notice to IHS, of (i) any
representation or warranty made by IHS or such Founder, as applicable, contained
in this Agreement or any Ancillary Agreement becoming untrue or inaccurate in
any material respect or (ii) the failure by IHS or such Founder, as applicable,
to comply with, or satisfy in any material respect, any covenant, condition or
agreement to be complied with or satisfied by IHS or such Founder, as
applicable, under this Agreement or any of the Ancillary Agreements; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of IHS or such Founder, as applicable, or the conditions
to the obligations of IHS or such Founder, as applicable, under this Agreement
or any of the Ancillary Agreements.
SECTION 6.03. Costs and Expenses; Transfer Taxes. (a) If the Closing
-----------------------------------
does not take place, all costs and expenses incurred in connection with this
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby shall be paid by the party incurring such cost or expense. If the
Closing takes place, (i) all costs and expenses incurred by IHS in connection
with this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby shall be paid by IHS and (ii) all costs and
expenses incurred by the Founders and ICI in connection with this Agreement and
the Ancillary Agreements and the transactions contemplated hereby and thereby
shall be paid by Holdings; provided, however, that in no event shall the amount
-------- -------
paid by Holdings pursuant to this Section 6.03(a) for any costs or expenses
incurred by the Founders or ICI exceed $350,000 (exclusive of the costs and
expenses related to the maintenance of policies of directors' and officers'
liability insurance pursuant to Section 6.10).
(b) All Transfer Taxes applicable to the conveyance and transfer from
IHS to Holdings of the Acquired Assets and any other Transfer Taxes incurred in
connection with the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements shall be paid by Holdings, and IHS shall,
and the Founders shall cause ICI to, cooperate in the preparation, execution,
and filing of any and all Tax Returns with respect to such Transfer Taxes in a
timely manner.
SECTION 6.04. Publicity. IHS shall not make a public release or
----------
announcement concerning the transactions contemplated
62
by this Agreement and the Ancillary Agreements without the prior consent of the
Founders, which consent shall not be unreasonably withheld, except as such
release or announcement may be required by law or the rules or regulations of
any United States or foreign securities exchange, in which case IHS shall allow
the Founders reasonable time to comment on such release or announcement in
advance of such issuance. The Founders shall not, and shall not permit ICI to,
make a public release or announcement concerning the transactions contemplated
by this Agreement and the Ancillary Agreements without the prior consent of IHS,
which consent shall not be unreasonably withheld, except as such release or
announcement may be required by law or the rules or regulations of any United
States or foreign securities exchange, in which case ICI shall allow IHS
reasonable time to comment on such release or announcement in advance of such
issuance.
SECTION 6.05. Bulk Transfer Laws. The Founders hereby waive
-------------------
compliance by IHS with the provisions of any so-called "bulk transfer law" of
any jurisdiction in connection with the contribution of the Acquired Assets to
Holdings.
SECTION 6.06. Waiver of Certain Defenses. Each of IHS and the
---------------------------
Founders hereby expressly agrees (i) that Sections 4(b) and 4(e) of the Year
2000 Information and Readiness Disclosure Act are inapplicable to this
Agreement, and (ii) to waive any defenses arising under such act in any suit,
action or proceeding relating to the matters addressed by this Agreement.
SECTION 6.07. Preparation of Proxy Statement; Shareholders' Meeting.
------------------------------------------------------
As soon as practicable following the date of this Agreement, the Founders shall
cause ICI to prepare the Proxy Statement. The Founders shall cause ICI to use
all reasonable efforts to cause the Proxy Statement to be mailed to the
shareholders of ICI as promptly as practicable. The Founders shall cause ICI
to, as soon as practicable following the date of this Agreement, duly call, give
notice of, convene and hold the Shareholders' Meeting for the purpose of
obtaining the Shareholders' Approval. The Founders will prohibit ICI from
mailing the Proxy Statement, or any amendment thereof or supplement thereto, to
the shareholders of ICI unless ICI has first given IHS an opportunity to review
and comment on such document and has obtained the consent of IHS to such
mailing, which consent will not be unreasonably withheld or delayed.
SECTION 6.08. Agreement of Founders To Vote in Favor of Merger. (a)
-------------------------------------------------
Unless this Agreement shall have been earlier terminated in accordance with the
provisions of Section 8.01, at the Shareholders' Meeting, or in any other
circumstances upon
63
which a vote, consent or other approval (including by written consent) with
respect to the Merger Agreement or the Merger is sought, each Founder shall,
including by executing a written consent, vote (or cause to be voted) all shares
of ICI Common Stock such Founder is entitled to vote in favor of granting the
Shareholders' Approval.
(b) At any meeting of the shareholders of ICI, at any adjournment
thereof, and in any other circumstances upon which the vote, consent or other
approval of the Founders is sought, each Founder shall vote (or cause to be
voted) all shares of ICI Common Stock such Founder is entitled to vote against
(i) any merger agreement or merger (other than the Merger Agreement and the
Merger), consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by ICI, (ii) any
ICI Takeover Proposal and (iii) any amendment of Restated Articles of
Incorporation of ICI, By-laws of ICI or other proposal or transaction involving
ICI, which amendment or other proposal or transaction would in any manner
impede, frustrate, prevent or nullify any provision of the Merger Agreement or
the Merger or change in any manner the voting rights of any class of ICI Common
Stock. Each of the Founders shall refrain from committing or agreeing to take
any action inconsistent with the foregoing.
SECTION 6.09. Agreements Not To Compete.
--------------------------
(a) Agreement of Founders Not To Compete. Each of the Founders understands
-------------------------------------
that IHS shall be entitled to protect and preserve the going concern value of
the Business and the going concern value of ICI to the extent permitted by law
and that IHS would not have entered into this Agreement absent the provisions of
this Section 6.09(a) and, therefore, for a period of three years from the
Closing, each of the Founders shall not, directly or indirectly:
(i) engage in activities or businesses, or establish any new
businesses, that are directly in competition with the Business or the CSM
software business of ICI, including (A) selling products or services
competitive with the Products or the CSM software of ICI, (B) soliciting
any customer or prospective customer of the Business or ICI to purchase any
products or services competitive with the Products or the CSM software of
ICI from anyone other than Holdings and its Affiliates, (C) developing any
products or services competitive with the Products or the CSM software of
ICI and (D) assisting any Person in any way to do, or attempt to do,
anything prohibited by clause (A), (B) or (C) above; and
64
(ii) perform any action, activity or course of conduct that is
directly detrimental to the Business or the business of ICI or the business
reputation of the Business or ICI, including disclosing or furnishing to
anyone other than Holdings and its Affiliates any confidential information
relating to the Business or the business of ICI or otherwise using such
confidential information for the benefit of such Founder or any other
Person.
(b) Agreement of IHS Not To Compete. IHS understands that each of
--------------------------------
the Founders shall be entitled to protect and preserve the going concern value
of Holdings to the extent permitted by law and that the Founders would not have
entered into this Agreement absent the provisions of this Section 6.09(b) and,
therefore, for a period of three years from the Closing, IHS shall not, directly
or indirectly:
(i) engage in activities or businesses, or establish any new
businesses, that are directly in competition with the Business or the CSM
software business of ICI, including (A) selling products or services
competitive with the Products or the CSM software of ICI, (B) soliciting
any customer or prospective customer of Holdings to purchase any products
or services competitive with the Products or the CSM software of ICI from
anyone other than Holdings and its Affiliates, (C) developing any products
or services competitive with the Products or the CSM software of ICI and
(D) assisting any Person in any way to do, or attempt to do, anything
prohibited by clause (A), (B) or (C) above; and
(ii) perform any action, activity or course of conduct that is
directly detrimental to Holdings or the business reputation of Holdings,
including disclosing or furnishing to anyone other than Holdings and its
Affiliates any confidential information relating to Holdings or otherwise
using such confidential information for the benefit of IHS or any other
Person (other than pursuant to a separate agreement between IHS and
Holdings).
(c) Notwithstanding any other provision of this Agreement, it is
understood and agreed that any remedies at law would be inadequate in the case
of any breach of the covenants contained in Section 6.09. IHS shall be entitled
to equitable relief, including the remedy of specific performance, with respect
to any breach or attempted breach of the covenants
65
contained in Section 6.09(a) and the Founders shall be entitled to equitable
relief including the remedy of specific performance, with respect to any breach
or attempted breach of the covenants contained in Section 6.09(b).
SECTION 6.10. Agreement to Provide Directors' and Officers'
---------------------------------------------
Insurance. IHS hereby agrees that, for a period of five years following the
----------
Closing Date, IHS shall cause Holdings to maintain the policies of directors'
and officers' liability insurance maintained by ICI on the date hereof, which
policies shall cover acts or omissions occurring prior to the Closing Date in
respect of each Person covered by the directors' and officers' liability
insurance policies maintained by ICI as of the date hereof; provided, however,
-------- -------
that IHS may cause Holdings to substitute therefor policies providing at least
the same coverage and containing terms and conditions that, when considered as a
whole, are in all material respects no less favorable than the terms and
conditions of such policies. IHS hereby agrees that, immediately following
consummation of the Merger, IHS shall cause Holdings and ICI, as the surviving
corporation in the Merger, to indemnify all directors and officers of ICI
(including former directors and officers) to the same extent that ICI is
obligated to indemnify such directors and officers as of the date hereof
pursuant to the Restated Articles of Incorporation and By-laws of ICI and any
written agreements in effect as of the date hereof between ICI and such
directors and officers. All indemnification obligations of Holdings and ICI, as
the surviving corporation in the Merger, shall continue in full force and effect
in accordance with their terms from and after the consummation of the Merger for
the maximum period permitted by law.
SECTION 6.11. Tax Matters. (a) The parties hereto intend that the
------------
contributions to Holdings and issuances of stock by Holdings pursuant to
Sections 2.01(b), (c) and (d) are intended to be described in Section 351 of the
Code, and the parties hereto agree to take positions consistent with this intent
in all tax filings.
(b) The parties hereto shall cooperate with each other and provide
tax information to each other necessary or appropriate for the parties to file
tax returns and reports consistent with this position and to defend any
challenges to this position by any tax authorities. In particular, the Founders
shall provide Holdings with information necessary for Holdings to determine its
tax basis in the Founders Contributed Shares.
(c) Promptly following the Merger, IHS shall enter into a tax sharing
agreement with Holdings generally consistent
66
with the tax sharing agreements entered into between members of the Federal
consolidated group of which IHS is a member. Such agreement shall be based
generally on the principle that Holdings and its subsidiaries will be liable for
their share of the consolidated group's Federal income tax liabilities
determined generally on the same basis as if Holdings and its subsidiaries were
the only members of their own consolidated Federal income tax group. Similar
principles shall apply to other tax returns filed on a consolidated or combined
basis by a group that includes Holdings or its subsidiaries as well as IHS or
its other affiliates.
SECTION 6.12. Stock Options. The Founders shall use their best
--------------
efforts to obtain from each Optionholder the consent of such Optionholder to the
transactions contemplated by the form of Option Amendment Agreement, which
consent shall be evidenced by the execution and delivery by such Optionholder of
a counterpart to an Option Amendment Agreement between ICI and such
Optionholder.
As soon as practicable following the date of this Agreement, the
Founders shall use their best efforts to cause the Board of Directors of ICI
(or, if appropriate, any committee administering the 1995 ICI Stock Option Plan
or the 1996 ICI Stock Option Plan) to adopt such resolutions or take such other
actions (i) as are required (A) to adjust the terms of all outstanding options
to purchase shares of ICI Common Stock (and any stock appreciation rights linked
to the price of shares of ICI Common Stock) heretofore granted to any employee
(but not former employee) or director of ICI under the 1995 ICI Stock Option
Plan or the 1996 ICI Stock Option Plan, whether vested or unvested, and (B) to
adjust the terms of all outstanding options to purchase shares of ICI Common
Stock (and any stock appreciation rights linked to the price of shares of ICI
Common Stock) heretofore granted to any former employee of ICI under the 1995
ICI Stock Option Plan or the 1996 ICI Stock Option Plan that are vested as of
the date on which the employment of such employee was terminated, in the case of
clauses (A) and (B), as necessary to provide that each such option to purchase
shares of ICI Common Stock (and any stock appreciation right related thereto)
outstanding immediately prior to the effectiveness of the Merger shall not give
the holder thereof the right to receive any capital stock of ICI or Holdings
after the effective time of the Merger or to receive any consideration other
than, for each option (and any stock appreciation right related thereto), an
amount in cash equal to (i) the excess, if any, of (x) the consideration paid in
the Merger for each outstanding share of ICI Common Stock over (y) the exercise
price per share of ICI Common Stock subject to such option multiplied by (ii)
the number
67
of shares of ICI Common Stock subject to such option and (ii) as are required to
make such other changes to the 1995 ICI Stock Option Plan and the 1996 ICI Stock
Option Plan as IHS and the Founders may agree are appropriate to give effect to
the transactions contemplated by this Agreement and the Ancillary Agreements.
The Founders shall use their best efforts to cause ICI to (i) cause
the 1995 ICI Stock Option Plan and the 1996 ICI Stock Option Plan to terminate
upon consummation of the Merger, (ii) cause all provisions in any other ICI
Benefit Plan providing for the issuance, transfer or grant of any capital stock
of ICI, or any interest in respect of any capital stock of ICI, to be deleted
upon consummation of the Merger and (iii) ensure that, upon consummation of the
Merger, no holder of options to purchase shares of ICI Common Stock or
participant in the 1995 ICI Stock Option Plan, the 1996 ICI Stock Option Plan or
any other ICI Benefit Plan shall have any right to acquire any capital stock of
ICI or Holdings.
ARTICLE VII
Conditions Precedent
--------------------
SECTION 7.01. Conditions to the Obligations of IHS and the Founders.
------------------------------------------------------
The obligation of IHS to, and the obligation of IHS to cause Holdings and Merger
Sub to, consummate the transactions contemplated by this Agreement and the
Ancillary Agreements, and the obligation of the Founders to, and to cause ICI
to, consummate the transactions contemplated by this Agreement and the Ancillary
Agreements, is subject to the satisfaction or waiver on or prior to the Closing
of the following conditions:
(a) Governmental Approvals. The waiting period under the HSR Act, if
-----------------------
applicable to the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, shall have expired or been terminated.
All other authorizations, consents, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any Governmental
Entity necessary for the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements shall have been obtained or filed or
shall have occurred.
(b) No Injunctions or Restraints. No applicable statute, law,
-----------------------------
ordinance, rule or regulation enacted, entered, promulgated, enforced or issued
by, any Governmental Entity, no
68
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction, and no other legal restraint or
prohibition preventing the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements shall be in effect.
(c) Shareholders' Approval. The Merger Agreement and the Merger
-----------------------
shall have been approved by the affirmative vote of holders of shares of ICI
Common Stock and shares of Merger Sub Common Stock representing, in each case, a
majority of the votes entitled to be cast by holders of the outstanding shares
of ICI Common Stock or Merger Sub Common Stock, as the case may be, voting as a
single class.
SECTION 7.02. Conditions to the Obligations of IHS. The obligation of
-------------------------------------
IHS to, and to cause Holdings and Merger Sub to, consummate the transactions
contemplated by this Agreement and the Ancillary Agreements is subject to the
satisfaction or waiver on or prior to the Closing of the following conditions:
(a) Representations and Warranties. The representations and
-------------------------------
warranties of the Founders and ICI in this Agreement and in the Ancillary
Agreements, as applicable, shall be true and correct, as of the date hereof and
as of the Closing Date as though made on such Closing Date, except where failure
of such representations and warranties to be true and correct as of the date
hereof and as of the Closing Date as made on the Closing Date, when considered
as a whole, has not had and could not reasonably be expected to have an ICI
Material Adverse Effect. IHS shall have received a certificate signed by each of
the Founders (and ICI, if applicable) to such effect.
(b) Performance of Obligations. The Founders shall have, and shall
---------------------------
have caused ICI to have, performed or complied in all material respects with all
covenants and obligations required by this Agreement and the Ancillary
Agreements to be satisfied by the Founders or ICI, as the case may be, prior to
the Closing. IHS shall have received a certificate signed by each of the
Founders to such effect.
(c) Opinion of Counsel. IHS shall have received an opinion dated the
-------------------
Closing Date of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., counsel to the Founders, which opinion
shall include the opinion of such counsel with respect to (i) the due
organization, valid existence and good standing of ICI, (ii) the power and
authority of ICI to execute and deliver each of the Ancillary Agreements to
which it is a party and to consummate the transactions contemplated thereby,
(iii) the enforceability of this Agreement against each of the Founders and the
enforceability of each of
69
the Ancillary Agreements to which any of the Founders of ICI is a party against
such Founder or ICI, as applicable, (iv) the absence of any conflict created by
the execution and delivery of any of the Ancillary Agreements to which ICI is a
party, the consummation of any of the transactions contemplated thereby or the
compliance by ICI of the terms thereof with the Restated Articles of
Incorporation or By-laws of ICI, any Contract to which ICI is a party or by
which any of its properties or assets are bound or any judgment, order or
decree, or statute, law, ordinance, rule or regulation applicable to ICI, its
properties or assets, (v) the compliance of ICI with all laws, ordinances, rules
and regulations, applicable to ICI, including those laws, ordinances, rules and
regulations relating to occupational health and safety and the environment and
(vi) the absence of any material suit, action or proceeding against ICI, other
than any such suit, action or proceeding disclosed on Schedule 4.03(o), and
which opinion shall be reasonably satisfactory in form and substance to IHS and
its counsel.
(d) Ancillary Agreements. Each of the Employment Agreements, the
---------------------
Merger Agreement, the Services Agreement and the Stockholders' Agreement, and
Option Amendment Agreements in respect of not less than 95% of all shares of ICI
Common Stock to be issued to the Optionholders upon exercise of all their
options to purchase shares of ICI Common Stock, shall have been duly executed
and delivered by each of the parties thereto (other than IHS, Holdings and
Merger Sub), and each such Ancillary Agreement shall constitute a legal, valid
and binding obligation of each of the parties thereto (other than IHS, Holdings
and Merger Sub), enforceable against each such party in accordance with its
terms, and be in full force and effect.
(e) Absence of Proceedings. There shall not be pending or threatened
-----------------------
any suit, action or proceeding by any Governmental Entity or any action, suit or
proceeding by any other Person that has a reasonable likelihood of success and
that, if successful, could be reasonably expected to have an ICI Material
Adverse Effect or a material adverse effect on the business, assets, condition
(financial or otherwise), prospects or results of operations of the Business as
combined with the business of ICI upon consummation of the Merger:
(i) challenging or seeking to restrain or prohibit the consummation
of the transactions contemplated by this Agreement and the Ancillary
Agreements or seeking to obtain from IHS, Holdings, Merger Sub, the
Founders or ICI in connection with the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements any damages
that are material in relation to ICI;
70
(ii) seeking to prohibit or limit the ownership or operation by IHS
or any of its subsidiaries of any material portion of its business,
properties or assets (including the Business), or the ownership or
operation by IHS of any of its subsidiaries (or ICI), or to compel IHS or
any of its subsidiaries to dispose of or hold separate any material portion
of its business, properties or assets (including the Business) or any of
its subsidiaries (or ICI), in each case as a result of the consummation of
the transactions contemplated by this Agreement and the Ancillary
Agreements;
(iii) seeking to impose material limitations on the ability of IHS or
any of its subsidiaries to acquire or hold, or exercise full rights of
ownership of, its business, properties and assets (including the Business)
(or any material portion of its business, properties and assets (including
the Business)) or the business, properties and assets of ICI (or any
material portion of the business, properties and assets of ICI), or seeking
to impose material limitations on the ability of IHS or any of its
subsidiaries to acquire or hold, or exercise full rights of ownership of,
any shares of ICI Common Stock;
(iv) seeking to prohibit IHS or any of its subsidiaries from
effectively controlling in any material respect its business, properties or
assets (including the Business) or the business, properties and assets of
ICI; or
(v) which otherwise is reasonably likely to have an ICI Material
Adverse Effect.
(f) Other Documents. The Founders shall have furnished to IHS such
----------------
other documents relating to the Founders or ICI as IHS (or its counsel) may
reasonably request.
(g) Dissenters' Rights. The shares of ICI Common Stock held by any
-------------------
Person who complies with all the provisions of the laws of the Georgia Business
Corporation Code concerning the right of any holder of shares of ICI Common
Stock to dissent from the Merger and require appraisal of such holder's shares
of ICI Common Stock shall constitute less than 5% of the issued and outstanding
shares of ICI Common Stock immediately prior to the Closing.
SECTION 7.03. Conditions to the Obligations of the Founders. The
----------------------------------------------
obligation of each of the Founders to consummate the transactions contemplated
by this Agreement and the Ancillary
71
Agreements is subject to the satisfaction or waiver on or prior to the Closing
of the following conditions:
(a) Representations and Warranties. The representations and
-------------------------------
warranties of IHS in this Agreement and the Ancillary Agreements, as applicable,
shall be true and correct, as of the date hereof and as of the Closing Date as
though made on the Closing Date, except where the failure of such
representations and warranties to be true and correct, as of the date hereof and
as of the Closing Date as though made on the Closing Date when considered as a
whole, has not had and could not reasonably be expected to have a Business
Material Adverse Effect. The Founders shall have received a certificate signed
by IHS (and Holdings and Merger Sub, if applicable) to such effect.
(b) Performance of Obligations. IHS shall have, and shall have
---------------------------
caused Holdings and Merger Sub to have, performed or complied in all material
respects with all covenants and obligations required by this Agreement and the
Ancillary Agreements to be satisfied by IHS, Holdings or Merger Sub, as the case
may be, prior to the Closing. The Founders shall have received a certificate
signed by IHS to such effect.
(c) Opinion of Counsel. The Founders shall have received an opinion
-------------------
dated the Closing Date of Cravath, Swaine & ▇▇▇▇▇, counsel to IHS, which opinion
shall include the opinion of such counsel with respect to (i) the due
organization, valid existence and good standing of each of IHS, Holdings and
Merger Sub, (ii) the power and authority of IHS to execute and deliver this
Agreement and to consummate the transactions contemplated hereby and the power
and authority of each of IHS, Holdings and Merger Sub to execute and deliver
each of the Ancillary Agreements to which it is a party and to consummate the
transactions contemplated thereby, (iii) the enforceability of this Agreement
against each of IHS and the enforceability of each of the Ancillary Agreements
to which IHS, Holdings or Merger Sub is a party against IHS, Holdings or Merger
Sub, as applicable, and (iv) the absence of any conflict created by the
execution and delivery of this Agreement, the consummation of any of the
transactions contemplated hereby or the compliance by IHS with the terms hereof
with Certificate of Incorporation or By-laws of IHS and the absence of any
conflict created by the execution and delivery of any of the Ancillary
Agreements to which IHS, Holdings or Merger Sub is a party, the consummation of
any of the transactions contemplated thereby or the compliance by IHS, Holdings
or Merger Sub with the terms thereof with the Certificate or Articles of
Incorporation or By-laws of IHS, Holdings or Merger Sub, as applicable, and
which opinion shall be
72
reasonably satisfactory in form and substance to the Founders and their counsel.
(d) Ancillary Agreements. Each of the Employment Agreements, the
---------------------
Merger Agreement, the Services Agreement and the Stockholders' Agreement, and
Option Amendment Agreements in respect of not less than 95% of all shares of ICI
Common Stock to be issued to the Optionholders upon exercise of all their
options to purchase shares of ICI Common Stock, shall have been duly executed
and delivered by each of the parties thereto (other than the Founders and ICI),
and each such Ancillary Agreement shall constitute a legal, valid and binding
obligation of each of the parties thereto (other than the Founders and ICI),
enforceable against each such party in accordance with its terms, and be in full
force and effect.
(e) Absence of Proceedings. There shall not be pending or threatened
-----------------------
any suit, action or proceeding by any Governmental Entity or any action, suit or
proceeding by any other Person that has a reasonable likelihood of success and
that, if successful, could be reasonably expected to have an ICI Material
Adverse Effect or a material adverse effect on the business, assets, condition
(financial or otherwise), prospects or results of operations of the Business as
combined with the business of ICI upon consummation of the Merger:
(i) challenging or seeking to restrain or prohibit the consummation
of the transactions contemplated by this Agreement and the Ancillary
Agreements or seeking to obtain from IHS, Holdings, Merger Sub, the
Founders or ICI in connection with the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements any damages
that are material in relation to ICI;
(ii) seeking to prohibit or limit the ownership or operation by IHS
or any of its subsidiaries of any material portion of its business,
properties or assets (including the Business), or the ownership or
operation by IHS of any of its subsidiaries (or ICI), or to compel IHS or
any of its subsidiaries to dispose of or hold separate any material portion
of its business, properties or assets (including the Business) or any of
its subsidiaries (or ICI), in each case as a result of the consummation of
the transactions contemplated by this Agreement and the Ancillary
Agreements;
(iii) seeking to impose material limitations on the ability of IHS or
any of its subsidiaries to acquire or hold, or exercise full rights of
ownership of, its business, properties and assets (including the Business)
(or any
73
material portion of its business, properties or assets (including the
Business)) or the business, properties and assets of ICI (or any material
portion of the business, properties or assets of ICI), or seeking to
material impose limitations on the ability of IHS or any of its
subsidiaries to acquire or hold, or exercise full rights of ownership of,
any shares of ICI Common Stock;
(iv) seeking to prohibit IHS or any of its subsidiaries from
effectively controlling in any material respect its business, properties or
assets (including the Business) or the business, properties and assets of
ICI; or
(v) which otherwise is reasonably likely to have a Business Material
Adverse Effect.
(f) Option Plan. IHS shall have caused Holdings to create an option
------------
plan permitting the Board of Directors of Holdings to grant options to Holdings
employees for up to 5% of the outstanding equity of Holdings.
(g) Other Documents. IHS and Holdings shall have furnished the
----------------
Founders such other documents relating to IHS, Holdings or Merger Sub as the
Founders (or their counsel) may reasonably request.
ARTICLE VIII
Termination, Amendment and Waiver
---------------------------------
SECTION 8.01. Termination. This Agreement may be terminated at any
------------
time prior to the Closing:
(i) by mutual written consent of IHS, Holdings and the Founders;
(ii) by either IHS or the Founders:
(A) if the transactions contemplated by this Agreement and the
Ancillary Agreements are not consummated on or before March 29, 1999
(the "Outside Date"), unless the failure to consummate such
transactions is the result of a wilful and material breach of this
Agreement or any Ancillary Agreement by the party seeking to terminate
this Agreement;
(B) if any Governmental Entity issues an order, decree or ruling,
or takes any other action,
74
permanently enjoining, restraining or otherwise prohibiting the
transactions contemplated by this Agreement and the Ancillary
Agreements and such order, decree, ruling or other action shall have
become final and nonappealable;
(C) if any condition to the obligation of IHS to consummate the
transactions contemplated in this Agreement and the Ancillary
Agreements set forth in Section 7.02 or any condition to the
obligation of the Founders to consummate the transactions contemplated
by this Agreement and the Ancillary Agreements set forth in Section
7.03 becomes incapable of satisfaction prior to the Outside Date;
unless the failure to satisfy such condition is the result of a wilful
and material breach of this Agreement or any Ancillary Agreement by
the party seeking to terminate this Agreement; or
(D) if, upon a vote at a duly held at a Shareholders' Meeting to
obtain the Shareholders' Approval, the Shareholders' Approval is not
obtained;
(iii) by IHS, if the Founders breach or fail to perform in any
material respect any of their representations, warranties or covenants
contained in this Agreement or any Ancillary Agreement, or fail to cause
ICI to perform in any material respect any of its representations,
warranties or covenants contained in any Ancillary Agreement, which breach
or failure to perform (i) would give rise to the failure of a condition set
forth in Section 7.02(a) or 7.02(b) and (ii) cannot be, or has not been,
cured within 30 days after the giving of written notice to the Founders of
such breach (so long as IHS is not then in wilful and material breach of
any representation, warranty or covenant contained in this Agreement or any
Ancillary Agreement);
(iv) by the Founders, if IHS breaches or fails to perform in any
material respect any of its representations, warranties or covenants
contained in this Agreement or any Ancillary Agreement, or IHS fails to
cause Holdings or Merger Sub to perform any of its representations,
warranties or covenants contained in any Ancillary Agreement, which breach
or failure to perform (i) would give rise to the failure of a condition set
forth in Section 7.03(a) or 7.03(b) and (ii) cannot be, or has not been,
cured within 30 days after the giving of written notice to IHS of such
breach (so long as none of the Founders is then in wilful and material
breach of any representation, warranty or
75
covenant contained in this Agreement or any Ancillary Agreement); or
(v) by IHS, if the Founders shall participate in discussions in breach
of Section 5.02.
SECTION 8.02. Effect of Termination. In the event of termination of
----------------------
this Agreement by IHS, on the one hand, or the Founders, on the other hand, as
provided in Section 8.01, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of IHS or the Founders,
other than pursuant to Section 4.01(q), Section 4.03(s), Section 6.03, this
Section 8.02 and Article IX, which provisions shall survive such termination,
except to the extent that such termination results from a wilful and material
breach of this Agreement or any Ancillary Agreement by the party seeking to
terminate this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by IHS and
----------
the Founders at any time before or after receipt of the Shareholders' Approval;
provided, however, that, after receipt of the Shareholders' Approval, there
-------- -------
shall be made no amendment that by law requires further approval by the
shareholders of ICI without the further approval of such shareholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of IHS and the Founders.
SECTION 8.04. Extension; Waiver. At any time prior to the Closing,
------------------
the parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any Ancillary Agreement or (c) subject to the limitations set forth in
Section 8.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
ARTICLE IX
General Provisions
------------------
SECTION 9.01. Nonsurvival of Representations and Warranties. None of
----------------------------------------------
the representations and warranties in this
76
Agreement or any of the Ancillary Agreements, or in any instrument delivered in
connection herewith or therewith, shall survive the Closing. This Section 9.01
shall not limit any covenant or agreement of any of the parties hereto or
thereto which, by its terms, contemplates performance after the Closing.
SECTION 9.02. Notices. All notices, requests, claims, demands and
--------
other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties hereto at the following addresses (or
at such other address for such party as shall be specified by like notice):
(a) if to IHS,
Information Handling Services Inc.
Iverness Business Park
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
TBG Services Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Founders,
International CompuTex, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
77
with a copy to
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
SunTrust Plaza
Suite 4300
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.03. Headings. The table of contents and headings contained
---------
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 9.04. Severability. If any term or other provision of this
-------------
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party hereto. Upon determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 9.05. Counterparts. This Agreement may be executed in one or
-------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties hereto and delivered to the other parties hereto.
SECTION 9.06. Entire Agreement; No Third-Party Beneficiaries. This
-----------------------------------------------
Agreement, the Ancillary Agreements and any written confidentiality agreement
between or among any of the Founders or ICI, on the one hand, and IHS, on the
other hand, (a) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the parties hereto
and thereto with respect to the transactions contemplated by this Agreement and
the Ancillary Agreements and (b) are not intended to confer upon any Person
other than the parties hereto or thereto any rights or remedies.
SECTION 9.07. Governing Law. This Agreement shall be
--------------
governed by, and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
SECTION 9.08. Assignment. Neither this Agreement nor any of the
-----------
rights, interests or obligations under this Agreement
78
shall be assigned, in whole or in part, by operation of law or otherwise, by any
of the parties hereto without the prior written consent of the other parties.
Any purported assignment without such consent shall be void. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties hereto and their respective successors
and assigns.
SECTION 9.09. Consent to Jurisdiction. Each of the parties hereto
------------------------
(a) consents to submit to the personal jurisdiction of any Federal court located
in the State of Delaware or any Delaware state court in the event any dispute
arises regarding this Agreement or the transactions contemplated hereby, (b)
agrees not to attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (c) agrees not to bring any action
relating to this Agreement or the transactions contemplated hereby in any court
other than any Federal court sitting in the State of Delaware or any Delaware
state court and (d) waives any right to trial by jury with respect to any action
related to, or arising out of, this Agreement or the transactions contemplated
hereby.
IN WITNESS WHEREOF, IHS has caused this Agreement to be signed by its
officer thereunto duly authorized, and each of the Founders has signed this
Agreement, all as of the date first written above.
INFORMATION HANDLING SERVICES
INC.,
by _____________________
Name:
Title:
__________________________
▇▇▇▇ ▇. ▇▇▇▇▇
__________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Salem
__________________________
▇▇▇▇▇ ▇▇▇▇
__________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
79
EXHIBIT A
ICI Letterhead
CONFIDENTIAL
------------
▇▇. ▇▇▇▇ ▇▇▇▇▇
International CompuTex, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Dear ▇▇. ▇▇▇▇▇:
This letter will confirm and record our agreement as to the terms relating to
your employment by International CompuTex, Inc. ("ICI") following the
acquisition of ICI by [NEWCO] as follows:
1. Commencing on the effective date of the acquisition of ICI by [NEWCO], your
position with ICI will be President and Chief Technology Officer, reporting
to the Chief Executive Officer of ICI.
2. Your salary will be at the rate of $180,000 per year payable in equal
biweekly installments. It is contemplated that at least annually during the
term of your employment, the Board of Directors of ICI will consider and
appraise your contribution to the operating efficiency, growth, production
and profit of ICI and on the basis of such consideration and appraisal may
increase (but shall not decrease) your rate of salary. In addition to your
salary, you shall participate in an Annual Incentive Compensation Plan
("Annual Plan") pursuant to which you shall be eligible to receive an
annual bonus commencing with respect to the fiscal year ended November 30,
1999 and each fiscal year that you are employed by ICI thereafter, in an
amount equal to $30,000 in the event ICI equals or exceeds "target"
performance, payable in accordance with the terms and conditions of the
Annual Plan. "Target" performance for the fiscal year ended November 30,
1999 shall be profit before interest and income tax for ICI equal to or
greater than $1 million for the period commencing on the date hereof and
ending on November 30, 1999. The "target"
80
performance requirements for subsequent fiscal years shall be established
for each such year by the Board of Directors of ICI or such person
designated by the terms of the Annual Plan. No bonus shall be paid for any
fiscal year for performance below "target" performance, and no bonus shall
be paid for any fiscal year unless you are employed on November 30 of such
fiscal year..
3. You will have continued use of the ICI owned car you have been using during
the twelve month period preceding the date of this Agreement. You shall
also be included, to the extent eligible, under any plans providing
benefits subsequent to the date hereof to the employees of ICI generally.
4. In the event your employment with ICI is terminated before the completion
of three years from the date hereof for any reason other than termination
by ICI for "cause" as defined below, then ICI shall pay you on the
effective date of termination of your employment a lump-sum severance
payment equal to the base salary paid to you by ICI during the preceding
twelve month period. For purposes of this Agreement, "cause" shall mean
malfeasance or misconduct materially detrimental to the interests of ICI or
any of its affiliates or a material breach by you of this agreement.
5. In the event your employment with ICI is terminated after the completion of
three years from the date hereof, any severance payment shall be subject to
and in accordance with the ICI severance policy in effect on the effective
date of termination (which severance policy shall be, so long as ICI is an
affiliate of Information Handling Services Group Inc. ("IHS Group"), the
severance policy of IHS Group in effect on the effective date of
termination).
6. Your death or "permanent and total disability" as defined in Section 22(e)
of the US Internal Revenue Code, as amended from time to time, shall
terminate all obligations hereunder.
7. Simultaneously with the execution and delivery of this agreement, ICI and
you shall execute and deliver the ICI Agreement with Employee -
Nondisclosure and other Covenants in the form attached hereto as Exhibit A
("Nondisclosure Agreement").
8. It is understood that this agreement does not entitle you to employment for
any specific period of time and that in the event of termination of your
employment the only obligation of ICI and its affiliates shall be solely as
specified herein.
81
9. (A) For a period of three years from the effective date of termination of
your employment, you agree that you will not, directly or indirectly:
(i) engage in activities or businesses, or establish any new businesses,
that are directly in competition with the business of ICI at the time
your employment with ICI is terminated, including without limitation
(a) selling products or services competitive with the CAPSXpert
products or the CSM software of ICI, (b) soliciting any customer or
prospective customer of ICI to purchase any products or services
competitive with the CAPSXpert products or the CSM software of ICI
from anyone other than ICI and its affiliates, (c) developing any
products or services competitive with the CAPSXpert products or the
CSM software of ICI, and (d) assisting any person or entity in any way
to do, or attempt to do, anything prohibited by clause (a), (b) or (c)
above; and
(ii) perform any action, activity or course of conduct that is
substantially detrimental to the business of ICI or the business
reputation of ICI.
(B) Notwithstanding any other provision of this Agreement, it is
understood and agreed that any remedies at law would be inadequate in
the case of any breach of the covenants contained in paragraph 9. ICI
shall be entitled to equitable relief, including the remedy of
specific performance, with respect to any breach or attempted breach
of the covenants contained in this paragraph.
(C) The parties hereto agree that the duration and area for which the
covenant not to compete set forth in this paragraph 9 is to be
effective are reasonable. In the event that any court determines that
the time period or the area, or both of them, are unreasonable and
that such covenant is to that extent unenforceable, the parties hereto
agree that the covenant shall remain in full force and effect for the
greatest time period and in the greatest area that would not render it
unenforceable. The parties intend that this covenant shall be deemed
to be a series of separate covenants, one for each and every political
subdivision of each and every state of the United States of America
and each and every political subdivision of each and every country
throughout the world where this covenant is intended to be effective.
10. Any notice, request, instruction or other document to be given hereunder by
any party hereto shall be in writing and shall be
82
delivered personally or sent by registered or certified mail or sent by
overnight courier addressed as set forth below:
If to ICI:
International CompuTex, Inc.
c/o Information Handling Services Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
TBG Services Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Vice President & General Counsel
If to ▇▇▇▇ ▇▇▇▇▇:
c/o International CompuTex, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
or such other address as you or ICI shall designate to the other in
conformity with the foregoing
11. This agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this agreement
or any rights or obligations hereunder, except that ICI may assign or
transfer this agreement to any affiliate or to a successor corporation;
provided that in the case of any such assignment or transfer, this
agreement shall, subject to the provisions hereof, be binding upon and
inure to the benefit of any such affiliate or successor corporation and
such affiliate or successor corporation shall discharge and perform all of
the obligations of ICI.
12. This agreement and the Nondisclosure Agreement constitute the entire
agreement and understanding of the parties with respect to the subject
matter hereof, and all prior negotiations and understandings relating to
the subject matter of this Agreement are merged herein and are superseded
and canceled by this agreement. All modifications and amendments hereto
must be in writing signed by both parties.
13. This Agreement shall be governed by and construed in accordance with, the
laws of the State of Georgia applicable to agreements made and to be
performed within Georgia.
83
IN WITNESS WHEREOF, the parties have executed this Agreement _____________,
1999.
INTERNATIONAL COMPUTEX, INC.
By:________________________
Title:_____________________
_________________________
▇▇▇▇ ▇▇▇▇▇
84
EXHIBIT B
ICI Letterhead
CONFIDENTIAL
------------
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
International CompuTex, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇:
This letter will confirm and record our agreement as to the terms relating to
your employment by International CompuTex, Inc. ("ICI") following the
acquisition of ICI by [NEWCO] as follows:
1. Commencing on the effective date of the acquisition of ICI by [NEWCO], you
will be a Vice President of ICI.
2. Your salary will be at the rate of $100,000 per year payable in equal
biweekly installments. Its is contemplated that at least annually during
the term of your employment, the Board of Directors of ICI will consider
and appraise your contribution to the operating efficiency, growth,
production and profit of ICI and on the basis of such consideration and
appraisal may increase (but shall not decrease) your rate of salary. In
addition to your salary, you shall participate in an Annual Incentive
Compensation Plan ("Annual Plan") pursuant to which you shall be eligible
to receive an annual bonus commencing with respect to the fiscal year ended
November 30, 1999 and each fiscal year that you are employed by ICI
thereafter, in an amount equal to 25% of your December 1 base salary in
effect at the beginning of such fiscal year at "target performance" and in
an amount equal to 37 1/2 % at "maximum performance", payable in accordance
with the terms and conditions of the Annual Plan. The "target" and
"maximum" performance requirements shall be established for each year by
the Board of Directors of ICI or such person
85
designated by the terms of the Annual Plan. You shall also be included, to
the extent eligible, under any plans providing benefits subsequent to the
date hereof to the employees of ICI generally.
3. In the event your employment with ICI is terminated before the completion
of three years from the date hereof for any reason other than termination
(x) by ICI for "cause" as defined below, or (y) by you other than for "good
reason" as defined below, then ICI shall pay you on the effective date of
termination of your employment a lump-sum severance payment equal to the
base salary paid to you by ICI during the preceding twelve month period.
For purposes of this agreement, "cause" shall mean malfeasance or
misconduct materially detrimental to the interests of ICI or any of its
affiliates or a material breach by you of this agreement and "good reason"
shall mean a material breach by ICI of this agreement.
4. In the event your employment with ICI is terminated after the completion of
three years from the date hereof, any severance payment shall be subject to
and in accordance with the ICI severance policy in effect on the effective
date of termination (which severance policy shall be, so long as ICI is an
affiliate of Information Handling Services Group Inc. ("IHS Group"), the
severance policy of IHS Group in effect on the effective date of
termination).
5. Your death or "permanent and total disability" as defined in Section 22(e)
of the US Internal Revenue Code, as amended from time to time, shall
terminate all obligations hereunder.
6. Simultaneously with the execution and delivery of this Agreement, ICI and
you shall execute and deliver the ICI Agreement with Employee -
Nondisclosure and other Covenants in the form attached hereto as Exhibit A
("Nondisclosure Agreement").
7. It is understood that this Agreement does not entitle you to employment for
any specific period of time and that in the event of termination of your
employment the only obligation of ICI and its affiliates shall be solely as
specified herein.
8. (A) For a period of one year from the effective date of termination of
your employment, you agree that you will not, directly or indirectly:
(i) engage in activities or businesses, or establish any new businesses,
that are directly in competition with the
86
business of ICI at the time your employment with ICI is terminated,
including without limitation (a) selling products or services
competitive with the CAPSXpert products or the CSM software of ICI,
(b) soliciting any customer or prospective customer of ICI to purchase
any products or services competitive with the CAPSXpert products or
the CSM software of ICI from anyone other than ICI and its affiliates,
(c) developing any products or services competitive with the CAPSXpert
products or the CSM software of ICI, and (d) assisting any person or
entity in any way to do, or attempt to do, anything prohibited by
clause (a), (b) or (c) above; and
(ii) perform any action, activity or course of conduct that is
substantially detrimental to the business of ICI or the business
reputation of ICI.
(B) Notwithstanding any other provision of this Agreement, it is
understood and agreed that any remedies at law would be inadequate in
the case of any breach of the covenants contained in paragraph 8. ICI
shall be entitled to equitable relief, including the remedy of
specific performance, with respect to any breach or attempted breach
of the covenants contained in this paragraph.
(C) The parties hereto agree that the duration and area for which the
covenant not to compete set forth in this paragraph 8 is to be
effective are reasonable. In the event that any court determines that
the time period or the area, or both of them, are unreasonable and
that such covenant is to that extent unenforceable, the parties hereto
agree that the covenant shall remain in full force and effect for the
greatest time period and in the greatest area that would not render it
unenforceable. The parties intend that this covenant shall be deemed
to be a series of separate covenants, one for each and every political
subdivision of each and every state of the United States of America
and each and every political subdivision of each and every country
throughout the world where this covenant is intended to be effective.
9. Any notice, request, instruction or other document to be given hereunder by
any party hereto shall be in writing and shall be delivered personally or
sent by registered or certified mail or sent by overnight courier addressed
as set forth below:
If to ICI:
International CompuTex, Inc.
87
c/o Information Handling Services Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
TBG Services Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Vice President & General Counsel
If to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇:
__________________________
__________________________
__________________________
or such other address as you or ICI shall designate to the other in
conformity with the foregoing
10. This agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this agreement
or any rights or obligations hereunder, except that ICI may assign or
transfer this agreement to any affiliate or to a successor corporation;
provided that in the case of any such assignment or transfer, this
agreement shall, subject to the provisions hereof, be binding upon and
inure to the benefit of any such affiliate or successor corporation and
such affiliate or successor corporation shall discharge and perform all of
the obligations of ICI.
11. This agreement and the Nondisclosure Agreement constitute the entire
agreement and understanding of the parties with respect to the subject
matter hereof, and all prior negotiations and understandings relating to
the subject matter of this Agreement are merged herein and are superseded
and canceled by this agreement. All modifications and amendments hereto
must be in writing signed by both parties.
12. This Agreement shall be governed by and construed in accordance with, the
laws of the State of Georgia applicable to agreements made and to be
performed within Georgia.
IN WITNESS WHEREOF, the parties have executed this Agreement _____________,
1999.
88
INTERNATIONAL COMPUTEX, INC.
By:_______________________
Title:_____________________
_________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
89
EXHIBIT C
AGREEMENT AND PLAN OF MERGER
Dated as of January [ ], 1999,
Among
INFORMATION HANDLING SERVICES INC.
IHS ITEMQUEST HOLDINGS INC.
[MERGER SUB]
And
INTERNATIONAL COMPUTEX, INC.
90
TABLE OF CONTENTS
Page
----
ARTICLE I
The Merger
----------
SECTION 1.01. The Merger.............................................. 1
SECTION 1.02. Closing................................................. 1
SECTION 1.03. Effective Time.......................................... 1
SECTION 1.04. Effects................................................. 2
SECTION 1.05. Articles of Incorporation and
By-laws............................................... 2
SECTION 1.06. Directors............................................... 2
SECTION 1.07. Officers................................................ 2
ARTICLE II
Effect of the Merger on the Capital Stock of the
------------------------------------------------
Constituent Corporations; Exchange of Certificates
--------------------------------------------------
SECTION 2.01. Effect on Capital Stock ................................ 3
SECTION 2.02. Exchange of Certificates ............................... 4
ARTICLE III
Conditions Precedent .................................................... 6
ARTICLE IV
Termination, Amendment and Waiver
---------------------------------
SECTION 4.01. Termination............................................. 7
SECTION 4.02. Effect of Termination................................... 7
SECTION 4.03. Amendment............................................... 7
ARTICLE V
General Provisions
------------------
SECTION 5.01. Notices................................................. 7
SECTION 5.02 Headings................................................ 8
SECTION 5.03. Interpretation.......................................... 8
91
SECTION 5.04. Assignment.............................................. 9
SECTION 5.05. Severability............................................ 9
SECTION 5.06. Entire Agreement; No Third-Party
Beneficiaries......................................... 9
SECTION 5.07. Governing Law........................................... 9
SECTION 5.08. Enforcement; Exclusive
Jurisdiction.......................................... 9
SECTION 5.09. Counterparts............................................ 10
92
AGREEMENT AND PLAN OF MERGER dated as of January [ ], 1999
(this "Agreement"), among INFORMATION HANDLING SERVICES INC., a
Delaware corporation ("IHS"), IHS ITEMQUEST HOLDINGS INC., a
Delaware corporation ("Holdings"), [MERGER SUB], a Georgia
corporation ("Merger Sub"), and International CompuTex, Inc., a
Georgia corporation ("ICI").
WHEREAS IHS and certain shareholders of ICI are parties to a Formation
Agreement dated as of January 10, 1999 (the "Formation Agreement"), pursuant to
which the Formation Transaction (capitalized terms used herein but not defined
herein shall have the meanings assigned thereto in the Formation Agreement) will
be consummated; and
WHEREAS the respective Boards of Directors of Holdings, Merger Sub and
ICI have approved the merger of Merger Sub with and into ICI on the terms and
subject to the conditions set forth in this Agreement, whereby each issued share
of common stock, par value $0.001 per share, of ICI (the "ICI Common Stock") not
owned directly or indirectly by Holdings or ICI shall be converted into cash.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
The Merger
----------
SECTION 1.01. The Merger. On the terms and subject to the conditions
-----------
set forth in this Agreement, and in accordance with the Georgia Business
Corporation Code (the "GBCC"), Merger Sub shall be merged with and into ICI at
the Effective Time (as defined below). At the Effective Time, the separate
corporate existence of Merger Sub shall cease, and ICI shall continue as the
surviving corporation (the "Surviving Corporation").
SECTION 1.02. Closing. The closing of the Merger (the "Closing")
--------
shall take place immediately following the consummation of the Formation
Transaction.
SECTION 1.03. Effective Time. Prior to the Closing, Holdings shall
---------------
prepare, and on the date on which the Closing
93
occurs (or as soon as practicable thereafter), Holdings shall file with the
Secretary of State of the State of Georgia, a certificate or articles of merger
or other appropriate documents (in any such case, the "Certificate of Merger")
executed in accordance with the relevant provisions of the GBCC and shall make
all other filings or recordings required under the GBCC. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Georgia or at such subsequent time as shall
be stated in the Certificate of Merger (the "Effective Time").
SECTION 1.04. Effects. The Merger shall have the effects set forth
--------
in Section 14-2-1106 of the GBCC.
SECTION 1.05. Articles of Incorporation and By-laws. (a) The
--------------------------------------
Restated Articles of Incorporation of ICI as in effect immediately prior to the
Effective Time shall be amended at the Effective Time so that (i) Article I of
such Restated Articles of Incorporation reads in its entirety as follows: "The
name of the Corporation is: "IHS Itemquest II Inc." and (ii) Article IV of such
Restated Articles of Incorporation reads in its entirety as follows: "The
Corporation shall have authority to issue not more than 110,000,000 shares of a
single class of Common Stock with par value $0.001 per share.", and, as so
amended, such Restated Articles of Incorporation shall be the articles of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-laws of Merger Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. ▇▇▇▇ ▇. ▇▇▇▇▇, who is currently the
----------
President, Chief Executive Officer and Chairman of ICI, will become a director
of the Surviving Corporation at the Effective Time. Other than ▇▇. ▇▇▇▇▇, the
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be.
SECTION 1.07. Officers. ▇▇. ▇▇▇▇▇ will become the President and
---------
Chief Technology Officer of the Surviving Corporation. In addition, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Salem, who are currently officers and directors of
ICI, will become officers, but not directors, of the Surviving Corporation.
Other than ▇▇. ▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇, the officers of Merger Sub
immediately prior to the Effective Time shall be the
94
officers of the Surviving Corporation, until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified, as
the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
------------------------------------------------
Constituent Corporations; Exchange of Certificates
--------------------------------------------------
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of the holder of any
shares of ICI Common Stock or any shares of Merger Sub Common Stock:
(a) Capital Stock of Merger Sub. Each issued and outstanding share
----------------------------
of Merger Sub Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.001 per share, of the
Surviving Corporation.
(b) Cancelation of Treasury Stock and Stock Owned by Holdings or
------------------------------------------------------------
Merger Sub. Each share of ICI Common Stock that is owned by ICI and each share
-----------
of ICI Common Stock that is owned by Holdings or Merger Sub shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and no Merger Consideration (as defined below) or other consideration
shall be delivered in exchange therefor.
(c) Conversion of ICI Common Stock. Subject to Sections 2.01(b) and
-------------------------------
2.01(d), each issued and outstanding share of ICI Common Stock shall be
converted into the right to receive $9.50 in cash (the "Merger Consideration").
As of the Effective Time, all such shares of ICI Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate previously representing any such shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration upon surrender of such certificate in accordance with
Section 2.02, without interest.
(d) Dissenters' Rights. Notwithstanding anything in this Agreement
-------------------
to the contrary, shares ("Dissent Shares") of ICI Common Stock that are
outstanding immediately prior to the Effective Time and that are held by any
Person who is entitled to demand, and who properly demands, payment of the fair
value of such Dissent Shares pursuant to, and who complies in all respects with,
Article 13 of the GBCC ("Article 13") shall not be converted into Merger
Consideration as provided in Section 2.01(c), but rather the holders of Dissent
Shares shall
95
be entitled to payment of the fair value of such Dissent Shares in accordance
with Article 13; provided, however, that if any such holder shall fail to
-------- -------
perfect or otherwise shall waive, withdraw or lose the right to receive payment
of fair value under Article 13, then the right of such holder to be paid the
fair value of such holder's Dissent Shares shall cease and such Dissent Shares
shall be deemed to have been converted as of the Effective Time into, and to
have become exchangeable solely for the right to receive, the Merger
Consideration as provided in Section 2.01(c). Prior to the Effective Time, ICI
shall not, without the prior written consent of IHS, make any payment with
respect to, or settle or offer to settle, any such demands, or agree to do any
of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to
------------------------- -------------
the Effective Time, ICI shall designate American Stock Transfer & Trust Company,
or other bank or trust company, to act as paying agent (the "Paying Agent") for
the payment of the Merger Consideration upon surrender of certificates
representing ICI Common Stock.
(b) ICI To Provide Funds. ICI shall take all steps necessary to
---------------------
enable the Surviving Corporation to provide to the Paying Agent, on a timely
basis, as and when needed on and after the Effective Time, cash necessary to pay
for the shares of ICI Common Stock converted into the right to receive cash
pursuant to Section 2.01 (such cash being hereinafter referred to as the
"Exchange Fund").
(c) Exchange Procedures. As soon as reasonably practicable after the
--------------------
Effective Time, the Surviving Corporation shall cause the Paying Agent to mail
to each holder of record of a certificate or certificates (each, a
"Certificate") which immediately prior to the Effective Time represented
outstanding shares of ICI Common Stock whose shares were converted into the
right to receive the Merger Consideration pursuant to Section 2.01 (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancelation
to the Paying Agent or to such other agent or agents as may be appointed by ICI,
together with such letter of transmittal, duly executed, and such other
documents as may be reasonably required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the amount of cash
into which the
96
shares of ICI Common Stock theretofore represented by such Certificate shall
have been converted pursuant to Section 2.01, and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of ICI
Common Stock which is not registered in the transfer records of ICI, payment may
be made to a Person other than the Person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the Person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
Person other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the amount of cash, without
interest, into which the shares of ICI Common Stock theretofore represented by
such Certificate shall have been converted pursuant to Section 2.01. No interest
will be paid or will accrue on the cash payable upon the surrender of any
Certificate, except to the extent provided under Article 13.
(d) No Further Ownership Rights in ICI Common Stock. The Merger
------------------------------------------------
Consideration paid upon the surrender of Certificates in accordance with the
terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of ICI Common Stock theretofore represented by
such Certificates, subject, however, to the Surviving Corporation's obligation
------- -------
to pay any dividends or make any other distributions with a record date prior to
the Effective Time which may have been declared or made by ICI on such shares of
ICI Common Stock in accordance with the terms of this Agreement and the
Formation Agreement on or prior to the Effective Time and which remain unpaid at
the Effective Time, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of ICI
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article II.
(e) Termination of Exchange Fund. Any portion of the Exchange Fund
-----------------------------
that remains undistributed to the holders of ICI Common Stock for six months
after the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any holder of ICI Common Stock who has not theretofore complied with
this Article II shall thereafter look only to the Surviving Corporation for
payment of its claim for Merger Consideration.
97
(f) No Liability. None of IHS, Holdings, Merger Sub, ICI or the
-------------
Paying Agent shall be liable to any Person in respect of any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity), any such shares, cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any Person previously entitled thereto.
(g) Investment of Exchange Fund. The Paying Agent shall invest any
----------------------------
cash included in the Exchange Fund, as directed by the Surviving Corporation, on
a daily basis. Any interest and other income resulting from such investments
shall be paid to the Surviving Corporation.
(h) Withholding Rights. The Surviving Corporation shall be entitled
-------------------
to deduct and withhold from the consideration otherwise payable to any holder of
ICI Common Stock pursuant to this Agreement such amounts as may be required to
be deducted and withheld with respect to the making of such payment under the
Code, or under any provision of state, local or foreign tax law.
ARTICLE III
Conditions Precedent
--------------------
The only conditions precedent to the respective obligation of each
party to effect the Merger shall be satisfaction (or waiver by the applicable
beneficiary of the applicable condition) of the conditions set forth in Article
VII of the Formation Agreement and the consummation of the Formation
Transaction.
ARTICLE IV
Termination, Amendment and Waiver
---------------------------------
SECTION 4.01. Termination. This Agreement may be terminated, whether
------------
before or after receipt of the Shareholders' Approval, but only upon termination
of the Formation Agreement in accordance with the terms thereof.
98
SECTION 4.02. Effect of Termination. In the event of termination of
----------------------
this Agreement as provided in Section 4.01, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of IHS, Holdings, Merger Sub or ICI, other than this Section 4.02 and Article V.
SECTION 4.03. Amendment. This Agreement may be amended by IHS,
----------
Holdings, Merger Sub and ICI at any time before or after receipt of the
Shareholders' Approval; provided, however, that, after receipt of the
-------- -------
Shareholders' Approval, there shall be made no amendment that by law requires
further approval by the shareholders of ICI without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of IHS, Holdings, Merger Sub and ICI.
ARTICLE V
General Provisions
------------------
SECTION 5.01. Notices. All notices, requests, claims, demands and
--------
other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties hereto at the following addresses (or
at such other address for such party as shall be specified by like notice):
(a) if to IHS, Holdings or Merger Sub,
Information Handling Services Inc.
Iverness Business Park
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
TBG Services Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
99
and
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to ICI,
International CompuTex, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
SunTrust Plaza
Suite 4300
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 5.02. Headings. The table of contents and headings contained
---------
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 5.03. Interpretation. When a reference is made in this
---------------
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
SECTION 5.04. Assignment. Neither this Agreement nor any of the
-----------
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties. Any purported assignment
without such consent shall be void. Subject to the preceding sentences, this
100
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 5.05. Severability. If any term or other provision of this
-------------
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party hereto. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
SECTION 5.06. Entire Agreement; No Third-Party Beneficiaries. This
-----------------------------------------------
Agreement, the Formation Agreement, the other Ancillary Agreements and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
hereto and thereto with respect to the transactions contemplated by this
Agreement, the Formation Agreement and the other Ancillary Agreements and (b)
are not intended to confer upon any Person other than the parties hereto or
thereto any rights or remedies.
SECTION 5.07. Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof, except to the extent the laws of the State of Georgia are
mandatorily applicable to the Merger.
SECTION 5.08. Enforcement; Exclusive Jurisdiction. Each of the
------------------------------------
parties hereto (a) consents to submit to the personal jurisdiction of any
Federal court located in the State of Delaware or any Delaware state court in
the event any dispute arises regarding this Agreement or the transactions
contemplated hereby, (b) agrees not to attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c)
agrees not to bring any action relating to this Agreement or the transactions
contemplated hereby in any court other than any Federal court sitting in the
State of Delaware or any Delaware state court and (d) waives any right to trial
by jury with respect to any action related to, or arising out of, this Agreement
or the transactions contemplated hereby.
101
SECTION 5.09. Counterparts. This Agreement may be executed in one or
-------------
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
102
IN WITNESS WHEREOF, each of IHS, Holdings, Merger Sub and ICI have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, and each of the Founders has signed this Agreement, all as of the
date first written above.
INFORMATION HANDLING SERVICES
INC.,
by ________________________
Name:
Title:
IHS ITEMQUEST HOLDINGS INC.,
by ________________________
Name:
Title:
MERGER SUB,
by _________________________
Name:
Title
INTERNATIONAL COMPUTEX, INC.,
by _________________________
Name:
Title:
103
EXHIBIT D
AGREEMENT dated as of January [ ], 1999, between
INTERNATIONAL COMPUTEX, INC., a Georgia corporation (the
"Company"), and [ ] (the "Optionholder").
WHEREAS, pursuant to a Formation Agreement dated as of January 10,
1999 (the "Formation Agreement"), among Information Handling Services Inc., a
Delaware corporation ("IHS"), and certain management shareholders of the Company
(collectively, the "Founders"), IHS has caused IHS Itemquest Holdings Inc., a
Delaware corporation ("Holdings"), to be incorporated:
(i) IHS intends to contribute to Holdings certain assets and
liabilities related to the CAPSXpert product lines of IHS, 330,000 shares of
common stock, par value $0.001 per share, of the Company (the "Company Common
Stock") and cash in exchange for 7,989,877 shares of common stock of Holdings,
par value $0.001 per share (the "Holdings Common Stock"), resulting in IHS
owning an aggregate of 7,989,977 shares of Holdings Common Stock;
(ii) The Founders intend to contribute to Holdings 1,566,153
shares of Company Common Stock in exchange for 1,566,153 shares of Holdings
Common Stock;
(iii) Following the foregoing contributions and exchanges (the
"Formation Transaction"), all outstanding shares of Company Common Stock will be
converted into the right to receive $9.50 in cash in a merger (the "Merger") of
a wholly owned subsidiary of Holdings with and into the Company such that the
Company will be the Surviving Corporation in the Merger;
(iv) As a result of the Formation Transaction and the Merger, (i)
(A) IHS will own 83.611% of the outstanding shares of Holdings Common Stock and
(B) the Founders will collectively own 16.389% of the outstanding shares of
Holdings Common Stock and (ii) the Company, as the surviving corporation in the
Merger, will be a wholly owned subsidiary of Holdings;
(v) The Optionholder currently holds one or more options to
purchase shares of Company Common Stock, as described in Appendix A (the
"Company Options");
(vi) The agreement of the Optionholder to amend the agreements
evidencing the Company Options to provide that the
104
Optionholder shall receive, upon the effectiveness of the Merger, for each
Company Option, an amount in cash equal to (i) the excess, if any, of (x) the
consideration paid in the Merger in respect of each outstanding share of ICI
Common Stock over (y) the exercise price per share of ICI Common Stock subject
to such Company Option multiplied by (ii) the number of shares of ICI Common
Stock subject to such Company Option (together with a similar agreement on the
part of other employees of the Company and certain directors of the Company who
have been granted options to purchase shares of Company Common Stock) is a
condition precedent to the consummation of the transactions contemplated by the
Formation Agreement; and
WHEREAS the Company and the Optionholder desire to enter into certain
agreements relating to the amendment of the agreements evidencing the Company
Options.
NOW, THEREFORE, in consideration of the premises, mutual promises and
covenants contained in this Agreement, the Company and the Optionholder hereby
agree:
1. Representations and Warranties of the Optionholder. The
---------------------------------------------------
Optionholder hereby represents and warrants to the Company as follows:
(a) The Optionholder has full power and authority to execute this
Agreement and to consummate the transactions contemplated hereby. The
Optionholder has duly executed and delivered this Agreement, and this Agreement
constitutes a legal, valid and binding obligation of the Optionholder,
enforceable against the Optionholder in accordance with its terms.
(b) Appendix A attached hereto accurately sets forth for each Company
Option (i) the date of grant of such Company Option, (ii) the number of shares
of Company Common Stock that may be purchased upon exercise of such Company
Option, (iii) the exercise price in respect of such Company Option and (iv) the
ISN/NSO status and vesting (exercisability) status of such Company Option as of
January [ ], 1999.
2. Representations and Warranties of the Company. The Company
----------------------------------------------
hereby represents and warrants to the Optionholder as follows: the Company has
full power and authority to execute this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by the Company of
this Agreement and consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company (and no
105
other corporate proceedings are necessary to authorize this Agreement or the
transactions contemplated hereby). The Company has duly executed and delivered
this Agreement, and this Agreement constitutes a valid, legal and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. The execution and delivery by the Company of this Agreement do not,
and the consummation of the transactions contemplated hereby and compliance by
the Company with the terms hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancelation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any Lien upon any of its properties or assets under, any provision of (i) the
Restated Articles of Incorporation or By-laws of the Company, (ii) any purchase
order, sales agreement, customer subscription, service contract, distribution
agreement, quotation and bid, product warranty, technical assistance or service
agreement, or any other written or oral contract, lease, sublease, license,
sublicense, indenture or other commitment, agreement, arrangement or
undertaking, or any amendment thereto, to which the Company is a party or by
which any of its properties or assets is bound or (iii) any judgment, order or
decree, or statute, law, ordinance, rule or regulation, applicable to the
Company or any of its properties or assets, other than any such items that, in
the aggregate with all other breaches of such representations and warranties,
has not had and could not reasonably be expected to have a material adverse
effect on the business, assets, condition (financial or otherwise), prospects or
results of operations of the Company.
3. Amendment of Options. (a) By executing this Agreement, the
---------------------
Company and the Optionholder hereby amend the agreements evidencing the Company
Options as set forth in paragraph 3(b), which amendments shall become effective
only if, and upon, the consummation of the transactions contemplated by the
Formation Agreement. The Optionholder hereby acknowledges that he or she has
received, and has had an opportunity to review with his or her financial or
other advisors, the Option Amendment Memorandum dated January [ ], 1999,
furnished to him or her by the Company.
(b) The terms of the agreements evidencing the Company Options, as
amended, shall provide that, upon the effectiveness of the Merger, each Company
Option shall, without any action on the part of the Optionholder, the Company or
any other person or entity, be automatically exercised, on a cashless basis, and
the Optionholder shall receive for such Company Option an amount in cash equal
to (i) the excess, if any, of (x) the consideration
106
paid in the Merger in respect of each outstanding share of Company Common Stock
over (y) the exercise price per share of Company Common Stock subject to such
Company Option multiplied by (ii) the number of shares of Company Common Stock
subject to such Company Option.
(c) The Optionholder hereby agrees that all amounts payable in
respect of the Company Options, as amended pursuant to the terms of paragraph
3(b), shall be subject to any required withholding of taxes and shall not bear
interest.
(d) The Optionholder hereby further agrees that, upon the
effectiveness of the amendments to the agreements evidencing the Company Options
pursuant to the terms of paragraph 3(b), the Optionholder shall not have any
right to receive any capital stock of the Company or any other entity under such
agreements (or the Company Options) or to receive any consideration other than,
for each Company Option, the amount in cash as provided in paragraph 3(b).
4. General Provisions. (a) Amendments. This Agreement may not be
------------------- -----------
amended except by an instrument in writing signed by the Company and the
Optionholder, with the written consent of IHS, which consent shall not be
unreasonably withheld.
(b) Notices. All notices, requests, claims, demands and other
--------
communications hereunder shall be in writing and shall be deemed given upon
receipt by the Company and the Optionholder at the following addresses(or at
such other address for such party as shall be specified by like notice):
(i) if to the Company:
International CompuTex, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
107
and
(ii) if to the Optionholder:
[ ]
[ ]
[ ]
[ ]
Attention:
(c) Interpretation. When a reference is made in this Agreement to
---------------
paragraphs, such reference shall be to a paragraph to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Wherever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation".
(d) Severability. If any term or other provision of this Agreement
-------------
is invalid, illegal or incapable of being enforced by any rule or law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to the Company or the Optionholder. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Company and the Optionholder shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Company and the
Optionholder as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
(e) Counterparts. This Agreement may be executed in one or more
-------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by Company
and the Optionholder and delivered to the other party hereto.
(f) Governing Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof, except to the extent the laws of the State of Georgia are
mandatorily applicable to the transactions contemplated hereby.
(g) Assignment. Neither this Agreement nor any of the rights,
-----------
interests or obligations under this Agreement shall be
108
assigned, in whole or in part, by operation of law or otherwise, by Company and
the Optionholder without the prior written consent of the other party and the
written consent of IHS, which consent shall not be unreasonably withheld. Any
purported assignment without such consent shall be void. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the Company and the Optionholder and their respective
successors and assigns.
(h) Consent to Jurisdiction. The Company and the Optionholder (a)
------------------------
consent to submit to the personal jurisdiction of any Federal court located in
the State of Delaware or any Delaware state court in the event any dispute
arises regarding this Agreement or the transactions contemplated hereby, (b)
agree not to attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (c) agree not to bring any action
relating to this Agreement or the transactions contemplated hereby in any court
other than any Federal court sitting in the State of Delaware or any Delaware
state court and (d) waive any right to trial by jury with respect to any action
related to, or arising out of, this Agreement or the transactions contemplated
hereby.
(i) Enforcement. The Company and the Optionholder agree that
------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the Company and the
Optionholder shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any Delaware state court or, any Federal court located in
the State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
by its officers thereunto duly authorized,
109
and the Optionholder has signed this Agreement, all as of the date first written
above.
INTERNATIONAL COMPUTEX, INC.,
by
__________________________
Name:
Title:
_______________________________
[Optionholder]
110
Appendix A
111
EXHIBIT E
ICI Letterhead
CONFIDENTIAL
------------
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Salem
International CompuTex, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Ms. Salem:
This letter will confirm and record our agreement as to the terms relating to
your employment by International CompuTex, Inc. ("ICI") following the
acquisition of ICI by [NEWCO] as follows:
1. Commencing on the effective date of the acquisition of ICI by [NEWCO], you
will be a Vice President of ICI.
2. Your salary will be at the rate of $100,000 per year payable in equal
biweekly installments. Its is contemplated that at least annually during
the term of your employment, the Board of Directors of ICI will consider
and appraise your contribution to the operating efficiency, growth,
production and profit of ICI and on the basis of such consideration and
appraisal may increase (but shall not decrease) your rate of salary. In
addition to your salary, you shall participate in an Annual Incentive
Compensation Plan ("Annual Plan") pursuant to which you shall be eligible
to receive an annual bonus commencing with respect to the fiscal year ended
November 30, 1999 and each fiscal year that you are employed by ICI
thereafter, in an amount equal to 25% of your December 1 base salary in
effect at the beginning of such fiscal year at "target performance" and in
an amount equal to 37 1/2 % at "maximum performance", payable in accordance
with the terms and conditions of the Annual Plan. The "target" and
"maximum" performance requirements shall be established for each year by
the Board of Directors of ICI or such person designated by the terms of the
Annual Plan. You shall also be included, to the extent eligible, under any
plans providing benefits subsequent to the date hereof to the employees of
ICI generally.
112
3. In the event your employment with ICI is terminated before the completion
of three years from the date hereof for any reason other than termination
(x) by ICI for "cause" as defined below or (y) by you other than for "good
reason" as defined below, then ICI shall pay you on the effective date of
termination of your employment a lump-sum severance payment equal to the
base salary paid to you by ICI during the preceding twelve month period.
For purposes of this agreement, "cause" shall mean malfeasance or
misconduct materially detrimental to the interests of ICI or any of its
affiliates or a material breach by you of this agreement and "good reason"
shall mean a material breach by ICI of this agreement.
4. In the event your employment with ICI is terminated after the completion of
three years from the date hereof, any severance payment shall be subject to
and in accordance with the ICI severance policy in effect on the effective
date of termination (which severance policy shall be, so long as ICI is an
affiliate of Information Handling Services Group Inc. ("IHS Group"), the
severance policy of IHS Group in effect on the effective date of
termination).
5. Your death or "permanent and total disability" as defined in Section 22(e)
of the US Internal Revenue Code, as amended from time to time, shall
terminate all obligations hereunder.
6. Simultaneously with the execution and delivery of this Agreement, ICI and
you shall execute and deliver the ICI Agreement with Employee -
Nondisclosure and other Covenants in the form attached hereto as Exhibit A
("Nondisclosure Agreement").
7. It is understood that this Agreement does not entitle you to employment for
any specific period of time and that in the event of termination of your
employment the only obligation of ICI and its affiliates shall be solely as
specified herein.
8. (A) For a period of one year from the effective date of termination
of your employment, you agree that you will not, directly or
indirectly:
1. engage in activities or businesses, or establish any new businesses,
that are directly in competition with the business of ICI at the time
your employment with ICI is terminated, including without limitation
(a) selling products or services competitive with the CAPSXpert
products or the CSM software of ICI (b) soliciting any customer or
prospective customer of ICI to purchase any products or services
competitive with the
113
CAPSXpert products or the CSM software of ICI from anyone other than
ICI and its affiliates, (c) developing any products or services
competitive with the CAPSXpert products or the CSM software of ICI,
and (d) assisting any person or entity in any way to do, or attempt to
do, anything prohibited by clause (a), (b) or (c) above; and
(ii) perform any action, activity or course of conduct that is
substantially detrimental to the business of ICI or the business
reputation of ICI.
(B) Notwithstanding any other provision of this Agreement, it is
understood and agreed that any remedies at law would be inadequate in
the case of any breach of the covenants contained in paragraph 8.
ICI shall be entitled to equitable relief, including the remedy of
specific performance, with respect to any breach or attempted breach
of the covenants contained in this paragraph.
(C) The parties hereto agree that the duration and area for which the
covenant not to compete set forth in this paragraph 8 is to be
effective are reasonable. In the event that any court determines that
the time period or the area, or both of them, are unreasonable and
that such covenant is to that extent unenforceable, the parties hereto
agree that the covenant shall remain in full force and effect for the
greatest time period and in the greatest area that would not render it
unenforceable. The parties intend that this covenant shall be deemed
to be a series of separate covenants, one for each and every political
subdivision of each and every state of the United States of America
and each and every political subdivision of each and every country
throughout the world where this covenant is intended to be effective.
9. Any notice, request, instruction or other document to be given hereunder by
any party hereto shall be in writing and shall be delivered personally or
sent by registered or certified mail or sent by overnight courier addressed
as set forth below:
If to ICI:
114
International CompuTex, Inc.
c/o Information Handling Services Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
TBG Services Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Vice President & General Counsel
If to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Salem:
__________________________
__________________________
__________________________
or such other address as you or ICI shall designate to the other in
conformity with the foregoing
10. This agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this agreement
or any rights or obligations hereunder, except that ICI may assign or
transfer this agreement to any affiliate or to a successor corporation;
provided that in the case of any such assignment or transfer, this
agreement shall, subject to the provisions hereof, be binding upon and
inure to the benefit of any such affiliate or successor corporation and
such affiliate or successor corporation shall discharge and perform all of
the obligations of ICI.
11. This agreement and the Nondisclosure Agreement constitute the entire
agreement and understanding of the parties with respect to the subject
matter hereof, and all prior negotiations and understandings relating to
the subject matter of this Agreement are merged herein and are superseded
and canceled by this agreement. All modifications and amendments hereto
must be in writing signed by both parties.
12. This Agreement shall be governed by and construed in accordance with, the
laws of the State of Georgia applicable to agreements made and to be
performed within Georgia.
IN WITNESS WHEREOF, the parties have executed this Agreement _____________,
1999.
115
INTERNATIONAL COMPUTEX, INC.
By:_______________________
Title:_____________________
_________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Salem
116
EXHIBIT F
SERVICES AGREEMENT dated as of
_______________, 1999
between
INFORMATION HANDLING SERVICES INC.,
a Delaware corporation ("IHS"), and
[NEWCO], a Delaware corporation ("Company").
WHEREAS IHS has, effective on the date hereof, contributed to the Company
certain assets and liabilities related to the CAPSXpert product lines of IHS;
WHEREAS prior to the date hereof certain personnel and assets of IHS have
been used to provide services in connection with both the CAPSXpert product
lines and other product lines of IHS; and
WHEREAS the Company desires IHS to provide certain services to the Company
in connection with the CAPSXpert product lines after the date hereof, and IHS is
willing to provide such services.
NOW, THEREFORE, IHS and the Company hereby agree:
1. Services to be Provided by IHS
------------------------------
Commencing on the date hereof, IHS agrees to provide to the Company in
connection with the CAPSXpert product lines, and the Company agrees to accept,
the services set forth in Exhibit A.
2. Payment.
-------
The Company agrees to pay IHS monthly on or before the fifth day of each
month the monthly fixed fee of $331,165 for the fixed
117
fee services set forth in Exhibit A, subject to adjustment as provided in
paragraph 3 below. In addition to the fixed fee, the Company agrees to pay on
receipt of invoice the IHS affiliated companies in India/Malaysia for data
conversion services provided by such companies in connection with the CAPSXpert
databases.
3. Fee Adjustment.
--------------
(a) On each anniversary of the date of this Agreement, IHS may increase
the monthly fixed fee provided in paragraph 2 by a percentage equal to
the increase, if any, in the Consumer Price Index for the preceding
twelve month period. The monthly fixed fee, as so increased, shall be
the amount paid by the Company to IHS for the fixed fee services set
forth in Exhibit A for the succeeding twelve month period.
(b) In addition to the adjustment for changes in the consumer price index
provided in paragraph 3(a) above, in the event there is a change in
the nature or level of services provided by IHS that either increases
or decreases the costs incurred by IHS in providing such services by
more than 5% from costs used to determine the initial fees in Exhibit
A, then the parties will in good faith agree upon an equitable
adjustment in the fees for providing the services to take in to
consideration such change in costs. (For example, in the event there
is a material shift in CAPSXpert customers from CD-ROM to internet
delivery, the costs to IHS for providing hosting may increase while
the costs for providing shipping and handling of CD-ROM products may
decrease, and if the net change is more
118
than 5%, the parties will in good faith agree upon an equitable
adjustment in the monthly fee.)
(c) At least ninety days prior to each anniversary of the date of this
Agreement, the Company may notify IHS that the Company desires to
terminate one or more of the services set forth in Exhibit A,
effective on the anniversary of the date of this Agreement. In the
event the parties fail to negotiate a new arrangement with respect to
the services specified in the notice prior to the anniversary date,
then IHS shall cease providing the services specified in the notice on
the anniversary date, and the fees payable by the Company to IHS will
be reduced by the amount of fees in Exhibit A attributed to the
terminated services.
4. Proration.
---------
The fixed monthly fee will be prorated for partial months if this Agreement
commences or ends on a day other than the first or last day of a month.
5. Force Majeure.
-------------
IHS shall be excused for failure to perform any parts of this Agreement due
to events beyond its control, including but not limited to, fire, storm, flood,
earthquake, explosion, accident, acts of the public enemy, riots and other civil
disturbances, sabotage, strikes or other labor disturbances, injunctions,
transportation embargoes or delays, acts of God, failure of performance of third
parties necessary to IHS' performance under this Agreement, or the laws or
regulations of the Federal, state or local government or branch or agency
thereof. The fees payable by the Company during any force
119
majeure period will be reduced to reflect any services not provided by IHS
during such period.
6. Standard of Performance.
-----------------------
IHS agrees that it will use the same standard of care in performing
services under this Agreement as it uses in performing such services for its own
account. In the event of any errors or defects in the services, IHS' sole
obligation shall be correction of such errors or defects at IHS' expense. In no
event shall IHS be liable for punitive, incidental, indirect or consequential
damages arising out of or in connection with this Agreement.
7. Financing.
---------
During the three year period from the date of this Agreement, IHS agrees to
make available to the Company a working capital line of credit in the aggregate
principal amount of Five Million Dollars ($5,000,000). The outstanding
borrowings under the line of credit shall bear interest, payable monthly on the
first day of each month, at the prime rate in effect from time to time as
announced by First Union National Bank. The borrowings under the line of
credit shall be evidenced by a promissory note in the form of Exhibit B. In
the event the Company maintains cash credit balances with IHS, IHS shall pay
interest on such credit balances at the prime rate in effect from time to time
as announced by First Union National Bank.
8. Cash Flow.
---------
In the event the CAPXpert business contributed to the Company by IHS fails
to operate on a break-even cash flow basis during the initial twelve month
period from the date of this Agreement, then at the end of the twelve month
period IHS will make a cash contribution to the Company in an amount equal to
the
120
net negative cash flow of the CAPSXpert business for the twelve month period
from the date of this Agreement.
9. Employees.
---------
After the date of this Agreement, employees of the Company and/or ICI will
perform work strictly for the Company and ICI, and IHS will not cause such
employees to engage in projects for IHS, unless otherwise agreed to in a
separate agreement between the parties.
10. D.A.T.A.
--------
IHS will discontinue publication of D.A.T.A. hardcopy books and the
DATA/PAL CD-ROM product during the 1999 calendar year. Following such
discontinuance, IHS will transfer to the Company those telemarketing employees
of IHS who were working primarily on sales of the discontinued products. The
Company shall have the right, at the date of expiration of the customers'
subscriptions for the discontinued products, to attempt to convert the customers
to the CAPS EZ product of ICI.
11. Term.
-----
a) The initial term of this Agreement shall be a period of three years
from the date hereof. This Agreement shall continue for additional
terms of one year each thereafter unless terminated by either party on
not less than 180 days written notice prior to the end of the initial
term or any succeeding one year renewal term.
b) Either party may terminate this Agreement for cause if the other party
materially breaches its obligations under this Agreement and fails to
cure said breach
121
within 90 days after receipt of notice from the nonbreaching party.
12. Assignment.
----------
In the event the Company assigns the CAPSXpert business to its wholly-owned
subsidiary International CompuTex, Inc. ("ICI"), this Agreement shall be binding
upon and inure to the benefit of ICI.
13. Miscellaneous.
-------------
a) This Agreement constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, between
the parties hereto and thereto with respect to the subject matter
hereof.
b) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Colorado, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws
thereof.
IN WITNESS WHEREOF, each of IHS and the Company have caused this Agreement
to be signed by their respective officers thereunder duly authorized, all as of
the date first written above.
INFORMATION HANDLING SERVICES INC.
BY:_________________________
NAME:
TITLE:
[ NEWCO ]
122
BY:_________________________
NAME:
TITLE:________________________
123
EXHIBIT A
---------
Services Provided for Fixed Monthly Fee
---------------------------------------
Hosting - online host for internet delivery Fee - $ 21,666 per month
------- ---
of the CAPSXpert databases through IHS'
Engineering Resource Center (ERC)
Shipping/Order Assembly - shipping and
-----------------------
assembly of CAPSXpert CD-ROM products Fee - $ 13,583 per month
---
and other customer materials
Occupancy - occupancy of space at IHS Fee - $20,000 per month
--------- ---
facility by employees of the Company,
telephones, telephone usage through IHS'
switchboard and office supplies (in the event the
Company sets up its own direct telephone line, the
Company will bear the direct cost)
Product Build - front end costs associated with
-------------
IHS personnel and assets not transferred Fee - $156,250 per month
---
to the Company under the Formation Agreement
in connection with build of CAPSXpert databases
Data Processing - computer time for staging
---------------
and building CAPSXpert products Fee - $103,000 per month
---
General and Administrative -
--------------------------
Human resources, payroll, general ledger, Fee - $16,666 per month
---
order processing, payables, purchasing and
casualty insurance premiums
Total Fixed Monthly
Fee for Services
Described Above $ 331,165
---------
Services Provided for Fee based on Volume
-----------------------------------------
Data Conversion - conversion and formatting of invoiced monthly based
---------------
data by IHS affiliated companies in India/Malaysia on volume of data at same
billing rate charged to
other IHS operations
124
EXHIBIT B TO SERVICES AGREEMENT
REVOLVING CREDIT NOTE
---------------------
$5,000,000 ________________, 1999
FOR VALUE RECEIVED, the undersigned, INTERNATIONAL COMPUTEX, INC., a
Georgia corporation having its main business office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and [NEWCO], a Delaware corporation
having its main business office at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (collectively the "Borrowers"), hereby jointly and severally promise to
pay to the order of Information Handling Services Inc., a Delaware corporation
("IHS"), on ________________, 2002, the principal amount of Five Million Dollars
($5,000,000), or such lesser sum as provided below. The unpaid principal
balance hereof shall bear interest at a rate equal to the prime rate of interest
announced from time to time by First Union National Bank. Interest shall be
payable monthly on the first day of each month.
All such principal and interest shall be payable in immediately available funds
at the office of IHS at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or
such other addresses as IHS may designate from time to time in writing.
The rate of interest payable under this Note shall be reduced to the highest
rate permitted by applicable law if, and only to the extent and so long as, the
rate of interest payable under this Note exceeds the highest rate permitted by
applicable law.
Notwithstanding the face amount of this Note, the liability of the Borrowers
hereunder shall equal at all times the actual aggregate outstanding
indebtedness to IHS, and shall be limited to the aggregate principal balance
loaned by IHS to the Borrowers
125
together with all interest thereon, as established by IHS' books and records.
It shall be an "Event of Default" hereunder if (i) the Borrowers shall fail to
pay any amount hereunder when due (whether maturity, acceleration or otherwise);
or (ii) any proceeding shall be instituted by or against either of the
Borrowers, under the provisions of the Federal bankruptcy, reorganization,
arrangement of debt, insolvency or receivership laws or similar state or Federal
laws providing for the relief of debtors; or (iii) receivership proceedings
shall be instituted by or against either of the Borrowers; or (iv) either of the
Borrowers makes an assignment for the benefit of its creditors.
Upon the occurrence of an Event of Default, the entire outstanding principal
balance of this Note, together with all accrued and unpaid interest shall become
immediately due and payable at the option of IHS without notice to the
Borrowers, and IHS may thereupon exercise all rights of IHS hereunder and under
applicable law, cumulatively and not exclusively. The Borrowers hereby
irrevocably and unconditionally expressly hereby waives presentment for payment,
protest and demand, notice of protest, demand and of dishonor and nonpayment of
this Note and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Note.
No failure on the part of IHS to exercise any right or remedy hereunder, whether
before or after the happening of a default, shall constitute a waiver of such
default, any future default or of any other default. No failure to accelerate
the debt evidenced hereby by reason of default hereunder, or acceptance of a
past due installment, or indulgence granted from time to time shall be construed
to be a waiver of the right to insist upon prompt payment, nor shall it be
deemed to be a novation of this Note or as a reinstatement of the debt evidenced
hereby or as a
126
waiver of such right of acceleration or any other right, nor be construed so as
to preclude the exercise of any right which IHS may have, whether by the laws of
the state governing this Note, by agreement or otherwise, and the Borrowers
hereby expressly waive the benefit of any statute or rule of law or equity which
would produce a result contrary to or in conflict with the foregoing. This Note
may not be changed orally, but only by an agreement in writing signed by the
party against whom such agreement is sought to be enforced.
The Borrowers agree to pay all costs and expenses, including reasonable
attorneys' fees and expenses, incurred by the IHS to enforce this Note or any of
the provisions hereof.
The obligations of the Borrowers under this Note shall be binding upon and
enforceable against each of the Borrowers and its successors and assigns and
shall inure to the benefit of IHS or any subsequent holder hereof and their
respective successors and assigns.
This Note shall be governed and controlled as to validity, enforcement,
interpretation, construction, effect and in all other respects, by the laws of
the State of Colorado.
INTERNATIONAL COMPUTEX, INC.
By:____________________________
Name:__________________________
Title:___________________________
[ NEWCO ]
By:_____________________________
Name:___________________________
Title:____________________________
127
EXHIBIT G
STOCKHOLDERS' AGREEMENT
Among
INFORMATION HANDLING SERVICES INC.
And
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SALEM, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Dated as of February [ ], 1999
128
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Interpretations
-------------------------------
SECTION 1.01. Definitions....................................... 1
SECTION 1.02. Interpretations................................... 4
ARTICLE II
Certain Transfers of Shares of
------------------------------
Restricted Holdings Common Stock
--------------------------------
SECTION 2.01. Restrictions on Transfers of
Shares of Restricted Holdings
Common Stock...................................... 5
SECTION 2.02. Purchase of Shares of Restricted
Holdings Common Stock by IHS...................... 5
ARTICLE III
Certain Rights regarding Initial Public Offering
------------------------------------------------
of Shares of Holdings Common Stock............ 8
----------------------------------
ARTICLE IV
Registration Rights
-------------------
SECTION 4.01. Incidental Registration Rights.................... 9
SECTION 4.02. Holdback Agreement................................ 11
SECTION 4.03. Registration Procedures........................... 12
SECTION 4.04. Registration Expenses............................. 17
SECTION 4.05. Indemnification................................... 18
129
Page
----
ARTICLE V
Rights of IHS To Compel Sales
-----------------------------
of Holdings Common Stock,
------------------------
Obligations To Sell Holdings Common Stock
-----------------------------------------
and
---
Rights to Participate in Sales of Holdings Common Stock
-------------------------------------------------------
SECTION 5.01. Rights To Compel Sales by
Management Stockholders upon
Sales of Holdings Common Stock.................... 22
SECTION 5.02. Obligations To Sell upon Sale of
Holdings.......................................... 23
SECTION 5.03. Rights of Management Stockholders
To Sell upon Sales of Holdings
Common Stock...................................... 25
ARTICLE VI
Legends......................... 28
-------
ARTICLE VII
Certain Covenants Relating to the Conduct of the
------------------------------------------------
Business prior to an Initial Public Offering
--------------------------------------------
SECTION 7.01. Board of Directors of Holdings.................... 28
SECTION 7.02. Transactions between Holdings
and IHS........................................... 29
SECTION 7.03. Financing of Holdings by IHS...................... 30
SECTION 7.04. Audited Financial Statements of
Holdings.......................................... 30
SECTION 7.05. Option Plan....................................... 30
ARTICLE VIII
General Provisions
------------------
130
Page
----
SECTION 8.01. Notices........................................... 30
SECTION 8.02. Headings.......................................... 31
SECTION 8.03. Severability...................................... 31
SECTION 8.04. Counterparts...................................... 31
SECTION 8.05. Entire Agreement; No Third-Party
Beneficiaries.................................... 31
SECTION 8.06. Governing Law..................................... 32
SECTION 8.07. Assignment........................................ 32
SECTION 8.08. Consent to Jurisdiction........................... 32
SECTION 8.09. Agreement To Be Bound............................. 32
Appendix A Management Stockholders and Shares of Restricted
Holdings Common Stock
Schedule I Management Stockholders Addresses
131
STOCKHOLDERS' AGREEMENT dated as of February [ ], 1999
(this "Agreement"), among INFORMATION HANDLING SERVICES INC., a
Delaware corporation ("IHS"), and ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Salem, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(collectively, the "Management Stockholders").
WHEREAS IHS, IHS Itemquest Holdings Inc., a Delaware corporation
("Holdings"), and the Management Stockholders have entered into a Formation
Agreement dated as of January 10, 1999 (the "Formation Agreement");
WHEREAS the execution and delivery of this Agreement is a condition
precedent to the consummation of the transactions contemplated by the Formation
Agreement;
WHEREAS, upon consummation of the transactions contemplated by the
Formation Agreement and certain of the ancillary agreements entered into in
connection therewith, IHS will own 7,989,977 shares of Restricted Holdings
Common Stock (as defined below) and each of the Management Stockholders will own
the number of shares of Restricted Holdings Common Stock set forth opposite the
name of such Management Stockholder in the second column of Appendix A;
WHEREAS IHS and the Management Stockholders desire to enter into
certain agreements relating to the transfer and sale of shares of Holdings
Common Stock (as defined below), the members of the Board of Directors of
Holdings and certain other matters;
132
NOW, THEREFORE, in consideration of the premises, mutual promises and
covenants contained in this Agreement, the parties hereto hereby agree:
ARTICLE I
Definitions and Interpretations
-------------------------------
SECTION 1.01. Definitions. The following terms, as used in this
------------
Agreement, shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person.
"Agreement" means this Stockholders' Agreement, including all
Appendices, Exhibits and Schedules attached hereto.
"Appraisal Firm" means (i) Deloitte & Touche LLP, Ernst & Young L.L.P.
and Veronois Suhler Associates Inc., or any successor thereto, which firm is
retained by IHS on behalf of, and at the expense of, Holdings for the purpose of
determining the Fair Market Value of shares of Holdings Common Stock or (ii) in
the event that any such firm is unavailable or unwilling to perform such
services for any reason, any other nationally recognized investment banking firm
retained by IHS with the consent of the Management Stockholders (and the
Permitted Transferees of the Management Stockholders) who hold a majority of the
shares of Holdings Common Stock then held by all Management Stockholders (and
the Permitted Transferees of the Management Stockholders) on behalf of, and at
the expense of, Holdings for the purpose of determining the Fair Market Value of
shares of Holdings Common Stock, which firm does not have (i) any direct
financial interest in, or any indirect material financial
133
interest in, IHS or any of Affiliate of IHS or (ii) any relationship with, or
connection to, IHS, any Affiliate of IHS or any of the Management Stockholders.
"Appraised Value" means the arithmetic average of the Fair Market
Value of shares of Holdings Common Stock determined by each of three Appraisal
Firms.
"Commission" means the Securities and Exchange Commission.
"Contract" means any purchase order, sales agreement, customer
subscription, service contract, distribution agreement, quotation and bid,
product warranty, technical assistance or service agreement, or any other
written or oral contract, lease, sublease, license, sublicense, indenture or
other commitment, agreement, arrangement or undertaking, and all amendments
thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as from time
to time amended.
"Fair Market Value" means, with respect to shares of Holdings Common
Stock, the fair market value thereof (without regard to any transfer
restrictions thereon, whether imposed by law or contract, or to lack of
liquidity thereof and without regard to the minority shareholder status of the
holder thereof) on a fully diluted and fully distributed basis as determined by
an Appraisal Firm retained for the purpose of determining the fair market value
of such shares of Holdings Common Stock.
"Formation Agreement" means the Formation Agreement dated as of
January 10, 1999, among IHS and the Management Stockholders.
134
"Governmental Entity" means any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality.
"Holdings" means IHS Itemquest Holdings Inc., a Delaware corporation.
"Holdings Common Stock" means the common stock, par value $0.001 per
share, of Holdings.
"IHS" means Information Handling Services Inc., a Delaware
corporation.
"Incidental Registration" has the meaning set forth in Section
4.01(a).
"indemnified party" has the meaning set forth in Section 4.05(c).
"indemnifying party" has the meaning set forth in Section 4.05(c).
"Initial Public Offering" means the first underwritten primary public
offering of shares of Holdings Common Stock pursuant to an effective
registration statement (other than a registration statement on Form S-4 or Form
S-8 or any similar or successor form) under the Securities Act.
"Lien" means any lien, charge, claim, pledge, security interest,
security agreement, right to purchase, conditional sale agreement or other title
retention agreement, mortgage, restriction, reservation, reversion, option,
covenant or other encumbrance.
135
"Loss" means any loss, liability, claim, damage, charge, penalty, cost
or expense, including court costs, reasonable legal fees and expenses and
reasonable expenses incurred in investigating, prosecuting, defending or
settling any claim, demand or suit.
"Management Stockholders" means, collectively, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Salem, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"Permitted Transferee" means, with respect to any Management
Stockholder, or any Permitted Transferee of such Management Stockholder, (i)
upon the death of such Management Stockholder, the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of such
Management Stockholder and (ii) a trust, the beneficiaries of which include only
such Management Stockholder, the spouse of such Management Stockholder and/or
the lineal descendants of such Management Stockholder; provided, however, that
-------- -------
each Permitted Transferee must agree in writing, in accordance with the
provisions of Section 8.09, to be bound by the terms, and subject to the
conditions, of this Agreement to the same extent, and in the same manner, as
such Management Stockholder prior to the transfer of any shares of Holdings
Common Stock to such Permitted Transferee; and provided, further, that the
-------- -------
transfer of shares of Holdings Common Stock from such Management Stockholder to
such Permitted Transferee is in compliance with all applicable securities laws.
"Person" means any individual, corporation, organization, partnership,
joint venture, trust, firm, association (whether or not incorporated),
Governmental Entity or other entity.
"Restricted Holdings Common Stock" means shares of Holdings Common
Stock held by IHS (or any Affiliate of IHS) or
136
any Management Stockholder (or any Permitted Transferee of such Management
Stockholder) unless (i) such shares have been effectively registered under
Section 5 of the Securities Act and disposed of pursuant to an effective
registration statement or (ii) such shares can be freely sold and transferred
without restriction under the Securities Act not less than 90 days following the
date on which an Initial Public Offering is consummated.
"Sale of Holdings" has the meaning set forth in Section 5.02.
"Sale of Holdings Common Stock" has the meaning set forth in Section
5.01.
"Securities Act" means the Securities Act of 1933, as from time to
time amended.
SECTION 1.02. Interpretations. (a) When used in this Agreement, the
----------------
words "include", "includes" and "including" shall be deemed to be followed by
the words "without limitation".
(b) Any terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) When used in this Agreement, the word "or" is not exclusive.
(d) All references to Articles, Sections, Appendices, Exhibits and
Schedules shall be deemed references to Articles, Sections, Appendices, Exhibits
and Schedules to this Agreement.
(e) This Agreement shall be deemed drafted jointly by all the parties
hereto and shall not be specifically construed
137
against any party hereto based on any claim that such party or its counsel
drafted this Agreement.
ARTICLE II
Certain Transfers of Shares of
------------------------------
Restricted Holdings Common Stock
--------------------------------
SECTION 2.01. Restrictions on Transfers of Shares of Restricted
-------------------------------------------------
Holdings Common Stock. Each Management Stockholder agrees that such Management
----------------------
Stockholder shall not, directly or indirectly, transfer, sell, assign, tender,
hypothecate or otherwise dispose of, or grant any security interest in, pledge
or place in trust, or create or suffer to exist any Lien on, any shares of
Restricted Holdings Common Stock held by such Management Stockholder as of the
date of this Agreement or any shares of Restricted Holdings Common Stock
acquired by such Management Stockholder after the date of this Agreement, other
than (i) to a Permitted Transferee, (ii) to IHS pursuant to the provisions of
Section 2.02(a) or (iii) to any other Person, upon the direction of IHS,
pursuant to the provisions of Article V. Any attempt on the part of any
Management Stockholder to transfer any shares of Restricted Holdings Common
Stock other than in accordance with the provisions of this Section 2.01 shall be
void and of no force and effect, and Holdings shall refrain from recognizing any
such transfer and shall refuse to reflect in the corporate records of Holdings
any change in the record ownership of shares of Restricted Holdings Common Stock
in connection with any such transfer.
SECTION 2.02. Purchase of Shares of Restricted Holdings Common Stock
------------------------------------------------------
by IHS. (a) Purchase of Shares from Management Stockholders. Subject to the
------- ------------------------------------------------
provisions of Section 2.02(b), in the event that, at any time prior to the date
138
on which an Initial Public Offering is commenced, IHS shall have declined a
request made on behalf of the Management Stockholders pursuant to Article III
that IHS cause Holdings to undertake an Initial Public Offering, each Management
Stockholder (and the Permitted Transferees of such Management Stockholder) shall
have the right to sell to IHS, and IHS shall be obligated to purchase, in a
single transaction, such number of shares of Restricted Holdings Common Stock
held by such Management Stockholder (and the Permitted Transferees of such
Management Stockholder) as such Management Stockholder (and the Permitted
Transferees of such Management Stockholder) shall request at a price equal to
the Appraised Value of such shares of Restricted Holdings Common Stock.
To exercise the rights granted under this Section 2.02(a), a
Management Stockholder must deliver written notice to IHS of the desire of such
Management Stockholder (and the Permitted Transferees of such Management
Stockholder) to require IHS to purchase shares of Restricted Holdings Common
Stock held by such Management Stockholder (and the Permitted Transferees of such
Management Stockholder) pursuant to this Section 2.02(a) within ten business
days of the date on which IHS shall have declined a request made on behalf of
the Management Stockholders pursuant to Article III that IHS cause Holdings to
undertake any Initial Public Offering, which notice shall specify the number of
shares of Restricted Holdings Common Stock to be sold to IHS. The sale and
purchase of such shares shall close on the tenth business day following the date
on which IHS shall have received from each of three Appraisal Firms a
determination of the Fair Market Value of shares of Holdings Common Stock. At
the closing of such sale and purchase, which closing shall take place at the
principal offices of IHS (or any other place in the United States designated by
IHS), (i) each Management Stockholder (and the Permitted Transferees of such
Management Stockholder) shall deliver to IHS certificates representing the
shares of Restricted
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock to be sold by such Management Stockholder (and the
Permitted transferees of such Management Stockholder) and purchased by IHS, duly
endorsed in blank for transfer, free and clear of all Liens, and otherwise
without representation or warranty, with all requisite stock transfer stamps
affixed thereon, and (ii) IHS shall pay to such Management Stockholder (and the
Permitted Transferees of such Management Stockholder), in next day funds, an
amount equal to the Appraised Value of such shares of Restricted Holdings Common
Stock.
(b) Limitations on Obligations of IHS to Purchase Shares. IHS shall
-----------------------------------------------------
not be obligated to purchase any shares of Restricted Holdings Common Stock at
any time pursuant to Section 2.02(a) to the extent, but only to the extent, that
such purchase would conflict with, or result in a violation of, or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of its
properties or assets under, any provision of any Contract to which IHS is a
party or by which any of its properties or assets is bound or any judgment,
order or decree, or statute, law, ordinance, rule or regulation, applicable to
IHS or any of its properties or assets that would, individually or in the
aggregate, have a material adverse effect on the business, assets, condition
(financial or otherwise), prospects or results of operations of IHS and its
subsidiaries, taken as a whole. Prior to being relieved of the obligation to
purchase shares of Restricted Holdings Common Stock pursuant to Section 2.02(a)
by operation of the provisions of this Section 2.02(b), IHS shall use all
reasonable efforts to obtain a waiver of all relevant provisions of any
Contract, and all relevant restrictions imposed by any applicable judgment,
order, decree, statute, law, ordinance, rule or regulation, from the parties to
such Contract or the Governmental Entity responsible for such judgment, order,
140
decree, statute, law, ordinance, rule or regulation, in each case to permit IHS
to perform its obligations to purchase shares of Restricted Holdings Common
Stock pursuant to Section 2.02(a).
IHS shall notify the Management Stockholders at such time as IHS is no
longer subject to the condition that relieved IHS of its obligation to purchase
shares of Restricted Holdings Common Stock by operation of the provisions of
this Section 2.02(b). If IHS has been relieved of its obligation to purchase
shares of Restricted Holdings Common Stock pursuant to Section 2.02(a) and there
had been a determination of Fair Market Value of the shares of Holdings Common
Stock by the Appraisal Firms pursuant to Section 2.02(a) more than six months
prior to the date of the notice delivered by IHS pursuant to the first sentence
of this paragraph, then, at the option of the Management Shareholders, there
shall be a new determination of the Fair Market Value of the shares of Holdings
Common Stock by the Appraisal Firms, and the prior determination of Fair Market
Value shall be of no effect.
ARTICLE III
Certain Rights regarding Initial Public Offering
------------------------------------------------
of Shares of Holdings Common Stock
----------------------------------
So long as an Initial Public Offering shall not have been commenced,
on the third anniversary of the date of this Agreement, the Management
Stockholders (and the Permitted Transferees of the Management Stockholders)
shall have the right to request that IHS cause Holdings to undertake an Initial
Public Offering and, if the Management Stockholders (and the Permitted
Transferees of the Management Stockholders) shall not have previously exercised
such right, on each subsequent anniversary of the date of this Agreement, the
Management Stockholders (and the Permitted Transferees of the Management
Stockholders) shall
141
have the right to request that IHS cause Holdings to undertake an Initial Public
Offering.
To exercise the rights granted under this Article III, the Management
Stockholders (and the Permitted Transferees of the Management Stockholders) who
hold a majority of the shares of Holdings Common Stock then held by all
Management Stockholders (and Permitted Transferees of the Management
Stockholders) shall (i) determine whether to request that IHS cause Holdings to
undertake an Initial Public Offering and (ii) in the event that such Management
Stockholders (and Permitted Transferees) determine to request that IHS cause
Holdings to undertake an Initial Public Offering, select a representative to
deliver written notice, on behalf of all Management Stockholders (and Permitted
Transferees of the Management Stockholders), to IHS of the desire of the
Management Stockholders (and the Permitted Transferees of the Management
Stockholders) to request that IHS cause Holdings to undertake an Initial Public
Offering pursuant to this Article III; provided, however, that in no event shall
-------- -------
the Management Stockholders (and the Permitted Transferees of the Management
Stockholders) deliver more than one such notice to IHS. Such notice must be
delivered to IHS within ten business days of the third anniversary of the date
of this Agreement, or within ten business days of any anniversary of the date of
this Agreement thereafter, as applicable, and specify the identity of the
representative of the Management Stockholders (and the Permitted Transferees of
the Management Stockholders) for purposes of this Article III.
142
ARTICLE IV
Registration Rights
-------------------
SECTION 4.01. Incidental Registration Rights. (a) Rights to include
------------------------------- -----------------
Shares of Restricted Holdings Common Stock. If Holdings, at any time, proposes
-------------------------------------------
to register any of its equity securities (other than a registration on Form S-4
or Form S-8 or any similar or successor form), whether or not for sale for its
own account, in a manner which would permit the registration of Restricted
Holdings Common Stock for sale to the public under the Securities Act, then IHS
shall cause Holdings to give written notice to each Management Stockholder (and
each Permitted Transferee of such Management Stockholder) of such proposed
registration at least 30 days prior to the date on which the registration
statement with respect to such registration is anticipated to be filed with the
Commission. Such notice shall offer each Management Stockholder (and each
Permitted Transferee of such Management Stockholder) opportunity to include in
such registration such number of shares of Restricted Holdings Common Stock as
such Management Stockholder (and such Permitted Transferee) may request (an
"Incidental Registration"). Subject to Section 4.01(b), upon the written
request of any Management Stockholder (and any Permitted Transferee of such
Management Stockholder) (which notice shall specify the number of shares of
Restricted Holdings Common Stock such Management Stockholder (or such Permitted
Transferee) intends to dispose) made within 20 days after the receipt by such
Management Stockholder (or such Permitted Transferee) of the notice given by
Holdings, IHS shall cause Holdings to use all reasonable efforts to include in
such Incidental Registration such number of shares of Restricted Holdings Common
Stock as such Management Stockholder (and such Permitted Transferee) shall
request, together with any and all other shares of Restricted Holdings Common
Stock as any other Management Stockholder (and any Permitted Transferee of such
143
Management Stockholder) shall request; provided, however, that, if such
-------- -------
Incidental Registration involves an underwritten offering, all Management
Stockholders (and Permitted Transferees) requesting inclusion of shares of
Restricted Holdings Common Stock in such Incidental Registration must sell such
shares of Restricted Holdings Common Stock to the underwriter (or underwriters)
selected by Holdings on the same terms, and subject to the same conditions, as
are applicable to Holdings. Each Management Stockholder (and each Permitted
Transferee of such Management Stockholder) shall be permitted to withdraw all or
any portion of the shares of Restricted Holdings Common Stock such Management
Stockholder (or such Permitted Transferee) shall have requested to be included
in any Incidental Registration at any time prior to the effective date of the
registration statement with respect to such Incidental Registration; provided,
--------
however, that, if such withdrawal occurs after the filing with the Commission of
-------
the registration statement with respect to such Incidental Registration, such
Management Stockholder (or such Permitted Transferee) shall be required to
reimburse Holdings for the portion of registration expenses payable with respect
to the shares of Restricted Holdings Common Stock so withdrawn.
(b) Priority in Incidental Registrations. IHS shall cause Holdings
-------------------------------------
to permit each Management Stockholder (and each Permitted Transferee of such
Management Stockholder) to include in any Incidental Registration all shares of
Restricted Holdings Common Stock such Management Stockholder (and such Permitted
Transferee) shall request to include in such Incidental Registration on the same
terms and subject to the same conditions as any similar securities, if any, of
Holdings included therein. Notwithstanding the foregoing, if IHS, Holdings or
the managing underwriter (or underwriters) participating in any offering
pursuant to such Incidental Registration shall advise the Management
Stockholders (and Permitted Transferees of the Management Stockholders) in
writing that the total amount of
144
securities requested to be included in such Incidental Registration exceeds the
amount of securities that can be sold in (or during the time of) such offering
without delaying or jeopardizing the success of such offering (including the
price per share of the securities to be sold), then the amount of securities to
be offered for the account of all Management Stockholders (and Permitted
Transferees) shall be reduced pro rata on the basis of the number of shares
requested to be registered by each Management Stockholder (and each Permitted
Transferee of such Management Stockholder) and other Person participating in
such offering; provided, however, that in no event shall the amount of
-------- -------
securities to be offered for the account of all Management Stockholders (and
Permitted Transferees) be more than 50% of the total amount of securities
included in such Incidental Registration.
(c) Right To Abandon. Nothing contained in this Section 4.01 shall
-----------------
create any liability on the part of IHS or Holdings to any Management
Stockholder (or any Permitted Transferee of such Management Stockholder) in the
event that IHS, in its sole discretion, should decide to cause Holdings to
refrain from filing any registration statement contemplated by Section 4.01(a)
or to cause Holdings to withdraw any such registration statement subsequent to
the filing of such registration statement with the Commission, regardless of any
action whatsoever that such Management Stockholder (or such Permitted
Transferee) may have taken, whether as a result of the issuance by Holdings of
any notice contemplated by Section 4.01(a) or otherwise.
SECTION 4.02. Holdback Agreement. If, prior to the commencement of
-------------------
an Initial Public Offering, Holdings shall file a registration statement with
respect to Holdings Common Stock, or similar securities or securities
convertible into, or exchangeable or exercisable for, Holdings Common Stock or
such
145
securities, then, each Management Stockholder (and each Permitted Transferee of
such Management Stockholder), to the extent requested by Holdings or, in the
case of an underwritten public offering pursuant to such registration statement,
the managing underwriter (or underwriters) in respect of such offering, shall
refrain from, directly or indirectly, transferring, selling, assigning,
hypothecating or otherwise disposing of, or granting an option to purchase,
offering to sell or otherwise seeking to dispose of, any shares of Holdings
Common Stock held by such Management Stockholder (or the Permitted Transferees
of such Management Stockholder) for a period of 180 days following the
effectiveness of such registration statement, and, if requested by Holdings or
such managing underwriter (or underwriters), such Management Stockholder (and
the Permitted Transferees of such Management Stockholder) shall enter into a
binding agreement with Holdings or such managing underwriter (or underwriters),
as applicable, to such effect.
If, after the consummation of an Initial Public Offering, Holdings
shall file a registration statement with respect to Holdings Common Stock, or
similar securities or securities convertible into, or exchangeable or
exercisable for, Holdings Common Stock or such securities, then, each Management
Stockholder (and each Permitted Transferee of such Management Stockholder), to
the extent requested by Holdings or, in the case of an underwritten public
offering pursuant to such registration statement, the managing underwriter (or
underwriters) in respect of such offering, shall refrain from, directly or
indirectly, transferring, selling, assigning, hypothecating or otherwise
disposing of, or granting an option to purchase, offering to sell or otherwise
seeking to dispose of, any shares of Holdings Common Stock held by such
Management Stockholder (or the Permitted Transferees of such Management
Stockholder) for a period of 90 days following the effectiveness of such
registration statement, and, if requested by Holdings or such managing
146
underwriter (or underwriters), such Management Stockholder (and the Permitted
Transferees of such Management Stockholder) shall enter into a binding agreement
with Holdings or such managing underwriter (or underwriters), as applicable, to
such effect.
SECTION 4.03. Registration Procedures. In connection with the
------------------------
performance of it obligations pursuant to this Article IV, IHS shall cause
Holdings (subject to the provisions of this Article IV) to:
(i) prepare and file with the Commission a registration statement for
the sale of shares of Restricted Holdings Common Stock on any form for
which Holdings qualifies, or which counsel for Holdings shall deem
appropriate in accordance with the intended methods of disposition
specified by any Management Stockholder (or any Permitted Transferee of
such Management Stockholder) with respect to the shares of Restricted
Holdings Common Stock of such Management Stockholder (and such Permitted
Transferee) covered by such registration statement, and, subject to
Holdings's right to abandon any registration statement pursuant to Section
4.01(c), use all reasonable efforts to cause such registration statement to
become effective and remain effective as provided herein;
(ii) prepare and file with the Commission such amendments (including
post-effective amendments) to such registration statement, and such
supplements to the related prospectus, as may be required by the applicable
rules, regulations or instructions under the Securities Act during the
applicable period in accordance with the intended methods of disposition
specified by any Management Stockholder (or any Permitted Transferee of
such Management Stockholder) with respect to the shares of Restricted
Holdings Common Stock such Management Stockholder (and such Permitted
Transferee)
147
covered by such registration statement, make generally available earnings
statements satisfying the provisions of Section 11(a) of the Securities Act
(or comply with the requirements of Rule 158 under the Securities Act) and
cause the related prospectus, as so supplemented, to be filed with the
Commission pursuant to Rule 424 under the Securities Act; provided,
--------
however, that prior to the filing of any registration statement or
-------
prospectus, or any amendments or supplements thereto (other than reports
required to be filed by Holdings under the Exchange Act), Holdings shall
furnish to all Management Stockholders (and Permitted Transferees) who own
shares of Restricted Holdings Common Stock covered by such registration
statement and their counsel for review and comment, copies of all documents
required to be filed with the Commission;
(iii) notify all Management Stockholders (and Permitted Transferees)
who own any shares of Restricted Holdings Common Stock covered by such
registration statement promptly and (if requested) confirm such notice in
writing, (A) when a prospectus, or any prospectus supplement or post-
effective amendment, has been filed with the Commission, and, with respect
to such registration statement or any post-effective amendment, when the
same has become effective, (B) of any request by the Commission for any
amendment or supplement to such registration statement or the related
prospectus, or for additional information regarding such Management
Stockholders, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or the
initiation of any proceedings for that purpose, (D) of the receipt by the
Holdings of any notification with respect to the suspension of the
qualification, or the exemption from qualification, of any of the shares of
Restricted Holdings Common Stock for sale in any jurisdiction, or the
initiation or threatening of any
148
proceeding for such purpose, and (E) of the happening of any event that
requires the making of any changes in such registration statement,
prospectus or documents incorporated or deemed to be incorporated therein
by reference so that they will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(iv) use all reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or the lifting
of any suspension of the qualification, or the exemption from
qualification, of any shares of Restricted Holdings Common Stock for sale
in any jurisdiction in the United States;
(v) furnish to each Management Stockholder (and each Permitted
Transferee of such Management Stockholder) who owns any shares of
Restricted Holdings Common Stock covered by such registration statement and
any counsel for such Management Stockholder (and such Permitted
Transferee), without charge, one conformed copy of such registration
statement, as declared effective by the Commission, and of each post-
effective amendment thereto, in each case including financial statements
and schedules and all exhibits and reports incorporated, or deemed to be
incorporated, therein by reference, and deliver, without charge, such
number of copies of the preliminary prospectus, any amended preliminary
prospectus, each final prospectus and any post-effective amendment or
supplement thereto, as such Management Stockholder (or such Permitted
Transferee) may reasonably request in order to facilitate the disposition
of the shares of Restricted Holdings Common Stock of such Management
Stockholder (or such Permitted
149
Transferee) covered by such registration statement in conformity with the
requirements of the Securities Act;
(vi) prior to any public offering of shares of Restricted Holdings
Common Stock covered by such registration statement, use all reasonable
efforts to register or qualify such shares of Restricted Holdings Common
Stock for offer and sale under the securities or blue sky laws of such
jurisdictions as each Management Stockholder (and each Permitted Transferee
of such Management Stockholder) who owns any shares of Restricted Holdings
Common Stock covered by such registration statement shall reasonably
request in writing; provided, however, that Holdings shall in no event be
-------- -------
required to qualify generally to do business as a foreign corporation or as
a dealer in any jurisdiction where it is not at the time so qualified or to
execute or file a general consent to service of process in any such
jurisdiction where it has not theretofore done so or to take any action
that would subject it to taxation or general service of process in any such
jurisdiction where it is not then subject;
(vii) upon the happening of any event that requires the making of any
changes in such registration statement, prospectus or documents
incorporated or deemed to be incorporated therein by reference so that they
will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, prepare a post-effective amendment to such
registration statement or supplement to the related prospectus or any
amendment of any document incorporated or deemed to be incorporated therein
by reference and file any other required document so that, as thereafter
delivered to the
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purchasers of the shares of Restricted Holdings Common Stock being sold
thereunder, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(viii) use all reasonable efforts to cause all shares of Restricted
Holdings Common Stock covered by such registration statement to be listed
on each securities exchange or quoted on any automated interdealer
quotation system, if any, on which similar securities issued by Holdings
are then listed or quoted;
(ix) on or before the effective date of such registration statement,
provide the transfer agent for the shares of Restricted Holdings Common
Stock covered by such registration statement with printed certificates for
such shares of Restricted Holdings Common Stock, which certificates shall
be in a form eligible for deposit with The Depository Trust Company;
(x) make available for inspection by each Management Stockholder
(and each Permitted Transferee of such Management Stockholder) who owns any
shares of Restricted Holdings Common Stock covered by such registration
statement and any attorney, accountant or other agent retained by such
Management Stockholder (or such Permitted Transferee), all financial and
other records, and all other information, as shall be reasonably necessary
to enable such Management Stockholder to satisfy all due diligence
responsibilities; provided, however, that all financial and other records,
-------- -------
and all other information, determined by Holdings to be confidential shall
not be disclosed to any such Person unless such Person shall have entered
into a confidentiality
151
agreement, reasonably satisfactory to Holdings, with Holdings; and
(xi) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and
substance customary in underwritten offerings) and take all other
appropriate action to expedite or facilitate the disposition of the shares
of Restricted Holdings Common Stock covered by such registration statement,
and in connection therewith (A) use all reasonable efforts to obtain
opinions of counsel to Holdings (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to each Management
Stockholder (and each Permitted Transferee of such Management Stockholder)
who owns any shares of Restricted Holdings Common Stock covered by such
registration statement and the managing underwriter (or underwriters)), (B)
use all reasonable efforts to obtain "comfort" letters (and updates
thereof) from the independent certified public accountants of Holdings
(and, if necessary, any independent certified public accountants of any
Person acquired by Holdings in respect of which financial statements and
financial data are, or are required to be, included in the registration
statement), (C) if requested, and if an underwriting agreement is entered
into, provide for indemnification provisions and procedures substantially
to the effect set forth in Section 4.05 with respect to all parties to be
indemnified pursuant thereto.
Holdings may require each Management Stockholder (and each Permitted
Transferee of such Management Stockholder) who owns any shares of Restricted
Holdings Common Stock covered by such registration statement to furnish such
information regarding such Management Stockholder (and such Permitted
Transferee) and the intentions of such Management Stockholder (and such
Permitted
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Transferee) regarding the method of disposition of such shares of Restricted
Holdings Common Stock as Holdings may from time to time reasonably request in
writing. If any such information is not furnished within a reasonable period of
time after receipt of such request, Holdings shall be entitled to exclude the
shares of Restricted Holdings Common Stock held by such Management Stockholder
(and such Permitted Transferee) from such registration statement.
Each Management Stockholder (and each Permitted Transferee of such
Management Stockholder) agrees that, upon receipt of any notice from Holdings of
the happening of any event of the kind described in clause (iii)(B), (iii)(C),
(iii)(D) or (iii)(E) above, such Management Stockholder (and such Permitted
Transferee) shall forthwith discontinue disposition of any shares of Restricted
Holdings Common Stock covered by such registration statement or the related
prospectus until (1) receipt of the copies of the amended registration statement
and supplemented prospectus contemplated by clause (vii) above or (2) such
Management Stockholder (and such Permitted Transferee) is advised in writing by
Holdings that the use of the applicable prospectus may be resumed and such
Management Stockholder (and such Permitted Transferee) has received copies of
any amended registration statement or supplemented prospectus or any additional
or supplemental filings which are incorporated, or deemed to be incorporated, by
reference in such prospectus.
Each Management Stockholder (and each Permitted Transferee of such
Management Stockholder) also agrees that, if requested by Holdings, such
Management Stockholder (and such Permitted Transferee) shall deliver to Holdings
(at the expense of Holdings) all copies of any registration statement covering
any shares of Restricted Holdings Common Stock owned by such Management
Stockholder (or such Permitted Transferee) and the related prospectus, other
than permanent file copies thereof, in
153
the possession of such Management Stockholder (or such Permitted Transferee) at
the time of such request. Each Management Stockholder (and each Permitted
Transferee of such Management Stockholder) further agrees to refrain from
utilizing any material, other than the applicable current preliminary prospectus
or prospectus, in connection with the offering of any shares of Restricted
Holdings Common Stock owned by such Management Stockholder (or such Permitted
Transferee) under any registration statement.
SECTION 4.04. Registration Expenses. Subject to Section 4.01(a),
----------------------
whether or not any registration statement is filed or becomes effective, IHS
shall cause Holdings to pay all costs, fees and expenses incident to the
performance by IHS or Holdings of its obligations under this Article IV,
including (i) all registration and filing fees, including NASD filing fees, (ii)
all fees and expenses of compliance with securities or blue sky laws, including
reasonable fees and disbursements of counsel in connection therewith, (iii)
printing expenses (including expenses of printing certificates for shares of
Restricted Holdings Common Stock and of printing prospectuses if the printing of
prospectuses is requested by the Stockholders or the managing underwriter (or
underwriters), if any), (iv) messenger, telephone and delivery expenses, (v)
fees and disbursements of counsel for Holdings, (vi) fees and disbursements of
all independent certified public accountants of Holdings (including expenses of
any "comfort" letters required in connection with this Agreement), (vii) fees
and disbursements of all other Persons retained by Holdings in connection with
any registration statement, (viii) fees and disbursements of one counsel, other
than counsel for Holdings, selected by the Management Stockholders (and the
Permitted Transferees of the Management Stockholders) who own a majority of the
shares of Restricted Holdings Common Stock being registered, to represent all
such Management Stockholders (and Permitted Transferees of the
154
Management Stockholders), (ix) fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities and (x) all other
costs, fees and expenses incident to the performance by IHS or Holdings of its
obligations under this Article IV. Notwithstanding the foregoing, the costs,
fees and expenses of any Person retained by any Management Stockholder (or any
Permitted Transferee of such Management Stockholder) (other than one counsel for
all Management Stockholders (and Permitted Transferees)), any discounts,
commissions or brokers' fees or fees of similar securities industry
professionals and any transfer taxes relating to the disposition of shares of
Restricted Holdings Common Stock by any Management Stockholder (or any Permitted
Transferee of such Management Stockholder), will be payable by such Management
Stockholder (or such Permitted Transferee), and Holdings will have no obligation
to pay any such amounts.
SECTION 4.05. Indemnification. (a) Indemnification by Holdings.
---------------- ----------------------------
IHS shall cause Holdings, without limitation as to time, to indemnify and hold
harmless, to the fullest extent lawful, each Management Stockholder (and each
Permitted Transferee of such Management Stockholder) who owns shares of
Restricted Holdings Common Stock that are covered by a registration statement or
a prospectus, and the agents of such Management Stockholder (or such Permitted
Transferee, and each director, officer or employee, if any, of such Permitted
Transferee, and each Person, if any, who controls such Permitted Transferee
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) and the directors, officers, employees or agents of any such
controlling Persons), and from and against any and all Losses, as incurred,
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in such registration statement or prospectus, or in any
amendment or supplement thereto, or in any preliminary prospectus, or arising
out of or based upon any
155
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are based upon information furnished in writing to Holdings by or on behalf
of such Management Stockholder (or such Permitted Transferee) expressly for use
therein; provided, however, that Holdings shall not be liable to such Management
-------- -------
Stockholder (or such Permitted Transferee) to the extent that any such Losses
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any preliminary prospectus if (i) having
previously been furnished by or on behalf of Holdings with copies of the final
prospectus, such Management Stockholder (or such Permitted Transferee) failed to
send or deliver a copy of the final prospectus with or prior to the delivery of
written confirmation of the sale of shares of Restricted Common Stock by such
Management Stockholder (or such Permitted Transferee) to the Person asserting
the claim from which such Losses arise and (ii) the final prospectus would have
corrected in all material respects such untrue statement or alleged untrue
statement or such omission or alleged omission; and provided further, however,
-------- ------- -------
that Holdings shall not be liable in any such case to the extent that any such
Losses arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the final prospectus, if (i) such
untrue statement or alleged untrue statement or such omission or alleged
omission is corrected in all material respects in a supplement to the final
prospectus and (ii) having previously been furnished by or on behalf of Holdings
with copies of the final prospectus as so supplemented, such Management
Stockholder (or such Permitted Transferee) thereafter failed to deliver such
final prospectus as so supplemented prior to or concurrently with the sale of
shares of Restricted Holdings Common Stock.
156
(b) Indemnification by Management Stockholders. In connection with
------------------------------------------
any Incidental Registration in which any Management Stockholder (or any
Permitted Transferee of such Management Stockholder) is participating, such
Management Stockholder (or such Permitted Transferee) shall furnish to Holdings
in writing such information as Holdings reasonably requests for use in
connection with the registration statement with respect to such Incidental
Registration or the related prospectus, and each Management Stockholder (and
each Permitted Transferee of such Management Stockholder) agrees to indemnify
and hold harmless, to the fullest extent lawful, Holdings, its directors,
officers, employees or agents, each Person who controls Holdings (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act)
and the directors, officers, employees or agents of such controlling Persons,
from and against all Losses arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in such registration statement or
the related prospectus or any amendment or supplement thereto, or any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, to the extent, but only to the extent,
that such untrue or alleged untrue statement or omission or alleged omission is
based upon any information so furnished in writing by or on behalf of such
Management Stockholder (or such Permitted Transferee) to Holdings expressly for
use in such registration statement or prospectus.
(c) Conduct of Indemnification Proceedings. If any Person shall be
--------------------------------------
entitled to indemnity under this Section 4.05 (an "indemnified party"), such
indemnified party shall give prompt notice to the party from whom such indemnity
is sought (the "indemnifying party") of any claim or of the commencement of any
proceeding with respect to which such indemnified party seeks
157
indemnification or contribution pursuant hereto; provided, however, that the
-------- -------
delay or failure to so notify the indemnifying party shall not relieve the
indemnifying party from any obligation or liability except to the extent that
the indemnifying party has been prejudiced by such delay or failure.
The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party promptly after receipt of written notice
from such indemnified party of such claim or proceeding, to assume, at the
expense of the indemnifying party, the defense of any such claim or proceeding,
with counsel reasonably satisfactory to such indemnified party; provided,
--------
however, that (i) an indemnified party shall have the right to employ separate
-------
counsel in any such claim or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (A) the indemnifying party agrees to pay such fees
and expenses, (B) the indemnifying party fails to assume promptly the defense of
such claim or proceeding or fails to employ counsel reasonably satisfactory to
such indemnified party or (C) the named parties to any proceeding (including
impleaded parties) include both such indemnified party and the indemnifying
party, and such indemnified party shall have been advised by counsel that there
may be one or more legal defenses available to it that are inconsistent with
those available to the indemnifying party or that a conflict of interest is
likely to exist among such indemnified party and any other indemnified parties
(in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party) and (ii) subject to
clause (C) above, the indemnifying party shall not, in connection with any such
claim or proceeding or separate but substantially similar or related claims or
proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one firm of attorneys
158
(together with appropriate local counsel) at any time for all the indemnified
parties, or for fees and expenses that are not reasonable. Whether or not such
defense is assumed by the indemnifying party, such indemnified party shall not
be subject to any liability for any settlement made without the consent of such
indemnified party. The indemnifying party shall not consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release, in form and substance reasonably satisfactory to the indemnified
party, from all liability in respect of such claim or proceeding for which such
indemnified party would be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
------------
Section 4.05 is unavailable to an indemnified party in respect of any Losses
(other than in accordance with its terms), then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The
relative fault of such indemnifying party, on the one hand, and indemnified
party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
taken by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include
159
any legal or other fees or expenses incurred by such party in connection with
any claim or proceeding. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 4.05(d) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations described in the immediately preceding
sentence. Notwithstanding any provision of this Section 4.05(d), an indemnifying
party that is a Management Stockholder (or a Permitted Transferee of such
Management Stockholder) shall not be required to contribute any amount which is
in excess of the amount by which the total proceeds received by such Management
Stockholder (or such Permitted Transferee) from the sale of the shares of
Restricted Holdings Common Stock sold by such Management Stockholder (or such
Permitted Transferee) (net of all underwriting discounts and commissions)
exceeds the amount of any damages that such indemnifying party has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
ARTICLE V
Rights of IHS To Compel Sales of Holdings Common Stock,
-------------------------------------------------------
Obligations To Sell Holdings Common Stock and
---------------------------------------------
Rights To Participate in Sales of Holdings Common Stock
-------------------------------------------------------
SECTION 5.01. Rights To Compel Sales by Management Stockholders upon
------------------------------------------------------
Sales of Holdings Common Stock. In the event that IHS (or any Affiliate of IHS)
------------------------------
enters into an agreement with any Person (other than an Affiliate of IHS)
regarding the sale (other than a public offering of shares of Holdings Common
Stock
160
pursuant to an effective registration statement under the Securities Act) of all
or any portion of the shares of Holdings Common Stock held by IHS (or any
Affiliate of IHS) (a "Sale of Holdings Common Stock"), then IHS shall have the
right to require each Management Stockholder (and the Permitted Transferees of
such Management Stockholder) to include in such Sale of Holdings Common Stock
the proportion of shares of Holdings Common Stock held by such Management
Stockholder (and the Permitted Transferees of such Management Stockholder) that
is identical to the proportion of shares of Holdings Common Stock held by IHS
(and its Affiliates) that is to be sold by IHS (and its Affiliates) in
connection with such Sale of Holdings Common Stock.
To exercise the rights granted under this Section 5.01, IHS must
deliver to each Management Stockholder written notice of the intent of IHS to
require such Management Stockholder (and the Permitted Transferees of such
Management Stockholder) to participate in a Sale of Holdings Common Stock
pursuant to this Section 5.01 not less than ten business days prior to the date
on which such Sale of Holdings Common Stock is to be consummated. Such notice
shall set forth in reasonable detail the material terms of such Sale of Holdings
Common Stock, including the price per share at which such Management Stockholder
(and the Permitted Transferees of such Management Stockholder) shall be required
to sell the applicable proportion of shares of Holdings Common Stock held by
such Management Stockholder (and the Permitted Transferees of such Management
Stockholder) (which price shall be equal to the price to be paid for the shares
of Holdings Common Stock that are to be sold by IHS (and its Affiliates) in such
Sale of Holdings Common Stock).
Upon receipt of such notice, each Management Stockholder (and the
Permitted Transferees of such Management Stockholder) shall be obligated to sell
the applicable proportion
161
of shares of Holdings Common Stock held by such Management Stockholder (and the
Permitted Transferees of such Management Stockholder) in such Sale of Holdings
Common Stock. Each Management Stockholder (and the Permitted Transferees of such
Management Stockholder) shall, if requested by IHS, enter into a binding
agreement with the Person to whom shares of Holdings Common Stock are to be sold
pursuant to such Sale of Holdings Common Stock to sell the applicable proportion
of shares of Holdings Common Stock held by such Management Stockholder (and the
Permitted Transferees of such Management Stockholder) on the terms, and subject
to the conditions, if any, set forth in the notice delivered to such Management
Stockholder by IHS.
At the closing of such Sale of Holdings Common Stock, which closing
shall take place at the location specified by IHS in the notice delivered to
each Management Stockholder, each Management Stockholder (and the Permitted
Transferees of such Management Stockholder) shall deliver to the Person to whom
shares of Holdings Common Stock are to be sold pursuant to such Sale of Holdings
Common Stock certificates representing the applicable proportion of shares of
Holdings Common Stock required to be sold by such Management Stockholder (and
the Permitted Transferees of such Management Stockholder), duly endorsed in
blank for transfer, free and clear of all Liens, and otherwise without
representation or warranty, with all requisite stock transfer stamps affixed
thereon, against delivery of the price to be paid therefor in connection with
such Sale of Holdings Common Stock.
SECTION 5.02. Obligations To Sell upon Sale of Holdings. In the
-----------------------------------------
event that the Board of Directors of Holdings approves the sale of Holdings to
any other Person (other than an Affiliate of IHS) (whether by merger,
consolidation or sale of all or substantially all the capital stock or assets of
Holdings) (a "Sale of Holdings"), then each Management Stockholder (and the
162
Permitted Transferees of such Management Stockholder) shall be obligated to
consent to, vote in favor of, and raise no objections to, such Sale of Holdings.
In the event that any Sale of Holdings involves the sale of shares of
Holdings Common Stock, then each Management Stockholder (and the Permitted
Transferees of such Management Stockholder) shall also be obligated to sell all
the shares of Holdings Common Stock held by such Management Stockholder (and the
Permitted Transferees of such Management Stockholder) to such Person on the
terms, and subject to the conditions, approved by the Board of Directors of
Holdings in connection with such Sale of Holdings.
In the event that the Board of Directors of Holdings desires to
consummate a Sale of Holdings pursuant to this Section 5.02, the Board of
Directors of Holdings shall deliver to each Management Stockholder written
notice of the proposed Sale of Holdings not less than ten business days prior to
the date on which such Sale of Holdings is to be consummated. Such notice shall
set forth in reasonable detail the material terms of such Sale of Holdings, and,
if such Sale of Holdings involves the sale of shares of Holdings Common Stock,
such notice shall also set forth the fair market value of the consideration
(whether cash, securities or other property) to be paid for each share of
Holdings Common Stock in connection with such Sale of Holdings. Upon receipt of
such notice, each Management Stockholder (and the Permitted Transferees of such
Management Stockholder) shall be obligated to take any action the Board of
Directors of Holdings shall deem necessary or appropriate in connection with the
consummation of such Sale of Holdings. In addition, if such Sale of Holdings
involves the sale of shares of Holdings Common Stock, each Management
Stockholder (and the Permitted Transferees of such Management Stockholder)
shall, if requested by the Board of Directors of Holdings, enter into a binding
agreement with such
163
Person to sell all shares of Holdings Common Stock held by such Management
Stockholder (and the Permitted Transferees of such Management Stockholder) on
the terms, and subject to the conditions, if any, set forth in the notice
delivered to such Management Stockholder by the Board of Directors of Holdings.
Upon the closing of any Sale of Holdings that involves the sale of
shares of Holdings Common Stock, which closing shall take place at the location
specified by IHS in the notice delivered to each Stockholder, each Management
Stockholder (and the Permitted Transferees of such Management Stockholder) shall
deliver to the Person to whom shares of Holdings Common Stock are to be sold
pursuant to such Sale of Holdings certificates representing all shares of
Holdings Common Stock held by such Management Stockholder (and the Permitted
Transferees of such Management Stockholder), duly endorsed in blank for
transfer, free and clear of all Liens, and otherwise without representation or
warranty, with all requisite stock transfer stamps affixed thereon, against
delivery of the consideration to be paid therefor in connection with such Sale
of Holdings.
SECTION 5.03 Rights of Management Stockholders To Sell upon Sales of
-------------------------------------------------------
Holdings Common Stock. (a) In the event that IHS (or any Affiliate of IHS)
---------------------
proposes to enter into an agreement with any Person (other than an Affiliate of
IHS) regarding a Sale of Holdings Common Stock, then, so long as such Person
raises no objection, IHS shall deliver to each Management Stockholder written
notice of such proposed Sale of Holdings Common Stock, which notice shall set
forth in reasonable detail the material terms of such proposed Sale of Holdings
Common Stock, including both the number of shares of Holdings Common Stock to be
sold and the price per share at which shares of Holdings Common Stock are to be
sold in connection with such proposed Sale of Holdings Common Stock. Each
Management Stockholder (and the Permitted Transferees of such Management
Stockholder) shall have the option
164
to sell all shares of Holdings Common Stock held by such Management Stockholder
(and the Permitted Transferees of such Management Stockholder) to such Person in
connection with such proposed Sale of Holdings Common Stock, on the terms and
subject to the conditions, if any, set forth such notice prior to the sale of
any shares of Holdings Common Stock held by IHS (or any Affiliate of IHS) to
such Person. In the event that the number of shares of Holdings Common Stock to
be sold in connection with such proposed Sale of Holdings Common Stock is less
than the total number of shares of Holdings Common Stock held by the Management
Stockholders, then the Management Stockholders shall sell their shares of
Holdings Common Stock in such proposed Sale of Holdings Common Stock on a pro
rata basis. Within ten business days following the date on which such notice is
received by any Management Stockholder, such Management Stockholder (and the
Permitted Transferees of such Management Stockholder) shall notify IHS (and any
Affiliate of IHS) of the decision of such Management Stockholder (and such
Permitted Transferee) regarding such proposed Sale of Holdings Common Stock.
If a Management Stockholder (or a Permitted Transferee of such
Management Stockholder) gives notice of such Management Stockholder's (or such
Permitted Transferee's) election to participate in a proposed Sale of Holdings
Common Stock, such Management Stockholder (and such Permitted Transferee) shall
be obligated to sell, on a pro rata basis, the shares of Holdings Common Stock
held by such Management Stockholder (and such Permitted Transferee) to such
Person pursuant to such proposed Sale of Holdings Common Stock, on the terms and
subject to the conditions, if any, set forth in the notice delivered to such
Management Stockholder by IHS. Each Management Stockholder (and each Permitted
Transferee of such Management Stockholder) that exercises the option granted
under this Section 5.03(a) (and each Permitted Transferee of such Management
Stockholder) shall, if requested by IHS, enter into a binding agreement with the
Person
165
to whom shares of Holdings Common Stock are to be sold pursuant to such Sale of
Holdings Common Stock to sell such Management Stockholder's (or such Permitted
Transferee's) pro rata share of shares of Holdings Common Stock on the terms,
and subject to the conditions, if any, set forth in the notice delivered to such
Management Stockholder by IHS.
At the closing of such Sale of Holdings Common Stock, which closing
shall take place at the location specified by IHS in the notice delivered to
each Management Stockholder, each Management Stockholder (and the Permitted
Transferees of such Management Stockholder) shall deliver to the Person to whom
shares of Holdings Common Stock are to be sold pursuant to such Sale of Holdings
Common Stock certificates representing the applicable proportion of shares of
Holdings Common Stock to be sold by such Management Stockholder (and the
Permitted Transferees of such Management Stockholder), duly endorsed in blank
for transfer, free and clear of all Liens, and otherwise without representation
or warranty, with all requisite stock transfer stamps affixed thereon, against
delivery of the price to be paid therefor in connection with such Sale of
Holdings Common Stock.
(b) In the event that any Management Stockholder elects not to
exercise the option granted pursuant to Section 5.03(a) to participate in a
proposed Sale of Holdings Common Stock and IHS (or any Affiliate of IHS) enters
into an agreement with such Person regarding a Sale of Holdings Common Stock,
then such Management Stockholder (and the Permitted Transferees of such
Management Stockholder) shall have the option to require IHS to include in such
Sale of Holdings Common Stock the proportion of shares of Holdings Common Stock
held by such Management Stockholder (and the Permitted Transferees of such
Management Stockholder) that is identical to the proportion of shares of
Holdings Common Stock held by IHS (and its Affiliates)
166
that is to be sold by IHS (and its Affiliates) in connection with such Sale of
Holdings Common Stock.
IHS shall deliver to each Management Stockholder written notice of the
intent of IHS to participate in a Sale of Holdings Common Stock pursuant to this
Section 5.03(b) not less than ten business days prior to the date on which such
Sale of Holdings Common Stock is to be consummated. Such notice shall set forth
in reasonable detail the material terms of such Sale of Holdings Common Stock,
including the price per share at which such Management Stockholder (and the
Permitted Transferees of such Management Stockholder) shall have the option to
sell the applicable proportion of shares of Holdings Common Stock held by such
Management Stockholder (and the Permitted Transferees of such Management
Stockholder) (which price shall be equal to the price to be paid for the shares
of Holdings Common Stock that are to be sold by IHS (and its Affiliates) in such
Sale of Holdings Common Stock).
The option granted pursuant to this Section 5.03(b) shall be
exercisable by written notice to IHS by each Management Stockholder (or any
Permitted Transferee of such Management Stockholder) given within ten business
days after receipt by such Management Stockholder of the notice delivered by
IHS. If any Management Stockholder (or any Permitted Transferee of such
Management Stockholder) gives notice of the election of such Management
Stockholder (or such Permitted Transferee) to sell, the Management Stockholder
(and the Permitted Transferee) shall be obligated to sell, conditioned only upon
the closing of the Sale of Holdings Common Stock. Each Management Stockholder
(and each Permitted Transferee of such Management Stockholder) that exercises
such option shall, if requested by IHS, enter into a binding agreement with the
Person to whom shares of Holdings Common Stock are to be sold pursuant to such
Sale of Holdings Common Stock to sell the applicable proportion of shares of
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock held by such Management Stockholder (or such Permitted
Transferee) on the terms, and subject to the conditions, if any, set forth in
the notice delivered to such Management Stockholder by IHS.
At the closing of such Sale of Holdings Common Stock, which closing
shall take place at the location specified by IHS in the notice delivered to
each Management Stockholder, each Management Stockholder (and the Permitted
Transferees of such Management Stockholder) shall deliver to the Person to whom
shares of Holdings Common Stock are to be sold pursuant to such Sale of Holdings
Common Stock certificates representing the applicable proportion of shares of
Holdings Common Stock required to be sold by such Management Stockholder (and
the Permitted Transferees of such Management Stockholder), duly endorsed in
blank for transfer, free and clear of all Liens, and otherwise without
representation or warranty, with all requisite stock transfer stamps affixed
thereon, against delivery of the price to be paid therefor in connection with
such Sale of Holdings Common Stock.
ARTICLE VI
Legends
-------
Each certificate representing shares of Restricted Holdings Common
Stock will, until the time at which (i) such shares have been effectively
registered under Section 5 of the
168
Securities Act and disposed of pursuant to an effective registration statement
or (ii) such shares can be freely sold and transferred without restriction under
the Securities Act, bear the following legends:
(i) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT") OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, AND, UNLESS SO REGISTERED, THEY MAY NOT BE SOLD, OFFERED FOR
SALE, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE ACT AND APPLICABLE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION.";
(ii) "THESE SECURITIES ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
STOCKHOLDERS' AGREEMENT DATED AS OF FEBRUARY [ ], 1999 AMONG INFORMATION
HANDLING SERVICES INC., CERTAIN MEMBERS OF MANAGEMENT OF Holdings AND
CERTAIN EMPLOYEES OF HOLDINGS. A COPY OF THE STOCKHOLDERS' AGREEMENT IS ON
FILE WITH THE SECRETARY OF Holdings." and
(iii) any legend required by the "blue sky" laws of any state to the
extent such laws are applicable to the shares represented by such
certificate.
169
ARTICLE VII
Certain Covenants Relating to the Conduct of the Business
---------------------------------------------------------
prior to an Initial Public Offering
-----------------------------------
SECTION 7.01. Board of Directors of Holdings. IHS agrees, and each
------------------------------
Management Stockholder (and each Permitted Transferee of such Management
Stockholder) agrees, that, at all times prior to the consummation of an Initial
Public Offering, IHS or such Management Stockholder (and such Permitted
Transferee), as applicable, shall take all action necessary, including the
voting of all shares of Holdings Common Stock held by IHS or such Management
Stockholder (or such Permitted Transferee), as applicable, to cause the Board of
Directors of Holdings to consist at all times prior to the consummation of an
Initial Public Offering of not more than five members.
The Management Stockholders (together with their Permitted
Transferees) shall be entitled, at all times prior to the consummation of an
Initial Public Offering, to designate one member of the Board of Directors so
long as either (i) the shares of Holdings Common Stock held by the Management
Stockholders (and their Permitted Transferees) constitute not less than 5% of
the outstanding shares of Holdings Common Stock or (ii) ▇▇▇▇ ▇. ▇▇▇▇▇ is an
employee of Holdings or its subsidiary. In the event that both the shares of
Holdings Common Stock held by the Management Stockholders (and their Permitted
Transferees) constitute less than 5% of the outstanding shares of Holdings
Common Stock and ▇▇▇▇ ▇. ▇▇▇▇▇ has ceased to be an employee of Holdings or its
subsidiary, the Management Stockholders (together with their Permitted
Transferees) shall no longer be entitled to designate any member of the Board of
Directors of Holdings. The Management Stockholders hereby designate ▇▇▇▇ ▇.
▇▇▇▇▇ as their designee to the Board of Directors of Holdings pursuant to this
Article VII, which designation shall continue until such time as the
170
Management Stockholders (and any Permitted Transferees of the Management
Stockholders) who hold a majority of the shares of Holdings Common Stock then
held by all Management Stockholders (and any Permitted Transferees of the
Management Stockholders) designate another Person to serve as the Management
Stockholders' designee to the Board of Directors of Holdings and such Management
Stockholders (and Permitted Transferees) shall have advised IHS in writing of
such designation. So long as the Management Stockholders are entitled to
designate a member of the Board of Directors of Holdings, Holdings shall hold at
least one in-person meeting of its Board of Directors in each fiscal year.
SECTION 7.02. Transactions between Holdings and IHS. Except for the
-------------------------------------
Merger and as otherwise contemplated by this Agreement and the Formation
Agreement, at all times prior to the earlier to occur of the consummation of an
Initial Public Offering and the third anniversary of the date of this Agreement,
as long as the Management Stockholders hold shares constituting more than 5% of
the outstanding Holdings Common Stock, IHS will not, and will not permit
Holdings, to sell, lease, license or otherwise transfer any material assets
between IHS or any Affiliate of IHS and Holdings, except (i) pursuant to
contracts or commitments existing on the Closing Date in accordance with the
Formation Agreement, (ii) in the ordinary course of business or (iii) with the
consent of Management Stockholders holding a majority of the shares of Holdings
Common Stock then held by the Management Stockholders.
SECTION 7.03. Financing of Holdings by IHS. Except (i) for financing
----------------------------
in the form of debt or (ii) with the consent of a majority of shares then held
by the Management Stockholders, IHS will not invest in or advance any amount to
Holdings until the earlier to occur of the consummation of an Initial Public
Offering and the third anniversary of the date of this Agreement.
171
SECTION 7.04. Audited Financial Statements of Holdings. So long as
----------------------------------------
the Management Stockholders are entitled to designate a member of the Board of
Directors of Holdings pursuant to Section 7.01, and prior to the consummation of
an Initial Public Offering, IHS agrees to cause Holdings to have separate annual
audited consolidated financial statements.
SECTION 7.05. Option Plan. Within 90 days from the date hereof, IHS
-----------
will cause Holdings to issue initial grants of options under an employee stock
option plan for employees of Holdings.
ARTICLE VIII
General Provisions
------------------
SECTION 8.01. Notices. All notices, requests, claims, demands and
-------
other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties hereto at the following addresses (or
at such other address for such party as shall be specified by like notice):
(i) if to IHS,
Information Handling Services Inc.
IvernessBusiness Park
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
172
with a copy to:
TBG Services Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to any Management Stockholder,
to the address of such Management Stockholder set
forth in Schedule I, and, in the case of any Permitted
Transferee of such Management Stockholder, to the
address set forth in the written agreement entered
into accordance with the provisions of Section 8.09
SECTION 8.02. Headings. The table of contents and headings contained
--------
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 8.03. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party hereto. Upon determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an
173
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
SECTION 8.04. Counterparts. This Agreement may be executed in one or
------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties hereto and delivered to the other parties hereto.
SECTION 8.05. Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement (a) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties hereto
with respect to the transactions contemplated hereby and (b) is not intended to
confer upon any Person other than the parties hereto any rights or remedies.
SECTION 8.06. Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
SECTION 8.07. Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise, by any Management
Stockholder without the prior written consent of the holders of a majority of
the shares of Holdings Common Stock then held by IHS and its Affiliates;
provided, however, that each Management Stockholder may assign the rights,
-------- -------
interests and obligations of such Stockholder under this Agreement to a
Permittee Transferee in accordance with the provisions of this Agreement. Any
purported assignment without such consent shall be void. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and
174
be enforceable by, the parties hereto and their respective successors and
assigns.
SECTION 8.08. Consent to Jurisdiction. Each of the parties hereto
-----------------------
(a) consents to submit to the personal jurisdiction of any Federal court located
in the State of Delaware or any Delaware state court in the event any dispute
arises regarding this Agreement or the transactions contemplated hereby, (b)
agrees not to attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (c) agrees not to bring any action
relating to this Agreement or the transactions contemplated hereby in any court
other than any Federal court sitting in the State of Delaware or any Delaware
state court and (d) waives any right to trial by jury with respect to any action
related to, or arising out of, this Agreement or the transactions contemplated
hereby.
SECTION 8.09. Agreement To Be Bound. Notwithstanding anything to the
---------------------
contrary contained in this Agreement, no shares of Holdings Common Stock may be
transferred, sold, assigned, tendered, hypothecated or otherwise disposed of to
any Permitted Transferee unless such Permitted Transferee, prior to such
transfer, sale, assignment, tender, hypothecation or other disposition, agrees
in writing, in form and substance satisfactory to IHS, to be bound by the terms
of this Agreement to the same extent, and in the same manner, as the transferor
of such shares of Holdings Common Stock, which writing shall include the address
of such Permitted Transferee to which notices given pursuant to this Agreement
may be sent.
IN WITNESS WHEREOF, each IHS has caused this Agreement to be signed by
its officer thereunto duly authorized, and each of the Management Stockholders
has signed this Agreement, all as of the date first written above.
175
INFORMATION HANDLING SERVICES
INC.,
by ______________________________
Name:
Title:
___________________________________
▇▇▇▇ ▇. ▇▇▇▇▇
___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Salem
___________________________________
▇▇▇▇▇ ▇▇▇▇
___________________________________
▇▇▇ ▇▇▇▇▇▇▇▇▇
176
Appendix A
Shares of Restricted Holdings
-----------------------------
Management Stockholder Common Stock
---------------------- ------------
▇▇▇▇ ▇. ▇▇▇▇▇ 1,037,322
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 244,077
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Salem 203,396
▇▇▇▇▇ ▇▇▇▇ 40,679
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 40,679
177