1
Exhibit 2.1
================================================================================
YANKEE GROUP RESEARCH, INC.
STOCK PURCHASE AGREEMENT
--------------------
Dated as of May 8, 2000
Between
PRIMARK HOLDING CORPORATION
a wholly-owned direct subsidiary
of
PRIMARK CORPORATION
and
REUTERS HOLDING SWITZERLAND SA
a wholly-owned indirect subsidiary
of
REUTERS GROUP PLC
With Respect to all of the
Outstanding Capital Stock of
YANKEE GROUP RESEARCH, INC.
--------------------
$72,500,000
--------------------
================================================================================
2
TABLE OF CONTENTS
PAGE
----
Article I SALE OF SHARES AND CLOSING ........................... 1
Section 1.1 Purchase and Sale of Shares ................... 1
Section 1.2 Purchase Price ................................ 1
Section 1.3 Closing ....................................... 1
Article II REPRESENTATIONS AND WARRANTIES OF SELLER ............. 2
Section 2.1 Organization of Seller ........................ 2
Section 2.2 Corporate Authority ........................... 2
Section 2.3 Organization of the Company ................... 2
Section 2.4 Capital Stock of the Company .................. 3
Section 2.5 No Subsidiaries ............................... 3
Section 2.6 Corporate Records ............................. 3
Section 2.7 Consents and Approvals ........................ 3
Section 2.8 Financial Statements; Contingent Liabilities... 4
Section 2.9 Absence of Changes ............................ 4
Section 2.10 Accounts Receivable ........................... 7
Section 2.11 Taxes ......................................... 8
Section 2.12 Litigation .................................... 10
Section 2.13 Compliance With Laws .......................... 11
Section 2.14 Pension and Benefit Plans; ERISA .............. 11
Section 2.15 Properties and Other Assets ................... 14
Section 2.16 Intellectual Property Rights .................. 15
Section 2.17 Environmental Matters ......................... 17
Section 2.18 Contracts ..................................... 17
Section 2.19 Licenses and Permits .......................... 19
Section 2.20 Employees ..................................... 19
Section 2.21 Customers and Suppliers ....................... 20
Section 2.22 Insurance ..................................... 20
Section 2.23 Intercompany Liabilities ...................... 20
Section 2.24 Intercompany Services ......................... 21
Section 2.25 Certain Agreements ............................ 21
Section 2.26 Brokers ....................................... 21
i
3
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
Section 2.27 Bank Accounts ............................... 21
Section 2.28 Disclosure .................................. 21
Section 2.29 Knowledge of the Company .................... 21
Article III REPRESENTATIONS AND WARRANTIES OF PURCHASER .......... 21
Section 3.1 Organization ................................ 21
Section 3.2 Corporate Authority ......................... 21
Section 3.3 Consents and Approvals ...................... 22
Section 3.4 Brokers ..................................... 22
Section 3.5 Purchase for Investment ..................... 22
Section 3.6 Availability of Funds ....................... 22
Section 3.7 Litigation .................................. 22
Section 3.8 Investigation by Buyer ...................... 23
Article IV COVENANTS OF SELLER .................................. 23
Section 4.1 Contract and Regulatory Approvals ........... 23
Section 4.2 HSR Filings ................................. 23
Section 4.3 Investigation by Purchaser .................. 24
Section 4.4 No Negotiations ............................. 24
Section 4.5 Conduct of Business ......................... 24
Section 4.6 Financial Statements and Reports ............ 25
Section 4.7 Employee Matters ............................ 26
Section 4.8 Participation in Benefit Plans .............. 26
Section 4.9 Termination of 1999 Stock Option Plan ....... 27
Section 4.10 Separation of Services ...................... 27
Section 4.11 No Disposal of Property ..................... 27
Section 4.12 No Breach or Default ........................ 28
Section 4.13 No Acquisitions ............................. 28
Section 4.14 Intercompany Liabilities .................... 28
Section 4.15 Resignations of Directors ................... 28
Section 4.16 Tax Matters ................................. 29
Section 4.17 Books and Records ........................... 29
ii
4
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
Section 4.18 Notice and Cure ............................. 29
Section 4.19 Conduct of Business ......................... 29
Article V COVENANTS OF PURCHASER ............................... 29
Section 5.1 Regulatory Approvals ........................ 29
Section 5.2 Employee Matters ............................ 30
Article VI CONDITIONS TO OBLIGATIONS OF PURCHASER ............... 31
Section 6.1 Representations and Warranties .............. 31
Section 6.2 Performance ................................. 31
Section 6.3 Regulatory Approvals ........................ 31
Section 6.4 No Injunctions .............................. 31
Section 6.5 Consents and Authorizations ................. 32
Section 6.6 No Adverse Change ........................... 32
Section 6.7 Transfer of Brazilian Operations ............ 32
Section 6.8 Stock Options Plan .......................... 32
Section 6.9 Other Documents ............................. 33
Section 6.10 Opinion of Counsel .......................... 33
Section 6.11 Officer's Certificates ...................... 33
Section 6.12 Resignations ................................ 33
Section 6.13 Non-Foreign Status .......................... 33
Section 6.14 Primark Non-Compete Agreement ............... 33
Article VII CONDITIONS TO OBLIGATIONS OF SELLER .................. 33
Section 7.1 Representations and Warranties .............. 33
Section 7.2 Performance ................................. 33
Section 7.3 Regulatory Approvals ........................ 34
Section 7.4 Consents and Authorizations ................. 34
Section 7.5 Other Documents ............................. 34
Section 7.6 Officer's Certificates ...................... 34
Article VIII ADDITIONAL POST-CLOSING COVENANTS .................... 34
Section 8.1 Subscription Services ....................... 34
Section 8.2 Cooperation with Purchaser .................. 34
iii
5
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
Section 8.3 Non-Competition ............................. 34
Section 8.4 Non-Hire and Non-Solicitation ............... 35
Section 8.5 No Enforcement of Non-Competition Agreement . 35
Section 8.6 Release and Indemnity ....................... 35
Article IX SURVIVAL OF PROVISIONS ............................... 36
Section 9.1 Survival of Representations and Warranties .. 36
Section 9.2 Survival of Covenants and Agreements ........ 36
Section 9.3 Pursuit of Claims ........................... 36
Article X INDEMNIFICATION ...................................... 36
Section 10.1 Non-Tax Indemnification by Seller ........... 36
Section 10.2 Non-Tax Indemnification by Purchaser ........ 37
Section 10.3 Non-Tax Indemnification Procedures; Certain
Limitations ............................... 38
Section 10.4 Tax Indemnification ......................... 40
Section 10.5 Indemnification Payments .................... 47
Article XI TERMINATION .......................................... 47
Section 11.1 Termination ................................. 47
Section 11.2 Effect of Termination ....................... 47
Article XII MISCELLANEOUS ........................................ 47
Section 12.1 Notices ..................................... 47
Section 12.2 Entire Agreement; Interpretation ............ 48
Section 12.3 Expenses .................................... 49
Section 12.4 Public Announcements ........................ 49
Section 12.5 Confidentiality ............................. 50
Section 12.6 Brokers ..................................... 50
Section 12.7 Further Assurances .......................... 50
Section 12.8 Waiver ...................................... 51
Section 12.9 Amendment ................................... 51
Section 12.10 Counterparts ................................ 51
Section 12.11 No Third Party Beneficiary .................. 51
Section 12.12 Governing Law ............................... 51
iv
6
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
Section 12.13 Submission to Jurisdiction; Consent to
Service of Process ........................ 51
Section 12.14 Binding Effect .............................. 52
Section 12.15 No Assignment ............................... 52
Section 12.16 Invalid Provisions .......................... 52
v
7
Schedule Index
Schedule 1.2 Allocation of Purchase Price
Schedule 2.3 Jurisdictions of Qualification
Schedule 2.4 Options and Warrants
Schedule 2.7 Consents and Approvals
Schedule 2.8 Financial Statements
Schedule 2.9 Certain Business Developments
Schedule 2.10 Accounts Receivable Aging Schedule
Schedule 2.11 Taxes
Schedule 2.12 Litigation
Schedule 2.13 Compliance with Laws
Schedule 2.14(a) Employee Benefit Plans and Pension Plans
Schedule 2.14(h) Effect under Employee Benefit Plans
Schedule 2.15 Properties and Other Assets
Schedule 2.15(b) Leased Real Property
Schedule 2.16(a) Patents, Copyrights and Trademarks
Schedule 2.16(b) Royalty Payments
Schedule 2.16(c) Intellectual Property - Infringements
Schedule 2.17 Environmental Matters
Schedule 2.18 Contracts
Schedule 2.19 Licenses and Permits
Schedule 2.20(a) Employee Contracts
Schedule 2.20(b) Employees - Pending Termination or Absence
Schedule 2.20(d) Employees - Severance
Schedule 2.21 Customers and Suppliers
Schedule 2.22 Insurance
Schedule 2.23 Intercompany Liabilities
Schedule 2.24 Intercompany Services
Schedule 2.25 Certain Agreements
Schedule 2.27 Bank Accounts
Schedule 3.3 Consents and Approvals
Schedule 4.8 Payments - Primark Stock Option Plan
Schedule 4.9 Payments - 1999 Stock Option Plan
Schedule 8.6 Primark Guaranty
vi
8
TABLE OF CONTENTS
(CONTINUED)
Exhibit Index
Exhibit A Primark Corporation Non-Compete
Exhibit B Services Agreement
Exhibit C Transition Plan
Exhibit D Stock Option Plan
Exhibit E Opinion of Seller's Counsel
Exhibit F-1 Officer's Certificate of Seller
Exhibit F-2 Secretary's Certificate of Seller
Exhibit G Certificate of Non-Foreign Status
Exhibit H Officer's Certificate of Purchaser
vii
9
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made and entered
into this 8th day of May 2000 by and between Reuters Holdings Switzerland SA
(the "Purchaser"), corporation organized under the laws of Switzerland and a
wholly-owned indirect subsidiary of Reuters Group PLC, a company organized under
the laws of England and Wales, and Primark Holding Corporation, a Delaware
corporation (the "Seller") and a wholly-owned subsidiary of Primark Corporation,
a Michigan corporation ("Primark").
RECITALS:
A. Seller owns 4,000,000 shares (the "Shares") of common stock of
Yankee Group Research, Inc., a Massachusetts corporation (the "Company"),
constituting all the issued and outstanding shares of capital stock of the
Company;
B. Seller desires to sell the Shares to Purchaser, and Purchaser
desires to purchase the Shares from Seller, all on the terms and subject to the
conditions set forth herein;
THEREFORE, Purchaser and Seller agree as follows:
ARTICLE I
SALE OF SHARES AND CLOSING
Section 1.1 .Purchase and Sale of Shares. Subject to the terms and
conditions of this Agreement, Seller agrees to sell the Shares to Purchaser and
Purchaser agrees to purchase the Shares from Seller.
Section 1.2 Purchase Price.
(a) Purchaser shall pay to Seller the amount of $72,500,000 in cash
(the "Purchase Price") which is in consideration for (i) the sale of the Shares,
(ii) the Seller's covenant not to compete contained in Section 8.3 hereof, (iii)
Primark's covenant not to compete contained in Exhibit A hereto (the "Primark
Non-Compete Agreement") and (iv) the transfer of the Seller's Brazilian
operations which relate to the business of the Company referred to in Section
6.7 hereof. Seller and Purchaser hereby agree that the allocation of the
Purchase Price shall be as set forth in Schedule 1.2 hereto.
Section 1.3 Closing.
(a) The purchase and sale of the Shares (the "Closing") will take
place at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York,
NY 10153, at 9:00 a.m., local time on the fifth business day after the
satisfaction or waiver of the
10
conditions in ARTICLES VI AND VII (the "Closing Date") or at such other place
and at such other time as Seller and Purchaser may agree in writing.
(b) At the Closing, Purchaser shall deliver to Seller (i) via wire
transfer of immediately available funds, cash in the amount of the Purchase
Price and (ii) such documents and instruments required to be delivered by
Purchaser pursuant to this Agreement.
(c) At the Closing, Seller will deliver to Purchaser (i) a
certificate or certificates representing all the Shares in appropriate form for
transfer to Purchaser or accompanied by stock powers duly executed in blank and
(ii) such other documents and instruments required to be delivered by Seller
pursuant to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
Section 2.1 Organization of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
Section 2.2 Corporate Authority. Seller has all requisite corporate
power and authority to enter into this Agreement and the other agreements to be
entered into in connection herewith and to perform its obligations hereunder and
thereunder. Seller's execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action on the part of Seller. This
Agreement has been duly and validly executed and delivered by Seller and
constitutes the legal, valid and binding obligation of Seller, enforceable
against it in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or other laws affecting the enforcement of creditors' rights
generally from time to time in effect or by general equitable principles.
Section 2.3 Organization of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts and has all requisite corporate power and
authority to own, lease and operate its assets and carry on its business as it
is now being conducted. Schedule 2.3 lists all jurisdictions in which the
Company is duly qualified as a foreign corporation, and the Company is in good
standing in each such jurisdiction, and there are no other jurisdictions in
which the ownership, leasing or use of its assets or the conduct or nature of
its business make such qualification necessary, except for jurisdictions in
which the failure to be so qualified or in good standing has not had and would
not reasonably be expected to have a material adverse effect on the business,
condition (financial or otherwise), assets, results of operations or properties
of the Company (a "Material Adverse Effect").
2
11
Section 2.4 Capital Stock of the Company. The authorized capital
stock of the Company consists of 10,000,000 shares of common stock, par value
$0.01 per share, of which the Shares are the only shares issued and outstanding.
The Shares are duly authorized, validly issued, fully paid and nonassessable,
and have not been issued in violation of any preemptive or similar rights.
Seller is the owner of record and beneficially of the Shares, free and clear of
all mortgages, pledges, encumbrances, security interests, charges, agreements or
claims of any kind (collectively, "Liens"), except for Liens set forth in
Schedule 2.4. Except for the employee stock options set forth in Schedule 4.9,
there are no authorized or outstanding options, warrants, calls, subscriptions
or rights, commitments or other agreements of any kind to purchase capital stock
of the Company or to cause the Company to issue any shares of capital stock or
securities convertible into or exchangeable or exercisable for any shares of
such stock. There are no authorized or outstanding securities of the Company
convertible into or exchangeable or exercisable for any capital stock of the
Company. Except for the agreement relating to the employee stock options set
forth in Schedule 4.9, there are no agreements or understandings to which the
Company is a party or by which it is bound with respect to the voting, sale or
transfer of the Shares. Upon delivery of the Shares against payment therefor in
accordance with this Agreement, Purchaser will acquire good and marketable title
to the Shares, free and clear of any and all Liens, except for those created by
the Purchaser or arising out of the ownership of the Shares by the Purchaser.
Section 2.5 No Subsidiaries. The Company has no direct or indirect
subsidiaries, and owns no direct or indirect equity interest in any partnership,
joint venture arrangement or other business entity (except for the Company's
interest in Yankeetek Incubator Fund, L.P.)
Section 2.6 Corporate Records.
(a) The Seller has delivered to the Purchaser true, correct and
complete copies of the certificate of incorporation (certified by the Secretary
of Massachusetts) and by-laws (certified by the secretary, assistant secretary
or other appropriate officer) or comparable organizational documents of the
Company.
(b) The minute books of the Company previously made available to the
Purchaser contain complete and accurate records of all meetings and accurately
reflect all other corporate action of the stockholders and board of directors
(including committees thereof) of the Company. The stock certificate books and
stock transfer ledgers of the Company previously made available to the Purchaser
are true, correct and complete.
Section 2.7 Consents and Approvals. Except for the requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") and the filings required by the International Investment and Trade in
Services Survey Act, neither Seller nor the Company is required to make any
filing with, or to obtain any permit, authorization, consent or approval of or
from, any governmental authority as a condition to the consummation of the
transactions contemplated by this Agreement. The
3
12
execution, delivery of this Agreement by Seller does not, and the performance by
Seller of its obligations under this Agreement will not: (i) conflict with or
result in a breach of any of the terms, conditions or provisions of the
certificate of incorporation or bylaws of Seller or the Company; (ii) except as
set forth in Schedule 2.7, conflict with or constitute a default under, or give
rise to any right to terminate, cancel, modify or accelerate, or to the loss of
any right or any benefit under, any contract, agreement, arrangement, license,
mortgage, note, debenture or other evidence of indebtedness or other instrument
to which Seller or the Company is a party or by which any of their respective
assets may be bound; (iii) assuming compliance with the HSR Act, violate any
term or provision of any law, rule or regulation or any permit, concession,
grant, franchise, license, writ, judgment, decree, injunction, order or ruling
of any court or governmental or regulatory authority applicable to Seller or the
Company or any of their respective assets; or (iv) result in the creation or
imposition of any Lien upon Seller, the Company or any of their respective
assets, except in the case of clauses (ii) and (iv), any conflicts, defaults,
rights of termination, cancellation, modification or acceleration, loss of any
right or benefit or violation that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect and would not adversely
affect or delay the Seller's ability to consummate the transactions contemplated
hereby.
Section 2.8 Financial Statements; Contingent Liabilities.
(a) Schedule 2.8 contains true, correct and complete copies of the
audited balance sheets of the Company at December 31, 1998 and 1999 and the
related audited consolidated statements of income, stockholder's equity and cash
flows of the Company for the years ended December 31, 1998 and 1999, together
with the notes related thereto and the reports thereon of Deloitte & Touche. The
foregoing financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") and present fairly and in all material
respects the financial position of the Company, at the respective dates thereof
and the related results of operations and cash flow and changes in stockholder's
equity of the Company for the respective periods covered thereby.
(b) All debts, obligations and other liabilities (whether absolute,
accrued, contingent, fixed, known, unknown or otherwise) (collectively,
"Liabilities") of the Company (i) are fully reflected and quantified in, or
reserved on, the audited balance sheet of the Company at December 31, 1999 (the
"Balance Sheet") (or are fully disclosed in the notes thereto), (ii) were
incurred in arms' length transactions in the ordinary course of business since
the date of the Balance Sheet and (iii) were incurred after the date of this
Agreement in transactions permitted by Section 4.5 hereof.
Section 2.9 Absence of Changes. Except as set forth with reasonable
specificity in Schedule 2.9, since December 31, 1999, the Company has conducted
its business only in the ordinary course of business and consistent with past
practices and, since December 31, 1999, there has not been, occurred, or arisen
(i) any change in, or any event (including without limitation any damage,
destruction, or loss whether or not covered by insurance), condition, or state
of facts of any character that individually or in
4
13
the aggregate has had or would reasonably be expected to have a Material Adverse
Effect, (ii) any event which, if it had taken place after the execution of this
Agreement, would not have been permitted by Article IV hereof, or (iii) any
condition, event or occurrence which would reasonably be expected to prevent,
hinder or materially delay the ability of the Seller or the Company to
consummate the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, except as set
forth with reasonable specificity in Schedule 2.9, since December 31, 1999,
there has not been:
(a) any declaration, setting aside, or payment of any dividend or
distribution (whether in cash, securities, property or a combination thereof) in
respect of the Shares of the Company or any direct or indirect redemption,
purchase, or other acquisition by the Company of any of the Shares of the
Company or of any interest in or right to acquire any such Shares;
(b) (i) any entry by the Company into, or any amendment of, any
employment, deferred compensation, consulting, severance, retention, change in
control, termination, indemnification or other salary, wage, or compensation
contract with any of its officers, directors, employees, agents or consultants;
(ii) any increase in the severance, termination pay, salary, wages, or other
compensation, whether current or deferred, of any officer, director, employee,
agent, consultant or independent contractor of the Company, except in the
ordinary course of business and consistent with past practice in connection with
the hiring or promotion of any such person; or (iii) any creation of an Employee
Benefit Plan (as defined in Section 2.14(a) hereof) or any contribution to
(other than required contributions in the ordinary course of business and
consistent with past practice), or amendment or modification of, any Employee
Benefit Plan that would reasonably be expected to materially affect the
employees of the Company as a whole;
(c) any issuance, sale, or other disposition by the Company of any
debenture, note, stock, or other security of the Company, or any modification or
amendment of any of the foregoing (or any contract pursuant to which such
securities were issued or such Liabilities were incurred);
(d) any Liability incurred by the Company for borrowed money or for
the deferred and unpaid purchase price of goods or services in excess of $10,000
(other than trade payables incurred in the ordinary course of business and
consistent with past practice);
(e) any Liability (other than liabilities incurred in the ordinary
course of business) incurred by the Company in any transaction not involving the
borrowing of money which Liabilities individually or in the aggregate could
subject the Company to liability for an amount in excess of $10,000;
5
14
(f) any mortgage or pledge of, or the creation of any Lien on, any
assets of the Company securing Liabilities of the Company or another person in
an amount in excess of $10,000;
(g) any damage, destruction or loss (whether or not covered by
insurance) (a "Casualty Event") of any assets having a replacement value,
individually or in the aggregate, in excess of $10,000 or, regardless of the
replacement value of the assets involved, any Casualty Event that has had or
would reasonably be expected to have a Material Adverse Effect;
(h) any change in any financial reporting, tax, or accounting
practice or policy followed by the Company or in any assumption underlying such
a practice or policy, or in any method of calculating any bad debt, contingency,
or other reserve for financial reporting purposes or for any other tax or
accounting purposes;
(i) any payment, prepayment, discharge, or satisfaction by the
Company of any Lien or Liability in excess of $10,000 individually or $100,000
in the aggregate other than Liens or Liabilities that were paid, discharged, or
satisfied in the ordinary course of business and consistent with past practice;
(j) any cancellation of any Liability in excess of $10,000
individually or $100,000 in the aggregate owed to the Company by any other
person (other than trade credit concessions made in the ordinary course of
business and consistent with past practice) other than liabilities owed by the
Seller or its affiliates and satisfied or cancelled in accordance with Section
4.14 hereof;
(k) any write-off or write-down of, or any determination to write
off or write down, the assets of the Company except for write-offs or
write-downs that do not exceed $50,000 individually or in the aggregate;
(l) any sale, transfer, or conveyance of any assets of the Company
except dispositions of obsolete inventory or equipment or dispositions of
inventory in the ordinary course of business and consistent with past practice;
(m) any amendment, termination, waiver, disposal, or lapse of, or
other failure to preserve, any license, permit, or other form of authorization
of the Company, the result of which individually or in the aggregate has had or
may reasonably be expected to have a Material Adverse Effect;
(n) any sale, transfer, conveyance or lapse of any interest in any
patent, trademark, trade name, copyright, license or similar intangible asset of
the Company used or useful in its business as now conducted;
(o) any transaction or arrangement under which the Company paid,
lent, advanced or invested any amount in excess of $10,000 individually or
$100,000 in the aggregate to or in respect of, or sold, transferred, or leased
any of its assets or any
6
15
services to, (i) Seller, (ii) any officer or director of the Company or of any
affiliate of Seller; (iii) any affiliate of Seller, the Company or of any such
officer or director, or (iv) any business or other person in which Seller, the
Company, any such officer or director, or any such affiliate has any material
interest, except for payments of salaries, wages and other employee benefits to
officers or directors of the Company in the ordinary course of business and
consistent with past practice and except for advances made to, or reimbursements
of, officers or directors of the Company for travel and other business expenses
in reasonable amounts in the ordinary course of business and consistent with
past practice;
(p) any amendment of, any failure to perform any of its obligations
under, any default under, any waiver of any right under, or any termination
(other than on the stated expiration date) of, any contract that involves or may
reasonably be expected to involve the annual expenditure or receipt by the
Company of more than $25,000 or that individually or in the aggregate is
material to the business, condition (financial or otherwise), assets,
properties, results of operations or prospects of the Company;
(q) any amendment to the articles or certificate of incorporation or
bylaws of the Company;
(r) any expenditure or commitment for additions to property, plant,
equipment, or other tangible or intangible capital assets of the Company, which
expenditure or commitment exceeds $25,000, individually or in the aggregate; or
(s) any agreement or commitment to take any of the actions that
should be disclosed as exceptions to this Section 2.9.
Section 2.10 Accounts Receivable.
(a) All accounts receivable of the Company have arisen from bona
fide transactions in the ordinary course of business consistent with past
practice. All accounts receivable have been accurately invoiced in a timely
manner and such invoices have been sent to the debtor at the most recent address
of such debtor as reflected in the records of the Company. Schedule 2.10
contains a list and an aging schedule for the accounts receivable of the Company
as of March 31, 2000 and at Closing Seller will deliver to Purchaser an updated
version of such Schedule 2.10 as of the Closing Date (which shall be subject to
adjustment by Seller within five (5) business days after the Closing Date to
reflect corrections, amendments, ordinary course of business collections and
payments), and each version of such Schedule, without regard to any subsequent
adjustments, is or will be true, complete and correct in all material respects.
(b) Seller further represents and covenants that at Closing, the
gross billed accounts receivable of the Company which are of a quality generally
comparable to the accounts receivable reflected on the Balance Sheet ("the
Closing Receivables") shall be at least $6.0 million. On or prior to the Closing
Date, Seller shall deliver, or shall cause the Company to deliver, to Purchaser
true and correct copies of the invoices and
7
16
other documentary records relating to the Closing Receivables that will enable
Seller to reconcile the Closing Receivables to the Company's financial
statements and books and records.
Section 2.11 Taxes. Except as disclosed in Schedule 2.11:
(a) (i) All Tax Returns required to be filed by or on behalf of the
Company or any affiliated group of which the Company is or was a member have
been properly prepared and duly and timely filed with the appropriate taxing
authorities in all jurisdictions in which such Tax Returns are required to be
filed (after giving effect to any valid extensions of time in which to make such
filings), (ii) all such Tax Returns are true, complete and correct in all
material respects; all Taxes payable by or on behalf of the Company, either
directly, as part of the consolidated Tax Return of another taxpayer, or
otherwise, have been fully and timely paid, and adequate reserves or accruals
for Taxes have been provided in the Balance Sheet with respect to any period for
which Tax Returns have not yet been filed or for which Taxes are not yet due and
owing; (iii) no agreement, waiver or other document or arrangement extending or
having the effect of extending the period for assessment or collection of Taxes
(including, but not limited to, any applicable statute of limitation), has been
executed or filed with the IRS or any other taxing authority by or on behalf of
the Company and (iv) no power of attorney with respect to any Tax matter of the
Company or any affiliated group of which it is a member is currently in force.
(b) The Company has complied in all material respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes and has duly and timely withheld from employee salaries, wages and
other compensation and has paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods under all
applicable laws.
(c) Purchaser has received complete copies of (i) all federal,
state, local and foreign income or franchise Tax Returns of the Company (or, in
the case of Tax Returns filed for an affiliated group, the portion of such
consolidated Tax Returns relating to the Company) for all taxable periods since
August 9, 1996 and (ii) any audit report issued within the last three years
relating to Taxes due from or with respect to the Company its income, assets or
operations. All income and franchise Tax Returns filed by or on behalf of the
Company for the taxable years ended on the respective dates set forth on
Schedule 2.11 have been examined by the relevant taxing authority or the statute
of limitations with respect to such Tax Returns has expired.
(d) Except as set forth on Schedule 2.11, no written claim has been
made by a taxing authority in a jurisdiction where the Company does not file Tax
Returns such that it is or may be subject to taxation by that jurisdiction.
(e) All material deficiencies asserted or assessments made as a
result of any examinations by the IRS or any other taxing authority of the Tax
Returns of or covering or including Seller or the Company have been fully paid,
and there are no other
8
17
audits or investigations by any taxing authority in progress, nor have the
Seller or the Company received any notice from any taxing authority that it
intends to conduct such an audit or investigation. No issue has been raised by a
federal, state, local or foreign taxing authority in any prior examination
which, by application of the same or similar principles, would reasonably be
expected to result in a proposed deficiency for any subsequent taxable period.
(f) Neither the Company nor any other Person (including Seller) on
behalf of the Company has (i) filed a consent pursuant to Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as such term is defined in Section 341(f)(4) of the
Code) owned by the Company, (ii) agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by the Company or has any knowledge that the IRS has proposed any such
adjustment or change in accounting method, or has any application pending with
any taxing authority requesting permission for any changes in accounting methods
that relate to the business or operations of the Company, (iii) executed or
entered into a closing agreement pursuant to Section 7121 of the Code or any
predecessor provision thereof or any similar provision of state, local or
foreign law with respect to the Company, or (iv) requested any extension of time
within which to file any Tax Return, which Tax Return has since not been filed.
(g) No property owned by the Company is (i) property required to be
treated as being owned by another Person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986, (ii)
"tax-exempt use property" within the meaning of Section 168(h)(1) of the Code or
(iii) is "tax-exempt bond financed property" within the meaning of Section
168(g) of the Code or (iv) "limited use property" within the meaning of Rev.
Proc. 76-30.
(h) The Seller is not a foreign person within the meaning of Section
1445 of the Code.
(i) The Company is not a party to any tax sharing or similar
agreement or arrangement (whether or not written) pursuant to which it will have
any obligation to make any payments after the Closing. Notwithstanding any
disclosure, the Company shall not be a party to, be bound by or have any
obligations under any Tax sharing agreement or similar contract or arrangement.
(j) 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, Purchaser, or their
respective affiliates by reason of Section 280G of the Code, or by reason of the
limitation set forth in Section 162(m) of the Code.
9
18
(k) The Company is not subject to any private letter ruling of the
IRS or comparable rulings of other taxing authorities.
(l) There are no material liens as a result of any unpaid Taxes upon
any of the assets of the Company.
(m) Since 1992, Company has never been a member of any consolidated,
combined, unitary, or affiliated group of corporations for any Tax purposes
other than the group of which the Company or the Seller's parent is the common
parent.
(n) For all taxable years from August 9, 1996 through the year ended
December 31, 1998, Seller and the Company (along with Seller's Parent and other
subsidiaries of Seller's Parent) have filed (and for the taxable year ended
December 31, 1999, will file) a consolidated federal income Tax Return.
For purposes of this Agreement, the following terms have the
following meanings:
"Code" shall mean the Internal Revenue Code of 1986, as amended
(including without limitation any successor code) and the rules and regulations
promulgated thereunder.
"IRS" shall mean the United States Internal Revenue Service or any
successor agency.
"Taxes" shall mean (i) all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing
authority in connection with any item described in clause (i).
"Tax Returns" shall mean any report, return, statement, or other
information required to be supplied to a taxing authority in connection with
Taxes.
Section 2.12 Litigation. Except as disclosed in Schedule 2.12:
(a) There are no actions, suits, investigations, arbitrations, or
proceedings pending, or, to the knowledge of Seller or the Company, threatened,
against Seller or any of its assets that questions the validity or
enforceability of this Agreement or that would have an adverse effect on the
ability of Seller to perform its obligations hereunder.
(b) There are no, and since January 1, 1998 there have been no,
actions, suits, investigations, arbitrations or proceedings pending against the
Company or
10
19
any of its assets that, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect. To the knowledge of
the Seller or the Company, there are no actions, suits, investigations,
arbitrations or proceedings threatened against the Company or any of its assets
that, individually or in the aggregate, would reasonably be expected to have
Material Adverse Effect.
(c) There are no, and since January 1, 1998 there have been no,
writs, judgments, decrees, injunctions, or similar orders of any court or
governmental or arbitral authority outstanding against the Company or any of its
assets.
Section 2.13 Compliance With Laws. Except as disclosed in Schedule
2.13, since January 1, 1998 the Company has not been in violation (or with or
without notice or lapse of time or both would be in violation) of any term or
provision of any law, rule or regulation (including without limitation any
Environmental Law, as defined in Section 2.17) or any writ, judgment, decree,
injunction, or similar order applicable to such entity or any of its assets,
except for any such violations that individually or in the aggregate have not
had and would not reasonably be expected to have a Material Adverse Effect.
Without limiting the generality of the foregoing the Company has duly and
validly filed or caused to be filed all reports, statements, documents,
registrations, filings, or submissions that were required by law, rule or
regulation to be filed with any court or other governmental authority, other
than reports, statements, documents, registrations, filings, or submissions,
which (individually or in the aggregate) the failure to file would not
reasonably be expected to have a Material Adverse Effect. All such filings
complied with applicable laws, rule or regulation in all material respects when
filed and no deficiencies have been asserted by any person with respect to any
such filings.
Section 2.14 Pension and Benefit Plans; ERISA.
(a) Schedule 2.14(a) contains a true and complete list of: (i) all
"employee benefit plans," as defined in Section 3(3) of ERISA; (ii) all bonus or
other incentive compensation, deferred compensation, employee loan, salary
continuation, severance, retention, change in control, vacation, sick leave,
stock award, stock option, stock purchase, phantom stock, retirement,
disability, death benefit, hospitalization, medical employee loan, educational
assistance or leave of absence agreements, arrangements, policies or plans; and
(iii) all employment, consulting, termination, or individual compensation
agreements or arrangements; in each case, which the Company has any obligation
or liability (contingent or otherwise) relating to any current or former
employee officer or director ("Employee Benefit Plans"). None of the Employee
Benefits Plans is subject to Title IV of ERISA, and the Company has no Liability
pursuant to Title IV of ERISA. Except as disclosed in Schedule 2.14(a), neither
the Company nor any ERISA Affiliate maintains or sponsors an "employee benefit
plan" as defined in Section 3(3) of ERISA which covers or provides benefits to
the employees (current or former) of the Company.
11
20
(b) Each Employee Benefit Plan and its related trust that are
intended to qualify under Sections 401 and 501(a) of the Code, respectively, so
qualify, and have received a favorable determination letter from the IRS to such
effect, and nothing has occurred with respect to the operation or administration
of any such Employee Benefit Plan which could adversely affect such favorable
determination or could cause the loss of such qualification or exemption or the
imposition of any Liability, penalty, or Tax under ERISA or the Code, in each
case which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect. There are no audits or proceedings initiated or
pursuant to the Employee Plans Compliance Resolution System or similar
proceedings pending with the IRS or Department of Labor with respect to any
Employee Benefit Plan which, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.
(c) True and complete copies of the following documents (if
applicable) with respect to each of the Employee Benefit Plans have been
furnished to Purchaser: (i) the most recent document constituting the Employee
Benefit Plan and all amendments thereto, and any related trust documents; (ii)
the most recent summary plan description, and all related summaries of material
modifications; (iii) the most recent IRS determination letter; (iv) the most
recent Form 5500 (including schedules and attachments); (v) the most recent
financial statements and actuarial reports (including for purposes of Financial
Accounting Standards Board report nos. 87, 106 and 112); and (vi) a description
of any nonwritten Employee Benefit Plan.
(d) There are no actions, claims, suits, investigations,
arbitrations, or similar proceedings pending or, to the knowledge of Seller or
the Company, threatened in respect of or relating to any Employee Benefit Plan
(other than routine claims for benefits in the ordinary course) or, to the
knowledge of Seller and the Company, no facts exist that could form the basis
for any such action, claim, suit, investigation, arbitration, or proceeding. The
Company is not subject to any outstanding claims for severance payments that
have not been paid or will not have been paid at Closing.
(e) All amendments and actions required to bring the Employee
Benefit Plans that are intended to qualify under Section 401 of the Code into
conformity with all of the applicable provisions of ERISA, the Code and other
applicable laws have been made or taken except to the extent that such
amendments or actions are not required by law to be made or taken until a date
after the Closing Date.
(f) Each Employee Benefit Plan has been maintained, operated and
administered in all material respects, in accordance with its terms and with all
applicable provisions of ERISA, the Code and other applicable law, and neither
Seller, the Company nor any "party in interest" or any "disqualified person"
with respect to the Employee Benefit Plans has engaged in a "prohibited
transaction" within the meaning of Section 4975 of the Code or Section 406 of
ERISA which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect. In particular, no individual who has performed
services for the Company has been improperly excluded from
12
21
participation in any Employee Benefit Plan which would reasonably be expected to
have a Material Adverse Effect.
(g) Neither Seller nor the Company nor any ERISA Affiliate provides,
or is obligated to provide, any retiree life insurance or retiree health
benefits coverage (whether or not insured) to any current or former employee or
director of the Company beyond the date of his or her termination of employment
or services with the Company, except as may be required under Section 4980B of
the Code and Part 6 of Subtitle B of Title I of ERISA and at the expense of the
individual or the individual's beneficiary.
(h) Except as disclosed in Schedule 2.14(h), neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (either alone or in combination with another event) (i)
result in any payment becoming due, or increase the amount of any compensation
due, to any current or former employee of the Company; (ii) increase any
benefits otherwise payable under any Employee Benefit Plan; (iii) result in the
acceleration of the time of payment or vesting of any such benefits or
compensation; or (iv) result in the failure of any amount payable under any
Employee Benefit Plan to be deductible for federal income tax purposes by virtue
of Section 280G or 162(m) of the Code.
(i) Neither Seller nor the Company nor any ERISA Affiliate has any
contract, plan, or commitment, whether legally binding or not, to create any
additional Employee Benefit Plans or to modify any existing Employee Benefit
Plan.
(j) No employees of the Company are represented by any labor
organization, and there are no labor or collective bargaining agreements which
pertain to the employees of the Company. No labor organization or group of
employees of the Company has made a pending demand for recognition or
certification, and, within the preceding three years, there have been no
representation, certification or other related proceedings, or petitions seeking
a representation proceeding or other related proceeding, pending or, to the
knowledge of Seller or the Company, threatened to be brought or filed with the
National Labor Relations Board or any other labor relations tribunal or
authority. Within the preceding three years, there has been no organizing
activities involving the Company pending or, to the knowledge of Seller or the
Company, threatened by any labor organization or group of employees of the
Company.
(k) There are no strikes, work stoppages, slowdowns, lockouts,
arbitrations, grievances, unfair labor practice charges or complaints pending
or, to the knowledge of Seller and the Company, threatened against or involving
the Company, and, to the knowledge of Seller or the Company, there are no facts
or circumstances which could form the basis for any of the foregoing. There are
no grievances lodged by any employee which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect. Relations with
the employees of the Company are good, and the Seller and the Company are not
aware of any fact which would reasonably be expected to affect such state of
relations with employees.
13
22
(l) Each of the Employee Benefit Plans covering employees of the
Company and its Subsidiaries outside of the United States is fully funded
through adequate reserves on financial statements of the Company, insurance
contracts, annuity contracts, trust funds or similar arrangements. The benefits
and compensation covering employees of the Company and its Subsidiaries outside
of the United States are no more than customary and reasonable for the country
in which such employees work and the industry in which the Company conduct its
business.
For purposes of this Section 2.14, the following terms have the
following meanings:
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended (including without limitation any successor act) and the rules
and regulations promulgated thereunder.
"ERISA Affiliate" shall mean any Person under common control (as
defined in Section 414 of the Code), or treated (under Section 414(b), (c), (m),
or (o) of the Code) as a single employer, with the Company.
Section 2.15 Properties and Other Assets. Except as disclosed in
Schedule 2.15:
(a) The Company does not own any real property.
(b) Schedule 2.15(b) contains a true and complete list and
description of all real property leased by the Company (all contracts or
agreements relating to such leases of real property, hereinafter, the "Leases").
The Company has valid leasehold interests in all real property leased in
connection with the business, operations, or affairs of the Company. No
improvement on any leased real property encroaches upon any real property of any
other person. The Company leases, or has a valid right under contract to use,
adequate means of ingress and egress to, from and over all such real property.
The Company has received all deeds, assignments, waivers, consents,
non-disturbance and recognition or similar agreements, bills of sale and other
documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect the Company's right, title and
interest in and to all such leased real property. The Company has delivered to
Purchaser true and complete copies of all Leases and amendments thereto.
(c) The Company has good and marketable title to, or has a valid
leasehold interest in or has a valid right under contract to use, all tangible
personal property that is used in the conduct of the business, operations, or
affairs of the Company, free and clear of all material Liens (including without
limitation any assets reflected on the Balance Sheet which have not been
disposed of since its date in the ordinary course of business and consistent
with past practice). All such tangible personal property is in good operating
condition and repair and is suitable for its current uses.
14
23
(d) To the knowledge of the Seller or the Company, all components of
all improvements included within the real property leased or otherwise used by
Company (collectively, "Improvements"), including the roofs and structural
elements thereof and the heating, ventilation, air conditioning, plumbing,
electrical, mechanical, sewer, waste water, storm water, paving and parking
equipment, systems and facilities included therein, are maintained in good
working order and repair, ordinary wear and tear excepted, except where the
failure to so maintain has not had and would not reasonably be expected to have
a Material Adverse Effect.
(e) To the knowledge of the Seller or the Company, no portion of any
real property leased or otherwise used by the Company has suffered any material
damage by fire or other casualty loss which has not heretofore been completely
repaired and restored to its original condition. To the knowledge of the Seller
or the Company, no portion of any real property leased or otherwise used by the
Company is located in a special flood hazard area as designated by any federal
governmental authority.
(f) The Company has neither received any notice, nor has any
knowledge, of any pending, threatened or contemplated condemnation proceeding
affecting any real property leased or otherwise used by the Company or any part
thereof, except those which, in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect.
Section 2.16 Intellectual Property Rights.
(a) Schedule 2.16(a) contains a true and accurate list of all
patents, patent applications, patent or invention disclosures awaiting filing
and copyright applications and registrations, and trademarks and trademark
applications and registrations which constitute Intellectual Property (as
defined below) either owned by the Company or otherwise used in and material to
the conduct of the Company's business.
(b) Schedule 2.16(b) contains a true and accurate list of all
contracts relating to the distribution or license of, or royalty payments with
respect to, Intellectual Property, whether as licensor or licensee and whether
on an exclusive or non-exclusive basis other than customer contracts and
agreements relating to commercial off-the-shelf software.
(c) Except as set forth in Schedule 2.16(c):
(i) the Company owns or has a right to use all of the
Intellectual Property owned by the Company and all other Intellectual Property
used by the Company and material to the conduct of the Company's business, free
from any Liens;
(ii) no such Intellectual Property owned by the Company and no
intellectual property otherwise used in and material to the conduct of the
Company's
15
24
business is being used in a manner in the conduct of the Company's business that
infringes upon any rights owned or controlled by any third party;
(iii) there is neither pending nor (to the knowledge of the
Company or Seller) threatened, nor since January 1, 1998 has there been, any
claim, litigation or proceeding against the Company contesting the rights of the
Company to any Intellectual Property owned by the Company or the ownership,
enforceability or validity of the Intellectual Property or use by the Company of
any Intellectual Property used in the conduct of its business and material
thereto;
(iv) to the knowledge of the Seller or the Company there is no
infringement or misappropriation by any third party of the Intellectual Property
owned by the Company;
(v) no person (including, without limitation, any current or
former employee or consultant of the Company or Seller) has any ownership rights
in, or a right to receive a royalty or similar payment in respect of, any
Intellectual Property owned by the Company or any other Intellectual Property
used by the Company in the conduct of its business and material thereto, whether
pursuant to any contractual arrangements entered into by the Company or
otherwise;
(d) The Intellectual Property listed on Schedule 2.16(a) constitutes
all intellectual property rights necessary to conduct the business of the
Company in the manner as currently conducted.
(e) For the purposes of this Section 2.16, the following term has
the following meaning:
"Intellectual Property" means (1) all trademarks, service marks,
trade names, logos, and slogans, including the name "Yankee Group," and
registrations and applications for registration thereof; (2) all copyrights and
all other rights of authorship, and all applications, registrations and renewals
in connection therewith; (3) all patents (including registrations, reissuances,
continuations, continuations-in-part, divisions, renewals and applications for
any of the foregoing; (4) all trade secrets and confidential business and
technical information, know-how and technology used in or necessary in the
conduct of the Company's business, (5) all databases, computer and electronic
data processing programs and software, computer applications and operating
programs (other than commercial off-the-shelf software); (6) any rights relating
to or in connection with the Internet including, but not limited to, websites
(including HTML), domain names, URLs, keyword registrations and search engine
placements; and (7) all other proprietary, intellectual property and other
rights relating to any or all of the foregoing, including, without limitation,
customer and vendor lists and goodwill in each case to the extent used or owned
by the Company in connection with the operation of its business.
16
25
Section 2.17 Environmental Matters. Except as disclosed in Schedule
2.17:
(a) the operations of the Company are in compliance, in all material
respects, with all applicable Environmental Laws; and
(b) to the best knowledge of Seller or the Company, all real
property operated or leased by the Company and all property adjacent to such
properties, are free from contamination by any Hazardous Material.
For purposes of this Section 2.17, the following terms have the
following meanings:
"Environmental Law" shall mean any Law relating to the environment,
natural resources, or public or employee health and safety and includes, but is
not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") (42 U.S.C. Section 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
Conservation and Recovery Act ("RCRA") (42 U.S.C. Section 6901 et seq.), the
Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (33 U.S.C.
Section 2601 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
Section 136 et seq.) and the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.), as such Laws have been amended or supplemented, and the
regulations promulgated pursuant thereto and all analogous state or local
statutes.
"Hazardous Material" means any substance, material, or waste which
is regulated by any governmental authority in the jurisdictions in which the
Company conducts business, or by the United States or other national government,
including without limitation, any material, substance or waste which is defined
as "hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "contaminant," "toxic waste" or
"toxic substance" under any provision of Environmental Law, which includes, but
is not limited to, petroleum, petroleum products, asbestos, urea formaldehyde
and polychlorinated biphenyls.
Section 2.18 Contracts. Schedule 2.18 contains a true and complete
list of each of the following contracts (whether or not in writing) or other
documents or arrangements that involve the performance of services or delivery
of goods or materials by the Company or to the Company in an amount or value in
excess of $25,000 (provided, however that all contracts of the type described in
Sections 2.18(b) and (g) shall be disclosed herein regardless of their amount or
value) and true and complete copies, or, in the case of oral contracts or
arrangements, written summaries of the terms, of which have been made available
to Purchaser collectively, for the purposes of this Section 2.18, "contracts"),
to which the Company is a party or by which any of its assets is or may be
bound:
17
26
(a) all contracts with respect to any planning service or other
subscription contracts, including a description of the services provided under
each such contract and the annual subscription fee charged by the Company
thereunder;
(b) all employment, agency, consultation, or representation
contracts or other contracts of any type (including without limitation
agreements relating to loans or advances) with any present officer, director,
employee, agent, consultant, or other similar representative (or any former
officer, director, employee, agent, consultant or similar representative if
there exists any present or future Liability with respect to such contract)
other than any such contracts with Seller and Seller's subsidiaries;
(c) all contracts with any person (including, without limitation,
any prior owner of the Company) containing any stipulation, provision, or
covenant limiting the ability of any person to compete with or to provide
products or services to the Company or limiting the ability of the Company to
(i) sell any products or services of any other person, (ii) transact business or
engage in any line of business, (iii) compete with or to obtain products or
services from any person, or (iv) to hire or solicit for hire any employees of
any person;
(d) all contracts relating to the borrowing of money by the Company,
relating to the deferred purchase price for property or services, or relating to
the direct or indirect guarantee by the Company of any Liability including,
without limitation, any contract relating to (i) the maintenance of compensating
balances that are not terminable without penalty upon not more than 60 calendar
days' notice, (ii) any line of credit or similar facility, (iii) the payment for
property, products, or services of any other person, or (iv) the obligation to
take-or-pay, keep-well, make-whole, or maintain surplus or earnings levels or
perform other financial ratios or requirements;
(e) all contracts pursuant to which the Company has agreed to
indemnify or hold harmless any person;
(f) all leases or subleases of real property used in the business,
operations, or affairs of the Company (to the extent not disclosed in Schedule
2.15(b));
(g) all outstanding proxies, powers of attorney, or similar
delegations of authority of the Company;
(h) all collective bargaining or similar labor contracts;
(i) all leases or subleases of, or other contracts relating to,
personal property that involve the payment or potential payment by the Company
of more than $10,000 per year (it being understood that any such leases not
listed on Schedule 2.18 do not have an aggregate annual cost to the Company in
excess of $100,000
(j) all other contracts that involve the payment or potential
payment, pursuant to the terms of such contracts, by or to the Company of more
than $10,000
18
27
individually or $100,000 in the aggregate or that are otherwise, individually or
in the aggregate are material to the business, condition (financial or
otherwise), assets, results of operations or prospects of the Company.
Each contract disclosed or required to be disclosed in Schedule 2.18
is in full force and effect and constitutes a legal, valid and binding
obligation of each party thereto, enforceable against each party in accordance
with its terms. Neither Seller nor the Company has received any notice, whether
written or oral, of termination or intention to terminate from any other party
to such contract. Neither the Company nor, to the knowledge of Seller and the
Company, any other party to such contract is in violation or breach of or
default under any such contract (or with or without notice or lapse of time or
both, would be in violation or breach of or default under any such contract).
Section 2.19 Licenses and Permits. Except as disclosed in Schedule
2.19, the Company owns or validly holds all licenses, franchises, permits,
approvals, authorizations, exemptions, classifications, certificates,
registrations and similar documents or instruments that are required for their
business, operations and affairs, except for Permits (as defined below) with
respect to which the failure to hold has not had and would not reasonably be
expected to have a Material Adverse Effect. All such licenses, franchises,
permits, approvals, authorizations, exemptions, classifications, certificates,
registrations and similar documents or instruments ("Permits") are valid,
binding and in full force and effect, except where the failure of such Permit to
be valid, binding and in full force and effect has not had and would not
reasonably be expected to have a Material Adverse Effect.
Section 2.20 Employees.
(a) Schedule 2.20(a) sets forth list of all employees, directors,
consultants and independent contractors of the Company, and in respect of each
such individual (as applicable) (i) annual salary, hourly wage rate or retention
rate; (ii) date of hire; (iii) location; (iv) position; and (v) status (i.e.,
active, short term disability, long term disability or leave of absence
(specifying the kind of absence and the terms relating to such absence)), which
list is true, correct and complete in all material respects.
(b) Except as set forth on Schedule 2.20(b) and to the knowledge of
the Seller or the Company, no employee or group of employees has notified Seller
or the Company of its or their intention to terminate employment with the
Company (including because of the transactions contemplated herein) or to take a
long-term leave of absence.
(c) The Company is in compliance in all material respects with all
applicable laws and orders relating to the employment of labor, including all
such applicable laws and orders relating to wages, hours, collective bargaining,
employment discrimination, civil rights, safety and health, workers'
compensation, pay equity and the collection and payment of withholding and/or
Social Security Taxes and similar Taxes. There are no complaints, charges or
claims against the Company pending or, to the knowledge of Seller and the
Company, threatened to be brought or filed with any public
19
28
or governmental authority, arbitrator or court based on, arising out of, in
connection with, or otherwise relating to the employment or services, or
termination of employment or services, by the Company of any individual,
including but not limited to ERISA, the civil rights laws, Americans with
Disabilities Act, Age Discrimination in Employment Act (as amended by the Older
Workers Benefit Protection Act), Pregnancy Discrimination Act, Equal Pay Act,
Fair Labor Standards Act, Worker Adjustment and Retraining Notification Act, and
Family and Medical Leave Act, and, to the knowledge of Seller and the Company,
there are no facts or circumstances which could form the basis for any of the
foregoing. The Company has not made or started implementation of any collective
dismissals that have required or will require notification to any governmental
entity.
(d) Except as set forth in Schedule 2.20(d), the Company has no
Liabilities accruing or arising under or with respect to the severance of any
employees of the Company on or before the Closing Date, including statutory
severance resulting from the consummation of the transactions contemplated by
this Agreement.
Section 2.21 Customers and Suppliers. Schedule 2.21, sets forth a
list of the twenty (20) largest customers and the five (5) largest suppliers of
the Company, as measured by the dollar amount of purchases therefrom or thereby,
during the fiscal year ended December 31, 1999, showing the approximate total
sales by the Company to each such customer and the approximate total purchases
by the Company from each such supplier, during such period. To the knowledge of
the Seller or Company, since December 31, 1999, no customer or supplier set
forth on Schedule 2.21 has notified the Seller or Company of its intention to
terminate its agreement or business relationship with the Company or to
materially reduce the level of business provided by or to the Company to or from
such person or entity.
Section 2.22 Insurance. Schedule 2.22 contains a true and complete
list and description of all liability, property, workers compensation, directors
and officers liability and other similar insurance contracts that insure the
business, operations, or affairs of the Company or that affect or relate to the
ownership, use, or operations of any of their assets. All such insurance is in
full force and effect and (to the knowledge of Seller and the Company) is with
financially sound and reputable insurers and, in light of the respective
business, operations and affairs of the Company, is in amounts and provides
coverage that are reasonable and customary for persons in similar businesses.
Section 2.23 Intercompany Liabilities. Except as disclosed in
Schedules 2.23 and 2.24 or as contemplated by Section 4.14, (a) neither Seller
nor any other affiliate of Seller or the Company provides or causes to be
provided to the Company any products, services, equipment, facilities, or
similar items and (b) there are no Liabilities between the Company and Seller or
any other affiliate of the Company or the Seller. Except as disclosed in
Schedules 2.23 and 2.24, since December 31, 1999, such intercompany Liabilities
have been paid in the ordinary course of business and consistent with past
practice.
20
29
Section 2.24 Intercompany Services. Schedule 2.24 contains a
complete and accurate list of all agreements or arrangements relating to
intercompany services between the Seller and the Company.
Section 2.25 Certain Agreements. Schedule 2.25 contains a complete
and accurate list of all agreements or arrangements entered into by and between
the Company and Howard Anderson.
Section 2.26 Brokers. No Person has acted directly or indirectly as
a broker, finder or financial advisor for the Seller in connection with the
negotiation relating to or the transactions contemplated by this Agreement and
no Person is entitled to any fee or commission or like payment in respect
thereof based in any way on agreements, arrangements or understandings made by
or on behalf of the Seller.
Section 2.27 Bank Accounts. Schedule 2.27 contains (a) a true and
complete list of the names and locations of all banks, trust companies,
securities brokers and other financial institutions at which the Company has
accounts or safe deposit boxes or maintain banking, custodial, trading, or other
similar relationships and (b) a true and complete list and description of each
such account, box and relationship.
Section 2.28 Disclosure. The representations or warranties made by
Seller in this Agreement, in the schedules hereto, or in any certificate
furnished by Seller to Purchaser in connection with this Agreement or the
transactions contemplated hereby do not omit to state a material fact necessary
to make the statements herein or therein not misleading in light of the
circumstances under which they were made.
Section 2.29 Knowledge of the Company. For the purposes of this
Agreement, the term "to the knowledge of the Company" shall mean to the
knowledge of the following persons: Berge Ayvazian, Brian Adamik, Andrew
McGillicuddy and David Stiffler.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 3.1 .Organization. Purchaser is a corporation duly organized
and validly existing under the laws Switzerland.
Section 3.2 .Corporate Authority. Purchaser has full corporate power
and authority to enter into this Agreement and the other agreements to be
entered into in connection herewith and to perform its obligations hereunder and
thereunder. The Purchaser's execution and delivery of this Agreement and the
performance of its obligations hereunder have been duly and validly authorized
by all necessary corporate action on the part of Purchaser. This Agreement has
been duly and validly executed and
21
30
delivered by Purchaser and constitutes a legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms.
Section 3.3 Consents and Approvals. Except for the requirements of
the HSR Act and the filings required by the International Investment and Trade
in Services Survey Act or as disclosed in Schedule 3.3, Purchaser is not
required to make any filing with, or to obtain any permit, authorization,
consent or approval of, any governmental authority as a condition to the lawful
consummation of the transactions contemplated by this Agreement. The execution
and delivery of this Agreement by Purchaser does not, and the performance by
Purchaser of its obligations under this Agreement will not: (i) conflict with or
result in a breach of any of the terms, conditions or provisions of the
certificate of incorporation or bylaws of Purchaser; (ii) conflict with or
constitute a default under, or give rise to any right to terminate, cancel,
modify or accelerate, any contract, agreement, license, mortgage, note, bond,
debenture or other evidence of indebtedness to which Purchaser is a party or by
which any of its assets may be bound; (iii) assuming compliance with the HSR
Act, violate any term or provision of any law, rule or regulation or any permit,
concession, grant, franchise, license, writ, judgment, decree, injunction, order
or ruling of any court or governmental or regulatory authority applicable to
Purchaser; or (iv) result in the creation or imposition of any Lien upon
Purchaser or any of it assets, except in the case of clauses (ii) and (iv) any
conflicts, defaults, rights of termination, cancellation, modification or
acceleration, loss of any right or benefit or violation which individually or in
the aggregate, would not adversely affect the Purchaser's ability to consummate
the transactions contemplated hereby.
Section 3.4 Brokers. No Person has acted directly or indirectly as
a broker, finder or financial advisor for the Purchaser in connection with the
negotiation relating to or the transactions contemplated by this Agreement and
no Person is entitled to any fee or commission or like payment in respect
thereof based in any way on agreements, arrangements or understandings made by
or on behalf of the Purchaser.
Section 3.5 Purchase for Investment. Purchaser is acquiring the
Shares for its own account for investment purposes and not with a view to the
distribution of the Shares. Purchaser has such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Shares. Purchaser will not, directly or
indirectly, dispose of the Shares except in compliance with applicable federal
and state securities laws.
Section 3.6 Availability of Funds. At the Closing, the Purchaser
will have sufficient immediately available funds, in cash, to pay the Purchase
Price.
Section 3.7 Litigation. There is no claim, action, suit, proceeding
or, to the knowledge of the Purchaser, governmental investigation pending or, to
the knowledge of the Purchaser, threatened against the Purchaser or any of its
subsidiaries by or before any court or governmental or regulatory authority
which, individually or in the aggregate, would reasonably be expected to cause
an event, change or circumstance which would
22
31
adversely affect the ability of Purchaser to consummate the transactions
contemplated hereby.
Section 3.8 Investigation by Buyer. The Purchaser has conducted its
own independent review and analysis of the business, operations, assets,
liabilities, results of operations, financial condition, software, technology
and prospects of the Company and its Subsidiaries and acknowledges that the
Purchaser has been provided access to the personnel, properties, premises and
records of the Company and its Subsidiaries for such purpose. In entering into
this Agreement, the Purchaser has relied solely upon its own investigation and
analysis and the representations and warranties contained herein. For the
avoidance of doubt, it is understood and acknowledged that the foregoing shall
in no way be deemed to detract or limit Seller's representations and warranties
contained in this Agreement or restrict Purchaser's right to rely thereon.
ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser as follows:
Section 4.1 Contract and Regulatory Approvals. Seller will and will
cause the Company to, in all cases in consultation with the Purchaser, (a) take
all steps necessary or desirable, and to proceed diligently and in good faith
and to use all commercially reasonable efforts, to obtain as promptly as
practicable all (i) approvals and consents of any person under all contracts to
which the Seller or the Company is a party, or by which their respective assets
may be bound, necessary to permit Seller to consummate the transactions
contemplated hereby (including those consents and approvals that are not
conditions to Closing) and (ii) all approvals, authorizations and clearances of
governmental authorities required of the Seller or the Company to consummate the
transactions contemplated hereby, (b) provide such other information and
communications to such governmental authorities as such authorities may
reasonably request, (c) cooperate with Purchaser in obtaining, as promptly as
practicable, all approvals, authorizations and clearances of governmental
authorities and other persons required of Purchaser to consummate the
transactions contemplated hereby, and (d) provide such notifications or
information to customers, suppliers and other persons party to any contract with
the Company, with Purchaser's input and consultation, as is necessary in
connection with the transaction contemplated hereby.
Section 4.2 HSR Filings. Following the execution of this Agreement,
Seller will complete and promptly file the notification and report form required
by the HSR Act, comply promptly with any request for additional information
received from the Federal Trade Commission or the Antitrust Division of the
Department of Justice pursuant to the HSR Act, cooperate with Purchaser in
connection with Purchaser's filings under the HSR Act. All filing and other fees
incurred in connection with the filings made pursuant to this Section 4.2 shall
be paid by the Purchaser.
23
32
Section 4.3 Investigation by Purchaser. Seller will provide and will
cause the Company to provide, Purchaser, its counsel, accountants and other
representatives (including its financing sources and their respective
representatives) with full access, upon prior notice and during normal business
hours, to all facilities, officers, employees, agents, accountants, assets and
books and records of the Company and will furnish Purchaser and such other
persons with all such information and data (including without limitation copies
of contracts, Employee Benefit Plans and other books and records) concerning the
business, operations and affairs of the Company as Purchaser or any of such
other persons reasonably may request upon reasonable prior notice.
Section 4.4 No Negotiations. Seller shall not initiate or encourage
(including by way of furnishing information or assistance), or take any other
action to facilitate, any inquiries or the making of any proposal that
constitutes, or may be reasonably expected to lead to, any Company Acquisition
Proposal (as defined below), or enter into discussions or negotiate with any
person or entity in furtherance of such inquiries or to obtain a Company
Acquisition Proposal, or authorize or permit any of the officers, directors or
employees of Seller or the Company, or any investment bank, financial advisor,
attorney, accountant or other representative of Seller or the Company to take
any such action. The foregoing restriction shall apply to, and the Seller shall
not, and shall cause the Company not to, take any further action (including
making any filings with the Securities and Exchange Commission) in furtherance
of a public or private offering of capital stock of the Company. Seller shall
promptly notify Purchaser of all relevant terms of any such inquiries and
proposals received by it or the Company or by any such officer, director,
employee, investment banker, financial advisor, attorney, accountant or other
representative relating to such matters, and if such inquiry or proposal is in
writing, Seller shall deliver or cause to be delivered to Purchaser a copy of
such inquiry or proposal. For purposes of this Agreement, "Company Acquisition
Proposal" shall mean any of the following (other than the transactions between
Seller and Purchaser contemplated hereunder) involving the Company: (i) any
merger, consolidation, share exchange, business combination, or other similar
transaction; or (ii) or any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of 10% or more of the assets or any securities of the Company
in a single transaction or series of transactions.
Section 4.5 Conduct of Business. During the period from the date of
this Agreement through the Closing, Seller will cause the Company to conduct its
business only in the ordinary course and consistent with past practice. Seller
will not take and will not permit the Company to take action that would cause
the representations set forth in Article II hereof to be untrue in any material
respect at any date after the date hereof. Without limiting the generality of
the foregoing:
(a) Seller will use, and will cause the Company to use, all
commercially reasonable efforts to (i) preserve intact the present business
organization, reputation and customer relations of the Company, (ii) keep
available the services of the present officers, directors, employees, agents,
consultants and other similar representatives of the Company, and (iii) maintain
in full force and effect and not modify or agree to modify in any manner adverse
to the Company all contracts, documents and
24
33
arrangements referred to in Section 2.18 hereof, except in the ordinary course
of business (other than contracts of the type described in Sections 2.18(b) and
(g), which shall not be so modified whether or not in the ordinary course of
business);
(b) Seller will, and will cause the Company to, (i) maintain all
licenses, qualifications and authorizations of the Company to do business in
each jurisdiction in which it is so licensed, qualified, or authorized, except
for jurisdictions for which the failure to maintain all licenses, qualifications
and authorizations would not reasonably be expected to have a Material Adverse
Effect, (ii) maintain all assets of the Company in good working order and
condition, ordinary wear and tear excepted and (iii) continue all current
marketing and selling activities relating to the business, operations and
affairs of the Company;
(c) Seller will cause the books and records of each of the Company
to be maintained in a prudent manner;
(d) Seller will use, and will cause the Company to use, all
commercially reasonable efforts to maintain in full force and effect
substantially the same levels of coverage as the insurance afforded under the
contracts listed in Schedule 2.22; and
(e) Seller will cause the Company to continue to pay its accounts
payable and other bills in a timely fashion in the ordinary course of business
consistent with past practice.
Section 4.6 Financial Statements and Reports.
(a) Until the Closing, Seller will deliver to Purchaser true and
complete copies of the following:
(i) within 30 days after the end of each fiscal quarter ending
after December 31, 1999, the unaudited balance sheet of the Company as of each
fiscal quarter ending after December 31, 1999 (the "Interim Balance Sheet") and
the related statements of income and cash flows of the Company for such quarter
then ending (and for the comparable quarterly and year-to-date period for the
prior year, together with the notes relating thereto, which financial statements
(and the notes relating thereto) will be prepared in accordance with GAAP and
will present fairly the financial position of the Company as of each date
thereof and the related results of operations and cash flow of the Company for
each period covered thereby and a certificate of the Chief Financial Officer of
the Company certifying as to the accuracy of such unaudited financial
statements.
(ii) within 30 days after the end of each month ending after
the date of the Interim Balance Sheet, the unaudited balance sheet of the
Company as of each month ending after the date of the Interim Balance Sheet and
the related statements of income and cash flows of the Company for such month
and the year-to date period then ending, which financial statements will be
prepared in accordance with GAAP (except
25
34
for the absence of notes) and will present fairly the financial position of the
Company as of each date thereof and the related results of operations and cash
flow of the Company for each period covered thereby and a certificate of the
Chief Financial Officer of the Company certifying as to the accuracy of such
unaudited financial statements.
(b) As promptly as practicable, Seller will deliver to Purchaser
true and complete copies of such other financial statements, reports, or
analyses as may be prepared or received by Seller or any affiliate of Seller as
relate to the business, operations, or affairs of the Company, including,
without limitation, routine internal management reports and special reports
(such as those prepared by the Seller's or the Company's consultants or
advisers).
Section 4.7 Employee Matters.
(a) Except as may be required under existing Employee Benefit Plans,
Seller will refrain, and will cause the Company to refrain, from directly or
indirectly:
(i) granting any employee, officer or director of the Company
any increase in wages, bonus, severance, profit sharing, retirement, deferred
compensation, insurance or other compensation or benefits (other than an
increase in wages in the ordinary course of business consistent with past
practice);
(ii) amending or terminating any Employee Benefit Plan of the
Company, except as may be required by law or to maintain the tax qualified
status of any Employee Benefit Plan (and then only following prior consultation
with the Purchaser);
(iii) establishing any new broad based compensation or benefit
plan or arrangement for the employees of the Company;
(iv) entering into any employment, consulting, retention,
termination, severance or change in control agreement with respect to the
Company;
(v) assuming or entering into any labor or collective
bargaining agreement with respect to the Company;
(vi) hiring or, in the case of independent contractors,
retaining by the Company of any individual whose annual compensation or
remuneration exceeds $100,000; or
(vii) agreeing to do any of the foregoing.
Section 4.8 Participation in Benefit Plans.
(a) Except as otherwise provided in this Section 4.8, Seller will
take, and will cause each ERISA Affiliate and each other affiliate of Seller to
take, such corporate and other action as is necessary with respect to any
Employee Benefit Plan adopted, maintained, or sponsored by Seller or any
affiliate of Seller (other than the
26
35
Company) (each, a "Seller Benefit Plan") under which any current or former
officer, director, employee, agent, consultant, or other representative of the
Company participates in any manner to terminate, as of the Closing Date, the
participation thereunder by each such individual.
(b) Seller will take such action as is necessary to cause each
employee of the Company who is, on the Closing Date, a participant in the
Primark Corporation Savings and Stock Ownership Plan (the "Seller Savings Plan")
to be fully vested, as of the Closing Date, in his or her account under the
Seller Savings Plan.
(c) Seller will, or will cause its affiliates (other than the
Company and its Subsidiaries) to retain all Liability to pay or provide each
present or former officer, director, employee, agent, consultant and other
representative of the Company who is a participant or beneficiary under the
Seller Benefit Plans all rights and benefits under such Seller Benefit Plans
that have vested on or before the Closing Date or to which such persons are
entitled under such Seller Benefit Plans as of the Closing Date.
Section 4.9 Termination of 1999 Stock Option Plan. Simultaneously
with the Closing, (i) Seller will, or will cause the Company to, take all action
necessary to make the payments set forth in Schedule 4.9 in connection with the
options granted by the Company under the Company's 1999 Stock Option Plan (the
"1999 Plan") and (ii) upon satisfaction of such payment obligations, Seller will
cause the Company to terminate the 1999 Plan and all options or other rights
granted thereunder. If Seller does not make these payments directly, Seller
shall ensure that at Closing the Company has sufficient available cash to make
such payments.
Section 4.10 Separation of Services. At the Closing, Seller and the
Company shall enter into a services agreement substantially in the form attached
hereto as Exhibit B (the "Services Agreement") and Seller shall have taken (or
shall have caused or permitted the Company to take) all actions and provided to
the Company all information as indicated in the transition plan attached hereto
as Exhibit C (the "Transition Plan") in each case to the extent required in the
Transition Plan. Seller represents and warrants to Purchaser that the services
provided by Seller under the Services Agreement are all the services that the
Company will require to continue to conduct its operations in a manner
consistent with its current conduct (taking into account the implementation of
the Transition Plan, other than those services listed on Schedule 2.24).
Section 4.11 No Disposal of Property. Except as expressly permitted
in this Agreement, Seller will cause the Company to refrain from (a) disposing
of any assets of the Company (including but not limited to any real property)
and from permitting any of such assets to be subjected to any Liens, except for
dispositions of assets in the ordinary course of business and consistent with
past practice and except for non-consensual Liens imposed by operation of law,
(b) entering into any contracts obligating the Company to administer or manage
the operations of any other person and (c) entering
27
36
into any contracts permitting any person other than the Company to administer or
manage the operations of the Company.
Section 4.12 No Breach or Default. Seller will cause the Company to
refrain from violating, breaching, or defaulting and from taking or failing to
take any action that (with or without notice or lapse of time or both) would
constitute a violation, breach, or default, under any term or provision of any
contract listed in Schedule 2.18 or which, if permitted by this Agreement to be
entered into after the date of this Agreement would have been required to be
listed in Schedule 2.18 if such representation had been made at the date of such
contract.
Section 4.13 No Acquisitions. Seller will cause each of the Company
to refrain from (a) merging, consolidating, or otherwise combining or agreeing
to merge, consolidate, or otherwise combine with any other person, (b) acquiring
or agreeing to acquire all or substantially all assets or capital stock or other
equity securities of, or any division or business of, any other person, or (c)
otherwise acquiring or agreeing to acquire control or ownership of any other
person.
Section 4.14 Intercompany Liabilities. At least five business days
before the Closing, Seller will deliver to Purchaser a true and complete list
and description of all Liabilities between the Company and Seller or any
affiliate of Seller (other than the Company) to be outstanding on the Closing
Date (which liabilities shall be the same type or categories of those listed on
Schedule 2.23). On or prior to Closing, Seller shall cause all intercompany
accounts (including, without limitation, all debt of the Company owing to Seller
and all income tax related accounts, all of which shall be deemed to be
intercompany accounts for the purposes of this Agreement) and all other
agreements, understandings and/or obligations between the Company, on the one
hand, and Seller or any of its affiliates on the other hand, all of which will
be listed on the foregoing list, to be canceled as of the Closing Date without
any adverse effect to the Company other than the effect consummate with
cancellation of such obligation and termination of all related services (other
than the Seller's and the Company's obligations under the Services Agreement).
Seller has the right and may from time to time, prior to Closing, cause the
Company to distribute all cash balances generated in the ordinary course of
business to Seller, subject to Seller's compliance with the last sentence of
this Section 4.14 and provided, however, that the only assets Seller shall have
the right to cause the Company to distribute during the period between the date
of this Agreement and the Closing Date is cash. Seller will continue to provide
cash to the Company under its current cash management system in the ordinary
course of business, consistent with past practice.
Section 4.15 Resignations of Directors. Seller will cause such
members of the board of directors of the Company to tender, effective at the
Closing, their resignations from such board of directors. If requested by
Purchaser, Seller will cause the election of Purchaser's nominees to such boards
of directors effective on the Closing Date.
28
37
Section 4.16 Tax Matters. Seller will not make or cause any
Subsidiary to make any Tax Election not consistent with past practice that would
adversely affect Taxes payable by or Tax refunds payable to Purchaser or
Purchaser's Subsidiaries for any taxable period subsequent to the Closing Date
or that would adversely affect the amount of earnings and profits of the Company
and its Subsidiaries for any taxable period.
Section 4.17 Books and Records. On the Closing Date, Seller will
deliver to Purchaser or will make available to Purchaser all books and records
relating specifically to the Company. If (at any time after the Closing) Seller
discovers in its possession or under its control any other books and records of
the Company, Seller will forthwith deliver such books and records to Purchaser.
Section 4.18 Notice and Cure. Seller will notify Purchaser promptly
in writing of and contemporaneously will provide Purchaser with true and
complete copies of any and all information or documents relating to, any event,
transaction, or circumstance occurring after the date hereof that causes or will
cause any covenant or agreement of Seller under this Agreement to be breached in
any material respect or that renders or will render materially untrue on the
Closing Date or any date prior thereto any representation or warranty of Seller
contained in this Agreement. Seller will use all commercially reasonable best
efforts to cure, before the Closing, (a) any such material breach or
misrepresentation and (b) any material violation or breach of any
representation, warranty, covenant, or agreement made by it in this Agreement,
whether occurring or arising before or after the date hereof.
Section 4.19 Conduct of Business. Seller will cause the Company to
continue to pay its accounts payable and other expenditures in a timely fashion
and in the ordinary course of business in accordance with past practice.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller as follows:
Section 5.1 Regulatory Approvals. Purchaser will (a) take all steps
necessary or desirable, and to proceed diligently and in good faith and to use
all commercially reasonable efforts, to obtain as promptly as practicable all
(i) approvals and consents of any person under all contracts to which Purchaser
is a party, necessary to permit Purchaser to consummate the transactions
contemplated hereby and (ii) approvals, authorizations and clearances of
governmental authorities required of Purchaser or the Company to consummate the
transactions contemplated hereby, (b) provide such other information and
communications to such governmental authorities as such authorities may
reasonably request, (c) cooperate with Seller in obtaining, as promptly as
practicable, all approvals, authorizations and clearances of governmental
authorities and other persons required of Seller to consummate the transactions
contemplated hereby.
29
38
Section 5.2 Employee Matters.
(a) Employment. Effective as of the Closing Date, Purchaser shall
cause the Company to continue to employ, on an at will basis at the same rate of
annual base salary as in effect immediately prior to the Closing Date to the
extent set forth on Schedule 2.20(a), those individuals on Schedule 2.20(a) who
are employed by the Company on the Closing Date, and such individuals who
continue to be employed by the Company, shall be referred to collectively herein
as the "Transferred Employees." Subject to applicable laws, Purchaser, the
Company and its Subsidiaries, as the case may be, shall have the right to
dismiss any or all Transferred Employees at any time, with or without cause, and
to change the terms and conditions of their employment (including compensation
and, subject to Section 5.2(b)(i), employee benefits provided to them).
(b) Employee Benefit Plans.
(i) Purchaser agrees that, for a period of at least 12 months
following the Closing Date, it shall, or it shall cause the Company and its
respective Subsidiaries to, provide the U.S. Transferred Employees with employee
benefit plans, programs and policies (other than stock option plans) that are
not less favorable in the aggregate than those generally provided to similarly
situated employees of the U.S. operations of Purchaser's affiliates.
Notwithstanding the preceding sentence, the Purchaser shall cause the Company to
provide severance pay to any Transferred Employee who is terminated by the
Company other than for cause during the period beginning on the Closing Date and
ending on the first anniversary of the Closing Date in an amount equal to 3
months of such terminated Transferred Employee's salary as of the date of
termination (it being understood that the foregoing will not apply to any
Transferred Employee who is a party to any other agreement or arrangement
concerning severance). The Purchaser shall be liable for and shall hold Parent,
Seller, and their respective officers, directors, employees, agents and
affiliates harmless from all severance costs associated with the termination of
employment of any Transferred Employee following the Closing Date.
(ii) The Transferred Employees shall be given credit for
service with Seller, the Company and its Subsidiaries and their respective
affiliates under all employee benefits plans, programs and policies of
Purchaser's affiliate in which they become participants, to the extent such
service was recognized under the corresponding Employee Benefit Plans, solely
for purposes of eligibility, vesting, and the determination of vacation
entitlement and severance benefits. Purchaser or its relevant affiliate(s) shall
provide a medical and dental plan as of the Closing Date which (i) waives any
preexisting condition limitations (to the extent such limitations were waived
under the corresponding Employee Benefit Plan) and (ii) honors any deductible
and out-of-pocket expenses incurred by such employees and their beneficiaries
under the corresponding Employee Benefit Plan during the portion of such
calendar year preceding the Closing Date, in each case only to the extent
consistent with the past practices of Purchaser or its relevant affiliate(s) in
administering such plans. Purchaser or its relevant affiliate(s) shall provide a
group term life insurance plan and group disability plan as of the Closing Date
which
30
39
waives any medical certification for the Transferred Employees only to the
extent consistent with the past practices of Purchaser or its relevant
affiliate(s) in administering such plans.
(iii) Effective as of the Closing Date, Purchaser or its
relevant affiliate(s) shall, or shall cause the Company to, cover the
Transferred Employees under one or more defined contribution plans and trusts
intended to qualify under Section 401(a) and Section 501(a) of the Code (the
"Purchaser Savings Plan"). Effective as of the Closing Date, Purchaser shall
take all actions necessary to cause the Purchaser or its relevant affiliate(s)
Savings Plan to permit each Transferred Employee who is a participant in the
Seller Savings Plan as of the Closing Date to effect a direct rollover of the
vested portion of such participant's account under the Seller Savings Plan to
the Purchaser Savings Plan. In connection with any such direct rollover elected
by any such Transferred Employee, Purchaser or its relevant affiliate(s) shall
allow any such employee's outstanding loan and related promissory note under the
Seller Savings Plan to be directly rolled over into the Purchaser Savings Plan,
in accordance with the provisions of the Purchaser Savings Plan.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to close is subject to the following
conditions precedent:
Section 6.1 Representations and Warranties. Each representation and
warranty made by Seller in this Agreement, in the certificates delivered by
Seller pursuant to this Agreement and in schedules hereto shall be true and
correct on the date on which made and shall be true and correct in all material
respects, except for those representations and warranties that are by their
terms qualified as to materiality which shall be true and correct, on the date
on which made and as of the Closing Date as though such representation and
warranty were made on and as of the Closing Date.
Section 6.2 Performance. Seller shall have performed or complied in
all material respects with all its agreements, covenants and obligations
required to be performed or complied with by this Agreement on or before the
Closing Date.
Section 6.3 Regulatory Approvals. The waiting period under the HSR
Act applicable to this Agreement and the transactions contemplated hereby shall
have expired or shall have been properly terminated on or before the Closing
Date.
Section 6.4 No Injunctions. There shall not be in effect on the
Closing Date any injunction or similar restraining order of any court or
governmental authority of competent jurisdiction preventing either party from
consummating any of the transactions contemplated by this Agreement nor shall
there be any writ, injunction, decree or similar
31
40
order or any court or governmental authority of competent jurisdiction that
would impose any limitation on Purchaser's ability to exercise full rights of
ownership of the Shares.
Section 6.5 Consents and Authorizations. Each of the governmental
and other approvals, consents, permits, or waivers listed in Schedule 2.7 and
which is specifically designated on such Schedule as being required prior to
Closing shall have been obtained.
Section 6.6 No Adverse Change. Except as disclosed with reasonable
specificity in Schedule 2.9, since the date of the Balance Sheet, there shall
not have been, occurred, or arisen any change in, or any event (including
without limitation any damage, destruction, or loss whether or not covered by
insurance), condition, or state of facts of any character that individually or
in the aggregate has had or would reasonably be expected to have a Material
Adverse Effect.
Section 6.7 Transfer of Brazilian Operations. Seller shall cause its
Brazilian subsidiary to transfer, pursuant to an instrument of transfer in a
form reasonably acceptable to Seller and Purchaser, to such entity as designated
by Purchaser the ownership of, the benefits of, and all of the Seller's rights,
assets (including, without limitation the office lease between Antonio Augusto
Miele, as lessor and Primark do Brasil, as lessee (the "Brazil Lease")) and
employees that are used in the conduct of the Seller's Brazilian operations
which relate to the business of the Company and such entity will assume all
related liabilities (it being understood that such liabilities will be limited
to ordinary course obligations incurred in the operation of the Company's
business in Brazil) provided, however that in the event that the Brazil Lease
cannot be assigned under Brazilian law, Purchaser agrees to put the Seller or
its affiliates in the same economic position as if the Brazil Lease had been so
assigned and the parties hereto agree to use commercially reasonable efforts
after Closing to have the lessee released from the Brazil Lease. Seller agrees
to use its commercially reasonable efforts to relocate the two (2) employees of
Seller's subsidiary whose principal work site is located in the space covered by
the Brazil Lease as soon as practicable, and in any event within 90 days after
the Closing Date. During such 90-day period, such employees may use the
facilities covered by the Brazil Lease at no additional cost to Seller. Any
costs incurred in connection with the transfer of the Brazilian operations to
Purchaser (including any transfer taxes, filing fees and local counsel and
notarial fees and expenses) shall be shared equally between Seller and
Purchaser.
Section 6.8 Stock Options Plan. The Company shall have effectively
adopted a Stock Option Plan substantially in the form attached hereto as Exhibit
D and shall have made the grants and entered into grant agreements in form and
substance acceptable to Purchaser with each of the individuals listed in
Schedule 4.9. Purchaser agrees to indemnify and hold harmless the Seller, its
parent company, their respective officers and directors of the Company holding
such office on the date hereof from and against all losses, expenses and damages
that they incur as a result of adopting said plan and making the grants
contemplated by this Section 6.8.
32
41
Section 6.9 Other Documents. The Seller and the Company shall have
executed and delivered such other agreements and instruments that may be
necessary to effectuate the purposes of this Agreement.
Section 6.10 Opinion of Counsel. Seller shall have delivered to
Purchaser the opinion, dated the Closing Date, of Michael Kargula, Senior Vice
President, General Counsel and Secretary to Seller, to the effect set forth in
Exhibit E hereto.
Section 6.11 Officer's Certificates. Seller shall have delivered to
Purchaser a certificate, dated the Closing Date and signed by its chief
executive officer, to the effect set forth in Exhibit F-1 hereto. In addition,
Seller shall have delivered to Purchaser a certificate, dated the Closing Date
and executed by the secretary or any assistant secretary of Seller, to the
effect set forth in Exhibit F-2 hereto.
Section 6.12 Resignations. Seller shall have delivered to Purchaser
the written resignations of the directors of the Company effective on the
Closing Date.
Section 6.13 Non-Foreign Status. Seller shall have provided
Purchaser with an affidavit of non-foreign status in substantially the form as
attached hereto as Exhibit G.
Section 6.14 Primark Non-Compete Agreement. Primark shall have
executed and delivered to Purchaser the Primark Non-Compete Agreement in the
form attached as Exhibit A hereto.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligation of Seller to close is subject to the following
conditions precedent:
Section 7.1 Representations and Warranties. Each representation and
warranty made by Purchaser in this Agreement, in the certificates delivered by
Purchaser pursuant to this Agreement and in the schedules hereto shall be true
and correct in all material respects, except for those representations and
warranties that are by their terms qualified as to materiality, which shall be
true and correct, on and made and as of the Closing Date as though such
representation and warranty was made on and as of the Closing Date.
Section 7.2 Performance. Purchaser shall have performed or complied
in all material respects with all its agreements, covenants and obligations
required to be performed or complied with by this Agreement on or before the
Closing Date.
33
42
Section 7.3 Regulatory Approvals. The waiting period under the HSR
Act applicable to this Agreement and the transactions contemplated hereby shall
have expired or shall have been properly terminated on or before the Closing
Date.
Section 7.4 Consents and Authorizations. Each of the governmental
and other approvals, consents, permits, or waivers listed in Schedule 3.3 and
which is specifically designated on such Schedule as being required prior to
Closing shall have been obtained.
Section 7.5 Other Documents. The Purchaser shall have executed and
delivered such other agreements and instruments that may be necessary to
effectuate the purposes of this Agreement.
Section 7.6 Officer's Certificates. Purchaser shall have delivered
to Seller a certificate, dated the Closing Date and signed by its chief
executive officer, to the effect set forth in Exhibit H hereto.
ARTICLE VIII
ADDITIONAL POST-CLOSING COVENANTS
Section 8.1 Subscription Services. For a two year period following
Closing, Purchaser shall cause the Company to promptly deliver without charge,
to Seller at its headquarters in Waltham, Massachusetts, the Company's planning
service reports, "white papers" and other products, subject to the same
restrictions and obligations customarily placed on paying customers (and, if
required by Purchaser, Seller shall execute a standard subscription agreement
incorporating such terms); provided, however, that the foregoing shall not apply
to, and Seller shall not be entitled to receive any consulting services in
connection therewith.
Section 8.2 Cooperation with Purchaser. To the extent any
approvals, consents or waivers must be obtained or any filing must be made by
the Purchaser after the Closing, including the filing of a Form BE-13 with the
US Department of Commerce, the Seller shall use its reasonable best efforts to
cooperate with the Purchaser and the Company to obtain such approvals, consents
or waivers and to make such filings. Seller and Purchaser also shall cooperate
in good faith and take all action required to complete the transfer of the
Company's Brazilian operations to Purchaser in accordance with Section 5.3 (to
the extent such transfer has not been complete on or prior to the Closing Date).
Section 8.3 Non-Competition. For three (3) years after the Closing
Date (the "Non-Compete Period"), the Seller shall not, directly or indirectly,
whether for its own account or for the account of any other person, engage in
activities or businesses ("Competitive Activities") that are materially similar
or compete, directly or indirectly, with the products, services or activities of
the Company including without limitation, (1) providing research and consulting
to companies and businesses relating to e-business,
34
43
Internet strategy and systems, electronic commerce, communications, wireless
mobile, company enterprise application and technology or (2) soliciting,
enticing, persuading, inducing or encouraging any past, present or prospective
customer of the Company to purchase any of the services in clause (1) from
anyone other than the Company or (3) assisting any other Person in any way to
do, or attempt to do, anything prohibited by (1) or (2) above; provided,
however, that such restrictions shall in no way limit or prohibit the Seller
from conducting any of its businesses as currently operated or from acquiring
any person or entity engaged in the same or similar business as is currently
being conducted by Seller and its subsidiaries.
Section 8.4 Non-Hire and Non-Solicitation.
(a) The Seller agrees that, for a period of three (3) years after
the Closing Date, the Seller will not, directly or indirectly, solicit for hire,
hire, retain or employ any employee (or former employee) of the Company or
otherwise persuade or attempt to persuade any such employee, to leave the
Company's employ to become employed by any person other than the Purchaser or
the Company; provided, however, that the foregoing shall not prevent Seller from
hiring Andrew McGillicuddy (after the expiration of one year from the Closing
Date) or from hiring other employees whose resignation is received on or prior
to the Closing Date, so long as Seller does not, directly or indirectly, solicit
Mr. McGillicuddy or such other persons.
(b) The Purchaser agrees that it will cause the Company, for a
period of three (3) years after the Closing Date, to not, directly or
indirectly, solicit for hire, hire, retain or employ any employee of Seller
whose principal work site is located in the greater Boston area or otherwise
persuade or attempt to persuade any such employee, to leave the Company's employ
to become employed by any person other than Seller.
Section 8.5 No Enforcement of Non-Competition Agreement. Seller
agrees that it shall not enforce (and shall not permit any affiliate to enforce)
any non-competition agreement between any employee of the Company and Seller (or
Seller's affiliates) to prevent any such employee from working for the Company
or any other affiliate of Purchaser who, by virtue of the transactions
contemplated by this Agreement, ceased to be employed by the Seller or any of
the Seller's subsidiaries (including the Company) including, without limitation,
any non-competition agreement contained in any grant agreements under the
Seller's or Seller's affiliates stock options plans.
Section 8.6 Release and Indemnity. Except as set forth on Schedule
8.6, Primark Corporation has furnished the Purchaser with a copy of the two
guaranties (the "Parent Guaranty") given (or may be given) by Primark
Corporation with respect to offices leases of the Company listed on Schedule
8.4. As soon as reasonably practicable after the Closing, the Purchaser agrees
to use its commercially reasonable efforts to have Lessor release Primark
Corporation from all liability of all of its obligations under or with respect
to the Parent Guaranty. From and after the Closing and until the Parent is fully
released from all liability and all of its obligations under or with respect to
the Parent
35
44
Guaranty, the Purchaser agrees to reimburse Primark Corporation for any
obligations, costs and expenses incurred as a result of failure so to be fully
released.
ARTICLE IX
SURVIVAL OF PROVISIONS
Section 9.1 Survival of Representations and Warranties. Subject to
Section 9.3 and ARTICLE X hereof, the representations and warranties
respectively made by Seller and Purchaser in this Agreement, in the schedules
hereto and in any certificate delivered pursuant to this Agreement will survive
the Closing and will remain in full force and effect thereafter:
(a) indefinitely in the case of Sections 2.2 and 2.4;
(b) until the expiration of all applicable statutes of limitations
(including all periods of extension, whether automatic or permissive) in the
case of the representations and warranties of Seller set forth in Sections 2.11,
2.14 and 2.20; and
(c) until August 8, 2001 (15 months after the Closing Date) in the
case of all other representations and warranties.
Section 9.2 Survival of Covenants and Agreements. Subject to
Section 9.3 and ARTICLE X hereof, all covenants and agreements respectively made
by Seller and Purchaser in this Agreement to be performed after the date hereof
will survive the Closing and will remain in full force and effect thereafter,
until the expiration of the terms or periods specified therein or (if there is
no such specified term or period) indefinitely without regard to duration and
the right to enforce the obligations thereunder shall survive indefinitely
subject to applicable statue of limitations.
Section 9.3 Pursuit of Claims. Notwithstanding the foregoing, any
representation, warranty, covenant, or agreement as to which a bonafide claim
for indemnification has been asserted in accordance with ARTICLE X hereof during
the applicable survival period set forth in Section 9.1 or 9.2 hereof will (with
respect to such claim) survive and such claim may be pursued, beyond the
expiration of such survival period until such claim is resolved by final,
nonappealable judgment or by settlement.
ARTICLE X
INDEMNIFICATION
Section 10.1 Non-Tax Indemnification by Seller. Subject to the
provisions of Sections 10.3 and 10.5 hereof and this ARTICLE X, Seller will
indemnify and hold harmless each of the Purchaser and the Company and its
officers, directors, shareholders, employees, representatives and agents (each a
"Purchaser Party") (whether or not such Purchaser Party owns any Shares) in
respect of any and all monetary
36
45
damages, Liabilities, fines, fees, penalties, interest obligations,
deficiencies, losses and expenses (including without limitation punitive,
treble, or other exemplary or extra contractual damages, amounts paid in
settlement, interest, court costs, costs of investigation, fees and expenses of
attorneys, accountants, actuaries, environmental consultants, engineers and
geologists and other experts, consultants and advisors and other expenses of
litigation or of any claim, default, or assessment) (collectively, "Damages")
(whether or not such Damages are covered by insurance) resulting from or
relating to each of the following:
(a) any breach by Seller of any representation, warranty, covenant,
or agreement made by Seller in any section of this Agreement, in the schedules
hereto, or in any certificate delivered by Seller in connection with this
Agreement, except for the breach by Seller of Sections 2.10 or 10.4 hereof which
will be governed by Section 10.4 hereof;
(b) any of the following Liabilities related to any Employee Benefit
Plan maintained by, contributed to, or obligated to be contributed to, at any
time, by Seller, the Company or any ERISA affiliate:
(i) Liability relating to, arising under or accruing under any
Seller Benefit Plan, except for, subject to Section 10.1(b)((v), any unpaid
monetary obligations of the Company that are, as of the Closing Date, accrued
under such Seller Benefit Plan in accordance with GAAP and in the ordinary
course of business and consistent with past practice;
(ii) Liability to the Pension Benefit Guaranty Corporation
under Title IV of ERISA;
(iii) Liability relating to any "multiemployer plan" as
defined in Section 3(37) of ERISA;
(iv) Liability arising or accruing on or before the Closing
Date with respect to noncompliance with any of ERISA, the Code, other applicable
laws, or the notice and benefit continuation requirements of Title X of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the
regulations thereunder;
(v) Liability relating to, arising under or accruing under the
Primark Corporation 1992 Stock Option Plan, Primark Corporation 1992 Employee
Stock Purchase Plan, or the 1999 Plan; and
(vi) Liability with respect to any unfunded liabilities
accruing or arising under or with respect to any "defined benefit plan" as
defined in Section 3(35) of ERISA on or before the Closing Date.
Section 10.2 Non-Tax Indemnification by Purchaser. Subject to the
provisions of Sections 9.3 and 9.5 hereof and this ARTICLE X hereof, Purchaser
will
37
46
indemnify and hold harmless Seller and its officers, directors, shareholders,
employees and agents (each a "Seller Party") (whether or not such Seller Party
sells any Shares) in respect of any and all Damages resulting from or relating
to any breach by Purchaser of any representation, warranty, covenant, or
agreement made by Purchaser in this Agreement or in any schedule hereto or
certificate delivered by Purchaser in connection with this Agreement.
Section 10.3 Non-Tax Indemnification Procedures; Certain
Limitations.
(a) If any Purchaser Party or Seller Party, as the case may be (each
an "Indemnitee") becomes aware of any matter for which it believes it is
entitled to indemnification hereunder that involves (i) any claim made against
the Indemnitee by any person or entity other than a Purchaser Party or a Seller
Party or (ii) the commencement of any action, suit, investigation, arbitration,
or similar proceeding against the Indemnitee by any person other than a
Purchaser Party or a Seller Party, the Indemnitee will give the Seller or
Purchaser, as appropriate (each an "Indemnifying Party") prompt written notice
of such claim or the commencement of such action, suit, investigation,
arbitration, or similar proceeding. Such notice will (A) provide (with
reasonable specificity) the basis on which indemnification is being asserted,
(B) set forth the actual or estimated amount of Damages for which
indemnification is being asserted, if known, and (C) be accompanied by copies of
all relevant pleadings, demands and other papers served on the Indemnitee. The
failure to provide notice in accordance with this Section 10.3 shall in no
manner affect the rights of the Indemnitee except to the extent that any party
may have been materially prejudiced by such failure.
(b) The Indemnifying Party will have a period of 10 days (or shorter
if otherwise so required) after the delivery of each notice required by Section
10.3(a) hereof during which to respond to such notice. If the Indemnifying Party
elects to defend the claim described in such notice or does not respond within
such period, the Indemnifying Party will be obligated to compromise or defend
(and will control the defense of) such claim, at its own expense and by counsel
chosen by the Indemnifying Party and reasonably satisfactory to the Indemnitee.
The Indemnitee will reasonably cooperate with (and at the cost of) the
Indemnifying Party and counsel for the Indemnifying Party in the defense against
any such claim and the Indemnitee will have the right to participate at its own
expense in the defense of any such claim; provided, however, that if the
Indemnitee elects to defend the claim either because a legal conflict exists
which prohibits the Indemnifying Party from jointly pursuing the claim or the
Indemnifying Party is not diligently defending the claim, any cost incurred by
the Indemnifying Party to defend such claim shall be borne by the Indemnifying
Party. If the Indemnitee Party responds within such period and elects not to
defend such claim, the Indemnitee will be free to compromise or defend (and
control the defense of) such claim and to pursue such remedies as may be
available to the Indemnitee under applicable law.
(c) Any compromise or settlement of any claim (whether defended by
the Indemnitee or by the Indemnifying Party) will require the prior written
consent of the Indemnitee and the Indemnifying Party (which consent will not be
unreasonably
38
47
withheld); provided, however, that if the Indemnifying Party failed to respond
or to defend the claim when required, the consent of the Indemnifying Party
shall not be necessary for the compromise or settlement of any claim.
(d) If an Indemnitee gives the Indemnifying Party written notice of
any matter for which it believes it is entitled to indemnification hereunder
other than those specified in Section 10.5, the Indemnifying Party will have a
period of 15 days after the delivery of such notice during which to respond to
such notice. If the Indemnifying Party disputes such claim, the Indemnifying
Party and the Indemnitee agree to proceed in good faith to negotiate a
resolution of such dispute. If all such disputes are not resolved through
negotiations within 30 days after such response or either party does not so
proceed in good faith, either the Indemnifying Party or the Indemnitee may
initiate litigation to resolve such disputes. If the Indemnifying Party does not
respond within 15 days after delivery of any such claim notice it will be deemed
to have conclusively accepted liability therefor.
(e) The Indemnifying Party's obligation to indemnify the Indemnitee
pursuant to Section 10.1(a) hereof is subject to the following limitation:
(i) No indemnification payments shall be required to be made
by the Indemnifying Party until the aggregate amount of Indemnitee's Damages for
claims made under Section 10.1 with respect to breaches of representations and
warranties and covenants and under Section 10.4 with respect to Taxes exceeds
$1.0 million and, in such event, indemnification shall be made by the
Indemnifying Party only to the extent that the aggregate amount of Indemnitee's
Damages exceed $1.0 million (provided, however, that the foregoing limitation
shall not apply to (x) claims based on breaches of Seller's representations in
Section 2.10(b) or in Section 2.13, (y) claims based on breaches of the Seller's
covenants in Sections 4.1, 4.2, 4.4, 4.7, 4.8, 4.9, 4.11, 4.13, 4.14, 4.15,
4.16, 4.19, 8.3 and 8.4), and (z) claims made under Section 10.4 that relate to
Fully Indemnified Taxes.
(ii) In no event shall the Indemnifying Party's aggregate
obligation to indemnify (A) the Indemnitee for claims made under Section 10.1
with respect to breaches of representations and warranties, (B) in the case of
claims against Seller, with respect to breaches of Seller's covenants in
Sections 4.3, 4.5, 4.6, 4.10, 4.12, 4.17 and 4.18, and (C) the Indemnitee for
claims made under Section 10.4 that relate to Taxes other than Fully Indemnified
Taxes, exceed $36,250,000 in the aggregate;
39
48
(iii) Notwithstanding the foregoing and for the avoidance of
doubt, it is understood and acknowledged that the foregoing basket in clause (i)
and limitation in clause (ii) shall not apply to Section 10.1(b), Section 10.4
(Tax Indemnification, except to the extent expressly provided in Section
10.3(e)(i) and 10.3(e)(ii)) or for claims based on breaches of covenants other
than the Seller's covenants in Sections 4.3, 4.5, 4.6, 4.10, 4.12, 4.17 and
4.18.
(iv) For purposes of this Agreement, the following term has
the following meaning:
"Fully Indemnified Taxes" shall mean (A) all federal, state,
local, or foreign taxes, charges, fees, imposts, levies or other assessments
based upon net income, gross receipts, capital, franchise, or profits, (B) all
sales and use taxes imposed by Colorado, Texas, New York, Ohio, Connecticut,
Massachusetts and the city of Chicago (such listed jurisdictions being
hereinafter referred to as the "Indemnified Jurisdictions"), (C) all Taxes (as
defined in Section 2.11) due with respect to Tax Returns of or which include the
Company required to be filed (without regard to any extensions) on or after
December 31, 1999 but on or before the Closing Date, and (D) all interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing
authority in connection with any item described in clauses (A) thru (C). For
purposes of clause (A) above, taxes based upon "gross receipts" are not intended
to include sales taxes or other transactions-based taxes regardless of the name
given to such taxes by the applicable jurisdiction.
Section 10.4 Tax Indemnification.
(a) Subject to Section 10.3(e)(i) and Section 10.3(e)(ii), Seller
agrees to be responsible for, and to indemnify and hold harmless, each Purchaser
Party from and against any and all Damages resulting from, arising out of, based
on or related to:
(i) any and all Taxes with respect to any period of the
Company (or any predecessor) ending on or before the Closing Date;
(ii) any and all Taxes resulting from the Company having been
(or ceasing to be) included in any affiliated, consolidated, combined, or
unitary Tax Return that included the Company (or any predecessor) for any
taxable period (or portion thereof) ending on or prior to the Closing Date
(including without limitation any Liability for Taxes resulting from a "deferred
intercompany transaction," within the meaning of Treasury Regulation Section
1.1502-13(a)(2) (or any analogous or similar provision under state, local or
foreign law), that occurred on or prior to the Closing Date);
(iii) any and all Taxes of any member of an affiliated,
consolidated, combined, or unitary group (other than the Company) of which the
Company (or any predecessor) is or was a member on or prior to the Closing Date,
by reason of the Liability of the Company pursuant to Treasury Regulation
Section 1.1502-6(a) or any analogous or similar state, local or foreign law;
40
49
(iv) any breach by Seller of any representation, warranty, or
covenant contained in Section 2.11 or Section 10.4 hereof or the breach by
either party of the agreement set forth in Section 1.2 hereof regarding
allocation of Purchase Price;
(v) any and all Taxes allocated to Seller pursuant to Section
10.4(b)(iv) hereof;
(vi) any and all Taxes by reason of being a
successor-in-interest or transferee of another entity; and
(vii) and any and all Taxes respect to the termination of the
1999 Plan.
(b) Preparation of Tax Returns; Payment of Taxes.
(i) The Seller shall include the Company, or cause the Company
to be included in, and shall file or cause to be filed, (A) the United States
consolidated federal income Tax Returns of the Seller or its affiliates for all
taxable periods of the Company ending on or prior to the Closing Date and (B)
where applicable, all other consolidated, combined or unitary Tax Returns of
Seller or its affiliates for all taxable periods of the Company ending (or the
portion of any taxable period ending) on or prior to the Closing Date, and shall
pay any and all Taxes due with respect to the returns referred to in clause (A)
or (B) of this Section 10.4(b)(i). Such Tax Returns referred to in clause (A)
and (B) above are referred to as the "Seller Consolidated Returns"). Subject to
Section 10.4(c) hereof, which shall govern with respect to sales and use Tax
Returns and other filings in the Indemnified Jurisdictions, Seller also shall
file or shall cause the Company to file (C) all other Tax Returns with respect
to Fully Indemnified Taxes of or which include the Company required to be filed
(taking into account any extensions) on or prior to the Closing Date, (D) all
Tax Returns with respect to Fully Indemnified Taxes for the period ended
December 31, 1999, whether or not on extension, and (E) all short taxable period
Tax Returns for taxable periods ending on the Closing Date to the extent they
relate to Fully Indemnified Taxes, and shall pay any and all Taxes due with
respect to such Tax Returns. All Tax Returns described in this Section
10.4(b)(i) shall be prepared in a manner consistent with prior practice unless a
past practice has been finally determined to be incorrect by the applicable
taxing authority or a contrary treatment is required by applicable tax laws (or
the judicial or administrative interpretations thereof). Seller shall provide
the Purchaser with copies of such Tax Returns (other than Seller Consolidated
Returns) at least 30 days prior to the filing date, and Purchaser shall be
provided an opportunity to review such returns and supporting workpapers and
schedules prior to the filing of such Tax Returns. Seller and Purchaser shall
attempt to resolve in good faith any disagreement regarding such Tax Returns
prior to the due date for filing thereof (including extensions). Purchaser shall
cause to be executed such Tax Returns and shall return them to Seller so that
Seller receives such executed Tax Returns at least 5 days prior to such Tax
Returns filing deadline (including extensions); provided, however, that
Purchaser and the Company shall not be required to execute any such Tax Return
if Purchaser reasonably and in good faith determines that
41
50
such Tax Return is materially incorrect. Any disagreements regarding such Tax
Returns which are not resolved prior to the filing thereof shall be promptly
resolved pursuant to Section 10.4(g) which shall be binding on the parties. If a
Tax Return, which is prepared and provided to Purchaser for review in accordance
with the provisions of this Section 10.4(b)(i), is not timely filed because a
dispute arises with respect to the Tax Return and the Company does not execute
the Tax Return in a timely manner, the Company will be responsible for (and
Seller will not be required to indemnify any Purchaser Party for) any interest,
penalties or late fees imposed with respect to such Tax Return as a result of
Company's failure to execute such Tax Return if, the Seller's position with
respect to such Tax Return is determined to be correct in proceedings initiated
under Section 10.4(g). Seller shall subsequent to the Closing Date, provide
written notice to Purchaser of the filing of any amended Seller Consolidated
Returns (or provision thereof) or claim for refund with respect to such Returns
with respect to any taxable period ending on or prior to the Closing Date if
such filing includes material changes to the Company's Tax liabilities and, if
such filing would have a material adverse effect on Purchaser, the Company, or
their affiliates for any taxable period including or ending after the Closing
Date, Seller will not make such filing without the consent of Purchaser, which
consent will not be unreasonably withheld.
(ii) Following the Closing, Purchaser shall file or cause to
be filed all Tax Returns (other than Seller Consolidated Returns, Tax Returns
with respect to Fully Indemnified Taxes for the period ended December 31 1999
whether or not under extension, Tax Returns with respect to Fully Indemnified
Taxes required to be filed on or prior to the Closing Date, and short taxable
period Tax Returns with respect to Fully Indemnified Taxes for taxable periods
ending on the Closing Date) required to be filed by the Company after the
Closing Date. Purchaser shall file any required sales and use Tax Returns with
respect to jurisdictions other than the Indemnified Jurisdictions which Company
did not file for taxable periods ending on or prior to the Closing Date and any
other Tax Returns which the Company did not file on or prior to the Closing Date
with respect to Taxes other than Fully Indemnified Taxes and shall, subject to
receiving the payments from Seller referred to in Section 10.4(b)(iii), cause
the Company to pay the Taxes shown due thereon; provided, however, that nothing
contained in the foregoing shall in any manner terminate, limit, or adversely
affect any right of Purchaser Parties to receive indemnification pursuant to any
provision of this Agreement.
(iii) Except as otherwise provided in Section 10.4(b)(iv) for
a Straddle Tax Return (as defined therein), not later than 5 days before the due
date for payment of Taxes with respect to any Tax Returns, Seller shall pay to
Purchaser an amount equal to that portion of the Taxes shown on such return for
which Seller has an obligation to indemnify the Purchaser Parties pursuant to
the provisions of Section 10.4(a). Purchaser and Seller will attempt to resolve
in good faith any disagreement regarding the amount owing by Seller to Purchaser
prior to the due date for the payment of such Taxes. In the event that Purchaser
and Seller fail to resolve any such disagreement prior to such due date, then
Seller shall, not later than 2 days before such due date, pay to Purchaser an
amount reasonably determined by Seller to be due to
42
51
Purchaser and the balance, if any, shall be paid upon resolution of the dispute.
Any dispute concerning any further amount claimed by Purchaser shall resolved in
accordance with Section 10.4(g).
(iv) For federal income tax purposes, the taxable year of the
Company shall end as of the close of the Closing Date and, with respect to all
other Taxes, Seller and Purchaser will, unless prohibited by applicable law,
close the taxable period of the Company as of the close of the Closing Date.
Neither Seller nor Purchaser shall take any position inconsistent with the
preceding sentence on any Tax Return. In any case where applicable law does not
permit the Company to close its taxable year on the Closing Date or in any case
in which a Tax is assessed with respect to a taxable period which includes the
Closing Date (but does not begin or end on that day) (each a "Straddle Period"
and all Tax Returns in respect thereof, a "Straddle Period Return"), then Taxes,
if any, attributable to the taxable period of the Company beginning before and
ending after the Closing Date shall be allocated to (i) Seller for the period up
to and including the Closing Date, and (ii) Purchaser for the period subsequent
to the Closing Date. Any allocation of income or deductions required to
determine any Taxes attributable to any period beginning before and ending after
the Closing Date shall be made by means of a closing of the books and records of
the Company as of the close of the Closing Date, provided that exemptions,
allowances or deductions that are calculated on an annual basis (including, but
not limited to, depreciation and amortization deductions) shall be allocated
between the period ending on the Closing Date and the period after the Closing
Date in proportion to the number of days in each such period. With respect to
(i) Straddle Returns relating to Fully Indemnified Taxes, and (ii) Straddles
Returns relating to Taxes other than Fully Indemnified Taxes after the basket in
Section 10.3(e)(i) has been satisfied, Purchaser will notify Seller of
Purchaser's calculation of Seller's share of the Taxes of the Company for any
Straddle Period and provide to Seller a copy of the Straddle Period Return and
the calculation of the split of the Tax liability for such period between
Purchaser and Seller (the "Statement") no later than 30 days before the due date
for filing of such Straddle Period Return. Purchaser and Seller will attempt to
resolve in good faith any disagreement with or arising out of any such Straddle
Period Return and/or Statement prior to the due date for the payment of such
Taxes. In the event that Purchaser and Seller fail to resolve any such
disagreement prior to such due date, then Seller shall, not later than 2 days
before such due date, pay to Purchaser an amount reasonably determined by Seller
to be due to Purchaser and the balance, if any, shall be paid upon resolution of
the dispute. Any disputes shall resolved in accordance with Section 10.4(g).
(v) Any payment pursuant to this Section 10.4(b) paid after
the date such payment is due shall become accompanied by payment of any amount
equal to simple interest on the amount of such payment at a rate of 12% per
annum from and including the date that such payment was due but excluding the
date such payment was made.
(c) Special Procedures for Certain Sales and Use Taxes
43
52
(i) As soon as practicable following the Closing, Seller shall
prepare or cause to be prepared and shall submit to Purchaser for its review and
execution all documentation necessary to (A) register the Company for sales and
use tax purposes in each Indemnified Jurisdiction in which the Company is not
registered at Closing and (B) enter into a voluntary disclosure agreement with
the appropriate taxing authority in each Indemnified Jurisdiction (other than
Massachusetts) in which the Company has not entered into a voluntary disclosure
agreement prior to Closing. Seller shall consult with Purchaser regarding the
positions to be taken with respect to the registration, the voluntary disclosure
agreement and any Tax Return to be filed in connection with the registration and
voluntary disclosure agreement. Seller and Purchaser shall negotiate in good
faith to reach a mutual agreement regarding the positions to be taken by the
Company, and any disputes shall be resolved in accordance with Section 10.4(g)
prior to filing the first document with the Indemnified Jurisdiction identifying
the Company or any positions to be taken by the Company with respect to the
registration, the voluntary disclosure agreement or any Tax Return to be filed
in connection with the registration and voluntary disclosure agreement. The
Purchaser and Seller must agree as to any material changes regarding the
positions to be taken by the Company with respect to the registration, voluntary
disclosure agreement or any Tax Returns to be filed in connection with the
registration and voluntary disclosure agreement.
(ii) Seller shall prepare or cause to be prepared and shall
file or cause to be filed all sales and use Tax Returns in the Indemnified
Jurisdictions for taxable periods ending on or prior to the Closing Date and any
other filings in connection with the registration and disclosure agreements
referred to Section 10.4(c)(i) above. Seller shall pay or cause to be paid all
Taxes due with respect to any such Tax Returns or other filings (including any
registration or disclosure agreements) and any other sales and use Taxes in the
Indemnified Jurisdictions for taxable periods ending on or prior to the Closing
Date. Seller shall provide Purchaser with copies of such Tax Returns or other
filings at least 10 days prior to filing thereof and Purchaser shall have the
right to review such filings. Purchaser shall cause to be executed by the
Company such Tax Returns or other filings and shall return them to Seller so
that Seller receives such executed Tax Returns or other filing within such ten
day period; provided, however, that Purchaser and the Company shall not be
required to execute any such Tax Return or other filing if Purchaser reasonably
and in good faith determines that such Tax Return or other filing is materially
incorrect. If a Tax Return or other filing, which is prepared and provided to
Purchaser for review in accordance with the provisions of this Section
10.4(c)(ii), is not timely filed because a dispute arises and the Company does
not execute such Tax Return or other filing in a timely manner, the Company will
be responsible for (and Seller will not be required to indemnify any Purchaser
Party for) any interest, penalties or late fees imposed with respect to such Tax
Return or other filing as a result of Company's failure to execute such Tax
Return if, the Seller's position with respect to such Tax Return is determined
to be correct in proceedings initiated under Section 10.4(g). Other than the
limitations set forth in this Section 10.4(c), Seller shall control, with
respect to each Indemnified Jurisdiction, the registration, the filing of the
voluntary disclosure agreement
44
53
and the filing of all Tax Returns in connection with the registration and
voluntary disclosure agreement for taxable periods ending on or before the
Closing Date.
(d) Cooperation with Respect to Tax Returns. Purchaser and Seller
agree to furnish or cause to be furnished to each other, and each at their own
expense, as promptly as practicable, such information (including access to books
and records) and assistance, including making employees available on a mutually
convenient basis to provide additional information and explanations of any
material provided, relating to the Company as is reasonably necessary for the
filing of any Tax Return, for the preparation for any audit, and for the
prosecution or defense of any claim, suit or proceeding relating to any
adjustment or proposed adjustment with respect to Taxes. Purchaser or the
Company shall retain in its possession, and shall provide Seller reasonable
access to (including the right to make copies of), such supporting books and
records and any other materials that Seller may specify with respect to Tax
matters relating to any taxable period ending on or prior to the Closing Date
until the relevant statute of limitations has expired. After such time,
Purchaser may dispose of such material, provided that prior to such disposition
Purchaser shall give Seller a reasonable opportunity to take possession of such
materials.
(e) Tax Audits.
(i) Seller shall have the sole right to represent the
interests of the Company in any Tax audit or administrative or court proceeding
relating to taxable periods of the Company which end on or before the Closing
Date and to employ counsel of its choice (other than any such audit or
proceeding relating to Taxes which are reasonably expected to be subject to the
limitations of Section 10.3(e)(i) or Section 10.3(e)(ii)); provided that if the
results of such Tax audit or proceeding would reasonably be expected to have an
adverse effect on the assets, business, operations, or financial condition of
the Company (or its affiliates with respect to the assets, business, operations
or financial condition of the Company) for taxable periods ending after the
Closing Date, then there shall be no settlement or closing or other agreement
with respect thereto without the written consent of Purchaser (which consent
shall not be unreasonably withheld).
(ii) Purchaser shall have the sole right to represent the
interests of the Company in any Tax audits or administrative or court proceeding
relating to taxable periods beginning after the Closing Date. The Seller agrees
to cooperate fully with Purchaser and its counsel in the defense against or
compromise of any claim in any said proceeding.
(iii) Purchaser shall have the sole right to represent the
interests of the Company in any Tax audits or administrative or court proceeding
relating to any Taxes which are reasonably expected to be subject to the
limitations of Section 10.3(e)(i) or Section 10.3(e)(ii); provided, however,
that Purchaser shall (A) provide Seller notice of such proceedings as required
under Section 10.4(e)(v), and (B) provide copies of all material documents
received by Company from the governmental authority or filed by
45
54
Company with the governmental authority with respect to such audit,
administrative or court proceeding.
(iv) The Seller and Purchaser shall jointly represent the
interests of the Company in any Tax audit or administrative or court proceedings
relating to any Straddle Period with respect to Fully Indemnified Taxes. Any
disputes regarding the conduct or resolution of any such audit or proceeding
shall be resolved pursuant to Section 10.4(g). No settlement of such proceeding
shall occur without the consent of both Seller and Purchaser.
(v) Purchaser will promptly notify Seller in writing upon
receipt by Purchaser of written notice of any pending or threatened federal,
state, local, or foreign Tax audits or assessments of the Company relating to a
taxable period that ends before the Closing Date. Seller will promptly notify
Purchaser in writing upon receipt by Seller or any affiliate of Seller of
written notice of any pending or threatened federal, state, local, or foreign
Tax audits or assessments from any Tax authority which may affect the Tax
Liability of the Company for periods subsequent to the Closing Date.
(f) Transfer Taxes. Seller and Purchaser shall share equally all
sales, use, stamp, documentary, filing, recording, transfer or similar fees or
taxes or governmental charges as levied by any taxing authority or governmental
agency in connection with the transactions contemplated by this Agreement.
Seller and Purchaser hereby agree to file all necessary documents (including,
but not limited to, all Tax Returns) with respect to all such amounts in a
timely manner.
(g) Any dispute as to any matter covered hereby shall be resolved by
an independent accounting firm mutually acceptable to the Seller and the
Purchaser. The fees and expenses of such accounting firm shall be borne equally
by the Seller and the Purchaser.
(h) The indemnification provided for in this Section 10.4 shall be
the sole remedy for any claim in respect of Taxes and the provisions of Sections
10.1 through 10.3 hereof shall not apply except to the extent provided in
Section 10.3(e)(i) and Section 10.3(e)(ii).
(i) Any claim for indemnity under this Section 10.4 may be made at
any time prior to 30 days after the expiration of the applicable Tax statute of
limitations with respect to the relevant taxable period (including all periods
of extension, whether automatic of permissive).
(j) Seller shall be responsible for, shall pay or cause to be paid
and shall indemnify and hold harmless Purchaser, the Company from and against
any Liability arising under any Tax sharing, Tax indemnity, Tax allocation or
similar contracts (whether or not written) to which the Company, any predecessor
of the Company or any transferor to the Company is a party or is obligated
thereunder, in each case on or prior to the Closing Date.
46
55
Section 10.5 Indemnification Payments. Seller and Purchaser agree
that any payment made under ARTICLE X hereof will be treated by the parties on
their Tax Returns as an adjustment to the aggregate consideration for the
Shares.
ARTICLE XI
TERMINATION
Section 11.1 Termination. Without limiting the rights or remedies
that any party hereto may otherwise have, this Agreement may be terminated and
the transactions contemplated hereby may be abandoned:
(a) at any time before the Closing by written agreement of Seller
and Purchaser;
(b) at any time before the Closing, by the non-breaching party, if a
breach of this Agreement shall have occurred and such breach has not be cured
thirty days after notice of such breach has been received; or
(c) at any time after August 8, 2000, by Seller or Purchaser if the
transactions contemplated by this Agreement have not been consummated on or
before such date and such failure to consummate is not caused by a breach of
this Agreement (or any representation, warranty, covenant, or agreement included
herein) by the party electing to terminate pursuant to this Section 11.1(b).
Section 11.2 Effect of Termination. If this Agreement is validly
terminated pursuant to Section 11.1 hereof, (a) the obligation of Purchaser to
purchase the Shares and the obligation of Seller to sell the Shares will
terminate, (b) the provisions of Sections 12.4, 12.5, 12.6 and 12.7 hereof will
continue to apply following any such termination and (c) no party hereto will be
relieved of any Liability for Damages that such party may have to the other
party by reason of such party's breach of this Agreement (or any representation,
warranty, covenant, or agreement included herein).
ARTICLE XII
MISCELLANEOUS
Section 12.1 Notices. Any notice or other communication given
pursuant to this Agreement must be in writing and (a) delivered personally, (b)
sent by facsimile or other similar facsimile transmission, (c) delivered by
overnight express, charges prepaid, or (d) sent by registered or certified mail,
postage prepaid, as follows:
47
56
(i) If to Seller:
Primark Corporation
1000 Winter Street, Suite 4300N
Waltham, MA 02451
Attention: Michael Kargula
Facsimile number: 781-890-6190
(ii) If to Purchaser:
Reuters Group PLC
85 Fleet Street
London EC4P4AJ
United Kingdom
Attention: Brad Hanson
Facsimile number: 011 44 171 542 9368
with copies to:
Reuters America Inc.
1700 Broadway - 40th Fl.
New York, NY 10019
Attention: General Counsel
Facsimile number: (212) 603-3757
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Matthew Bloch
Facsimile number: 212-310-8007
All notices and other communications required or permitted under
this Agreement that are addressed as provided in this Section 12.1 will (A) if
delivered personally or by overnight express, be deemed given upon delivery; (B)
if delivered by facsimile or similar facsimile transmission, be deemed given
when electronically confirmed; and (C) if sent by registered or certified mail,
be deemed given on the third day after delivery of such notice to the United
States Post Office for delivery. Any party from time to time may change its
address for the purpose of notices to that party by giving a similar notice
specifying a new address, but no such notice will be deemed to have been given
until it is actually received by the party sought to be charged with the
contents thereof.
Section 12.2 Entire Agreement; Interpretation. (a) Except for
documents executed by Seller and Purchaser pursuant hereto, this Agreement
supercedes all prior discussions and agreements between the parties with respect
to the subject matter of this Agreement and this Agreement contains the sole and
entire agreement between the
48
57
parties hereto with respect to the subject matter hereof. Unless the context of
this Agreement otherwise requires, (a) words of any gender are deemed to include
each other gender; (b) words using the singular or plural number also include
the plural or singular number, respectively; (c) the terms "hereof," "herein,"
"hereby," "hereto," and derivative or similar words refer to this entire
Agreement; (d) the terms "ARTICLE" or "Section" refer to the specified ARTICLE
or Section of this Agreement; (e) the term "or" means "and/or"; (f) the term
"party" means, on the one hand, Purchaser and, on the other hand, Seller; (g)
the phrase "in the ordinary course of business and consistent with past
practice" refers to the business, operations, affairs and practice of the
Company or the Subsidiaries, as the case may be, in each case consistent with
past practices of such business, operations and affairs and consistent with all
applicable laws; and (h) all references to "dollars" or "$" refer to currency of
the United States of America.
(b) The Schedules attached to this Agreement relate to certain
matters concerning the transactions contemplated by the Agreement. The Schedules
are qualified in their entirety by reference to specific provisions of the
Agreement, and are not intended to constitute, and shall not be construed as
constituting, representations or warranties of the Company except as and to the
extent provided in the Agreement. Matters reflected in the Schedules are not
necessarily limited to matters required by the Agreement to be reflected in the
Schedules. Such additional matters are set forth for informational purposes and
do not necessarily include other matters of a similar informational nature. Any
disclosure of a fact or circumstance made in the Schedule shall not establish,
or constitute an admission of the materiality of such fact or such circumstance
or such fact's or circumstance's consequence or relevance to a Purchaser.
Headings and section references have been inserted in the Schedules for
convenience of reference only, and such headings shall not have the effect of
amending or changing the express description of the Schedules as set forth in
the Agreement. Disclosure set forth in the Schedules under a particular heading
or with reference to a particular section of the Agreement shall be deemed to
apply to any other section of the Agreement to which the matters disclosed are
relevant, but only if such deemed disclosure is readily apparent on the face of
such disclosure in such other section.
Section 12.3 Expenses. Except as otherwise expressly provided in
this Agreement (including without limitation as provided in ARTICLE X hereof),
each of Seller and Purchaser will pay its own costs and expenses in connection
with this Agreement and the transactions contemplated hereby.
Section 12.4 Public Announcements. At all times at or before the
Closing, Seller and Purchaser will each consult with the other before issuing or
making any reports, statements, or releases to the public with respect to this
Agreement or the transactions contemplated hereby and will use good faith
efforts to agree on the text of a joint public report, statement, or release or
will use good faith efforts to obtain the other party's approval of the text of
any public report, statement, release to be made solely on behalf of a party. If
Seller and Purchaser are unable to agree on or approve any such public report,
statement, or release and such report, statement, or release is, in the opinion
of legal counsel to a party, required by law or appropriate to discharge such
party's
49
58
disclosure obligations, then such party may make or issue the legally required
or appropriate report, statement, or release. Any such report, statement, or
release approved or permitted to be made pursuant to this Section 12.4 may be
disclosed or otherwise provided by Seller or Purchaser to any person, including
without limitation to any employee or customer of either party hereto and to any
governmental or regulatory authority.
Section 12.5 Confidentiality. For a period of three years from the
Closing Date, (a) each of Purchaser and Seller will refrain, and will cause its
affiliates and their respective officers, directors, employees, agents and other
representatives to refrain, from disclosing to any other person any confidential
documents or confidential information concerning the other party hereto
furnished to it in connection with this Agreement or the transactions
contemplated hereby and (b) Seller will refrain, and will cause its affiliates
and their respective officers, directors, employees, agents and other
representatives to refrain, from disclosing to any person any confidential
documents or confidential information concerning the Company, unless, in either
case, (i) such disclosure is compelled by judicial or administrative process or
by other requirements of law and notice of such disclosure is furnished to such
other party hereto as early as possible; or (ii) such confidential documents or
information can be shown to have been (A) previously known by the party hereto
receiving such documents or information, (B) in the public domain through no
fault of such receiving party, or (C) later acquired by such receiving party
from other public sources.
Section 12.6 Brokers. Seller will indemnify and hold harmless the
Purchaser in respect of any and all claims or demands for commission,
compensation, or other Damages by any broker, finder, or other agent (whether or
not a present or former employee or agent of Seller or the Company) claiming to
have been engaged by Seller in connection with the transactions contemplated by
this Agreement and Seller will bear the cost of the reasonable out-of-pocket
expenses incurred by Purchaser in investigating, defending against, or appealing
any such claim or demand. Purchaser will indemnify and hold harmless the Seller
in respect of any and all claims or demands for commission, compensation, or
other Damages by any broker, finder, or other agent (whether or not a present or
former employee or agent of Purchaser) claiming to have been engaged by
Purchaser connection with the transactions contemplated by this Agreement and
Purchaser will bear the cost of the reasonable out-of-pocket expenses incurred
by Seller in investigating, defending against, or appealing any such claim or
demand. Neither party shall make any payment for which they intend to request
indemnification under this Section 12.6 without receiving the prior consent of
the other party, which consent shall not be unreasonably withheld.
Section 12.7 Further Assurances. Seller and Purchaser agree that,
from time to time prior to and after the Closing, upon the reasonable request of
the other, they will cooperate and will cause their respective affiliates to
cooperate with each other to effect the orderly transition of the business,
operations and affairs of the Company and the Subsidiaries. Without limiting the
generality of the foregoing, (a) Seller will provide, and will cause its
affiliates to provide, representatives of Purchaser reasonable access to
50
59
all Books and Records of Seller and its affiliates reasonably requested by
Purchaser in the preparation of any post-Closing financial statements, reports,
or Tax Returns of the Company; (b) Purchaser will provide representatives of
Seller reasonable access to all pre-Closing Books and Records of the Company
reasonably requested by Seller in the preparation of any post-Closing financial
statements, reports, or Tax Returns of Seller; and (c) each party hereto will
execute such documents and instruments as the other party hereto may reasonably
request containing terms and conditions mutually satisfactory to each party
hereto to further effectuate the terms hereof. Seller agrees to retain, until
the sixth anniversary of the Closing Date, all Books and Records of Seller and
its affiliates that relate to the Company and to provide Purchaser with copies
of such Books and Records upon request by Purchaser.
Section 12.8 Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof. Such
waiver must be in writing and must be executed by an executive officer of such
party. A waiver on one occasion will not be deemed to be a waiver of the same or
any other breach or nonfulfillment on a future occasion. All remedies, either
under this Agreement, or by law or otherwise afforded, will be cumulative and
not alternative.
Section 12.9 Amendment. This Agreement may be modified or amended
only by a writing duly executed by or on behalf of Seller and Purchaser.
Section 12.10 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which will be deemed an
original, but all of which will constitute one and the same instrument.
Section 12.11 No Third Party Beneficiary. The terms and
provisions of this Agreement are intended solely for the benefit of Seller,
Purchaser, each Seller Party, each Purchaser Party and their respective
successors and permitted assigns and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person.
Section 12.12 Governing Law. This Agreement will be governed by and
construed and enforced in accordance with the laws of the State of Delaware
(without regard to the principles of conflict of laws) applicable to a contract
executed and performable in such state. The parties hereto agree that any
action, suit or proceeding arising from or relative to this Agreement shall be
brought in any State or Federal Court of competent jurisdiction sitting in the
State of Delaware and each party hereby agrees to submit to the jurisdiction of
such courts to the fullest extent permitted by law. In addition, each party
hereto waives any objection which it may have to the changing of venue from
Delaware.
Section 12.13 Submission to Jurisdiction; Consent to Service of Process.
(a) The parties hereto irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the State of Delaware
over any dispute arising out of or relating to this Agreement or any of the
transactions
51
60
contemplated hereby and each party hereby irrevocably agrees that all claims in
respect of such dispute or any suit, action proceeding related thereto may be
heard and determined in such courts. The parties hereto irrevocably waive, to
the fullest extent permitted by applicable law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each of the parties hereto agrees that a judgment in any such dispute may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Each of the parties hereto consents to process being served by
any party to this Agreement in any suit, action or proceeding by the mailing of
a copy thereof in accordance with the provisions of Section 12.1.
(c) Each party hereto waives trial by jury in any judicial
proceeding or other Legal Proceeding brought by the other party hereto
involving, directly or indirectly, any matter in any way arising out of, related
to or connected with this Agreement or the transactions contemplated hereby.
Section 12.14 Binding Effect. This Agreement is binding upon and
will inure to the benefit of the parties and their respective successors and
permitted assigns.
Section 12.15 No Assignment. Neither this Agreement nor any right or
obligation hereunder or part hereof may be assigned by any party hereto without
the prior written consent of the other party hereto (and any attempt to do so
will be void), except as otherwise specifically provided herein and except that
Purchaser may assign all or any part of the rights or obligations of Purchaser
hereunder to one or more affiliates of Purchaser without the consent of Seller;
provided, however, that upon such assignment Purchaser shall not be deemed to be
released from any of its obligations hereunder.
Section 12.16 Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid, or unenforceable under any present or future law
and if the rights or obligations under this Agreement of Seller and Purchaser
will not be materially and adversely affected thereby, (a) such provision will
be fully severable; (b) this Agreement will be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part hereof;
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid, or unenforceable
provision or by its severance herefrom; and (d) in lieu of such illegal,
invalid, or unenforceable provision, there will be added automatically as a part
of this Agreement a legal, valid and enforceable provision as similar in terms
to such illegal, invalid, or unenforceable provision as may be possible.
[SIGNATURES BEGIN ON NEXT PAGE]
52
61
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the date first written above by the duly authorized officers of
Seller and Purchaser.
REUTERS HOLDING SWITZERLAND SA
By: /s/ Bradley J. Hanson
-------------------------------------
Name: Bradley J. Hanson
Title: Director
PRIMARK HOLDING CORPORATION
By: /s/ Joseph E. Kasputys
-------------------------------------
Name: Joseph E. Kasputys
Title: President and Chief
Executive Officer