Exhibit 99.(d)(1)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
Fimalac, S.A.
Fimalac, INC.
FSA Acquisition Corp.
and
Duff & Xxxxxx Credit Rating Co.
Dated as of March 6, 2000
TABLE OF CONTENTS
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ARTICLE I
THE OFFER.......................................................................................2
Section 1.1 The Offer.........................................................................2
Section 1.2 Company Action....................................................................4
Section 1.3 Boards of Directors and Committees; Section 14(f).................................5
ARTICLE II
THE MERGER......................................................................................6
Section 2.1 The Merger........................................................................6
Section 2.2 Effective Date....................................................................7
Section 2.3 Effect of the Merger..............................................................7
Section 2.4 Articles of Incorporation, By-Laws................................................7
Section 2.5 Directors and Officers............................................................7
Section 2.6 Effect on Capital Stock...........................................................8
Section 2.7 Exchange of Certificates.........................................................10
Section 2.8 Stock Transfer Books.............................................................11
Section 2.9 No Further Ownership Rights in Common Stock......................................11
Section 2.10 Lost, Stolen or Destroyed Certificates...........................................12
Section 2.11 Taking of Necessary Action; Further Action.......................................12
Section 2.12 Stockholders' Meeting............................................................12
Section 2.13 Material Adverse Effect..........................................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................14
Section 3.1 Organization and Qualification; Subsidiaries.....................................14
Section 3.2 Articles of Incorporation and By-Laws............................................15
Section 3.3 Capitalization...................................................................15
Section 3.4 Authority Relative to this Agreement.............................................16
Section 3.5 Material Contracts; No Conflict; Required Filings and
Consents.....................................................................16
Section 3.6 Compliance, Permits..............................................................18
Section 3.7 SEC Filings; Financial Statements................................................18
Section 3.8 Absence of Certain Changes or Events.............................................19
Section 3.9 No Undisclosed Liabilities.......................................................20
Section 3.10 Absence of Litigation............................................................20
Section 3.11 Employee Benefit Plans, Employment Agreements....................................21
Section 3.12 Employment and Labor Matters.....................................................23
Section 3.13 Schedule 14D-9; Offer Documents; Proxy Statement.................................23
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Section 3.14 Restrictions on Business Activities..............................................24
Section 3.15 Title to Property................................................................24
Section 3.16 Taxes............................................................................25
Section 3.17 Environmental Matters............................................................27
Section 3.18 Intellectual Property............................................................28
Section 3.19 Interested Party Transactions....................................................29
Section 3.20 Insurance........................................................................29
Section 3.21 Opinion of Financial Adviser.....................................................29
Section 3.22 Brokers..........................................................................29
Section 3.23 Sections 7.85 and 11.75 of Illinois Law Not Applicable...........................30
Section 3.24 Vote Required....................................................................30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT, Fimalac-U.S. AND ACQUISITION SUB.......................................................30
Section 4.1 Organization and Qualification; Subsidiaries.....................................30
Section 4.2 Authority Relative to this Agreement.............................................31
Section 4.3 No Conflict, Required Filings and Consents.......................................31
Section 4.4 Offer Documents; Schedule 14D-9; Proxy Statement.................................32
Section 4.5 No Prior Activities; Financing...................................................32
Section 4.6 Ownership of Shares..............................................................33
ARTICLE V
CONDUCT OF BUSINESS............................................................................33
Section 5.1 Conduct of Business by the Company Pending the Merger............................33
Section 5.2 No Solicitation; Acquisition Proposals...........................................36
ARTICLE VI
ADDITIONAL AGREEMENTS..........................................................................39
Section 6.1 HSR Act..........................................................................39
Section 6.2 Access to Information; Confidentiality...........................................39
Section 6.3 Consents; Approvals..............................................................39
Section 6.4 Indemnification and Insurance....................................................40
Section 6.5 Notification of Certain Matters..................................................42
Section 6.6 Further Action...................................................................42
Section 6.7 Public Announcements.............................................................42
Section 6.8 Conveyance Taxes.................................................................42
Section 6.9 Employee Benefit Plans...........................................................43
Section 6.10 Delisting of Securities..........................................................43
Section 6.11 Audited Financial Statements.....................................................43
Section 6.12 State Takeover Laws..............................................................43
Section 6.13 Financing Efforts................................................................44
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ARTICLE VII
CONDITIONS TO THE MERGER.......................................................................44
Section 7.1 Conditions to Obligation of Each Party to Effect the
Merger.......................................................................44
Section 7.2 Conditions to Obligation of Parent, Fimalac-U.S. and
Acquisition Sub..............................................................45
ARTICLE VIII
TERMINATION....................................................................................45
Section 8.1 Termination......................................................................45
Section 8.2 Effect of Termination............................................................47
Section 8.3 Fees and Expenses................................................................47
ARTICLE IX
GENERAL PROVISIONS.............................................................................48
Section 9.1 Effectiveness of Representations, Warranties and
Agreements...................................................................48
Section 9.2 Notices..........................................................................48
Section 9.3 Certain Definitions..............................................................49
Section 9.4 Amendment........................................................................50
Section 9.5 Waiver...........................................................................50
Section 9.6 Headings.........................................................................51
Section 9.7 Severability.....................................................................51
Section 9.8 Entire Agreement.................................................................51
Section 9.9 Assignment; Guarantee of Acquisition Sub Obligations.............................51
Section 9.10 Parties in Interest..............................................................51
Section 9.11 Failure or Indulgence Not Waiver; Remedies Cumulative............................51
Section 9.12 Governing Law....................................................................52
Section 9.13 Counterparts.....................................................................52
Section 9.14 Interpretation...................................................................52
Annex A - Offer Conditions
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 6, 2000,
is among Duff & Xxxxxx Credit Rating Co., an Illinois corporation (the
"COMPANY"), Fimalac, S.A., a French SOCIETE ANONYME ("PARENT"), Fimalac, Inc., a
Delaware corporation ("FIMALAC-U.S."), and FSA Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Fimalac-U.S. ("ACQUISITION SUB").
WHEREAS, the Boards of Directors of Parent, Fimalac-U.S.,
Acquisition Sub and the Company have each approved the acquisition of the
Company by Parent, by means of a tender offer by Acquisition Sub to acquire all
outstanding shares (the "SHARES") of common stock, no par value per share, of
the Company (the "COMMON STOCK") for a cash amount of $100.00 per Share (such
amount, or any greater amount per Share paid pursuant to the tender offer, as
such amount may be adjusted from time to time pursuant to the third paragraph of
Section 1.1(a), being hereinafter referred to as the "PER SHARE AMOUNT") in
accordance with the terms and subject to the conditions provided for herein,
which shall include any subsequent offering period thereof (the "OFFER") and a
merger of Acquisition Sub and the Company (the "MERGER") following the Offer,
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors of the Company (the "BOARD")
has (i) determined that the consideration to be paid for each Share in the Offer
and the Merger is fair to and in the best interests of the stockholders of the
Company and (ii) approved this Agreement and the transactions contemplated
hereby and declared the advisability and resolved to recommend acceptance of the
Offer, approval of the Merger and approval and adoption of this Agreement by the
stockholders of the Company in accordance with the Illinois Business Corporation
Act of 1983, as amended (the "ILLINOIS LAW"), upon the terms and subject to the
conditions set forth herein; and
WHEREAS the Boards of Directors of Parent, Fimalac-U.S. and
Acquisition Sub have each approved the Offer and the Merger of Acquisition Sub
with and into the Company following the Offer in accordance with the Delaware
General Corporation Law (the "DELAWARE LAW") upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the Company, Parent, Fimalac-U.S. and Acquisition Sub hereby agree
as follows:
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ARTICLE I.
THE OFFER
Section 1.1 THE OFFER.
(a). COMMENCEMENT. Provided that this Agreement
shall not have been terminated in accordance with Section 8.1, as promptly as
practicable following the public announcement by Parent and the Company of
the terms of this Agreement, Parent shall cause Acquisition Sub to commence
the Offer. The obligation of Acquisition Sub to accept for payment and pay
for Shares tendered pursuant to the Offer shall be subject to (i) the
condition that a number of Shares representing not less than 51% of the
Company's outstanding voting power (assuming the exercise of all outstanding
options, warrants, convertible or exchangeable securities or other rights to
purchase shares of Common Stock which have an exercise price less than the
Per Share Amount and which have not been canceled as described in Section
2.6(b)) shall have been validly tendered and not withdrawn prior to the
expiration date of the Offer (the "MINIMUM CONDITION"), and (ii) the
satisfaction or waiver by Acquisition Sub of all the other conditions set
forth in ANNEX A hereto. It is agreed that the conditions set forth in ANNEX
A hereto are for the sole benefit of Acquisition Sub and that the Minimum
Condition and the other conditions set forth in ANNEX A may be asserted by
Acquisition Sub regardless of the circumstances giving rise to any such
condition unless Parent, Fimalac-U.S., Acquisition Sub or their affiliates
shall have caused the circumstances giving rise to such condition.
Acquisition Sub expressly reserves the right in its sole discretion to waive,
in whole or in part at any time or from time to time, any such condition, to
increase the price per Share payable in the Offer, to extend the Offer or
provide for a subsequent offering period or to make any other changes in the
terms and conditions of the Offer; provided that, unless previously approved
by the Company in writing, no change may be made that decreases the Per Share
Amount 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 this
Agreement, including in ANNEX A hereto, or waives or decreases below 51% the
Minimum Condition.
Subject to the conditions of the Offer set forth in
this Agreement, including in ANNEX A hereto, Parent shall cause Acquisition Sub
to, and Acquisition Sub shall, accept for payment and pay for Shares which have
been validly tendered and not withdrawn pursuant to the Offer as soon as it is
permitted to do so under applicable law. The initial expiration date of the
Offer shall be 20 business days after the date of its commencement. If all
conditions set forth in ANNEX A are not satisfied on the initial expiration date
of the Offer, Acquisition Sub may extend (and re-extend) the Offer to provide
additional time to satisfy such conditions. Without limiting the right of
Acquisition Sub to extend the Offer pursuant to the immediately preceding
sentence, in the event that a condition set forth in paragraphs
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(a) or (g) of ANNEX A is not satisfied at the scheduled initial expiration date
of the Offer, Acquisition Sub shall, and Parent shall cause Acquisition Sub to,
extend the expiration date of the Offer for an additional 10 business days. In
addition, Acquisition Sub shall have the right to extend the Offer for a
subsequent offering period of up to an additional 20 business days (the
"SUBSEQUENT OFFERING PERIOD") pursuant to Rule 14d-11 of the Exchange Act (as
defined below).
The Per Share Amount payable in the Offer shall be
paid to the sellers in cash, upon the terms and subject to the conditions of the
Offer. Notwithstanding the foregoing, if between the date of this Agreement and
the Effective Time (as defined below) the outstanding Shares shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Per Share Amount shall be correspondingly
adjusted on a per-share basis to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
(b) FILING OFFER DOCUMENTS. On the date of
commencement of the Offer, Parent, Fimalac-U.S. and Acquisition Sub shall
file or cause to be filed with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule TO with respect to the Offer,
which will contain the offer to purchase and form of the related letter of
transmittal and other ancillary offer documents and instruments pursuant to
which the Offer will be made (together with any supplements or amendments
thereto, the "OFFER DOCUMENTS") and which shall comply as to form in all
material respects with the provisions of applicable U.S. federal securities
laws. In addition, Parent, Fimalac-U.S. and Acquisition Sub shall file or
cause to be filed with the SEC under cover of Schedule TO any
pre-commencement press release or other written communications relating to
the Offer no later than the date of communication. The Company will promptly
supply to Parent, Fimalac-U.S. and Acquisition Sub in writing, for inclusion
in the Offer Documents, all information concerning the Company required under
the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "EXCHANGE ACT"). Parent,
Fimalac-U.S., Acquisition Sub and the Company each agree promptly to correct
any information provided by it for use in the Offer Documents if and to the
extent that any such information shall have become false or misleading in any
material respect and Parent, Fimalac-U.S. and Acquisition Sub each further
agrees to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable U.S. federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents prior to their
filing with the SEC and shall be provided with any comments Parent,
Fimalac-U.S., Acquisition Sub and their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after receipt of such
comments.
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Section 1.2 COMPANY ACTION.
(a) BOARD APPROVAL. The Company hereby approves of
and consents to the Offer and represents and warrants that the Board, at a
meeting duly called and held on March 6, 2000, by unanimous vote of those
present, (i) determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, are fair to and in the best
interests of the Company, (ii) approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and declared their
advisability and (iii) resolved to recommend that the stockholders of the
Company accept the Offer, tender their Shares thereunder to Acquisition Sub
and, if required by applicable law, approve and adopt this Agreement and the
Merger; provided, that such recommendation may be withdrawn or modified in
accordance with Section 5.2(a). The Company further represents and warrants
that Xxxxx X. Xxxxxxx Company has delivered to the Board its written opinion
that, as of the date hereof, the Per Share Amount in the Offer is fair, from
a financial point of view, to the Company's stockholders, a copy of which has
been provided to Parent. The Company has been authorized by Xxxxx X. Xxxxxxx
Company to permit the inclusion of such opinion in its entirety in the
Schedule 14D-9 referred to below and the Proxy Statement referred to in
Section 3.13, so long as such inclusion is in form and substance reasonably
satisfactory to Xxxxx X. Xxxxxxx Company and its counsel. Subject to the
fiduciary duties of the Board under applicable law as determined and
exercised in good faith by the Board in a manner consistent with Section 5.2,
the Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the Board described in this Section 1.2(a).
(b) SCHEDULE 14D-9. Simultaneously with the filing
by Parent, Fimalac-U.S. and Acquisition Sub of the Offer Documents, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 and other ancillary documents and instruments required to be
filed pursuant thereto (together with any amendments or supplements thereto,
the "SCHEDULE 14D-9") and shall mail the Schedule 14D-9 to the stockholders
of the Company promptly after the commencement of the Offer. The Schedule
14D-9 shall, subject to the fiduciary duties of the Board under applicable
law as determined and exercised in good faith by the Board in a manner
consistent with Section 5.2, at all times contain the determination,
approvals and recommendations described in Section 1.2(a). Parent,
Fimalac-U.S. and Acquisition Sub each agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that any such information 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 to
be disseminated to holders of Shares, in each case as and to the extent
required by applicable U.S. federal securities laws. Parent, Fimalac-U.S.,
Acquisition Sub and their counsel shall be given a reasonable opportunity to
review and comment on the Schedule 14D-9 prior to its filing with the SEC and
shall be provided with any comments the Company and its counsel may
5
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after receipt of such comments.
(c) DISSEMINATION OF THE OFFER. In connection with
the Offer, the Company will promptly furnish Parent with mailing labels,
security position listings and any available listing or computer file
containing the names and addresses of the record holders of the Shares as of
a recent date and shall furnish Parent with such additional information and
assistance (including, without limitation, updated lists of stockholders,
mailing labels and lists of securities positions) as Parent or its agents may
reasonably request in communicating the Offer to the record and beneficial
holders of Shares. 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 Merger, Parent, Fimalac-U.S.,
Acquisition Sub, and their affiliates and associates shall hold in confidence
the information contained in any such labels, listings and files, will use
such information only in connection with the Offer and the Merger, and, if
this Agreement shall be terminated, will deliver to the Company all copies of
such information then in their possession and not use such information for
any purpose whatsoever.
Section 1.3 BOARDS OF DIRECTORS AND COMMITTEES; SECTION 14(F).
(a) BOARD REPRESENTATION. Promptly upon the
purchase by Acquisition Sub of Shares pursuant to the Offer and from time to
time thereafter, Parent shall be entitled to designate up to such number of
directors, rounded up to the next whole number on the Board that equals the
product of (i) the total number of directors on the Board (giving effect to
the election of any additional directors pursuant to this Section) and (ii)
the percentage that the number of Shares owned by Acquisition Sub and its
affiliates (including any Shares purchased pursuant to the Offer) bears to
the total number of outstanding Shares, and the Company shall upon request by
Parent, subject to the provisions of Section 1.3(b), promptly either increase
the size of the Board (and shall, if necessary, amend the Company's by-laws
to permit such an increase) or use its reasonable best efforts to secure the
resignation of such number of directors as is necessary to enable Parent's
designees to be elected to the Board and shall cause Parent designees to be
so elected; provided, that, at all times prior to the Effective Time, the
Company's Board shall include at least two members who are not designees of
Parent. Promptly upon request by Parent, the Company will, subject to the
provisions of Section 1.3(b), use its reasonable best efforts to cause
persons designated by Parent to constitute the same percentage as the number
of Parent's designees to the Board bears to the total number of directors on
the Board on (i) each committee of the Board, (ii) each board of directors or
similar governing body or bodies of each subsidiary of the Company designated
by Parent and (iii) each committee of each such board or body.
(b) COMPLIANCE WITH SECTION 14(F). The Company's
obligations to appoint Parent's designees to the Board shall be subject to
Section 14(f)
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of the Exchange Act, and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.3 and shall include in the
Schedule 14D-9 or a separate Rule 14f-1 Statement provided to shareholders such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1. Parent or Acquisition Sub will
supply to the Company in writing and be solely responsible for any information
with respect to either of them and their nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
(c) ACTION BY DISINTERESTED DIRECTORS. Following
the election or appointment of Parent's designees pursuant to this Section
1.3 and prior to the Effective Time (as defined below), any amendment of this
Agreement or any amendment to the articles of incorporation or by-laws of the
Company inconsistent with this Agreement, 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 Acquisition Sub, any
waiver of any of the Company's rights hereunder or any other action by the
Company under or in connection with this Agreement that would adversely
affect the ability of the stockholders of the Company to receive the Merger
Consideration will require the concurrence of two-thirds of the directors of
the Company then in office who are not designees of Parent.
ARTICLE II.
THE MERGER
Section 2.1 THE MERGER.
(a) EFFECTIVE TIME. At the Effective Time (as
defined below), and subject to and upon the terms and conditions of this
Agreement, pursuant to and in accordance with the requirements of the
Illinois Law and the Delaware Law, at the option of the Parent, either (i)
Acquisition Sub shall be merged with and into the Company; the separate
corporate existence of Acquisition Sub shall cease and the Company shall
continue as the surviving corporation or (ii) the Company shall be merged
with and into Acquisition Sub, the separate corporate existence of the
Company shall cease and the Acquisition Sub shall continue as the surviving
corporation. In either case, the surviving corporation after the Merger is
hereinafter sometimes referred to as the "SURVIVING CORPORATION."
(b) CLOSING. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 8.1 and subject to the satisfaction or waiver of the
conditions set forth in Article VII, the consummation of the Merger will take
place as promptly as practicable (and in any event within two business days)
after satisfaction or waiver of
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the conditions set forth in Article VII, at the principal offices of Xxxx,
Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, unless another date and time or place is agreed to in writing by the
parties hereto.
Section 2.2 EFFECTIVE DATE. As promptly as practicable
after the satisfaction or waiver of the conditions set forth in Article VII
(and in any event within two business days thereafter), the parties hereto
shall cause the Merger to be consummated by (i) filing a certificate of
merger as contemplated by the Delaware Law (the "DELAWARE CERTIFICATE OF
MERGER"), together with any required related certificate, with the Secretary
of State of the State of Delaware, in such form as required by, and executed
in accordance with, the relevant provisions of the Delaware Law and (ii)
filing a certificate of merger as contemplated by the Illinois Law (the
"ILLINOIS CERTIFICATE OF MERGER"), together with any required related
certificate, with the Secretary of State of the State of Illinois, in such
form as required by, and executed in accordance with, the relevant provisions
of the Illinois Law (the time at which both such filings shall have been made
being the "EFFECTIVE TIME").
Section 2.3 EFFECT OF THE MERGER. At the Effective Time,
the effect of the Merger shall be as provided in this Agreement, the Delaware
Certificate of Merger, the Illinois Certificate of Merger, and the applicable
provisions of the Delaware Law and the Illinois 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
Acquisition Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Acquisition Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 2.4 ARTICLES OF INCORPORATION, BY-LAWS.
(a) ARTICLES OF INCORPORATION. Unless otherwise
determined by Parent prior to the Effective Time, at the Effective Time the
articles of incorporation of the Acquisition Sub, 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.
(b) BY-LAWS. Unless otherwise determined by Parent
prior to the Effective Time, at the Effective Time the by-laws of the
Acquisition Sub, 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 2.5 DIRECTORS AND OFFICERS. At the Effective Time,
the directors of Acquisition Sub 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 executive officers of Acquisition Sub
immediately prior to the Effective Time shall be
8
the initial executive officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified.
Section 2.6 EFFECT ON CAPITAL STOCK. At the Effective Time,
by virtue of the Merger and without any action on the part of the Parent,
Fimalac-U.S., Acquisition Sub, the Company, or the holders of any of the
following securities:
(a) CONVERSION OF SECURITIES. Each Share issued
and outstanding immediately prior to the Effective Time (excluding any Shares
to be canceled pursuant to Section 2.6(b) and any Dissenting Shares (as
defined in Section 2.6(e)) shall immediately cease to be outstanding and
shall automatically be canceled and retired and shall cease to exist and be
converted into the right to receive the Per Share Amount, without any
interest thereon (the "MERGER CONSIDERATION"), in accordance with Section 2.7
and each holder of any such Share shall cease to have any rights with respect
thereto arising therefrom (including without limitation the right to vote),
except for the right to receive the Merger Consideration in accordance with
Section 2.7. Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding Shares shall have been
changed into a different number of shares or a different class, by reason of
any stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Merger Consideration shall be
correspondingly adjusted on a per-share basis to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares, unless such adjustment shall already have been made
pursuant to the third paragraph of Section 1.1(a).
(b) CANCELLATION. Each Share held in the treasury
of the Company and each Share owned by the Parent, Fimalac-U.S., Acquisition
Sub or any direct or indirect wholly owned subsidiary of the Company or
Parent immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, cease to be
outstanding, and be canceled and retired without payment of any consideration
therefor and cease to exist.
(c) STOCK OPTIONS. On the date Acquisition Sub
purchases Shares pursuant to the Offer, each outstanding option to purchase
Common Stock (a "STOCK OPTION") granted under the Company's 1994 Long-Term
Stock Incentive Plan or pursuant to any other employee stock option plan or
agreement entered into by the Company with any employee of the Company or any
subsidiary thereof and listed on Section 3.3 of the Company Disclosure
Schedule (the "COMPANY STOCK OPTION PLAN"), whether or not then exercisable,
shall become exercisable, subject to the terms of the Company Stock Option
Plan pursuant to which such Stock Option was issued. If and to the extent
that a Stock Option shall not have been exercised at the Effective Time, such
Stock Option shall be automatically canceled. Each holder of a canceled Stock
Option shall be entitled to receive as soon as practicable after the first
date payment can be made without liability to such person under Section 16(b)
of the Exchange Act from the Company in consideration for such cancellation
an amount in
9
cash (less applicable withholding taxes) equal to the product of (i) the number
of shares of Common Stock previously subject to such Stock Option multiplied by
(ii) the excess, if any, of the Per Share Amount over the exercise price per
share of Common Stock previously subject to such Stock Option (the "OPTION
CONSIDERATION") upon surrender of such Stock Option to the Company or an
affidavit of loss in the form requested by Parent, together with such additional
documentation as may be reasonably required by Parent or the Company. The
surrender of a Stock Option in exchange for the Option Consideration in
accordance with the terms of this Section 2.6(c) shall be deemed a release of
any and all rights the holder had or may have had in respect of such Stock
Option. Prior to the purchase by Acquisition Sub of Shares pursuant to the
Offer, the Company shall use its reasonable best efforts to obtain all necessary
consents or releases from holders of Stock Options under the Company Stock
Option Plan and take all such other lawful action as may be necessary to give
effect to the transactions contemplated by this Section 2.6(c). Except as
otherwise agreed to by the parties, the Company shall use its reasonable best
efforts to assure that following the purchase by Acquisition Sub of Shares
pursuant to the Offer no participant in the Company Stock Option Plan or other
plans, programs or arrangements shall have any right thereunder to acquire any
equity securities of the Company, the Surviving Corporation or any subsidiary
thereof and to terminate all such plans.
(d) CAPITAL STOCK OF ACQUISITION SUB. At the
Effective Time, if Acquisition Sub is merged into the Company, each share of
common stock, par value $0.01 per share, of Acquisition Sub 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
the common stock, no par value, of the Surviving Corporation.
(e) DISSENTING SHARES. Notwithstanding anything in
this Agreement to the contrary, Shares issued and outstanding immediately
prior to the Effective Time held by any person (a "DISSENTING SHAREHOLDER")
who objects to the Merger and complies with all of the provisions of the
Illinois Law concerning the right of holders of Shares to dissent from the
Merger and obtain payment for their Shares (the "DISSENTING SHARES") shall
not be converted into the right to receive the Merger Consideration, but
shall be converted into the right to receive such consideration as may be
determined to be due to such Dissenting Shareholder pursuant to the Illinois
Law. If, after the Effective Time, such Dissenting Shareholder withdraws his
demand for payment or fails to perfect or otherwise loses his right of
payment in accordance with Illinois Law, the Dissenting Shares shall be
deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give prompt notice to Parent of any
demands received by the Company for payment and Parent shall have the right
to participate in and direct all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any
such demands.
10
Section 2.7 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT AND PROCEDURES. Within 21
calendar days following the date of this Agreement, Parent shall, with the
Company's prior approval, which approval shall not be unreasonably withheld
or delayed, appoint a paying agent (the "PAYING AGENT") to receive, hold and
distribute, for the benefit of the holders of Shares, all funds deposited
pursuant to Section 2.7(b) hereof (such cash being referred to as the
"EXCHANGE FUND"). Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each record holder, as of the
Effective Time, of a certificate or certificates (the "CERTIFICATES") that,
prior to the Effective Time, represented Shares (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Paying Agent, and shall be in such form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates for payment of the Merger
Consideration therefor. Upon the surrender of each such Certificate formerly
representing Shares, together with such letter of transmittal and any
additional documents as may reasonably be required by Parent or the Paying
Agent, in each case duly completed and validly executed in accordance with
the instructions thereto, the Paying Agent shall pay the holder of such
Certificate the Merger Consideration multiplied by the number of Shares
formerly represented by such Certificate, in exchange therefor, and such
Certificate shall forthwith be canceled. Until so surrendered and exchanged,
each such Certificate (other than Shares held by Parent, Fimalac-U.S.,
Acquisition Sub or the Company, or any direct or indirect subsidiary thereof)
shall represent solely the right to receive the Merger Consideration. No
interest shall be paid or accrue on the Merger Consideration. If the Merger
Consideration (or any portion thereof) is to be delivered to any person other
than to the person in whose name the Certificate formerly representing Shares
surrendered in exchange therefor is registered, it shall be a condition to
such exchange that the Certificate so surrendered shall be properly endorsed
or otherwise be in proper form for transfer and that the person requesting
such exchange shall pay to the Paying Agent any transfer or 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
establish to the satisfaction of the Paying Agent that such tax has been paid
or is not applicable.
(b) CONSIDERATION. Prior to the Effective Time,
Parent or Acquisition Sub shall deposit or cause to be deposited in trust
with the Paying Agent the aggregate Merger Consideration to which holders of
Shares shall be entitled at the Effective Time pursuant to Section 2.6(a)
hereof.
(c) INVESTMENT OF MERGER CONSIDERATION. The Merger
Consideration shall be invested by the Paying Agent, as directed by Parent,
provided that such investments shall be limited to (i) direct obligations of
the United States of America, (ii) obligations for which the full faith and
credit of the United States of
11
America is pledged to provide for the payment of principal and interest, (iii)
commercial paper rated of the highest quality by a nationally recognized (in the
United States) rating service, or (iv) certificates of deposit issued by a
commercial bank having at least $1,000,000,000 in assets.
(d) TERMINATION OF DUTIES. Promptly following the
date which is six months after the Effective Time, Parent will cause the
Paying Agent to deliver to the Surviving Corporation all cash and documents
in its possession relating to the transactions described in this Agreement
and the Paying Agent's duties shall terminate thereafter. Thereafter each
holder of a Certificate formerly representing a Share may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor the Merger
Consideration, without any interest thereon.
(e) NO LIABILITY. None of Parent, Fimalac-U.S.,
Acquisition Sub or the Company shall be liable to any holder of Common Stock
for any Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(f) WITHHOLDING RIGHTS. Parent or the Paying Agent
shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of Common Stock
such amounts as Parent or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "CODE"), or any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by Parent or the Paying
Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by Parent or the Paying Agent.
Section 2.8 STOCK TRANSFER BOOKS. At the Effective Time,
the stock transfer books of the Company shall be closed, and there shall be
no further registration of transfers of the Common Stock thereafter on the
records of the Company.
Section 2.9 NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK.
The Merger Consideration delivered in exchange for the Shares in accordance
with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation
of Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided
in this Article II.
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Section 2.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the
event any Certificates shall have been lost, stolen or destroyed, the Paying
Agent shall deliver in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder
thereof, the Merger Consideration as may be required pursuant to Section 2.6;
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificate to deliver a bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against Parent or the
Paying Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed.
Section 2.11 TAKING OF NECESSARY ACTION; FURTHER ACTION.
Each of Parent, Fimalac-U.S., Acquisition Sub and the Company will use its
best efforts to take all such reasonable and lawful action as may be
necessary or appropriate in order to effectuate the Merger in accordance with
this Agreement as promptly as possible. If at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Acquisition Sub, the officers and
directors of the Company and Acquisition Sub immediately prior to the
Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and
necessary action.
Section 2.12 STOCKHOLDERS' MEETING.
(a) If approval by the Company's stockholders is
required by applicable law to consummate the Merger, the Company, acting
through the Board, shall, in accordance with applicable law and, subject to
the fiduciary duties of the Board under applicable law as determined and
exercised in good faith by the Board in a manner consistent with Section 5.2
and in consultation with Parent, as soon as practicable following the
consummation of the Offer:
(i) duly call, give notice of, convene and
hold an annual or special meeting of its stockholders (the
"STOCKHOLDERS' MEETING") for the purpose of considering and taking
action upon this Agreement;
(ii) prepare and file with the SEC a proxy
statement or information statement (together with any supplement or
amendment thereto, the "PROXY STATEMENT") relating to the Stockholders'
Meeting in accordance with the Exchange Act and include in the Proxy
Statement the recommendation of the Board that stockholders of the
Company vote in favor of the approval and adoption of this Agreement
and the transactions contemplated hereby; and
(iii) use its reasonable best efforts (A) to
obtain and furnish the information required to be included by it in the
Proxy Statement and, after consultation with Parent, respond promptly
to any comments made
13
by the SEC with respect the Proxy Statement and any preliminary version
thereof and cause the Proxy Statement to be mailed to its stockholders
at the earliest practicable time following the consummation of the
Offer in accordance with SEC rules and regulations and (B) to obtain
the necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby.
At such meeting, Parent and Acquisition Sub will vote all Shares owned by them
to approve this Agreement and the transactions contemplated hereby.
(b) Notwithstanding the foregoing clause (a), in
the event that Acquisition Sub or any other wholly owned subsidiary of Parent
shall acquire at least 90% of the outstanding shares of Common Stock in or
following the Offer, the parties hereto shall, at the request of Acquisition
Sub, take all necessary actions to cause the Merger to become effective as
soon as practicable after the expiration of the Offer, without a meeting of
stockholders of the Company, in accordance with Section 11.30 of the Illinois
Law.
Section 2.13 MATERIAL ADVERSE EFFECT.
(a) When used in connection with the Company or
any of its subsidiaries, or Parent or any of its subsidiaries, as the case
may be, the term "MATERIAL ADVERSE EFFECT" means any change, effect or
circumstance that is, or is reasonably likely to be, materially adverse to
the business, assets, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, or Parent and its
subsidiaries, as the case may be, in each case taken as a whole, other than
any such changes, effects or circumstances (i) expressly set forth in Section
2.13 of the Company Disclosure Schedule or the Parent Disclosure Schedule
(each as hereinafter defined), as the case may be, or (ii) specifically set
forth or described in the Company SEC Reports (each as hereinafter defined),
other than general risk factors. The following, considered alone without
regard to any other effects, changes, events, circumstances or conditions,
shall not constitute a Material Adverse Effect: (i) a change in the trading
prices of either of the Parent's or the Company's securities between the date
hereof and the Effective Time; (ii) effects, changes, events, circumstances
or conditions generally affecting the industry in which either the Parent or
the Company operate or arising from changes in general business or economic
conditions; (iii) any effects, changes, events, circumstances or conditions
resulting from any change in law or generally accepted accounting principles;
(iv) any effects, changes, events, circumstances or conditions resulting from
the announcement or pendency of any of the transactions contemplated by this
Agreement other than a breach of a representation or warranty pursuant to
this Agreement which would occur except for this clause (iv) or clause (v) of
this definition of Material Adverse Effect; and (v) any effects, changes,
events, circumstances or conditions resulting from actions taken by the
Parent or the Company in order to comply with the terms of this Agreement
other than a breach of a representation or warranty pursuant to this
14
Agreement which would occur except for this clause (v) or clause (iv) of this
definition of Material Adverse Effect.
(b) For purposes of this Agreement, a "MATERIAL
ADVERSE EFFECT ON THE OFFER" means any event, action, state, circumstance,
occurrence or development that would prevent, materially delay, or render
materially more onerous to Parent or Acquisition Sub the consummation of the
Offer and the other transactions contemplated by this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Acquisition Sub that on the date hereof, except as set forth in the section of
the written disclosure schedule delivered on or prior to the date hereof by the
Company to Parent (the "COMPANY DISCLOSURE SCHEDULE") corresponding to each
representation and warranty made hereunder by the Company (or except as set
forth in another section of the Company Disclosure Schedule if the applicability
and relevance of the disclosure under such other section to such representation
and warranty is apparent on its face):
Section 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
The Company and each of its subsidiaries are corporations duly organized,
validly existing and in good standing under the respective laws of the
jurisdictions of their incorporation. The Company and each of its
subsidiaries have the requisite corporate power and authority and are in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders (the "APPROVALS")
necessary to own, lease and operate the properties they purport to own, lease
or operate and to carry on their business as they are now being conducted,
except where the failure to be so organized, existing and in good standing or
to have such power, authority and Approvals would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or its subsidiaries.
The Company and each of its subsidiaries are duly qualified or licensed as a
foreign corporation to do business, and are in good standing in each
jurisdiction where the character of its properties owned, leased or operated
by them or the nature of their activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, individually or in the
aggregate, have a Material Adverse Effect. A true and complete list of all of
the Company's subsidiaries, together with the jurisdiction of incorporation
of each subsidiary and the percentage of each subsidiary's outstanding
capital stock owned by the Company or another subsidiary, is set forth in
Section 3.1-1 of the Company Disclosure Schedule. Except as set forth on
Section 3.1-2 of the Company Disclosure Schedule, the Company does not
directly or indirectly own any equity or similar
15
interest in, or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in, any other person.
Section 3.2 ARTICLES OF INCORPORATION AND BY-LAWS. The
Company has heretofore furnished to Parent a true, complete and correct copy
of its articles of incorporation and by-laws, each as amended to date, and
has furnished or made available to Parent the articles of incorporation and
by-laws (or equivalent organizational documents) of each of its subsidiaries
(the "SUBSIDIARY DOCUMENTS"). Such articles of incorporation, by-laws and
Subsidiary Documents are in full force and effect. Neither the Company nor
any of its subsidiaries is in violation of any of the provisions of its
articles of incorporation or by-laws or Subsidiary Documents.
Section 3.3 CAPITALIZATION. The authorized capital stock of
the Company consists of (i) 15,000,000 shares of Common Stock and (ii)
3,000,000 shares of preferred stock, no par value per share, none of which is
issued and outstanding and none of which is held in treasury. As of March 3,
2000, (i) 4,644,121 shares of Common Stock were issued and outstanding, all
of which are validly issued, fully paid and nonassessable, and none of which
were held in treasury, (ii) no shares of Common Stock were held by
subsidiaries of the Company and (iii) 1,055,705 shares of Common Stock were
reserved for future issuance pursuant to outstanding Stock Options granted
under the Company Stock Option Plan and agreements listed in Section 3.3 of
the Company Disclosure Schedule. No material change in such capitalization
has occurred between March 3, 2000 and the date hereof. Section 3.3 of the
Company Disclosure Schedule sets forth a true and complete list of all
outstanding options, warrants and other rights for the purchase of, or
conversion into or exchange for Common Stock, the name of each holder
thereof, the number of shares purchasable thereunder or upon conversion or
exchange thereof and the per share exercise or conversion price or exchange
rate of each option, warrant and other right. There are no options, warrants
or other similar rights, agreements, arrangements, commitments or
understanding, whether or not in writing, of any character relating to the
issued or unissued capital stock or other securities of the Company or any of
its subsidiaries or obligating the Company or any of its subsidiaries to
issue (whether upon conversion, exchange or otherwise) or sell any share of
capital stock of, or other equity interests in or other securities of, the
Company or any of its subsidiaries other than those listed in Section 3.3 of
the Company Disclosure Schedule. All securities subject to issuance as
aforesaid upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable shall be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth on Section
3.3 of the Company Disclosure Schedule, there are no obligations, contingent
or otherwise, of the Company or any of its subsidiaries to repurchase, redeem
or otherwise acquire any shares of Common Stock or capital stock of any
subsidiary or any other securities of the Company or any of its subsidiaries
or to provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any such subsidiary or any other entity. Except
as set forth on Section 3.3 of the Company Disclosure Schedule, all of the
16
outstanding shares of capital stock of each of the Company's subsidiaries are
duly authorized, validly issued, fully paid and nonassessable, and all such
shares are owned by the Company or another subsidiary of the Company free and
clear of all security interests, liens, claims, pledges, agreements, limitations
in the Company's voting rights, charges or other encumbrances of any nature
whatsoever (collectively, "LIENS"), other than Liens created by this Agreement.
Section 3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The
Company has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, other than,
if required in accordance with Illinois Law, the adoption of this Agreement
by the holders of a majority of the outstanding shares of Common Stock
entitled to vote in accordance with the Illinois Law and the Company's
articles of incorporation and by-laws (the "REQUISITE COMPANY VOTE"). The
Board has determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger upon the terms and subject to the
conditions of this Agreement, are fair to, advisable and in the best
interests of, the Company and its stockholders. This Agreement has been duly
and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Acquisition Sub, as
applicable, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
Section 3.5 MATERIAL CONTRACTS; NO CONFLICT; REQUIRED
FILINGS AND CONSENTS.
(a) Section 3.5(a) of the Company Disclosure
Schedule includes a list of all contracts, agreements, arrangements or
understanding, whether or not in writing, to which the Company or any of its
subsidiaries is a party or by which any of them is bound as of the date
hereof, (i) which are required to be filed as "material contracts" with the
SEC pursuant to the requirements of the Exchange Act; (ii) under which the
consequences of a default, nonrenewal or termination could have a Material
Adverse Effect; (iii) pursuant to which payments or acceleration of benefits
may be required in excess of $100,000 in the aggregate upon a "change of
control" of the Company or its subsidiaries; (iv) which require the consent
or waiver of a third party prior to the Company (or its subsidiary, if
applicable) consummating the transactions contemplated by this Agreement,
except where the failure to obtain such consent or waiver would not,
individually or in the aggregate, have a Material Adverse Effect; (v) whose
terms would have a Material Adverse Effect on the Offer; (vi) which pertain
to the rental by the Company or its subsidiaries of accommodations and
involve consideration in excess of $200,000 over the term of the Agreement or
17
have a term that will expire more than six months from the date hereof; (vii)
which constitute contracts, agreements, arrangements or understandings between
the Company or its subsidiaries and any person for the rental by such person of
accommodations and represent individually in excess of $200,000 in annual
revenue to the Company or its subsidiaries, as applicable; or (viii) the
termination of which would require or result in individual payments by the
Company, Acquisition Sub, Fimalac-U.S., Parent or any of their subsidiaries or
affiliates in excess of $100,000 (the contracts, agreements, arrangements or
understandings referred to in clauses (i) through (viii) above are referred to
collectively herein as the "MATERIAL CONTRACTS") and, except as set forth in
Section 3.5(a) of the Company Disclosure Schedule, neither the Company nor any
of its subsidiaries is currently negotiating, in discussion with any person with
respect to, or a party to any non-binding agreement or understanding with
respect to, any Material Contract.
(b) The execution and delivery of this Agreement
by the Company does not, and the performance of this Agreement by the Company
will not, (i) conflict with or violate the articles of incorporation or
by-laws of the Company or any Subsidiary Document, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
the Company or any of its subsidiaries or by which its or any of their
respective properties is bound or affected, or (iii) except as set forth in
Section 3.5(b) of the Company Disclosure Schedule, result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or result in a modification of any right or
benefit under, or impair the Company's or any of its subsidiaries' rights or
alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration, repayment or repurchase,
or result in increased payments or cancellation under, or result in the
creation of a Lien on any of the properties or assets of the Company or any
of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except in the case of (ii) or
(iii) only for any such conflicts, violations, breaches, defaults or other
occurrences that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(c) Except as set forth in Section 3.5(c) of the
Company Disclosure Schedule, the execution and delivery of this Agreement by
the Company does not, and the performance of this Agreement by the Company
will not require any consent, approval, authorization or permit of, or filing
with or notification to, any national, federal, state, provincial or local
governmental regulatory or administrative authority, agency, commission,
court, tribunal, arbitral body or self-regulated entity, domestic or foreign
(collectively, the "GOVERNMENTAL AUTHORITIES"), except for applicable
requirements, if any, of the Securities Act, the Exchange Act, the Investment
Advisors Act of 1940, as amended, state securities laws ("BLUE SKY LAWS"),
the premerger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
18
Improvements Act of 1976, as amended (the "HSR ACT"), and the filing and
recordation of appropriate merger or other documents as required by the Delaware
Law or the Illinois Law.
Section 3.6 COMPLIANCE, PERMITS.
(a) Neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any
of its subsidiaries or by which its or any of their respective properties is
bound or affected or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not
have a Material Adverse Effect.
(b) The Company and its subsidiaries hold all
permits, licenses, easements, variances, exemptions, consents, certificates,
orders and approvals from Governmental Authorities that are necessary to the
operation of the business of the Company and its subsidiaries taken as a
whole as it is now being conducted (collectively, the "COMPANY PERMITS"),
except when the failure to have such Company Permits would not, individually
or in the aggregate, have a Material Adverse Effect. The Company and its
subsidiaries are in compliance with the terms of the Company Permits, and
neither the Company nor any of its subsidiaries is in conflict with, or in
default or violation of any applicable laws or regulations except, in each
case, where the failure to so comply would not, individually or in the
aggregate, have a Material Adverse Effect.
Section 3.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and
documents required to be filed with the SEC since January 1, 1997, including
(i) its Annual Reports on Form 10-K for the fiscal years ended December 31,
1997 and 1998, respectively, (ii) its Quarterly Reports on Form 10-Q for the
periods ended March 31, 1999, June 30, 1999 and September 30, 1999, (iii) all
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since January 1, 1999, (iv) all other reports or
registration statements filed by the Company with the SEC since January 1,
1999 and (v) all amendments and supplements to all such reports and
registration statements filed by the Company with the SEC since January 1,
1999 (collectively, the "COMPANY SEC REPORTS"). The Company SEC Reports (i)
were prepared in all material respects in accordance with the requirements of
the Securities Act or the Exchange Act, as the case may be, and (ii) did not
at the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order
19
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. Except as set forth on Schedule 3.7(a) of the
Company Disclosure Schedule, none of the Company's subsidiaries is required to
file any forms, reports or other documents with the SEC or any national
securities exchange or quotation service or comparable Governmental Authority.
(b) The consolidated financial statements
(including, in each case, any related notes and schedules thereto) contained
in the Company SEC Reports were prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto), and
fairly present in all material respects the consolidated financial position
of the Company and its subsidiaries as at the respective dates thereof and
the consolidated results of their operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are
not expected to be material in amount.
(c) The unaudited consolidated financial
statements of the Company as of and for the period ending December 31, 1999
(including the related notes and schedules thereto) delivered to the Parent
prior to the date hereof (the "1999 FINANCIAL STATEMENTS") were prepared in
accordance with U.S. generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as may be indicated
in the notes thereto), and fairly present in all material respects the
consolidated financial position of the Company and its subsidiaries as at
December 31, 1999 and the consolidated results of their operations and cash
flows for the year then ended.
Section 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
set forth in the Company SEC Reports or in Section 3.8 of the Company
Disclosure Schedule, since September 30, 1999, the Company and its
subsidiaries have conducted their business in the ordinary course and there
has not occurred: (i) any Material Adverse Effect; (ii) any amendments or
changes in the articles of incorporation or By-laws of the Company; (iii) any
damage to, or destruction or loss of, any asset of the Company or its
subsidiaries (whether or not covered by insurance) that would have a Material
Adverse Effect; (iv) any material change by the Company or its subsidiaries
in their accounting methods, principles or practices; (v) any material
revaluation by the Company or its subsidiaries of any of their assets,
including, without limitation, writing down the value of inventory or writing
off notes or accounts receivable other than in the ordinary course of
business; (vi) any sale of a material amount of property of the Company or
any of its subsidiaries, except in the ordinary course of business; (vii) any
declaration, setting aside or payment of any dividend or distribution in
respect of Shares or any redemption, purchase or other acquisition of any of
the Company's securities (except as contemplated by this Agreement); (viii)
any increase in the compensation or benefits or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
20
sharing, stock option (including, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers of the
Company or any subsidiary, in each case except in the ordinary course of
business consistent with past practice or except as required by applicable law;
(ix) any creation or assumption by the Company or any of its subsidiaries of any
Lien on any material asset of the Company or any of its subsidiaries, other than
in the ordinary course of business, consistent with past practice; (x) any
making of any loan, advance or capital contribution to or investment in any
person by the Company or any of its subsidiaries, other than advances to
employees to cover travel and other ordinary business-related expenses in the
ordinary course of business consistent with past practice; (xi) any incurrence
or assumption by the Company or any of its subsidiaries of any indebtedness for
borrowed money or any guarantee, endorsement or other incurrence or assumption
of a material liability (whether directly, contingently or otherwise) by the
Company or any of its subsidiaries for the obligations of any other person
(other than any wholly owned subsidiary of the Company), in each case other than
in the ordinary course of business consistent with past practice; or (xii) any
modification, amendment, assignment or termination of or relinquishment by the
Company or any of its subsidiaries of any rights under any Material Contract
that has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
Section 3.9 NO UNDISCLOSED LIABILITIES. Except as set forth
in Section 3.9 of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) except liabilities (a) in the aggregate adequately provided for in
the Company's unaudited balance sheet (including any related notes thereto)
included in the 1999 Financial Statements, (b) incurred in the ordinary
course of business and not required under U.S. generally accepted accounting
principles to be reflected on the 1999 Financial Statements, (c) incurred
since December 31, 1999 in the ordinary course of business consistent with
past practice, (d) incurred in connection with this Agreement, (e) disclosed
in the Company SEC Reports or (f) which would not have a Material Adverse
Effect.
Section 3.10 ABSENCE OF LITIGATION. Except as set forth in
Section 3.10 of the Company Disclosure Schedule, there are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries, or
any properties or rights of the Company or any of its subsidiaries, before
any Governmental Authority or body, domestic or foreign, nor are there, to
the Company's knowledge, any investigations or reviews by any Governmental
Authority pending or threatened against, relating to or affecting, the
Company or any of its subsidiaries that, if adversely determined, would,
individually or in the aggregate, have a Material Adverse Effect. Neither the
Company nor any of its subsidiaries is subject to any outstanding order,
writ, injunction or decree of any court or Governmental Authority
21
which, individually or in the aggregate, has resulted or would reasonably be
expected to result in a Material Adverse Effect.
Section 3.11 EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS.
(a) Section 3.11(a) of the Company Disclosure
Schedule lists all employee pension plans (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended; ("ERISA")), all
employee welfare plans (as defined in Section 3(1) of ERISA) and all other
bonus, stock option, stock purchase, incentive or deferred compensation,
supplemental retirement, severance and other fringe or employee benefit
plans, programs, or arrangements, and any current or, to the extent the
Company or any subsidiary thereof may have any continuing liability
thereunder, former employment, executive compensation, stay, change in
control, consulting, noncompetition or severance agreements, programs or
policies, written or otherwise, for the benefit of, or relating to, any
employee of or consultant to, and which is maintained or contributed to, by
the Company, any trade or business (whether or not incorporated) which is a
member of a controlled group including the Company or which is under common
control with the Company (an "ERISA AFFILIATE") within the meaning of Section
414 of the Code, or any subsidiary of the Company (collectively the "COMPANY
EMPLOYEE PLANS"). There have been made available to Parent copies of (i) each
such written Company Employee Plan and (ii) the three most recent annual
reports on Form 5500, with accompanying schedules and attachments, filed with
respect to each Company Employee Plan required to make such a filing.
(b) (i) Except as set forth on Section 3.11(b) of the
Company Disclosure Schedule, none of the Company Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person
(other than post-employment benefits provided in accordance with the health
care continuation provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, or comparable state law).
(ii) None of the Company Employee Plans is (A) a
"multiemployer plan" as such term is defined in Section 3(37) of ERISA or (B) a
plan subject to Title IV of ERISA.
(iii) Except as set forth on Section 3.11(b) of the Company
Disclosure Statement, (A) there has been no "prohibited transaction," as such
term is defined in Section 406 of ERISA and Section 4975 of the Code, with
respect to any Company Employee Plan, which could result in any material
liability of the Company or any of its subsidiaries; (B) all Company Employee
Plans are in compliance in all material respects with the requirements
prescribed by any and all statutes (including ERISA and the Code), orders, or
governmental rules and regulations currently in effect with respect thereto
(including all applicable requirements for notification to participants or the
Department of Labor, the Internal Revenue Service (the "IRS") or
22
Secretary of the Treasury), and the Company and each of its subsidiaries have
performed all material obligations required to be performed by them as of and
through the date hereof under, are not in any material respect in default under
or violation of, and have no knowledge of any default or violation by any other
party to, any of the Company Employee Plans; (C) each Company Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
determination letter from the IRS, and nothing has occurred which may reasonably
be expected to impair such determination; (D) there is no pending or, to the
knowledge of the Company, threatened litigation, administrative action or
proceeding relating to any Company Employee Plan (other than claims for benefits
in the ordinary course of business); (E) there has been no announcement or
commitment by the Company or any of its subsidiaries to create an additional
Company Employee Plan or to amend a Company Employee Plan except for amendments
required by applicable law or changes in the ordinary course, in each case which
do not materially increase the cost of such Company Employee Plan; and (F) the
Company has no liability, whether absolute or contingent, direct or indirect,
including any obligations under any Company Employee Plan, with respect to any
misclassification of a person as an independent contractor rather than as an
employee, or with respect to any employee leased from another employer.
(iv) Except as specifically identified in Section 3.11(b)
of the Company Disclosure Schedule, the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not (a)
increase the amount of, accelerate the time of payment of, or the vesting of
compensation payable to any employee of the Company or an ERISA Affiliate or (b)
result in any liability to any present or former employee established or
maintained in or under a non-U.S. jurisdiction, including but not limited to, as
a result of the Worker Adjustment Retraining and Notification Act. Neither the
Company nor any ERISA Affiliate maintains or contributes to any Employee Plan
established or maintained in or under a non-U.S. jurisdiction.
(c) Section 3.11(c) of the Company Disclosure Schedule sets
forth a true and complete list of each current or former employee, officer or
director of the Company or any of its subsidiaries who holds (i) any Stock
Option as of the date hereof, together with the number of shares of Common
Stock subject to such Stock Option, the exercise price of such Stock Option
(to the extent determined as of the date hereof), whether such Stock Option
is intended to qualify as an incentive stock option within the meaning of
Section 422(b) of the Code (an "ISO") and the expiration date of such option;
and (ii) any other right granted by the Company to acquire, directly or
indirectly, Common Stock, together with the number of shares of Common Stock
subject to such right. Section 3.11(c) of the Company Disclosure Schedule
also sets forth the total number of such ISOs, such nonqualified options and
such other rights. Upon the purchase by Acquisition Sub of Shares pursuant to
the Offer (i) the provisions in the Company Stock Option Plan with respect to
the right or
23
obligation to issue or grant additional options or rights to acquire Common
Stock shall be terminated and (ii) the provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any subsidiary thereof shall be
cancelled.
Section 3.12 EMPLOYMENT AND LABOR MATTERS.
(a) Except as set forth in Section 3.12(a) of the
Company Disclosure Schedule, there are no controversies pending or, to the
knowledge of the Company, threatened, between the Company or any of its
subsidiaries and any of their respective employees, which controversies have
had or could have, individually or in the aggregate, a Material Adverse
Effect. Neither the Company nor any of its subsidiaries is a party to, any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or its subsidiaries, nor does the Company
know of any activities or proceedings of any labor union to organize any such
employees. The Company has no knowledge of any strikes or lockouts, or any
material slowdowns, work stoppages, or threats thereof, by or with respect to
any employees of the Company or any of its subsidiaries.
(b) Neither the Company nor any of its
subsidiaries has violated, in a manner that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, any
provision of federal or state law or any rule, regulation, order, ruling,
decree, judgment or arbitration award of any Governmental Authority regarding
the terms and conditions of employment of employees, former employees, or
prospective employees or other labor related matters, including without
limitation, laws, rules, regulations, orders, rulings, decrees, judgments and
awards relating to discrimination, fair labor standards and occupational
health and safety, wrongful discharge or violation of the personal rights of
employees, former employees or prospective employees.
Section 3.13 SCHEDULE 14D-9; OFFER DOCUMENTS; PROXY
STATEMENT. Neither the Schedule 14D-9, nor any of the information provided by
the Company or its auditors, legal counsel, financial advisors or other
consultants or advisors specifically for use in the Offer Documents, shall,
on the respective dates the Schedule 14D-9 or the Offer Documents are filed
with the SEC or on the date first published, sent or given to the Company's
stockholders, 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 therein, in light of the
circumstances under which they were made, not misleading. The Proxy Statement
or similar materials distributed to the Company's stockholders in connection
with the Merger, including any amendments or supplements thereto, shall not,
at the time filed with the SEC, at the time mailed to the Company's
stockholders, at the time of the Stockholders' Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or
24
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to
any information provided by Parent, Fimalac-U.S., Acquisition Sub or by their
auditors, legal counsel, financial advisors or other consultants or advisors
specifically for use in the Schedule 14D-9 or the Proxy Statement. The
Schedule 14D-9 and the Proxy Statement will comply in all material respects
with the provisions of the Exchange Act and any other applicable law.
Section 3.14 RESTRICTIONS ON BUSINESS ACTIVITIES.
(a) Except for this Agreement and except as set
forth on Section 3.14(a) of the Company Disclosure Schedule, to the Company's
knowledge, there is no material agreement, judgment, injunction, order or
decree binding upon the Company or any of its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or impairing any
material business practice of the Company or any of its subsidiaries, any
acquisition of property by the Company or any of its subsidiaries or the
conduct of business by the Company or any of its subsidiaries as currently
conducted or as proposed to be conducted by the Company, in any location in
the world, except for any prohibition or impairment as would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) To the Company's knowledge, none of the
Company's officers, directors or key employees is a party to any agreement
which, by virtue of such person's relationship with the Company, restricts in
any material respect the Company or any of its subsidiaries from, directly or
indirectly, engaging in any of the businesses described in paragraph (a)
above.
Section 3.15 TITLE TO PROPERTY. Except as set forth in
Section 3.15 of the Company Disclosure Schedule, the Company and each of its
subsidiaries have good and marketable title to all of their properties and
assets, free and clear of all Liens, except Liens for taxes not yet due and
payable and such Liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which would not, individually or in the
aggregate, have a Material Adverse Effect. Section 3.15(a) of the Company
Disclosure Schedule is a schedule of all leases of real property ("REAL
PROPERTY LEASES") (i) pursuant to which the Company or any of its
subsidiaries lease from others or (ii) pursuant to which third parties lease
from the Company or any of its subsidiaries. The Real Property Leases and all
leases of personal property by the Company or its subsidiaries from others
are in good standing, valid and effective in accordance with their respective
terms and there is not, to the knowledge of the Company, under any of such
leases, any existing default or event of default (or event which with notice
or lapse of time, or both, would constitute a default), except where the lack
of such good standing, validity and effectiveness or the existence of such
25
default would not, individually or in the aggregate, have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries owns any real property.
Section 3.16 TAXES.
(a) For purposes of this Agreement, "AUDIT" shall
mean any audit, assessment, action, suit, claim or other examination relating
to Taxes by any tax authority or any judicial or administrative proceedings
related to Taxes; "TAX" or "TAXES" shall mean taxes, fees, levies, duties,
tariffs, imposts, and governmental impositions or charges of any kind in the
nature of (or similar to) taxes, payable to any federal, state, local or
foreign taxing authority, including (without limitation) (i) income,
franchise, profits, gross receipts, ad valorem, net worth, value added,
sales, use, service, real or personal property, special assessments, capital
stock, license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer and gains
taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "TAX RETURNS" shall mean returns, reports,
and information statements with respect to Taxes required to be filed with
the IRS or any other taxing authority, domestic or foreign, including,
without limitation, consolidated, combined and unitary tax returns.
(b) Except as set forth in Section 3.16(b) of the
Company Disclosure Schedule, the Company and its subsidiaries (for such
periods as each subsidiary was owned, directly or indirectly, by the Company)
have filed all income Tax Returns and all other material Tax Returns required
to be filed by them and all such Tax Returns are true and correct in all
material respects, and the Company and its subsidiaries have paid and
discharged all Taxes due in connection with or with respect to the periods or
transactions covered by such Tax Returns and have paid all other taxes as are
due, except such as are being contested in good faith by appropriate
proceedings (to the extent that any such proceedings are required) and except
as may be determined to be owed upon completion of any tax return not yet
filed based upon an extension of time to file, and there are no other taxes
that would be due if asserted by a taxing authority, except with respect to
which the Company is maintaining reserves to the extent currently required
and except to the extent the failure to do so would not, individually or in
the aggregate, have a Material Adverse Effect. Except as set forth on Section
3.16(b) of the Company Disclosure Schedule:
(i) there are no tax liens on any assets of
the Company or any subsidiary thereof, except to the extent that such a lien
would not have a Material Adverse Effect upon the Company or any of its
subsidiaries;
(ii) neither the Company nor any of its
subsidiaries has granted any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of, any Tax that is
currently in effect;
26
(iii) as of the date hereof, no Federal,
state, local or foreign Audits are pending (A) with regard to any Taxes or Tax
Returns of the Company or its subsidiaries and (B) for which the Company or any
of its subsidiaries has received written notice. Neither the Company nor any of
its subsidiaries has received written notification that such an Audit may be
commenced, and, to the best knowledge of the Company and its subsidiaries, no
such Audit is threatened;
(iv) the United States Federal income Tax
Returns of the Company and its subsidiaries have been examined by the applicable
tax authorities or closed without audit by applicable statutes of limitations
for all periods through and including December 31, 1995, and as of the date
hereof no material adjustments have been asserted as a result of such
examinations which have not been (x) resolved and fully paid or (y) reserved on
the 1999 Financial Statements in accordance with U.S. generally accepted
accounting principles;
(v) neither the Company nor any of its
subsidiaries is a party to any agreement providing for the allocation,
indemnification or sharing of Taxes with any person other than the Company
and its subsidiaries, and the Company has provided Parent with copies of any
such agreement that the Company or any of its subsidiaries has entered into
with any other subsidiary of the Company;
(vi) neither the Company nor any of its
subsidiaries has been a member of any "affiliated group" (as defined in
section 1504(a) of the Code) other than the affiliated group of which the
Company is the "parent" and, except with respect to any group of which only
the Company and/or its subsidiaries are members, is not subject to Treas.
Reg. 1.1502-6 (or any similar provision under foreign, state or local law)
for any period;
(vii) neither the Company nor any of its
subsidiaries has constituted either a "distributing corporation" or a
"controlled corporation" (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock qualifying for tax-free treatment under
Section 355 of the Code (i) in the two years prior to the date of this
Agreement or (ii) in a distribution which otherwise constitutes part of a
"plan" or "series of related transactions" (within the meaning of Section
355(e) of the Code) in conjunction with the Merger;
(viii) proper and materially accurate
amounts have been duly and timely (x) withheld by the Company and its
subsidiaries from their employees in compliance with the tax withholding
provisions of applicable U.S. federal, state and local laws and (y) paid over
to appropriate taxing authorities;
(ix) neither the Company nor any of its
subsidiaries has been required to include in income any adjustment pursuant
to Section 481 of the Code (or any similar provision of state, local or
foreign tax law) by reason of a voluntary change in accounting method
initiated by the Company or any of its
27
subsidiaries, and the IRS has not notified the Company in writing that it has
initiated or proposed any such adjustment or change in accounting method;
(x) no closing agreement that could
affect the Taxes of the Company or any of its subsidiaries for periods ending
after the Effective Time pursuant to Section 7121 of the Code (or any
predecessor provision) or any similar provision of any state, local or
foreign law has been entered into by or with respect to the Company or any of
its subsidiaries;
(xi) there is no contract, agreement,
plan or arrangement covering any person that, individually or collectively,
could give rise to the payment of any amount that would not be deductible by
the Company or any of its subsidiaries by reason of Section 162(m) or Section
280G of the Code and neither the Company nor any of its subsidiaries has made
any such payments;
(xii) neither the Company nor any of its
subsidiaries is, or has been, a United States real property holding corporation
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; and
(xiii) no material tax elections have been
made or filed by or with respect to the Company or any of its subsidiaries.
Section 3.17 ENVIRONMENTAL MATTERS. Except in all cases as,
in the aggregate, have not had and would not, individually or in the
aggregate, have a Material Adverse Effect, the Company and each of its
subsidiaries (i) to the Company's knowledge have obtained all applicable
permits, licenses and other authorizations (collectively, the "ENVIRONMENTAL
PERMITS") which are required to be obtained under all applicable U.S.
federal, state or local laws or any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into
ambient air, surface water, ground water, or land or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("ENVIRONMENTAL LAWS") by the Company or its subsidiaries
(or their respective agents) which Environmental Permits are in full force
and effect; (ii) to the Company's knowledge are in compliance in all material
respects with all terms and conditions of such Environmental Permits; (iii)
are in compliance in all material respects with all limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in applicable Environmental Laws; (iv) as
of the date hereof, are not aware of nor have received notice of any past or
present violations of Environmental Laws or Environmental Permits or any
event, condition, circumstance, activity, practice, incident, action or plan
which is reasonably likely to
28
interfere with or prevent continued compliance with Environmental Permits or
which would give rise to any common law or statutory liability, or otherwise
form the basis of any claim, action, suit or proceeding, against the Company or
any of its subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous toxic material or waste; and (v) to the Company's
knowledge, have taken all actions necessary under applicable Environmental Laws
to register any products or materials required to be registered by the Company
or its subsidiaries (or any of their respective agents) thereunder.
Section 3.18 INTELLECTUAL PROPERTY.
(a) Section 3.18(a) of the Company Disclosure
Schedule sets forth a true and complete list of all Intellectual Property (as
defined below) owned or used by the Company or its subsidiaries, excluding
over-the-counter shrink-wrapped software. The Company and each of its
subsidiaries owns free and clear of all Liens, or is licensed or otherwise
possesses legally enforceable right to use all patents, trademarks, trade
names, service marks, and any applications therefor, and computer software
programs or applications (the "INTELLECTUAL PROPERTY") that are used in its
respective business as currently conducted, and such rights constitute all
the rights necessary for the Company and its subsidiaries to conduct their
business as currently conducted except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, the Company is not, nor will it be
as a result of the execution and delivery of this Agreement or the
performance of its obligations hereunder, in violation of any licenses,
sublicenses and other agreements as to which the Company is a party and
pursuant to which the Company is authorized to use any third-party
Intellectual Property ("THIRD PARTY INTELLECTUAL PROPERTY RIGHTS"). After the
completion of the transactions contemplated by this Agreement, the Company
will continue to own all right, title and interest in, and to have a license
to use all Intellectual Property material to its or any of its subsidiaries'
business and operations on terms and conditions identical in all material
respects to those enjoyed by the Company immediately prior to such
transactions. No claims with respect to the Intellectual Property owned by
the Company or any of its subsidiaries (the "COMPANY INTELLECTUAL PROPERTY
RIGHTS"), any trade secret material to the Company, or Third Party
Intellectual Property Rights to the extent arising out of any use,
reproduction or distribution of such Third Party Intellectual Property Rights
by or through the Company or any of its subsidiaries, are currently pending
or, to the knowledge of the Company, are threatened by any person, except
claims that would not have a Material Adverse Effect. The Company does not
know of any valid grounds for any bona fide claims (i) against the use by the
Company or any of its subsidiaries of any Intellectual Property used in the
business of the Company or any of its subsidiaries as currently
29
conducted or as proposed to be conducted; (ii) challenging the ownership,
validity or effectiveness of any of the Company Intellectual Property Rights or
other trade secret material to the Company or its subsidiaries; or (iii)
challenging the license or legally enforceable right to use of the Third Party
Property Rights by the Company or any of its subsidiaries, except claims that
would not have a Material Adverse Effect.
(c) To the Company's knowledge, all Company
Intellectual Property Rights are valid and subsisting, except as would not
have a Material Adverse Effect. To the Company's knowledge, there is no
material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property by any third party, including any employee or
former employee of the Company or any of its subsidiaries, except any use,
infringement or misappropriation that would not have a Material Adverse
Effect.
(d) All software, hardware, databases, and
embedded control systems (collectively, the "SYSTEMS") used by the Company
and its subsidiaries are Year 2000 Compliant (as defined below), except for
failures to be Year 2000 Compliant that, individually or in the aggregate,
have not resulted in a Material Adverse Effect. For purposes of this
Agreement, "Year 2000 Compliant" means that the Systems (i) accurately
process date and time data (including calculating, comparing, and sequencing)
from, into, and between the twentieth and twenty-first centuries, the years
1999 and 2000, and leap year calculations and (ii) operate accurately with
other software and hardware that use standard date format (4 digits) for
representation of the year.
Section 3.19 INTERESTED PARTY TRANSACTIONS. Except as set
forth in the Company SEC Reports, since January 1, 1999, no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by
the SEC.
Section 3.20 INSURANCE. All material fire and casualty,
general liability, business interruption, and sprinkler and water damage
insurance policies maintained by the Company or any of its subsidiaries are
with reputable insurance carriers, provide, to the Company's knowledge, full
and adequate coverage for all normal risks incident to the business of the
Company and its subsidiaries and their respective properties and assets and
are, to the Company's knowledge, in character and amount at least equivalent
to that carried by entities engaged in similar businesses and subject to the
same or similar perils or hazards, except as would not, individually or in
the aggregate, have a Material Adverse Effect.
Section 3.21 OPINION OF FINANCIAL ADVISER. The Board has
received the written opinion of the Company's financial advisor, Xxxxx X.
Xxxxxxx Company, to the effect that, as of the date of this Agreement, the
Per Share Amount is fair to the Company's stockholders from a financial point
of view and the Company has delivered or will, promptly after receipt of such
written opinion, deliver a signed copy
30
of that opinion to Parent.
Section 3.22 BROKERS. No broker, finder or investment
banker (other than Xxxxx X. Xxxxxxx Company) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement. The Company has heretofore furnished to
Parent a complete and correct copy of all agreements between the Company and
Xxxxx X. Xxxxxxx Company pursuant to which such firm would be entitled to any
payment relating to the transactions contemplated hereunder.
Section 3.23 SECTIONS 7.85 AND 11.75 OF ILLINOIS LAW NOT
APPLICABLE. The Board has taken all actions so that the restrictions
contained in Sections 7.85 and 11.75 of the Illinois Law applicable to a
"business combination" (as defined in such Section 11.75) will not apply to
the execution, delivery or performance of this Agreement or the consummation
of the Offer or the Merger or the other transactions contemplated by this
Agreement.
Section 3.24 VOTE REQUIRED. The Requisite Company Vote is
the only vote of the holders of any class or series of the Company's capital
stock necessary (under the charter documents of the Company, the Illinois
Law, other applicable law or otherwise) to approve this Agreement, the Offer,
the Merger or the other transactions contemplated by this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
PARENT, Fimalac-U.S. AND ACQUISITION SUB
Parent, Fimalac-U.S. and Acquisition Sub hereby, jointly and
severally, represent and warrant to the Company that, except as set forth in the
section of the written disclosure schedule delivered on or prior to the date
hereof, by Parent to the Company (the "PARENT DISCLOSURE SCHEDULE")
corresponding to each representation and warranty made hereunder by Parent,
Fimalac-U.S. and Acquisition Sub:
Section 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
Each of Parent, Fimalac-U.S. and Acquisition Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each of Parent, Fimalac-U.S. and
Acquisition Sub has the requisite corporate power and authority and is in
possession of all Approvals necessary to own, lease and operate the
properties it purports to own, operate or lease 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, authority and Approvals
would not, individually or in the aggregate, have a Material Adverse Effect
on Parent, Fimalac-U.S. or Acquisition Sub. Each of Parent, Fimalac-U.S. and
Acquisition Sub is duly
31
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. Fimalac-U.S. is a wholly-owned
subsidiary of Parent and Acquisition Sub is a wholly-owned subsidiary of
Fimalac-U.S.
Section 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent, Fimalac-U.S. and Acquisition Sub has all necessary corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by each of Parent, Fimalac-U.S.
and Acquisition Sub and the consummation by each of Parent, Fimalac-U.S. and
Acquisition Sub of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Parent,
Fimalac-U.S. and Acquisition Sub, and no other corporate proceedings on the
part of Parent, Fimalac-U.S. or Acquisition Sub are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of Parent,
Fimalac-U.S. and Acquisition Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Parent, Fimalac-U.S. and Acquisition Sub enforceable against
each of them in accordance with its terms.
Section 4.3 NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement
by Parent, Fimalac-U.S. and Acquisition Sub do not, and the performance of
this Agreement by Parent, Fimalac-U.S. and Acquisition Sub will not, (i)
conflict with or violate the certificate of incorporation (or equivalent
organizational documents) or by-laws of Parent, Fimalac-U.S. or Acquisition
Sub, (ii) conflict with or violate any law, rule, regulation, order, judgment
or decree applicable to Parent or any of its subsidiaries or by which its or
their respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or modification in a manner
materially adverse to Parent or its subsidiaries of any right or benefit
under, or impair Parent's or any of its subsidiaries' rights or alter the
rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration, repayment or repurchase, increased
payments or cancellation under, or result in the creation of a Lien on any of
the properties or assets of Parent or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except in the case of (ii) or (iii) only, for any such conflicts,
violations, breaches, defaults or other
32
occurrences that would not, individually or in the aggregate, have a Material
Adverse Effect on Parent or its subsidiaries.
(b) The execution and delivery of this Agreement
by each of Parent, Fimalac-U.S. and Acquisition Sub does not, and the
performance of this Agreement by each of Parent, Fimalac-U.S. and Acquisition
Sub will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except for
applicable requirements, if any, of the Securities Act, the Exchange Act, the
Blue Sky Laws, the pre-merger notification requirements of the HSR Act, and
the filing and recordation of appropriate merger or other documents as
required by the Delaware Law or the Illinois Law.
Section 4.4 OFFER DOCUMENTS; SCHEDULE 14D-9; PROXY
STATEMENT. Neither the Offer Documents, nor any of the information provided
by Parent, Fimalac-U.S. or Acquisition Sub or by their auditors, legal
counsel, financial advisors or other consultants or advisors specifically for
use in the Schedule 14D-9 shall, on the respective dates the Offer Documents
or the Schedule 14D-9 are filed with the SEC or on the date first published,
sent or given to the Company's stockholders, 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
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, neither Parent, Fimalac-U.S. nor
Acquisition Sub makes any representation or warranty with respect to any
information provided by the Company or by its auditors, legal counsel,
financial advisors, or other consultants or advisors specifically for use in
the Offer Documents. None of the information provided by Parent, Fimalac-U.S.
or Acquisition Sub or by their auditors, legal counsel, financial advisors or
other consultants or advisors specifically for use in the Proxy Statement
shall, at the time filed with the SEC, at the time mailed to the Company's
stockholders, at the time of the Stockholders' Meeting or at the Effective
Time, 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 are made,
not misleading. The Offer Documents will comply in all material respects with
the provisions of the Exchange Act and any other applicable law.
Section 4.5 NO PRIOR ACTIVITIES; FINANCING.
(a) Acquisition Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement. As of
the date hereof, except for obligations or liabilities incurred in connection
with its incorporation or organization and the transactions contemplated by
this Agreement and except for this Agreement and any other agreements or
arrangements contemplated by this Agreement, Acquisition Sub has not and will
not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any
33
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
(b) Parent has available to it funding necessary
to satisfy Acquisition Sub's obligations hereunder including, without
limitation, the obligation to pay the aggregate Per Share Amount pursuant to
the Offer and the aggregate Merger Consideration pursuant to the Merger and
to pay all related fees and expenses in connection with the Offer and the
Merger. Parent shall make available (i) to Acquisition Sub sufficient cash to
purchase Shares to be purchased pursuant to the Offer prior to such purchase
and (ii) to Acquisition Sub, for deposit in the Exchange Fund, sufficient
cash to pay the aggregate Merger Consideration pursuant to the Merger prior
to the Effective Time.
Section 4.6 OWNERSHIP OF SHARES. As of the date hereof,
neither Parent nor any of its affiliates beneficially owns any Shares (except
that a subsidiary of Fimalac-U.S. owns 100 Shares) or is an "Interested
Shareholder" as defined in Section 7.85 or Section 11.75 of the Illinois Law.
ARTICLE V.
CONDUCT OF BUSINESS
Section 5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. The Company covenants and agrees that, during the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the time Parent's designees are elected as directors of the
Company pursuant to Section 1.3, unless Parent shall otherwise agree in
writing, which agreement shall not be unreasonably withheld, delayed, or
conditioned, the Company shall, unless expressly authorized to do otherwise
pursuant to paragraphs (a) through (o) below, in all material respects
conduct its business and shall cause the businesses of its subsidiaries to be
conducted only in the ordinary course of business consistent with past
practice, and the Company shall use reasonable commercial efforts to preserve
substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers,
employees and consultants of the Company and its subsidiaries and to preserve
the present relationships of the Company and its subsidiaries with customers,
suppliers and other persons with which the Company or any of its subsidiaries
has a significant business relations. Without limiting the foregoing, except
as contemplated by this Agreement or as set forth on Section 5.1 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries
shall, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the time Parent's
designees are elected as directors of the Company pursuant to Section 1.3,
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 or delayed:
34
(a) amend or otherwise change the articles of
incorporation or by-laws of the Company or any of the Subsidiary Documents;
(b) issue, sell, pledge, dispose of or encumber,
or authorize the issuance, sale, pledge, disposition or encumbrance of, any
shares of capital stock of any class, or any options, warrants, convertible
securities, exchangeable securities or other rights of any kind to acquire
any shares of capital stock of any class, or any other ownership interest
(including, without limitation, any phantom interest) in the Company or any
of its subsidiaries or affiliates (except for (i) the issuance of shares of
Common Stock issuable pursuant to the Stock Options or agreements listed on
Section 3.3 of the Company Disclosure Schedule and (ii) the issuance of
shares of Company Common Stock required to be issued to participants in the
Company's Employee Plans pursuant to the terms thereof);
(c) sell, pledge, dispose or encumber any assets
of the Company or any of its subsidiaries (except for (i) sales of assets in
the ordinary course of business and in a manner consistent with past
practice, (ii) disposition of obsolete or worthless assets and (iii) sales of
immaterial assets not in excess of $100,000);
(d) (i) declare, set aside, make or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock, except for the
payment of the Company's regular quarterly cash dividend of $0.03 per share
declared prior to the date hereof except that a wholly owned subsidiary of
the Company may declare and pay a dividend or make advances to its parent or
the Company, (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or (iii)
amend the terms or change the period of exercisability of, purchase,
repurchase, redeem or otherwise acquire, or permit any subsidiary to
purchase, repurchase, redeem or otherwise acquire, any of its securities or
any securities of its subsidiaries, including, without limitation, shares of
Common Stock or any option, warrant, convertible or exchangeable securities
or other right, directly or indirectly, to acquire shares of Common Stock, or
propose to do any of the foregoing, except for the acceleration or
termination of Stock Options pursuant to the terms of the Company Stock
Option Plan and the exercise of such Stock Options or the termination of any
other arrangement providing for the issuance of shares thereunder;
(e) (i) acquire (by merger, consolidation, or
acquisition of stock or assets) any material property or assets, make any
investment in, or make any capital contributions to, any corporation,
partnership or other business organization or division thereof; (ii) incur
any indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse or otherwise as an accommodation become responsible for,
the obligations of any person or, except in the ordinary course of business
consistent with past practice or in connection with purchases of equipment or
35
capital improvements, make any loans or advances (other than loans or advances
to or from direct or indirect wholly owned subsidiaries), (iii) enter into,
terminate or amend any Material Contract or agreement other than in the ordinary
course of business or where such contract, termination or amendment would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or its subsidiaries; (iv) authorize any capital expenditures or purchases of
fixed assets which are, in the aggregate, in excess of $300,000; or (v) enter
into or amend any contract, agreement, commitment or arrangement to effect any
of the matters prohibited by this Section 5.1(e);
(f) (i) increase the compensation or fringe
benefits payable or to become payable to its directors, officers or
employees, except for increases in salary or wages of employees of the
Company or its subsidiaries in accordance with past practice and in amounts
that are in the aggregate reflected in the budgets previously provided to
Parent, (ii) except pursuant to the existing agreements set forth on Section
3.11(a) of the Company Disclosure Schedule, grant any severance or
termination pay to, or enter into any severance agreement or other agreement
providing for severance payments with, any director, officer or other
employee of the Company or any of its subsidiaries, (iii) 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 current or former
directors, officers or employees, (iv) enter into any employment or
consulting agreement except with respect to new hires of employees who are
not executive officers or senior management personnel in the ordinary course
of business or (v) accelerate the payment, right to payment or vesting of any
bonus, severance, profit sharing, retirement, deferred compensation, stock
option, insurance or other compensation or benefits except as required under
the Company Employee Plans; except in each of (i) through (v), as may be
required by law;
(g) take any action to change material accounting
policies or procedures (including, without limitation, procedures with
respect to revenue recognition, payments of accounts payable and collection
of accounts receivable) except as required by U.S. generally accepted
accounting principles;
(h) make any material tax election inconsistent
with past practice or settle or compromise any material federal, state, local
or foreign tax liability or agree to an extension of a statute of
limitations, except to the extent the amount of any such settlement has been
reserved for in the 1999 Financial Statements;
(i) pay, discharge or satisfy any claims,
liabilities or obligations (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
36
Financial Statements or incurred in the ordinary course of business and
consistent with past practice;
(j) enter into any compromise or settlement of, or
take any material action with respect to, any litigation, action, suit,
claim, proceeding or investigation other than the prosecution, defense and
settlement of routine litigation, actions, suits, claims, proceedings or
investigations in the ordinary course of business;
(k) adopt or enter into a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other material reorganization or any agreement relating
to an Acquisition Proposal (as defined in Section 5.2 of this Agreement);
(l) enter into any agreement, understanding or
commitment that restrains, limits or impedes the Company's ability to compete
with or conduct any business or line of business;
(m) plan, announce, implement or effect any
reduction in force, lay-off, early retirement program, severance program or
other program or effort concerning the termination of employment of employees
of the Company or its subsidiaries, except, only with respect to employees
who do not exercise the functions of general manager, the equivalent or
higher, in the ordinary course of business consistent with past practice;
(n) enter into any new agreement to acquire or
rent accommodations (x) involving aggregate rental payments in an amount in
excess of $100,000 or which will remain in effect for longer than six months
from the date hereof or (y) on other than ordinary course of business terms;
or
(o) take, or agree in writing or otherwise to
take, any of the actions described in Sections 5.1(a) through (n) above, or
any action which would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect in any material
respect or prevent the Company from performing or cause the Company not to
perform its covenants hereunder.
Section 5.2 NO SOLICITATION; ACQUISITION PROPOSALS.
(a) The Company shall not, nor shall it permit any of
its subsidiaries to, nor shall it authorize or permit any officer, director or
representative or agent of the Company or any of its subsidiaries (including,
without limitation, any investment banker, financial advisor, attorney or
accountant retained by the Company or any of its subsidiaries) to, directly or
indirectly, (i) solicit, initiate or knowingly encourage (including by way of
furnishing information or assistance), or take any other action to facilitate
the initiation of any inquiries or proposals regarding an Acquisition Proposal
(as hereinafter defined), (ii) engage in negotiations or discussions concerning,
37
or provide any nonpublic information to any person relating to, any Acquisition
Proposal, or (iii) agree to approve or recommend any Acquisition Proposal;
provided, however, that nothing contained in this Section 5.2 shall prohibit the
Company or the Board from taking and disclosing to stockholders a position
contemplated by Rule 14e-2 promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith reasonable
judgment of the Board after consultation with outside legal counsel, the failure
to so disclose would be inconsistent with its fiduciary obligations to
stockholders under applicable law; and provided, further, that, prior to the
time at which Acquisition Sub shall have accepted Shares for payment pursuant to
the Offer and to the extent that the Board determines in good faith (after
consultation with outside legal counsel) that not to do so would be inconsistent
with its fiduciary duties to stockholders under applicable law, (y) the Board on
behalf of the Company may, in response to an unsolicited bona fide written
Acquisition Proposal (as hereinafter defined), make such inquiries of the Third
Party (as hereinafter defined) making such unsolicited bona fide written
Acquisition Proposal as may be necessary to inform itself of the particulars of
the Acquisition Proposal and, if the Board reasonably believes that such
Acquisition Proposal may constitute a Superior Proposal (as hereinafter
defined), furnish information or data (including, without limitation,
confidential information or data) relating to the Company or its subsidiaries
to, and participate in negotiations with, the Third Party (as hereinafter
defined) making such unsolicited bona fide written Acquisition Proposal and (z)
following receipt of a Superior Proposal (as hereinafter defined), the Board may
withdraw or modify its recommendation relating to the Offer or the Merger if the
Board determines in good faith after consultation with outside legal counsel
that failure to take such action would be inconsistent with its fiduciary duties
to stockholders under applicable law. Subject to the Company's right to
terminate this Agreement pursuant to Section 8.1(f), nothing in this Agreement
and no action taken by the Board pursuant to this Section 5.2 will permit the
Company to enter into any agreement or undertaking providing for any transaction
contemplated by an Acquisition Proposal for so long as this Agreement remains in
effect.
As used in this Agreement, "ACQUISITION PROPOSAL" means a
proposal for either (i) a transaction pursuant to which any person (or group of
persons) other than the Parent or its affiliates (a "THIRD PARTY") would acquire
25% or more of the outstanding shares of the Common Stock of the Company
pursuant to a tender offer or exchange offer or otherwise, (ii) a merger or
other business combination involving the Company pursuant to which any Third
Party would acquire 25% or more of the outstanding shares of the Common Stock of
the Company or of the entity surviving such merger or business combination,
(iii) any other transaction pursuant to which any Third Party would acquire
control of assets (including for this purpose the outstanding equity securities
of subsidiaries of the Company, and the entity surviving any merger or business
combination including any of them) of the Company having a fair market value
equal to 25% or more of the fair market value of all the assets of the Company
immediately prior to such transaction, (iv) any public announcement by a Third
Party of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing, (v) a self tender offer, or (vi)
any transaction subject to Rule 13(e)-3 under the Exchange
38
Act. No Acquisition Proposal received by the Company following the date of this
Agreement shall be deemed to have been solicited by the Company or any of its
officers, directors, employees, representatives and agents (including, without
limitation, any investment banker, attorney or accountant retained by the
Company) in violation of Section 5.2 solely by virtue of the fact that the
person or entity making such Acquisition Proposal made an Acquisition Proposal
prior to the date of this Agreement or the fact that the Company or any of its
officers, directors, employees, representatives and agents (including, without
limitation, any investment banker or attorney retained by the Company) solicited
such Acquisition Proposal prior to February 29, 2000.
As used in this Agreement, "SUPERIOR PROPOSAL" means an
Acquisition Proposal that (i) is not subject to any financing contingencies or
is, in the good faith judgment of the Board after consultation with a nationally
recognized financial advisor, reasonably capable of being financed and (ii) the
Board determines in good faith, based upon such matters as it deems relevant,
including an opinion of a nationally recognized financial advisor, would, if
consummated, result in a transaction more favorable to the Company's
stockholders from a financial point of view than the Offer and the Merger.
(b) Prior to providing any information to or entering
into discussions with any person in connection with an Acquisition Proposal by a
person as set forth in Section 5.2(a), the Company shall receive from such
person an executed confidentiality agreement in reasonably customary form and
shall notify Parent orally and in writing of any Acquisition Proposal
(including, without limitation, the material terms and conditions thereof and
the identity of the person making it) or any inquiries indicating that any
person is considering making or wishes to make an Acquisition Proposal, as
promptly as practicable (but in no case later than 24 hours) after its receipt
thereof, and shall provide Parent with a copy of any written Acquisition
Proposal, and shall thereafter inform Parent on a prompt basis of (i) any
material changes to the terms and conditions of such Acquisition Proposal, and
shall promptly give Parent a copy of any information provided to such person
which has not previously been provided to Parent and (ii) any request by any
person for nonpublic information relating to its or any of its subsidiaries'
properties, books or records.
(c) Subject to the foregoing provisions of this
Section 5.2, the Company shall immediately cease any existing discussions or
negotiations with any person (other than Parent and Acquisition Sub) conducted
heretofore with respect to any of the foregoing. The Company agrees not to
release any third party from the confidentiality provisions of any
confidentiality agreement to which the Company is a party.
(d) The Company shall ensure that the officers and
directors of the Company and its subsidiaries and any investment banker,
financial advisor, attorney, accountant or other advisor or representative
retained by the Company are aware of the restrictions described in this Section
5.2.
39
VI.
ADDITIONAL AGREEMENTS
Section 6.1 HSR ACT. As promptly as practicable after the
date of this Agreement, the Company and Parent shall file notifications under
the HSR Act in connection with the Offer, the Merger and the transactions
contemplated hereby and shall respond as promptly as practicable to any
inquiries and requests received from the Federal Trade Commission (the "FTC")
and the Antitrust Division of the Department of Justice (the "ANTITRUST
DIVISION") for additional information or documentation and from any State
Attorney General or other Governmental Authority in connection with antitrust
matters.
Section 6.2 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon
reasonable notice and subject to (i) restrictions contained in
confidentiality agreements to which such party is subject (from which such
party shall use reasonable efforts to be released), and (ii) the Company's
written consent (which consent shall not be unreasonably withheld) with
respect to current or future prices of products and services or information
relating to specific customers or other competitively sensitive information,
the Company shall, and shall cause each of its subsidiaries to afford, to the
officers, employees, accountants, counsel, financial advisors and other
representatives of Parent, Fimalac-U.S., Acquisition Sub or the financing
sources of Parent or Acquisition Sub reasonable access during normal business
hours, during the period prior to the earlier of the termination of this
Agreement and the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its subsidiaries to) furnish promptly to Parent, Fimalac-U.S.
or Acquisition Sub all information concerning its business, properties and
personnel as Parent, Fimalac-U.S. or Acquisition Sub may reasonably request,
and each shall make available to Parent, Fimalac-U.S. and Acquisition Sub the
appropriate individuals (including attorneys, accountants, and other
professionals) for discussion of the Company's business, properties and
personnel as Parent, Fimalac-U.S. or Acquisition Sub may reasonably request.
Any such investigation by Parent, Fimalac-U.S. or Acquisition Sub shall not
affect the representations or warranties of the Company contained in this
Agreement. Parent, Fimalac-U.S. and Acquisition Sub shall keep such
information confidential in accordance with the terms of the confidentiality
letter dated January 25, 2000 (the "CONFIDENTIALITY LETTER"), between Parent
and the Company, which Confidentiality Letter shall survive termination of
this Agreement. Upon any termination of this Agreement, Parent shall, upon
written request of the Company, destroy or collect and deliver to the Company
all documents obtained by it or any of its representatives pursuant to this
Section 6.2 then in their possession and any copies thereof.
Section 6.3 CONSENTS; APPROVALS. Subject to Section 5.2,
the Company, Parent, Fimalac-U.S. and Acquisition Sub shall each use their
reasonable best efforts to take all appropriate action to do or cause to be
done all things
40
necessary, proper or advisable under applicable laws and regulations to
consummate the Offer, the Merger and the other transactions contemplated by this
Agreement, including, without limitation, using their best efforts to obtain all
consents, waivers, approvals, authorizations or orders of Governmental
Authorities and parties to contracts with the Company or any of its
subsidiaries, and the Company, Parent, Fimalac-U.S. and Acquisition Sub shall
make all filings including, without limitation, all filings with Governmental
Authorities required in connection with the authorization, execution and
delivery of this Agreement by the Company, Parent, Fimalac-U.S. and Acquisition
Sub, the consummation by them of the transactions contemplated hereby and to
fulfill the conditions to the Offer and the Merger. The Company and Parent shall
furnish all information required to be included in the Proxy Statement, or for
any application or other filing to be made pursuant to the rules and regulations
of any United States or foreign governmental body in connection with the
transactions contemplated by this Agreement.
Section 6.4 INDEMNIFICATION AND INSURANCE.
(a) The articles of incorporation and by-laws of
the Surviving Corporation shall contain provisions with respect to
indemnification and exculpation at least as protective to any officer or
director as those set forth in the articles of incorporation and 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 adversely affect the rights thereunder of individuals who at or prior
to the Effective Time were directors, officers, employees or agents of the
Company, unless such modification is required by law.
(b) The Company shall, to the fullest extent
permitted under applicable law or under the Company's articles of
incorporation or by-laws and regardless of whether the Merger becomes
effective, indemnify and hold harmless, and, after the Effective Time,
Fimalac-U.S. and the Surviving Corporation shall, to the fullest extent
permitted under applicable law or under the Surviving Corporation's articles
of incorporation or by-laws, indemnify 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 and liabilities incurred in connection with, and amounts paid in
settlement of, any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative and wherever asserted,
brought or filed, (x) arising out of or pertaining to the transactions
contemplated by this Agreement or (y) otherwise with respect to any acts or
omissions or alleged acts or omissions occurring at or prior to the Effective
Time, to the same extent as provided in the respective articles of
incorporation or by-laws of the Company or the subsidiaries 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) in which there exists no conflict between the
41
interests of the indemnifying party and the Indemnified Party, the indemnifying
party shall have a right to assume and direct all aspects of the defense
thereof, including settlement, and the Indemnified Party shall cooperate in the
defense of any such matter. The Indemnified Party shall have a right to
participate in (but not control) the defense of any such matter with its own
counsel and at its own expense. The indemnifying party shall not settle any such
matter unless (i) the Indemnified Party gives prior written consent, which shall
not be unreasonably withheld, or (ii) the terms of the settlement provide that
the Indemnified Party shall have no responsibility for the discharge of any
settlement amount and impose no other obligations or duties on the Indemnified
Party and the settlement provides the Indemnified Party with a full release and
discharges all rights against the Indemnified Party with respect to such matter.
In no event shall the indemnifying party be liable for any settlement effected
without its prior written consent; provided that if such indemnifying party
elected not to assume and direct the defense of such action, such indemnifying
party's consent to such settlement shall not be unreasonably withheld or
delayed. Any Indemnified Party wishing to claim indemnification under this
Section 6.4(b), upon learning of any such claim, action, suit, proceeding or
investigation, shall notify Fimalac-U.S. and the Surviving Corporation (but the
failure so to notify shall not relieve the indemnifying party from any liability
which it may have under this Section 6.4(b) except to the extent of any damages
caused by such failure to the indemnifying party), and shall deliver to
Fimalac-U.S. and the Surviving Corporation the undertaking contemplated by
Section 8.75(e) of the Illinois Law. If the indemnifying party does not assume
the defense of any such action, the Indemnified Parties as a group may retain
only one law firm in each jurisdiction to represent them with respect to any
single action unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two or
more Indemnified Parties. The indemnity agreements of Fimalac-U.S. and the
Surviving Corporation in this Section 6.4(b) shall extend, on the same terms to,
and shall inure to the benefit of and shall be enforceable by, each person or
entity who controls, or in the past controlled, any present or former director,
officer or employee of the Company or any of its subsidiaries.
(c) This Section shall survive the consummation of
the Merger at the Effective Time, is intended to benefit the Company, the
Surviving Corporation and the Indemnified Parties, shall be binding on all
successors and assigns of Fimalac-U.S. and the Surviving Corporation and
shall be enforceable by the Indemnified Parties. In the event that
Fimalac-U.S. or Surviving Corporation or any of their successors or assigns
(i) consolidates or merges into any other person or entity and shall not be
the continuing or surviving corporation or entity in such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any person or entity, then and in such case, proper provisions
shall be made so that the successors and assigns of Fimalac-U.S. or the
Surviving Corporation (as the case may be) assume the obligations of
Fimalac-U.S. and the Surviving Corporation set forth in this Section.
42
Section 6.5 NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to
the Company, of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be materially
untrue or inaccurate, or (ii) any failure of the Company, Parent or
Acquisition Sub, as the case may be, materially to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 6.6 FURTHER ACTION. Upon the terms and subject to
the conditions hereof (including, without limitation, Section 5.2), each of
the parties shall use all reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all other things necessary,
proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement.
Parent and Fimalac-U.S. shall take all action necessary to cause Acquisition
Sub to perform its obligations under this Agreement and to make the Offer and
purchase Shares and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement.
Section 6.7 PUBLIC ANNOUNCEMENTS. Parent and the Company
shall consult with each other before issuing any press release with respect
to the Offer, the Merger or this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the
other party, which shall not be unreasonably withheld, delayed or
conditioned; provided, however, that a party may, without the prior consent
of the other part, issue such press release or make such public statement as
may upon the advice of counsel be required by law or the rules and
regulations of the New York Stock Exchange or the Paris BOURSE, if it has
used all reasonable efforts to consult with the other party.
Section 6.8 CONVEYANCE TAXES. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and
stamp taxes, any transfer, recording, registration and other fees, and any
similar taxes which become payable in connection with the transactions
contemplated hereby that are required or permitted to be filed on or before
the Effective Time.
43
Section 6.9 EMPLOYEE BENEFIT PLANS. Parent agrees that the
employees of the Company will continue to be provided with benefits under
employee benefit plans (other than plans involving the potential issuance of
or investment in securities of the Company or similar performance-based
incentive plans) that in the aggregate are substantially comparable to those
currently provided by the Company to such employees. Following the Effective
Time, Parent shall cause service by employees of the Company to be taken into
account for purpose of eligibility to participate and vesting under any
benefit plans of Parent or its subsidiaries (including the Surviving
Corporation) which cover such employees, to the same extent such service was
counted under a similar plan of the Company. From and after the Effective
Time, Parent shall (i) cause to be waived any pre-existing condition
limitations and evidence of insurability requirements under benefit plans of
Parent or its subsidiaries in which employees of the Company participate, and
(ii) cause to be credited any deductibles and out-of-pocket expenses incurred
by such employees and their beneficiaries and dependents under the Company's
benefit plans during the portion of the calendar year prior to their
participation in the benefit plans provided by Parent and its subsidiaries.
Parent shall cause the Surviving Corporation to honor all employee benefit
obligations to current and former employees under the Company Employee Plans
accrued as of the Effective Time and all employee severance plans and all
employment or severance agreements set forth in Section 3.11(a) of the
Company Disclosure Schedule. Notwithstanding any of the foregoing to the
contrary, none of the provisions contained herein shall operate to duplicate
any benefit provided to any employee of the Company or the funding of any
such benefit or obligate Parent or any affiliate of Parent to (i) make any
particular benefit plan or benefit available to any employee, (ii) continue
any particular benefit plan or benefit or (iii) refrain from terminating or
amending any particular benefit plan or benefit.
Section 6.10 DELISTING OF SECURITIES. As soon as
practicable following the Effective Time, the parties hereto shall take all
action necessary to cause the Company's Common Stock to be de-listed from the
New York Stock Exchange and de-registered under the Exchange Act.
Section 6.11 AUDITED FINANCIAL STATEMENTS. As soon as
practicable but in any case five (5) business days prior to the initial
expiration date of the Offer, the Company shall provide to Parent and
Acquisition Sub copies of the fully audited consolidated financial statements of
the Company and its consolidated subsidiaries for the Company's fiscal year
ended December 31, 1999.
Section 6.12 STATE TAKEOVER LAWS. If any "fair price,"
"business combination" or "control share acquisition" statute or other similar
statute or regulation shall become applicable to the transactions contemplated
hereby, Parent and the Company and their respective boards of directors shall
use their reasonable best efforts to grant such approvals and take such actions
as are necessary so that the transactions contemplated hereby and thereby may be
consummated as promptly as practicable on the terms contemplated hereby and
thereby and otherwise act to
44
minimize the effects of any such statute or regulation on the transactions
contemplated hereby and thereby.
Section 6.13 FINANCING EFFORTS. If an event of the type listed
in clause (f) of Annex A hereto shall have occurred and, as a consequence
thereof, the Parent's and the Acquisition Sub's financing for the Offer is
withdrawn or otherwise unavailable, and if the other conditions to the Offer
have otherwise been satisfied, the Parent will use reasonable best efforts to
arrange alternative financing for the Offer (provided that the terms thereof are
not materially worse than those available to it previously).
ARTICLE VII.
CONDITIONS TO THE MERGER
Section 7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO
EFFECT THE MERGER. The respective obligations of each party to effect the
Merger shall be subject to the satisfaction or waiver to the extent
permissible under law at or prior to the Effective Time of all the following
conditions:
(a) PURCHASE OF SHARES. Acquisition Sub shall have
accepted and purchased Shares pursuant to the Offer.
(b) HSR ACT. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
earlier terminated.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No
temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Merger shall be in effect;
and there shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger illegal; provided, however, that prior
to invoking this condition, the party so invoking this condition shall have
complied with its obligations under Section 6.3.
(d) GOVERNMENTAL ACTIONS. There shall not be in
effect any judgment, decree or order of any Governmental Authority,
administrative agency or court of competent jurisdiction prohibiting or
limiting Parent from exercising all material rights and privileges pertaining
to its ownership of the Surviving Corporation or the ownership or operation
by Parent or any of its subsidiaries of all or a material portion of the
business or assets of Parent or any of its subsidiaries, or compelling Parent
or any of its subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of Parent or any of its subsidiaries
(including the
45
Surviving Corporation and its subsidiaries), as a result of the Merger or the
transactions contemplated by this Agreement.
(e) STOCKHOLDERS' APPROVAL. The Merger shall have
been approved by the shareholders of the Company, if and to the extent a vote
of the stockholders of the Company shall be required in respect of the Merger
in accordance with Illinois Law.
Section 7.2 CONDITIONS TO OBLIGATION OF PARENT,
FIMALAC-U.S. AND ACQUISITION SUB. The respective obligations of Parent,
Fimalac-U.S. and Acquisition Sub to effect the Merger shall be subject to the
satisfaction or waiver to the extent permissible under law at or prior to the
Effective Time of the following condition:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of the Company set forth in this Agreement
shall be true and correct in all material respects when made.
ARTICLE VIII.
TERMINATION
Section 8.1 TERMINATION. This Agreement may be terminated
at any time prior to the Effective Time, notwithstanding approval thereof by
the stockholders of the Company:
(a) by mutual written consent duly authorized by
the boards of directors or any committee thereof of Parent, Fimalac-U.S.,
Acquisition Sub and the Company, subject to compliance with Section 1.3(c);
(b) by either Parent or the Company if a court of
competent jurisdiction or Governmental Authority shall have issued a
nonappealable final order, decree or ruling or taken any other action having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Offer or the Merger (provided that the right to terminate this Agreement
under this Section 8.1(b) shall not be available to any party who has not
complied with its obligations under Sections 6.3 and 6.6 and such
noncompliance materially contributed to the issuance of any such order,
decree or ruling or the taking of such action);
(c) by either Parent or the Company if (A) as the
result of the failure of any of the conditions set forth in ANNEX A to this
Agreement, the Offer shall have expired or Acquisition Sub shall have
terminated the Offer in accordance with its terms without Acquisition Sub
having purchased any Shares pursuant to the Offer or (B) Acquisition Sub
shall have failed to accept for purchase and pay for Shares pursuant to the
Offer by May 12, 2000 unless such failure by Acquisition Sub
46
is a result of the receipt by the Company of a bona fide unsolicited Acquisition
Proposal or a request for additional information under the HSR Act or the
failure to obtain any necessary governmental or regulatory approval, in which
case the date by which Acquisition Sub shall accept for purchase and pay for
Shares shall be extended to June 30, 2000 (provided that the right to terminate
this Agreement under this Section 8.1(c) shall not be available to any party
whose breach or failure to fulfill any obligation under this Agreement has been
the cause of or resulted in any of the circumstances described in clauses (A)
and (B) before such dates);
(d) by Parent, prior to the purchase of Shares
pursuant to the Offer, if the Board shall have (i) withdrawn or modified in a
manner adverse to Parent, Fimalac-U.S. or Acquisition Sub, or publicly taken
a position materially inconsistent with, its approval or recommendation of
the Offer, the Merger or the transactions contemplated by this Agreement,
(ii) approved, endorsed or recommended an Acquisition Proposal, or (iii)
publicly disclosed any intention to do any of the foregoing;
(e) by the Company, prior to the purchase of
Shares pursuant to the Offer, or the Parent, at any time prior to the
Effective Time, (i) if any representation or warranty of the Company or
Parent, respectively, set forth in this Agreement that are qualified by
reference to materiality shall not be true and correct when made or any
representation or warranty of the Company or Parent, respectively, set forth
in this Agreement that are not qualified by reference to materiality shall
not be true and correct in all material respects when made, or (ii) upon a
breach of or failure to perform in any material respect any covenant or
agreement on the part of the Company or Parent, respectively, set forth in
this Agreement except, in each of (i) and (ii) above, where the failure to
perform such covenants or agreements or the failure of such representations
and warranties to be so true and correct would not have a Material Adverse
Effect on the Company, Parent or the Offer (either (i) or (ii) above being a
"TERMINATING BREACH"); provided however, that, if such Terminating Breach is
curable by the Company or Parent, as the case may be, through the exercise of
its reasonable best efforts and for so long as the Company or Parent, as the
case may be, continues to exercise such reasonable best efforts, neither
Parent nor the Company, respectively, may terminate this Agreement under this
Section 8.1(e), and provided further that the right to terminate this
Agreement pursuant to this Section 8.1(e) shall not be available to any party
whose breach of or failure to fulfill its obligations under this Agreement
resulted in the failure of any such condition; or
(f) by the Company, following the receipt by the
Company after the date hereof, under circumstances not involving any breach
of the provisions of Section 5.2, of an unsolicited bona fide Superior
Proposal, if the Board, after consultation with outside legal counsel, shall
have determined in good faith that the failure to terminate this Agreement
would be inconsistent with its fiduciary duties to the Company's stockholders
under applicable law; provided that (i) the Company has complied with all
provisions of Section 5.2, including the notice provisions therein,
47
(ii) such termination shall only be effective if the Company enters into a
definitive agreement providing for the transactions contemplated by such
Acquisition Proposal immediately following such termination; (iii) the Board
shall have given Parent at least two business days prior written notice of its
determination to terminate this Agreement pursuant to this Section 8.1(f) and
shall have afforded Parent a reasonable opportunity within such two business
day-period to amend its Offer; and (iv) the Company pays Parent the Termination
Fee (as defined below) in accordance with provisions of Section 8.3.
Section 8.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 8.1, there shall be no
liability on the part of any party hereto or any of its affiliates,
directors, officers, employees or stockholders except as set forth in
Sections 3.22, 6.2, 6.7, 8.1 and 8.3 and Article IX and this Agreement shall
otherwise forthwith become void. Except as otherwise provided in Section 8.3,
nothing herein shall relieve any party from liability for any willful breach
of any of its representations and warranties or the breach of any of its
covenants or agreements set forth in this Agreement.
Section 8.3 FEES AND EXPENSES.
(a) Except as otherwise set forth in this
Agreement, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated.
(b) The Company shall pay Parent a fee of
$16,000,000 (the "TERMINATION FEE") plus the amount of the actual
out-of-pocket expenses (not to exceed $2 million) incurred by Parent,
Fimalac-U.S. and Acquisition Sub in connection with this Agreement and the
transactions contemplated hereby if this Agreement is terminated (x) by
Parent pursuant to Section 8.1(d), or (y) by the Company pursuant to Section
8.1(f), or (z) by the Company or Parent pursuant to Section 8.1(c) if, at the
time of such termination pursuant to Section 8.1(c), the Minimum Condition
had not been satisfied and an Acquisition Proposal had been publicly
announced and, within twelve months of such termination pursuant to Section
8.1(c), any person or entity (other than Parent) has acquired, by purchase,
merger, consolidation, sale, assignment, lease, transfer or otherwise, in one
transaction or any related series of transactions, a majority of the voting
power of the outstanding securities of the Company or a majority of the
assets of the Company. The Termination Fee payable pursuant to this Section
8.3(b) shall be paid by wire transfer in immediately available funds
immediately upon termination of this
48
Agreement as set forth above, except in the case of a termination pursuant to
Section 8.1(c), in which case it shall be paid immediately upon satisfaction of
the conditions to payment set forth in clause (z) of the preceding sentence. The
out-of-pocket expenses shall be paid promptly upon receipt of reasonable
documentation of such expenses. Except as provided in this Section 8.3(b), upon
termination of this Agreement pursuant to Sections 8.1(d) or 8.1(f), or upon
termination of this Agreement pursuant to Section 8.1(c) under circumstances in
which a Termination Fee is payable hereunder, none of the parties hereto shall
have any liability hereunder.
ARTICLE IX.
GENERAL PROVISIONS
Section 9.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS. Except as otherwise provided in this Section 9.1, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any other party hereto, any person controlling any such
party or any of their officers or directors, whether prior to or after the
execution of this Agreement. The representations, warranties, covenants and
agreements in this Agreement shall terminate at the Effective Time or upon
the termination of this Agreement pursuant to Section 8.l, as the case may
be, except that this Section 9.1 shall not limit any covenant or any
agreement of the parties which by its terms contemplates performance after
the Effective Time and which shall survive in accordance with its respective
terms. The Confidentiality Letter shall survive termination of this Agreement
as provided therein.
Section 9.2 NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made if and when delivered personally or by overnight
courier to the parties at the following addresses or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
below (or at such other address or telecopy number for a party as shall be
specified by like notice):
(a) If to Parent, Fimalac-U.S. or Acquisition Sub:
Fitch IBCA, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
49
With a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
(b) If to the Company:
Duff & Xxxxxx Credit Rating Co.
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: President
With a copy to:
Xxxxxx Xxxxxx Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
XXX
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Xx., Esq.
Section 9.3 CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) AFFILIATE means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
(b) BENEFICIAL OWNER with respect to any shares of
Common Stock 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 of 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 only to the
50
passage of time), 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
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares;
(c) BUSINESS DAY means any day other than a day on
which banks in New York or Paris are required or authorized to be closed;
(d) CONTROL (including the terms CONTROLLED BY,
and UNDER COMMON CONTROL WITH) means the possession, directly or indirectly
or as trustee or executor, of the power to direct or cause the direction of
the management or policies of a person, whether through the ownership of
stock, as trustee or executor, by contract or credit arrangement or otherwise;
(e) KNOWLEDGE means, with respect to any matter in
question, actual knowledge of any executive officer of the entity in question
with respect to such matter after making reasonable inquiry of officers and
other employees charged with senior administrative or operational
responsibility of such matters;
(f) PERSON means an individual, corporation,
partnership, limited liability company, association, joint venture, trust,
unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(g) SUBSIDIARY or SUBSIDIARIES of the Company, the
Surviving Corporation, Parent or any other person means any person or other
legal entity of which the Company, the Surviving Corporation, Parent or such
other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, more than 50% of the
stock or other equity interests the holders of which are generally entitled
to vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
Section 9.4 AMENDMENT. 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, subject to compliance with
Section 1.3(c); provided, however, that, after approval of the Merger by the
stockholders of the Company, no amendment may be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
Section 9.5 WAIVER. At any time prior to the Effective
Time, any party hereto may with respect to any other party hereto (a) extend
the time for the
51
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
Section 9.6 HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 9.7 SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
Section 9.8 ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement and supersedes all prior agreements and undertakings
(other than the Confidentiality Letter), both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and,
except as otherwise expressly provided herein.
Section 9.9 ASSIGNMENT; GUARANTEE OF ACQUISITION SUB
OBLIGATIONS. This Agreement shall not be assigned by operation of law or
otherwise, except that Parent, Fimalac-U.S. and Acquisition Sub may assign
all or any of their rights hereunder to any affiliate provided that no such
assignment shall relieve the assigning party of its obligations hereunder.
Section 9.10 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, including, without limitation, by way
of subrogation, other than Section 6.4 (which is intended to be for the
benefit of the Indemnified Parties and may be enforced by such Indemnified
Parties).
Section 9.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to be
a waiver of, or acquiescence in, any breach of any representation, warranty
or agreement herein, nor
52
shall any single or partial exercise of any such right preclude other or further
exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
Section 9.12 GOVERNING LAW. This Agreement shall be
governed by, and construed in accordance with, the law of the State of New
York, without regard to any conflict of laws principles thereof that might
indicate the applicability of the law of any other jurisdiction.
Section 9.13 COUNTERPARTS. This Agreement may be executed
in one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
Section 9.14 INTERPRETATION. The parties hereto acknowledge
that certain matters set forth in the Company Disclosure Schedule and certain
matters set forth in the Parent Disclosure Schedule are included for
informational purposes only, notwithstanding the fact that, because they do
not rise above applicable materiality thresholds or otherwise, they would not
be required to be set forth therein by the terms of this Agreement. The
parties agree that disclosure of such matters shall not be taken as an
admission by the Company or Parent, as the case may be, that such disclosure
is required to be made under the terms of any provision of this Agreement and
in no event shall the disclosure of such matters be deemed or interpreted to
broaden or otherwise amplify the representations and warranties contained in
this Agreement or to imply that such matters are or are not material and
neither party shall use, in any dispute between the parties, the fact of any
such disclosure as evidence of what is or is not material for purposes of
this Agreement.
53
IN WITNESS WHEREOF, Parent, Fimalac-U.S., Xxxxx Acquisition
Sub and the Company have caused this Agreement to be executed as of the date
first written above by their respective officers thereunto duly authorized.
Fimalac, S.A.
By:
--------------------------------
Name: Xxxxxxxxx Xxxxxx
Title: Directeur General
Fimalac, Inc.
By:
--------------------------------
Name: Xxxxxxxxx Xxxxxx
Title: Chairman
FSA Acquisition Corp.
By:
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
Duff & Xxxxxx Credit Rating Co.
By:
--------------------------------
Name: Xxxx X. XxXxxxxx
Title: Chairman and Chief
Executive Officer
54
ANNEX A
OFFER CONDITIONS
The capitalized terms used in this ANNEX A have the meanings
set forth in the attached Agreement and Plan of Merger among Duff & Xxxxxx
Credit Rating Co., Fimalac, S.A., Fimalac, Inc. and FSA Acquisition Corp. except
that the term "Merger Agreement" shall be deemed to refer to the attached
Agreement and Plan of Merger and the term "Commission" shall be deemed to refer
to the SEC.
Notwithstanding any other provision of the Offer, Acquisition
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the Commission, including, without limitation, Rule
14e-1(c) under the Exchange Act, pay for any Shares tendered pursuant to the
Offer, and may postpone the acceptance for payment or, subject to the
restriction referred to above, payment for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer (whether or not any Shares have
theretofore been purchased or paid for pursuant to the Offer) and not accept for
payment any Shares, if (i) the Minimum Condition shall not have been satisfied,
or (ii) any applicable waiting period under the HSR Act shall not have expired
or been terminated; or (iii) Acquisition Sub shall not have been reasonably
satisfied that the provisions of Sections 7.85 and 11.75 of the Illinois Law are
inapplicable to the Offer and Merger, or (iv) at any time on or after the
announcement and prior to the acceptance for payment of Shares pursuant to the
Merger Agreement, or payment for, the Shares, any of the following conditions
occurs:
(a) there shall have been any action or proceeding
brought or threatened by any Governmental Authority or any other Person
(other than any action or proceeding brought or threatened by a Person other
than a Governmental Authority that would not reasonably be expected to have a
Material Adverse Effect) or any statute, regulation, legislation, judgment,
decree or order, enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to the Offer or the Merger by any Governmental Authority
that would have the effect of: (i) making illegal, or otherwise directly or
indirectly restraining or prohibiting or imposing material penalties or fines
or requiring the payment of material damages in connection with the making
of, the Offer, the acceptance for payment of, the payment for, or the
ownership, directly or indirectly, of, some or all of the Shares by Parent or
Acquisition Sub or the consummation of the Offer or the Merger; (ii)
prohibiting or materially limiting, the direct or indirect ownership or
operation by the Company or by Parent of all or any material portion of the
business or assets of the Company and its subsidiaries, taken as a whole, or
compelling Parent to dispose of or hold separate all or any material portion
of the business or assets of the Company or Parent or their respective
subsidiaries, taken as a whole, as a result of the transactions contemplated
by this Agreement; (iii) imposing or confirming material limitations on the
ability of
55
Parent effectively to hold or to exercise full rights of ownership of Shares,
including, without limitation, the right to vote any Shares on all matters
properly presented to the stockholders of the Company, including, without
limitation, the approval and adoption of the Agreement and the transactions
contemplated thereby; (iv) requiring divestiture by Parent, Fimalac-U.S. or
Acquisition Sub, directly or indirectly, of any Shares; or (v) which would
reasonably be likely to result in a Material Adverse Effect;
(b) the Company shall have breached or failed to
perform in any material respect any of its covenants or agreements under the
Merger Agreement or any of the representations and warranties of the Company
set forth in the Merger Agreement that are qualified by reference to
materiality shall not be true and correct or any of the representations and
warranties of the Company set forth in the Merger Agreement that are not so
qualified by reference to materiality shall not be true and correct in all
material respects, in each case, when made and as of the date of consummation
of the Offer (except to the extent such representations and warranties of the
Company address matters only as of a particular date, in which case as of
such date), except where the failure to perform such covenants or agreements
or the failure of such representations and warranties to be so true and
correct would not have a Material Adverse Effect;
(c) the Merger Agreement shall have been
terminated in accordance with its terms;
(d) there shall have occurred any Material Adverse
Effect, or any development that is reasonably likely to result in a Material
Adverse Effect, on the Company or the Offer;
(e) the Board shall have (i) withdrawn or modified
in a manner adverse to Parent, Fimalac-U.S. or Acquisition Sub, or publicly
taken a position materially inconsistent with, its approval or recommendation
of the Offer, the Merger or the transactions contemplated by this Merger
Agreement, (ii) approved, endorsed or recommended an Acquisition Proposal, or
(iii) publicly disclosed any intention to do any of the foregoing;
(f) there shall have occurred (i) any general
suspension of, or limitation on prices (other than suspensions or limitations
triggered by price fluctuations on a trading day) for, trading in securities on
any national securities exchange in the United States, France, the United
Kingdom or Germany that lasts for more than one trading day, (ii) the
declaration of a banking moratorium or any limitation or suspension of payments
in respect of the extension of credit by banks or other lending institutions in
the United States, France, the United Kingdom, Germany or any other member
country of the European Monetary Union where such moratorium or limitation in
such other member country has a significant adverse effect on the functionality
of the banking markets in the United States, the United
56
Kingdom, Germany or France, (iii) any commencement of war, armed hostilities or
other international or national calamity directly involving the United States,
France or any member countries of the European Union, having a significant
adverse effect on the functionality (which shall not be deemed to include market
average) of financial markets in the United States, France, the United Kingdom
or Germany, (iv) any catastrophic decline in (A) the Dow Xxxxx Industrial
Average or the Standard & Poor's Index of 500 Industrial Companies and (B) the
Nasdaq Stock Market, in each case by an amount in excess of 25% measured from
the close of business on the date of the Merger Agreement to any date after
March 20, 2000; provided that such decline, as so measured, is sustained for a
period of 5 consecutive trading days or exists as of the date of acceptance for
payment of the Shares or (v) in the case of any of the foregoing (other than
clause (iv)) existing at time of the commencement of the Offer, a material
acceleration or worsening thereof; PROVIDED, that the foregoing conditions set
forth in this clause (f) shall only be a condition if the consequence of the
failure of such condition to be satisfied is to cause Parent's and the
Acquisition Sub's financing for the Offer to be withdrawn or otherwise
unavailable; or
(g) all consents and approvals necessary to the
consummation of the Offer, including without limitation consents from parties to
loans, leases and other agreements and consents from any Governmental Authority
shall not have been obtained other than consents and approvals the failure to
obtain which would not, individually or in the aggregate, have a Material
Adverse Effect on the Offer or on the Company or on Parent;
which, in the absolute discretion of Acquisition Sub in any such case, and
regardless of the circumstances (including any action or omission by Acquisition
Sub not inconsistent with the Merger Agreement) giving rise to any such
condition, makes it inadvisable to proceed with such acceptance for payment or
payment of Shares.
The foregoing conditions are for the sole benefit of
Acquisition Sub and its affiliates (except for the Minimum Condition, which is
also for the benefit of the Company) and may be asserted by Acquisition Sub
regardless of the circumstances giving rise to any such condition or may be
waived by Acquisition Sub in whole or in part at any time or from time to time
in its sole discretion (except for the Minimum Condition, which cannot be waived
without the Company's consent). The failure by Acquisition Sub 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 or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time or from time to time.
