<PAGE> 1
THE INFORMATION CONTAINED
IN THIS DOCUMENT IS
-------------------------------------------------------------
CONFIDENTIAL
-------------------------------------------------------------
WE WANT TO PROVIDE YOU WITH
THE BEST SERVICE POSSIBLE
PLEASE HELP US IN OUR EFFORT BY NOTING THE FOLLOWING POINTS:
- -- WRITE LEGIBLY.
- -- SPECIFY BLACKLINING REQUIREMENTS.
- -- USE MOST RECENT VERSION OF DOCUMENT TO MARK-UP.
- -- ALLOW 1/4" FROM EDGE OF PAGE WHEN MAKING CHANGES.
- -- AVOID USE OF FELT-TIPPED OR BLUE INK PENS AND SOFT LEAD PENCILS.
- -- INDICATE MINOR CHANGES WITH AN "X" IN THE MARGIN.
- -- AVOID USE OF "POST-ITS" AND STAPLES WHENEVER POSSIBLE.
EDGAR FILERS:
- -- SUBMIT EDGAR EXHIBITS WELL IN ADVANCE OF FILING DATE.
- -- SUBMIT CIK & CCC #S IN ADVANCE FOR TEST FILING.
TELEPHONE: (617) 542-1926 FAX: (617) 542-5790
YOUR CUSTOMER SERVICE REPRESENTATIVES ARE:
<TABLE>
<CAPTION>
(8:00 A.M. -- 4:00 P.M.) (4:00 P.M. -- 12:00 A.M.) (12:00 A.M. -- 8:00 A.M.)
- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C>
Bob Strause Rick Lydon John Connolly
Steve Muller Michael Boris Peter Hanlon
Tim Sweeney Mike Miller Kevin Robinson
Tom Walsh Peggy Bayliss Brian Kostanski
Sandy Bandanza Scott Gagnon
Tracy Goulet
</TABLE>
(LOGO)
BOWNE OF BOSTON
411 D STREET, BOSTON, MA 02210
<PAGE> 2
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 24, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRIMARK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MICHIGAN 38-2383282
(STATE OF INCORPORATION OF (IRS EMPLOYER
CORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
1000 WINTER STREET
SUITE 4300N
WALTHAM, MASSACHUSETTS 02154
(781) 466-6611
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MICHAEL R. KARGULA, ESQ.
EXECUTIVE VICE PRESIDENT
GENERAL COUNSEL AND SECRETARY
PRIMARK CORPORATION
1000 WINTER STREET SUITE 4300N
WALTHAM, MASSACHUSETTS 02150
(781) 466-661
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration statement is declared effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, without par value............. 2,200,000 $40.22 $88,484,000 $26,102.78
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee in accordance with Rule 457 (c) of the Securities Act of 1933 based on
the average of the high and low prices for shares of the Registrant's Common
Stock on December 19, 1997 on the NYSE.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
IF, AS A RESULT OF STOCK SPLITS, STOCK DIVIDENDS OR SIMILAR TRANSACTIONS,
THE NUMBER OF SECURITIES PURPORTED TO BE REGISTERED ON THIS REGISTRATION
STATEMENT CHANGES, THE PROVISIONS OF RULE 416 SHALL APPLY TO THIS REGISTRATION
STATEMENT AND THIS REGISTRATION STATEMENT SHALL BE DEEMED TO COVER THE
ADDITIONAL SECURITIES RESULTING FROM THE SPLIT OF, OR THE DIVIDEND ON, THE
SECURITIES COVERED BY THIS REGISTRATION STATEMENT.
================================================================================
<PAGE> 3
2,200,000 SHARES
[PRIMARK LOGO]
COMMON STOCK
This Prospectus relates to 2,200,000 shares of Common Stock of Primark
Corporation ("Primark" or the "Company") that may be offered from time to time
by certain shareholders of the Company, who were the prior owners of ICV Limited
("ICV"), an indirect wholly owned subsidiary of the Company. See "Selling
Shareholders." The Company will not receive any of the proceeds from the sale of
such shares.
The Common Stock is traded on the New York Stock Exchange ("NYSE") and
Pacific Exchange under the symbol "PMK." On December 19, 1997, the last reported
sale price of the Common Stock on the NYSE was $40.625 per share.
The Company has been advised that the Selling Shareholders may sell, from
time to time, in one or more transactions (which may include block
transactions), all or a portion of their shares on the NYSE or the Pacific Stock
Exchange, in special offerings, in the over-the-counter market, in negotiated
transactions, through underwriters or otherwise at market prices prevailing at
the time of sale or at negotiated prices. The Selling Shareholders have
indicated that if any of the Common Stock offered hereby is sold through
underwriters, brokers or dealers, then the Selling Shareholders may pay
customary underwriting discounts and brokerage commissions and charges. The
Selling Shareholders and any underwriters, brokers or dealers or other persons
who participate with them in the distribution of the shares offered hereby may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), although the Selling Shareholders disclaim
such status. Any commissions and discounts received by such underwriters,
brokers or dealers, and any profit on the resale of the stock by such
underwriters, brokers or dealers, may be deemed to be underwriting discounts and
commissions under the Securities Act. The shares of Common Stock being offered
hereby may also be sold by the Selling Shareholders pursuant to Rule 144
promulgated under the Securities Act. See "Plan of Distribution."
The Company has entered into an agreement which provides for the sale of
TASC, Inc. and The Analytic Sciences Corporation Limited, each, an indirect
wholly owned subsidiary of the Company. See "The Company."
FOR INFORMATION CONCERNING CERTAIN FACTORS RELATING TO THIS OFFERING, SEE
"RISK FACTORS" ON PAGE FIVE OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS DECEMBER 24, 1997.
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). Such reports, proxy statements
and other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the SEC at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the Regional
Offices of the SEC located at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and at 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies of such reports, proxy statements and
other information can be obtained by mail from the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The SEC maintains a Web site that contains reports, proxy statements and other
information regarding registrants that file electronically with the SEC which
may be obtained at the SEC's Web site [http://www.sec.gov]. Such reports, proxy
statements and other information can also be inspected at the offices of the
NYSE, Inc., 20 Broad Street, New York, New York 10005; and the Pacific Exchange,
Inc., 301 Pine Street, San Francisco, California 94104.
The Company has filed with the SEC a Registration Statement on Form S-3
(herein together with all exhibits, referred to as the "Registration Statement")
under the Securities Act with respect to the Common Stock being offered by this
Prospectus. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules thereto. Statements contained in this Prospectus as to
the contents of any contract or other document are not necessarily complete, and
in each instance reference is made to the copy of such contract or document
filed, or incorporated by reference, as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. The Registration Statement, together with exhibits and schedules
thereto, may be inspected without charge at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington D.C.
20549. Copies of all or any part of the Registration Statement, may be obtained
at prescribed rates from the public reference facilities of the SEC at its
Washington, D.C. address.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference the following documents heretofore
filed with the SEC pursuant to the Exchange Act:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1996 and Amendment on Form 10-K/A dated December 11, 1997;
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997;
3. The Company's Current Reports on Form 8-K dated January 7, 1997
(amending the Form 8-K filed November 14, 1996), February 4, 1997, April
3, 1997, April 18, 1997, June 19, 1997, July 11, 1997, July 28, 1997,
December 9, 1997 and December 10, 1997 (amending the Form 8-K dated
December 9, 1997); and
4. The description of the Company's Common Stock set forth in the Company's
Form 10 dated November 17, 1981, the Company's form 8-A dated October
18, 1985, the Company's Form 8-A dated June 16, 1992 and the Company's
Form 8-A dated June 20, 1997.
All documents filed by the Company with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the Offering hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
2
<PAGE> 5
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to constitute a part of
this Prospectus except as so modified or superseded.
The Company will provide without charge, upon written or oral request, a
copy of any or all of the documents containing information which is incorporated
herein by reference, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). Requests should
be directed to Primark Corporation, Investor Relations, 1000 Winter Street,
Suite 4300N, Waltham, Massachusetts 02154-1248, telephone: (781) 466-6611.
3
<PAGE> 6
THE COMPANY
The Company is a Michigan corporation organized in 1981. The Company is
engaged principally in the information services industry serving two primary
markets, financial information ("Financial Information") and applied technology
("Applied Technology"). The Company's Financial Information businesses consist
of the operations of Datastream, Disclosure, DAFSA, I/B/E/S, ICV, Vestek,
Worldscope, Baseline and WEFA. Primark also has an equity interest in Primark
Decision Economics, Inc. Primark develops and markets "value-added" database and
information products that cover established and emerging markets worldwide, as
well as proprietary analytical software for the analysis and presentation of
financial and economic information. Customers include investment managers,
investment bankers, financial market traders, analysts, accounting and legal
professionals and information and reference service providers. The Applied
Technology activities, conducted through TASC, Yankee and WSI, provide a broad
spectrum of information technology services and products primarily to United
States government agencies principally involved in national security and
intelligence related activities, as well as customers of real-time and
historical weather information. Within Applied Technology, Yankee supplies
market research to vendors and users of telecommunications and computing.
On December 8, 1997, the Company entered into a stock purchase agreement
providing for the sale of the outstanding securities of TASC, its subsidiaries,
including WSI, and TASC U.K. to Litton Industries, Inc. and Litton U.K. Limited,
respectively, for an aggregate purchase price of $432 million, as adjusted (the
"Proposed TASC Sale").
Following consummation of the Proposed TASC Sale, the Company's management
will focus its resources primarily on the Company's financial, economic and
market research information services businesses. The Company also will focus its
resources on opportunities for growth in the global market for information
content. The Company's management intends to consider new approaches to its
business systems and organizational structure to achieve efficiencies, improve
profitability and customer service, and accelerate new product development. The
Company's information content businesses will continue to receive information
technology support from TASC through a three-year Information Technology
Services Agreement (the "IT Services Agreement"), which is a part of the
Proposed TASC Sale. The Company also continues to engage BT Alex. Brown
Incorporated ("BT Alex. Brown") to assist the Company in evaluating strategic
alternatives that could increase shareholder value. As part of this process, the
Company anticipates that BT Alex. Brown will assist it in the preparation of
information that could be furnished to parties that indicate an interest in
acquiring the Company or key businesses other than those being disposed of in
the Proposed TASC Sale. BT Alex. Brown had been initially retained earlier in
1997 when the Company was approached by various third parties regarding a
possible sale of the Company. The Company, with BT Alex. Brown's assistance,
will explore various strategic alternatives which could include, among other
things, a sale of the Company, repurchase of the Company's shares of Common
Stock, further reductions in bank debt or acquisitions in the financial economic
and market research information services sector. It should be emphasized that,
at this time, the Company has not made a decision to pursue any particular
alternative, including without limitation, a sale of the Company.
In June 1997, the Company adopted a formal plan to sell its non-core
transportation services segment, TIMCO. The Company anticipates that the sale of
TIMCO will be completed within one year at amounts which will at least
approximate its net book value. The business of TIMCO, a wholly-owned subsidiary
of the Company is being accounted for as a discontinued operation. For the year
ended December 31, 1996, TIMCO employed 1,313 persons and reported revenues of
$106.4 million.
The Company's principal executive offices are located at Primark
Corporation, 1000 Winter Street, Suite 4300N, Waltham, Massachusetts 02154, and
its telephone number is (781) 466-6611. Further information on Primark's
businesses can be accessed via the Internet through Primark's home page at
http://www.primark.com. All of the product names referred to herein are
trademarks owned by the Company or its subsidiaries and some are registered
trademarks or are the subject of pending trademark applications.
The Company's subsidiaries and affiliates referred to in this Prospectus
include Baseline Financial Services Inc. ("Baseline"), Datastream International
Limited and its affiliates ("Datastream"), Disclosure
4
<PAGE> 7
Incorporated ("Disclosure"), Groupe DAFSA S.A. ("DAFSA"), I/B/E/S International,
Inc. ("I/B/E/S"), ICV Limited ("ICV"), Vestek Systems, Inc. ("Vestek"), WEFA
Holdings, Inc. ("WEFA"),Worldscope/Disclosure LLC ("Worldscope"), TASC, Inc.
("TASC"), The Analytic Sciences Corporation Limited ("TASC U.K."), WSI
Corporation ("WSI"), Triad International Maintenance Corporation ("TIMCO"),
Yankee Group Research, Inc. ("Yankee") and an equity interest in Primark
Decision Economics, Inc. ("PDE").
RISK FACTORS
FOREIGN CURRENCY EXCHANGE RATE RISK
International revenues accounted for 21.3% of the Company's 1996 revenues.
Since not all of the Company's revenues and expenses are incurred in U.S.
dollars, the Company's operations have been and may continue to be affected by
fluctuations in currency exchange rates. The Company engages in hedging
activities including foreign currency options and forward contracts, in order to
minimize the ongoing exposure to foreign currency exchange risk with respect to
its foreign source operating income and cash flows. In 1996, the Company
recorded a $1.9 million gain before income taxes for foreign currency
transactions. With regard to foreign currency, the Company does have substantial
foreign currency expenses, especially in the United Kingdom, which in part
offset revenue losses due to currency fluctuations. In addition, the Company
typically maintains foreign currency hedges for its significant foreign currency
exposures. Excluding the operations of TASC and TIMCO, the Company would have
had international revenues of approximately 59% for the year ending December 31,
1996.
TECHNOLOGICAL CHANGES
The Company operates principally in the information services industry,
which is a rapidly changing and highly competitive industry. Even if the Company
remains abreast of the latest developments and available technology, it could be
adversely affected by technological advances and/or the introduction of new
products and services in the information services industry. There are many large
and successful companies which compete in the information services industry,
many of which have greater resources. The future success of the Company will
depend significantly on its ability to develop and deliver technologically
advanced quality products and services. The Company's future results of
operations could be adversely affected by the cost of developing such products
and services.
LEVEL OF INDEBTEDNESS
The Company has substantial indebtedness. At September 30, 1997, the
Company had consolidated total debt of $350.4 million and consolidated common
shareholders' equity of $462.8 million. Subject to certain restrictions on the
Company and certain subsidiaries, including the satisfaction of certain debt
coverage tests, the Company and its subsidiaries may incur additional
indebtedness from time to time for general corporate purposes, including but not
limited to, acquisitions and capital expenditures. Historically, cash generated
from operating activities, in conjunction with borrowings and proceeds from
equity issuances, has been sufficient to meet its debt service requirements,
acquisitions and investment and capital expenditure requirements. The Company
believes that cash generated from operating activities, together with borrowings
from existing and future credit facilities and proceeds from future equity
issuances, will be sufficient to meet its future debt service requirements and
to make anticipated acquisitions, investments and capital expenditures. However,
there can be no assurances in this regard. Offsetting these risks, following
consummation of the Proposed TASC Sale, the Company will redeem in full its $112
million of 8.75% Senior Notes due October 15, 2000, thereby reducing fixed
charges.
LOSS OF TASC
Following the Proposed TASC Sale, the Company's business will principally
serve institutions and professionals in the financial markets, although the
Company will also have corporate and government customers in both the United
States and other countries. As a result, any downturn in the financial markets
could adversely affect to a greater degree the Company's overall revenues and
profits.
5
<PAGE> 8
DEPENDENCE ON FEDERAL GOVERNMENT CONTRACTS
A substantial potion of the Company's revenues is derived from services
performed directly or indirectly under contracts with the U.S. government.
Revenues derived from contracts with the U.S. government, primarily at TASC,
accounted for approximately 44%, 49% and 58% of the Company's revenues for the
years ended December 31, 1996, 1995, and 1994, respectively.
All contracts made with the U.S. government may be terminated by the U.S.
government at any time, with or without cause. There can be no assurance that
any existing or future contracts with the U.S. government would not be
terminated or that the U.S. government will continue to use the Company's
services at levels comparable to current use.
Companies that contract with the U.S. government are subject to regular
audits with respect to costs charged to the government. Such audits may result
in the disallowance of amounts charged to or paid by the government. There can
be no assurance that such disallowances will not be claimed or imposed against
the Company, and if imposed, will not have a material impact on the Company.
National and global political, social and economic events may affect U.S.
national security programs. Contracts made with the U.S. government are normally
subject to annual approval of funding. Limitations imposed on spending by U.S.
government agencies, which might result from efforts to reduce the Federal
deficit or for other reasons, may limit both the continued funding of existing
contracts with the U.S. government and the ability to obtain additional
contracts. These limitations, if significant, could have a material adverse
effect on the Company. No assurance can be given that the current level of
government spending for national security programs will continue, that the U.S.
government will continue its commitment to programs in which the Company's
products and services are applicable or that it will not be adversely affected
by any decline in that spending or commitment by the U.S. government.
The Company's dependence on federal government contracts will be
substantially lowered upon consummation of the Proposed TASC Sale.
DEPENDENCE ON TECHNICAL PERSONNEL
The Company's future success is dependent upon its ability to attract and
retain highly skilled personnel. The market for these professionals is
competitive. There can be no assurance that the Company will continue to be
successful in its effort to attract and retain such qualified professionals.
NEED FOR SECURITY CLEARANCES
TASC is involved in a number of classified programs. TASC's ability to
maintain its current base of business and to grow in the future is based in part
upon its ability to provide employees and facilities which meet rigorous U.S.
government security requirements. There can be no assurance that TASC will be
able to meet such requirements in the future.
The Company's need for security clearances will be eliminated upon
consummation of the Proposed TASC Sale.
USE OF PROCEEDS
The shares of Common Stock offered hereby are being sold by the Selling
Shareholders. The Company will not receive any of the proceeds from the sale of
such shares. The Company will pay approximately $100,000 in expenses associated
with the Offering.
DIVIDEND POLICY
Since 1988, the Company has not paid cash dividends on its Common Stock.
The Company currently intends to retain its earnings for future growth and
therefore does not anticipate paying any cash dividends in the foreseeable
future. See the Consolidated Financial Statements of the Company and the Notes
thereto incorporated herein by reference concerning restrictions on dividends.
6
<PAGE> 9
SELLING SHAREHOLDERS
The Selling Shareholders (the former owners of ICV) acquired 2,200,000
shares of the Common Stock of Primark on October 24, 1996 when the Company
acquired ICV. Pursuant to the terms of a Registration Rights Agreement between
the Company and the Selling Shareholders dated as of October 24, 1996, the
Company has agreed to provide registration rights with respect to such shares.
The following table sets forth the position held with the Company by each
Selling Shareholder for the past three years (except as otherwise noted), the
number of shares of Common Stock beneficially owned by the Selling Shareholders
as of November 30, 1997 and the number of shares of Common Stock offered by the
Selling Shareholders pursuant to this Prospectus. The shares of Common Stock
offered hereby are those shares that have been acquired at the time of the
Company's acquisition of ICV. Because the Selling Shareholders may sell, from
time to time, all or some of the Common Stock offered hereby, no estimate can be
made of the aggregate amount of Common Stock that will be owned by each Selling
Shareholder upon completion of the offering to which this Prospectus relates.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF
NOVEMBER 30, NUMBER OF SHARES
NAME AND POSITION OF HOLDER 1997 BEING OFFERED
- ------------------------------------------------------------ -------------------- -----------------
<S> <C> <C>
GNI Holdings Limited........................................ 103,671 103,671
Anita Florence Taylor(1).................................... 411,735 381,735
3i plc...................................................... 42,011 42,011
Harry Ferguson Holdings Ltd Timothy James Sheldon Trust UA
5/27/87................................................... 100,457 100,457
K.E. Ahl & E.J. Kaier....................................... 84,022 84,022
Technical Investments Holdings SA........................... 66,964 66,964
Goddard Nominees (Jersey) Limited(2)........................ 1,205,501 1,205,501
G McCaldin.................................................. 4,681 4,681
C A Stevens(3).............................................. 64,074 60,274
Adrian Dear(4).............................................. 50,228 50,228
Paren Knadjian(5)........................................... 61,978 50,228
Kevin Underwood(6).......................................... 37,437 30,137
Barry Woodward(7)........................................... 23,583 18,283
Tracy Woodward(7)........................................... 1,808 1,808
--------- ---------
2,258,150 2,200,000
========= =========
</TABLE>
- ---------------
Notes:
(1) Ms. Anita Florence Taylor is the wife of Mr. David Taylor, Managing Director
of ICV Limited. As of November 30, 1997, Mr. Taylor held options on 30,000
shares of Primark common stock at an exercise price of $26.25 per share.
(2) Goddard Nominees (Jersey) Limited is the trustee for Mr. Christopher
Sharples, Chairman of ICV limited.
(3) Ms. Claire Stevens is the Technical Director of Data Production and a Senior
Manager of ICV Limited. As of November 30, 1997, Ms. Stevens held options on
3,800 shares of Primark common stock at exercise prices ranging from $26.25
to $29.56.
(4) Mr. Adrian Dear held the position of Director of Marketing of ICV Limited
until December of 1996.
(5) Mr. Paren Knadjian is the Director of Marketing and Product Development and
a Senior Manager of ICV Limited. As of November 30, 1997, Mr. Knadjian held
options on 11,750 shares of Primark common stock at exercise prices ranging
from $26.25 to $29.56.
(6) Mr. Kevin Underwood is the Group Administration Director and a Senior
Manager of ICV Limited. As of November 30, 1997, Mr. Underwood held options
on 7,300 shares of Primark common stock at prices ranging from $26.25 to
$29.56.
(7) Mr. Barry Woodward is the Director of Operations and a Senior Manager of ICV
Limited. Ms. Tracy Woodward is his wife. As of November 30, 1997, Mr.
Woodward held options on 5,300 shares of Primark common stock at prices
ranging from $26.25 to $29.56.
7
<PAGE> 10
SELECTED CONSOLIDATED HISTORICAL AND
PRO FORMA FINANCIAL AND OPERATING DATA
The following table sets forth selected consolidated historical and pro
forma financial and operating data concerning the Company. With the exception of
(i) the selected data as of September 30, 1997 and for the nine months ended
September 30, 1997 and 1996, and (ii) the pro forma data for the nine months
ended September 30, 1997, and the fiscal year ended December 31, 1996, the
"Income Statement Data," "Other Operating and Financial Data" and "Balance Sheet
Data" are derived from historical consolidated financial statements of the
Company restated to present the results of operations of TIMCO as a discontinued
operation. The Company's consolidated financial statements as of December 31,
1996 and 1995, and for each of the three years in the period ended December 31,
1996, are incorporated by reference in this Registration Statement and have been
audited by Deloitte & Touche LLP, independent auditors, whose report thereon is
also incorporated by reference herein. The selected financial data as of
September 30, 1997, and for the nine months ended September 30, 1997 and 1996,
have been derived from the unaudited interim consolidated financial statements
of the Company incorporated by reference in this Registration Statement. The
selected pro forma data are derived from the Unaudited Pro Forma Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Registration
Statement. The selected financial data should be read in conjunction with the
Consolidated Financial Statements of the Company and Notes thereto and the
information contained in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" incorporated herein by reference, and the
Unaudited Pro Forma Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Registration Statement.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------------------------- ---------------------------------
HISTORICAL(1)(2) PRO FORMA HISTORICAL(1)(2) PRO FORMA
-------------------------------------------------------- (2)(3) -------------------- (2)(3)
1992 1993 1994 1995 1996 1996 1996 1997 1997
-------- -------- -------- -------- -------- --------- -------- -------- ---------
(IN THOUSANDS EXCEPT STATISTICAL DATA AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA:
Operating
revenues........... $298,721 $395,054 $423,193 $530,979 $660,763 $277,063 $478,322 $617,468 $294,725
Cost of services.... 268,648 259,705 236,903 297,968 368,749 113,125 255,962 342,830 117,996
Selling, general and
administrative..... 5,406 78,864 128,955 150,840 189,721 102,817 146,577 179,905 115,043
Depreciation........ 5,656 10,266 11,469 14,137 18,241 12,318 12,348 16,963 13,108
Amortization of
goodwill and other
intangible
assets............. 5,496 15,287 15,361 21,203 23,909 19,800 17,118 26,081 23,287
Restructuring
charge............. -- -- -- -- -- -- -- 6,800 6,800
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating income.... 13,515 30,932 30,505 46,831 60,143 29,003 46,317 44,889 18,491
Interest expense
(income) -- net.... 2,909 10,174 9,853 15,084 15,950 (2,675) 10,625 17,021 735
Foreign currency
transaction loss
(gain) -- net...... (1,130) 1,477 1,329 2,620 (1,864) (1,836) (1,487) (2,327) (2,325)
Other expense
(income) 2,266 33 (533) 807 1,294 (66) 735 (1,646) (1,679)
Income tax
expense............ 5,034 9,059 8,988 13,190 19,219 12,612 16,859 18,537 13,119
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from
continuing
operations......... $ 4,436 $ 10,189 $ 10,868 $ 15,130 $ 25,544 $ 20,968 $ 19,585 $ 13,304 $ 8,641
======= ======= ======= ======= ======= ======= ======= ======= =======
Earnings per share
from continuing
operations(4)...... $ 0.16 $ 0.44 $ 0.47 $ 0.66 $ 0.95 $ 0.78 $ 0.75 $ 0.48 $ 0.31
Net income (loss)
applicable to
Common Stock....... $ 5,821 $ 4,087 $ 12,316 $ 16,882 $ 36,749 $ 20,609 $ 30,019 $ 10,797 $ 8,641
Weighted average
shares of Common
Stock
outstanding........ 19,388 19,805 19,909 20,602 26,555 26,555 25,807 27,577 27,577
OTHER OPERATING AND
FINANCIAL DATA:
EBITDA(5)........... $ 24,667 $ 56,485 $ 57,335 $ 82,171 $102,293 $ 61,121 $ 75,783 $ 87,933 $ 54,886
EBITDA as a % of
operating
revenue............ 8.3% 14.3% 13.5% 15.5% 15.5% 22.1% 15.8% 14.2% 18.6%
Capital expenditures
and capitalized
software........... $ 7,294 $ 16,183 $ 22,464 $ 21,499 $ 40,406 $ 36,328 $ 26,328 $ 38,844 $ 31,697
Book value per
share.............. $ 11.08 $ 11.33 $ 12.14 $ 15.19 $ 17.59 N/A $ 17.79 $ 19.15 $ 24.51
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------- -----------------------------------
HISTORICAL(1)(2) HISTORICAL(1)(2) PRO FORMA
-------------------------------------------------------- ---------------------- (2)(3)
1992 1993 1994 1995 1996 1996 1997 1997
-------- -------- -------- -------- -------- -------- ---------- ---------
(IN THOUSANDS EXCEPT STATISTICAL DATA AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets................. $116,346 $110,927 $121,145 $188,140 $201,552 $206,029 $ 243,141 $145,407
Goodwill and other
intangibles -- net............ 301,151 297,863 296,097 485,953 665,560 505,168 745,917 647,148
Property, plant &
equipment -- net.............. 24,102 25,620 30,534 41,747 53,417 45,287 58,318 46,576
Net assets of discontinued
operations.................... 17,290 6,769 10,639 32,428 39,930 33,463 16,609 16,609
Other noncurrent assets........ 16,284 10,804 6,508 11,156 11,124 38,848 7,680 7,361
------- ------- ------- ------- ------- ------- ------- -------
Total assets................... $475,173 $451,983 $464,923 $759,424 $971,583 $828,795 $1,071,665 $863,101
======= ======= ======= ======= ======= ======= ======= =======
Accounts payable and other
current liabilities........... $ 65,434 $ 64,083 $ 72,969 $100,022 $210,271 $121,418 $ 222,994 $117,246
Total debt and capital lease
obligations (including current
maturities)................... 161,088 130,386 115,573 239,476 248,340 240,091 350,374 27,050
Other noncurrent liabilities... 30,574 32,506 34,726 48,923 36,490 58,783 34,636 80,206
Minority interest -- -- -- -- 265 -- 907 907
Series A Preferred Stock....... 16,522 16,874 16,874 16,874 -- -- -- --
Common shareholders' equity.... 201,555 208,134 224,781 354,129 476,217 408,503 462,754 637,692
------- ------- ------- ------- ------- ------- ------- -------
Total liabilities and
shareholders' equity.......... $475,173 $451,983 $464,923 $759,424 $971,583 $828,795 $1,071,665 $863,101
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
- ---------------
(1) In June of 1997, the Company adopted a formal plan to sell TIMCO.
Accordingly, the historical financial statement data presented herein has
been restated to present the operations of TIMCO separately as a
discontinued operation.
(2) The historical and pro forma financial information includes the operations
of the following companies from their respective dates of acquisition:
Datastream acquired September 25, 1992; Vestek acquired June 30, 1994;
Disclosure and I/B/E/S acquired June 29, 1995; DAFSA acquired June 18, 1996;
Yankee acquired August 9, 1996; Worldscope acquired October 15, 1996; ICV
acquired October 24, 1996; Baseline acquired January 6, 1997; and WEFA
acquired February 7, 1997.
(3) Gives effect to the Proposed TASC Sale for the sale of TASC and its
affiliates assuming the transaction occurred on January 1 of the period
presented. See "Unaudited Pro Forma Consolidated Financial Information."
(4) Earnings per share represent earnings per common and common share equivalent
before discontinued and extraordinary items.
(5) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization. EBITDA represents supplemental information
only and should not be construed as an alternative to operating income or to
cash flows from operating activities as defined by U.S. generally accepted
accounting principles.
N/A Not applicable.
9
<PAGE> 12
PRIMARK CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma consolidated financial information presented herein
gives effect to the Company's sale of the TASC Entities and their affiliates.
For purposes of the Unaudited Pro Forma Consolidated Financial Information, the
term "TASC" shall mean TASC, Inc., its affiliates and TASC U.K. The Unaudited
Pro Forma Condensed Consolidated Statements of Income for the nine months ended
September 30, 1997 and for the year ended December 31, 1996 assume that the
Proposed TASC Sale occurred on January 1. Accordingly, the pro forma financial
information for the 1997 period is based upon the historical financial
statements of Primark and TASC for the nine months ended September 30, 1997. The
pro forma financial information for 1996 is based upon the historical financial
statements of Primark and TASC for the twelve months ended December 31, 1996,
adjusted to reflect the operations of TIMCO as discontinued. Certain
reclassifications have been made to the historical income statements to conform
with the Company's current presentation.
The Unaudited Pro Forma Consolidated Financial Statements include the
accounts of TASC and give effect to events that are directly attributable to the
Proposed TASC Sale and expected to have a continuing impact on the Company.
Explanations for these adjustments are included in the Notes to the Unaudited
Pro Forma Condensed Consolidated Balance Sheet and Income Statements. The pro
forma condensed consolidated income statement for the year ended December 31,
1996 does not reflect interest income which would have been earned on
approximately $78,556,000 of unapplied proceeds. Assuming the Company had
invested such unapplied proceeds in over night funds, it would have earned
interest income of approximately $4,000,000.
It should be noted that the Unaudited Pro Forma Condensed Consolidated
Statement of Income for the year ended December 31, 1996 includes the operations
of the following companies from their respective dates of acquisition: DAFSA
acquired June 18, 1996: Yankee, acquired August 9, 1996; ICV Limited acquired
October 24, 1996: Worldscope/Disclosure LLC acquired October 15, 1996.
Similarly, the unaudited pro forma financial information for the nine months
ended September 30, 1997 includes the operations of Baseline Financial Services,
Inc. and WEFA from their January 6, 1997 and February 7, 1997 dates of
acquisition, respectively. With the exception of this matter, the Company knows
of no specific matters that would cause the unaudited pro forma consolidated
financial information included herein not to be indicative of future operations.
However, such pro forma operating results have been prepared for comparative
purposes only and do not necessarily represent actual operating results that may
occur in the future or that would have occurred had the Proposed TASC Sale been
consummated on the above-mentioned assumed date.
The Company's Unaudited Pro Forma Consolidated Financial Information should
be read in conjunction with the historical financial statements of Primark and
the information contained in the Company's "Management's Discussion and Analysis
of Financial Condition and Results of Operations" incorporated herein by
reference.
10
<PAGE> 13
PRIMARK CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
UNAUDITED
AS PROPOSED PRO
REPORTED TASC(1) TRANSACTION ADJUSTMENTS FORMA
---------- -------- ----------- ----------- ---------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents.................... $ 16,308 $ (160) $ 429,190(2) $(429,190) $ 16,148
Accounts receivable.......................... 181,969 (94,411) 87,558
Net assets of discontinued operations........ 16,609 151,723 (151,723)(2) 16,609
Other current assets......................... 44,864 (3,163) 41,701
Goodwill, net................................ 652,763 (93,298) 559,465
Capitalized data and other intangibles,
net........................................ 49,194 (883) (3,899)(4) 44,412
Capitalized software, net.................... 43,960 (689) 43,271
Other assets................................. 7,680 (319) 7,361
Property, Plant and Equipment................ 58,318 (11,742) 46,576
---------- -------- --------- --------- --------
Total assets............................. $1,071,665 $(52,942) $ 277,467 $(433,089) $863,101
========== ======== ========= ========= ========
Notes payable................................ $ 2,951 $ 2,951
Accounts payable and accrued liabilities..... 61,263 $(28,751) $ (6,905)(3) 25,607
Federal income, property and other taxes
payable.................................... 11,767 (3,428) $ 3,013(2) (1,862)(5) 9,490
94,061(2) (94,061)(3)
Deferred income.............................. 88,912 (6,763) 82,149
Long term debt............................... 347,423 (323,324)(3) 24,099
Deferred income taxes........................ 15,043 (6,933) (1,482)(4) 6,628
Other liabilities............................ 80,645 (7,067) 73,578
Minority interest............................ 907 907
Stockholders' equity......................... 462,754 180,393(6) (3,038)(5) 637,692
(2,417)(4)
---------- -------- --------- --------- --------
Total liabilities and stockholders'
equity................................ $1,071,665 $(52,942) $ 277,467 $(433,089) $863,101
========== ======== ========= ========= ========
</TABLE>
The notes to the unaudited pro forma condensed consolidated financial statements
are an integral part of this statement.
11
<PAGE> 14
PRIMARK CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
1. TASC
The pro forma condensed consolidated balance sheet gives effect to the
classification of TASC as a discontinued operation upon receipt of shareholder
approval. Included in the net assets of TASC is an account receivable, net, from
Primark of $18,435,000.
2. PROPOSED TASC SALE
The pro forma condensed consolidated balance sheet gives effect to the sale
of TASC for $432,000,000, net of estimated transaction costs of $2,810,000.
Income taxes associated with the sale of TASC are estimated to be $94,061,000.
In connection with the proposed transaction, Primark has agreed to fund all
federal and state income tax liabilities of TASC as of the closing. Federal and
state income taxes at September 30, 1997 included in the historical financial
statements of TASC aggregate $3,013,000.
3. USE OF PROCEEDS
The pro forma condensed consolidated balance sheet assumes for the purpose
of this presentation that the proceeds will be used to (i) prepay all amounts
outstanding on the Company's $112,000,000 senior callable bonds, including a
4.375% premium aggregating $4,900,000, together with the accrued interest
thereon, (ii) repay $211,324,000 of the Company's outstanding term loan together
with accrued interest thereon, and (iii) to fund the estimated income tax
liability associated with the proposed transaction of $94,061,000. The actual
amount of taxes to be paid and the level and timing of bank debt to be repaid,
if any, will be determined following completion of the Proposed TASC Sale.
4. DEBT ISSUE COSTS
The pro forma condensed consolidated balance sheet gives effect to the
write off of unamortized debt issue cost of $3,899,000 and related tax benefit
of $1,482,000 associated with prepayment of the senior callable bonds and term
loan described in note 3 above. Such amounts will be reflected as an
extraordinary item in the Company's consolidated statement of income.
5. DEBT PREPAYMENT PREMIUM
The pro forma condensed consolidated balance sheet gives effect to charge
for the prepayment premium of $4,900,000, net of tax benefit of $1,862,000, as
described in note 2 above. Such amounts will be reflected as an extraordinary
item in the Company's consolidated statement of income.
6. CLOSING ADJUSTMENTS
The actual gain at the closing date will be adjusted from the amounts
presented herein on a dollar for dollar basis for increases or decreases in
stockholder's equity of TASC between September 30, 1997 and the closing date,
excluding the effect of changes resulting from income tax liabilities to be paid
by the Company as described in note 2 above.
12
<PAGE> 15
PRIMARK CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
UNAUDITED
AS REPORTED TASC(1) ADJUSTMENTS PRO FORMA
----------- ---------- ----------- ---------
(THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Operating Revenues......................... $ 617,468 $ (324,753) $ 2,010(2) $ 294,725
-------- ---------- ------- --------
Operating Expenses:
Cost of Services......................... 342,830 (226,046) 1,212(2) 117,996
Selling General and Administrative....... 179,905 (64,862) 115,043
Depreciation............................. 16,963 (3,855) 13,108
Amortization of Goodwill................. 13,893 (2,070) 11,823
Amortization of other intangible
assets................................ 12,188 (724)(6) 11,464
Restructuring Charge..................... 6,800 6,800
-------- ---------- ------- --------
Total Operating Expenses.............. 572,579 (296,833) 488 276,234
-------- ---------- ------- --------
Operating Income......................... 44,889 (27,920) 1,522 18,491
-------- ---------- ------- --------
Other Income and (Deductions)
Investment Income........................ 904 (776) 742(2) 870
Interest Expense......................... (17,925) 108 (32)(2) (1,605)
16,244(3)
Foreign Currency Gain (loss)............. 2,327 (2) 2,325
Other.................................... 1,646 33 1,679
-------- ---------- ------- --------
Total Other........................... (13,048) (637) 16,954 3,269
-------- ---------- ------- --------
Income From Continuing Operations Before
Income Taxes............................. 31,841 (28,557) 18,476 21,760
Income Taxes............................... 18,537 (12,439) 7,021(4) 13,119
-------- ---------- ------- --------
Income From Continuing Operations.......... $ 13,304 $ (16,118) $11,455 $ 8,641
======== ========== ======= ========
Earnings per Common and Common Equivalent
Share.................................... $ 0.48 $ 0.31
======== ========
Weighted Average Common and Common
Equivalent Shares Outstanding............ 27,577 27,577
======== ========
</TABLE>
The notes to the unaudited pro forma condensed consolidated financial statements
are an integral part of this statement.
13
<PAGE> 16
PRIMARK CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
AS
REPORTED UNAUDITED
RESTATED PRO
AS REPORTED TIMCO(5) TIMCO TASC(1) ADJUSTMENTS FORMA
----------- --------- --------- --------- ----------- ---------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues.......... $ 767,125 $(106,362) $660,763 $(386,953) $ 3,253(2) $277,063
--------- --------- -------- --------- ------- --------
Operating Expenses:
Cost of services.......... 457,528 (88,779) 368,749 (258,768) 3,144(2) 113,125
Selling General and
Administrative.......... 199,922 (10,201) 189,721 (86,904) 102,817
Depreciation.............. 19,445 (1,204) 18,241 (5,923) 12,318
Amortization of
Goodwill................ 13,369 13,369 (2,753) 10,616
Amortization of other
intangible assets....... 10,540 10.540 (192) (1,164)(6) 9,184
Restructuring Charge......
--------- --------- -------- --------- ------- --------
Total Operating
Expenses.............. 700,804 (100,184) 600,620 (354,540) 1,980 248,060
--------- --------- -------- --------- ------- --------
Operating Income.......... 66,321 (6,178) 60,143 (32,413) 1,273 29,003
--------- --------- -------- --------- ------- --------
Other Income and
(Deductions)
Investment income......... 2,703 (4) 2,699 (638) 614(2) 2,675
Interest Expense.......... (20,193) 1,544 (18,649) 26 18,623(3) --
Foreign Currency Gain
(Loss).................. 1,864 1,864 (28) 1,836
Other..................... (1,533) 239 (1,294) 1,360 66
--------- --------- -------- --------- ------- --------
Total Other............. (17,159) 1,779 (15,380) 720 19,237 4,577
--------- --------- -------- --------- ------- --------
Income From Continuing
Operations Before Income
Taxes..................... 49,162 (4,399) 44,763 (31,693) 20,510 33,580
Income Taxes................ 21,207 (1,988) 19,219 (14,401) 7,794(4) 12,612
--------- --------- -------- --------- ------- --------
Income From Continuing
Operations................ 27,955 $ (2,411) $ 25,544 $ (17,292) $12,716 20,968
========= ======== ========= =======
Dividends on Preferred
Stock..................... (359) (359)
--------- --------
Income Applicable to Common
Stock..................... $ 27,596 $ 20,609
========= ========
Earnings per Common and
Common Equivalent Share... $ 1.04 $ 0.78
========= ========
Weighted Average Common and
Common Equivalent Shares
Outstanding............... 26,555 26,555
========= ========
</TABLE>
The notes to the unaudited pro forma condensed consolidated financial statements
are an integral part of this statement.
14
<PAGE> 17
PRIMARK CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENTS
1. TASC
The pro forma condensed consolidated income statements give effect to the
classification of TASC as a discontinued operation upon the receipt of
shareholder approval.
2. INTERCOMPANY ELIMINATION
The pro forma condensed consolidated income statements give effect to the
elimination of transactions between TASC and Primark or any of its other
subsidiaries that are included in the amounts reported for TASC on a separate
entity basis.
3. INTEREST EXPENSE
The pro forma condensed consolidated income statements give effect to the
reduction of interest expense as a result of the application of the proceeds
from the proposed transaction to repay outstanding debt balances. The pro forma
condensed consolidated income statement for the year ended December 31, 1996
does not reflect interest income which would have been earned on approximately
$78,556,000 of unapplied proceeds. Assuming the Company had invested such
unapplied proceeds in over night funds, it would have earned interest income of
approximately $4,000,000.
4. INCOME TAXES
The pro forma condensed consolidated income statements give effect to the
tax benefit of adjustments in notes 1 through 3 and note 6, as described above
and below, at an incremental rate of 38%.
5. TIMCO
The pro forma condensed consolidated income statement for the year ended
December 31, 1996 gives effect to the classification of TIMCO, a wholly owned
subsidiary of the Company, as discontinued operation as a result of the
Company's June 1997 announced plan to dispose of TIMCO. The September 30, 1997
financial statements of the Company as previously reported reflect TIMCO as a
discontinued operation.
6. DEBT ISSUE COSTS
The pro forma condensed consolidated income statements give effect to the
reduction in amortization of debt issue costs as a result of the Company's
assumed repayment of outstanding debt.
15
<PAGE> 18
PLAN OF DISTRIBUTION
This offering of 2,200,000 shares of Common Stock is being made by the
Selling Shareholders, who have indicated they are acting independently of each
other and the Company in determining the manner and extent of sales of the
shares of Common Stock included herein. The Company will receive none of the
proceeds of this Offering.
Although all of the shares of Common Stock that are currently owned by the
Selling Shareholders, or that would be owned by them upon the exercise of
options granted under the Plan, are being registered for public sale, the sale
of any or all of such shares by a Selling Shareholder may depend on the sale
price of such shares and market conditions generally prevailing at the time. The
Selling Shareholders reserve the right to reject any order in whole or in part.
The Selling Shareholders have informed the Company that they may sell the
shares of Common Stock being offered hereby in one or more transactions (which
may involve block transactions) effected from time to time on the NYSE or the
Pacific Stock Exchange, in special offerings, in the over-the counter market, in
negotiated transactions, or through a combination of such methods of sale, in
each case at market prices prevailing at the time of sale, at prices relating to
such prevailing market prices, or at negotiated prices. The shares of Common
Stock may be sold by one or more of the following methods: (i) a block trade in
which the broker or dealer so engaged will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction; (ii) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; (iii) an
exchange distribution and/or a secondary distribution in accordance with the
rules of the NYSE or the Pacific Stock Exchange, as applicable; and (iv)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate.
Some or all of the shares offered hereunder also may be sold to or through
an underwriter or underwriters. Any shares sold in that manner will be acquired
by such underwriters for their own accounts and may be resold from time to time
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale. Such
shares may be offered to the public through underwriting syndicates represented
by one or more managing underwriters or may be offered to the public directly by
one or more underwriters. Any initial public offering price and any discounts or
concessions allowed or disallowed or paid to dealers may be changed from time to
time.
The Selling Shareholders have indicated that if any of the Common Stock
offered hereby is sold through underwriters, brokers or dealers, then the
Selling Shareholders may pay customary brokerage commissions and charges or an
underwriting discount or concession. The Selling Shareholders and any
underwriters, brokers or dealers or other persons who participate with them in
the distribution of the shares offered hereby may be deemed to be "underwriters"
within the meaning of the Securities Act, although the Selling Shareholders
disclaim such status. Any commissions and discounts received by such persons, or
any profit on the resale of the stock by such persons, may be deemed to be
underwriting discounts and commissions under the Securities Act. Neither the
delivery of the Prospectus, or any Prospectus Supplement, nor any other action
taken by the Company, the Selling Shareholders or any purchaser in connection
with the purchase or sale of shares offered hereby shall be deemed or treated as
an admission that any of them is an underwriter within the meaning of the
Securities Act in connection with the sales of any shares.
The Selling Shareholders have agreed to indemnify and hold harmless the
Company, its officers and directors, with respect to any untrue statement in or
omission from, this Prospectus or the Registration Statement of which it is a
part, including amendments and supplements, if such statement or omission was
made in reliance upon information furnished to the Company by such Selling
Shareholder for use in the preparation of this Prospectus or Registration
Statement.
The Company will pay all expenses incidental to the registration of the
Common Stock, but will not pay selling or other expenses incurred in the
offering, including the discounts and commissions of broker-dealers.
16
<PAGE> 19
The Company has agreed to indemnify the Selling Shareholders against certain
civil liabilities, including liabilities under the Securities Act, in connection
with the Common Stock offered hereby.
The shares of Common Stock being offered hereby may also be sold by the
Selling Shareholders pursuant to Rule 144 promulgated under the Securities Act.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby and certain legal
matters relating to the Offering will be passed upon for the Company and the
Selling Shareholders by Michael R. Kargula, General Counsel of the Company. As
of December 22, 1997, Mr. Kargula beneficially owned 333,872 shares of Common
Stock.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report which is incorporated herein by reference
and has been so incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
17
<PAGE> 20
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 4
Risk Factors.......................... 5
Use of Proceeds....................... 6
Dividend Policy....................... 6
Selling Shareholders.................. 7
Selected Consolidated Historical and
Pro Forma Financial and Operating
Data................................ 8
Unaudited Pro Forma Consolidated
Financial Information............... 10
Plan of Distribution.................. 16
Legal Matters......................... 17
Experts............................... 17
</TABLE>
======================================================
======================================================
2,200,000 SHARES
[PRIMARK LOGO]
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
DECEMBER 24, 1997
======================================================
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. FEES*
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee....................... $ 26,103
Printing Expenses......................................................... 10,000
Accounting Fees........................................................... 5,000
Miscellaneous............................................................. 58,897
----------
Total..................................................................... $100,000
==========
</TABLE>
- ---------------
* All amounts except registration fee are estimates. All fees, excluding
underwriting fees and discounts, will be paid by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 561 through 571 of the Michigan Business Corporation Act (the
"MBCA") contain detailed provisions concerning the indemnification of directors,
officers, employees, and agents against judgments, penalties, fines and amounts
paid in settlement of litigation that they may incur in their capacity as such.
Section 561 through 571 of the MBCA, which are filed as Exhibit 99.1 to this
Registration Statement, are incorporated herein by reference.
Article VIII of the Articles of Incorporation of the Registrant provides
that the Registrant shall indemnify any person who is or was a director or
officer of the registrant or is or was serving at the request of the Registrant
as a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with any threatened, pending or completed
action, suit, or proceeding to the full extent provided by the MBCA from time to
time in effect.
Section 6.1 of the By-laws of the Registrant provides that the Registrant
shall indemnify its officers, directors, employees, agents and other persons to
the fullest extent to which corporations are empowered to indemnify such persons
at law.
Article IX of the Articles of Incorporation of the Registrant provides that
a director of the Registrant shall not be personally liable to the Registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in
good faith or that involve intentional misconduct or a knowing violation of law,
(iii) for a violation of Section 551(1) of the MBCA or (iv) for any transaction
from which the director derived any improper personal benefit.
The Company maintains a director's and officer's liability insurance policy
that covers its directors and officers for certain claims and actions incurred
in the course of their duties, including, under certain circumstances, alleged
violations of the Securities Act of 1933, as amended.
II-1
<PAGE> 22
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------------------------------------------------------------------------------
<C> <S>
4.1 Articles of Incorporation of the Registrant (incorporated by reference to Exhibit
3.1 to the Registrant's Registration Statement No. 2-74688); Amendment to the
Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the
Registrant's 1985 Form 10-K); Amendment dated August 8, 1991 (incorporated by
reference to Exhibit 3(a) to the Registrant's Form 8-K dated August 9, 1991);
Amendment dated May 27, 1992 (incorporated by reference to Exhibit 3.1 to the
Registrant's June 30, 1992 Form 10-Q); Amendment dated May 28, 1997 (incorporated
by reference to Exhibit 3.1 to the Registrant's June 30, 1997 Form 10-Q).
4.2 By-laws of the Registrant, as amended (incorporated by reference to the
Registrant's September 30, 1990 Form 10-Q).
5.1* Opinion of Michael R. Kargula, General Counsel of the Company, regarding the
legality of the shares of Common Stock being offered hereby.
23.1* Consent of Deloitte & Touche LLP.
23.2* Consent of Michael R. Kargula, General Counsel of the Company (included in Exhibit
5.1).
99.1* Sections 561-571 of the Michigan Business Corporation Act.
</TABLE>
- ---------------
* Filed herewith.
For documents incorporated by reference, references are to File No. 1-8260.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-2
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Waltham, Commonwealth of Massachusetts, on December
24, 1997.
PRIMARK CORPORATION
By: STEPHEN H. CURRAN
-----------------------------------
Executive Vice President and
Chief Financial Officer
December 24, 1997
The undersigned directors and officers of Primark Corporation, a Michigan
corporation, hereby severally constitute and appoint Joseph E. Kasputys, Stephen
H. Curran and Michael R. Kargula, and each of them, (with full power to act
without the others), his or her true and lawful attorneys-in-fact and agents,
with full powers of substitution and resubstitution, for him or her and in his
or her name, place and stead, in any and all capacities, to execute and file
with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933, as amended, a Registration Statement on Form S-3
offering for sale to the public of 2,200,000 shares of Primark common stock
("Registration Statement') and any and all amendments (including post-effective
amendments) to the Registration Statement, hereby giving and granting unto said
attorneys full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises as fully, to
all intents and purposes, as he or she might or could do if personally present
at the time thereof, hereby ratifying and confirming all that said attorneys and
agents, or any of them, or their or his or her substitute or substitutes, may or
shall lawfully do, or cause to be done, by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ -------------------
<C> <S> <C>
* Chairman, President and Chief December 23, 1997
- ------------------------------------------ Executive Officer (Principal
Joseph E. Kasputys Executive Officer)
/s/ STEPHEN H. CURRAN Executive Vice President and December 23, 1997
- ------------------------------------------ Chief Financial (Principal
Stephen H. Curran Accounting and Financial
Officer)
* Director December 23, 1997
- ------------------------------------------
Jonathan Newcomb
* Director December 23, 1997
- ------------------------------------------
Kevin J. Bradley
* Executive Vice President and December 23, 1997
- ------------------------------------------ Director
John C. Holt
</TABLE>
II-3
<PAGE> 24
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ -------------------
<C> <S> <C>
* Director December 23, 1997
- ------------------------------------------
Steven Lazarus
* Director December 23, 1997
- ------------------------------------------
Patricia McGinnis
* Director December 23, 1997
- ------------------------------------------
Constance K. Weaver
</TABLE>
*By: /S/ STEPHEN H. CURRAN
--------------------------
Stephen H. Curran
Attorney-in-Fact
II-4
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. DESCRIPTION NUMBERED PAGE
- ------- ------------------------------------------------------------------------ --------------
<S> <C> <C>
4.1 Articles of Incorporation of the Registrant (incorporated by reference
to Exhibit 3.1 to the Registrant's Registration Statement No. 2-74688);
Amendment to the Articles of Incorporation (incorporated by reference to
Exhibit 3.1 to the Registrant's 1985 Form 10-K); Amendment dated August
8, 1991 (incorporated by reference to Exhibit 3(a) to the Registrant's
Form 8-K dated August 9, 1991); Amendment dated May 27, 1992
(incorporated by reference to Exhibit 3.1 to the Registrant's June 30,
1992 Form 10-Q); Amendment dated May 28, 1997 (incorporated by reference
to Exhibit 3.1 to the Registrant's June 30, 1997 Form 10-Q).
4.2 By-laws of the Registrant, as amended (incorporated by reference to the
Registrant's September 30, 1990 Form 10-Q).
5.1* Opinion of Michael R. Kargula, General Counsel of the Company, regarding
the legality of the shares of Common Stock being offered hereby.
23.1* Consent of Deloitte & Touche LLP.
23.2* Consent of Michael R. Kargula, General Counsel of the Company (included
in Exhibit 5.1).
99.1* Sections 561-571 of the Michigan Business Corporation Act.
</TABLE>
- ---------------
* Filed herewith.
For the Company's documents incorporated by reference, references are to File
No. 1-8260.
II-5
<PAGE> 1
EXHIBIT 5.1
December 24, 1997
Primark Corporation
1000 Winter Street
Suite 4300
Waltham, MA 02154
Ladies and Gentlemen:
I am General Counsel of Primark Corporation, a Michigan corporation (the
"Company"). I am providing you with this opinion in connection with the
underwritten public offering of 2,200,000 shares of the Company's Common Stock,
without par value (the "Common Stock") to be sold by the Selling Shareholders
named in the Registration Statement, as hereinafter defined.
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the
"Act").
In connection with this opinion, I have examined (i) the Registration
Statement of the Company on Form S-3 relating to the Company Shares filed with
the Securities and Exchange Commission (the "Commission") on December 24, 1997
(the "Registration Statement"); (ii) the Articles of Incorporation and the
By-laws of the Company, in each case as amended to the date hereof; (iii)
certain resolutions of the Board of Directors of the Company; and (iv) such
other documents as I have deemed necessary or appropriate for the opinions
expressed below.
In my examination I have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to me as originals, the conformity to the original documents of all
documents submitted to me as certified or photostatic copies and the
authenticity of the originals of such copies. As to any facts material to the
opinions expressed below which I did not independently establish or verify, I
have relied upon oral or written statements and representations of officers and
other representatives of the Company and others.
I am admitted to the Bar of the State of Michigan and I do not express any
opinion as to the law of any other jurisdiction.
Based upon and subject to the foregoing, I am of the opinion that the
2,200,000 shares of Company Stock outstanding on the date hereof are validly
issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the prospectus which constitutes a part of the Registration
Statement. In giving such consent, I do not thereby admit that I am in the
category of persons whose consent is required under Section 7 of the Act or
rules and regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ MICHAEL R. KARGULA
- -----------------------------------
MICHAEL R. KARGULA
II-6
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Primark Corporation on Form S-3 of our report dated February 11, 1997,
incorporated by reference in the Annual Report on Form 10-K of Primark
Corporation for the year ended December 31, 1996 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 23, 1997
II-7
<PAGE> 1
EXHIBIT 99.1
SECTION 561. INDEMNIFICATION FOR EXPENSES, JUDGMENTS, FINES AND
SETTLEMENTS; PLEA OF NOLO CONTENDERE, EFFECT. A Corporation shall have power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative or investigative and whether formal or informal,
other than an action by or in the right of the corporation, by reasons of the
fact that he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise,
whether for profit or not, against expenses, including attorneys' fees,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such action, suit or
proceeding if the person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation or its shareholders, and with respect to any criminal action or
proceeding, if the person had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
does not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the corporation or its shareholders, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his or her conduct was unlawful.
SECTION 562. INDEMNIFICATION FOR EXPENSE INCURRED FOR DEFENSE OR
SETTLEMENT OF LITIGATION; NEGLIGENCE OR MISCONDUCT; EXTENT OF
INDEMNIFICATION. A corporation has the power to indemnify a person who was or
is a party or is threatened to be made a party to a threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee,
or agent of another foreign or domestic corporation, partnership, joint venture,
trust, or other enterprise, whether for profit or not, against expenses,
including attorneys' fees, and amounts paid in settlement actually and
reasonably incurred by the person in connection with the action or suit, if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interest of the corporation or its shareholders.
Indemnification shall not be made for a claim, issue, or matter in which the
person has been found liable to the corporation except to the extent authorized
in section 564c.
SECTION 563. SUCCESS IN DEFENSE OF LITIGATION. To the extent that a
director, officer, employee, or agent of a corporation has been successful on
the merits or otherwise in defense of an action, suit, or proceeding referred to
in section 561 or 562, or in defense of a claim, issue, or matter in the action,
suit, or proceeding, he or she shall be indemnified against actual and
reasonable expenses, including attorneys' fees, incurred by him or her in
connection with the action, suit, or proceeding and an action, suit, or
proceeding brought to enforce the mandatory indemnification provided in this
subsection.
SECTION 564a. DETERMINING PERMISSIBILITY OF INDEMNIFICATION AND
REASONABLENESS OF EXPENSE. (1) An indemnification under section 561 or 562,
unless ordered by the court, shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in sections 561 and 562 and
upon an evaluation of the reasonableness of expenses and amounts paid in
settlement. This determination and evaluation shall be made in any of the
following ways:
By a majority vote of a quorum of the board consisting of directors who are
not parties or threatened to be made parties to the action, suit or proceeding.
If a quorum cannot be obtained under subdivision (a), by majority vote of a
committee duly designated by the board and consisting solely of 2 or more
directors not at the time parties or threatened to be made parties to the
action, suit, or proceeding.
By independent legal counsel in a written opinion, which counsel shall be
selected in 1 of the following ways:
II-8
<PAGE> 2
By the board or its committee in the manner prescribed in subdivision (a)
or (b).
If a quorum of the board cannot be obtained under subdivision (a) and a
committee cannot be designated under subdivision (b), by the board.
By all independent directors who are not parties or threatened to be made
parties to the action, suit, or proceeding.
By the shareholders, but shares held by directors, officers, employees, or
agents who are parties or threatened to be made parties to the action, suit, or
proceeding may not be voted.
In the designation of a committee under subsection (1)(b) or in the
selection of independent legal counsel under subsection (1)(c)(ii), all
directors may participate.
If a person is entitled to indemnification under section 561 or 562 for a
portion of expenses, including reasonable attorneys' fees, judgments, penalties,
fines and amounts paid in settlement, but not for the total amount, the
corporation may indemnify the person for the portion of the expenses, judgments,
penalties, fines, or amounts paid in settlement for which the person is entitled
to be indemnified.
SECTION 564b. ADVANCEMENT OF REASONABLE EXPENSES PRIOR TO FINAL
DISPOSITION; CONDITIONS. (1) A corporation may pay or reimburse the reasonable
expenses incurred by a director, officer, employee, or agent who is a party or
threatened to be made a party to an action, suit, or proceeding in advance of
final disposition of the proceeding if all of the following apply:
The person furnishes the corporation a written affirmation of his or her
good faith belief that he or she has met the applicable standard of conduct set
forth in sections 561 and 562.
The person furnishes the corporation a written undertaking, executed
personally or on his or her behalf, to repay the advance if it is ultimately
determined that he or she did not meet the standard of conduct.
A determination is made that the facts then known to those making the
determination would not preclude indemnification under this act.
The undertaking required by subsection (1)(b) must be an unlimited general
obligation of the person but need not be secured.
Determinations and evaluations under this section shall be made in the
manner specified in section 564a.
SECTION 564c. APPLICATION TO COURT FOR INDEMNIFICATION. A director,
officer, employee, or agent of the corporation who is a party or threatened to
be made a party to an action, suit, or proceeding may apply for indemnification
to the court conducting the proceeding or to another court of competent
jurisdiction. On receipt of an application, the court after giving any notice it
considers necessary may order indemnification if it determines that the person
is fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not he or she met the applicable standard of conduct
set forth in sections 561 and 562 or was adjudged liable as described in section
562, but if he or she was adjudged liable, his or her indemnification is limited
to reasonable expenses incurred.
SECTION 565. NONEXCLUSIVITY OF STATUTE; RIGHTS OF OTHER PERSONS;
CONTINUATION OF RIGHTS. (1) The indemnification or advancement of expenses
provided under section 561 to 564c is not exclusive of other rights to which a
person seeking indemnification or advancement of expenses may be entitled under
the articles of incorporation, bylaws, or a contractual agreement. The total
amount of expenses advanced or indemnified from all sources combined shall not
exceed the amount of actual expenses incurred by the person seeking
indemnification or advancement of expenses.
(2) The indemnification provided for in sections 561 to 565 continues as to
a person who ceases to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, personal representatives, and administrators
of the person.
SECTION 567. INSURANCE AGAINST LIABILITY. A corporation shall have power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the corporation, or is
II-9
<PAGE> 3
or was serving at the request of the corporation as a director, officer,
partner, trustee, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
or her and incurred by him or her status as such, whether or not the corporation
would have power to indemnify him or her against liability under sections 561 to
565.
Section 569. CORPORATION; CONSTRUCTION OF REFERENCES TO. For purposes of
section 561 to 567, "corporation" include all constituent corporations absorbed
in a consolidation or merger and the resulting or surviving corporation, so that
a person who is or was a director, officer, partner, trustee, employee, or agent
of such constituent corporation or is or was serving at the request of the
constituent corporation as a director, officer, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust, or other
enterprise whether for profit or not shall stand in the same position under the
provisions of this section with respect to the resulting or surviving
corporation as the person would if he or she had served the resulting or
surviving corporation in the same capacity.
SECTION 571. DEFINITIONS. For the purposes of section 561 to 567:
"Fines" shall include any excise taxes assessed on a person with respect to
an employee benefit plan.
"Other enterprises" shall include employee benefit plans.
"Serving at the request of the corporation" shall include any service as a
director, officer employee, or agent of the corporation which imposes duties on,
or involves services by, the director, officer, employee, or agent with respect
to an employee benefit plan, its participants, or its beneficiaries.
A person who acted in good faith and in a manner he or she reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be considered to have acted in a manner "not opposed
to the best interests of the corporation or its shareholders" as referred to in
sections 561 and 562.
II-10
