EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
Among
THE THOMSON CORPORATION
MARQUEE ACQUISITION CORPORATION
and
PRIMARK CORPORATION
Dated as of June 5, 2000
EXECUTION COPY
This AGREEMENT AND PLAN OF MERGER, dated as of June 5, 2000 (this
"AGREEMENT"), among THE THOMSON CORPORATION, a corporation incorporated under
the laws of Ontario, Canada ("PARENT"), MARQUEE ACQUISITION CORPORATION, a
Michigan corporation and a wholly owned subsidiary of Parent ("PURCHASER"), and
PRIMARK CORPORATION, a Michigan corporation (the "COMPANY"),
W I T N E S S E T H :
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
shareholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "OFFER") to acquire all the shares
of common stock, no par value, of the Company (the "SHARES") that are issued and
outstanding for $38.00 per Share (such amount, or any greater amount per Share
paid pursuant to the Offer, being the "PER SHARE AMOUNT"), net to each seller in
cash, upon the terms and subject to the conditions of this Agreement and the
Offer;
WHEREAS, the Board of Directors of the Company (the "BOARD") has
unanimously approved the making of the Offer and resolved to recommend that
holders of Shares tender their Shares pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved this Agreement
and declared its advisability and approved the merger (the "MERGER") of
Purchaser with and into the Company in accordance with the Michigan Business
Corporation Act ("MICHIGAN LAW"), following the consummation of the Offer and
upon the terms and subject to the conditions set forth herein;
WHEREAS, certain key employees have entered into employment agreements
to be effective as of the Effective Time; and
WHEREAS, Parent, Purchaser and the Company's Chief Executive Officer,
Chief Financial Officer and General Counsel (the "SHAREHOLDERS") have entered
into Shareholder Agreements, dated as of the date hereof (the "SHAREHOLDER
AGREEMENTS"), providing that, among other things, the Shareholders shall (i)
tender their Shares into the Offer, and (ii) vote their Shares in favor of the
Merger, if applicable, in each case subject to the conditions set forth herein.
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NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. (a) For purposes of this Agreement:
"ACQUISITION PROPOSAL" means (i) any bona fide written
proposal or offer from any person relating to any direct or indirect
acquisition of (A) all or a substantial part of the assets of the
Company or of any material Subsidiary or (B) over 15% of any class of
equity securities of the Company or of any material Subsidiary; (ii)
any tender offer or exchange offer, as defined pursuant to the Exchange
Act, that, if consummated, would result in any person beneficially
owning 15% or more of any class of equity securities of the Company or
any material Subsidiary; or (iii) any merger, consolidation, business
combination, sale of all or a substantial part of the assets,
recapitalization, liquidation, dissolution or similar transaction
involving the Company or any material Subsidiary, other than the
Transactions; PROVIDED, HOWEVER, that for purposes of Section 9.03
hereof each reference herein to "15%" shall be changed to "35%". An
Acquisition Proposal includes a Superior Proposal.
"AFFILIATE" of a specified person means a person who, directly
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified person.
"BENEFICIAL OWNER", with respect to any Shares, means a person
who shall be deemed to be the beneficial owner of such Shares (i) which
such person or any of its affiliates or associates (as such term is
defined in Rule 12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or any of its
affiliates or associates has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or subject to
the passage of time or other conditions), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (B) the right to
vote pursuant to any agreement, arrangement or understanding or (iii)
which are beneficially owned, directly or indirectly, by any other
persons with whom such person or any of its affiliates or associates or
person with whom such person or any of its affiliates or associates has
any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any Shares.
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"BUSINESS DAY" means any day on which banks are not required
or authorized to close in the City of New York.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession, directly or indirectly, or
as trustee or executor, of the power to direct or cause the direction
of the management and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise.
"ENVIRONMENTAL LAWS" means any United States federal, state,
local or non-United States laws relating to (i) releases or threatened
releases of Hazardous Substances or materials containing Hazardous
Substances; (ii) the manufacture, handling, transport, use, treatment,
storage or disposal of Hazardous Substances or materials containing
Hazardous Substances; or (iii) pollution or protection of the
environment, health or natural resources.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary
and which, together with the Company or any Subsidiary, is treated as a
single employer within the meaning of Section 414(b), (c), (m) or (o)
of the Code.
"HAZARDOUS SUBSTANCES" means (i) those substances defined in
or regulated as hazardous or toxic substances, materials or wastes
under the following United States federal statutes and their state
counterparts, as each may be amended from time to time, and all
regulations thereunder: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe
Drinking Water Act, the Atomic Energy Act, the Federal Insecticide,
Fungicide, and Rodenticide Act and the Clean Air Act; (ii) petroleum
and petroleum products, including crude oil and any fractions thereof;
(iii) natural gas, synthetic gas, and any mixtures thereof; (iv)
polychlorinated biphenyls, asbestos and radon; (v) any other
contaminant; and (vi) any substance, material or waste regulated as a
hazardous or toxic substance, material or waste by any Governmental
Authority pursuant to any Environmental Law.
"INTELLECTUAL PROPERTY" means (i) United States, non-United
States, and international patents, patent applications and statutory
invention registrations, (ii) trademarks, service marks, trade dress,
logos, trade names, corporate names and other source identifiers, and
registrations and applications for registration thereof, (iii)
copyrightable works, copyrights, and registrations and applications for
registration thereof, and (iv) confidential and proprietary
information, including trade secrets and know-how.
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"KNOWLEDGE OF THE COMPANY" means the actual knowledge of the
individuals set forth in Section 1.01 of the Disclosure Schedule.
"MATERIAL ADVERSE EFFECT" means any event, circumstance,
change or effect that is or is reasonably likely to be materially
adverse to the business, financial condition or results of operations
of the Company and the Subsidiaries, taken as a whole; PROVIDED,
HOWEVER, that events, circumstances, changes and effects that are
generally applicable to (i) the financial information services
industry, or (ii) the United States economy shall not constitute a
Material Adverse Effect PROVIDED that the Company and its Subsidiaries
are not disproportionately affected thereby.
"PERSON" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person
(including, without limitation, a "person" as defined in Section
13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a
government.
"SEC REPORTS" means (i) the Company's Annual Reports on Form
10-K for the fiscal years ended December 31,1997, 1998 and 1999,
respectively, (ii) the Company's Quarterly Reports on Form 10-Q for the
period ended Xxxxx 00, 0000, (xxx) all proxy statements relating to the
Company's meetings of shareholders (whether annual or special) held
since April 30, 1997 and (iv) all other forms, reports and other
registration statements (other than Quarterly Reports on Form 10-Q not
referred to in clause (ii) above) filed by the Company with the SEC
since April 30, 1999.
"SUBSIDIARY" or "SUBSIDIARIES" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled
by such person, directly or indirectly, through one or more
intermediaries.
"TAXES" shall mean any and all taxes, fees, levies, duties,
tariffs, imposts and assessments of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed
with respect thereto) imposed by any Governmental Authority or taxing
authority.
The following terms have the meaning set forth in the Sections
set forth below:
Defined Term Location of Definition
------------ ----------------------
Action 4.09
Agreement Preamble
Blue Sky Laws 4.05(b)
Board Recitals
Certificate of Merger 3.02
Certificates 3.08(b)
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Code 4.10(a)
Company Preamble
Company Licensed Intellectual Property 4.14(b)
Company Material Contracts 4.18(a)
Company Owned Intellectual Property 4.14(c)
Company Preferred Stock 4.03
Company Required Approvals 4.05
Company Stock Option 3.07
Company Stock Option Plans 3.07
Confidentiality Agreement 7.04(b)
Disclosure Schedule 4.01(b)
Effective Time 3.02
Environmental Permits 4.16
ERISA 4.10(a)
Exchange Act 2.01(a)
Expenses 9.03(a)
Fee 9.03(a)
GAAP 4.07(b)
Governmental Authority 4.05(b)
HSR Act 4.05(b)
IRS 4.10(a)
Law 4.05(a)
Liens 4.13(b)
Material Subsidiary 4.01(c)
Merger Recitals
Merger Consideration 2.01(a)
Minimum Condition 2.01(a)
Michigan Law Recitals
Multiemployer Plan 4.10(b)
Multiple Employer Plan 4.10(b)
New Plan 7.06(b)
Non-U.S. Benefit Plan 4.10(h)
Offer Recitals
Offer Documents 2.01(b)
Offer to Purchase 2.01(b)
Parent Preamble
Paying Agent 3.09(a)
Permits 4.06
Permitted Liens 4.13(b)
Per Share Amount Recitals
Plans 4.10(a)
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Proxy Statement 4.12
Purchaser Preamble
Retained Employees 7.06
Rights 4.03
Rights Agreement 4.03
Schedule 14D-9 2.02(b)
Schedule TO 2.01(b)
SEC 2.01(a)
Securities Act 4.07(a)
Shares Recitals
Shareholder Agreements Recitals
Shareholders Recitals
Shareholders' Meeting 7.01(a)
Subsidiary 4.01(a)
Superior Proposal 7.05
Surviving Corporation 3.03
Transactions 2.02(a)
1999 Balance Sheet 4.07(c)
ARTICLE II
THE OFFER
SECTION 2.01. THE OFFER. (a) Provided that none of the events
set forth in Annex A hereto shall have occurred or be continuing, Purchaser
shall commence the Offer as promptly as reasonably practicable and in any event
within ten (10) business days after the date hereof. The obligation of Purchaser
to accept for payment, purchase and pay for any Shares tendered pursuant to the
Offer shall be subject to the condition (the "MINIMUM CONDITION") that at least
the number of Shares that shall constitute 51% of the then outstanding Shares on
a fully diluted basis (including, without limitation, all Shares issuable upon
the conversion of any convertible securities or upon the exercise of any
options, warrants or rights (other than the Rights (as defined in Section 4.03))
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer and also shall be subject to the satisfaction of each of the other
conditions set forth in Annex A hereto. Purchaser expressly reserves the right
to waive any such condition other than the Minimum Condition, to increase the
price per Share payable in the Offer, and to make any other changes in the terms
and conditions of the Offer; PROVIDED, HOWEVER, that no change may be made that
decreases the price per Share payable in the Offer, changes the form of
consideration payable in the Offer, reduces the maximum number of Shares to be
purchased in the Offer, imposes conditions to the Offer in addition to those set
forth in Annex A hereto, modifies or amends any condition to the Offer in any
manner materially adverse
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to the holders of Shares or, except as provided herein or required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") applicable to the Offer, change the expiration date of the Offer.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer beyond the scheduled expiration date, which shall
be 20 business days following the commencement of the Offer, if, at the
scheduled expiration of the Offer, any of the conditions to Purchaser's
obligation to accept for payment Shares, shall not be satisfied or waived until
such conditions are satisfied or waived (except that the Minimum Condition may
not be waived); PROVIDED, HOWEVER, that no such extension shall extend the Offer
beyond October 31, 2000, (ii) extend the Offer for any period required by any
rule, regulation or interpretation of the SEC, or the staff thereof, applicable
to the Offer, or (iii) extend the Offer for one or more periods, each not to
exceed two business days and, in no event, in excess of an aggregate period of
10 business days beyond the latest applicable date that would otherwise be
permitted under clause (i) or (ii) of this sentence, if, as of such date, all of
the conditions to Purchaser's obligations to accept for payment Shares are
satisfied or waived, but the number of Shares validly tendered and not withdrawn
pursuant to the Offer equals 80% or more, but less than 90%, of outstanding
Shares on a fully diluted basis. In addition, if, on the initial scheduled
expiration date of the Offer, the sole condition remaining unsatisfied is that
condition in clause (ii) of the introductory paragraph of Annex A, Purchaser
shall extend the Offer from time to time until the earlier to occur of (A)
December 31, 2000 and (B) the fifth business day after the satisfaction of such
condition in clause (ii) of the introductory paragraph of Annex A. The Per Share
Amount shall, subject to applicable withholding of taxes, be net to the seller
in cash, upon the terms and subject to the conditions of the Offer. Purchaser
shall pay for all Shares validly tendered and not withdrawn promptly following
the acceptance of Shares for payment pursuant to the Offer. Notwithstanding the
immediately preceding sentence and subject to the applicable rules of the SEC
and the terms and conditions of the Offer, Purchaser expressly reserves the
right to delay payment for Shares in order to comply in whole or in part with
applicable laws. Any such delay shall be effected in compliance with Rule
14e-1(c) under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"). If the payment equal to the Per Share Amount in cash (the "MERGER
CONSIDERATION") is to be made to a person other than the person in whose name
the surrendered certificate formerly evidencing Shares is registered on the
stock transfer books of the Company, it shall be a condition of payment that the
certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the certificate
surrendered, or shall have established to the satisfaction of Purchaser that
such taxes either have been paid or are not applicable.
(b) As promptly as reasonably practicable on the date of
commencement of the Offer, Purchaser shall file with the SEC a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto,
the "SCHEDULE TO") with respect to the Offer. The Schedule TO shall contain or
shall incorporate by reference an offer to purchase (the "OFFER
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TO PURCHASE") and forms of the related letter of transmittal and any related
summary advertisement (the Schedule TO, the Offer to Purchase and such other
documents, together with all supplements and amendments thereto, being referred
to herein collectively as the "OFFER DOCUMENTS"). Parent and Purchaser further
agree to take all steps necessary to cause the Offer Documents to be
disseminated to holders of Shares as and to the extent required by applicable
federal securities laws. Parent, Purchaser and the Company agree to correct
promptly any information provided by any of them for use in the Offer Documents
that shall have become false or misleading in any material respect, and Parent
and Purchaser further agree to take all steps necessary to cause the Schedule
TO, as so corrected, to be filed with the SEC, and the other Offer Documents, as
so corrected, to be disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws. The Company and its
counsel shall be given the opportunity to review the Schedule TO before it is
filed with the SEC. In addition, Parent and Purchaser agree to provide the
Company and its counsel in writing with any comments, whether written or oral,
Parent, Purchaser or their counsel may receive from time to time from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments, and any written or oral responses thereto.
SECTION 2.02. COMPANY ACTION. (a) The Company represents that
(i) the Board, at a meeting duly called and held on June 4, 2000, has
unanimously (A) determined that this Agreement and the transactions contemplated
hereby, including each of the Offer and the Merger (collectively, the
"TRANSACTIONS"), are fair to, and in the best interests of, the holders of
Shares, (B) approved and adopted this Agreement and the Transactions (such
approval and adoption having been made in accordance with Michigan Law), (C)
resolved to recommend that the holders of Shares accept the Offer and tender
Shares pursuant to the Offer, and approve and adopt this Agreement and the
Transactions, and (D) resolved to amend the Rights Agreement as contemplated
herein, and (ii) Deutsche Bank Securities, Inc. has delivered to the Board an
opinion, which will be confirmed promptly in writing, that the consideration to
be received by the holders of Shares pursuant to each of the Offer and the
Merger is fair to the holders of Shares from a financial point of view. The
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board described in the immediately preceding sentence, and
the Company shall not withdraw or modify such recommendation in any manner
adverse to Purchaser or Parent except as provided in Section 7.05(b). If so
requested by the Purchaser, the Company will take all reasonable actions
necessary in support of any consent solicitation and/or tender offer for the
Company's outstanding 9.25% senior subordinated notes due 2008. The Company has
been advised by its directors and executive officers that they intend to tender
all Shares beneficially owned by them to Purchaser pursuant to the Offer.
(b) As promptly as reasonably practicable on the date of
commencement of the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-9") containing, except as
provided in Section 7.05(b), the recommendation of the Board described in
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Section 2.02(a), and shall disseminate the Schedule 14D-9 to the extent required
by Rule 14d-9 promulgated under the Exchange Act, and any other applicable
federal securities laws. The Company, Parent and Purchaser agree to correct
promptly any information provided by any of them for use in the Schedule 14D-9
which shall have become false or misleading in any material respect, and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9,
as so corrected, to be filed with the SEC and disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. Parent, Purchaser and their counsel shall be given the opportunity to
review the Schedule 14D-9 before it is filed with the SEC. In addition, the
Company agrees to provide Parent, Purchaser and their counsel in writing with
any comments, whether written or oral, the Company or its counsel may receive
from time to time from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments, and any written or oral responses
thereto.
(c) In connection with the Offer, the Company shall promptly
furnish or cause to be furnished to Purchaser mailing labels containing the
names and addresses of all record holders of Shares and with security position
listings of Shares held in stock depositories, each as of a recent date,
together with all other available listings and computer files containing names,
addresses and security position listings of record holders and beneficial owners
of Shares. The Company shall promptly furnish or cause to be furnished to
Purchaser such additional information, including, without limitation, updated
listings and computer files of shareholders, mailing labels and security
position listings, and such other assistance in disseminating the Offer
Documents to holders of Shares as Parent or Purchaser may reasonably request.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer or the Merger, Parent and Purchaser shall hold in
confidence the information contained in such labels, listings and files, shall
use such information only in connection with the Transactions, and, if this
Agreement shall be terminated in accordance with Section 9.01, shall deliver or
cause to be delivered to the Company all copies of such information then in
their possession or the possession of their agents or representatives.
ARTICLE III
THE MERGER
SECTION 3.01. THE MERGER. Upon the terms and subject to the
conditions set forth in Article VIII, and in accordance with Michigan Law,
Purchaser shall be merged with and into the Company.
SECTION 3.02. EFFECTIVE TIME; CLOSING. As promptly as
practicable after the satisfaction or, if permissible, waiver of the conditions
set forth in Article VIII, the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger (the "CERTIFICATE OF
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THE MERGER") with the Administrator of the State of Michigan, in such forms as
are required by, and executed in accordance with, the relevant provisions of
Michigan Law (the date and time of such filing being the "EFFECTIVE TIME").
Prior to such filing, a closing shall be held at the offices of Shearman &
Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other place as
the parties shall agree, for the purpose of confirming the satisfaction or
waiver, as the case may be, of the conditions set forth in Article VIII.
SECTION 3.03. EFFECT OF THE MERGER. As a result of the Merger,
the separate corporate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation of the Merger (the "SURVIVING
CORPORATION"). At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of Michigan Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and Purchaser
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
SECTION 3.04. ARTICLES OF INCORPORATION; BY-LAWS. (a) At the
Effective Time, subject to Section 7.07(a), the Articles of Incorporation of
Purchaser, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation until thereafter amended
as provided by law and such Articles of Incorporation; PROVIDED, HOWEVER, that,
at the Effective Time, Article I of the Articles of Incorporation of the
Surviving Corporation shall be amended to read as follows: "The name of the
corporation is Primark Corporation."
(b) Unless otherwise determined by Parent prior to the
Effective Time, and subject to Section 7.07(a), the By-laws of Purchaser, as in
effect immediately prior to the Effective Time, shall be the By-laws of the
Surviving Corporation until thereafter amended as provided by law, the Articles
of Incorporation of the Surviving Corporation and such By-laws.
SECTION 3.05. DIRECTORS AND OFFICERS. The directors of
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation, each to hold office in accordance with the
Articles of Incorporation and By-laws of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified or until their
earlier death, resignation or approval.
SECTION 3.06. CONVERSION OF SECURITIES. At the Effective Time,
by virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
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(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to
Section 3.06(b) and any Dissenting Shares (as hereinafter defined))
shall be canceled and shall be converted automatically into the right
to receive an amount equal to the Merger Consideration payable, without
interest, to the holder of such Share, upon surrender, in the manner
provided in Section 3.08, of the certificate that formerly evidenced
such Share;
(b) Each Share held in the treasury of the Company and each
Share owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the
Effective Time shall be canceled without any conversion thereof and no
payment or distribution shall be made with respect thereto;
(c) Each share of common stock, no par value, of Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, no par value, of the Surviving
Corporation; and
(d) Notwithstanding anything in this Agreement to the
contrary, Shares outstanding immediately prior to the Effective Time
and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has complied with all of the
relevant provisions of Michigan Law ("DISSENTING SHARES") shall not be
converted into a right to receive the Merger Consideration, unless such
holder fails to perfect or withdraws or otherwise loses his or her
right to appraisal. A holder of Dissenting Shares shall be entitled to
receive payment of the appraised value of such Shares held by him or
her in accordance with the provisions of Michigan Law, unless, after
the Effective Time, such holder fails to perfect or withdraws or loses
his or her right to appraisal, in which case such Shares shall be
converted into and represent only the right to receive the Merger
Consideration, without interest thereon, upon surrender of the
Certificate or Certificates representing such Shares pursuant to
Section 3.08.
SECTION 3.07. EMPLOYEE STOCK OPTIONS. (a) Effective as of the
Effective Time, the Company shall take all necessary action, including obtaining
the consent of the individual option holders, if necessary, to (i) terminate the
stock option plans listed in item 2 of Section 4.03 of the Disclosure Schedule,
each as amended through the date of this Agreement (the "COMPANY STOCK OPTION
PLANS"), and (ii) cancel, at the Effective Time, each outstanding option to
purchase shares of Company Common Stock granted under the Company Stock Option
Plans (each, a "COMPANY STOCK OPTION") that is outstanding and unexercised as of
such time. Each holder of a Company Stock Option that is outstanding and
unexercised at the Effective Time, whether or not then exercisable or vested,
shall be entitled to receive from the Surviving Corporation immediately after
the Effective Time, in exchange for the cancellation of such Company Stock
Option, an amount in cash equal to the excess, if any, of (x) the Per Share
Amount over (y) the per share exercise price of such Company Stock Option,
multiplied by the
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number of shares of Company Common Stock subject to such Company Stock Option as
of the Effective Time. Any such payment shall be subject to all applicable
federal, state and local tax withholding requirements.
(b) The Company shall take all action reasonably necessary to
approve the disposition of the Company Stock Options in connection with the
transactions contemplated by this Agreement so as to exempt such dispositions
under Rule 16b-3 of the Exchange Act.
SECTION 3.08. SURRENDER OF SHARES; STOCK TRANSFER BOOKS. (a)
Prior to the Effective Time, Purchaser shall designate a bank or trust company
reasonably acceptable to the Company to act as agent (the "PAYING AGENT") for
the holders of Shares to receive the funds to which holders of Shares shall
become entitled pursuant to Section 3.06(a). Promptly after the Effective Time,
Parent or Purchaser shall deposit, or cause to be deposited, with the Paying
Agent the aggregate amount payable pursuant to Section 3.06(a). Such funds shall
be invested by the Paying Agent as directed by the Surviving Corporation.
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each person who was, at the Effective
Time, a holder of record of Shares entitled to receive the Merger Consideration
pursuant to Section 3.06(a) a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "CERTIFICATES") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each Share formerly
evidenced by such Certificate, and such Certificate shall then be canceled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such Certificate.
(c) At any time following the sixth month after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it), and, thereafter, such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat and other similar
laws) only as general creditors thereof with respect to any Merger Consideration
that may be payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Share for any Merger Consideration
delivered in respect of such Share to a public official pursuant to any
abandoned property, escheat or other similar law.
13
(d) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers of Shares on the records of the
Company. From and after the Effective Time, the holders of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Purchaser that:
SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of the Company and each subsidiary of the Company ("SUBSIDIARY") is a
corporation duly organized, validly existing and, to the extent applicable, in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power and authority would not, individually or in the aggregate, have a
Material Adverse Effect. The Company and each Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not have a Material Adverse Effect.
(b) Except as disclosed in Section 4.01(b) of the Disclosure
Schedule (the "DISCLOSURE SCHEDULE") and except for the Subsidiaries identified
in Exhibit 21.1 of the Company's Annual Report on Form 10-K for the year ended
December 31, 1999 (other than Yankee Group Research, Inc.), the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
SECTION 4.02. ARTICLES OF INCORPORATION AND BY-LAWS. The
Company has heretofore made available to Parent a complete and correct copy of
the Articles of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company each the Subsidiary. Such
Articles of Incorporation, By-laws or equivalent organizational documents are in
full force and effect. Neither the Company nor any Subsidiary is in violation of
any of the provisions of its Articles of Incorporation, By-laws or equivalent
organizational documents.
14
SECTION 4.03. CAPITALIZATION. The authorized capital stock of
the Company consists of 100,000,000 Shares and 4,000,000 shares of preferred
stock, par value $1.00 per share ("COMPANY PREFERRED STOCK"). As of May 31,
2000, (a) 20,282,597 Shares are issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (b) no Shares are held in the treasury of
the Company, (c) no Shares are held by any Subsidiary, and (d) 565,361 Shares
are reserved for future issuance pursuant to outstanding employee stock options
or stock incentive rights granted pursuant to the Company Stock Option Plans. As
of the date hereof, no shares of Company Preferred Stock are issued and
outstanding. Except as set forth in this Section 4.03, except for the
Shareholder Agreements, and except for the rights (the "RIGHTS") issued pursuant
to the Rights Agreement, dated as of May 29, 1997 (the "RIGHTS AGREEMENT"),
between the Company and BankBoston, N.A., as rights agent, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
Subsidiary or obligating the Company or any Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in, the Company or any
Subsidiary. All Shares subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
There are no outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any Shares or any capital
stock of any Subsidiary or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Subsidiary or any
other person. Except as set forth in Section 4.03 of the Disclosure Schedule,
each outstanding share of capital stock of each Subsidiary is duly authorized,
validly issued, fully paid and nonassessable, and each such share is owned by
the Company or another Subsidiary free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or any Subsidiary's voting rights, charges and
other encumbrances of any nature whatsoever.
SECTION 4.04. AUTHORITY RELATIVE TO THIS AGREEMENT. The
Company has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and, subject, in the case of the
Merger, to obtaining approval of the shareholders of the Company, if required,
to consummate the Transactions. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the Transactions have been
duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the Transactions (other than, with respect to the
Merger, the approval and adoption of this Agreement by the holders of a majority
of the then-outstanding Shares, if and to the extent required by applicable law,
and the filing and recordation of appropriate merger documents as required by
Michigan Law). This Agreement has been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Purchaser, constitutes legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that (i)
such enforcement may be subject to applicable
15
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
SECTION 4.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a)
The execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws or equivalent organizational
documents of the Company or any Subsidiary, (ii) subject to obtaining the
Company Required Approvals and, in the case of the Merger, the approval of the
shareholders of the Company, if required, conflict with or violate any United
States or non-United States statute, law, ordinance, regulation, rule, code,
executive order, injunction, judgment, decree or other order ("LAW") applicable
to the Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) subject to obtaining
the consents listed in Section 4.05 of the Disclosure Schedule, result in any
breach of or constitute a default (or an event which, with notice or lapse of
time or both, would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation,
except, with respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent or
materially delay consummation of the Offer or the Merger and would not have a
Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any United States federal, state, county or local or other
governmental, regulatory or administrative authority, agency, instrumentality or
commission or any court, tribunal, or judicial or arbitral body (a "GOVERNMENTAL
AUTHORITY"), except (i) for applicable requirements, if any, of the Exchange
Act, state securities or "blue sky" laws ("BLUE SKY LAWS"), state takeover laws,
the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), and the requirements in
the countries where a merger filing will be necessary, and filing and
recordation of appropriate merger documents as required by Michigan Law (the
"COMPANY REQUIRED APPROVALS"), and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the Offer
or the Merger and would not have a Material Adverse Effect.
SECTION 4.06. PERMITS; COMPLIANCE. Each of the Company and the
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances,
16
exceptions, consents, certificates, approvals and orders of any Governmental
Authority necessary for each of the Company or the Subsidiaries to own, lease
and operate its properties or to carry on its business as it is now being
conducted (the "PERMITS"), except where the failure to have, or the suspension
or cancellation of, any of the Permits would not prevent or materially delay
consummation of the Offer or the Merger and would not have a Material Adverse
Effect. As of the date hereof, no suspension or cancellation of any of the
Permits is pending or, to the knowledge of the Company, threatened, except where
the failure to have, or the suspension or cancellation of, any of the Permits
would not prevent or materially delay consummation of the Offer or the Merger
and would not have a Material Adverse Effect. Neither the Company nor any
Subsidiary is in conflict with, or in default, breach or violation of, (a) any
Law applicable to the Company or any Subsidiary or by which any property or
asset of the Company or any Subsidiary is bound or affected, or (b) any note,
bond, mortgage, indenture, contract, agreement, lease, license, Permit,
franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any property
or asset of the Company or any Subsidiary is bound, except for any such
conflicts, defaults, breaches or violations that would not prevent or materially
delay consummation of the Offer or the Merger and would not have a Material
Adverse Effect.
SECTION 4.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) The
Company has filed all forms, reports and documents required to be filed by it
with the SEC since January 1, 1997. The SEC Reports (x) complied as to form in
all material respects with the applicable requirements of the Securities Act of
1933, as amended (the "SECURITIES ACT"), or the Exchange Act, as the case may
be, and the applicable rules and regulations promulgated thereunder, and (y) did
not, at the time they were filed, or, if amended, as of the date of such
amendment, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. Except as set forth in Section 4.07 (a) of the Disclosure
Schedule, no Subsidiary is required to file any form, report or other document
with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the SEC Reports was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presents, in all material
respects, the consolidated financial position, results of operations and cash
flows of the Company and its consolidated Subsidiaries as at the respective
dates thereof and for the respective periods indicated therein, except as
otherwise noted therein (subject, in the case of unaudited statements, to normal
and recurring year-end adjustments) and except where the failure to so fairly
present such financial position, results of operations or cash flows would not
have a Material Adverse Effect).
17
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries as at December
31, 1999, including the notes thereto (the "1999 BALANCE SHEET") or as set forth
in Section 4.07(c) of the Disclosure Schedule, neither the Company nor any
Subsidiary has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities and obligations,
incurred in the ordinary course of business consistent with past practice since
December 31, 1999 that would not prevent or materially delay consummation of the
Offer or the Merger and would not have a Material Adverse Effect.
(d) The Company has heretofore furnished to Parent complete
and correct copies of all amendments and modifications that have not been filed
by the Company with the SEC to all agreements, documents and other instruments
that previously had been filed by the Company with the SEC and are currently in
effect.
SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since
December 31, 1999, except as set forth in Section 4.08 of the Disclosure
Schedule, or as expressly contemplated by this Agreement, (a) the Company and
the Subsidiaries have conducted their businesses only in the ordinary course and
in a manner consistent with past practice, (b) there has not been any Material
Adverse Effect, and (c) neither the Company nor, to the knowledge of the
Company, any Subsidiary has taken any action that if taken after the date of
this Agreement, would constitute a breach of any of the covenants set forth in
Section 6.01, other than, in the case of clauses (a) and (c), any action
specifically identified in the Company's 2000-2004 business plan as an action to
be taken during the first or second quarter of 2000, and any action disclosed in
a press release issued by the Company after December 31, 1999 and prior to the
date hereof.
SECTION 4.09. ABSENCE OF LITIGATION. Except as disclosed in
Section 4.09 of the Disclosure Schedule, there is no litigation, suit, claim,
action, proceeding or investigation (an "ACTION") pending or, to the knowledge
of the Company, threatened against the Company or any Subsidiary, or any
property or asset of the Company or any Subsidiary, before any Governmental
Authority that (a) would have a Material Adverse Effect or (b) seeks to
materially delay or prevent the consummation of any Transaction. Neither the
Company nor any Subsidiary nor any property or asset of the Company or any
Subsidiary is subject to any continuing order of, consent decree, settlement
agreement or similar written agreement with, or, to the knowledge of the
Company, continuing investigation by, any Governmental Authority, or any order,
writ, judgment, injunction, decree, determination or award of any Governmental
Authority that would prevent or materially delay consummation of the Offer or
the Merger or would have a Material Adverse Effect.
SECTION 4.10. EMPLOYEE BENEFIT PLANS. (a) Section 4.10(a) of
the Disclosure Schedule lists (i) all material employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and all material bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree medical or life
18
insurance, supplemental retirement, severance or other material benefit plans,
programs or arrangements, and all material employment, termination, severance or
other contracts or agreements to which the Company or any ERISA Affiliate is a
party, with respect to which the Company or any ERISA Affiliate has any
obligation or which are maintained, contributed to or sponsored by the Company
or any ERISA Affiliate for the benefit of any current or former employee,
officer or director of the Company or any ERISA Affiliate, (ii) each material
employee benefit plan for which the Company or any Subsidiary could incur
liability under Section 4069 of ERISA in the event such plan has been or were to
be terminated, (iii) any material plan in respect of which the Company or any
Subsidiary could incur liability under Section 4212(c) of ERISA, and (iv) any
material contracts, arrangements or understandings between the Company or any
Subsidiary and any employee of the Company or any Subsidiary including, without
limitation, any contracts, arrangements or understandings relating in any way to
a sale of the Company or any Subsidiary (collectively, with the exception of any
plans, programs or arrangements not subject to United States law, the "PLANS").
The Company has made available to Purchaser a true and complete copy of each
Plan and has made available to Purchaser a true and complete copy of each
material document, if any, prepared in connection with each such Plan,
including, without limitation, as applicable (i) a copy of each trust or other
funding arrangement, (ii) each most recent summary plan description and summary
of material modifications, (iii) the most recently filed Internal Revenue
Service ("IRS") Form 5500, (iv) the most recently received IRS determination
letter for each such Plan, and (v) the most recently prepared actuarial report
and financial statement in connection with each such Plan. Neither the Company
nor any Subsidiary has any express or implied commitment (i) to create, incur
liability with respect to or cause to exist any other material employee benefit
plan, program or arrangement, (ii) to enter into any contract or agreement to
provide compensation or benefits to any individual other than in the ordinary
course of business, or (iii) to modify, change or terminate any Plan, other than
with respect to a modification, change or termination required by ERISA, the
Internal Revenue Code of 1986, as amended (the "CODE") or other applicable law.
(b) Except as set forth in Section 4.10(b) of the Disclosure
Schedule, none of the Plans is a multiemployer plan (within the meaning of
Section 3(37) or 4001(a)(3) of ERISA) (a "MULTIEMPLOYER PLAN") or a single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) for
which the Company or any Subsidiary could incur liability under Section 4063 or
4064 of ERISA (a "MULTIPLE EMPLOYER PLAN"). Except as set forth in Section
4.10(b) of the Disclosure Schedule, none of the Plans (i) provides for the
payment of separation, severance, termination or similar-type benefits to any
person, (ii) obligates the Company or any Subsidiary to pay separation,
severance, termination or similar-type benefits solely or partially as a result
of any transaction contemplated by this Agreement, or (iii) obligates the
Company or any Subsidiary to make any payment or provide any benefit as a result
of a "change in control", within the meaning of such term under Section 280G of
the Code. Except as set forth in Section 4.10(b) of the Disclosure Schedule,
none of the Plans provides for or promises retiree medical, disability or life
insurance benefits to any current or former employee,
19
officer or director of the Company or any Subsidiary. Except as set forth in
Section 4.10(b) of the Disclosure Schedule, each of the Plans is subject only to
the Laws of the United States or a political subdivision thereof.
(c) Each Plan is now and always has been operated in all
material respects in accordance with its terms and the requirements of all
applicable Laws including, without limitation, ERISA and the Code. The Company
and the Subsidiaries have performed all material obligations required to be
performed by them under and are not in any material respect in default under or
in violation of, and the Company has no knowledge of any material default or
violation by any party to, any Plan. No Action is pending or, to the knowledge
of the Company, threatened with respect to any Plan (other than claims for
benefits in the ordinary course) and, to the knowledge of the Company, no fact
or event exists that could give rise to any such Action.
(d) Each Plan that is intended to be qualified under Section
401(a) of the Code or Section 401(k) of the Code has timely received a favorable
determination letter from the IRS covering all of the provisions applicable to
the Plan for which determination letters are currently available that the Plan
is so qualified and each trust established in connection with any Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and,
to the knowledge of the Company, no fact or event has occurred since the date of
such determination letter or letters from the IRS to adversely affect the
qualified status of any such Plan or the exempt status of any such trust.
(e) There has not been any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Plan. Neither the Company nor any ERISA Affiliate has incurred any liability
under, arising out of or by operation of Title IV of ERISA (other than liability
for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary
course), including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA, or (ii) the withdrawal from any Multiemployer Plan or Multiple
Employer Plan, and, to the knowledge of the Company, no fact or event exists
which could give rise to any such liability.
(f) All contributions, premiums or payments required to be
made with respect to any Plan have been made on or before their due dates. All
such contributions are or were fully deductible for federal income tax purposes
and no such deduction has been challenged or disallowed by any Governmental
Authority and, to the knowledge of the Company, no fact or event exists which
could give rise to any such challenge or disallowance.
(g) Except as set forth in Section 4.10(g) of the Disclosure
Schedule, all directors, officers, management employees, and technical and
professional employees of the Company and the Subsidiaries are under written
obligation to the Company and the Subsidiaries
20
to maintain in confidence all confidential or proprietary information acquired
by them in the course of their employment and to assign to the Company and the
Subsidiaries all inventions made by them within the scope of their employment
during such employment and for a reasonable period thereafter.
(h) In addition to the foregoing, with respect to each
material plan, program or arrangement described in Section 4.10(a) that is not
subject to United States law (a "NON-U.S. BENEFIT PLAN"):
(i) all employer and employee contributions to each Non-U.S.
Benefit Plan required by law or by the terms of such Non-U.S. Benefit
Plan have been made, or, if applicable, accrued in accordance with
normal accounting practices, and a PRO RATA contribution for the period
prior to and including the date of this Agreement has been made or
accrued;
(ii) the fair market value of the assets of each funded
Non-U.S. Benefit Plan, the liability of each insurer for any Non-U.S.
Benefit Plan funded through insurance or the book reserve established
for any Non-U.S. Benefit Plan, together with any accrued contributions,
is sufficient to procure or provide for the benefits determined on an
ongoing basis accrued to the date of this Agreement with respect to all
current and former participants under such Non-U.S. Benefit Plan
according to the actuarial assumptions and valuations most recently
used to determine employer contributions to such Non-U.S. Benefit Plan,
and no Transaction shall cause such assets or insurance obligations to
be less than such benefit obligations; and
(iii) each Non-U.S. Benefit Plan required to be registered has
been registered and has been maintained in good standing with
applicable regulatory authorities and is approved by any applicable
taxation authorities to the extent such approval is available. Each
Non-U.S. Benefit Plan is now and always has been operated in material
compliance with all applicable non-United States laws and regulations.
SECTION 4.11. LABOR AND EMPLOYMENT MATTERS. (a) Except as set
forth in Section 4.11 of the Disclosure Schedule, (i) to the knowledge of the
Company, there are no controversies pending or threatened between the Company or
any Subsidiary and any of their respective employees, which controversies would
prevent or materially delay consummation of the Offer or the Merger or would
have a Material Adverse Effect; (ii) neither the Company nor any Subsidiary is a
party to any collective bargaining agreement, work council agreement, work force
agreement or any other labor union contract applicable to persons employed by
the Company or any Subsidiary, nor, to the knowledge of the Company, are there
any activities or proceedings of any labor union to organize any such employees;
(iii) neither the Company nor any Subsidiary has breached or otherwise failed to
comply with any provision of any such agreement or contract, and there are no
grievances outstanding against the Company or any
21
Subsidiary under any such agreement or contract; (iv) there are no unfair labor
practice complaints pending against the Company or any Subsidiary before the
National Labor Relations Board or any other court or tribunal or any current
union representation questions involving employees of the Company or any
Subsidiary; and (v) there is no strike, slowdown, work stoppage or lockout, or,
to the knowledge of the Company, threat thereof, by or with respect to any
employees of the Company or any Subsidiary. The consent of any labor union is
not required to consummate the Transactions. There is no obligation to inform,
consult or obtain consent whether in advance or otherwise of any works council,
employee representatives or other representative bodies in order to consummate
the Transactions.
(b) The Company and the Subsidiaries are in compliance with
all applicable laws relating to the employment of labor, including those related
to wages, hours, collective bargaining, individual and collective consultation,
notice of termination, redundancy and the payment and withholding of taxes and
other sums as required by the appropriate Governmental Authority and has
withheld and paid to the appropriate Governmental Authority or are holding for
payment not yet due to such Governmental Authority all amounts required to be
withheld from employees of the Company or any Subsidiary and are not liable for
any arrears of wages, taxes, penalties or other sums for failure to comply with
any of the foregoing except where the failure to be in compliance, withhold or
pay any such liability would not prevent or materially delay consummation of the
Offer or the Merger and would not have a Material Adverse Effect. To the
knowledge of the Company, the Company and the Subsidiaries have paid in full to
all employees or adequately accrued for in accordance with GAAP consistently
applied all wages, salaries, commissions, bonuses, benefits and other
compensation due to or on behalf of such employees and there is no claim with
respect to payment of wages, salary or overtime pay that has been asserted or is
now pending or threatened before any Governmental Authority with respect to any
persons currently or formerly employed by the Company or any Subsidiary other
than claims that would not prevent or materially delay consummation of the Offer
or the Merger or have Material Adverse Effect. Neither the Company nor any
Subsidiary is a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Authority relating to employees or employment
practices, other than those that would not prevent or materially delay
consummation of the Offer or the Merger or have Material Adverse Effect. There
is no charge or proceeding with respect to a violation of any occupational
safety or health standards that has been asserted or is now pending or
threatened with respect to the Company, other than charges or proceedings that
would not prevent or materially delay consummation of the Offer or the Merger
and would not have a Material Adverse Effect. There is no charge of
discrimination in employment or employment practices, for any reason, including,
without limitation, age, gender, race, religion or other legally protected
category, which has been asserted or is now pending or threatened before the
United States Equal Employment Opportunity Commission, or any other Governmental
Authority in any jurisdiction in which the Company or any Subsidiary have
employed or employ any person, other than charges that would not prevent or
materially delay consummation of the Offer or the Merger and would not have a
Material
22
Adverse Effect. No inquiry or investigation affecting any Company or any
Subsidiary has been made or threatened by the Commission for Racial Equality,
the Equal Opportunities Commission or any similar body other than inquiries or
investigations that would not prevent or materially delay consummation of the
Offer or the Merger and would not have a Material Adverse Effect.
23
(c) Except as disclosed in Section 4.11 of the Disclosure
Schedule, (i) all subsisting contracts of employment to which the Company or, to
the knowledge of the Company, any Subsidiary is a party are terminable by the
Company or any Subsidiary on three months' notice or less without compensation
(other than in accordance with applicable legislation); (ii) there are no
customs, established practices or discretionary arrangements of the Company or,
to the knowledge of the Company, any Subsidiary in relation to the termination
of employment of any of its employees (whether voluntary or involuntary); (iii)
neither the Company nor, to the knowledge of the Company, any Subsidiary has any
outstanding liability to pay compensation for loss of office or employment or a
redundancy payment to any present or former employee or to make any payment for
breach of any agreement listed in Section 4.10(a) of the Disclosure Schedule;
(iv) there is no term of employment of any employee of the Company or, to the
knowledge of the Company, any Subsidiary which shall entitle that employee to
treat the consummation of the Transactions as amounting to a breach of his
contract of employment or entitling him to any payment or benefit whatsoever or
entitling him to treat himself as redundant or otherwise dismissed or released
from any obligation.
SECTION 4.12. OFFER DOCUMENTS; SCHEDULE 14D-9; PROXY
STATEMENT. Neither the Schedule 14D-9 nor any information supplied by the
Company for inclusion in the Offer Documents shall, at the times the Schedule
14D-9, the Offer Documents or any amendments or supplements thereto are filed
with the SEC or are first published, sent or given to shareholders of the
Company, as the case may be, 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 the light of the circumstances under which they
were made, not misleading. Neither the proxy statement to be sent to the
shareholders of the Company in connection with the Shareholders' Meeting (as
hereinafter defined) or the information statement to be sent to such
shareholders, as appropriate (such proxy statement or information statement, as
amended or supplemented, being referred to herein as the "PROXY STATEMENT"),
shall, at the date the Proxy Statement (or any amendment or supplement thereto)
is first mailed to shareholders of the Company and at the time of the
Shareholders' Meeting, contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading. The Schedule 14D-9 and the Proxy Statement shall comply in
all material respects as to form with the requirements of the Exchange Act and
the rules and regulations thereunder.
SECTION 4.13. PROPERTY AND LEASES. (a) The Company and the
Subsidiaries have sufficient title to all their properties and assets to conduct
their respective businesses as currently conducted, with only such exceptions as
would not have a Material Adverse Effect.
(b) The Company does not own any real property.
(c) All leases of real property leased for the use or benefit
of the Company or any Subsidiary to which the Company or any Subsidiary is a
party, and all amendments and
24
modifications thereto, are in full force and effect and have not been modified
or amended, and there exists no default under any such lease by the Company or
any Subsidiary, nor any event which, with notice or lapse of time or both, would
constitute a default thereunder by the Company or any Subsidiary, except as
would not prevent or materially delay consummation of the Offer or the Merger
and would not have a Material Adverse Effect.
SECTION 4.14. INTELLECTUAL PROPERTY. Except as would not have
a Material Adverse Effect (a) the conduct of the business of the Company and the
Subsidiaries as currently conducted, with respect to their owned Intellectual
Property, does not infringe upon or misappropriate the Intellectual Property
rights of any third party, and no claim has been asserted to the Company that
the conduct of the business of the Company and, to the knowledge of the Company,
the Subsidiaries as currently conducted infringes upon or may infringe upon or
misappropriates the Intellectual Property rights of any third party; (b) with
respect to each item of Intellectual Property owned by the Company or a
Subsidiary and material to the business, financial condition or results of
operations of the Company and the Subsidiaries taken as a whole ("COMPANY OWNED
INTELLECTUAL PROPERTY"), the Company or a Subsidiary is the owner of the entire
right, title and interest in and to such Company Owned Intellectual Property and
is entitled to use such Company Owned Intellectual Property in the continued
operation of its respective business; (c) with respect to each item of
Intellectual Property licensed to the Company or a Subsidiary that is material
to the business of the Company and the Subsidiaries, taken as a whole, as
currently conducted ("COMPANY LICENSED INTELLECTUAL PROPERTY"), the Company or a
Subsidiary has the right to use such Company Licensed Intellectual Property in
the continued operation of its respective business in accordance with the terms
of the license agreement governing such Company Licensed Intellectual Property;
(d) to the knowledge of the Company, the Company Owned Intellectual Property is
valid and enforceable, and has not been adjudged invalid or unenforceable in
whole or in part; (e) to the knowledge of the Company, no person is engaging in
any activity that infringes upon the Company Owned Intellectual Property; (f) to
the knowledge of the Company, each license of the Company Licensed Intellectual
Property is valid and enforceable, is binding on all parties to such license,
and is in full force and effect; (g) to the knowledge of the Company, no party
to any license of the Company Licensed Intellectual Property is in breach
thereof or default thereunder; and (h) neither the execution of this Agreement
nor the consummation of any Transaction shall adversely affect any of the
Company's rights with respect to the Company Owned Intellectual Property or the
Company Licensed Intellectual Property.
SECTION 4.15. TAXES. The Company and the Subsidiaries have
filed all United States federal, state, local and United Kingdom and other
non-United States Tax returns and reports required to be filed by them for tax
years ended prior to the date of this Agreement or requests for extensions have
been timely filed and any such request shall have been granted and not expired
and have paid and discharged all Taxes required to be paid or discharged, other
than (a) such payments as are being contested in good faith by appropriate
proceedings and (b) such
25
filings, payments or other occurrences that would not have a Material Adverse
Effect. Except as disclosed in Section 4.15 of the Disclosure Schedule, neither
the IRS nor any other United States or non-United States taxing authority or
agency is now asserting or, to the knowledge of the Company, threatening to
assert against the Company or any Subsidiary any deficiency or claim for any
Taxes. Except as disclosed in Section 4.15 of the Disclosure Schedule, neither
the Company nor any Subsidiary has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of
any Tax.
SECTION 4.16. ENVIRONMENTAL MATTERS. Except as described in
Section 4.17 of the Disclosure Schedule or as would not prevent or materially
delay consummation of the Offer or the Merger and would not have a Material
Adverse Effect, (a) the Company is in compliance with all applicable
Environmental Laws; (b) none of the properties currently or formerly owned,
leased or operated by the Company (including, without limitation, soils and
surface and ground waters) are contaminated with any Hazardous Substance; (c)
the Company has not received any written notice that it is liable for any
contamination by Hazardous Substances at any site containing Hazardous
Substances generated, transported, stored, treated or disposed by the Company;
(d) the Company is not actually, potentially or allegedly liable under any
Environmental Law (including, without limitation, pending or threatened liens);
(e) the Company is in compliance with all permits, licenses and other
authorizations required under any Environmental Law ("ENVIRONMENTAL PERMITS"),
and, to the knowledge of the Company, all past non-compliance with Environmental
Laws or Environmental Permits has been resolved without any pending, ongoing or
future obligation, costs or liability; and (f) neither the execution of this
Agreement nor the consummation of the Transactions will require any
investigation, remediation or other action with respect to Hazardous Substances,
or any notice to or consent of Governmental Authorities or third parties,
pursuant to any applicable Environmental Law or Environmental Permit.
SECTION 4.17. AMENDMENT TO RIGHTS AGREEMENT. The Board has
authorized an amendment to the Rights Agreement so that so long as this
Agreement has not been terminated (a) none of the execution or delivery of this
Agreement or the Shareholder Agreements, the making of the Offer, the acceptance
for payment of Shares by Purchaser pursuant to the Offer, the consummation of
the Merger or the consummation of any other Transaction will result in (i) the
occurrence of the "flip-in event" described under Section 11 of the Rights
Agreement, (ii) the occurrence of the "flip-over event" described in Section 13
of the Rights Agreement, or (iii) the Rights becoming evidenced by, and
transferable pursuant to, certificates separate from the certificates
representing Shares, and (b) the Rights will expire pursuant to the terms of the
Rights Agreement at the Effective Time. The Company shall use its best efforts
to effect such amendment.
SECTION 4.18. MATERIAL CONTRACTS. (a) Subsections (i) through
(x) of Section 4.19 of the Disclosure Schedule contain a list of the following
types of contracts and
26
agreements to which the Company or any Subsidiary is a party (such contracts,
agreements and arrangements as are required to be set forth in Section 4.19(a)
of the Disclosure Schedule being the "MATERIAL CONTRACTS"):
(i) each contract and agreement which (A) is likely to involve
consideration of more than $1,000,000, in the aggregate, during the
calendar year ending December 31, 2000, (B) is likely to involve
consideration of more than $5,000,000, in the aggregate, over the
remaining term of such contract, and which, in either case, cannot be
canceled by the Company or any Subsidiary without penalty or further
payment and without more than 90 days' notice;
(ii) all material broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing, consulting and advertising contracts and agreements to which
the Company or, to the knowledge of the Company, any Subsidiary is a
party except any such contract that can be canceled by the Company or
any Subsidiary without penalty or further payment and without more than
90 days' notice;
(iii) all management contracts (excluding contracts for
employment) and contracts with other consultants, including any
contracts involving the payment of royalties or other amounts
calculated based upon the revenues or income of the Company or any
Subsidiary or income or revenues related to any product of the Company
or any Subsidiary to which the Company or any Subsidiary is a party;
(iv) all contracts and agreements evidencing indebtedness for
borrowed money in excess of $1,000,000;
(v) all material contracts and agreements with any
Governmental Authority to which the Company or to the knowledge of the
Company, any Subsidiary is a party;
(vi) all contracts and agreements that limit, or purport to
limit, the ability of the Company or any Subsidiary to compete in any
line of business or with any person or entity or in any geographic area
or during any period of time;
(vii) all material contracts or arrangements that result in
any person or entity holding a power of attorney from the Company or,
to the knowledge of the Company, any Subsidiary that relates to the
Company, any Subsidiary or their respective businesses; and
(viii) all other contracts and agreements, whether or not made
in the ordinary course of business, the absence of which would have a
Material Adverse Effect.
27
(b) Except as would not prevent or materially delay
consummation of the Offer or the Merger and would not have a Material Adverse
Effect, (i) each Material Contract is a legal, valid and binding agreement, and
none of the Material Contracts is in default by its terms or has been canceled
by the other party; (ii) to the Company's knowledge, no other party is in breach
or violation of, or default under, any Material Contract; (iii) the Company and,
to the knowledge of the Company, the Subsidiaries are not in receipt of any
claim of default under any such agreement; and (iv) neither the execution of
this Agreement nor the consummation of any Transaction shall constitute default,
give rise to cancellation rights, or otherwise adversely affect any of the
Company's rights under any Material Contract. The Company has furnished or made
available to Parent true and complete copies of all Material Contracts,
including any amendments thereto.
SECTION 4.19. INSURANCE. (a) As of the date hereof, the
Company and its Subsidiaries are, and continually since the later of 1997 or the
date of acquisition by the Company have been, insured by insurers, reasonably
believed by the Company to be of recognized financial responsibility and
solvency, against such losses and risks and in such amounts as are customary in
the businesses in which they are engaged.
(b) With respect to each such insurance policy: (i) the policy
is legal, valid, binding and enforceable in accordance with its terms and,
except for policies that have expired under their terms in the ordinary course,
is in full force and effect; (ii) neither the Company nor any Subsidiary is in
material breach or default (including any such breach or default with respect to
the payment of premiums or the giving of notice), and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default, or permit termination or modification, under the policy; and (iii) to
the knowledge of the Company, no insurer on the policy has been declared
insolvent or placed in receivership, conservatorship or liquidation.
(c) At no time subsequent to January 1, 1997 has the Company
or, to the knowledge of the Company, any Subsidiary (i) been denied any
insurance or indemnity bond coverage which it has requested, (ii) made any
material reduction in the scope or amount of its insurance coverage, or (iii)
received notice from any of its insurance carriers that any insurance premiums
will be subject to increase in an amount materially disproportionate to the
amount of the increases in the amount of coverage with respect thereto (or with
respect to similar insurance) in prior years or that any current insurance
coverage will not be available in the future, other than as a result of the
Transactions, substantially on the same terms as are now in effect.
(d) BROKERS. No broker, finder or investment banker (other
than Deutsche Bank Securities, Inc.) is entitled to any brokerage, finder's or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct copy of all agreements between the
Company and Deutsche Bank Securities, Inc. pursuant to which such firm would be
entitled to any payment relating to the Transactions.
28
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent
and warrant to the Company that:
SECTION 5.01. CORPORATE ORGANIZATION. Parent is a corporation
duly organized and validly existing under the laws of the Province of Ontario.
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Michigan, except where the failure to be so
organized, existing and in good standing would not prevent or delay consummation
of the Transactions or otherwise prevent Parent or Purchaser from performing any
of their material obligations under this Agreement. Each of Parent and Purchaser
has the requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to have such power
authority and government approvals would not prevent or materially delay
consummation of the Transactions or otherwise prevent Parent and Purchaser from
performing any of their material obligations under this Agreement.
SECTION 5.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent and Purchaser has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and, subject,
in the case of the Merger, to obtaining approval of the shareholders of the
Company, if required, to consummate the Transactions. The execution and delivery
of this Agreement by Parent and Purchaser and the consummation by Parent and
Purchaser of the Transactions have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Parent or Purchaser are necessary to authorize this Agreement or to consummate
the Transactions (other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by Michigan Law). This
Agreement has been duly and validly executed and delivered by Parent and
Purchaser and, assuming due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of each of Parent and
Purchaser enforceable against each of Parent and Purchaser in accordance with
its terms.
SECTION 5.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a)
The execution and delivery of this Agreement by Parent and Purchaser do not, and
the performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of Incorporation or By-laws of either Parent or
Purchaser, (ii) assuming that all consents, approvals, authorizations and other
actions described in Section 5.03(b) have been obtained and all filings and
obligations described in Section 5.03(b) have been made and, subject, in the
case of the Merger, to obtaining approval of the shareholders, if required,
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Parent or Purchaser or by which any property or asset of either of
them is bound or affected, or (iii) result in any breach of, or
29
constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Parent or Purchaser pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Purchaser
is a party or by which Parent or Purchaser or any property or asset of either of
them is bound or affected, except, with respect to clauses (ii) and (iii), for
any such conflicts, violations, breaches, defaults or other occurrences which
would not prevent or materially delay consummation of the Transactions or
otherwise prevent Parent and Purchaser from performing any of their material
obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with, or notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws, state takeover laws,
the HSR Act and the requirements in the countries where a merger filing will be
necessary or advisable, and the filing and recordation of appropriate merger
documents as required by Michigan Law, and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the
Transactions, or otherwise prevent Parent or Purchaser from performing their
material obligations under this Agreement.
SECTION 5.04. FINANCING. At the time of execution of this
Agreement, expiration of the Offer and at the Effective Time, either Purchaser
will have available or Parent will make available or cause one or more of its
affiliates to make available the funds necessary to purchase all of the Shares
pursuant to the Offer and the Merger and to pay all fees and expenses in
connection therewith.
SECTION 5.05. OFFER DOCUMENTS; PROXY STATEMENT; SCHEDULE
14D-9. The Offer Documents shall not, at the time the Offer Documents are filed
with the SEC or are first published, sent or given to shareholders of the
Company, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The information supplied by Parent
for inclusion in the Schedule 14D-9 and Proxy Statement, if any, shall not, at
the date first mailed to shareholders of the Company, and at the time of the
Shareholders' Meeting, contain any untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not false or misleading, or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Shareholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, Parent and Purchaser make no representation or
30
warranty with respect to any information supplied by the Company or any of its
representatives for inclusion in any of the foregoing documents or the Offer
Documents. The Offer Documents shall comply in all material respects as to form
with the requirements of the Exchange Act and the rules and regulations
thereunder.
SECTION 5.06. VOTE REQUIRED. No vote of the holders of any of
the outstanding shares of capital stock of Parent is necessary to approve this
Agreement and the transactions contemplated hereby.
SECTION 5.07. OWNERSHIP OF SHARES. As of the date of this
Agreement, Parent does not beneficially own any Shares.
SECTION 5.08. BROKERS. No broker, finder or investment banker
(other than Xxxxxx Xxxxxxx Xxxx Xxxxxx and Compass Partners International, LLC)
is entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. The Company agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, the businesses
of the Company and the Subsidiaries shall be conducted only in, and the Company
and the Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use its reasonable best efforts to preserve substantially intact the business
organization of the Company and the Subsidiaries, to keep available the services
of the current officers, employees and consultants of the Company and the
Subsidiaries and to preserve the current relationships of the Company and the
Subsidiaries with customers, suppliers and other persons with which the Company
or any Subsidiary has significant business relations. By way of amplification
and not limitation, except as expressly contemplated by this Agreement and
Section 6.01 of the Disclosure Schedule, neither the Company nor any Subsidiary
shall, between the date of this Agreement and the Effective Time, directly or
indirectly, do, or propose to do, any of the following without the prior written
consent of Parent, which consent shall not be unreasonably withheld:
(a) amend or otherwise change its Articles of Incorporation or
By-laws or equivalent organizational documents;
31
(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, (i) any shares of any class of capital stock of the Company or any
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary (except for the issuance of
a maximum of 4,933,628 Shares issuable pursuant to the Company Stock
Option Plans outstanding on the date hereof) or (ii) any material
assets of the Company or any Subsidiary, except in the ordinary course
of business and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except that a direct or indirect
wholly owned Subsidiary may declare and pay a dividend or make an
advance to its parent or the Company;
(d) reclassify, combine, split, subdivide or redeem, or
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization
or any division thereof or any material amount of assets, other than
pending acquisitions or minority investments, in each case publicly
announced prior to the date hereof; (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise become responsible for, the obligations of any
person, or make any loans or advances, except in the ordinary course of
business and consistent with past practice; (iii) authorize, or make
any commitment with respect to (A) any capital expenditures in excess
of $4,000,000 in the aggregate per month, (B) any single capital
expenditure which is in excess of $500,000 or (C) any single capital
project that is reasonably likely to cost $2,000,000 or more in the
aggregate for the Company and the Subsidiaries taken as a whole; (iv)
make or direct to be made any capital investments or equity investments
in any entity, other than investments in any wholly-owned Subsidiary,
in excess of $500,000 for a single transaction and $1,000,000 in the
aggregate; or (v) enter into or amend any contract, agreement,
commitment or arrangement with respect to any matter set forth in this
Section 6.01(e);
(f) increase the compensation payable or to become payable or
the benefits provided to its directors, officers or employees, except
for increases in the ordinary course of business and consistent with
past practice in salaries or wages of employees of the Company or any
Subsidiary who are not directors or officers of the Company, or grant
any severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of
the Company or of any
32
Subsidiary, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit-sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any director, officer or
employee;
(g) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures;
(h) make any material tax election or settle or compromise any
material United States federal, state, local or other non-United States
income tax liability, except in the ordinary course of business or in a
manner consistent with past practice;
(i) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the 1999 Balance Sheet or
subsequently incurred in the ordinary course of business and consistent
with past practice;
(j) amend, modify or consent to the termination of any Company
Material Contract, or amend, waive, modify or consent to the
termination of the Company's or any Subsidiary's rights thereunder,
other than in the ordinary course of business and consistent with past
practice;
(k) commence or settle any material Action; or
(l) announce an intention, enter into any formal or informal
agreement or otherwise make a commitment, to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. SHAREHOLDERS' MEETING. (a) If required by
applicable law in order to consummate the Merger, the Company, acting through
the Board, shall, in accordance with applicable law and the Company's Articles
of Incorporation and By-laws, (i) duly call, give notice of, convene and hold an
annual or special meeting of its shareholders as promptly as practicable
following consummation of the Offer for the purpose of considering and taking
action on this Agreement and the Transactions (the "SHAREHOLDERS' MEETING"), and
(ii) subject to the terms of this Agreement, include in the Proxy Statement, and
not subsequently withdraw or modify in any manner adverse to the Purchaser or
Parent, the unanimous recommendation of the
33
Board that the shareholders of the Company approve and adopt this Agreement and
the Transactions and (B) use its reasonable best efforts to obtain such approval
and adoption. At the Shareholders' Meeting, Parent and Purchaser shall cause all
Shares then owned by them and their subsidiaries to be voted in favor of the
approval and adoption of this Agreement and the Transactions.
(b) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the then outstanding Shares, the parties shall
take all necessary and appropriate action to cause the Merger to become
effective, in accordance with Section 450.1711(i) of Michigan Law, as promptly
as reasonably practicable after such acquisition, without a meeting of the
shareholders of the Company.
SECTION 7.02. PROXY STATEMENT. If approval of the Company's
shareholders is required by applicable law to consummate the Merger, promptly
following consummation of the Offer, the Company shall file the Proxy Statement
with the SEC under the Exchange Act, and shall use its reasonable best efforts
to have the Proxy Statement cleared by the SEC. Parent, Purchaser and the
Company shall cooperate with each other in the preparation of the Proxy
Statement, and the Company shall notify Parent of the receipt of any comments of
the SEC with respect to the Proxy Statement and of any requests by the SEC for
any amendment or supplement thereto or for additional information and shall
provide to Parent promptly copies of all correspondence between the Company or
any representative of the Company and the SEC. The Company shall provide Parent
and its counsel the opportunity to review the Proxy Statement, including all
amendments and supplements thereto, prior to its being filed with the SEC and
shall give Parent and its counsel the opportunity to review all responses to
requests for additional information and replies to comments prior to their being
filed with, or sent to, the SEC. Each of the Company, Parent and Purchaser
agrees to use its reasonable best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and requests by the
SEC and to cause the Proxy Statement and all required amendments and supplements
thereto to be mailed to the holders of Shares entitled to vote at the
Shareholders' Meeting at the earliest practicable time.
SECTION 7.03. COMPANY BOARD REPRESENTATION; SECTION 14(f). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer and from
time to time thereafter, Purchaser shall be entitled to designate up to such
number of directors, rounded up to the next whole number, on the Board as shall
give Purchaser representation on the Board equal to the product of the total
number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser or any affiliate of Purchaser
following such purchase bears to the total number of Shares then outstanding,
and the Company shall, at such time, promptly take all actions within its power
reasonably necessary to cause Purchaser's designees to be elected as directors
of the Company, including increasing the size of the Board or securing the
resignations
34
of incumbent directors, or both. At such times, the Company shall use its
reasonable best efforts to cause persons designated by Purchaser to constitute
the same percentage as persons designated by Purchaser shall constitute of the
Board of (i) each committee of the Board, (ii) the board of directors of each
Subsidiary, and (iii) each committee of each such board, in each case only to
the extent permitted by applicable law. Notwithstanding the foregoing, until the
Effective Time, the Company shall use its reasonable best efforts to ensure that
at least two members of the Board (in addition to the Company's Chief Executive
Officer) and each committee of the Board and such boards and committees of the
Subsidiaries, as of the date hereof, who are not employees of the Company shall
remain members of the Board and of such boards and committees.
(b) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder to fulfill its obligations under this Section 7.03, and shall include
in the Schedule 14D-9 such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1 to
fulfill such obligations. Parent or Purchaser shall supply to the Company, and
be solely responsible for, any information with respect to either of them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1.
(c) Following the election of designees of Purchaser pursuant
to this Section 7.03, prior to the Effective Time, any amendment of this
Agreement or the Articles of Incorporation or By-laws of the Company, any
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or Purchaser, or waiver of any of the Company's rights hereunder, shall require
the concurrence of a majority of the directors of the Company then in office who
were directors of the Company on the date hereof or designees of such directors.
SECTION 7.04. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) From
the date hereof until the Effective Time, to the extent permitted by applicable
law, the Company shall, and shall cause the Subsidiaries and the officers,
directors, employees, auditors and agents of the Company and the Subsidiaries
to, afford the officers, employees and agents of Parent and Purchaser complete
access at all reasonable times to the officers, employees, agents, properties,
offices, plants and other facilities, books and records of the Company and each
Subsidiary, and shall furnish Parent and Purchaser with such financial,
operating and other data and information as Parent or Purchaser, through their
officers, employees or agents, may reasonably request.
(b) All information obtained by Parent or Purchaser pursuant
to this Section 7.04 shall be kept confidential in accordance with the
confidentiality agreement, dated April 4, 2000 (the "CONFIDENTIALITY
AGREEMENT"), between Parent and the Company.
(c) No investigation pursuant to this Section 7.04 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto or any condition to the
Offer.
35
SECTION 7.05. NO SOLICITATION OF TRANSACTIONS. (a) Neither the
Company nor any Subsidiary shall, directly or indirectly, through any officer,
director, agent or otherwise, (i) solicit, initiate or encourage the submission
of, any Acquisition Proposal, including a Superior Proposal or (ii) participate
in any discussions or negotiations regarding, or furnish to any person, any
information with respect to, or otherwise cooperate in any way with respect to,
or assist or participate in, or facilitate, any Acquisition Proposal, except
that the Company may take any action referred to in this clause (ii) if (A) the
Board determines in good faith after having received advice from outside legal
counsel that such action is required by the fiduciary duties of the Board under
applicable law, (B) the Board determines in good faith that the Acquisition
Proposal constitutes, or may reasonably be expected to lead to, a Superior
Proposal, and (C) after giving prior written notice to Parent and Purchaser and
entering into a customary confidentiality agreement on terms no less favorable
to the Company than those contained in the Confidentiality Agreement. For
purposes of this Agreement, a "SUPERIOR PROPOSAL" means any bona fide written
proposal, not solicited, initiated or encouraged in violation of this Section
7.05, made by a third person to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, all of the equity securities
of the Company entitled to vote generally in the election of directors or all or
substantially all of the assets of the Company, if and only if, the Board
reasonably determines (after consultation with its financial advisor and outside
counsel) (x) that the proposed transaction would be more favorable from a
financial point of view to its shareholders than the Offer and the Merger and
the Transactions taking into account at the time of determination any changes to
the terms of this Agreement that as of that time had been proposed by Parent,
and (y) that the person or entity making such Superior Proposal is capable of
consummating such Acquisition Proposal (based upon, among other things, the
availability of financing and the degree of certainty of obtaining financing,
the expectation of obtaining required regulatory approvals and the identity and
background of such person).
(b) Except as set forth in this Section 7.05(b), neither the
Board nor any committee thereof shall withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Board or any such committee of this Agreement, the Offer,
the Merger or any other Transaction. Notwithstanding the foregoing, in the event
that, prior to the time of acceptance for payment of Shares pursuant to the
Offer, in connection with an Acquisition Proposal, the Board determines in good
faith (i) after having received advice from outside counsel that such action is
required by the fiduciary duties of the Board under applicable law and (ii) that
the Acquisition Proposal constitutes a Superior Proposal, the Board may withdraw
or modify its approval or recommendation of the Offer and the Merger.
(c) The Company shall, and shall direct or cause its
directors, officers, employees, representatives and agents to, immediately cease
and cause to be terminated any discussions or negotiations with any parties that
may be ongoing with respect to any Acquisition Proposal.
36
(d) The Company shall promptly advise Parent orally and in
writing of (i) any Acquisition Proposal or any request for information with
respect to any Acquisition Proposal, the material terms and conditions of such
Acquisition Proposal or request and the identity of the person making such
Acquisition Proposal or request and (ii) any changes in any such Acquisition
Proposal or request.
(e) Nothing contained in this Section 7.05 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's shareholders, if the Board determines in good
faith, after having received advice from outside legal counsel, that such action
is required under applicable law; PROVIDED, HOWEVER, that neither the Company
nor the Board nor any committee thereof shall, except as permitted by Section
7.05(b), withdraw or modify, or propose publicly to withdraw or modify, its
position with respect to this Agreement, the Offer, the Merger or any other
Transaction or shall approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal, including a Superior Proposal.
(f) The Company agrees, except as required by the Board's
fiduciary duties under applicable law after having received advice from outside
legal counsel, not to release any third party from, or waive any provision of,
any confidentiality or standstill agreement to which the Company is a party.
SECTION 7.06. EMPLOYEE BENEFITS MATTERS. (a) Parent and
Purchaser agree that following the Effective Time, the Surviving Corporation and
its Subsidiaries and successors shall provide those persons who, immediately
prior to the Effective Time, were employees of the Company or its Subsidiaries
("RETAINED EMPLOYEES") with employee plans and programs which provide benefits
that are no less favorable in the aggregate than those provided to similarly
situated employees of the Thomson Financial group of Parent. Employees of the
Company or any Subsidiary shall receive credit for purposes of eligibility to
participate and vesting (but, except as required by applicable law, not for
benefit accruals under any defined benefit pension plan) under any employee
benefit plan, program or arrangement established or maintained by the Surviving
Corporation or any of its subsidiaries for service accrued or deemed accrued
prior to the Effective Time with the Company or any Subsidiary; PROVIDED,
HOWEVER, that such crediting of service shall not operate to duplicate any
benefit or the funding of any such benefit. In addition, with respect to any
medical, dental, pharmaceutical and/or vision benefit plan of Parent in which
employees of the Company may participate following the Effective Time (a "New
Plan"), Parent shall cause all pre-existing condition exclusion and
actively-at-work requirements to be waived for such employees and their covered
dependents (PROVIDED, HOWEVER, that such waiver shall not apply to any
pre-existing condition that excluded any such employee or dependent prior to the
Effective Time from the corresponding Plan maintained by the Company) and shall
provide that any covered expenses incurred on or before the Effective Time by an
37
employee or an employee's covered dependents shall be taken into account for
purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions under the relevant New Plan after the Effective Time to
the same extent as such expenses are taken into account for the benefit of
similarly situated employees of Parent and its Subsidiaries.
(b) In addition, Parent and Purchaser shall provide severance
arrangements to the individuals set forth in Exhibit 7.06(b) for the time
periods and for the amounts contained therein.
SECTION 7.07. DIRECTORS' AND OFFICERS' INDEMNIFICATION AND
INSURANCE. (a) The By-laws of the Surviving Corporation shall contain provisions
no less favorable with respect to indemnification than are set forth in Article
VII of the By-laws of the Company, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would affect adversely the rights thereunder of individuals
who, at or prior to the Effective Time, were directors, officers, employees,
fiduciaries or agents of the Company, unless such modification shall be required
by law.
(b) Parent shall cause the Surviving Corporation, to the
fullest extent permitted under applicable law to indemnify, defend and hold
harmless, each present and former director, officer or employee of the Company
or any of its Subsidiaries (collectively, the "INDEMNIFIED PARTIES") against any
costs or expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
actual or threatened claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, (x) arising out of or
pertaining to the Transactions or (y) otherwise with respect to any acts or
omissions occurring at or prior to the Effective Time, to the same extent as
provided in the Company's certificate of incorporation or by-laws or any
applicable contract or agreement as in effect on the date hereof, in each case
for a period of six years after the date hereof. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time) and subject to the specific terms of any indemnification
contract, (i) any counsel retained by the Indemnified Parties for any period
after the Effective Time shall be reasonably satisfactory to the Surviving
Corporation, (ii) after the Effective Time, the Surviving Corporation shall pay
the reasonable fees and expenses of such counsel, promptly after statements
therefor are received and (iii) the Surviving Corporation will cooperate in the
defense of any such matter; PROVIDED, HOWEVER, that the Surviving Corporation
shall not be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld or delayed); and PROVIDED,
FURTHER, that, in the event that any claim or claims for indemnification are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until the disposition of any
and all such claims. The Indemnified Parties as a group may retain only one law
firm (plus local counsel, if applicable) to represent them with respect to any
single action unless there is, under applicable standards of professional
conduct, a conflict on any significant
38
issue between the positions of any two or more Indemnified Parties, in which
case each Indemnified Person with respect to whom such a conflict exists (or
group of such Indemnified Persons who among them have no such conflict) may
retain one separate law firm.
(c) The Surviving Corporation shall maintain in effect for six
years from the Effective Time the current directors' and officers' liability
insurance policies maintained by the Company (provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions that are not materially less favorable) with
respect to matters occurring prior to the Effective Time; PROVIDED, HOWEVER,
that in no event shall the Surviving Corporation be required to expend pursuant
to this Section 7.07(b) more than an amount per year equal to 200% of current
annual premiums paid by the Company for such insurance (which premiums the
Company represents and warrants to be $215,000 per annum in the aggregate).
(d) In the event the Company or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the Company
or the Surviving Corporation, as the case may be, or at Parent's option, Parent,
shall assume the obligations set forth in this Section 7.07.
SECTION 7.08. NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which reasonably could be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect and (b) any failure of the Company, Parent or
Purchaser, as the case may be, to comply with or satisfy any covenant or
agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER,
that the delivery of any notice pursuant to this Section 7.08 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 7.09. FURTHER ACTION; REASONABLE BEST EFFORTS. Upon
the terms and subject to the conditions hereof, each of the parties hereto shall
(i) make promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act and in the other countries where a merger filing
is necessary or advisable, including but not limited to the United Kingdom and
the Federal Democratic Republic of Germany, with respect to the Transactions and
(ii) use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the Transactions, including, without limitation, using its reasonable
best efforts to obtain all Permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities and parties to contracts
with the Company
39
and the Subsidiaries as are necessary for the consummation of the Transactions
and to inform or consult with any trade unions, works councils, employee
representatives or any other representative body as required, and to fulfill the
conditions to the Offer and the Merger; PROVIDED that neither Purchaser nor
Parent will be required by this Section 7.09 to take any action, including
entering into any consent decree, hold separate orders or other arrangements,
that (A) requires the divestiture of any assets of any of the Purchaser, Parent,
Company or any of their respective subsidiaries or (B) limits Parent's freedom
of action with respect to, or its ability to retain, the Company and the
Subsidiaries or any portion thereof or any of Parent's or its affiliates' other
assets or businesses. In case, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use
their reasonable best efforts to take all such action.
SECTION 7.10. PUBLIC ANNOUNCEMENTS. Parent and the Company
agree that no public release or announcement concerning the Transactions, the
Offer or the Merger shall be issued by either party without the prior consent of
the other party (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 non-United States securities exchange, in which case the
party required to make the release or announcement shall use its best efforts to
allow the other party reasonable time to comment on such release or announcement
in advance of such issuance.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. CONDITIONS TO THE MERGER. The obligations of
each party to effect the Merger shall be subject to the satisfaction, at or
prior to the Effective Time, of the following conditions:
(a) SHAREHOLDER APPROVAL. If and to the extent required by
Michigan Law, this Agreement and the Transactions shall have been
approved and adopted by the affirmative vote of the shareholders of the
Company;
(b) HSR ACT; OTHER COMPETITION ACTS. Any waiting period (and
any extension thereof) applicable to the consummation of the Merger
under the HSR Act and in the other countries where a merger filing was
necessary (including, but not limited to the Federal Democratic
Republic of Germany, and if deemed necessary, the European Commission)
shall have expired or been terminated;
40
(c) UK COMPETITION COMMISSION. The UK Office of Fair Trading
shall have indicated, in terms satisfactory to Parent and Purchaser in
their reasonable discretion, that it is not the intention of the
Secretary of State for Trade and Industry to refer the Transactions, or
any matter arising therefrom, to the Competition Commission.
(d) NO ORDER. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is then in effect and has the effect of
making the acquisition of Shares by Parent or Purchaser or any
affiliate of either of them illegal or otherwise restricting,
preventing or prohibiting consummation of the Transactions; and
(e) OFFER. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. TERMINATION. This Agreement may be terminated
and the Merger and the other Transactions may be abandoned at any time prior to
the Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions by the shareholders of the Company:
(a) By mutual written consent of each of Parent, Purchaser and
the Company duly authorized by the Boards of Directors of Parent,
Purchaser and the Company; or
(b) By either Parent, Purchaser or the Company if (i) the
Effective Time shall not have occurred on or before December 31, 2000;
PROVIDED, HOWEVER, that the right to terminate this Agreement under
this Section 9.01(b) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause of,
or resulted in, the failure of the Effective Time to occur on or before
such date or (ii) any Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any injunction, order, decree
or ruling (whether temporary, preliminary or permanent) which has
become final and nonappealable and has the effect of making
consummation of the Offer or the Merger illegal or otherwise preventing
or prohibiting consummation of the Offer or the Merger; or
(c) By Parent if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Annex A
hereto, Purchaser shall have (A) failed to commence the Offer within
ten (10) business days following the date of this Agreement, or (B)
terminated the Offer, or the Offer shall have expired, without
41
Purchaser having accepted any Shares for payment thereunder, unless
such action or inaction under (A) or (B) shall have been caused by or
resulted from the failure of Parent or Purchaser to perform, in any
material respect, any of their material covenants or agreements
contained in this Agreement, or the material breach by Parent or
Purchaser of any of their material representations or warranties
contained in this Agreement or (ii) prior to the purchase of Shares
pursuant to the Offer, the Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Purchaser or Parent its
approval or recommendation of this Agreement, the Offer, the Merger or
any other Transaction, or shall have recommended or approved any
Acquisition Proposal, or shall have resolved to do any of the
foregoing; or
(d) By the Company if Purchaser shall have (A) failed to
commence the Offer within ten (10) business days following the date of
this Agreement, or (B) terminated the Offer, or the Offer shall have
expired, without Purchaser having accepted any Shares for payment
thereunder, unless such action or inaction under (A) or (B) shall have
been caused by or resulted from the failure of the Company to perform,
in any material respect, any of its material covenants or agreements
contained in this Agreement or the material breach by the Company of
any of its material representations or warranties contained in this
Agreement.
SECTION 9.02. EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 9.01, this Agreement shall
forthwith become void, and there shall be no liability on the part of any party
hereto, except (a) as set forth in Section 9.03 and (b) nothing herein shall
relieve any party from liability for any fraud or willful breach hereof prior to
the date of such termination; PROVIDED, HOWEVER, that the Confidentiality
Agreement shall survive any termination of this Agreement.
SECTION 9.03. FEES. (a) In the event that
(i) any person (including, without limitation, the Company or
any affiliate thereof), other than Parent or any affiliate of Parent,
shall have become the beneficial owner of more than 15% of the
then-outstanding Shares, and this Agreement shall have been terminated
pursuant to Section 9.01(b)(i), 9.01(c) or 9.01(d); or
(ii) any person shall have commenced, publicly proposed or
communicated to the Company an Acquisition Proposal that is publicly
disclosed and (A) the Offer shall have remained open for at least 20
business days, (B) the Minimum Condition shall not have been satisfied
and (C) this Agreement shall have been terminated pursuant to Section
9.01; or
(iii) this Agreement is terminated (A) pursuant to Section
9.01(c)(ii) or (B) pursuant to Section 9.01(c)(i) or 9.01(d), to the
extent that the failure to commence,
42
the termination or the failure to accept any Shares for payment, as set
forth in Section 9.01(c)(i) or 9.01(d), as the case may be, shall
relate to the failure of the Company to perform, in any material
respect, any of its material covenants or agreements contained in this
Agreement or the material breach by the Company of any of its material
representations or warranties contained in this Agreement; or
(iv) the Company enters into an agreement with respect to an
Acquisition Proposal, or an Acquisition Proposal is consummated, in
each case within 12 months after the termination of this Agreement
pursuant to Section 9.01(c) or (d), and the Company shall not therefore
have been required to pay the Fee to Parent pursuant to Section
9.03(a)(i), 9.03(a)(ii) or 9.03(a)(iii);
THEN, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of $42,000,000 (the "FEE"), which amount shall be payable in immediately
available funds. Notwithstanding the foregoing, the Company shall not be
required to pay Parent the Fee if this Agreement is terminated pursuant to
Section 9.01 if the failure to consummate the Offer is the result of the failure
of the conditions set forth in clause (ii) of the introductory paragraph or
clause (a) or (b) of Annex A to be satisfied. In addition, notwithstanding the
foregoing, the Company shall be required to pay to the Parent only $11,000,000
of the Fee in the event this Agreement is terminated due to the occurrence of
any event in clause (f) of Annex A; PROVIDED, that if the Company consummates a
transaction that would be an Acquisition Proposal within 12 months of the date
of such Termination, the Company shall pay to the Parent the balance of the Fee.
(b) Except as set forth in this Section 9.03, all costs and
expenses incurred in connection with this Agreement, the Shareholder Agreements
and the Transactions shall be paid by the party incurring such expenses, whether
or not any Transaction is consummated.
(c) In the event that the Company shall fail to pay the Fee
when due, the term "Fee" shall be deemed to include the costs and expenses
actually incurred or accrued by Parent and Purchaser (including, without
limitation, fees and expenses of counsel) in connection with the collection
under and enforcement of this Section 9.03, together with interest on such
unpaid Fee, commencing on the date that the Fee became due, at a rate equal to
the rate of interest publicly announced by Citibank, N.A. from time to time, in
the City of New York, as such bank's Base Rate.
SECTION 9.04. AMENDMENT. Subject to Section 7.03, this
Agreement may be amended by the parties hereto by action taken by or on behalf
of their respective Boards of Directors at any time prior to the Effective Time;
PROVIDED, HOWEVER, that, after the approval and adoption of this Agreement and
the Transactions by the shareholders of the Company, no amendment may be made
that would reduce the amount or change the type of consideration into
43
which each Share shall be converted upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by each
of the parties hereto.
SECTION 9.05. WAIVER. Subject to Section 7.03, at any time
prior to the Effective Time, any party hereto may (a) extend the time for the
performance of any obligation or other act of any other party hereto, (b) waive
any inaccuracy in the representations and warranties of any other party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any agreement of any other party or any condition to its own
obligations contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 10.01):
if to Parent or Purchaser:
The Thomson Corporation
Metro Center
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier No: (000) 000-0000
Attention: General Counsel
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
if to the Company:
Primark Corporation
44
0000 Xxxxxx Xxxxxx
Xxxxx 0000X
Xxxxxxx, XX 00000-0000
Telecopier No: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Telecopier No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
SECTION 10.02. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 10.03. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
and the Shareholder Agreements constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. This Agreement shall not be assigned
(whether pursuant to a merger, by operation of law or otherwise), except that
Parent and Purchaser may assign all or any of their rights and obligations
hereunder to any affiliate of Parent, PROVIDED that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations.
SECTION 10.04. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Section 7.07 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
SECTION 10.05. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
were not performed in
45
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at law
or equity.
SECTION 10.06. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State (other
than those provisions set forth herein that are required to be governed by
Michigan Law). All actions and proceedings arising out of or relating to this
Agreement shall be heard and determined exclusively in any New York state or
federal court sitting in the County of New York. The parties hereto hereby (a)
submit to the exclusive jurisdiction of any state or federal court sitting in
the County of New York for the purpose of any Action arising out of or relating
to this Agreement brought by any party hereto, and (b) irrevocably waive, and
agree not to assert by way of motion, defense, or otherwise, in any such Action,
any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that the Action is brought in an inconvenient forum, that the venue
of the Action is improper, or that this Agreement or the Transactions may not be
enforced in or by any of the above-named courts.
SECTION 10.07. WAIVER OF JURY TRIAL. Each of the parties
hereto hereby waives to the fullest extent permitted by applicable law any right
it may have to a trial by jury with respect to any litigation directly or
indirectly arising out of, under or in connection with this Agreement or the
Transactions. Each of the parties hereto (a) certifies that no representative,
agent or attorney of any other party has represented, expressly or otherwise,
that such other party would not, in the event of litigation, seek to enforce
that foregoing waiver and (b) acknowledges that it and the other hereto have
been induced to enter into this Agreement and the Transactions, as applicable,
by, among other things, the mutual waivers and certifications in this Section
10.07.
SECTION 10.08. HEADINGS. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 10.09. COUNTERPARTS. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 10.10. DISCLOSURE SCHEDULE. Any information disclosed
in one Section of the Disclosure Schedule shall be deemed to be disclosed in all
Sections of the Disclosure Schedule but only if such deemed disclosure is
readily apparent based on the disclosure in such other Section. The disclosure
of any information in the Disclosure Schedule shall not be deemed to constitute
an acknowledgment that such information is required to be disclosed or that it
is material, nor shall such information be deemed to establish a standard of
materiality.
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
THE THOMSON CORPORATION
By
-----------------------------------
Title:
MARQUEE ACQUISITION CORPORATION
By
-----------------------------------
Title:
PRIMARK CORPORATION
By
-----------------------------------
Title:
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment any Shares tendered pursuant to the
Offer, and may extend, terminate or amend the Offer, if (i) immediately prior to
the expiration of the Offer, the Minimum Condition shall not have been
satisfied, (ii) any applicable waiting period under the HSR Act, the antitrust
laws in the Federal Democratic Republic of Germany and the United Kingdom and in
the other countries where a merger filing was necessary shall not have expired
or been terminated prior to the expiration of the Offer, or (iii) at any time on
or after the date of this Agreement and prior to the expiration of the Offer,
any of the following conditions shall exist:
(a) there shall have been instituted, threatened or be pending
any Action before any Governmental Authority (i) challenging or seeking
to make illegal, materially delay, or otherwise, directly or
indirectly, restrain or prohibit or make materially more costly, the
making of the Offer, the acceptance for payment of any Shares by
Parent, Purchaser or any other affiliate of Parent, or the purchase of
Shares pursuant to any Shareholder Agreement, or the consummation of
any other Transaction, or seeking to obtain material damages in
connection with any Transaction; (ii) seeking to prohibit or limit
materially the ownership or operation by the Company, Parent or any of
their subsidiaries of all or any of the business or assets of the
Company, Parent or any of their subsidiaries that is material to either
Parent and its subsidiaries or the Company and the Subsidiaries, in
either case, taken as a whole, or to compel the Company, Parent or any
of their subsidiaries, as a result of the Transactions, to dispose of
or to hold separate all or any portion of the business or assets of the
Company, Parent or any of their subsidiaries that is material to either
Parent and its subsidiaries or the Company and the Subsidiaries, in
each case, taken as a whole; (iii) seeking to impose or confirm any
limitation on the ability of Parent, Purchaser or any other affiliate
of Parent to exercise effectively full rights of ownership of any
Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer or otherwise on all matters
properly presented to the Company's shareholders, including, without
limitation, the approval and adoption of this Agreement and the
Transactions; (iv) seeking to require divestiture by Parent, Purchaser
or any other affiliate of Parent of any Shares; or (v) which otherwise
would prevent or materially delay consummation of the Offer or the
Merger or would have a Material Adverse Effect;
(b) there shall have been any statute, rule, regulation,
legislation or interpretation enacted, promulgated, amended, issued or
deemed applicable to (i) Parent, the Company or any subsidiary or
affiliate of Parent or the Company or (ii) any Transaction, by any
United States or non-United States legislative body or Governmental
Authority with appropriate jurisdiction, other than the routine
application of the waiting period provisions of the HSR Act and in the
other countries where a merger filing was
A-2
necessary or advisable, to the Offer, the Shareholder Agreements or
the Merger, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
(c) any Material Adverse Effect shall have occurred;
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange or the Pacific Exchange, Inc. (other than a shortening
of trading hours or any coordinated trading halt triggered solely as a
result of a specified increase or decrease in a market index), (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or Canada, (iii) any limitation
(whether or not mandatory) by any government or Governmental Authority,
on the extension of credit by banks or other lending institutions, (iv)
a commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United
States or Canada or (v) in the case of any of the foregoing existing on
the date hereof, a material acceleration or worsening thereof;
(e) (i) it shall have been publicly disclosed, or Purchaser
shall have otherwise learned, that beneficial ownership (determined for
the purposes of this paragraph as set forth in Rule 13d-3 promulgated
under the Exchange Act) of 15% or more of the then-outstanding Shares
has been acquired by any person, other than Parent or any of its
affiliates, or (ii) (A) the Board, or any committee thereof, shall have
withdrawn or modified, in a manner adverse to Parent or Purchaser, the
approval or recommendation of the Offer, the Merger, or the Agreement,
or approved or recommended any Acquisition Proposal other than the
Offer or the Merger or (B) the Board, or any committee thereof, shall
have resolved to do any of the foregoing;
(f) the representations and warranties of the Company set
forth in the Merger Agreement shall not be true and accurate (without
giving effect to any qualification as to "materiality" or "Material
Adverse Effect" set forth therein) as of the date of consummation of
the Offer as though made on or as of such date or the Company shall
have breached or failed to perform or comply with any material
obligation, agreement or covenant required by the Merger Agreement to
be performed of complied with by it except, in each case, (A) those
representations and warranties that address matters only as of a
particular date or only with respect to a specified period of time
which need only be true and accurate as of such date or with respect to
such period or (B) where the failure of such representations and
warranties to be true and correct, or the failure to perform or comply
with such obligations, agreements or covenants, would not, individually
or in the aggregate, have a Material Adverse Effect; or
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(g) the Agreement shall have been terminated in accordance
with its terms.
which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment.
The foregoing conditions are for the sole benefit of Purchaser
and Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
