1
EXHIBIT 2-1
STOCK PURCHASE AGREEMENT
- --------------------------------------------------------------------------------
YANKEE GROUP RESEARCH, INC.
- --------------------------------------------------------------------------------
2
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (as amended, supplemented or otherwise
modified from time to time, in each case whether in whole or in part, this
"Agreement"), dated as of August 9, 1996, is entered into by and between Howard
Anderson, an individual resident of Massachusetts ("Anderson") and Primark
Corporation, a Michigan corporation ("Primark").
RECITALS
--------
WHEREAS, Anderson owns all of the issued and outstanding "Shares" (as
defined below) of Yankee Group Research, Inc., a Massachusetts corporation (the
"Company");
WHEREAS, Primark wishes to purchase one hundred percent of the issued and
outstanding Shares on the terms and conditions set forth herein;
WHEREAS, this Agreement is being entered into simultaneously with the
execution of (i) the Stock Purchase Agreement by and among Primark and the
holders of the Class B shares of common stock, no par value per share, of the
Company, and (ii) the Stock Purchase Agreement by and among Primark and the
holders of the Class C shares of common stock, no par value per share, of the
Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, Anderson and Primark hereby agree as
follows:
AGREEMENT
---------
1. DEFINITIONS
1.1 DEFINED TERMS. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"ADDITIONAL PURCHASE PRICE" shall mean an amount equal to $1,904,091 plus
the Company's cash on hand at Closing minus the sum of the cash operating needs
of the Company. For purposes hereof, the operating cash needs shall be deemed to
be $1,600,000 assuming all accounts payable and other liabilities continue to be
paid in the ordinary course of business and consistent with past practice,
provided that the Closing Date (as defined below) will not be considered to be
the end of the accounting period.
3
"AFFILIATE" shall have the meaning set forth in the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder.
"ANCILLARY AGREEMENTS" shall mean the Employment and Noncompetition
Agreement in the form attached hereto as Exhibit A, the Registration Rights
Agreement in the form attached hereto as Exhibit B, the lease indemnification
letter referred to in SECTION 7.7 and the Class B Stock Purchase Agreement.
"BALANCE SHEET" shall mean the audited combined balance sheet of the
Company at December 31, 1995, together with the notes thereon.
"BOOKS AND RECORDS" shall mean (a) all records and lists pertaining to the
Company and its Subsidiaries and their respective customers, suppliers or
personnel, (b) all product, business and marketing plans of the Company and its
Subsidiaries, and (c) all books, ledgers, files, reports, plans and operating
records of every kind of the Company and its Subsidiaries.
"BUSINESS DAY" shall mean any date other than Saturday, Sunday or any other
day on which commercial banks are closed for business in the Commonwealth of
Massachusetts.
"CLEANUP" shall mean all actions required to: (1) cleanup, remove, treat or
remediate Hazardous Substances in the indoor or outdoor environment; (2) prevent
the Release of Hazardous Substances so that they do not migrate, endanger or
threaten to endanger public health or welfare of the indoor or outdoor
environment; (3) perform pre-remedial studies and investigations and
post-remedial monitoring and care; or (4) respond to any government requests for
information or documents in any way relating to cleanup, removal, treatment or
rededication or potential cleanup, removal, treatment or remediation of
Hazardous Substances in the indoor or outdoor environment, in each case to the
extent required by applicable Environmental Laws.
"CLOSING DATE" shall mean August 9, 1996, or such other date as Anderson
and Primark shall mutually agree upon.
"CLASS B HOLDERS" shall mean the holders of Class B Shares listed on
Schedule 1.1(a) hereto.
"CLASS B SHARES" shall mean the Class B shares of common stock of the
Company, no par value per share.
"CLASS B STOCK PURCHASE AGREEMENT" shall mean the stock purchase agreement
dated as of the date hereof by and among Primark and the Class B Holders.
- 2 -
4
"CLASS C HOLDERS" shall mean the holders of Class C Shares listed on
Schedule 1.1(b) hereto.
"CLASS C SHARES" shall mean the Class C shares of common stock of the
Company, no par value per share.
"CLASS C STOCK PURCHASE AGREEMENT" shall mean the stock purchase agreement
dated as of the date hereof by and among Primark and the Class C Holders.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder.
"COMBINED" shall mean, when used in connection with a financial statement,
the Yankee Group financial statements as audited by Ernst & Young, LLP,
including the consolidated financial statements of Yankee Group Research, Inc.
combined with Yankee Group Financial, Inc.
"CONTRACT" shall mean (a) each written employment agreement and any other
agreement that is related to severance or change in control, immediate or
deferred compensation, bonuses, pensions, retirement payments, profit sharing,
stock bonuses, equity opportunities, insurance, hospitalization, medical
expenses, death benefits or any similar employee benefits applicable to
employees or categories of employees; (b) each capital construction contract
requiring payment over the remainder of the term in excess of Five Thousand
Dollars ($5,000); (c) each loan agreement or other financing arrangement
including, but not limited to, any indenture, installment obligation, mortgage
note, finance lease, agreement with respect to the purchase price of property or
equipment, agreement or other instrument relating to the borrowing of money by
the Company, guarantee issued by or for the benefit of the Company, or a
mortgage, security agreement or other collateral arrangement securing
indebtedness of any Person, excluding, in each case, any such obligation
relating to trade payables in the ordinary course of business; (d) each written
or verbal contract with a supplier not terminable within one hundred eighty
(180) days and requiring annual payments or payments over the remainder of its
terms in excess of Ten Thousand Dollars ($10,000); (e) each written or verbal
contract with a customer involving payments of more than $15,000; (f) each lease
of tangible personal property requiring annual payment in excess of Five
Thousand Dollars ($5,000); (g) real property leases; (h) each service and
consulting agreement involving payments of more than $15,000 per annum; (i) all
collective bargaining agreements; (j) all licensing agreements (except
off-the-shelf software licensing agreements); (k) each contract related to any
consents or approvals required under the terms of this Agreement; and (1) each
contract that is a material intercompany agreement to which the Company is a
party, including all evidences of indebtedness, all tax revenue or expense
sharing agreements and all management or operating agreements.
"ENCUMBRANCE" shall mean any security interest, interest of another, claim,
lien, charge or encumbrance.
- 3 -
5
"ENVIRONMENTAL CLAIM" shall mean any claim, action, cause of action,
investigation or notice (written or oral) by any Person or entity alleging
potential liability for investigatory costs, Cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries,
or penalties arising out of, based on or resulting from (a) the presence, or
Release into the indoor or outdoor environment, of any Hazardous Substance at
any location, whether or not owned or operated by the Company or any of its
Subsidiaries or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
"ENVIRONMENTAL LAW" shall mean all foreign, federal, state and local laws,
regulations, rules and ordinances relating to pollution or protection of human
health or the environment, including, without limitation, laws relating to
Releases or threatened Releases of Hazardous Substances into the environment or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, Release, transport or handling of Hazardous Substances, and all laws
and regulations with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Substances.
"FINANCIAL STATEMENTS" shall mean the Year-End Financial Statements and the
Interim Financial Statements.
"FIRST INSTALLMENT" shall have the meaning set forth in SECTION 2.1.
"GAAP" shall mean Generally Accepted Accounting Principles, consistently
applied.
"GOVERNMENTAL ENTITY" means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.
"HAZARDOUS SUBSTANCES" shall mean all substances defined as hazardous
substances, oils, pollutants or contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. [Section]300.5, or defined as
such by, or regulated as such under, any Environmental Law.
"INTERIM FINANCIAL STATEMENT" shall mean the balance sheet and the related
consolidated statements of operations, changes in shareholders' equity and cash
flows for the six months ended June 30, 1996.
"MATERIAL ADVERSE EFFECT" shall mean any effect that is, or series of
effects that are (in the aggregate), materially adverse to the business,
operations, results of operations, or financial condition of the Company and the
Subsidiaries taken as a whole or the ability of the Company or any Subsidiary to
consummate the transactions contemplated by this Agreement.
- 4 -
6
"PERSON" means an individual, sole proprietorship, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
organization, mutual company, joint stock company, estate, union, employee
organization, bank, trust company, land trust, business trust or other
organization, or a Governmental Entity.
"POST-CLOSING PARTIAL PERIOD" shall mean with respect to any tax period
beginning prior to the Closing Date and ending after the Closing Date, the
portion of such period beginning one day after the Closing Date.
"POST-CLOSING PERIOD" shall mean a taxable period ending after the Closing
Date.
"PRE-CLOSING PARTIAL PERIOD" shall mean with respect to any tax period
beginning prior to the Closing Date and ending after the Closing Date, the
portion of such period up to and including the Closing Date.
"PRE-CLOSING PERIOD" shall mean any Tax period ending on or prior to the
Closing Date and, with respect to any Straddle Period, the portion of such
Straddle Period that ends on and includes the Closing Date.
"PROPERTY" or "PROPERTIES" shall mean the real properties leased or owned
by the Company or any of its Subsidiaries.
"RELEASE" shall mean any release, spill, emission, discharge, leaking,
deposit, disposal or dispersal, into the environment (including, without
limitation, ambient air, surface water, groundwater, and surface or subsurface
strata), in each case in violation of applicable Environmental Laws.
"REPRESENTATIVE" shall mean, with respect to any Person, any executive
officer or director.
"SHARES" shall have the meaning set forth in SECTION 4.3.
"STRADDLE PERIOD" shall mean a taxable year or taxable period of the
Company or its Subsidiary which begins before the Closing Date and ends after
the Closing Date.
"SUBSIDIARY" or "SUBSIDIARY" shall mean (a) any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain, (b) any partnership in which the Company
or another Subsidiary is a general partner, or (c) any partnership in which the
Company or another Subsidiary possesses a 50% or greater interest in the total
capital or total income of such partnership.
"TAX" shall mean any federal, state, local, foreign or other tax, levy,
impost, fee assessment, including, without limitation, income, estimated income,
business.
- 5 -
7
occupation, franchise, real property, payroll, personal property, sales,
transfer, use, employment, or withholding, occupancy, gross receipts, profits,
deemed profits, capital, corporation, ad valorem, excise, or duty tax, including
interest, penalties and additions in connection therewith for which the Company
or any of the Subsidiaries is liable.
"TAX ATTRIBUTE" shall mean any loss, deduction or credit for any Tax
purpose or any other item that could give rise to a Tax Benefit.
"TAX BENEFIT" shall mean in the case of any Tax Return, the sum of the
amount by which the Tax liability is reduced (or the Tax refund is increased)
plus any interest relating to such Tax liability (or Tax refund), and in the
case of a consolidated federal income Tax Return or similar state, local or
other Tax Return, the sum of the amount by which the Tax liability of the
affiliated group of corporations is reduced (or the Tax refund is increased)
plus any interest from such government or jurisdiction relating to such Tax
liability (or Tax refund).
"TAX ELECTION" shall include, but is not limited to, any election, claim,
disclaimer, or waiver relating to any Tax, Tax Return, Tax Attribute or Tax
Benefit.
"TAX RETURN" shall mean any return, declaration, report, statement or other
document required to be filed in respect of Taxes.
"YEAR-END FINANCIAL STATEMENTS shall mean (x) the balance sheet and the
related combined statements of operations, changes in shareholders' equity and
cash flows for the year ended December 31, 1995, and (y) the balance sheet of
the Company dated December 31, 1994 and the related combined statement of
operations for the three (3) month period ending on such date, and (z) the
balance sheet of the Company dated September 30, 1994 and the related combined
statements of operations, changes in shareholders' equity and cash flows for
such year.
1.2 HEREOF, HEREIN, ETC. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified herein, the term "or" has the inclusive meaning
represented by the term "and/or" and the term "including" is not limiting. All
references as to "Sections", "Subsections", "Articles", "Schedules" and
"Exhibits" shall be to Section, Subsections, Articles, Schedules and Exhibits,
respectively, of this Agreement unless otherwise specifically provided.
1.3 COMPUTATION OF TIME PERIODS. In the computation of periods of time
from a specified date to a later specified date, unless otherwise specified
herein the words "commencing on" mean "commencing on and including", the word
"from" means "from and including" and the words "to" and "until" each means
"to but excluding".
- 6 -
8
2. SALE AND PURCHASE
2.1 SALE AND PURCHASE OF THE SHARES. (a) On the terms and subject to the
conditions of this Agreement, (i) on the Closing Date, Anderson will sell,
assign, transfer, convey and deliver to Primark, free and clear of all
Encumbrances whatsoever all of the Shares (as hereinafter defined) and (ii) in
consideration of such sale and transfer, Primark will purchase and accept, on
the Closing Date, all of the Shares, and will pay to Anderson, by wire transfer
of readily available funds, on the Closing Date, an amount equal to Twenty-Nine
Million Ninety-Five Thousand Nine Hundred and Nine Dollars ($29,095,909) plus
the Additional Purchase Price, if any. The payments set forth in (ii) are
referred to herein collectively as the "First Installment").
(b) In addition, Primark shall pay Anderson an additional Two Million
Dollars ($2,000,000) for the Shares if the Company achieves $16.0 million of
Revenues and $3.1 million of Operating Income for the 12 months ended December
31, 1996 ("GAAP 1996 Targets"), which Revenues and Operating Income shall be
calculated in accordance with GAAP, applied on a basis consistent with those
reflected in the Year End Financial Statements, provided that no effect shall be
given to the transactions contemplated by this Agreement, including, without
limitation the payments and stock awards payable by the Company or Anderson,
and, provided, further, that Anderson's annual compensation for such year shall
be deemed to be $240,000. The aforementioned Two Million Dollars ($2,000,000)
shall be paid three (3) Business Days following the issuance to Primark of its
1996 audited financial statements. Any dispute between the parties regarding
such Revenue and Operating Income amounts shall be settled in accordance with
the procedures described in Section 2.2(c) of the Class B Stock Purchase
Agreement. Primark's independent public accountants ("Primark's Accountants")
shall furnish to Anderson its determination of the 1996 GAAP Targets within 60
days following December 31, 1996 which shall be binding upon all parties hereto
unless, within twenty (20) Business Days after receipt of such written
determination, Anderson, by written notice to Primark (the "Anderson Notice"),
disputes such determination. If Anderson and Primark are unable to resolve any
such dispute within twenty-five (25) Business Days after receipt by Primark of
the Anderson Notice, Anderson and Primark shall promptly select an independent
accounting finn (the "Reviewing Accountants") to review the Primark's
Accountants' determinations of the 1996 GAAP Targets. At the request of Anderson
and/or the Reviewing Accountants, the Company shall furnish to such party all
work papers and all other information and material in its possession relating to
such determinations. Nothing herein shall require the Company to cause Primark's
Accountants to furnish work papers of such accountants. The Reviewing
Accountants shall render their determination as soon as practicable after their
retention. The determination of the Reviewing Accountants shall be final and
binding on all Persons and may be enforced by any court having jurisdiction. The
fees and expenses of the Reviewing Accountants shall be borne by the
non-prevailing party in such dispute. Any amount due from Primark to Anderson
pursuant to SECTION 2.1 of this Agreement shall be paid within five Business
Days after such amount is finally determined and not disputed. In the event that
such amount is not paid for whatever reason within 90
- 7 -
9
days following December 31, 1996 interest shall accrue, at the then current
prime rate as such rate is published in the Wall Street Journal, on the unpaid
amount from April 1, 1997 to the date that the payment is made.
(c) On the second anniversary of the Closing Date, the Company shall,
as additional consideration for the Shares, (a) pay to Anderson, by wire
transfer of readily available funds, an amount equal to Two Million Three
Hundred and Fifty Thousand Dollars ($2,350,000) or (b) deliver to Anderson
shares of common stock, without par value, of Primark (the "Primark Shares")
equal in value to Two Million Three Hundred and Fifty Thousand Dollars
($2,350,000) (the "Second Installment"), subject to adjustment as set forth in
the Registration Rights Agreement dated as of the date hereof between Primark
and Anderson, based on the average closing price of the Primark Shares for the
ten trading days immediately preceding the second anniversary of the Closing
Date; provided that Primark shall determine, in its sole discretion, whether
such payment shall be made in cash or in Primark Shares, provided, further, if
the 1996 GAAP Targets are met, determined as provided above, the amount of the
Second Installment shall be increased by $2,000,000.
2.2 CLOSING. The closing of the transactions contemplated hereby (the
"Closing") will take place at the offices of Edwards & Angell at 101 Federal
Street, Boston, Massachusetts on the Closing Date. At the Closing, (i) Anderson
shall deliver to Primark certificates representing the Shares duly endorsed in
blank, or with an executed blank stock power attached, and accompanied by all
other documents or other instruments of transfer necessary to effect and
evidence the transfer, as well as all other documents required by this Agreement
to be delivered by Anderson to Primark at Closing and (ii) Primark shall pay to
Anderson the First Installment and shall deliver all other documents required by
this Agreement to be delivered by Primark to Anderson at Closing.
2.3 THE MERGER. As soon as practicable following the Closing Date, a
wholly-owned subsidiary of Primark will be merged with and into the Company with
the Company as the surviving corporation.
2.4 BONUS PAYMENTS.
(a) Immediately prior to the Closing the Company shall pay to the
individuals listed on Schedule 2.4 hereto the sum of money set forth opposite
such person's name under the column captioned "Bonus Payments."
(b) Following the Closing, Primark shall provide to certain existing
and future employees of the Company the opportunity to receive up to $2 million
in the aggregate under a long-term incentive arrangement, on terms and
conditions mutually agreeable to Anderson and Primark.
3. REPRESENTATIONS AND WARRANTIES OF PRIMARK
Primark represents and warrants to Anderson as follows:
- 8 -
10
3.1 ORGANIZATION AND QUALIFICATION. Primark is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan and has the requisite corporate power to carry on its business as now
conducted. Primark is duly qualified as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of its
properties owned or leased or the nature of its activities makes such
qualification necessary, except for failures to be so qualified or in good
standing which would not, in the aggregate, have a material adverse effect on
Primark. Copies of the Certificate of Incorporation and Bylaws of Primark
delivered to Anderson are accurate and complete as of the date hereof.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) Primark has the requisite corporate power and authority to enter
into each Ancillary Agreement to which Primark is a party and to perform its
obligations thereunder. The execution and delivery by Primark of each Ancillary
Agreement to which Primark is a party and the consummation by Primark of the
transactions contemplated thereby shall have been duly authorized by all
requisite corporate action on the part of Primark as of the date hereof. Each
Ancillary Agreement to which Primark is a party has been duly executed and
delivered by Primark and constitutes its valid and binding obligation,
enforceable against it in accordance with its terms, except to the extent that
its enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization and other laws affecting the enforcement of
creditors' rights generally from time to time in effect or by general equitable
principles.
(b) Neither the execution and delivery by Primark of each Ancillary
Agreement to which Primark is a party nor the consummation of the transactions
contemplated thereby nor compliance by Primark with any of the provisions
thereof will (i) violate, conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Encumbrance upon any of the
properties or assets of Primark under, any of the terms, conditions or
provisions of (x) the Certificate of Incorporation or Bylaws of Primark or (y)
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument to which Primark is a party, or to which it or its properties
or assets may be subject, or (ii) subject to compliance with the statutes and
regulations referred to in the next paragraph, violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to
Primark or any of its properties or assets, except, in the case of each of
clauses (i) and (ii) above, for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances, which, in the aggregate, would not materially affect the
ability of Primark to consummate the transaction contemplated herein.
(c) Except for a Hart-Scott-Rodino filing, other than in connection
- 9 -
11
with any required foreign regulatory approvals, no notice to, filing with, or
authorization, consent or approval of, any domestic or foreign public body or
authority is necessary for the consummation by Primark of the transactions
contemplated by any Ancillary Agreement to which Primark is a party, except
where failure to give such notice, make such filings, or obtain authorizations,
consents or approvals would, in the aggregate, not materially affect the ability
of Primark to consummate the transaction contemplated herein.
(d) Primark is acquiring the Shares to be acquired by it for its own
account for investment and not with a view to or with any present intention of
disposing of all or any part of the Shares, except in a transaction in
compliance with U.S. federal securities laws. Primark has sufficient knowledge
and experience in investments and financial affairs to be able to evaluate the
merits and risks of an investment in the Shares. Primark further represents that
no commission or other remuneration was paid, directly or indirectly, for
soliciting any investment in the Shares.
4. REPRESENTATIONS AND WARRANTIES OF ANDERSON
Anderson represents and warrants to Primark as follows:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the requisite corporate power to carry on
its business as it is now being conducted. Except as set forth in Schedule 4.1,
the Company is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or leased or the nature of its activities makes such qualification necessary,
except for failures to be so qualified or in good standing which would, in the
aggregate, result in an expense, obligation, damage or liability to the Company
which is less than Twenty Thousand Dollars ($20,000). Schedule 4.1(a) identifies
the jurisdictions in which the Company is duly qualified as a foreign
corporation. Copies of the Articles of Organization and Bylaws of the Company
have been delivered to Primark and are accurate and complete as of the date
hereof. No corporate proceedings are required on the part of the Company or any
Subsidiary in connection with the consummation of the transaction contemplated
by this Agreement.
4.2 SUBSIDIARIES. The only Subsidiaries of the Company are those listed in
Schedule 4.2(a). Except as set forth in Schedule 4.2(b) (i) the Company is,
directly or indirectly, the record and beneficial owner of all of the
outstanding shares of capital stock of each of the Subsidiaries, (ii) there are
no proxies granted with respect to such shares, and (iii) no equity securities
of any of the Subsidiaries are or may become required to be issued by reason of
any options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of any capital stock of any Subsidiary. There are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is bound to issue additional shares of its capital stock or securities
convertible into or
- 10 -
12
exchangeable for such shares. All of such shares of capital stock of
Subsidiaries so owned by the Company and/or another Subsidiary are owned free
and clear of any Encumbrance. Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power to carry on its business as
it is now being conducted. Except as set forth in Schedule 4.2(c), each
Subsidiary is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or leased or the nature of its activities makes such qualification necessary
except for failures to be so qualified or in good standing which would, in the
aggregate, result in an expense, obligation, damage or liability to the Company
or such Subsidiary which is less than Twenty Thousand Dollars ($20,000). Copies
of the charter documents, bylaws and regulations of each Subsidiary have been
heretofore delivered to Primark and are accurate and complete. Except as set
forth in Schedule 4.2(d), neither the Company nor any of its Subsidiaries is a
party to any partnership agreement or understanding or joint venture agreement
or understanding (collectively the "Partnership Interests").
4.3 CAPITALIZATION. The authorized capital stock of the Company consists
of (i) Two Million (2,000,000) shares of common stock, par value $.01 per share,
of the Company, (ii) 1,000 Class B shares, and (iii) 1,000 Class C shares. One
Million (1,000,000) shares of common stock (the "Shares"), 333.33 Class B Shares
and 650 Class C Shares are issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable. All of the Shares are
owned beneficially and of record by Anderson, and he has good and valid title to
the Shares free and clear of any Encumbrances. Anderson has full legal right,
power and authority to sell, transfer and convey, or cause the sale, transfer or
conveyance of, the Shares to Primark. To the knowledge of Anderson, (i) all of
the issued and outstanding Class B Shares are owned beneficially and of record
by the Class B Holders in the amounts set forth in Schedule 4.3 hereto and each
Class B Holder has good and valid title to the Class B Shares held by such
holder free and clear of any Encumbrances; (ii) all of the issued and
outstanding Class C Shares are owned beneficially and of record by the Class C
Holders in the amounts set forth on Schedule 4.3 hereto and each Class C Holder
has good and valid title to the Class C Shares held by such holder free and
clear of any Encumbrances; (iii) the Class B Holders have full legal right,
power and authority to sell, transfer and convey or cause the sale, transfer or
conveyance of, the Class B Shares to Primark; and (iv) the Class C Holders have
full legal right, power and authority to sell, transfer and convey or cause the
sale, transfer or conveyance of, the Class C Shares to Primark. There are no
other shares of capital stock, or other equity securities of the Company
outstanding, and no outstanding options, warrants, rights to subscribe to
(including any preemptive rights), purchase rights, conversion rights, calls or
commitments of any character whatsoever to which the Company or any of its
Subsidiaries or to which Anderson is a party or may be bound, requiring the
issuance or sale of, shares of any capital stock or other equity securities of
the Company or securities or rights convertible into or exchangeable for such
shares or other equity securities, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares of its capital stock or other equity securities or
options, warrants or rights to purchase or
- 11 -
13
acquire any additional shares of its capital stock or other equity securities or
securities convertible into or exchangeable for such shares or other equity
securities.
4.4 AUTHORITY RELATIVE TO AGREEMENT. Anderson has the requisite power and
authority to enter into this Agreement, to perform his obligations hereunder and
to consummate the transactions contemplated hereunder. This Agreement has been
duly executed and delivered by Anderson and constitutes his valid and binding
obligation, enforceable against Anderson 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.
4.5 COMPLIANCE.
(a) Except as set forth in Schedule 4.5(a), neither the execution and
delivery of this Agreement by Anderson, nor the consummation of the transactions
contemplated hereby, nor compliance by Anderson with any of the provisions
hereof will (i) violate, conflict with, or result in a breach of any provisions
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries under, any of the
terms, conditions or provisions of (x) their respective charter documents or
bylaws, (y) any Contract, or (z) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which the
Company is a party, or to which its properties or assets may be subject, or (ii)
subject to compliance with the statutes and regulations referred to in SECTION
4.5(b), violate any judgment, ruling, order, writ, injunction, decree, statute,
rule or regulation applicable to the Company and its Subsidiaries or any of
their respective properties or assets, except, in the case of each of clauses
(i) and (ii) above, for such violations or conflicts that would not result in an
expense, obligation, damage or liability to the Company or a Subsidiary in
excess of $20,000.
(b) Other than in connection with the Hart-Scott-Rodino Act and except
as set forth in Schedule 4.5(b), no notice to, filing with, or authorization,
consent or approval of, any domestic or foreign Governmental Entity is necessary
for the consummation by Anderson of the transactions contemplated by this
Agreement. Except as set forth in Schedule 4.5(b), neither the execution,
delivery or performance of the Agreement by Anderson nor the consummation by
Anderson of the transactions contemplated hereby will require the consent,
authorization or approval of any Person under any contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party.
4.6 LITIGATION. There are no actions, suits, proceedings, hearings, or
investigations pending (in each case with respect to which the Company or a
Subsidiary
- 12 -
14
has been served notice) or, to the knowledge of Anderson, threatened against the
Company or any of the Subsidiaries in, before or by any Governmental Entity, nor
is the Company or any of the Subsidiaries subject to any order, judgment, writ,
injunction or decree.
4.7 COMPLIANCE WITH LAW. Except as set forth in Schedule 4.7(a), the
Company has not violated or failed to comply with any statute, law, ordinance,
regulation, rule, code, plan or order of any foreign, federal, state or local
government or any Governmental Entity, or any judgment, decree, injunction,
ruling, or order of any court or Governmental Entity except for such violation
or failure that would not result in an expense, obligation, damage or liability
to the Company or a Subsidiary in excess of $20,000. Except as set forth in
Schedule 4.7(b), the conduct of the Company's business is in conformity with all
energy, public utility, zoning, building code, health, OSHA and environmental
requirements and all other foreign, federal, state and local governmental and
regulatory requirements except where any such nonconformity would not result in
an expense, obligation, damage, loss or liability to the Company or a Subsidiary
in excess of $20,000. Except as set forth in Schedule 4.7(c) neither Anderson
nor the Company has received any written or verbal notice asserting a failure to
comply with any such statute, law, ordinance, regulation, rule, judgment, decree
or order.
4.8 CHANGES. Except as set forth in Schedule 4.8, since December 31, 1995,
none of the following have occurred with respect to the Company or any
Subsidiary:
(a) any Material Adverse Change within the meaning of SECTION 8.11 of
this Agreement;
(b) any change in accounting methods, principles or investment
practices, actuarial practices, underwriting standards or retention policies,
claims, payment and processing practices, policies regarding intercompany
transactions or other policies or practices affecting the Company's assets,
liabilities or business;
(c) any damage, destruction or loss (whether or not covered by
insurance) to the property of the Company or any Subsidiary, except for such
damage, destruction or loss that would not result in an expense, obligation,
damage or liability to the Company or any Subsidiary in excess of $20,000;
(d) any cancellation of or any action that comprises any material
debts or any waiver or release of or any action that compromises any material
right or claim relating to the Company's business activities or properties, in
each case, other than in the ordinary course of business;
(e) any declaration, setting aside or payment of dividends or
distributions in respect of the Shares or any direct or indirect redemption,
purchase or other acquisition of any of the Shares;
- 13 -
15
(f) other than as required by previously existing plans, agreements or
arrangements, (i) any increase or agreement, arrangement or understanding to
increase the rate of compensation payable or to become payable to any director,
officer, or other employee of the Company other than increases in compensation
made in the ordinary course of business consistent with past practice, (ii) the
payment, grant or accrual of any bonus, incentive compensation, or other similar
benefit to, any such director, officer, or employee, or (iii) the modification
of, or contribution to any employee benefit plan of the Company;
(g) any amendment, cancellation or termination (other than by its
terms) of any Contract to which the Company is a party made outside the ordinary
course of business which required, requires or is anticipated to require
payments (whether to or by the Company or a Subsidiary) in excess of $5,000, in
the aggregate, in any twelve-month period;
(h) Encumbrance of any assets of the Company;
(i) any sale, assignment or transfer of any assets, other than in the
ordinary course of business;
(j) any incurrence of any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, in excess of $50,000 in
the aggregate and incurrence of indebtedness (other than obligations,
liabilities or trade payables in the ordinary course of business consistent with
past practices) or any loans made or agreed to be made (other than loans to
officers, directors and employees of the Company or a Subsidiary in an amount
less than or equal to $50,000 in the aggregate outstanding at any time), or
indebtedness guaranteed;
(k) any capital expenditures in excess of $10,000 in the aggregate,
the execution of any lease for real property or the incurring of any obligation
to any lease for real property, except for the proposed lease of office space at
31 St. James Avenue, Boston, Massachusetts, in substantially the form of and on
no less favorable terms than those set forth in the draft of such lease
delivered by Anderson to Primark in connection with this Agreement;
(1) the establishment of any additional pension, profit-sharing,
bonus, incentive, deferred compensation, group insurance, retirement or employee
benefit plan; or the entering into of any employment agreement with or for the
benefit of any Person;
(m) any issuance or sale of any equity security or any security
convertible into or exchangeable for equity securities;
(n) any amendment to the charter or by-laws of the Company;
- 14 -
16
(o) any receipt of a written notice of default under any Contract;
(p) any disposition or lapse of any patent, trademark, trade name or
copyright or any application for the foregoing or any license, permit or
authorization to use any of the foregoing;
(q) the issuance of any guarantee;
(r) the sale of any marketable securities;
(s) the sale, transfer or other disposition of any Partnership
Interests;
or
(t) any agreement to take any of the actions described above in this
SECTION 4.8 other than as expressly provided for herein.
4.9 PROPERTIES. Neither the Company nor any Subsidiary owns any real
property. Except as set forth on Schedule 4.9(a), the Company and each of its
Subsidiaries presently conducts and has conducted for the last three years all
of its operations in leased office space in commercial office buildings owned by
unaffiliated third parties. Copies of all current leases for office space have
been provided by Anderson to Primark. Except as set forth in Schedule 4.9(b), no
portion of any of the premises covered by such leases has been subleased by the
Company or any Subsidiary to any third party. All rents and additional rents due
by the Company or any Subsidiary under such leases to date have been paid in
full. No waiver, indulgence or postponement of obligations of the Company or any
Subsidiary thereunder has been granted by any other party thereto. There exists
no event of default by the Company or any Subsidiary or event, occurrence,
condition or act which constitutes or would constitute (with notice or lapse of
time or both) a material default by the Company or any Subsidiary under any of
such leases. Except as set forth on Schedule 4.9(c), no material representation
or covenant has been made by the Company or any Subsidiary to any of the
landlords under such leases except as incorporated in their respective leases.
Except as set forth in Schedule 4.9(a), the Company has subsisting
leasehold interests in all real properties used or necessary in the ordinary
course of its business, free and clear of all Encumbrances. The Company has
title to, or subsisting leasehold interests in, all of the personal properties
and assets used or necessary in the ordinary course of its business, free and
clear of all Encumbrances.
4.10 CONTRACTS AND COMMITMENTS. Set forth in Schedule 4.10(a) is a
complete and accurate list of all Contracts and with respect to the planning
service (i.e. subscription) Contracts, such Schedule includes a description of
the services provided under each such contract and the annual subscription fee
charged by the Company under each such Contract. Anderson has delivered to
Primark true and complete copies of all such written Contracts, including all
amendments and supplements thereto. All of the
- 15 -
17
Contracts are valid and binding obligations of the Company or a Subsidiary as
the case may be and in full force and effect against the Company or such
Subsidiary as the case may be enforceable against the Company or such
Subsidiary, as the case may be, according to their 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
and have not been assigned by the Company or such Subsidiary. Except as set
forth in Schedule 4.10(b), (i) the Company or the Subsidiary party thereto has
duly performed all of its obligations under the Contracts to the extent those
obligations to perform have accrued, and (ii) no violation of, or default or
breach under any Contract by the Company or Subsidiary party thereto or any
other party thereto has occurred except for such violations, defaults or
breaches that will not have a Material Adverse Effect. The Company does not make
royalty or similar payments to any Person. All disclosures made pursuant to this
SECTION 4.10 shall be as of June 30, 1996.
4.11 FINANCIAL STATEMENTS. True and complete copies of the Financial
Statements are set forth in Schedule 4.11 hereto. The Financial Statements and
the notes thereto (a) are in accordance with the books and records of the
Company, (b) have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, except for the financial statements for
periods ended on or prior to December 31, 1994, and (c) fairly and accurately
present, in all material respects, the consolidated assets, liabilities and
financial position of the Company as of the respective dates thereof and the
consolidated results of operation's and changes in cash flows for the period
ended December 31, 1995 (subject, in the case of the Interim Financial
Statements, to normal year-end adjustments). The Year-End Financial Statements
at and for the year ended December 31, 1995, have been examined by Ernst & Young
LLP, independent certified public accountants, whose report thereon is included
with such Year-End Financial Statements. At the respective dates of the
Financial Statements, there were no liabilities, obligations, debts or
commitments of any nature (whether absolute, accrued, contingent, unliquidated
or otherwise and whether matured or unmatured, or due or to become due) and
whether or not the amount thereof is readily ascertainable, which, in accordance
with GAAP (or, in the case of 1994, in accordance with the cash method of
accounting) should have been shown or reflected in the Financial Statements or
the notes thereto and which are not shown or reflected in the Financial
Statements or the notes thereto and which are not otherwise prohibited by, in
violation of or which will result in a breach of the representations, warranties
and covenants of Anderson contained in this Agreement.
At the Closing, the Company shall have at least $1,600,000 of cash on
hand after deducting the Additional Purchase Price and all legal, accounting,
out-of-pocket and other expenses incurred by the Company in connection with the
transactions contemplated by this Agreement. Prior to the Closing, Anderson
shall have caused the Company to pay $3,040,591 in the aggregate to the
employees listed on Schedule 2.4 hereto.
- 16 -
18
4.12 LIABILITIES. Except as set forth in Schedule 4.12, neither the
Company nor any Subsidiary has any liabilities, obligations, debts or
commitments of any nature other than those subject to SECTION 4.6 in excess of
$25,000, individually or in the aggregate, (whether absolute, accrued,
contingent, unliquidated or otherwise and whether matured or unmatured or due or
to become due (for purposes of this SECTION 4.12, collectively "Liabilities")),
including without limitation Tax liabilities due or to become due, except (a)
Liabilities which are reflected and reserved against on the Balance Sheet or on
the Interim Financial Statement, which have not been paid or discharged since
the date thereof, (b) Liabilities arising under and in compliance with the
contracts to which the Company or a Subsidiary is a party, and (c) Liabilities
arising in the ordinary course of business consistent with past practice.
4.13 NO BROKERS. Neither Anderson nor the Company has employed any broker,
finder, advisor or intermediary in connection with the transactions contemplated
hereby which would be entitled to a broker's, finder's or similar fee or
commission in connection therewith or upon the consummation thereof, except for
Alex Brown & Co. whose fees will be the responsibility of Anderson.
4.14 NO OTHER AGREEMENTS TO SELL. Neither Anderson nor the Company is a
party to any agreement to sell all or a portion of any of the Shares or any of
the Company's assets (other than the sale of such assets in the ordinary course
of business) to any other Person.
4.15 PROPRIETARY RIGHTS.
(a) PROPRIETARY RIGHTS. The Company has no patents or pending
application therefor. Schedule 4.15 lists the following with respect to the
Company and each Subsidiary, each of which is used in connection with the
operation of the Company's business: all material non-registered and all
federal, state and foreign registrations of trademarks, service marks, designs
and copyrights and all pending applications for any such registrations in each
case owned by the Company or a Subsidiary, and all tradenames, service names,
design rights, topography rights, logos and assumed names that are owned or used
by the Company or any Subsidiary (collectively, "Proprietary Rights"). Schedule
4.15 also sets forth for each registration, the application serial number or the
registration number, the class of goods covered and the expiration date for each
jurisdiction of registration.
(b) ROYALTIES AND LICENSES. Except as set forth on Schedule 4.15(b),
no person has a right to receive a royalty or similar payment in respect of any
Proprietary Rights whether or not pursuant to any contractual arrangements
entered into by the Company or any Subsidiary. Except as set forth on Schedule
4.15(b), neither the Company nor any Subsidiary has any licenses granted, sold
or otherwise transferred by or to it. Except as set forth on Schedule 4.15(b),
neither the Company nor any Subsidiary is a party to any agreement relating in
whole or in part to any of the Proprietary Rights.
- 17 -
19
(c) OWNERSHIP AND PROTECTION OF PROPRIETARY RIGHTS. With respect to
each of the Proprietary Rights, either the Company or a Subsidiary is the sole
and exclusive owner of or is listed in the records of the appropriate agency as
the sole and exclusive owner of record for each registration, grant and
application. All registration fees that have become due and payable in respect
of any Proprietary Rights have been paid and, to the knowledge of Anderson, no
act has been done or omitted to be done by any such party to impair or dedicate
to the public or entitle any Governmental Entity to cancel, forfeit, modify or
hold abandoned any of the Proprietary Rights. To the knowledge of Anderson, all
such Proprietary Rights are valid and enforceable. To the knowledge of Anderson,
there are no pending or threatened suits, claims, oppositions or other
challenges by any person against the ownership of the Company or any Subsidiary
of or the use or prospective use by the Company or any Subsidiary of any of the
Proprietary Rights and the Company has not received any notice of invalidity or
infringement of any rights of others with respect to any of the Proprietary
Rights. To the knowledge of Anderson, the Company and each Subsidiary's use of
the Proprietary Rights is not infringing upon or otherwise violating the rights
of any third party in or to such Proprietary Rights.
(d) NO LOSS OR IMPAIRMENT. The execution and delivery of this
Agreement and the consummation of the transactions contemplated herein will not
result in the loss or impairment of any Proprietary Rights. All consents or
approvals from any person necessary to ensure the foregoing shall have been
obtained by Anderson prior to the Closing.
(e) REPORTS. The data, information and other content included in the
articles, papers and reports written by the Company and/or its Subsidiaries may
be disseminated and otherwise sold without the approval or consent of any third
party and all such articles, papers and reports were prepared by or on behalf of
the Company or its Subsidiaries.
4.16 EMPLOYEE BENEFIT PLANS.
(a) DEFINITIONS. The following terms, when used in this SECTION 4.16,
shall have the following meanings. Any of these terms may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.
(i) BENEFIT ARRANGEMENT. "Benefit Arrangement" shall mean any
employment, consulting, severance or other similar contract, arrangement or
policy and each plan, arrangement (written or oral), program, agreement or
commitment providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, life, health,
disability or accident benefits (including, without limitation, any "voluntary
employees' beneficiary association" as defined in SECTION 501(c)(9) of the Code
providing for the same or other benefits) or for deferred compensation,
profit-sharing bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation or post-retirement insurance,
- 18 -
20
compensation or benefits which (A) is not a Welfare Plan, Pension Plan or
Multiemployer Plan, (B) is entered into, maintained, contributed to or required
to be contributed to, as the case may be, by the Company, any Subsidiary or any
ERISA Affiliate and (c) covers any employee or former employee of the Company or
any Subsidiary.
(ii) EMPLOYEE PLANS. "Employee Plans" shall mean all Benefit
Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans.
(iii) ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(iv) ERISA AFFILIATE. "ERISA Affiliate" shall mean any
corporation or business which is now, or at the relevant times was, a member of
a controlled group of corporations or trades or businesses with the Company, as
defined in SECTIONs 414(b) or (c) of the Code.
(v) MULTIEMPLOYER PLAN. "Multiemployer Plan" shall mean any
"multiemployer plan," as defined in SECTION 4001(a)(3) of ERISA, which the
Company or any ERISA Affiliate maintains, administers, contributes to or is
required to contribute to.
(vi) PENSION PLAN. "Pension Plan" shall mean any "employee
pension benefit plan," as defined in SECTION 3(2) of ERISA (other than a
Multiemployer Plan), which the Company or any ERISA Affiliate maintains,
administers, or contributes to or is required to contribute to.
(vii) WELFARE PLAN. "Welfare Plan" shall mean any "employee
welfare benefit plan," as defined in SECTION 3(1) of ERISA, which the Company or
any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to.
(b) DISCLOSURE: DELIVERY OF COPIES OF RELEVANT DOCUMENTS AND OTHER
INFORMATION. Section 4.16 of the Disclosure Schedule contains a complete list of
Employee Plans that cover employees of the Company or any Subsidiary. True and
complete copies of each of the following documents have been delivered or made
available to Primark by Anderson: (i) each Welfare Plan and Pension Plan (and,
if applicable, related trust agreements) and all amendments thereto, all written
interpretations thereof and written descriptions thereof which have been
distributed to the employees of the Company or its Subsidiaries and all annuity
contracts or other funding instruments pertaining to each Welfare Plan and
Pension Plan, (ii) each Benefit Arrangement including written descriptions
thereof which have been distributed to the Company's employees and a description
of any such Benefit Arrangement which is not in writing, (iii) the most recent
determination letter issued by the Internal Revenue Service with respect to each
Pension Plan, and (iv) for the three most recent plan years, Annual Reports on
Form 5500 Series required to be filed with any governmental agency for each
Pension Plan and Welfare Plan. For purposes of this paragraph (b), Multiemployer
Plans.
- 19 -
21
Pension Plans and Welfare Plans shall only include those plans that cover any
employee, former employee or beneficiary of either of the foregoing, of the
Company or any Subsidiary.
(c) REPRESENTATIONS. Anderson represents as follows:
(i) PENSION PLANS. No Pension Plan is subject to the minimum
funding requirements of Title I of ERISA or SECTION 412 of the Code or Title IV
of ERISA. Each Pension Plan, each related trust agreement, annuity contract or
other funding instrument is qualified and tax-exempt under the provisions of
Code SECTION 401(a) (or 403(a), as appropriate) and 501(a) and has been so
qualified during the period from its adoption to date. No lien imposed under the
Code or ERISA exists or is likely to exist on account of any Pension Plan.
(ii) EMPLOYEE PLANS. Except as set forth in Schedule 4.16, no
Employee Plan provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former employees
of the Company after retirement or other termination of service (other than (i)
coverage mandated by applicable law including, without limitation, health
benefit continuation rights under federal and state law, (ii) death benefits or
retirement benefits under any "employee pension plan," as that term is defined
in SECTION 3(2) of ERISA, (iii) deferred compensation benefits accrued as
liabilities on the books of the Companies or the ERISA Affiliates, or (iv)
benefits, the full cost of which is borne by the current or former employee (or
his or her beneficiary)). No amounts payable under the Employee Plans or any
other agreement or arrangement to which the Company or any Subsidiary is a party
will, as a result of the transaction contemplated hereby, fail to be deductible
for federal income tax purposes by virtue of SECTION 280G of the Code.
(iii) MULTIEMPLOYER PLANS. Neither the Company nor any ERISA
Affiliate contributes to, or within the past six years has been obligated to
contribute to, any Multiemployer Plan.
(iv) COMPLIANCE WITH LAW. Each Welfare Plan which is a "group
health plan," as defined in SECTION 607(1) of ERISA, has been operated, in all
material respects, in compliance with provisions of Part 6 of Title I of ERISA
and Section 4980B of the Code at all times.
(v) BENEFIT ARRANGEMENTS. Each Benefit Arrangement which covers
employees of the Company has been maintained, in all material respects, in
compliance with its terms and, in all material respects, with the applicable
requirements of the Code or ERISA.
(vi) FIDUCIARY DUTIES AND PROHIBITED TRANSACTIONS. To the
knowledge of Anderson, neither the Company nor any plan fiduciary of any Welfare
Plan or Pension Plan which covers or has covered employees or former employees
of the Company or any ERISA Affiliate, has engaged in any transaction in
violation of
- 20 -
22
Sections 404 or 406 of ERISA or any "prohibited transaction," as defined in
Section 4975 of the Code, for which no exemption exists under Section 408 of
ERISA or Section 4975(c)(2) or (d) of the Code.
(vii) NO LIABILITY. To the knowledge of Anderson, neither the
Company nor any Subsidiary has taken any action, nor has any event occurred,
that has resulted or will likely result in liability under Title IV of ERISA,
including, but not limited to, withdrawal liability with respect to any
Multiemployer Plan, which liability will become a liability of Primark. All
Employee Plans are fully paid up or fully funded or adequate provision for all
liabilities or obligations of the Company or any Subsidiary in respect of or
relating to any period or portion thereof on or before December 31, 1995 have
been made in the Financial Statements.
4.17 TRANSACTIONS WITH CERTAIN PERSONS. Except as set forth in Schedule
4.17, neither Anderson nor any officer, director or employee of the Company or
any Subsidiary nor, to the knowledge of Anderson, any company of which such
Person is an officer, director or employee, nor, to the knowledge of Anderson,
any member of any such Person's immediate family, is a party to any transaction
with the Company or any Subsidiary, including without limitation, any contract
(a) providing for the furnishing of services by any such Person or company, (b)
providing for the rental of real or personal property from any such Person or
company, or (c) otherwise requiring payments (other than for services as a
director, officer or employee) to any such Person or company.
4.18 TAX MATTERS.
(a) FILING. As of the time of Closing, the Company and each of the
Subsidiaries has filed or caused to be filed, within the times (including
permitted extensions) and within the manner prescribed by law, all federal,
state, local and foreign Tax Returns which are required to be filed by, or with
respect to, the Company and the Subsidiaries, and their assets, income or
operations. Such Tax Returns reflect accurately in all material respects all
liability for Taxes of the Company and the Subsidiaries for the periods,
operations or transactions covered thereby. Anderson has heretofore furnished to
Primark true and complete copies of all federal and state income Tax Returns
filed by or with respect to the Company and the Subsidiaries or with respect to
the income or operations of the Company and the Subsidiaries for the years
ending on and after September 30, 1994. All Taxes shown on the Tax Returns to be
due from the Company and any of the Subsidiaries have been fully and timely
paid. No examination (other than any purely internal governmental examination of
which Anderson cannot be aware) of any Tax Return of the Company or any of the
Subsidiaries is currently in progress, and neither the Company nor any of the
Subsidiaries nor Anderson has received notice of any proposed audit or
examination. There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any Tax Return of the Company or
any of the Subsidiaries. No taxing authority has asserted any claim for the
assessment of any additional Tax for which the Company or any of the
Subsidiaries is liable (whether in its own right or as transferee of the assets
of, or as successor to, and
- 21 -
23
person or entity). There are no liens for Taxes (other than for current Taxes
not yet due and payable) on the assets of the Company or any of the
Subsidiaries.
(b) AFFILIATED GROUP/"S" CORPORATION. Except as listed on Schedule
4.18, neither the Company nor any predecessor corporation has been a member of
an affiliated group of corporations for federal income tax purposes. The Company
made a valid election effective as of October 1, 1994 to be treated as an "S"
corporation within the meaning of Section 1361 of the Code, except as set forth
on Schedule 4.18, and any analogous state and local law requirements for
federal, state and local purposes. Such election has been in full force and
effect for all taxable years ending since the date of such election and shall
remain in full force and effect through the taxable year of the Company ending
on the date prior to the Closing Date.
(c) TAX SHARING AGREEMENT/PARACHUTE PAYMENTS. Except as set forth on
Schedule 4.18, beginning with the Company's taxable year ending on December 31,
1995, Anderson and the Company have filed all federal, state, foreign and local
income Tax Returns reporting income and operations of the Company based on the
status of the Company as an "S" corporation within the meaning of Section 1361
of the Code. Except as set forth on Schedule 4.18, no federal, state, local or
foreign income taxes will be payable by the Company with respect to the taxable
year of the Company beginning on January 1, 1996 and ending on the day
immediately preceding the Closing Date. The Company has not consented to the
application of Section 341(f)(2) of the Code (or any comparable state income tax
provision). Neither the Company nor any of the Subsidiaries is a party to any
Tax sharing agreement, Tax indemnity or similar arrangement with any other
Person. Because of the operation of Section 280G(b)(5) of the Code, neither the
Company nor any of the Subsidiaries is a party to any agreement, contract,
arrangement or plan that has resulted or could result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code.
(d) SHORT-PERIOD RETURN. The Company and Anderson will file federal,
state and local income Tax Returns reporting income and operations of the
Company for the period commencing January 1, 1996 and ending on the date prior
to the Closing Date and for the period consisting of the Closing Date. The Tax
Returns for the tax year of the Company for such short taxable year shall be
prepared by Anderson at Anderson's expense. Anderson shall deliver copies of
such Tax Returns to Primark. The Chief Financial Officer of the Company may sign
and file such returns on behalf of the company. Anderson agrees to include his
share of the Company' s income, loss, deduction or credit items for such short
taxable year in his income. Without limiting the generality of the foregoing,
Anderson will execute such consents and other documents as may be necessary or
appropriate in order to effect the foregoing under the Code and the regulations
thereunder and under the laws of any relevant state or local jurisdiction. To
the extent permissable under the Code and related regulations, Primark and
Anderson agree to report income of the Company for the short period "S" year
ending on the date prior to the Closing Date and for the period consisting of
the Closing Date on a pro rata
- 22 -
24
basis pursuant to SECTION 1362(e)(2) of the Code. For the purposes of this
allocation, Primark agrees that it will cause the Company to join Primark's
consolidated group as of the date immediately following the Closing Date.
(e) WITHHOLDING TAXES. The Company and the Subsidiaries have complied
(and until the Closing Date will comply) with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes (including, without
limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of the
Internal Revenue Code ("the Code") or similar provisions under foreign laws) and
have, within the time and in the manner prescribed by law, withheld from
employee wages and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under all applicable laws.
(f) EXTENSION REQUEST. Except as listed on Schedule 4.18, neither the
Company nor any of the Subsidiaries has requested any extension of time within
which to file any Tax Return, which Tax Return has not since been filed.
(g) POWER OF ATTORNEY. Except for powers of attorney granted to the
Company's accountant, Steven R. Gallant, no power of attorney has been granted
by the Company or any of the Subsidiaries with respect to any matter relating to
Taxes which is currently in force.
(h) SECTION 168. No property of the Company or any of the
Subsidiaries is property that the Company, any of the Subsidiaries is or will be
required to treat as being owned by another person pursuant to the provisions of
Section 168(f)(8) of the Code (as in effect prior to amendment by Tax Reform Act
of 1986) or is "tax exempt use property" within the meaning of Section 168 of
the Code.
(i) CHANGE IN ACCOUNTING METHOD. Neither the Company nor any of the
Subsidiaries is required to include in income any adjustments pursuant to
Section 481(a) of the Code by reason of a voluntary change in accounting method
initiated by the Company or any of the Subsidiaries and the Company and the
Subsidiaries do not have knowledge that the Internal Revenue Service has
proposed any such adjustment or change in accounting method.
(j) U.S. REAL PROPERTY HOLDING COMPANY. The Company and the
Subsidiaries are not and have not been United States real property holding
companies (as defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code.
(k) SUBSTANTIAL UNDERSTATEMENT. All transactions which could give
rise to a "substantial understatement" of Federal Income Tax (within the meaning
of former Section 6661 of the Code or Section 6662 of the Code) were adequately
disclosed (or, with respect to Tax Returns filed before the Closing Date will be
adequately disclosed) on the Tax Returns as required by such Sections of the
Code.
- 23 -
25
4.19 INSURANCE.
(a) Schedule 4.19 sets forth (i) a complete and accurate list of the
policies of insurance presently in force with respect to the Company and the
Subsidiaries, including, without limiting the generality of the foregoing, those
covering public liability, and their respective businesses, assets or
operations, specifying with respect to each such policy the name of the insurer,
policy number, term of policy, and limits of liability, and (ii) any outstanding
insurance claims in excess of $5,000 with respect thereto, which have been
referenced to insurers or which are covered by commercial insurance.
(b) The insurance policies set forth in Schedule 4.19 are in full
force and effect, all premiums with respect thereto covering all periods up to
and including the Closing Date have been paid, and no notice of cancellation or
termination has been received with respect to any such policy. Such policies are
sufficient for compliance with all requirements of law. Neither the Company nor
any Subsidiary has been refused any insurance with respect to their business,
respective assets or operations nor has any such insurance coverage been limited
by any insurance carrier to which the Company or any Subsidiary has applied for
any such coverage or with which the Company or any Subsidiary has carried
insurance during the past three (3) years.
(c) For the past three years, the Company and each Subsidiary has
been continuously insured against third party liability and loss or damage to
property and assets in types and amounts customarily carried by like businesses.
4.20 LABOR MATTERS. There are no strikes or work stoppages pending or, to
the knowledge or Anderson, threatened between the Company or any Subsidiary and
any of its respective employees. The Company and each Subsidiary materially
complies with all laws and regulations relating to the employment of labor
including (without limitation) provisions relating to wages, hours, collective
bargaining, occupational safety and health, equal employment opportunity, and
the withholding of income taxes and social security contributions. Neither the
Company nor any Subsidiary has a labor union or are parties to any collective
bargaining agreements or similar agreements with any labor unions and no union
organized campaign (by any union or group of employees) is in progress (or has
been undertaken within the past two years) with respect to the employees of the
Company or any Subsidiary. All payments, fines, or assessments incurred within
the last one year due to any Governmental Entity pursuant to any applicable
foreign, federal, state or local law, common law, statute, rule or regulation
with respect to the employment, discharge or layoff of employees have been paid
by the Company or one of its Subsidiaries and, except as set forth in Schedule
4.20, on the date hereof there is no claim pending against the Company or any
Subsidiary with respect to wrongful discharge or, other wrongful act with
respect to the employment or termination of any employee. Schedule 4.20 lists
all outstanding loans or advances extended by the Company or any Subsidiary to
any employee or director and existing on the date hereof.
- 24 -
26
4.21 PERMITS. The Company and its Subsidiaries have such permits,
licenses, certifications, approvals, orders, franchises and authorizations of
Governmental Entities, including without limitation self-regulatory bodies
("Permits") as are necessary to use its respective properties and to conduct its
business as currently conducted except for the failure to obtain those Permits
that would not result in an expense, obligation, damage or liability to the
Company or any Subsidiary in excess of $20,000; the Company and each Subsidiary
have fulfilled and performed all material obligations with respect to such
Permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such Permit; and none of such
Permits contains any restriction that is materially burdensome to the Company or
any Subsidiary. Anderson has delivered to Primark documentation relating to all
material Permits obtained since January 1, 1994 by the Company or any
Subsidiary.
4.22 POWERS OF ATTORNEY. Except for those referred to in SECTION 4.18(g),
there are no outstanding powers of attorney executed on behalf of the Company or
Anderson relating to the business of the Company or its Subsidiaries.
4.23 INTERCOMPANY SERVICES AND TRANSACTIONS. Schedule 4.23 contains a
complete and accurate list of all agreements or arrangements relating to all
intercompany services and transactions currently existing by and between the
Company and any of its Subsidiaries, including a description of the financial
terms of such transactions. All intercompany services or transactions provided
thereunder have been carried out in accordance with applicable law and consents
and notice filings for such services or transactions have been obtained or made,
as applicable. Anderson has provided Primark with copies of all agreements
listed in Schedule 4.23.
4.24 COMPUTER PROGRAMS.
(a) Schedule 4.24 (i) lists all of the Computer Programs (except
off-the-shelf software programs) which are owned, licensed, leased or otherwise
used by the Company or any Subsidiary in connection with the operation of their
businesses as currently or planned to be conducted; (ii) identifies which is
owned, licensed, leased, or otherwise used, as the case may be, and by which
entity; and (iii) identifies all agreements relating to such licensing or
leasing, the parties thereto and the date thereof.
(b) The components of each Computer Program used in or necessary for
the conduct of the business of the Company and its Subsidiary as currently
conducted (including without limitation the data, articles and other content
included therein) are (i) owned by the Company or a Subsidiary, or (ii)
currently in the public domain or otherwise available to the Company or a
Subsidiary without the approval or consent of any third party, or (iii) included
in such database or computer program or system pursuant to rights granted to the
Company or a Subsidiary so including the same pursuant to a written license or
lease from a third party.
- 25 -
27
(c) Anderson and the Company and its Subsidiaries, with respect to
all Computer Programs owned by the Company or a Subsidiary, and the contents
thereof have taken or caused to be taken all reasonable steps to obtain and
retain valid and enforceable intellectual property rights therein. Anderson and
the Company and its Subsidiaries have taken all security measures necessary to
protect the secrecy, confidentiality and value of all trade secrets, know-how
and other confidential information material to the conduct of the business of
the Company and its Subsidiaries, and all persons who have been provided with
knowledge of or access to the same have been put on notice of the proprietary
nature of such confidential interest, and have entered into agreements adequate
to protect the respective Company's or Subsidiary's interest therein.
(d) The Computer Programs owned by the Company or a Subsidiary or
otherwise used in or necessary for the conduct of the business of the Company or
a Subsidiary as currently or planned to be conducted function in all material
respects in accordance with the specifications therefor published by the Company
or any Subsidiary. The Computer Programs provide all of the functionality,
features and content described in any user manuals, technical manuals, and any
other documentation related thereto published by the Company or any Subsidiary
or in any advertisements or other materials therefor made available to the
customers of the Company or any Subsidiary. The Company routinely takes steps to
detect and prevent viruses and to Anderson's knowledge, the Company has taken
commercially reasonable steps to detect and prevent any "back door," "time
bomb," "Trojan horse," "worm," "drop dead device," "virus" (as these terms
commonly are used in the computer software industry), other software routines or
hardware components designed to permit unauthorized access, to disable or erase
software, hardware, or data, or to perform any other similar functions.
(e) "COMPUTER PROGRAMS" means (i) any and all computer programs
(consisting of sets of statements or instructions to be used directly or
indirectly in a computer), and (ii) all associated data and compilations of
data. "Computer Programs" shall include, without limitation, all versions
thereof, all screen displays and designs thereof, all component modules of
source code or object code, all descriptions, flow charts and other work product
used to design, plan, organize and develop any of the foregoing, and all
documentation, including, without limitation, user manuals and training
materials, relating to any of the foregoing. Notwithstanding anything herein to
the contrary, "Computer Programs" shall not include off-the-shelf computer
programs.
4.25 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 4.25 and
except for any noncompliance which would not result in an expense, obligation,
damage or liability to the Company or a Subsidiary in excess of $20,000:
(a) All permits, licenses and other authorizations which are required
under the Environmental Laws as of the date hereof for the operation of each
property leased or occupied by the Company or any Subsidiary which are required
to be obtained or applied for by the Company or any Subsidiary, have been
obtained or applied for;
- 26 -
28
(b) Neither the Company nor any Subsidiary as of the date hereof has
failed to comply with any Environmental Laws;
(c) Neither the Company nor any Subsidiary, and to Anderson's
knowledge, no other Person, has Released on the Properties of the Company and
its Subsidiaries and neither the Company nor any Subsidiary, and to Anderson's
knowledge, no other Person, has placed, stored, buried or dumped any Hazardous
Substances on, beneath or adjacent to the Properties (in each case in violation
of applicable Environmental Laws) except for inventories of such substances to
be used, and wastes generated therefrom, in the ordinary course of business
(which inventories and wastes, if any, were and are stored or disposed of in
substantial compliance with applicable laws and regulations and in a manner such
that there has been no Release of any such substance into the indoor or outdoor
environment);
(d) Neither the Company nor any Subsidiary has received any notice
(written or oral) or order from any Governmental Entity or private or public
entity advising it that it is responsible for or potentially responsible for
Cleanup or remediation of any Hazardous Substances and neither the Company nor
any Subsidiary has entered into any agreements concerning such Cleanup;
(e) There is no Environmental Claim pending or, to Anderson's
knowledge, threatened against the Company or any Subsidiary or, to the knowledge
of Anderson, against any other Person or entity whose liability for any
Environmental Claim that the Company or any Subsidiary has or may have retained
or assumed either contractually or by operation of law;
(f) There are no past or present (or to the knowledge of the
Anderson, future) actions, activities, circumstances, conditions, events or
incidents (including, without limitation, the release, emission, discharge,
presence or disposal of any Hazardous Substance) which would form the basis of
any Environmental Claim against the Company or any Subsidiary, or, to the
knowledge of Anderson, against any other Person or entity whose liability for
any Environmental Claim that the Company or any Subsidiary has or may have
retained or assumed either contractually or by operation of law;
(g) Anderson has delivered or otherwise made available for inspection
to Primark true, complete and correct copies and results of any reports,
studies, analyses, tests or monitoring possessed or initiated by Anderson or the
Company or any Subsidiary pertaining to Hazardous Substances in, on, beneath or
adjacent to the Properties or regarding the Company's or any Subsidiary's
compliance with applicable Environmental Laws; and
(h) No transfers of permits or other governmental authorizations
under Environmental Laws, and no additional permits or other governmental
authorizations under Environmental Laws, will be required to permit Primark to
conduct the business of the Company and its Subsidiaries in full compliance with
all applicable Environmental Laws
- 27 -
29
immediately following the Closing, as conducted by the Company and its
Subsidiaries immediately prior to the Closing. To the extent that such transfers
or additional permits and other governmental authorizations are required,
Anderson and the Company agree to cooperate with Primark to effect such
transfers and obtain such permits and other governmental authorizations prior to
the Closing.
4.26 NO SECURITY INTERESTS. Except as set forth in Schedule 4.26, neither
the Company nor any Subsidiary has granted to any third parties any pledge,
lien, mortgage, assignment, other security interest or encumbrance in any of its
assets (whether tangible or intangible) or businesses.
4.27 RECEIVABLES. All receivables owing to the Company or any of the
Subsidiaries since December 31, 1995 have arisen in the ordinary course of
business of the Company and the Subsidiaries, and are (to Anderson's knowledge)
legal, valid and binding obligations.
4.28 CUSTOMER RELATIONS. No single supplier or customer is materially
important to the business of the Company or any Subsidiary. As of the date
thereof, Anderson has no knowledge or reason to believe that any current
substantial customer, supplier, licensor or agent of the Company or any
Subsidiary would substantially reduce trade or materially change its
relationship with the Company or any Subsidiary.
4.29 NO CLAIMS. Except as disclosed in Schedule 4.29 and except for the
payment of normal pay and benefits, on the Closing Date, neither Anderson nor
any Affiliate, officer or director of the Company will have any claim,
contingent or otherwise, against the Company or any Subsidiary or any officer or
director thereof, including in connection with the transactions contemplated in
this Agreement.
4.30 PURCHASE FOR INVESTMENT. With respect to any shares of common stock,
without par value, of Primark that Anderson may receive pursuant to the terms of
this Agreement, Anderson represents that he will acquire such Primark Shares for
investment for his own account and not with a view to, or for sale in connection
with, any distribution thereof, and that he will not resell, pledge, assign or
otherwise dispose of such Primark Shares unless they are subsequently registered
under the Securities Act of 1933, as amended and applicable securities laws of
certain states or an exemption from such registration is available. Anderson
further represents that (i) he (either alone or together with his advisors) has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of any investment in the Primark
Shares and is capable of bearing the economic risks of any such investment, and
(ii) no commission or other remuneration was paid, directly or indirectly, for
soliciting any investment in the Primark Shares, other than fees payable to
Alex. Brown & Co. in connection with the transactions contemplated by this
Agreement.
4.31 MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or warranty by
Anderson in this Agreement contains any untrue statement of material fact, or
omits to
- 28 -
30
state any material fact necessary to make the statements or facts contained
therein, in light of the circumstances under which they were made, not
misleading.
5. CONDUCT OF BUSINESS PENDING THE CLOSING
Anderson covenants and agrees that, from the date hereof to the Closing
Date, unless Primark shall otherwise agree in writing or as otherwise expressly
contemplated by this Agreement:
(a) The business of the Company and its Subsidiaries shall be conducted
only in the ordinary course of business and consistent with past practices, and
Anderson shall use his best efforts to (i) maintain and preserve intact the
respective assets, Properties, business organizations and goodwill of the
Company and its Subsidiaries, (ii) keep available the services of the respective
officers and employees of the Company and its Subsidiaries, and (iii) maintain
and preserve satisfactory relationships with suppliers, distributors, customers,
banks and others having business relationships with the Company or any of its
Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries shall directly or
indirectly do or omit to do anything which would cause any of the
representations in SECTION 4.8 to be or become untrue.
(c) Neither the Company nor any of its Subsidiaries shall take any action
with respect to the grant of any severance or termination pay (otherwise than
pursuant to written agreements of the Company or any of its Subsidiaries in
effect on the date hereof) or with respect to any increase of benefits payable
under its severance or termination pay written agreements in effect on the date
hereof.
(d) Neither the Company nor any of its Subsidiaries shall adopt or amend
any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan, agreement,
trust, fund or other arrangement for the benefit or welfare of any employee or
increase in any manner the compensation or fringe benefits of any employee or
pay any benefit not required by any existing written plan, arrangement or
agreement.
(e) Neither the Company nor any of its Subsidiaries has made or will make
any Tax Election that would increase Taxes for the Company or the Subsidiaries
after the Closing Date or has or will settle or compromise any federal, state,
local or foreign income Tax liability in a manner that would increase Taxes for
the Company or the Subsidiaries after the Closing Date.
(f) The Company shall not (i) permit or allow any of the properties or
assets of the Company or any Subsidiary to be mortgaged, pledged, or subjected
to any Encumbrance; (ii) sell or dispose of any properties or assets of the
Company or any Subsidiary (including any assets constituting or relating to
intellectual property) except in
- 29 -
31
the ordinary course of business; (iii) borrow any money or incur or guarantee
any debt for borrowed money which would be reflected on the Balance Sheet as
debt; (iv) increase in any manner the compensation of any of its Subsidiaries'
directors, officers or other employees, or (v) make any change in any of the
Company's present accounting methods and practices except as required by changes
in GAAP.
(g) The Company shall not (i) issue or sell any shares of the Company's
capital stock or issue or sell any securities convertible into, or options with
respect to, or warrants to purchase or rights to subscribe to, any shares of the
Company's capital stock; (ii) effect any recapitalization, reclassification,
stock dividend, stock split, reverse stock split or like change in
capitalization of the Company; (iii) redeem, purchase or otherwise acquire any
of its capital stock; or (d) amend the Certificate of Incorporation, By-Laws, or
other charter documents of the Company or any Subsidiary. Nothing herein shall
preclude the Company from purchasing Anderson's interest in the outstanding
capital stock of any Subsidiary.
(h) Neither the Company nor any Subsidiary shall (i) make any loans,
advances (other than advances to employees for travel and entertainment in the
ordinary course of business and consistent with past practice) or capital
contributions to, or investments in, any other Person in excess of $5,000 or
(ii) increase the amounts available for borrowing under existing lines of
credit.
(i) Neither the Company nor any Subsidiary shall:
(i) Terminate (except by its terms) or amend any Contract to which it
is a party, except in the ordinary course of business;
(ii) Cancel any existing insurance policies covering the businesses,
properties or assets of the Company or its Subsidiaries; or
(iii) Execute any waiver or release of, or otherwise waive or release
any rights, or execute any cancellation, compromise, release, or assignment of,
any material indebtedness owed to or claims held by the Company or any
Subsidiary.
(j) The Company and its Subsidiaries shall maintain all their material
structures, equipment, and other tangible personal property currently in use in
good operating condition and repair, except for ordinary wear and tear,
PROVIDED, HOWEVER, that this covenant shall not require the Company or any
Subsidiary to repair any structure, equipment or personal property if not
permitted to do so by the lessor or landlord thereof.
(k) The Company will promptly notify Primark in writing of (i) any material
adverse change in the business, operations, results of operations or financial
condition of the Company or its Subsidiaries and (ii) all claims, actions, suits
or proceedings asserted or instituted against or affecting the assets of the
Company or its Subsidiaries.
- 30 -
32
6. ADDITIONAL AGREEMENTS
6.1 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, and to
cooperate with each other in connection with the foregoing (a) to obtain all
necessary waivers, consents and approvals from other parties to material loan
agreements, leases and other contracts, (b) to obtain all necessary consents,
approvals and authorizations as are required to be obtained under any federal,
state or foreign law or regulations, (c) to defend all lawsuits or other legal
proceedings challenging this Agreement, or the consummation of the transactions
contemplated hereby, and thereby, (d) to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby, (e) to effect all necessary
registrations and filings, including, but not limited to, filings under the
Hart-Scott-Rodino Act, and submissions of information requested by Governmental
Entities; and (f) to fulfill all conditions to this Agreement.
6.2 NO SOLICITATION OF TRANSACTIONS. From the date hereof through the
Closing Date, Anderson will not, nor will he permit the Company or any of its
Subsidiaries to directly or indirectly, solicit, initiate or continue any
discussions or negotiations with, or encourage or respond to any inquiries or
proposals by, or participate in any negotiations with, or provide any
information to, or otherwise cooperate in any other way with, any person or
entity or group of persons or entities (other than Primark and its
Representatives) relating to any acquisition or purchase of any assets of, or
any equity interest in, the Company or any merger, consolidation or business
combination with the Company.
6.3 ACCESS TO INFORMATION. Anderson shall, and shall cause the Company's
Representatives to afford Primark's Representatives complete access at all
reasonable times to the properties, Books and Records of the Company and its
Subsidiaries.
6.4 (Intentionally Omitted)
6.5 PROTECTIVE PROVISIONS. From and after the Closing Date and until the
third anniversary of the Contingent Payment Initiation Date (as defined in the
Class B Stock Purchase Agreement) Primark shall:
(a) not cause or permit the Company to (i) sell all or substantially
all of its assets, or (ii) merge or consolidate with any other Person, or (iii)
liquidate or dissolve, or (iv) purchase all or substantially all of the assets
or capital stock of any Person;
(b) not, and shall cause any Affiliate of Primark not to, compete
anywhere in the world with any business conducted by the Company on the date
hereof;
- 31 -
33
(c) cause all transactions between Primark and Affiliates of Primark,
on the one hand, and the Company, on the other hand, to be conducted on an arm's
length basis on terms and conditions at least as favorable to the Company as the
Company could obtain from Persons who were not Primark or Affiliates of Primark;
(d) permit Anderson and the agents, attorneys and accountants for
Anderson to have reasonable access to all books and records of the Company;
(e) cause the Company to maintain accounting books and records which
will provide the information necessary for the calculation of EBTDA from the
Closing Date until the completion of three twelve month periods following the
Contingent Payment Initiation Date (as defined in the Class B Stock Purchase
Agreement);
(f) subject to Anderson's resignation, death or disability and to the
terms of the Employment Agreement, cause Anderson to be the president, chief
executive officer and a director of the Company, and shall cause Anderson to be
so elected and, subject to the ultimate control and responsibility of the
Company's Board of Directors and Primark and subject to Company's and Anderson's
compliance with the procedures, policies and limitations on authority of Primark
then in effect, Anderson shall have the right to manage the business and affairs
of the Company and direct the formulation and execution of both short-term and
long-term corporate plans, including, without limitation, the hiring, retention
or termination of employees, the setting of compensation and fringe benefits
consistent with the practices and levels established in the most recent prior
periods (other than with respect to Anderson), and the making of capital
expenditures at levels consistent with the levels expensed by the Company in the
most recent prior periods;
(g) cooperate with Anderson in maintaining and increasing the
Company's revenues and profitability, but this Agreement shall not be construed
as a commitment on the part of Primark to invest in or make available to the
Company any particular amount of additional capital, or to incur any particular
expense or obligation on behalf of the Company, whether or not Primark is to be
reimbursed by the Company for such expense or obligation; and
(h) Anderson acknowledges that neither Primark nor the Company's board
of directors shall have any affirmative obligation whatsoever to operate or
cause the operation of the Company during the three year period following the
Contingent Payment Initiation Date (as defined in the Class B Stock Purchase
Agreement) in a manner designed to maximize such contingent payments to
Anderson, but rather to operate or cause the operation of the business in the
best long-term interests of the Company, as determined by its board of directors
acting in good faith and in accordance with its fiduciary duties under
applicable law.
- 32 -
34
6.6 DEATH OF ANDERSON. In the event of the death of Anderson, no amounts
due under SECTION 2.1 of this Agreement will be forfeited. Anderson may, at any
time from time to time, file with Primark a notice designating the beneficiary
or beneficiaries who are to receive any amounts payable pursuant to SECTION 2.1
of this Agreement after Anderson's death. No designation shall be valid until
Primark has acknowledged in writing its receipt of the designation. Primark
shall have no responsibility with respect to the validity of any beneficiary
designation made by Anderson, and Primark shall be fully protected in acting
thereon in good faith. If there is no valid beneficiary designation in effect at
Anderson's death, any amounts then or thereafter due and payable to Anderson
shall be paid to the personal representative of Anderson's estate.
6.7 DISCLOSURE. Any disclosure made by Anderson in this Agreement or in
any Schedule hereto shall be deemed to constitute a disclosure for purposes of
all other Sections and Schedules of this Agreement regardless of whether any
cross reference is indicated in such Section or Schedule; provided, however,
that Anderson hereby represents to Primark that as of the date hereof he is not
aware of any such disclosure applicable to a Section or Schedule that is not
specifically referenced or cross-referenced to such Section or Schedule.
7. CONDITIONS TO ANDERSON'S OBLIGATIONS. The obligations of Anderson to
consummate the transactions provided for hereby are subject, in the discretion
of Anderson, to the satisfaction, on or prior to the Closing Date, of each of
the following conditions, any of which may be waived by Anderson:
7.1 REPRESENTATIONS. WARRANTIES AND COVENANTS. All representations and
warranties of Primark contained in each Ancillary Agreement to which Primark is
a party shall be true and correct in all material respects at and as of the date
thereof and at and as of the Closing Date, except as and to the extent that the
facts and conditions upon which such representations and warranties are based
are expressly required or permitted to be changed by the terms hereof, and
Primark shall have performed and satisfied in all material respects all
agreements and covenants required thereby to be performed by it prior to or on
the Closing Date.
7.2 CONSENTS. All material permits and waivers necessary to the
consummation by Primark of the transactions contemplated hereby (including,
without limitation, all required third party consents) as set forth on Schedule
7.2 shall have been obtained.
7.3 NO PROCEEDINGS, LITIGATION OR LAWS. No preliminary or permanent
injunction of any Governmental Entity shall be in effect on the Closing Date
directing that the transactions contemplated hereby, or any of them, not be
consummated (each an "Order").
7.4 OPINION OF COUNSEL. Primark shall have delivered to Anderson an
opinion of Michael R. Kargula, counsel to Primark, dated as of the Closing Date,
in form and
- 33 -
35
substance reasonably satisfactory to Anderson, to the effect set forth in
EXHIBIT C.
7.5 CERTIFICATES. Primark shall furnish Anderson with such certificates of
its officers and others to evidence compliance with the conditions set forth in
SECTION 7.1 hereof as may be reasonably requested by Anderson.
7.6 CORPORATE DOCUMENTS. Anderson shall have received from Primark
resolutions adopted by its board of directors approving each Ancillary Agreement
to which Primark is a party and the transactions contemplated thereby, certified
by the Primark's corporate secretary.
7.7 OTHER DOCUMENTS. Primark shall have executed and delivered to Anderson
the Ancillary Documents to which it is a party, including, without limitation,
the lease indemnification letter set forth as SCHEDULE 7.7 hereto.
7.8 HART-SCOTT-RODINO. Any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act")
relating to the transactions contemplated hereby shall have expired or been
terminated.
8. CONDITIONS TO PRIMARK'S OBLIGATIONS. The obligations of Primark to
consummate the transactions provided for hereby are subject, in the discretion
of Primark, to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by Primark:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of Anderson contained in this Agreement shall be true and correct in
all material respects at and as of the date of this Agreement and at and as of
the Closing Date, except as and to the extent that the facts and conditions upon
which such representations and warranties are based are expressly required or
permitted to be changed by the terms hereof, and Anderson shall have performed
and satisfied in all material respects all agreements and covenants required
hereby to be performed by him prior to or on the Closing Date.
8.2 CONSENTS. All permits and waivers necessary to the execution and
delivery of this Agreement and the consummation by Anderson of the transactions
contemplated hereby (including, without limitation, all required third party
consents) as set forth on Schedule 8.2 shall have been obtained.
8.3 NO PROCEEDINGS OR LITIGATION. No Order shall be in effect.
8.4 OPINION OF COUNSEL. Anderson shall have delivered to Primark an
opinion of Edwards & Angel, counsel to Anderson, dated as of the Closing Date,
in the form and substance reasonably satisfactory to Primark, to the effect set
forth in EXHIBIT D.
8.5 CERTIFICATES. Anderson shall furnish Primark with such certificates to
~ 34 -
36
evidence compliance with the conditions set forth in SECTION 8.1 as may be
reasonably requested by Primark.
8.6 OTHER AGREEMENTS. Anderson and the Company shall have executed and
delivered to Primark the Ancillary Agreements to which they are a party.
8.7 HART-SCOTT-RODINO. Any applicable waiting period under the HSR Act
relating to the transactions contemplated hereby shall have expired or been
terminated.
8.8 OTHER APPROVALS. All other regulatory consents, approvals or
clearances necessary for the consummation of the transactions contemplated
hereby shall have been obtained, and no provision of any applicable law or
regulation shall prohibit such transactions. Certificates of good standing for
the Company shall be provided to Primark.
8.9 EMPLOYMENT AGREEMENTS. Employment agreements shall be executed by the
nine employees listed on Schedule 1.1(b) and such agreements shall be in the
form of Exhibit E attached hereto.
8.10 STOCK PURCHASE AGREEMENTS. Each of the Class B Stock Purchase
Agreement and the Class C Stock Purchase Agreement shall have been duly executed
and delivered to Primark. Each of the conditions set forth in the Class B Stock
Purchase Agreement and the Class C Stock Purchase Agreement shall have been
satisfied or waived.
9. PRIMARK STOCK OPTIONS. Primark agrees to grant as of the Closing Date, to
the employees listed on Schedule 2.4 of this Agreement in the amount set forth
opposite such employees name under the caption "Primark Options," stock
option(s) covering an aggregate of 40,000 shares of Primark common stock. Any
such option would be granted under the Primark Corporation 1992 Stock Option
Plan and would vest in three equal annual installments.
10. ACTIONS AFTER THE CLOSING
10.1 BOOKS AND RECORDS. Each party agrees that it will cooperate with and
make available to the other party, during normal business hours, all Books and
Records and information (without substantial disruption of employment) retained
and remaining in existence after the Closing which are necessary or useful in
connection with the preparation of any tax return or financial statement, any
tax inquiry, audit, investigation or dispute, any litigation or investigation or
any other matter requiring any such Books and Records or information for any
reasonable business purpose. The party requesting any such Books and Records or
information shall bear all of the out-of-pocket costs and expenses (including
without limitation attorneys' fees) reasonably incurred in connection with
providing such Books and Records or information.
10.2 SURVIVAL OF REPRESENTATIONS ETC. All statements contained in the
Disclosure Schedule or in any certificate, schedule, exhibit or instrument
delivered by or
- 35 -
37
on behalf of the parties pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by the party delivering such Disclosure Schedule, certificate,
schedule, exhibit or instrument. The representations, warranties, covenants and
agreements of Anderson and Primark contained herein shall survive the
consummation of the transactions contemplated hereby and the Closing Date.
Except as provided in this sentence, all such representations and warranties and
all claims and causes of action with respect thereto (other than the provisions
of SECTION 4.18, SECTION 10.3 and this SECTION 10.2, and all claims and causes
of action with respect thereto) shall survive until the expiration of the
two-year anniversary of the Closing Date; PROVIDED, HOWEVER, that the
representations, warranties and covenants in SECTION 4.18 and SECTION 10.3 shall
survive until the expiration of the applicable statute of limitations (with
extensions). Notwithstanding anything set forth herein to the contrary, the
covenants and agreements of the parties hereunder shall not terminate on the
second anniversary of the Closing Date. The termination of the representations
and warranties provided herein shall not affect the rights of a party in respect
of any Claim made by such party in a writing received by the other party prior
to the expiration of the applicable survival period provided herein.
10.3 TAX COVENANTS AND AGREEMENTS.
(a) GENERAL INTENTION OF PARTIES. In general, subject to the specific
provisions contained in this Agreement, it is the intention of the parties
hereto that Anderson will pay, or cause to be paid, all federal, state, local
and foreign taxes based on income or gross receipts including excise and
franchise taxes based on income or gross receipts (specifically including
Massachusetts Corporate Excise Tax) with respect to taxable periods that are
Pre-Closing Periods or Pre-Closing Partial Periods and that Primark will pay,
and will cause to be paid, all Taxes with respect to taxable periods that are
Post-Closing Periods or Post-Closing Partial Periods. For the period beginning
January 1, 1996 and ending on the date prior to the Closing Date and for the
period consisting of the Closing Date, income taxes will be computed on a pro
rata basis as provided for in Section 1362(e)(2) of the Code and Section 4.18(d)
of this Agreement. Further, any Tax that arises as a result of the transactions
contemplated by this Agreement shall be borne by Anderson.
(b) TAX RETURNS. Anderson shall prepare and file, or cause to be
prepared and filed, on a timely basis, all federal, state, local and foreign Tax
Returns based on income or gross receipts including excise and franchise Tax
Returns based on income or gross receipts (specifically including Massachusetts
Corporate Excise Tax Return) of the Company and the Subsidiaries (including any
amendments thereto) with respect to any Pre-Closing Period. Primark shall have
the right to receive any Tax Return (and its supporting documents) that has not
been filed, as of the date of the purchase agreement, within fifteen (15) days
of the filing. Alternatively, at Anderson's request, timely made, the Company
shall, at no cost to Anderson, prepare for Anderson such Tax Returns other than
the U.S. Income Tax Return for an S Corporation, in a timely fashion to allow
Anderson to file such Tax Returns within the time permitted by law.
- 36 -
38
(c) PAYMENT OF TAXES AND PURCHASE PRICE ADJUSTMENT. Anderson shall
pay, or shall cause to be paid, all federal, state, local and foreign taxes
based on income or gross receipts including excise and franchise taxes based on
income or gross receipts (specifically including Massachusetts Corporate Excise
Tax) with respect to the Company or the Subsidiaries, for Pre-Closing Periods,
including any Taxes arising as a result of Treas. Reg. Section 1.1502-6 or any
equivalent provision under state or foreign Tax Law. Primark shall prepare and
file, or shall cause to be prepared and filed, all Tax Returns relating to the
Company and the Subsidiaries, and Primark shall pay, or shall cause to be paid,
all taxes with respect thereto for all taxable periods which do not constitute
Pre-Closing Periods.
(d) STRADDLE/OVERLAP PERIOD. Primark will cause to be prepared and
filed all Tax Returns required to be filed by the Company and its Subsidiaries
for Straddle Periods. Primark will notify Anderson of Primark's calculation of
Anderson's share of the Taxes of the Company and its Subsidiaries for any
Straddle Period (determined in accordance with this paragraph) and provide to
Anderson copies of Tax Returns and such calculations at least 15 days after the
due date for filing such Tax Returns. Primark and Anderson shall attempt to
resolve in good faith any disagreement arising out of any Straddle Period Tax
Return and/or any calculation of Anderson's share of the related Tax Liability;
if any such dispute is not resolved within 20 days after the receipt of the Tax
Return and calculation, the matter shall be resolved in accordance with SECTION
10.3(p) of this Agreement.
No later than five (5) days following receipt of any such Tax Return
and calculation, Anderson shall pay to Primark an amount equal to the taxes
shown on the calculation as being chargeable to Anderson unless Anderson has
disputed such amount. If Anderson has disputed such amount, then Anderson shall
pay to Primark on that date an amount reasonably determined by Anderson as the
proper amount of taxes chargeable to it. Anderson shall pay any additional
amount in order to reflect the decision of the Independent Accounting firm
within five (5) days of the Independent Accounting Firm decision. Interest will
also be paid with respect to any such adjustments at a rate equal to the prime
rate as published in the WALL STREET JOURNAL from the date of the delivery of
the calculation to the date the amount of any adjustment is paid.
(e) COPIES OF RETURNS. In the case of any Straddle Period, Primark
shall provide Anderson copies of the completed Tax Return for such period and a
Statement certifying the amount of Taxes shown on such Tax Return that are
chargeable to Anderson (the "Statement") no later than fifteen (15) days after
the due date for the filing of such Tax Return. Anderson shall have the right to
review such Tax Return and Statement. Anderson and Primark agree to consult and
resolve in good faith any issues arising as a result of the review of such Tax
Returns and Statement. If the parties are unable to resolve any issues in
dispute within five (5) Business Days after the receipt of such Tax Return and
Statement, the parties shall resolve the dispute under SECTION 10.3(p) of this
Agreement.
- 37 -
39
(f) PAYMENT OF TAXES. Anderson and Primark hereby agree that any
amount of taxes paid by Anderson to Primark constitute a reduction in the
Purchase Price of the Shares of the Company to which such payments relate.
(g) NOTICE. Primark shall promptly notify Anderson in writing upon
receipt by Primark or any Affiliate of Primark of notice of (i) any pending or
threatened federal, state, local, or foreign Tax audits or assessments of the
Company or the Subsidiaries related to a Pre-Closing Period, and (ii) any
pending or threatened federal, state, local or foreign Tax audits or assessments
of Primark or any Affiliate of Primark which may affect the Tax liabilities of
the Company and the Subsidiaries, in each case for Pre-Closing periods only.
Anderson shall promptly notify Primark in writing upon receipt by Anderson or
any Affiliate of Anderson of notice of any pending or threatened federal, state,
local or foreign Tax audits or assessments or other written communications
regarding the Company or Subsidiaries. Neither party shall extend or permit to
be extended the statute of limitations for assessment of any Tax for which the
other party would have liability without the consent of such other party (which
consent shall not be unreasonably withheld).
(h) TAX ELECTIONS. Anderson shall 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 the Company or the
Subsidiaries.
(i) U.S. REAL PROPERTY. Anderson shall provide a statement from the
Company and the Subsidiaries in accordance with Treasury Regulations Section
1.1445-2(c), certifying the Company or the Subsidiaries is not a U.S. real
property interest.
(j) CONTROL OF AUDIT. Primark shall have the right to control any
audit or determination by any Taxing authority, to initiate any claim for refund
or file any amended Tax Return, and to contest, resolve and defend against any
assessment, notice of deficiency, or other adjustment or proposed adjustment of
Taxes for any Straddle Periods and Post-Closing Periods. Anderson shall have the
right to control any audit or determination by any Taxing authority, to initiate
any claim for refund or file any amended Tax Return, and to contest, resolve and
defend against any assessment, notice of deficiency, or other adjustment or
proposed adjustment of Taxes for any Pre-Closing Periods.
(k) COOPERATION. Anderson shall cooperate fully, and shall cause the
Subsidiaries to cooperate fully, with Primark in making any Tax Election
permitted under this Agreement, provided, however, such election does not
increase Anderson's income tax liability. Further, each party agrees not to make
a SECTION 338(h)(10) election under the Code.
(1) TAX SETTLEMENTS OR COMPROMISES. Anderson shall not make any Tax
settlements or compromise any income Tax liability or, except as required by law
or
- 38 -
40
applicable accounting standards, change any accounting policies or procedures.
With respect to a Pre-Closing Period, Anderson may make Tax settlements or
compromise income Tax liability provided such settlements or compromises would
not adversely affect the Tax liability of the Company or the Subsidiaries in a
Post-Closing Period. Anderson shall promptly advise Primark of any Tax audit or
Tax adjustment or proposed or threatened Tax audit or Tax adjustment with
respect to the Company or the Subsidiaries, and shall also notify Primark of any
adverse determination by any Governmental Entity with respect to Taxes.
(m) FOREIGN TAXATION. Except as listed on Schedule 4.18, neither the
Company nor any of the Subsidiaries is or has been subject to taxation in any
jurisdiction outside the United States of America.
(n) TRANSFER TAXES. All transfer Taxes including, but not limited to,
all stamp duties and stamp duty reserve taxes incurred in connection with the
transaction contemplated by this Agreement will be borne by Anderson.
(o) TAXING AUTHORITY CORRESPONDENCE. Anderson shall forward within
three (3) days of receipt to Primark all notifications and communications from
any Taxing authority relating to any liability for Taxes of the Company or the
Subsidiaries for any taxable period for which Primark is charged with payment
responsibility.
(p) DISAGREEMENT RESOLUTION. If Anderson or Primark disagree as to
any matters governed by this Section of the Agreement, Anderson and Primark
shall promptly consult with each other in an effort to resolve such dispute. Any
amounts not in dispute shall be paid promptly, and any amount payable upon the
resolution of a dispute shall be made to a bank account designated by the payee
no later than three (3) Business Days after such resolution. If any such
disagreement cannot be resolved within 20 days after Anderson or Primark asserts
in writing that such dispute cannot be resolved, Anderson and Primark shall
jointly select an Independent Accounting Firm that shall be one of the "Big Six"
to act as an arbitrator to resolve this disagreement. The Independent Accounting
Firm's determination shall be final and binding upon the parties, and any fees
and expenses relating to the engagement of the Independent Accounting Firm shall
be paid by the losing party. Upon the resolution of such dispute by the
Independent Accounting Firm, any amounts payable by Anderson shall be made to a
bank account designated by the payee no later than three (3) business days after
such resolution. Interest will be paid with respect to any such amounts at a
rate equal to the prime rate as published in the WALL STREET JOURNAL from the
date of the delivery of the resolution.
10.4 INDEMNIFICATIONS.
(a) BY ANDERSON. Anderson shall indemnify, defend, save and hold
harmless Primark, its affiliates and Representatives, successors and assigns
from and against any and all costs, losses (including, without limitation,
diminution in value), Taxes, liabilities, obligations, damages, lawsuits,
actions, proceedings, assessments, judgments, deficiencies, claims, demands,
expenses (whether or not arising out of third-
- 39 -
41
party claims), including, without limitation, interest, penalties, attorneys'
fees and all reasonable amounts paid in investigation, defense or settlement of
any of the foregoing (herein, "Damages"), incurred in connection with, arising
out of, resulting from or incident to, caused by or otherwise relating to (i)
any breach of any representation or warranty or the inaccuracy of any
representation, made by Anderson in or pursuant to this Agreement; (ii) any
breach of any covenant made by Anderson in or pursuant to this Agreement; and
(iii) any failure by Anderson to perform or otherwise fulfill or comply with any
undertaking, agreement or obligation under this Agreement provided, however,
that the term "Damages" shall not include consequential or other special damages
or losses. The parties hereto waive any claim for exemplary or punitive damages.
Payments by Primark of amounts for which Primark is indemnified hereunder, and
payments by Anderson of amounts for which Anderson is indemnified, shall not be
a condition precedent to recovery.
(b) BY PRIMARK. Primark shall indemnify, defend, save and hold
harmless Anderson and his affiliates and Representatives from and against any
and all Damages incurred in connection with, arising out of, resulting from or
incident to, caused by or otherwise relating to (i) any breach of any
representation or warranty or the inaccuracy of any representation, made by
Primark in this Agreement, (ii) any breach of any covenant made by Primark in
this Agreement, and (iii) any failure by Primark to perform or otherwise fulfill
or comply with any undertaking, agreement or obligation under this Agreement.
(c) COOPERATION. The party asserting a claim for indemnification
hereunder (the "Indemnified Party") shall cooperate in all reasonable respects
with the other party (the "Indemnifying Party") and such attorneys as may
participate in the investigation, trial and defense of such lawsuit or action
and any appeal arising therefrom; PROVIDED, HOWEVER, that the Indemnified Party
may, at its own cost, participate in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom. The parties shall
cooperate with each other in any notifications to insurers.
(d) DEFENSE OF CLAIMS. If a claim for Damages (a "Claim") is to be
made by an Indemnified Party, such Indemnified Party shall subject to SECTION
10.3, give written notice (a "Claim Notice") to the Indemnifying Party as soon
as practicable after the Indemnified Party becomes aware of any fact, condition
or event which may give rise to Damages for which indemnification may be sought
under this SECTION 10.3. If any lawsuit or enforcement action is filed against
an Indemnified Party, written notice thereof shall be given to the Indemnifying
Party as promptly as practicable (and in any event within thirty (30) calendar
days after the service of the citation or summons). The failure of any
Indemnified Party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the Indemnifying Party
demonstrates actual damage caused by such failure or that such failure
prejudiced or hindered attempts to mitigate damages with respect to such Claim.
After such notice, if the Indemnifying Party shall acknowledge in writing to the
Indemnified Party that the Indemnifying Party shall be obligated under the terms
of its indemnity hereunder in connection with such
- 40 -
42
lawsuit or action, then the Indemnifying Party shall be entitled, if it so
elects, (i) to take control of the defense and investigation of such lawsuit or
action, (ii) to employ and engage attorneys of its own choice to handle and
defend the same, at the Indemnifying Party's cost, risk and expense unless the
named parties to such action or proceeding include both the Indemnifying Party
and the Indemnified Party and the Indemnified Party has been advised in writing
by counsel that there may be one or more legal defenses available to such
Indemnified Party that are different from or additional to those available to
the indemnifying Party, and (iii) to compromise or settle such claim, which
compromise or settlement shall be made only with the written consent of the
Indemnified Party, such consent not to be unreasonably withheld. If the
Indemnifying Party fails to assume the defense of such claim within thirty (30)
calendar days after receipt of the Claim Notice, the Indemnified Party (upon
delivering notice to such effect to the Indemnifying Party) shall have the right
to undertake, at the Indemnifying Party's cost and expense, the defense,
compromise or settlement of such claim on behalf of and for the account and risk
of the Indemnifying Party; PROVIDED, HOWEVER, that such Claim shall not be
compromised or settled without the written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld. In the event the Indemnified
Party assumes the defense of the claim, the Indemnified Party will keep the
Indemnifying Party reasonably informed of the progress of any such defense,
compromise or settlement. The Indemnifying Party shall be liable for any
settlement of any action effected pursuant to and in accordance with this
SECTION 10.3 and for any final judgment (subject to any right of appeal), and
the Indemnifying Party agrees to indemnify and hold harmless an Indemnified
Party from and against any Damages by reason of such settlement or judgment.
(e) LIMITATIONS.
The limitations of this Subsection (e) shall not apply to the
representations, warranties or covenants with respect to tax.
(i) No party shall be liable to the other under this SECTION 10.3
for any Damages until the aggregate amount of Damages due the Indemnified Party
exceeds an accumulated total of One Hundred Thousand Dollars ($100,000) in which
case, the Indemnified Party shall be entitled to the amount of all such Damages
(including the first One Hundred Thousand Dollars of such Damages) up to a
maximum aggregate amount of $31,000,000, PROVIDED, HOWEVER, that this limitation
shall not apply with respect to Damages arising out of a breach of a
representation or warranty contained in SECTION 4.18 nor shall the
aforementioned One Hundred Thousand Dollars ($100,000) apply to Primark's
payment obligations under this Agreement.
(ii) The amount which any Indemnifying Party is required to pay
to any Indemnified Party pursuant to SECTION 10.3 shall be reduced by any
insurance proceeds actually recovered by the Indemnified Party in reduction of
the Damages. In addition, if any Indemnified Party that receives insurance
proceeds in respect of a Claim has been indemnified already by the Indemnifying
Party, such Indemnified Party shall
- 41 -
43
reimburse the Indemnifying Party from such insurance proceeds to the extent of
the amount paid by the Indemnifying Party.
(iii) If an Indemnitee actually receives a tax savings by reason
of having incurred Damages for which Indemnitee has received a payment from the
Indemnifying Party, then the Indemnitee shall reimburse the Indemnifying Party
by an amount equal to the tax savings.
(f) Except in the case of fraud, the remedies provided in SECTION
10.4 hereof shall be the exclusive remedies of the parties hereto from and after
the Closing in connection with any breach of a representation or warranty or
non-performance, partial or total, of any covenant or agreement contained
herein. The provisions of this SECTION 10.4 shall apply to claims for
indemnification asserted as between the parties hereto, the Company as well as
to third party claims.
11. MISCELLANEOUS
11.1 TERMINATION.
(a) TERMINATION. This Agreement may be terminated at any time prior
to Closing:
(i) By mutual written consent of Primark and Anderson;
(ii) By Primark or Anderson if the Closing shall not have
occurred on or before August 9, 1996; PROVIDED, HOWEVER, that this provision
shall not be available to Primark if Anderson has the right to terminate this
Agreement under clause (iv) of this SECTION 11.1(a), and this provision shall
not be available to Anderson if Primark has the right to terminate this
Agreement under clause (iii) of this SECTION 11.1 (a);
(iii) By Primark if (i) there is a material breach of any
representation or warranty set forth in SECTION 4 or any covenant or agreement
to be complied with or performed by Anderson pursuant to the terms of this
Agreement, (ii) the failure of a condition set forth in SECTION 8 to be
satisfied (and such condition is not waived in writing by Primark) on or prior
to the Closing Date, or (iii) the occurrence of any event which results or would
result in the failure of a condition set forth in SECTION 8 to be satisfied on
or prior to the Closing Date, PROVIDED THAT Primark may not terminate this
Agreement pursuant to this Section unless Primark (i) delivers a written notice
of termination to Anderson in which it identifies the breach, failure or
occurrence serving as the reason for such termination and (ii) Anderson fails to
cure such breach, failure or occurrence within ten (10) Business Days of receipt
of such written notice of termination.
(iv) By Anderson if (i) there is a material breach of any
representation or warranty set forth in SECTION 3 hereof or of any covenant or
agreement
- 42 -
44
to be complied with or performed by Primark pursuant to the terms of this
Agreement, (ii) the failure of a condition set forth in SECTION 7 to be
satisfied (and such condition is not waived in writing by Anderson) on or prior
to the Closing Date, or (iii) the occurrence of any event which results or would
result in the failure of a condition set forth in SECTION 7 to be satisfied on
or prior to the Closing Date PROVIDED THAT Anderson may not terminate this
Agreement pursuant to this Section unless Anderson (i) delivers a written notice
of termination to Primark in which he identifies the breach, failure or
occurrence serving as the reason for such termination and (ii) Primark fails to
cure such breach, failure or occurrence within ten (10) days of receipt of such
written notice of termination; or
(v) By either party upon written notice to the other party on or
after September 1, 1996.
(b) IN THE EVENT OF TERMINATION. In the event of termination of this
Agreement:
(i) Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, and all copies thereof, whether so obtained before or after the
execution hereof, to the party furnishing the same;
(ii) No party hereto shall have any liability or further
obligation to any other party to this Agreement except for any willful breach of
this Agreement occurring prior to the proper termination of this Agreement and
except for subections (iii) and (iv) of SECTION 11.l(a). The foregoing
provisions shall not limit or restrict the availability of specific performance
or other injunctive relief to the extent that specific performance or such other
relief would otherwise be available to a party hereunder.
11.2 ASSIGNMENT. Neither this Agreement nor any of the rights, obligations
or liabilities hereunder may be assigned or delegated by any party without the
prior written consent of the other parties. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, and no other person shall
have any right, benefit or obligation under this Agreement, express or implied,
as a third party beneficiary or otherwise.
11.3 NOTICES. Any notices or other communications required to be given
pursuant to this Agreement shall be in writing and shall be deemed given: (i)
upon delivery, if by hand; (ii) three (3) Business Days after mailing, if sent
by registered or certified mail, postage prepaid, return receipt requested;
(iii) one (1) Business Day after mailing, if sent via overnight courier; or (iv)
upon transmission, if sent by telex or facsimile (provided that a confirmation
copy is sent in the manner provided in SECTION 11.3(ii) or (iii) above within
thirty six (36) hours after such transmission), except that if such notice or
other communication is received by telex or facsimile after 5:00 p.m. on a
Business Day at the place of receipt, it shall be effective as of the following
- 43 -
45
Business Day. All notices and other communications hereunder shall be given as
follows:
(a) If to Primark, to it at:
1000 Winter Street, Suite 4300
Waltham, Massachusetts 02154-1248
Attention: Joseph E. Kasputys
Telephone No.: (617) 487-2102
Telecopier No.: (617) 890-6187
with a copy to:
Michael R. Kargula
Primark Corporation
1000 Winter Street, Suite 4300
Waltham, Massachusetts 02154-1248
Telephone No.: (617) 487-2120
Telecopier No.: (617) 890-6190
(b) If to Anderson, to him at:
c/o Yankee Group Research, Inc.
200 Portland Street
Boston, MA 02114
Telephone No.:(617) 367-1000
Telecopier No.:(617) 367-5760
with a copy to:
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Attention: Richard M.C. Glenn III, Esq.
Telephone No.: (401) 274-9200
Telecopier No.: (401) 276-6611
Any party may change its address for receiving notice by written notice given to
the other names above in the manner provided above.
11.4 CHOICE OF LAW. This Agreement shall be construed, interpreted and the
rights of the parties determined in accordance with the laws of the Commonwealth
of Massachusetts (without reference to the choice of law provisions of
Massachusetts law), except with respect to matters of law concerning the
internal corporate affairs of any corporate entity which is a party to or the
subject of this Agreement.
- 44 -
46
11.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, the
Ancillary Agreements, the Class B Stock Purchase Agreement and the Class C Stock
Purchase Agreement, together with all exhibits and schedules hereto and thereto,
constitute the entire agreement among the parties pertaining to the subject
matter hereof and supersedes and cancels all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. There are
no restrictions, premises, representations, warranties, agreements or
undertakings of any party hereto with respect to the transactions under this
Agreement other than those set forth herein or made hereunder. This Agreement
may not be amended except by an instrument in writing executed by the parties
hereto or their respective successors or permitted assigns. No amendment,
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. The failure of any party
hereto to enforce at any time any of the provisions of this Agreement shall in
no way be construed to be a waiver of any such provision, nor in any way affect
the validity of this Agreement or any part hereof or the right of such party
thereafter to enforce each and every such provision. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
11.6 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7 EXPENSES. The Company and Primark shall each pay their own legal,
accounting, out-of-pocket and other expenses incident to this Agreement and to
any action taken by such party in connection with the negotiation, preparation
and execution of this Agreement and the consummation of the transactions
contemplated hereby. Notwithstanding anything herein to the contrary, it is the
understanding of the parties hereto that after the payment of the Additional
Purchase Price and after the payment of all of the Company's legal, accounting,
out-of-pocket and other expenses incurred in connection with the transactions
contemplated by this Agreement, the Company shall have $1,600,000 of cash on
hand immediately following the Closing.
11.8 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.9 TITLES. The titles, captions or headings of the Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
11.10 PUBLICITY. Prior to the execution of this Agreement, neither Primark
nor
- 45 -
47
Anderson shall issue any press release or make any public statement regarding
the transactions contemplated hereby, without the prior written consent of the
other party. Nothing herein shall prohibit Primark from making any disclosure of
the transactions contemplated hereby to the extent such disclosure is required
by applicable law. Prior to any such disclosure, Primark shall notify Anderson
of the contents of such disclosure.
11.11 CUMULATIVE REMEDIES. All rights and remedies of either party hereto
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
11.12 SPECIFIC PERFORMANCE. The obligations of Anderson and Primark under
this Agreement are unique. If either Anderson or Primark should default in its
obligations under this Agreement, Anderson and Primark acknowledge that it would
be extremely impracticable to measure the resulting damages. Accordingly,
Anderson or Primark may, in addition to any other available rights or remedies,
sue in equity for specific performance, and hereby expressly waive the defense
that a remedy in damages will be adequate.
11.13 KNOWLEDGE. Whenever a phrase herein is qualified by "to the
knowledge of Anderson" or a similar phrase, it is intended to mean the actual
knowledge of Anderson or Abhijit Banerjee.
11.14 ARBITRATION. Any controversy arising after the Closing out of or
relating to this Agreement or relating to the breach hereof, but excluding for
purposes of this SECTION 11.14 the Ancillary Agreements, shall be settled by
arbitration conducted in Boston, Massachusetts, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA")
then in effect (except as otherwise expressly provided in this Agreement). There
shall be three arbitrators selected from the AAA's lists, one to be chosen by
Primark, the other by Anderson and the third to be chosen by the other two
arbitrators. The award rendered by the arbitrator shall be final and
non-appealable and judgment upon the award rendered by the arbitrator may be
entered upon it in any court having jurisdiction thereof. The arbitrator shall
possess the powers to issue mandatory orders and restraining orders in
connection with such arbitration. Each party shall bear its own expenses of the
arbitration unless otherwise allocated by the arbitrator. The agreement to
arbitrate shall be specifically enforceable under the prevailing arbitration
law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 46 -
48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PRIMARK CORPORATION
By: /s/ Joseph E. Kasputys /s/ Howard Anderson
---------------------- -------------------
Name: Joseph E. Kasputys Howard Anderson
Title: Chairman
- 47 -