<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES
EXCHANGE ACT OF 1934
DUFF & PHELPS CREDIT RATING CO. (ISSUER)
-------------------------------------------
(NAME OF SUBJECT COMPANY)
FSA ACQUISITION CORP. (OFFEROR), AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FIMALAC S.A.
- --------------------------------------------------------------------------------
(NAMES OF FILING PERSONS (IDENTIFYING STATUS AS OFFEROR, ISSUER OR OTHER
PERSON))
COMMON STOCK, NO PAR VALUE
-------------------------------------------
(TITLE OF CLASS OF SECURITIES)
26432F109
-------------------------------------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
STEPHEN JOYNT (PRESIDENT) OR DAVID KENNEDY (VICE-PRESIDENT), FSA ACQUISITION
CORP.,
ONE STATE STREET PLAZA, NEW YORK, NY 10004 (TEL: (212) 908-0500)
- --------------------------------------------------------------------------------
(NAME, ADDRESS, AND TELEPHONE NUMBERS OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF FILING PERSONS)
Copy to: David K. Lakhdhir, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Tel: (212) 373-3000
Calculation of Filing Fee
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
- --------------------------------------------------------------------------------------------
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$527,400,000 $105,480
- --------------------------------------------------------------------------------------------
</TABLE>
* For purposes of calculating the filing fee pursuant to Rule 0-11(d), the
Transaction Valuation was calculated on the basis of (i) 4,644,121
outstanding shares of common stock, no par value per share, of Duff & Phelps
Credit Rating Co. (the "Shares"), (ii) the tender offer price of $100.00 per
Share and (iii) 1,055,705 options to acquire Shares with an exercise price
at less than $100.00 under Duff & Phelps Credit Rating Co. 1994 Long-Term
Stock Incentive Plan with an aggregate value of $63,587,900.00. Based on the
foregoing, the transaction value is equal to the sum of (1) the product of
4,644,121 Shares and $100.00 per Share and (2) the product of (A) 1,055,705
Shares which are subject to options to purchase Shares with an exercise
price of less than $100.00 per share and (B) the difference between $100.00
per Share and the exercise price per Share of such options.
** The filing fee, calculated in accordance with Rule 0-11 of the Securities
Exchange Act of 1934, is 1/50th of one percent of the aggregate Transaction
Valuation.
/ / Check the box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
Amount Previously Paid: None Filing Party: Not Applicable
Form or Registration No.: Not Applicable Date Filed: Not Applicable
/ / Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
/X/ third-party tender offer subject to Rule 14d-1.
/ / issuer tender offer subject to Rule 13e-4.
/ / going-private transaction subject to Rule 13e-3.
/ / amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: / /
<PAGE>
This Tender Offer Statement on Schedule TO relates to the third-party tender
offer by FSA Acquisition Corp., a Delaware corporation ("Purchaser") and an
indirect wholly-owned subsidiary of Fimalac S.A., a French SOCIETE ANONYME
("Parent"), to purchase all of the issued and outstanding shares (the "Shares")
of common stock, no par value per share (the "Common Stock"), of Duff & Phelps
Credit Rating Co., an Illinois corporation (the "Company"), at a purchase price
of $100.00 per Share, net to the seller in cash, without interest thereon, upon
the terms and subject to the conditions set forth in the Offer to Purchase dated
March 15, 2000 (the "Offer to Purchase"), a copy of which is attached hereto as
Exhibit (a)(1)(A), and in the related Letter of Transmittal (the "Letter of
Transmittal"), a copy of which is attached hereto as Exhibit (a)(1)(B) (which,
together with the Offer to Purchase, as amended or supplemented from time to
time, constitute the "Offer").
The information in the Offer to Purchase, including all schedules and
annexes thereto, is hereby expressly incorporated herein by reference in
response to all the items of this Schedule TO, except as otherwise set forth
below.
ITEM 1. SUMMARY TERM SHEET.
The information set forth in the Summary Term Sheet in the Offer to Purchase
is incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) The name of the subject company is Duff & Phelps Credit Rating Co., an
Illinois corporation. The Company's executive offices are located at
55 E. Monroe St., Chicago, Illinois 60603, telephone: (312) 368-3100.
(b) The class of securities to which this statement relates is the Common
Stock, no par value per share, of the Company, of which 4,644,121 shares
were issued and outstanding as of March 3, 2000. The information set
forth on the cover page and in the "Introduction" of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) This Tender Offer Statement is filed by Purchaser. The information set
forth in Section 8 ("Certain Information Concerning Parent and
Purchaser") of the Offer to Purchase and on Schedule I thereto is
incorporated herein by reference.
(b) The information set forth in Section 8 ("Certain Information Concerning
Parent and Purchaser") of the Offer to Purchase and on Schedule I thereto
is incorporated herein by reference.
(c) The information set forth in Section 8 ("Certain Information Concerning
Parent and Purchaser") of the Offer to Purchase and on Schedule I thereto
is incorporated herein by reference. During the last five years, none of
Purchaser or Parent or, to the best knowledge of Purchaser or Parent, any
of the persons listed on Schedule I to the Offer to Purchase (i) has been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) was a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final
order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of
any violation of such laws. All of the persons listed on Schedule I to
the Offer to Purchase are citizens of France, unless indicated otherwise
thereon.
2
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ITEM 4. TERMS OF THE TRANSACTION.
The information set forth in the Offer to Purchase is incorporated herein by
reference.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
The information set forth in the Introduction, Section 10 ("Background of
the Offer and the Merger; Past Contacts or Negotiations with the Company") and
Section 11 ("The Merger Agreement") of the Offer to Purchase is incorporated
herein by reference. Except as set forth in the Introduction, Section 10 and
Section 11 of the Offer to Purchase, there have been no material contacts,
negotiations or transactions during the past two years which would be required
to be disclosed under this Item 5 between any of Purchaser or Parent or any of
their respective subsidiaries or, to the best knowledge of Purchaser and Parent,
any of those persons listed on Schedule I to the Offer to Purchase and the
Company or its affiliates concerning a merger, consolidation or acquisition, a
tender offer or other acquisition of securities, an election of directors or a
sale or other transfer of a material amount of assets.
ITEM 6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a), (c)(1), (c)(4)-(7) The information set forth in the Introduction,
Section 10 ("Background of the Offer and the Merger; Past Contacts or
Negotiations with the Company"), Section 11 ("The Merger Agreement"),
Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company"), Section 13 ("Certain Effects of the Offer") and Section 14
("Dividends and Distributions") of the Offer to Purchase is incorporated
herein by reference.
(c)(2)-(3) Not applicable.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information set forth in Section 9 ("Source and Amount of Funds") of the
Offer to Purchase is incorporated herein by reference.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction and Section 8
("Certain Information Concerning Parent and Purchaser") of the Offer to
Purchase is incorporated herein by reference.
ITEM 9. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 10. FINANCIAL STATEMENTS.
Not applicable.
ITEM 11. ADDITIONAL INFORMATION.
The information set forth in the Offer to Purchase and Letter of Transmittal
is incorporated herein by reference.
3
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ITEM 12. EXHIBITS.
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(a)(1)(A) Offer to Purchase, dated March 15, 2000
(a)(1)(B) Letter of Transmittal
(a)(1)(C) Notice of Guaranteed Delivery
(a)(1)(D) Letter from the Dealer Manager to Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees
(a)(1)(E) Letter to clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees
(a)(1)(F) Guidelines for Certification of Taxpayer Identification
Number of Substitute Form W-9
(a)(1)(G) Summary Advertisement as published on March 15, 2000
(a)(1)(H) Press Release dated March 7, 2000
(b) None.
(d)(1) Agreement and Plan of Merger, dated March 6, 2000, by and
among Duff & Phelps Credit Rating Co., Fimalac S.A.,
Fimalac, Inc. and FSA Acquisition Corp.
(g) None.
(h) None.
</TABLE>
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete, and correct.
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FSA Acquisition Corp.
By /s/ STEPHEN JOYNT
-----------------------------------------
Name: Stephen Joynt
Title: President
</TABLE>
March 15, 2000
4
<PAGE>
EXHIBIT (a)(1)(A)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DUFF & PHELPS CREDIT RATING CO.
AT
$100.00 NET PER SHARE
BY
FSA ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FIMALAC S.A.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, APRIL 11, 2000,
UNLESS THE OFFER IS EXTENDED.
THIS OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED AS
OF MARCH 6, 2000 (THE "MERGER AGREEMENT") BY AND AMONG DUFF & PHELPS CREDIT
RATING CO. (THE "COMPANY"), FIMALAC S.A. (THE "PARENT"), FIMALAC, INC.
("FIMALAC-U.S.") AND FSA ACQUISITION CORP. (THE "PURCHASER"). THE BOARD OF
DIRECTORS OF THE COMPANY HAS DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR
TO AND IN THE BEST INTERESTS OF THE COMPANY, APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
DECLARED THEIR ADVISABILITY AND RESOLVED TO RECOMMEND THAT THE STOCKHOLDERS OF
THE COMPANY ACCEPT THE OFFER, TENDER THEIR SHARES THEREUNDER TO PURCHASER AND,
IF REQUIRED BY APPLICABLE LAW, APPROVE AND ADOPT THE MERGER AGREEMENT AND THE
MERGER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF
SHARES THAT WOULD CONSTITUTE ON THE DATE OF PURCHASE AT LEAST 51% OF ALL
OUTSTANDING SHARES ON A FULLY DILUTED BASIS (ASSUMING THE EXERCISE OF ALL STOCK
OPTIONS), WHICH REPRESENTS APPROXIMATELY 62.6% OF THE OUTSTANDING SHARES AND
(2) ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976 HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO
SUBJECT TO OTHER TERMS AND CONDITIONS. SEE SECTIONS 15 AND 16 OF THE OFFER TO
PURCHASE.
THE OFFER IS NOT CONDITIONED UPON PARENT OR PURCHASER OBTAINING FINANCING.
THE DEALER MANAGER FOR THE OFFER IS
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza
New York, NY 10020
(212) 632-6717
March 15, 2000
<PAGE>
IMPORTANT
If you wish to tender all or any portion of your Shares, you must take the
steps set forth in either (i) or (ii) below prior to the Expiration Date (as
defined in Section 1 of this Offer to Purchase):
(i) (a) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of
Transmittal, have your signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, deliver the Letter of
Transmittal (or such facsimile), or, in the case of a book-entry
transfer effected pursuant to the procedure set forth in Section 2 of
this Offer to Purchase, an Agent's Message, and any other required
documents to the Depositary, and
(b) deliver the certificates for such Shares to the Depositary along
with the Letter of Transmittal (or manually signed facsimile) or deliver
such Shares pursuant to the procedure for book-entry transfer set forth
in Section 2 of this Offer to Purchase; or
(ii) request your broker, dealer, bank, trust company or other nominee to
effect the transaction for you.
If you have Shares registered in the name of a broker, dealer, bank, trust
company or other nominee, you must contact such broker, dealer, bank, trust
company or other nominee if you desire to tender your Shares.
If you wish to tender Shares and your certificates for Shares are not
immediately available or the procedure for book-entry transfer cannot be
completed on a timely basis, or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, your tender may be effected
by following the procedure for guaranteed delivery set forth in Section 2 of
this Offer to Purchase.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to Morrow & Co., Inc. (the "Information Agent") or to Lazard
Freres & Co. LLC (the "Dealer Manager") at their respective addresses and
telephone numbers set forth on the back cover of this Offer to Purchase.
<PAGE>
TABLE OF CONTENTS
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PAGE
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SUMMARY TERM SHEET.......................................... 1
INTRODUCTION................................................ 5
THE TENDER OFFER............................................ 7
1. Terms of the Offer..................................... 7
2. Procedure for Accepting the Offer and Tendering
Shares.................................................... 9
3. Withdrawal Rights...................................... 11
4. Acceptance for Payment and Payment for Shares.......... 12
5. Certain United States Federal Income Tax
Consequences.............................................. 13
6. Price Range of Shares; Dividends....................... 14
7. Certain Information Concerning the Company............. 14
8. Certain Information Concerning Parent and Purchaser.... 17
9. Source and Amount of Funds............................. 19
10. Background of the Offer and the Merger; Past Contacts
or Negotiations with the Company.......................... 21
11. The Merger Agreement................................... 23
12. Purpose of the Offer and the Merger; Plans for the
Company................................................... 33
13. Certain Effects of the Offer........................... 35
14. Dividends and Distributions............................ 36
15. Certain Conditions of the Offer........................ 36
16. Certain Legal Matters.................................. 38
17. Fees and Expenses...................................... 40
18. Miscellaneous.......................................... 41
</TABLE>
Schedule I INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER.
<PAGE>
SUMMARY TERM SHEET
FSA Acquisition Corp. is offering to purchase all of the outstanding shares
of common stock of Duff & Phelps Credit Rating Co. for $100.00 per share in
cash. The following are some of the questions that you, as a stockholder of
Duff & Phelps Credit Rating Co., may have and the answers to those questions. We
urge you to read carefully the remainder of this offer to purchase and the
letter of transmittal because the information in this summary term sheet is not
complete. Additional important information is contained in the remainder of this
offer to purchase and the letter of transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is FSA Acquisition Corp. We are a Delaware corporation and have
carried on no business other than in connection with the merger agreement. We
are an indirect wholly owned subsidiary of Fimalac S.A., a corporation organized
under the laws of France. See the "Introduction" and Section 8.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are offering to purchase all of the outstanding common stock of Duff &
Phelps Credit Rating Co. See the "Introduction" and Section 1.
HOW MUCH ARE YOU OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT, AND WILL I
HAVE TO PAY ANY FEES OR COMMISSIONS?
We are offering to pay $100.00 per share, net to you, in cash. If you are
the record owner of your shares and you tender your shares to us in the offer,
you will not have to pay brokerage fees or similar expenses. If you own your
shares through a broker or other nominee, and your broker tenders your shares on
your behalf, your broker or nominee may charge you a fee for doing so. You
should consult your broker or nominee to determine whether any charges will
apply. See the "Introduction."
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Fimalac S.A. will provide us with sufficient funds to purchase all shares
validly tendered and not withdrawn in the offer and to provide funding for the
merger which is expected to follow the successful completion of the offer.
Fimalac S.A. has received a commitment letter from financial institutions in
which such financial institutions have committed to provide all financing
necessary to purchase all shares that are tendered in the offer. The offer is
not conditioned upon any financing arrangements. See Section 9.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision whether
to tender in the offer because the form of payment consists solely of cash and
we have already arranged for all of our funding to come from long-term
borrowings. Additionally, the offer is not subject to any financing condition.
See Section 9.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, New York City time, on Tuesday,
April 11, 2000 to tender your shares in the offer. If you cannot deliver
everything that is required in order to make a valid tender by that time, you
may be able to use a guaranteed delivery procedure, which is described later in
this offer to purchase. See Section 1 and Section 2.
1
<PAGE>
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Subject to the terms of the merger agreement, we can extend the offer. We
have agreed in the merger agreement that we may extend (and re-extend) the offer
without Duff & Phelps Credit Rating Co.'s consent in the following
circumstances:
- if any of the conditions to the offer have not been satisfied or waived,
we may extend (and re-extend) the offer until such time as they are
satisfied or waived; and
- after the initial offering period, we may extend the offer for an
additional period of up to 20 business days, if we pay for all shares that
have been tendered and not withdrawn at the expiration of the initial
offering period.
In addition, we may extend the offer for any period required by any rule,
regulation, interpretation or position of the SEC or its staff or as required by
applicable law, and we have agreed in the merger agreement to extend the offer
for an additional 10 business days if on the expiration date either one of the
following two conditions to the offer are not satisfied: that there be no claim
or litigation by a governmental authority or any other person negatively
affecting the offer or the merger, and that all consents and approvals required
in connection with the offer are received. See Section 15.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform Harris Trust Company of New York
(which is the depositary for the offer) of that fact and will make a public
announcement of the extension, not later than 9:00 a.m., New York City time, on
the next business day after the day on which the offer was scheduled to expire.
See Section 1.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We are not obligated to purchase any shares which are validly tendered
unless the number of shares validly tendered and not properly withdrawn before
the expiration date of the offer represents not less than 51% of the outstanding
shares of Duff & Phelps Credit Rating Co. on a fully diluted basis (assuming the
exercise of all stock options and excluding shares held by Duff & Phelps Credit
Rating Co. or any of its subsidiaries). This minimum number of shares represents
approximately 62.6% of presently outstanding Shares.
- We are not obligated to purchase shares which are validly tendered if
there is a material adverse change in Duff & Phelps Credit Rating Co. or
its business or any event occurs which has a material adverse effect on
the offer.
- We are not obligated to purchase shares which are validly tendered if the
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 has not expired or been waived.
The offer is also subject to a number of other conditions. We can waive any
of the conditions to the offer without the consent of Duff & Phelps Credit
Rating Co., except that we cannot waive or decrease the minimum condition. See
Section 15.
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal, to Harris Trust Company
of New York, the depositary for the offer, not later than the time the tender
offer expires. If your shares are held in street name, the shares can be
tendered by your nominee through The Depository Trust Company. If you cannot get
any document or instrument that is required to be delivered to the depositary by
the expiration of the tender offer, you may get some extra time to do so by
having a broker, a bank or other fiduciary which is a member of the Securities
Transfer Agents Medallion Program or other eligible institution guarantee that
the missing items will be received by
2
<PAGE>
the depositary within three New York Stock Exchange trading days after the date
of the execution of the notice of guaranteed delivery. For the tender to be
valid, however, the depositary must receive the missing items within that three
trading day period. See Section 2.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares at any time until the offer has expired and, if we
have not agreed by May 15, 2000 to accept your shares for payment, you can
withdraw them at any time after such time until we accept shares for payment.
This right to withdraw will not apply to Shares tendered during any subsequent
offering period discussed in Section 1, except if such Shares are not
immediately accepted for payment. See Section 3.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. See Section 3.
WHAT DOES DUFF & PHELPS CREDIT RATING CO.'S BOARD OF DIRECTORS THINK OF THE
OFFER?
We are making the offer pursuant to the merger agreement, which has been
approved by the board of directors of Duff & Phelps Credit Rating Co. by
unanimous vote of those present. The board of directors of Duff & Phelps Credit
Rating Co. by unanimous vote of those present (1) determined that the offer, the
merger and the merger agreement are advisable, fair to, and in the best
interests of, Duff & Phelps Credit Rating Co., (2) approved the merger, the
offer, the merger agreement and the other transactions contemplated by the
merger agreement and declared their advisability and (3) recommends that its
stockholders accept the offer and tender their shares pursuant thereto and
approve and adopt the merger agreement. See the "Introduction."
HAVE ANY STOCKHOLDERS PREVIOUSLY AGREED TO TENDER THEIR SHARES?
No.
IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL
DUFF & PHELPS CREDIT RATING CO. CONTINUE AS A PUBLIC COMPANY?
No. Following the purchase of shares in the offer we expect to consummate
the merger, and following the merger Duff & Phelps Credit Rating Co. no longer
will be publicly owned. Even if for some reason the merger does not take place,
if we purchase all the tendered shares, there may be so few remaining
stockholders and publicly held shares that Duff & Phelps Credit Rating Co.
common stock will no longer be eligible to be traded on the New York Stock
Exchange or on any other securities exchange, there may not be a public trading
market for Duff & Phelps Credit Rating Co. stock, and Duff & Phelps Credit
Rating Co. may cease making filings with the SEC or otherwise cease being
required to comply with SEC rules relating to publicly held companies. See
Section 13.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL THE DUFF & PHELPS
CREDIT RATING CO. SHARES ARE NOT TENDERED IN THE OFFER?
Yes. If we accept for payment and pay for at least 51% of the outstanding
shares of Duff & Phelps Credit Rating Co., either we will be merged with and
into Duff & Phelps Credit Rating Co., or Duff & Phelps Credit Rating Co. will be
merged into us. If that merger takes place, all remaining stockholders of
Duff & Phelps Credit Rating Co. (other than us, Duff & Phelps Credit Rating Co.
and stockholders properly exercising dissenters' rights) will receive $100.00
(or any higher price that may be paid for each share pursuant to the offer) in
cash. See the "Introduction" and Section 11.
3
<PAGE>
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, stockholders not tendering in the
offer will receive the same amount of cash per share that they would have
received had they tendered their shares in the offer, subject to dissenter's
rights properly exercised under Illinois law. Therefore, if the merger takes
place, the only difference to you between tendering your shares and not
tendering your shares is that you will be paid earlier and will not have
dissenters' rights if you tender your shares. However, if for some reason the
merger does not take place, the number of stockholders of Duff & Phelps Credit
Rating Co. and the number of shares of Duff & Phelps Credit Rating Co. which are
still in the hands of the public may be so small that there no longer will be an
active public trading market (or, possibly, there may not be any public trading
market) for Duff & Phelps Credit Rating Co. common stock. Also, as described
above, Duff & Phelps Credit Rating Co. may cease making filings with the SEC or
otherwise being required to comply with the SEC rules relating to publicly held
companies. See the "Introduction" and Section 13.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On March 6, 2000, the last trading day before we announced the tender offer
and the possible subsequent merger, the closing price of Duff & Phelps Credit
Rating Co. common stock reported on the New York Stock Exchange was $79.00 per
share. On March 14, 2000, the last trading day before we commenced the tender
offer, the closing price of Duff & Phelps Credit Rating Co. common stock
reported on the New York Stock Exchange was $98.38 per share. We advise you to
obtain a recent quotation for shares of Duff & Phelps Credit Rating Co. common
stock in deciding whether to tender your shares. See Section 6.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call Morrow & Co., Inc. at (800) 566-9061 (toll free) or Lazard
Freres & Co. LLC at (212) 632-6717. Morrow & Co., Inc. is acting as the
information agent and Lazard Freres & Co. LLC is acting as the dealer manager
for our tender offer. See the back cover of this offer to purchase.
4
<PAGE>
To the Holders of Common Stock of
Duff & Phelps Credit Rating Co.
INTRODUCTION
FSA Acquisition Corp. ("Purchaser"), a Delaware corporation and an indirect
wholly owned subsidiary of Fimalac S.A., a French SOCIETE ANONYME ("Parent"),
hereby offers to purchase all outstanding shares of common stock, no par value
per share (the "Shares"), of Duff & Phelps Credit Rating Co., an Illinois
corporation (the "Company"), at a price of $100.00 per Share (the "Offer
Price"), net to the selling stockholder in cash, upon the terms and subject to
the conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
Stockholders of record who hold Shares registered in their own name and
tender their Shares directly to the Depositary (as defined below) will not be
obligated to pay brokerage fees, commissions, solicitation fees or, subject to
Instruction 6 of the Letter of Transmittal, stock transfer taxes, if any, on the
purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold
their Shares through a bank or broker should check with such institution as to
whether they will be charged any service fees. However, any tendering
stockholder or other payee who fails to complete and sign the Substitute
Form W-9 that is included in the Letter of Transmittal may be subject to a
required federal backup withholding tax of 31% of the gross proceeds payable to
such stockholder or other payee pursuant to the Offer. See Section 2. Purchaser
will pay all charges and expenses of Lazard Freres & Co. LLC, as Dealer Manager
("Lazard Freres" or the "Dealer Manager"), Morrow & Co., Inc., as Information
Agent (the "Information Agent"), and Harris Trust Company of New York, as
Depositary (the "Depositary"), incurred in connection with the Offer. See
Section 17.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration date of the Offer that number
of Shares representing not less than 51% of the Company's outstanding voting
power on a fully diluted basis (assuming the exercise of all outstanding options
to purchase Shares which have an exercise price less than the Offer Price and
excluding any Shares held by the Parent, Fimalac-U.S., Purchaser or any of their
respective direct or indirect wholly owned subsidiaries) (the "Minimum
Condition") and (ii) the expiration or termination of any applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). The Offer is also subject to other terms and
conditions. See Section 15.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of March 6, 2000 (the "Merger Agreement"), by and among Parent, Purchaser,
Fimalac-U.S. and the Company. The Merger Agreement provides, among other things,
that, upon the terms and subject to the conditions therein, as soon as
practicable after the consummation of the Offer, at the option of Parent, either
Purchaser will be merged with and into the Company (in which event the separate
corporate existence of Purchaser will cease and the Company will be the
"Surviving Corporation") or the Company will be merged with and into the
Purchaser (in which event the separate corporate existence of the Company will
cease and Purchaser will be the "Surviving Corporation") (the "Merger"). At the
effective time of the Merger (the "Effective Time"), each outstanding Share will
be converted into and represent the right to receive the Offer Price, without
interest, except for (i) Shares held in the Company's treasury immediately
before the Effective Time, and each Share held by Parent, Fimalac-U.S.,
Purchaser, or any of their respective direct or indirect wholly owned
subsidiaries immediately before the Effective Time (all of which will be
canceled) and (ii) Shares with respect to which dissenters' rights are properly
exercised ("Dissenting Shares") under the Illinois Business Corporation Act of
1983, as amended (the "Illinois Law"),. See Section 11.
The Board of Directors of the Company (the "Board") by unanimous vote of
those present (i) determined that the Offer, the Merger and the Merger Agreement
are fair to and in the best interests of, the Company, (ii) approved the Merger,
the Offer, the Merger Agreement and the other transactions contemplated by the
Merger Agreement and declared their advisability and (iii) recommends that the
Company's stockholders accept the Offer, and tender their Shares pursuant
thereto and approve and adopt the Merger Agreement.
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The Board has received the written opinion of Peter J. Solomon Company Ltd.
stating that the proposed consideration to be received by the holders of shares
of Common Stock pursuant to the Offer and the Merger is fair to such holders
from a financial point of view. A copy of the written opinion of
Peter J. Solomon Company Ltd., which sets forth the assumptions made, procedures
followed, matters considered and limitations on the reviews undertaken, is
included as an annex to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 filed with the Securities and Exchange Commission (the "SEC") in
connection with the Offer, a copy of which is being furnished to stockholders
concurrently herewith. Stockholders are urged to read the full text of such
opinion carefully.
The Company has represented to Parent that, as of March 3, 2000, there were
4,644,121 Shares outstanding and there were options to acquire 1,055,705 Shares.
Except as otherwise set forth herein, neither Parent, Purchaser nor any person
listed on Schedule I hereto beneficially owns any Shares. See Section 8.
Accordingly, the Minimum Condition will be satisfied if 2,906,811 Shares
(approximately 62.6% of presently outstanding Shares) are tendered in the Offer.
The Merger Agreement provides that, on the date on which Shares are
purchased pursuant to the Offer, each outstanding option to purchase Shares will
become exercisable. At the Effective Time, each outstanding option to purchase
Shares will be converted into the right to receive the product of (i) the number
of Shares subject to such stock option multiplied by (ii) the excess of the
Offer Price over the exercise price per Share of such option. Members of the
Board will collectively receive in respect of options to purchase Shares held by
them an aggregate of approximately $11.1 million (of this amount, Mr. McCarthy
is entitled to receive approximately $4.5 million, Mr. Maffei is entitled to
receive approximately $1.7 million, Mr. Meigs is entitled to receive
approximately $2.8 million, Mr. Ingham is entitled to receive approximately
$1.9 million and Mr. Westerlund is entitled to receive approximately $270,000).
The Merger Agreement provides that, promptly following the purchase of and
payment for a number of Shares pursuant to the Offer, and from time to time
thereafter, Parent shall be entitled to designate the number of directors,
rounded up to the next whole number, on the Board that equals the product of
(i) the total number of directors on the Board (giving effect to any additional
directors elected by Purchaser) and (ii) the percentage that the number of
Shares beneficially owned by Purchaser and its affiliates following the Offer
bears to the total number of outstanding Shares, and the Company will upon
request by Parent either increase the size of the Board (and if necessary amend
the Company's by-laws to permit such an increase) or use its reasonable best
efforts to secure the resignation of such number of directors as is necessary to
enable Purchaser's designees to be elected to the Board and shall cause Parent
designees to be so elected. The Merger Agreement also provides, however, that at
all times prior to the Effective Time, the Board will have at least two
directors who are not designees of Parent. In addition, the Company will upon
request by Parent also use its reasonable best efforts to cause individual
directors designated by Parent to constitute the same percentage as the number
of Parent's designees to the Board bears to the total number of directors on the
Board on (i) each committee of the Board, (ii) each board of directors or
similar governing body or bodies of each subsidiary of the Company designated by
Parent and (iii) each committee of each such board or body. See Section 11. The
designation of directors by Parent is subject to compliance with the
requirements of Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
The information contained herein concerning or attributed to the Company and
its officers and directors has been supplied by the Company, and all other
information contained herein has been supplied by Parent and Purchaser. Although
neither the Company nor Parent or Purchaser have any knowledge that would
indicate that any statements contained herein based on the information provided
by the other are untrue, neither the Company nor Parent or Purchaser take any
responsibility for the accuracy or completeness of any information provided by
the other or for any failure by the other to disclose events that may have
occurred and may affect the significance or accuracy of such information but
which are unknown to the Company or Parent and Purchaser, respectively.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND YOU SHOULD READ THEM IN THEIR ENTIRETY BEFORE MAKING
ANY DECISION WITH RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment and pay for all Shares which are
validly tendered and not withdrawn on or prior to the Expiration Date, as soon
as practicable after the Expiration Date. The term "Expiration Date" means 12:00
midnight, New York City time, on April 11, 2000, unless and until Purchaser
(subject to the terms and conditions of the Merger Agreement) shall have
extended the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire prior to the purchase of any Shares by
Purchaser.
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act, pay for any Shares tendered pursuant to the Offer, and may
postpone the acceptance for payment or, subject to the restriction referred to
above, payment for any Shares tendered pursuant to the Offer, and may terminate
or amend the Offer (whether or not any Shares have theretofore been purchased or
paid for pursuant to the Offer) and not accept for payment any Shares, if the
Minimum Condition and the other conditions set forth in Section 15
(collectively, the "Offer Conditions") are not satisfied. Subject to the
provisions of the Merger Agreement, Purchaser expressly reserves the right to
waive, in whole or in part at any time or from time to time, any such condition,
to increase the price per Share payable in the Offer, to extend the Offer or
provide for a subsequent offering period or to make any other changes in the
terms and conditions of the Offer; provided that, unless previously approved by
the Company in writing, no change may be made that decreases the Offer Price,
changes the form of consideration payable in the Offer, reduces the maximum
number of Shares to be purchased in the Offer, imposes conditions to the Offer
in addition to the Offer Conditions, or waives or decreases the Minimum
Condition.
If all Offer Conditions not satisfied on the initial expiration date of the
Offer, Purchaser may extend (and re-extend) the Offer to provide additional time
to satisfy such conditions. Purchaser has agreed to extend the Offer for an
additional period of ten business days if on the Expiration Date either of the
two following Offer Conditions are not satisfied: (i) that there be no action or
proceeding brought or threatened by any governmental authority or any other
person (other than any action or proceeding brought or threatened by a person
other than a governmental authority that would not reasonably be expected to
have a material adverse effect) or any statute, regulation, legislation,
judgment, decree or order, enacted, entered, enforced, promulgated, amended,
issued or deemed applicable to the offer or the merger by any governmental
authority that would have the effect of: (A) making illegal, or otherwise
directly or indirectly restraining or prohibiting or imposing material penalties
or fines or requiring the payment of material damages in connection with the
making of, the offer, the acceptance for payment of, the payment for, or the
ownership, directly or indirectly, of, some or all of the Shares by Parent or
Purchaser or the consummation of the Offer or the Merger; (B) prohibiting or
materially limiting, the direct or indirect ownership or operation by the
Company or Parent of all or any material portion of the business or assets of
the Company and its subsidiaries, taken as a whole, or compelling Parent to
dispose of or hold separate all or any material portion of the business or
assets of the Company or Parent or their respective subsidiaries, taken as a
whole, as a result of the transactions contemplated by the Merger Agreement;
(C) imposing or confirming material limitations on the ability of Parent
effectively to hold or to exercise full rights of ownership of Shares, including
the right to vote any Shares on all matters properly presented to the
stockholders of the Company, including, without limitation, the approval and
adoption of the Merger Agreement and the transactions contemplated thereby;
(D) requiring divestiture by Parent, Fimalac-U.S. or Purchaser, directly or
indirectly, of any Shares; or (E) which would reasonably be likely to result in
a material adverse effect; or (ii) that all consents and approvals necessary to
the consummation of the offer, including consents from parties to loans, leases
and other agreements and consents from any governmental authority have been
obtained, other than consents and approvals the failure to obtain which
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would not, individually or in the aggregate, have a material adverse effect on
the offer or on the Company or on Parent.
The rights reserved by Purchaser in the preceding paragraph are in addition
to Purchaser's rights pursuant to Section 15.
In addition, the Merger Agreement provides that Purchaser has the right, but
is not required, to extend the Offer for a subsequent offering period of up to
an additional twenty business days pursuant to Rule 14d-11 of the Exchange Act
(a 'Subsequent Offering Period'), subject to certain conditions set forth in
such Rule. A Subsequent Offering Period is an additional period of time from
three business days up to twenty business days, beginning after Purchaser
purchases Shares tendered in the Offer, during which stockholders may tender,
but not withdraw, their Shares and receive the Offer Price. If Purchaser decides
to provide for a Subsequent Offering Period, and such Subsequent Offering Period
is for a period of time which is less than twenty business days, the Purchaser
may extend (and re-extend) such Subsequent Offering Period up to an aggregate of
twenty business days.
Pursuant to Rule 14d-7 under the Exchange Act, no withdrawal rights apply to
Shares tendered during a Subsequent Offering Period and no withdrawal rights
apply during the Subsequent Offering Period with respect to Shares tendered in
the Offer and accepted for payment. During a Subsequent Offering Period,
Purchaser will promptly purchase and pay for any Shares tendered at the same
price paid in the Offer.
Any extension, delay, termination or amendment of the Offer will be followed
as promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date,
in accordance with the public announcement requirements of Rule 14e-1(d) under
the Exchange Act. Subject to applicable law (including Rules 14d-4(d) and
14d-6(c) under the Exchange Act, which require that any material change in the
information published, sent or given to stockholders in connection with the
Offer be promptly disseminated to stockholders in a manner reasonably designed
to inform stockholders of such change), and without limiting the manner in which
Purchaser may choose to make any public announcement, Purchaser shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials (including
by public announcement as set forth above) and extend the Offer to the extent
required by Rules 14d-4(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the Offer, other than a change in price, percentage of securities sought or
inclusion of or change to a dealer's soliciting fee, will depend upon the facts
and circumstances, including the materiality, of the changes. In the SEC's view,
an offer should remain open for a minimum of five (5) business days from the
date the material change is first published, sent or given to stockholders, and,
if material changes are made with respect to information that approaches the
significance of price and share levels, a minimum of ten (10) business days may
be required to allow for adequate dissemination and investor response. With
respect to a change in price or, subject to certain limitations, a change in the
percentage of securities sought or inclusion of or change to a dealer's
soliciting fee, a minimum ten (10) business day period from the date of such
change is generally required to allow for adequate dissemination to
stockholders. Accordingly, if, prior to the Expiration Date, Purchaser decreases
the number of Shares being sought or increases or decreases the consideration
offered pursuant to the Offer, and if the Offer is scheduled to expire at any
time earlier than the tenth business day from the date that notice of such
increase or decrease is first published, sent or given to stockholders, the
Offer will be extended at least until the expiration of such tenth business day.
For purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or a U.S. federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
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In connection with the Offer, the Company has provided Purchaser with the
names and addresses of all record holders of Shares and security position
listings of Shares held in stock depositories. This Offer to Purchase, the
related Letter of Transmittal and other relevant materials will be mailed to
registered holders of Shares and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
2. PROCEDURE FOR ACCEPTING THE OFFER AND TENDERING SHARES.
VALID TENDERS. Except as set forth below, in order for Shares to be validly
tendered pursuant to the Offer, the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message (as hereinafter defined) in
connection with a book-entry transfer of Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase on or
prior to the Expiration Date, and either (i) certificates representing tendered
Shares must be received by the Depositary, or such Shares must be tendered
pursuant to the procedure for book-entry transfer set forth below (and
confirmation of receipt of such delivery must be received by the Depositary), in
each case on or prior to the Expiration Date, or (ii) the guaranteed delivery
procedures set forth below must be complied with. No alternative, conditional or
contingent tenders will be accepted.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal (i) if such Letter of Transmittal is signed by the registered holder
of the Shares tendered therewith, unless such holder has completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" in the Letter of Transmittal, or (ii) if Shares are
tendered for the account of a firm that is a member in good standing of the
Security Transfer Agent's Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program (each being
hereinafter referred to as an "Eligible Institution"). In all other cases, all
signatures on a Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 1 of the Letter of Transmittal.
If a certificate representing Shares is registered in the name of a person
other than the signatory of the Letter of Transmittal (or a manually signed
facsimile thereof), or if payment is to be made, or Shares not accepted for
payment or not tendered are to be registered in the name of a person other than
the registered holder, the certificate must be endorsed or accompanied by an
appropriate stock power, in either case signed exactly as the name(s) of the
registered holder(s) appears on the certificate, with the signature(s) on the
certificate or stock power guaranteed by an Eligible Institution. If the Letter
of Transmittal or stock powers are signed or any certificate is endorsed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and, unless waived by Purchaser, proper
evidence satisfactory to Purchaser of their authority to so act must be
submitted. See Instruction 5 of the Letter of Transmittal.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company ("DTC") for purposes of the Offer
within two (2) business days after the date of this Offer to Purchase, and any
financial institution that is a participant in DTC's system may make book-entry
delivery of the Shares by causing DTC to transfer such Shares into the
Depositary's account in accordance with DTC's procedure for such transfer.
However, although delivery of Shares may be effected through book-entry transfer
at DTC, a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantees, or
an Agent's Message and any other required documents, must, in any case, be
transmitted to and received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase prior to the Expiration Date, or the
guaranteed delivery procedures described below must be complied with. The term
"Agent's Message" means a message transmitted through electronic means by DTC
to, and received by, the Depositary and
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forming a part of a book-entry confirmation, which states that DTC has received
an express acknowledgment from the participant in DTC tendering the Shares that
such participant has received, and agrees to be bound by, the terms of the
Letter of Transmittal. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates representing Shares are not
immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such Shares may nevertheless
be tendered, PROVIDED that all of the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives, prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery, substantially
in the form provided by Purchaser; and
(c) in the case of a guarantee of Shares, the certificates therefor (or a
confirmation of a book-entry transfer of such Shares into the
Depositary's account at DTC), together with a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof)
with any required signature guarantees (or, in connection with a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which the New York Stock Exchange
is open for business.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by facsimile transmission or mail, to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
DETERMINATION OF VALIDITY. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment of
any tendered Shares will be determined by Purchaser in its sole discretion, and
its determination shall be final and binding on all persons. Purchaser reserves
the absolute right to reject any or all tenders of any Shares that it determines
are not in appropriate form or the acceptance for payment of or payment for
which may, in the opinion of Purchaser's counsel, be unlawful. Purchaser also
reserves the absolute right to waive any defect or irregularity in any tender
with respect to any particular Shares or any particular stockholder, and
Purchaser's interpretation of the terms and conditions of the Offer will be
final and binding on all persons. No tender of Shares will be deemed to have
been validly made until all defects or irregularities relating thereto have been
expressly waived or cured to the satisfaction of Purchaser. None of Purchaser,
Parent, the Depositary, the Dealer Manager, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders, nor shall any of them incur any liability for failure
to give any such notification.
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OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxy, in the manner set forth in the Letter of Transmittal,
with full power of substitution, to the full extent of such stockholder's rights
with respect to the Shares tendered by such stockholder and accepted for payment
by Purchaser (and any and all other Shares or other securities or rights issued
or issuable in respect of such Shares on or after the date of this Offer to
Purchase), effective if, when and to the extent that Purchaser accepts such
Shares for payment pursuant to the Offer. Upon such acceptance for payment, all
prior proxies given by such stockholder with respect to such Shares or other
securities accepted for payment will, without further action, be revoked, and no
subsequent proxies may be given by such stockholder nor any subsequent written
consents executed (and, if given or executed, will not be deemed effective).
Such designees of Purchaser will, with respect to such Shares and other
securities or rights issuable in respect thereof, be empowered to exercise all
voting and other rights of such stockholder as it, in its sole discretion, may
deem proper in respect of any annual, special or adjourned meeting of the
Company's stockholders, action by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, Purchaser must be able to exercise full voting
rights with respect to the Shares accepted by Purchaser for payment immediately
upon such acceptance.
Purchaser's acceptance for payment of Shares tendered pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
To prevent federal backup withholding tax on payments made to stockholders
with respect to Shares purchased pursuant to the Offer, each stockholder must
provide the Depositary with his correct taxpayer identification number ("TIN")
and certify that he is not subject to backup withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal. Non-United States
holders must submit a completed Form W-8 or Form W-8BEN to avoid backup
withholding. These forms may be obtained from the Depositary. If backup
withholding applies with respect to a stockholder, the Depositary is required to
withhold and deposit with the Internal Revenue Service 31% of any payments made
to such stockholder. See Instructions 10 and 11 of the Letter of Transmittal.
3. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer will be irrevocable, except
that Shares tendered may be withdrawn at any time prior to the Expiration Date,
and, unless previously accepted for payment by Purchaser pursuant to the Offer,
may also be withdrawn on or after May 15, 2000.
For a withdrawal of Shares tendered to be effective, a written, telegraphic,
telex or facsimile transmission notice of withdrawal must be timely received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name(s) in which the certificate(s) representing such Shares are registered,
if different from that of the person who tendered such Shares. If certificates
for Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, the name of the registered holder and the serial numbers shown on
the particular certificates evidencing such Shares to be withdrawn must also be
furnished to the Depositary prior to the physical release of the Shares to be
withdrawn. The signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedures for
book-entry transfer set forth in Section 2, any notice of withdrawal must
specify the name and number of the account at DTC to be credited with such
withdrawn Shares and must otherwise comply with DTC's procedures.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
any Shares tendered, or is unable to accept for payment or pay for Shares
tendered pursuant to the Offer, for any reason whatsoever, then, without
prejudice to Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf
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of Purchaser, retain tendered Shares, and such Shares may not be withdrawn
except to the extent that the tendering stockholder is entitled to and duly
exercises withdrawal rights as described in this Section. Any such delay will be
accompanied by an extension of the Offer to the extent required by law.
Withdrawals of tenders of Shares may not be rescinded, and Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following the
procedures described in Section 2 at any time prior to the Expiration Date or
during a Subsequent Offering Period.
No withdrawal rights will apply to Shares tendered into a Subsequent
Offering Period and no withdrawal rights apply during the Subsequent Offering
Period with respect to Shares tendered in the Offer and accepted for payment.
See Section 1.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
and its determination will be final and binding on all persons. None of Parent,
Purchaser, the Depositary, the Dealer Manager, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal, nor shall any of them incur any
liability for failure to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn, as
soon as practicable after the Expiration Date. Purchaser expressly reserves the
right to delay acceptance for payment of, or payment for, Shares in order to
comply in whole or in part with any applicable law. If Purchaser desires to
delay payment for Shares accepted for payment pursuant to the Offer, and such
delay would otherwise be in contravention of Rule 14e-1(c) of the Exchange Act,
Purchaser will extend the Offer. See Section 1.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
representing such Shares (or a timely confirmation of a book-entry transfer of
such Shares into the Depositary's account at DTC, as described in Section 2),
(ii) a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) with any required signature guarantees (or, in
connection with a book-entry transfer, an Agent's Message), and (iii) any other
documents required by the Letter of Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares tendered prior to the Expiration Date
when, as and if Purchaser gives oral or written notice to the Depositary, as
agent for the tendering stockholders, of Purchaser's acceptance for payment of
such Shares. Payment for Shares so accepted for payment will be made by the
deposit of the purchase price therefor with the Depositary, which will act as
agent for the tendering stockholders for the purpose of receiving such payment
from Purchaser and transmitting such payment to tendering stockholders. If, for
any reason whatsoever, acceptance for payment of any Shares tendered pursuant to
the Offer is delayed, or Purchaser is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to Purchaser's rights
under the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange
Act, which requires that Purchaser pay the Offer Price or return the tendered
Shares promptly after any termination or withdrawal of the Offer), the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that the tendering
stockholders are entitled to withdrawal rights as described in Section 3. Under
no circumstances will interest be paid on the purchase price by reason of any
delay in making such payments.
12
<PAGE>
Purchaser will immediately accept for payment and promptly pay for all
Shares validly tendered during any Subsequent Offering Period. See Section 1.
The procedures for tendering Shares and guaranteed delivery set forth in
Section 2 will apply during any Subsequent Offering Period.
If any tendered Shares are not accepted for payment and paid for,
certificates representing such Shares will be returned (or, in the case of
Shares delivered by book-entry transfer with DTC as permitted by Section 2, such
Shares will be credited to an account maintained with DTC) without expense to
the tendering stockholder as promptly as practicable following the expiration or
termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid for Shares pursuant to the Offer, Purchaser will pay such increased
consideration for all Shares accepted for payment or paid for pursuant to the
Offer, whether or not such Shares have been tendered, accepted for payment or
paid for prior to such increase in the consideration.
Purchaser reserves the right to transfer or assign in whole or in part to
one or more affiliates of Purchaser the right of Purchaser to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The receipt of cash for Shares pursuant to the Offer (or in the Merger) will
be a taxable transaction for United States federal income tax purposes (and may
also be a taxable transaction under applicable state, local or other tax laws).
In general, a stockholder will recognize gain or loss for such purposes equal to
the difference between the amount of cash received and such stockholder's
adjusted tax basis in the Shares. Gain or loss must be determined separately for
each block of Shares (i.e., Shares acquired at the same cost in a single
transaction) sold pursuant to the Offer or converted to cash in the Merger. Such
gain or loss will be capital gain or loss if the Shares are a capital asset in
the hands of the stockholder and will be long term capital gain or loss if the
Shares were held for more than one year on the date of sale (in the case of the
Offer) or the effective time of the Merger (in the case of the Merger). The
receipt of cash for Shares pursuant to the exercise of dissenters' rights, if
any, will generally be taxed in the same manner as described above.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%. Backup withholding generally applies if
the stockholder (a) fails to furnish such stockholder's TIN, (b) furnishes an
incorrect TIN or (c) under certain circumstances, fails to provide a certified
statement, signed under penalties of perjury, that the TIN provided is such
stockholder's correct number and that such stockholder is not subject to backup
withholding. Backup withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in an overpayment of
tax. Certain persons generally are entitled to exemption from backup
withholding, including corporations, non-United States persons and financial
institutions, provided they properly establish their status when required to do
so by completing and providing the appropriate IRS forms. Certain penalties
apply for failure to furnish correct information and for failure to include
reportable payments in income. Each stockholder should consult with his own tax
advisor as to such stockholder's qualification for exemption from backup
withholding and the procedure for obtaining such exemption. Tendering
stockholders may be able to prevent backup withholding by properly completing
the Substitute Form W-9 included in the Letter of Transmittal.
The foregoing discussion may not be applicable to a stockholder who acquired
Shares pursuant to the exercise of employee stock options or otherwise as
compensation, to a stockholder who is related to Purchaser for purposes of
Section 302 of the Internal Revenue Code or to a stockholder who is not a United
States person or who is otherwise subject to special tax treatment under the
Internal Revenue Code (for example, brokers, dealers in securities, banks,
insurance companies, tax-exempt organizations and
13
<PAGE>
financial institutions). For these purposes, a United States person means a
person who or which is (i) an individual who is a citizen or resident of the
United States for United States federal income tax purposes, (ii) a corporation
or other entity taxable as a corporation created or organized under the laws of
the United States or any state thereof (including the District of Columbia),
(iii) an estate the income of which is subject to United States federal income
tax regardless of its source, or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. In addition, the foregoing discussion does
not address the tax treatment of holders of options to acquire Shares.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE
URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX
CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND
EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL OR NON-UNITED STATES
INCOME AND OTHER TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Company's Common Stock is listed and traded on the New York Stock
Exchange ("NYSE") under the symbol "DCR." The following table sets forth, for
the periods indicated, the high and low sales prices for the Common Stock on the
NYSE as reported by published financial sources. The Company regularly pays a
quarterly cash dividend of $.03 per share on its Common Stock, including during
its two most recent fiscal years, and the Merger Agreement prohibits the Company
from declaring or paying any cash dividends prior to the earlier of the
termination of the Merger Agreement or the Offer Completion Date other than such
regular quarterly cash dividend declared prior to the date of the Merger
Agreement.
<TABLE>
<CAPTION>
YEAR HIGH LOW
- ---- -------- --------
<S> <C> <C>
1998
First Quarter............................................... $50.375 $36.625
Second Quarter.............................................. $59.00 $50.625
Third Quarter............................................... $59.4375 $46.0125
Fourth Quarter.............................................. $55.0625 $40.5000
1999
First Quarter............................................... $54.5625 $51.9375
Second Quarter.............................................. $66.875 $51.500
Third Quarter............................................... $79.9375 $66.8125
Fourth Quarter.............................................. $88.9375 $71.375
2000
First Quarter (January 1--March 6, 2000).................... $88.125 $78.375
</TABLE>
On March 6, 2000, the last full trading day prior to the public announcement
of the execution of the Merger Agreement, the closing price per Share reported
on the NYSE was $79.00. On March 14, 2000, the last full trading day before the
commencement of the Offer, the closing price per Share reported on the NYSE was
$98.38.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or is based upon
reports and other documents on file with the SEC or otherwise publicly
available. Although neither Purchaser nor Parent have any knowledge that would
indicate that any statements contained herein based upon such reports and
documents are untrue, neither
14
<PAGE>
Purchaser nor Parent takes any responsibility for the accuracy or completeness
of the information contained in such reports and other documents or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information but that are unknown to
Purchaser or Parent.
GENERAL. The Company is an Illinois corporation with its principal executive
offices located at 55 E. Monroe Street, Chicago, Illinois 60603 where its
telephone number is (312) 368-3100. The Company issues credit ratings on
domestic and international corporate bonds, sovereign bonds, preferred stocks,
commercial paper, certificates of deposit, structured financings and insurance
company claims paying ability, and, to a lesser extent, on municipal securities.
FINANCIAL INFORMATION. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the audited financial statements contained in the
Company's Annual Report on Form 10-K for the years ended December 31, 1998 and
December 31, 1997, which are incorporated by reference herein. More
comprehensive financial information is included in such reports and other
documents filed by the Company with the SEC. The financial information that
follows is qualified in its entirety by reference to such reports and other
documents, including the financial statements and related notes contained
therein. Such reports and other documents may be examined and copies may be
obtained from the offices of the SEC in the manner set forth below. Also set
forth below are certain selected consolidated financial information relating to
the Company and its subsidiaries for the year ended December 31, 1999. This
financial information is excerpted from unaudited financial statements for the
Company for the year ended December 31, 1999, which the Company provided to
Parent in the course of final due diligence and which, according to the Company,
has since been audited.
15
<PAGE>
DUFF & PHELPS CREDIT RATING CO.
SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31 DECEMBER 31 DECEMBER 31
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues......................................... $92,324 $83,995 $66,954
Operating Income................................. 33,619 28,422 18,794
Net earnings..................................... 19,098 16,434 10,678
PER SHARE DATA:
Basic Earnings Per Share Information:
Net earnings per common share.................... $ 4.16 $ 3.45 $ 2.14
DILUTED EARNINGS PER SHARE INFORMATION:
Net earnings per common share.................... $ 3.85 $ 3.16 $ 2.00
Weighted average number of common shares......... 4,589 4,767 4,986
Weighted average number of common shares,
assuming dilution.............................. 4,965 5,195 5,330
BALANCE SHEET DATA:
Current assets................................... $23,169 $13,426 $14,161
Office furniture, equipment and leasehold
improvements................................... 3,056 4,880 4,914
Goodwill and organization costs.................. 24,535 21,742 22,412
Intangible assets................................ 1,486 1,710 2,015
Other long-term investments...................... 2,252 2,316 1,823
Other long-term assets........................... 121 133 179
Total assets..................................... 57,071 44,207 45,504
Current liabilities.............................. 16,737 16,820 13,451
Other long-term liabilities...................... 3,815 2,585 1,776
Stockholders' equity............................. 36,520 24,802 23,277
</TABLE>
OTHER FINANCIAL INFORMATION. During the course of discussions between Parent
and the Company, the Company provided Parent with certain financial projections
for the Company for 2000. These projections, which reflect the first full-year
consolidation of the Company's Argentine subsidiary, contain the following
material financial information:
<TABLE>
<CAPTION>
2000
------------
<S> <C>
Revenues.................................................... $105,630,000
Operating Income Before Depreciation........................ $ 42,396,000
Net Income.................................................. $ 21,895,000
Earnings per Share (on a fully diluted basis)............... $ 4.563
</TABLE>
The Company indicated that the foregoing projections assume the repurchase
by the Company of 500,000 Shares, and that without such Share repurchase
Earnings per Share (on a fully diluted basis) were projected to be $4.48.
AVAILABLE INFORMATION. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational filing requirements of
the Exchange Act and, in accordance therewith, is obligated to file periodic
reports, proxy statements and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning the Company's directors and officers, their remuneration,
stock options granted to them, the
16
<PAGE>
principal holders of the Company's securities and any material interest of such
persons in transactions with the Company is required to be disclosed in such
proxy statements and distributed to the Company's stockholders and filed with
the SEC. Such reports, proxy statements and other information are available for
inspection at the public reference facilities at the SEC's principal office at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the
regional offices of the SEC located at 7 World Trade Center, Suite 1300, New
York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. The SEC maintains a site on the World Wide Web, and the reports, proxy
statements and other information filed by the Company with the SEC may be
accessed electronically on the World Wide Web at http://www.sec.gov. Copies of
such material may also be obtained by mail, upon payment of the SEC's customary
fees, from the SEC's principal office at 450 Fifth Street, N.W., Washington,
D.C. 20549.
8. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
GENERAL. Parent is a French SOCIETE ANONYME with its principal offices
located at 97, rue de Lille, 75007 Paris, France. The telephone number of Parent
is (33-1) 47.53.61.75. Parent is a diversified French corporation engaged
principally in activities aimed at providing products and services to the
business sector. Its principal lines of business are: credit rating services
through its Fitch IBCA subsidiaries, storage of chemical substances through its
subsidiary LBC S.A., assembly and supply of franking machines and office
equipment through its subsidiaries SECAP S.A. and ANFA S.A. and the distribution
of professional hand tools and garage equipment through its FACOM group. Parent
is a public company listed on the Paris Bourse.
Purchaser is a Delaware corporation with its principal offices located at 1
State Street Plaza, New York, NY 10004. The telephone number of Purchaser is
(212) 908-0500. Purchaser has not carried on any activities other than in
connection with the Merger Agreement.
Purchaser is 100%-owned by Fitch IBCA, Inc. a Delaware corporation with its
principal offices located at One State Street Plaza, New York, NY 10004, USA.
The telephone number of Fitch IBCA is (212) 908-0500.
Fitch IBCA is 100%-owned by Fimalac-U.S., a Delaware corporation with its
principal offices located at One State Street Plaza, New York, NY 10004, USA.
The telephone number of Fimalac-U.S. is (212) 908-0500.
Fimalac-U.S. is 100%-owned by Fimalac Communication S.A., a SOCIETE ANONYME
organized under the laws of France with its principal offices located at 97, rue
de Lille, 75007 Paris, France. The telephone number of Fimalac Communication
S.A. is (33-1) 47.53.61.75.
Fimalac Communication S.A. is 99.99%-owned by Minerais & Engrais S. A., a
SOCIETE ANONYME organized under the laws of France with its principal offices
located at 97, rue de Lille, 75007 Paris, France. The telephone number of
Minerais & Engrais S.A. is (33-1) 47.53.61.75.
Minerais et Engrais S. A. is 99.94%-owned by Parent.
Parent is 56.9% owned by Fimalac et Cie, a SOCIETE ANONYME organized under
the laws of France with its principal offices located at 97, rue de Lille, 75007
Paris, France. The telephone number of Fimalac et Cie is (33-1) 47.53.61.75.
Fimalac et Cie is 68.4%-owned by Fimalac Participations, a SOCIETE ANONYME
organized under the laws of France with its principal offices located at 97, rue
de Lille, 75007 Paris, France. The telephone number of Fimalac Participations is
(33-1) 47.53.61.75.
Fimalac Participations is 78.3%-owned by Mr. Marc Ladreit de Lacharriere,
whose business address is c/o Parent, 97, rue de Lille, 75007 Paris, France.
The name, citizenship, business address, business phone number, principal
occupation or employment and five-year employment history for each of the
directors and executive officers of Parent and Purchaser are set forth in
Schedule I hereto.
17
<PAGE>
FIMALAC S.A.
SELECTED CONSOLIDATED FINANCIAL DATA*
<TABLE>
<CAPTION>
(IN EUROS IN THOUSANDS)
---------------------------------
DECEMBER 31 DECEMBER 31
1998 1997
--------------- ---------------
<S> <C> <C>
Revenues.................................................... [EURO]1,108,518 [EURO]1,333,935
Operating income............................................ [EURO] 63,372 [EURO] 122,854
Consolidated net income..................................... [EURO] 105,951 [EURO] 58,052
Net earning per share....................................... [EURO] 18.15 [EURO] 11.88
Total assets................................................ [EURO]1,363,633 [EURO]2,700,253
</TABLE>
- ------------------------
* Prepared in accordance with French generally accepted accounting principles.
Due to a number of acquisitions and divestitures during 1998, the financial
information set forth above for Parent at December 31, 1998 is not directly
comparable to such financial information at December 31, 1997. On a comparable
basis, operating income increased 11.2% for 1998 over 1997. In addition, the
foregoing financial information relating to 1997 and 1998 does not reflect the
June 1999 acquisition by the Parent of Facom, a publicly quoted French company,
through a tender offer. As a result of the consolidation of Facom from the date
of acquisition, Parent's consolidated revenues and earnings will be
significantly higher for 1999 than for 1998. For 1998, the last full year prior
to Facom's acquisition by Parent, the consolidated revenues and operating income
for the Facom group were [EURO]760.6 million and [EURO]73.4 million,
respectively. After divestiture of its furniture and office furnishings
businesses, Facom's activities now consist mainly of the distribution of
professional hand tools and garage equipment.
Fitch IBCA, Inc. owns 100 Shares, which were purchased by IBCA Ltd., a
predecessor company to Fitch IBCA, Inc., on October 6, 1995 for a price of
$15.625 per Share. See Section 8. Except for the foregoing, (1) neither Parent
or Purchaser nor, to the best knowledge of Parent or Purchaser, any of the
persons listed in Schedule I to this Offer to Purchase or any associate or
majority-owned subsidiary of Parent or Purchaser or any of the persons so
listed, beneficially owns or has any right to acquire, directly or indirectly,
any Shares and (2) neither Parent or Purchaser nor, to the best knowledge of
Parent and Purchaser, any of the persons or entities referred to above nor any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement, or as otherwise described in
this Offer to Purchase, neither Parent or Purchaser nor, to the best knowledge
of Parent and Purchaser, any of the persons listed in Schedule I to this Offer
to Purchase, has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of the Company, including, but
not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or voting of such securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, neither Parent or Purchaser
nor, to the best knowledge of Parent and Purchaser, any of the persons listed on
Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the SEC applicable to
the Offer. Except as set forth in this Offer to Purchase, there have been no
contacts, negotiations or transactions between Parent or any of its subsidiaries
or, to the best knowledge of Parent, any of the persons listed in Schedule I to
this Offer to Purchase, on the one hand, and the Company or its affiliates, on
the other hand, concerning a merger, consolidation or acquisition, tender offer
or other acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets. None of Parent, Purchaser or any of the
persons listed in Schedule I have, during the past five years, been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors).
None of Parent, Purchaser or any of the persons listed in Schedule I
18
<PAGE>
have, during the past five years, been a party to any judicial or administrative
proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to federal
or state securities, laws, or a finding of any violation of federal or state
securities laws.
9. SOURCE AND AMOUNT OF FUNDS.
Purchaser estimates that the total amount of funds required to purchase all
Shares validly tendered pursuant to the Offer, to consummate the Merger and to
pay all related fees and expenses will be approximately US$531.5 million. See
"Introduction" and Section 17. Purchaser and Parent expect to obtain the
financing partially from Parent's internal resources and also from borrowings
under the facilities described below. The Offer is not conditioned upon any
financing being received.
Parent has received commitments for financing that will be sufficient to
consummate the Offer and the Merger, to pay related costs and expenses and to
refinance certain existing indebtedness of Parent and its subsidiaries.
Pursuant to a commitment letter, dated March 6, 2000 (the "Commitment
Letter"), Credit Agricole Indosuez and Credit Lyonnais (collectively, the
"Arrangers") have severally committed to provide secured credit facilities (the
"Credit Facilities") in the aggregate amount of [EURO]1,155 million, and the
Arrangers have agreed to arrange and syndicate the Credit Facilities to a group
of financial institutions (collectively, and together with the Arrangers, the
"Lenders").
The Credit Facilities will be comprised of (i) a [EURO]265 million
amortizing term loan facility (the "A Term Loan") and (ii) a [EURO]585 million
amortizing term loan facility (the "B Term Loan" and with the A Term Loan, the
"Term Loans") and (iii) a [EURO]305 million revolving credit facility (the
"Revolving Credit Facility"). The borrowers under the Term Loans are expected to
be Parent or Purchaser in an allocation to be agreed with the Arrangers. Parent
will be the borrower under the Revolving Credit Facility.
The Term Loans may only be incurred on each date upon which Shares are
purchased pursuant to the Offer, and may only be used to finance the Offer and
the Merger, to refinance certain existing indebtedness of Parent and of Fitch
IBCA, Inc., an indirect subsidiary of Parent and the parent of Purchaser, in an
aggregate amount of [EURO]669.9 million and to pay fees and expenses associated
therewith. The final date of maturity of the A Term Loan will be December 31,
2001 and the final date of maturity of the B Term Loan will be June 30, 2005.
The Term Loans may be made in Euros or US dollars as determined in agreement
with the Arrangers.
The final date of maturity of the Revolving Credit Facility will be
June 30, 2005. Such facility may be used for general corporate purposes and
working capital requirements of Parent, including the financing of the Offer and
the Merger and the refinancing of existing indebtedness of Parent and Fitch
IBCA, Inc. in an aggregate amount of [EURO]669.9 million. The Revolving Credit
Facility will be made available from the first date upon which Shares are
purchased pursuant to the Offer up to one month prior to June 30, 2005 in the
form of revolving credit loans for periods of one, two, three or six months (as
selected by Parent) (the "Revolving Loans"). Revolving Loans repaid by Parent
may be reborrowed. The Revolving Loans may be made in Euros or US dollars, as
selected by the borrower.
INTEREST RATES AND FEES. The Term Loans will bear interest at a rate equal
to the aggregate of the applicable Euro interbank offered rate ("EURIBOR") (in
the case of a Term Loan in Euros) or U.S. dollar London interbank offered rate
("USD LIBOR") (in the case of a Term Loan in US dollars) for the applicable
interest period (such interest period to be of one, two, three or six months, as
selected by the borrowers) and a margin originally equal to 1.90%. The Revolving
Credit Facility will bear interest at a rate equal to the aggregate of the
applicable EURIBOR (in the case of a Revolving Loan in Euros) or USD LIBOR (in
the case of a Revolving Loan in US dollars) for the duration of the Revolving
Loan selected by the borrower and a margin originally equal to 1.90%. The
foregoing margins will be subject to semi-annual
19
<PAGE>
downward adjustments to as low as 0.7%, depending upon achievement of certain
performance criteria by Parent.
Certain fees will be payable in connection with the Credit Facilities,
including, without limitation, (i) arrangement fees, (ii) agency fees and
(iii) commitment fees.
REPAYMENT OF CREDIT FACILITIES. The A Term Loan will be repaid in two
installments, the latter of which will be on December 31, 2001. The B Term Loan
will be repaid in installments, the last of which will be on June 30, 2005.
MANDATORY PREPAYMENTS. Mandatory prepayments of the Credit Facilities will
be required to be made under certain circumstances, including, certain asset
sales, capital increases or distributions from Facom S.A. to Parent.
CONDITIONS PRECEDENT TO CLOSING OF CREDIT FACILITIES. The availability of
the Credit Facilities are expected to be subject to the satisfaction of
conditions precedent usual for this type of facility, including, but not limited
to, the following: (i) the purchase of the Shares pursuant to the Offer shall
have been consummated in accordance with the Offer documentation, the Merger
Agreement and applicable law; (ii) no amendment, modification or waiver of any
of the terms and conditions of the principal substantive provisions of the Offer
shall have been made to which the Arrangers shall have reasonably objected and
no amendment, or modification of, the principal substantive provisions of the
Merger Agreement shall have been adopted without the prior written consent of
the Arrangers; (iii) all of the conditions to the consummation of the Offer
shall have been satisfied to the reasonable satisfaction of the Arrangers;
(iv) as a result of the consummation of the Offer, Purchaser shall have acquired
a sufficient number of Shares to effectuate the Merger in accordance with
applicable law without the votes or approval of any board members of the Company
not designated by Purchaser and without the favorable vote of any other
shareholders of the Company; (v) the borrowers shall have executed definitive
documentation, including a credit facility agreement consistent with the terms
of the term sheet, attached as Exhibit A to the Commitment Letter, and
reasonably satisfactory to the Arrangers; (vi) all consents and approvals
necessary for the consummation of the Offer and the transactions contemplated in
the Credit Facilities shall have been obtained and remain in effect and any
applicable waiting period shall have expired or been terminated, subject to
exceptions based on materiality standards; (vii) the Arrangers shall have
received audited consolidated financial statements of the Fimalac group and the
Company as of December 31, 1999, which shall reflect certain pre-determined
financial criteria; (viii) there shall not have occurred certain events,
including without limitation, any general suspension of, or limitation on prices
for, trading in securities, any banking moratorium or the commencement of a war
having a significant effect on the functionality of financial markets, in the
United States, France, the United Kingdom or Germany, any catastrophic decline
(in an amount in excess of 25% measured from the close of business on March 6,
2000 to any date after March 20, 2000) in the Dow Jones Industrial Average, the
Standard & Poor's Index of 500 Industrial Companies and NASDAQ, PROVIDED that
such decline lasts for five trading days or exists on the first date upon which
Shares are purchased pursuant to the Offer; (ix) there shall not have occurred
any change materially adverse to the business, assets, condition or results of
operation of the Company and its subsidiaries, taken as whole, or any change
materially adverse to the business, assets, condition or results of operation of
Parent and its subsidiaries, taken as a whole, that creates a substantial
likelihood that any of the borrowers will not be able to perform any of its
material obligations under the Credit Facilities and the Arrangers shall not
become aware of any information relating to Parent and its subsidiaries that
would have been a significant factor to their decision to grant the commitment;
(x) the borrowers and their respective subsidiaries shall have no more than
[EURO]310 million of outstanding indebtedness or contingent liabilities, except
for the indebtedness under the Credit Facilities or as otherwise permitted by
the Arrangers; and (xi) there shall not have been any action or proceeding
brought or threatened concerning, or any law applicable to, the Offer, Merger,
Credit Facilities and related documents and the transactions contemplated
thereby, by a governmental authority that could (a) make illegal, or otherwise
directly or indirectly restrain, prohibit or impose material penalties, fines or
damages in connection with the making
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or consummation of the Tender Offer or the Merger, (b) prohibit or materially
limit the direct or indirect ownership or operation by the Company or Parent of
all or any material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or compelling Parent to dispose of any material
portion of the business or assets of the Company or Parent or their respective
subsidiaries, taken as a whole, as a result of the transactions contemplated by
the Merger Agreement, (c) impose material limitations on Parent regarding its
full ownership of the Shares, (d) require Purchaser to divest, directly or
indirectly, of the Shares, or (e) reasonably result in a material adverse
effect.
SECURITY. The obligations of the borrowers in respect of the Credit
Facilities will be secured by a first priority perfected security interest in
(i) 100% of the capital stock held by Parent and its subsidiaries at any time,
including but not limited to: Purchaser, the Company, Facom S.A., Societe des
Cadres, LBC, Financiere SECAP, and Fitch IBCA, Inc. and (ii) subject to further
due diligence by the Arrangers in consultation with the borrowers, all other
assets of Fitch IBCA, Inc., the Company and its subsidiaries.
GUARANTEES. The Credit Facilities are expected to be guaranteed on a joint
and several basis by the borrowers and all of the direct and indirect
subsidiaries of the borrowers, pursuant to terms and conditions satisfactory to
the Arrangers and to the maximum extent permitted by law. The Lenders shall have
received solvency certificates and independent solvency opinions in form and
substance satisfactory to them, as reasonably necessary.
FINANCIAL AND OTHER COVENANTS. The Credit Facilities are expected to contain
financial and other covenants customary for transactions of this type.
EVENTS OF DEFAULT. The Credit Facilities are expected to contain events of
default usual for these types of facilities, including but not limited to the
following: (i) non-payment of amounts due under the Credit Facilities,
(ii) misrepresentations, (iii) covenant defaults, (iv) cross-defaults with other
indebtedness in excess of [EURO]5 million, (v) invalidity or unenforceability of
any provision of the Credit Facilities and related documents, (vi) insolvency
and related matters, (vii) change of control of Parent, as set forth in the Term
Sheet attached as Exhibit A to the Commitment Letter, (viii) failure to effect
the Merger within four months from the first date upon which Shares are
purchased pursuant to the Offer, (ix) material adverse change in the financial
condition, assets or revenues, or corporate structure of any borrower or any
member of the Group, (x) adverse judgments, (xi) liability relating to the
environment as a result of any change in applicable environmental laws,
(xii) reduction or amortization of the share capital of any borrower, in each
case, subject to grace periods, exceptions and thresholds to be agreed upon,
(xiii) any split-up (SCISSION) or contribution of assets (APPORT PARTIEL
D'ACTIF) of any borrower or any member of the Group except for the purpose of
reorganization on terms approved in writing by at least 66 2/3% of the Lenders
and (xiv) the auditors of any borrower qualify their reports (EMETTENT DES
RESERVES) on the accounts of such borrower in any manner.
10. BACKGROUND OF THE OFFER AND THE MERGER; PAST CONTACTS OR NEGOTIATIONS WITH
THE COMPANY.
Prior to June 1999, executives of Parent were familiar with the business and
operations of the Company through the activities in the credit rating business
of its Fitch IBCA subsidiaries.
In June 1999, Mr. Robin Monro-Davies, Chief Executive Officer of Fitch IBCA,
Inc. called Mr. Paul McCarthy, Chairman and CEO of the Company, to inquire
whether Mr. McCarthy might be interested in meeting to explore the possibility
of a business combination between Fitch IBCA and the Company. On September 17,
1999, Mr. Monro-Davies and Mr. McCarthy met in New York to discuss a possible
business combination between Fitch IBCA and the Company. Mr. McCarthy and Mr.
Monro-Davies then spoke by telephone in December 1999 to arrange for a meeting
with the President of Parent to discuss whether to move the exploration of a
business combination to the next stage.
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On January 18, 2000, Mr. Marc de Lacharriere, President of Parent,
Ms. Veronique Morali, Managing Director of Parent, Mr. Monro-Davies, Mr. Steven
Joynt, President of Fitch IBCA, Inc., Mr. McCarthy and Mr. Philip Maffei,
President and Chief Operating Officer of the Company, met in New York to discuss
the possibility of a transaction involving Parent and the Company.
Following the meeting, counsel to the Company delivered to counsel to Parent
a draft Confidentiality Agreement and the parties began to negotiate the terms
thereof. In response to the initial draft, Parent requested that the Company
agree to negotiate exclusively with Parent regarding a potential business
combination, but the Company declined to accept this request pending evolution
of discussions. On January 25, 2000, the Company and Parent entered into a
Confidentiality Agreement in which Parent agreed, among other things, to keep
information it obtained from the Company confidential, to refrain from
soliciting employees of the Company, and not to make an unsolicited offer to
acquire the Company.
Following the execution of the Confidentiality Agreement, the Company
transmitted to Parent certain preliminary commercial and legal information with
respect to the Company, including summary projections for 1999 and 2000. See
Section 7. On February 11, 2000, Parent requested through its counsel additional
information regarding the Company, but the Company declined to provide such
additional information pending the outcome of further discussions.
On February 24, 2000, Mr. de Lacharriere, Ms. Morali, Mr. Joynt,
Mr. McCarthy and Mr. Maffei met again in New York to discuss a possible business
combination. Parent indicated that it was interested in pursuing a transaction
and indicated that it was prepared to make a cash offer for the Shares at a
price of $95.00 per Share, subject to the satisfaction of a number of
conditions, including agreement on the structure of the transaction, the
completion of satisfactory due diligence and the negotiation of definitive
agreements. Following further discussions during the meeting, Parent indicated
that it was prepared to make a cash offer of $100.00 per Share, subject to the
same conditions. Parent also requested that the Company commit to negotiate
exclusively with Parent for a limited period of time, but the Company stated
that it was not prepared to provide exclusivity and reserved the right to
communicate with another party with which it had had discussions in the past.
After this meeting through the execution of the Merger Agreement, Parent and
its advisors conducted more intensive due diligence with respect to the Company
and were in contact with the Company and its advisors relating thereto.
On February 28, 2000, Parent delivered to the Company a proposed agreement
that would have committed the Company to negotiate exclusively with Parent for a
period of fourteen days. The Company refused to sign the draft agreement in the
form proposed by Parent. In consideration of the efforts of Parent to move
forward with negotiations with the Company regarding a possible transaction,
however, the Company sent a letter on February 29, 2000 to Parent confirming its
intent to negotiate in good faith with Parent regarding a definitive agreement,
confirming that it was not then in negotiations with any third party regarding a
proposed business combination involving the Company, and agreeing not to take
any steps to solicit prior to March 7, 2000 any proposals by third parties
regarding any such proposed business combination and to inform Parent of the
receipt by the Company of any unsolicited proposal by a third party.
On February 29, 2000, Parent's legal counsel distributed the initial draft
of the Merger Agreement to Company's legal counsel. In the days that followed,
representatives of Parent and representatives of the Company spoke on several
occasions and negotiated the terms of the Merger Agreement.
During the afternoon of March 6, 2000, after final negotiations, the Board
of Directors of the Company met to consider the Merger Agreement and the
transactions contemplated thereby. Following that meeting, Parent was informed
that the Company's Board of Directors had approved by unanimous vote of all
present the Merger Agreement and the Offer, determined that the Offer and the
Merger were fair to, and in the best interests of, the stockholders of the
Company, and declared their advisability and
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resolved to recommend that the Company's stockholders accept the Offer, tender
their Shares thereunder to Purchaser and, if required by applicable law, approve
and adopt the Merger Agreement and the Merger.
Late in the evening of March 6, 2000, Parent, Purchaser, Fimalac-U.S. and
the Company executed and delivered the Merger Agreement in New York. On
March 7, 2000, prior to the opening of trading on the NYSE, Parent and the
Company issued a joint press release announcing the execution of the Merger
Agreement.
A copy of the press release issued by Parent is filed as an exhibit to the
Schedule TO referred to in Section 18 and is incorporated herein by reference.
On March 15, 2000, Purchaser commenced the Offer.
11. THE MERGER AGREEMENT.
THE MERGER AGREEMENT
The following summary of certain provisions of the Merger Agreement is
qualified in its entirety by reference to the complete text of the Merger
Agreement, a copy of which has been filed as an exhibit to the Schedule TO
referred to in Section 18 and is incorporated herein by reference. The following
summary may not contain all of the information important to you. The Merger
Agreement may be examined and copies may be obtained from the SEC in the same
manner as set forth in Section 7. Capitalized terms used in the following
summary and not otherwise defined in this Offer to Purchase have the meanings
set forth in the Merger Agreement.
THE OFFER. The Merger Agreement provides that the Purchaser will commence
the Offer as promptly as practicable following the public announcement by Parent
and the Company of the terms of the Merger Agreement. The obligation of
Purchaser to accept for payment and pay for Shares tendered pursuant to the
Offer is subject to the satisfaction or waiver of the Minimum Condition and the
other Offer Conditions. For a description of the Offer Conditions, see
Section 15.
Under the terms of the Merger Agreement, Purchaser expressly reserves the
right to waive, in whole or in part at any time or from time to time, any such
condition, to increase the price per Share payable in the Offer, to extend the
Offer or provide for a subsequent offering period or to make any other changes
in the terms and conditions of the Offer, except that the Merger Agreement
provides that, unless previously approved by the Company in writing, no change
may be made that decreases the Offer Price, changes the form of consideration
payable in the Offer, reduces the maximum number of Shares to be purchased in
the Offer, imposes conditions to the Offer in addition to the Offer Conditions,
or waives or decreases below 51% the Minimum Condition.
If all Offer Conditions not satisfied on the initial expiration date of the
Offer, Purchaser may extend (and re-extend) the Offer to provide additional time
to satisfy such conditions. Purchaser has agreed to extend the Offer for an
additional period of ten business days if on the Expiration Date either of the
two following Offer Conditions are not satisfied: (i) that there be no action or
proceeding brought or threatened by any governmental authority or any other
person (other than any action or proceeding brought or threatened by a person
other than a governmental authority that would not reasonably be expected to
have a material adverse effect) or any statute, regulation, legislation,
judgment, decree or order, enacted, entered, enforced, promulgated, amended,
issued or deemed applicable to the offer or the merger by any governmental
authority that would have the effect of: (A) making illegal, or otherwise
directly or indirectly restraining or prohibiting or imposing material penalties
or fines or requiring the payment of material damages in connection with the
making of, the offer, the acceptance for payment of, the payment for, or the
ownership, directly or indirectly, of, some or all of the Shares by Parent or
Purchaser or the consummation of the offer or the merger; (B) prohibiting or
materially limiting, the direct or indirect ownership or operation by the
Company or Parent of all or any material portion of the business or assets of
the Company and its subsidiaries, taken as a whole, or compelling Parent to
dispose of or hold separate all or any material portion of the business or
assets of the Company or Parent or their respective
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subsidiaries, taken as a whole, as a result of the transactions contemplated by
the merger agreement; (C) imposing or confirming material limitations on the
ability of Parent effectively to hold or to exercise full rights of ownership of
Shares, including the right to vote any Shares on all matters properly presented
to the stockholders of the Company, including, without limitation, the approval
and adoption of the merger agreement and the transactions contemplated thereby;
(D) requiring divestiture by Parent, Fimalac-U.S. or Purchaser, directly or
indirectly, of any Shares; or (E) which would reasonably be likely to result in
a material adverse effect; or (ii) that all consents and approvals necessary to
the consummation of the offer, including consents from parties to loans, leases
and other agreements and consents from any governmental authority have been
obtained, other than consents and approvals the failure to obtain which would
not, individually or in the aggregate, have a material adverse effect on the
offer or on the Company or on Parent.
In addition, the Merger Agreement provides that Purchaser has the right to
extend the Offer for a subsequent offering period of up to an additional 20
business days pursuant to Rule 14d-11 of the Exchange Act.
DIRECTORS. The Merger Agreement provides that promptly upon the purchase by
Purchaser of Shares pursuant to the Offer and from time to time thereafter,
Parent may designate up to such number of directors, rounded up to the next
whole number on the Board that equals the product of (i) the total number of
directors on the Board (giving effect to the election of any additional
directors as provided herein) and (ii) the percentage that the number of Shares
owned by Purchaser and its affiliates (including any Shares purchased pursuant
to the Offer) bears to the total number of outstanding Shares, and the Company
shall upon request by Parent, promptly either increase the size of the Board
(and shall, if necessary, amend the Company's by-laws to permit such an
increase) or use its reasonable best efforts to secure the resignation of such
number of directors as is necessary to enable Parent's designees to be elected
to the Board and shall cause Parent designees to be so elected. The Merger
Agreement also provides, however, that, at all times prior to the Effective
Time, the Company's Board shall include at least two members who are not
designees of Parent. Promptly upon request by Parent, the Company will, use its
reasonable best efforts to cause persons designated by Parent to constitute the
same percentage as the number of Parent's designees to the Board bears to the
total number of directors on the Board on (i) each committee of the Board,
(ii) each board of directors or similar governing body or bodies of each
subsidiary of the Company designated by Parent and (iii) each committee of each
such board or body. The Company's obligations to appoint Parent's designees to
the Board shall be subject to Section 14(f) of the Exchange Act, and Rule 14f-1
promulgated thereunder.
Following the election or appointment of Parent's designees pursuant to the
foregoing paragraph and prior to the Effective Time (as defined below), any
amendment of the Merger Agreement or any amendment to the articles of
incorporation or by-laws of the Company inconsistent with the Merger Agreement,
any termination of the Merger Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Parent or purchaser, any waiver of any of the Company's rights under the
Merger Agreement or any other action by the Company under or in connection with
the Merger Agreement that would adversely affect the ability of the stockholders
of the Company to receive the Offer Price will require the concurrence of
two-thirds of the directors of the Company then in office who are not designees
of Parent.
THE MERGER. The Merger Agreement provides that, following the consummation
of the Offer and subject to the terms and conditions of the Merger Agreement, at
the Effective Time, at the option of Parent, either (i) Purchaser will be merged
with and into the Company (in which event, as a result of the Merger the
separate corporate existence of Purchaser will cease, and the Company will
continue as the Surviving Corporation and an indirect wholly owned subsidiary of
Parent) or (ii) the Company will be merged with and into Purchaser (in which
event, as a result of the Merger the separate corporate existence of the Company
will cease, and Purchaser will continue as the Surviving Corporation and an
indirect wholly owned subsidiary of Parent).
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CONDITIONS TO THE MERGER. The respective obligations of Parent,
Fimalac-U.S., Purchaser and the Company to effect the Merger is subject to the
satisfaction or waiver of the following conditions: (i) Purchaser shall have
accepted and purchased Shares pursuant to the Offer, (ii) the waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been earlier terminated; (iii) no temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; and there shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal; (iv) there shall not be in effect any judgment, decree or order of any
Governmental Authority, administrative agency or court of competent jurisdiction
prohibiting or limiting Parent from exercising all material rights and
privileges pertaining to its ownership of the Surviving Corporation or the
ownership or operation by Parent or any of its subsidiaries of all or a material
portion of the business or assets of Parent or any of its subsidiaries, or
compelling Parent or any of its subsidiaries to dispose of or hold separate all
or any material portion of the business or assets of Parent or any of its
subsidiaries (including the Surviving Corporation and its subsidiaries), as a
result of the Merger or the transactions contemplated by the Merger Agreement;
and (v) the Merger shall have been approved by the shareholders of the Company,
if and to the extent a vote of the stockholders of the Company is required in
respect of the Merger in accordance with the Illinois Law. In addition, Parent,
Fimalac-U.S. and Purchaser are not required to effect the Merger if (i) the
representations and warranties of the Company set forth in the Merger Agreement
were not true and correct in all material respects when made.
CONVERSION OF SHARES. At the Effective Time and without any action on the
part of Parent, Fimalac-U.S., Purchaser, the Company or the holder thereof
(i) each Share issued and outstanding immediately prior to the Effective Time
(excluding any Shares to be canceled as set forth below and any Shares that are
held by stockholders properly exercising dissenters' rights under the Illinois
Law) shall immediately cease to be outstanding and shall automatically be
canceled and retired and shall cease to exist and be converted into the right to
receive the Offer Price (the "Merger Consideration") in cash payable to the
holder thereof, without interest, upon surrender of the certificate representing
the Share; and (ii) each Share held in the Company's treasury immediately before
the Effective Time, and each Share held by Parent, Fimalac-U.S., Purchaser, any
other direct or indirect wholly owned subsidiary of Parent or the Company
immediately before the Effective Time, shall cease to be outstanding, and be
canceled and retired without payment of any consideration therefor and cease to
exist. If Purchaser is merged with and into the Company, each issued and
outstanding share of common stock of Purchaser will be converted into and
exchanged for one fully paid and non-assessable share of common stock of the
Surviving Corporation.
If, during the period between the date of the Merger Agreement and the
Effective Time, the outstanding Shares shall have been changed into a different
number of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, the Merger Consideration shall be correspondingly adjusted.
TREATMENT OF OPTIONS. The Merger Agreement provides that on the date
Purchaser purchases Shares pursuant to the Offer, each outstanding option to
purchase Common Stock (a "Stock Option") granted under the Company's 1994
Long-Term Stock Incentive Plan or pursuant to any other employee stock option
plan or agreement entered into by the Company with any employee of the Company
or any subsidiary thereof (the "Company Stock Option Plan"), whether or not then
exercisable, shall become exercisable, subject to the terms of the Company Stock
Option Plan pursuant to which such Stock Option was issued. If and to the extent
that a Stock Option shall not have been exercised at the Effective Time, such
Stock Option shall be automatically canceled. Each holder of a canceled Stock
Option shall be entitled to receive as soon as practicable after the first date
payment can be made without liability to such person under Section 16(b) of the
Exchange Act from the Company in consideration for such cancellation an amount
in cash (less applicable withholding taxes) equal to the product of (i) the
number of shares of Common Stock previously subject to such Stock Option
multiplied by (ii) the excess, if
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any, of the Offer Price over the exercise price per share of Common Stock
previously subject to such Stock Option upon surrender of such Stock Option to
the Company or an affidavit of loss in the form requested by Parent, together
with such additional documentation as may be reasonably required by Parent or
the Company.
STOCKHOLDERS' MEETING. If approval by the Company's stockholders is required
by applicable law to consummate the Merger, the Company, acting through the
Board, shall, in accordance with applicable law and, subject to the fiduciary
duties of the Board under applicable law as determined and exercised in good
faith by the Board and in consultation with Parent, as soon as practicable
following the consummation of the Offer: (i) duly call, give notice of, convene
and hold an annual or special meeting of its stockholders (the "Stockholders'
Meeting") for the purpose of considering and taking action upon the Merger
Agreement; (ii) prepare and file with the SEC a proxy statement or information
statement (together with any supplement or amendment thereto, the "Proxy
Statement") relating to the Stockholders' Meeting in accordance with the
Exchange Act and include in the Proxy Statement the recommendation of the Board
that stockholders of the Company vote in favor of the approval and adoption of
the Merger Agreement and the transactions contemplated thereby; and (iii) use
its reasonable best efforts (A) to obtain and furnish the information required
to be included by it in the Proxy Statement and, after consultation with Parent,
respond promptly to any comments made by the SEC with respect the Proxy
Statement and any preliminary version thereof and cause the Proxy Statement to
be mailed to its stockholders at the earliest practicable time following the
consummation of the Offer in accordance with SEC rules and regulations and
(B) to obtain the necessary approvals by its stockholders of the Merger
Agreement and the transactions contemplated thereby. At such meeting, Parent and
Purchaser have agreed to vote all Shares owned by them to approve the Merger
Agreement and the transactions contemplated thereby.
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Parent and
Purchaser with respect to, among other things: its organization and
qualification and subsidiaries; its articles of incorporation and bylaws;
capitalization; authority relative to the Merger Agreement; material contracts;
no conflicts; required filings and consents; compliance with law; SEC filings;
financial statements; absence of certain changes or events; undisclosed
liabilities; litigation; employee benefit plans; employment and labor matters;
Offer documents and proxy statement; restrictions on business activities; title
to property; taxes; environmental matters; intellectual property; interested
party transactions; insurance; opinion of financial advisor; brokers; the
applicability of Sections 7.85 and 11.75 of Illinois Law; and required votes.
Certain representations and warranties in the Merger Agreement made by the
Company are qualified as to "materiality" or "Material Adverse Effect" on the
Company. For purposes of the Merger Agreement and this Offer to Purchase, when
used in connection with the Company or any of its subsidiaries, the term
"Material Adverse Effect" means any change, effect or circumstance that is, or
is reasonably likely to be, materially adverse to the business, assets,
condition (financial or otherwise) or results of operations of the Company and
its subsidiaries, in each case taken as a whole, other than any such changes,
effects or circumstances (i) expressly set forth in the Company's disclosure
schedules to the Merger Agreement or (ii) specifically set forth or described in
the Company SEC Reports, other than general risk factors. The following,
considered alone without regard to any other effects, changes, events,
circumstances or conditions, shall not constitute a Material Adverse Effect:
(i) a change in the trading prices of the Company's securities between the date
of the Merger Agreement and the Effective Time; (ii) effects, changes, events,
circumstances or conditions generally affecting the industry in which the
Company operate or arising from changes in general business or economic
conditions; (iii) any effects, changes, events, circumstances or conditions
resulting from any change in law or generally accepted accounting principles;
(iv) any effects, changes, events, circumstances or conditions resulting from
the announcement or pendency of any of the transactions contemplated by the
Merger Agreement other than a breach of a representation or warranty pursuant to
the Merger Agreement which would occur except for this
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clause (iv) or clause (v) of this definition of Material Adverse Effect; and
(v) any effects, changes, events, circumstances or conditions resulting from
actions taken by the Parent or the Company in order to comply with the terms of
the Merger Agreement other than a breach of a representation or warranty
pursuant to the Merger Agreement which would occur except for this clause (v) or
clause (iv) of this definition of Material Adverse Effect.
Pursuant to the Merger Agreement, Parent, Fimalac-U.S. and Purchaser have
made customary representations and warranties to the Company with respect to,
among other things: their organization and qualification; their subsidiaries;
authority relative to the Merger Agreement; no conflicts; required filings;
consents; the Offer documents; the prior activities of Purchaser; the ability of
Parent and Purchaser to finance the transactions contemplated by the Merger
Agreement; and ownership of Shares. Certain representations and warranties in
the Merger Agreement made by the Parent, Fimalac-U.S. and Purchaser are
qualified as to "materiality" or "Material Adverse Effect" on the Parent.
None of the representations and warranties made by Parent, Fimalac-U.S.,
Purchaser or the Company in the Merger Agreement survive the Effective Time.
COVENANTS. The Merger Agreement contains various customary covenants of the
parties. A description of these covenants follows.
INTERIM OPERATIONS. The Company covenants and agrees in the Merger Agreement
that, during the period from the date of the Merger Agreement and continuing
until the earlier of the termination of the Merger Agreement or the time
Parent's designees are elected as directors of the Company, unless Parent shall
otherwise agree in writing, which agreement shall not be unreasonably withheld,
delayed, or conditioned, the Company shall, unless expressly authorized to do
otherwise pursuant to paragraphs (a) through (o) below, in all material respects
conduct its business and shall cause the businesses of its subsidiaries to be
conducted only in the ordinary course of business consistent with past practice,
and the Company shall use reasonable commercial efforts to preserve
substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has a
significant business relations.
Without limiting the foregoing, the Merger Agreement provides that, except
as contemplated thereby in separate disclosure schedules, neither the Company
nor any of its subsidiaries shall, during the period from the date of the Merger
Agreement and continuing until the earlier of the termination of the Merger
Agreement or the time Parent's designees are elected as directors of the
Company, directly or indirectly do, or propose to do, any of the following
without the prior written consent of Parent, which consent shall not be
unreasonably withheld or delayed:
a. amend or otherwise change the articles of incorporation or by-laws of
the Company or the subsidiaries;
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b. issue, sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of, any shares of capital stock
of any class, or any options, warrants, convertible securities,
exchangeable securities or other rights of any kind to acquire any shares
of capital stock of any class, or any other ownership interest
(including, without limitation, any phantom interest) in the Company or
any of its subsidiaries or affiliates (except for (i) the issuance of
shares of Common Stock issuable pursuant to the Stock Options or
agreements referenced in the Merger Agreement and (ii) the issuance of
shares of Company Common Stock required to be issued to participants in
the Company's Employee Plans pursuant to the terms thereof);
c. sell, pledge, dispose or encumber any assets of the Company or any of
its subsidiaries (except for (i) sales of assets in the ordinary course
of business and in a manner consistent with past practice,
(ii) disposition of obsolete or worthless assets and (iii) sales of
immaterial assets not in excess of $100,000);
d. (i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except for the payment of the
Company's regular quarterly cash dividend of $0.03 per share declared
prior to the date of the Merger Agreement except that a wholly owned
subsidiary of the Company may declare and pay a dividend or make advances
to its parent or the Company, (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares
of its capital stock, or (iii) amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, or
permit any subsidiary to purchase, repurchase, redeem or otherwise
acquire, any of its securities or any securities of its subsidiaries,
including, without limitation, shares of Common Stock or any option,
warrant, convertible or exchangeable securities or other right, directly
or indirectly, to acquire shares of Common Stock, or propose to do any of
the foregoing, except for the acceleration or termination of Stock
Options pursuant to the terms of the Company Stock Option Plans and the
exercise of such Stock Options or the termination of any other
arrangement providing for the issuance of shares thereunder;
e. (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any material property or assets, make any investment in, or make
any capital contributions to, any corporation, partnership or other
business organization or division thereof; (ii) incur any indebtedness
for borrowed money or issue any debt securities or assume, guarantee or
endorse or otherwise as an accommodation become responsible for, the
obligations of any person or, except in the ordinary course of business
consistent with past practice or in connection with purchases of
equipment or capital improvements, make any loans or advances (other than
loans or advances to or from direct or indirect wholly owned
subsidiaries), (iii) enter into, terminate or amend any "Material
Contract" or agreement other than in the ordinary course of business or
where such contract, termination or amendment would not, individually or
in the aggregate, have a Material Adverse Effect on the Company or its
subsidiaries; (iv) authorize any capital expenditures or purchases of
fixed assets which are, in the aggregate, in excess of $300,000; or
(v) enter into or amend any contract, agreement, commitment or
arrangement to effect any of such matters;
f. (i) increase the compensation or fringe benefits payable or to become
payable to its directors, officers or employees, except for increases in
salary or wages of employees of the Company or its subsidiaries in
accordance with past practice and in amounts that are in the aggregate
reflected in the budgets previously provided to Parent, (ii) except
pursuant to the existing agreements referenced in the Merger Agreement,
grant any severance or termination pay to, or enter into any severance
agreement or other agreement providing for severance payments with, any
director, officer or other employee of the Company or any of its
subsidiaries, (iii) establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination,
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severance or other plan, agreement, trust, fund, policy or arrangement
for the benefit of any current or former directors, officers or
employees, (iv) enter into any employment or consulting agreement except
with respect to new hires of employees who are not executive officers or
senior management personnel in the ordinary course of business or
(v) accelerate the payment, right to payment or vesting of any bonus,
severance, profit sharing, retirement, deferred compensation, stock
option, insurance or other compensation or benefits except as required
under the Company Employee Plans; except in each of (i) through (v), as
may be required by law;
g. take any action to change material accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable) except as required by U.S. generally accepted accounting
principles;
h. make any material tax election inconsistent with past practice or settle
or compromise any material federal, state, local or foreign tax liability
or agree to an extension of a statute of limitations, except to the
extent the amount of any such settlement has been reserved for in the
unaudited consolidated financial statements of the Company as of and for
the period ending December 31, 1999 (the "1999 Financial Statements");
i. pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course
of business and consistent with past practice of liabilities reflected or
reserved against in the 1999 Financial Statements or incurred in the
ordinary course of business and consistent with past practice;
j. enter into any compromise or settlement of, or take any material action
with respect to, any litigation, action, suit, claim, proceeding or
investigation other than the prosecution, defense and settlement of
routine litigation, actions, suits, claims, proceedings or investigations
in the ordinary course of business;
k. adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other material reorganization or any agreement relating to an Acquisition
Proposal (as defined below);
l. enter into any agreement, understanding or commitment that restrains,
limits or impedes the Company's ability to compete with or conduct any
business or line of business;
m. plan, announce, implement or effect any reduction in force, lay-off,
early retirement program, severance program or other program or effort
concerning the termination of employment of employees of the Company or
its subsidiaries, except, only with respect to employees who do not
exercise the functions of general manager, the equivalent or higher, in
the ordinary course of business consistent with past practice;
n. enter into any new agreement to acquire or rent accommodations
(i) involving aggregate rental payments in an amount in excess of
$100,000 or which will remain in effect for longer than six months from
the date hereof or (ii) on other than ordinary course of business terms;
or
o. take, or agree in writing or otherwise to take, any of the actions
described in subparagraphs (a) through (n) above, or any action which
would make any of the representations or warranties of the Company
contained in the Merger Agreement untrue or incorrect in any material
respect or prevent the Company from performing or cause the Company not
to perform its covenants hereunder.
NO SOLICITATION. In the Merger Agreement, the Company has agreed not to (nor
to permit its subsidiaries, or its or its subsidiaries' officers, directors or
representatives or agents to) (including, without limitation, any investment
banker, financial advisor, attorney or accountant retained by the Company or any
of its subsidiaries), directly or indirectly, (i) solicit, initiate or knowingly
encourage (including by way of
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furnishing information or assistance), or take any other action to facilitate
the initiation of any inquiries or proposals regarding an Acquisition Proposal,
(ii) engage in negotiations or discussions concerning, or provide any nonpublic
information to any person relating to, any Acquisition Proposal, or (iii) agree
to approve or recommend any Acquisition Proposal. The Merger Agreement provides,
however, that nothing in the Merger Agreement prohibits the Company or the Board
from taking and disclosing to stockholders a position contemplated by
Rule 14e-2 promulgated under the Exchange Act or from making any disclosure to
the Company's stockholders if, in the good faith reasonable judgment of the
Board after consultation with outside legal counsel, the failure to so disclose
would be inconsistent with its fiduciary obligations to stockholders under
applicable law. The Merger Agreement also provides, that, prior to the time at
which Purchaser shall have accepted Shares for payment pursuant to the Offer and
to the extent that the Board determines in good faith (after consultation with
outside legal counsel) that not to do so would be inconsistent with its
fiduciary duties to stockholders under applicable law, (x) the Board on behalf
of the Company may, in response to an unsolicited bona fide written Acquisition
Proposal, make such inquiries of the Third Party making such unsolicited bona
fide written Acquisition Proposal as may be necessary to inform itself of the
particulars of the Acquisition Proposal and, if the Board reasonably believes
that such Acquisition Proposal may constitute a Superior Proposal, furnish
information or data (including, without limitation, confidential information or
data) relating to the Company or its subsidiaries to, and participate in
negotiations with, the Third Party making such unsolicited bona fide written
Acquisition Proposal and (y) following receipt of a Superior Proposal, the Board
may withdraw or modify its recommendation relating to the Offer or the Merger if
the Board determines in good faith after consultation with outside legal counsel
that failure to take such action would be inconsistent with its fiduciary duties
to stockholders under applicable law. Subject to the Company's right to
terminate the Merger Agreement, nothing in the Merger Agreement and no action
taken by the Board pursuant to the foregoing provision will permit the Company
to enter into any agreement or undertaking providing for any transaction
contemplated by an Acquisition Proposal for so long as the Merger Agreement
remains in effect.
"Acquisition Proposal" means a proposal for either (i) a transaction
pursuant to which any person (or group of persons) other than the Parent or its
affiliates (a "Third Party") would acquire 25% or more of the outstanding shares
of the Common Stock of the Company pursuant to a tender offer or exchange offer
or otherwise, (ii) a merger or other business combination involving the Company
pursuant to which any Third Party would acquire 25% or more of the outstanding
shares of the Common Stock of the Company or of the entity surviving such merger
or business combination, (iii) any other transaction pursuant to which any Third
Party would acquire control of assets (including for this purpose the
outstanding equity securities of subsidiaries of the Company, and the entity
surviving any merger or business combination including any of them) of the
Company having a fair market value equal to 25% or more of the fair market value
of all the assets of the Company immediately prior to such transaction,
(iv) any public announcement by a Third Party of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the foregoing,
(v) a self tender offer, or (vi) any transaction subject to Rule 13(e)-3 under
the Exchange Act. The Merger Agreement clarifies that no Acquisition Proposal
received by the Company following the date of the Merger Agreement will be
deemed to have been solicited by the Company or any of its officers, directors,
employees, representatives and agents (including, without limitation, any
investment banker, attorney or accountant retained by the Company) in violation
of the non-solicitation provisions of the Merger Agreement solely by virtue of
the fact that the person or entity making such Acquisition Proposal made an
Acquisition Proposal prior to the date of the Merger Agreement or the fact that
the Company or any of its officers, directors, employees, representatives and
agents (including, without limitation, any investment banker or attorney
retained by the Company) solicited such Acquisition Proposal prior to
February 29, 2000.
"Superior Proposal" means an Acquisition Proposal that (i) is not subject to
any financing contingencies or is, in the good faith judgment of the Board after
consultation with a nationally recognized financial advisor, reasonably capable
of being financed and (ii) the Board determines in good faith, based upon such
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matters as it deems relevant, including an opinion of a nationally recognized
financial advisor, would, if consummated, result in a transaction more favorable
to the Company's stockholders from a financial point of view than the Offer and
the Merger.
The Merger Agreement also provides that the Company shall, prior to
providing any information to or entering into discussions with any person in
connection with an Acquisition Proposal, receive from such person an executed
confidentiality agreement in reasonably customary form, notify Parent orally and
in writing of any Acquisition Proposal (including, without limitation, the
material terms and conditions thereof and the identity of the person making it)
or any inquiries indicating that any person is considering making or wishes to
make an Acquisition Proposal, as promptly as practicable (but in no case later
than 24 hours) after its receipt thereof, and provide Parent with a copy of any
written Acquisition Proposal, and shall thereafter inform Parent on a prompt
basis of (i) any material changes to the terms and conditions of such
Acquisition Proposal, and shall promptly give Parent a copy of any information
provided to such person which has not previously been provided to Parent and
(ii) any request by any person for nonpublic information relating to its or any
of its subsidiaries' properties, books or records.
The Company also agreed in the Merger Agreement to immediately cease any
existing discussions or negotiations with any person (other than Parent and
Purchaser) conducted theretofore with respect to any of the foregoing. The
Company also agreed not to release any third party from the confidentiality
provisions of any confidentiality agreement to which the Company is a party.
INDEMNIFICATION. The Merger Agreement provides that the articles of
incorporation and by-laws of the Surviving Corporation must contain provisions
with respect to indemnification and exculpation at least as protective to any
officer or director as those set forth in the articles of incorporation and
by-laws of the Company, and that those provisions may not be amended, repealed
or otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
or prior to the Effective Time were directors, officers, employees or agents of
the Company, unless such modification is required by law.
The Merger Agreement provides that the Company shall, to the fullest extent
permitted under applicable law or under the Company's articles of incorporation
or by-laws and regardless of whether the Merger becomes effective, indemnify and
hold harmless, and that, after the Effective Time, Fimalac-U.S. and the
Surviving Corporation shall, to the fullest extent permitted under applicable
law or under the Surviving Corporation's articles of incorporation or by-laws,
indemnify and hold harmless, each present and former director, officer or
employee of the Company or any of its subsidiaries (collectively, the
"Indemnified Parties") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages and liabilities incurred in
connection with, and amounts paid in settlement of, any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative and wherever asserted, brought or filed, (x) arising out of or
pertaining to the transactions contemplated by the Merger Agreement or
(y) otherwise with respect to any acts or omissions or alleged acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided in
the respective articles of incorporation or by-laws of the Company or the
subsidiaries or any applicable contract or agreement as in effect on the date of
the Merger Agreement, in each case for a period of six years after the date of
the Merger Agreement. The indemnity agreements of Fimalac-U.S. and the Surviving
Corporation extend, on the same terms to, and inure to the benefit of and are
enforceable by, each person or entity who controls, or in the past controlled,
any present or former director, officer or employee of the Company or any of its
subsidiaries.
EMPLOYEE BENEFITS. Parent has agreed in the Merger Agreement that the
employees of the Company will continue to be provided with benefits under
employee benefit plans (other than plans involving the potential issuance of or
investment in securities of the Company or similar performance-based incentive
plans) that in the aggregate are substantially comparable to those currently
provided by the Company to such employees. Following the Effective Time, Parent
agrees to cause service by employees of
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the Company to be taken into account for purpose of eligibility to participate
and vesting under any benefit plans of Parent or its subsidiaries (including the
Surviving Corporation) which cover such employees, to the same extent such
service was counted under a similar plan of the Company. Parent has also agreed
to cause the Surviving Corporation to honor all employee benefit obligations to
current and former employees under the Company Employee Plans accrued as of the
Effective Time and all employee severance plans and all employment or severance
agreements. The Merger Agreement provides, however, that none of the foregoing
agreements will operate to duplicate any benefit provided to any employee of the
Company or the funding of any such benefit or obligate Parent or any affiliate
of Parent to (i) make any particular benefit plan or benefit available to any
employee, (ii) continue any particular benefit plan or benefit or (iii) refrain
from terminating or amending any particular benefit plan or benefit.
FINANCIAL INFORMATION. The Company has agreed to provide Parent and
Purchaser, as soon as practicable but in any case five (5) business days prior
to the initial expiration date of the Offer, copies of the fully audited
consolidated financial statements of the Company and its consolidated
subsidiaries for the Company's fiscal year ended December 31, 1999.
TERMINATION. The Merger Agreement may be terminated at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
(a) by mutual written consent duly authorized by the boards of directors or
any committee thereof of Parent, Fimalac-U.S., Purchaser and the Company;
(b) by either Parent or the Company if a court of competent jurisdiction or
Governmental Authority shall have issued a nonappealable final order,
decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the Offer or
the Merger (except that this right to terminate is not available to any
party who has not complied with its obligations set forth in the Merger
Agreement to use reasonable best efforts to take all appropriate action
to do or cause to be done all things necessary to consummate the Offer
and the Merger if such noncompliance materially contributed to the
issuance of any such order, decree or ruling or the taking of such
action);
(c) by either Parent or the Company if (A) as the result of the failure of
any of the Offer Conditions, the Offer shall have expired or Purchaser
shall have terminated the Offer in accordance with its terms without
Purchaser having purchased any Shares pursuant to the Offer or
(B) Purchaser shall have failed to accept for purchase and pay for Shares
pursuant to the Offer by May 12, 2000 unless such failure by Purchaser is
a result of the receipt by the Company of a bona fide unsolicited
Acquisition Proposal or a request for additional information under the
HSR Act or the failure to obtain any necessary governmental or regulatory
approval, in which case the date by which Purchaser shall accept for
purchase and pay for Shares shall be extended to June 30, 2000 (except
that this right to terminate is not available to any party whose breach
or failure to fulfill any obligation under the Merger Agreement has been
the cause of or resulted in any of the circumstances described in clauses
(A) and (B) before such dates);
(d) by Parent, prior to the purchase of Shares pursuant to the Offer, if the
Board shall have (i) withdrawn or modified in a manner adverse to Parent,
Fimalac-U.S. or Purchaser, or publicly taken a position materially
inconsistent with, its approval or recommendation of the Offer, the
Merger or the transactions contemplated by the Merger Agreement,
(ii) approved, endorsed or recommended an Acquisition Proposal or
(iii) publicly disclosed any intention to do any of the foregoing;
(e) by the Company, prior to the purchase of Shares pursuant to the Offer,
or the Parent, at any time prior to the Effective Time, (i) if any
representation or warranty of the Company or Parent, respectively, set
forth in the Merger Agreement that are qualified by reference to
materiality shall not be true and correct when made or any representation
or warranty of the Company or Parent,
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respectively, set forth in the Merger Agreement that are not qualified by
reference to materiality shall not be true and correct in all material
respects when made, or (ii) upon a breach of or failure to perform in any
material respect any covenant or agreement on the part of the Company or
Parent, respectively, set forth in the Merger Agreement except, in each
of (i) and (ii) above, where the failure to perform such covenants or
agreements or the failure of such representations and warranties to be so
true and correct would not have a Material Adverse Effect on the Company,
Parent or the Offer (either (i) or (ii) above being a "Terminating
Breach"); provided however, that, if such Terminating Breach is curable
by the Company or Parent, as the case may be, through the exercise of its
reasonable best efforts and for so long as the Company or Parent, as the
case may be, continues to exercise such reasonable best efforts, neither
Parent nor the Company, respectively, may so terminate the Merger
Agreement, and provided further that the right to terminate the Merger
Agreement shall not be available to any party whose breach of or failure
to fulfill its obligations under the Merger Agreement resulted in the
failure of any such condition; or
(f) by the Company, following the receipt by the Company after the date
hereof, under circumstances not involving any breach of the
non-solicitation provisions set forth in the Merger Agreement, of an
unsolicited bona fide Superior Proposal, if the Board, after consultation
with outside legal counsel, shall have determined in good faith that the
failure to terminate the Merger Agreement would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law;
provided that (i) the Company has complied with the non-solicitation
provisions of the Merger Agreement, including the notice provisions
therein, (ii) such termination shall only be effective if the Company
enters into a definitive agreement providing for the transactions
contemplated by such Acquisition Proposal immediately following such
termination; (iii) the Board shall have given Parent at least two
business days prior written notice of its determination to so terminate
the Merger Agreement and shall have afforded Parent a reasonable
opportunity within such two business day-period to amend its Offer; and
(iv) the Company pays Parent the Termination Fee (as defined below) in
accordance with the provisions of the Merger Agreement.
FEES AND EXPENSES. Except as otherwise set forth in the Merger Agreement,
all fees and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby will be paid by the party incurring such
expenses, whether or not the Merger is consummated.
The Company has agreed to pay Parent a fee of $16,000,000 (the "Termination
Fee") plus the amount of the actual out-of-pocket expenses (not to exceed
$2 million) incurred by Parent, Fimalac-U.S. and Purchaser in connection with
the Merger Agreement and the transactions contemplated thereby if the Merger
Agreement is terminated (x) by Parent pursuant to clause (d) above, or (y) by
the Company pursuant to clause (f) above, or (z) by the Company or Parent
pursuant to clause (c) above if, at the time of such termination pursuant to
clause (c) above, the Minimum Condition had not been satisfied and an
Acquisition Proposal had been publicly announced and within twelve months of
such termination pursuant to clause (c), any person or entity (other than
Parent) has acquired, by purchase, merger, consolidation, sale, assignment,
lease, transfer or otherwise, in one transaction or any related series of
transactions, a majority of the voting power of the outstanding securities of
the Company or a majority of the assets of the Company.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY.
PURPOSE OF THE OFFER AND THE MERGER. The purpose of the Offer and the Merger
is for Parent to acquire the entire equity interest in the Company. Through the
Offer, Purchaser intends to acquire control of, and a majority equity interest
in, the Company. Following the completion of the Offer, Parent intends to
acquire any outstanding Shares not owned by Purchaser by consummating the
Merger.
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The Merger Agreement provides that the Purchaser can complete the Merger
pursuant to a merger of the Company into the Purchaser (with the Purchaser being
the surviving corporation) or pursuant to a merger of the Purchaser into the
Company (with the Company being the surviving corporation).
Under the Illinois Law, if the Company is merged into the Parent, the
approval of the Board and, unless the Merger is consummated pursuant to
Section 11.30 of the Illinois Law described below, the affirmative vote of a
majority of the holders of outstanding Shares, are required to adopt the Merger
Agreement. The Board has unanimously approved the transactions contemplated by
the Merger Agreement, including the Offer and the Merger, and, unless the Merger
is consummated pursuant to the short form merger provisions of the Illinois Law
described below, the only remaining required corporate action necessary to
consummate the Merger of the Company into the Parent would be the adoption of
the Merger Agreement by the affirmative vote of the holders of a majority of the
then outstanding Shares. If the Minimum Condition is satisfied, Purchaser will
have sufficient voting power to cause the adoption of the Merger Agreement by
the requisite vote of stockholders of the Company without the affirmative vote
of any other stockholder.
Under Section 11.30 of the Illinois Law relating to the merger of a
subsidiary into its parent, if Purchaser acquires at least 90% of the
outstanding Shares, Purchaser will be able to effect the merger of the Company
into Purchaser without a vote of the Company's stockholders. If Purchaser is
unable to satisfy the requirements for such a merger without a shareholder vote,
a longer period of time may be required to effect the Merger, because a vote of
the Company's stockholders would be required under the Illinois Law.
Under the Illinois Law, if the Parent is merged into the Company, the
approval of the Board and the affirmative vote of a majority of the holders of
outstanding Shares are required to adopt the Merger Agreement. The Board has
unanimously approved the transactions contemplated by the Merger Agreement,
including the Offer and the Merger, and the only remaining required corporate
action necessary to consummate the Merger of the Parent into the Company is the
adoption of the Merger Agreement by the affirmative vote of the holders of a
majority of the then outstanding Shares. If the Minimum Condition is satisfied,
Purchaser will have sufficient voting power to cause the adoption of the Merger
Agreement by the requisite vote of the stockholders of the Company without the
affirmative vote of any other stockholder.
PLANS FOR THE COMPANY. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Surviving Corporation
substantially as they are currently being conducted. The directors of Purchaser
will be the initial directors of the Surviving Corporation, and the executive
officers of the Purchaser will be the initial executive officers of the
Surviving Corporation.
Parent intends to conduct a detailed review of the Company and its assets,
corporate structure, capitalization, operations, policies, management and
personnel. After such review, Parent will determine what actions or changes, if
any, would be desirable in light of the circumstances which then exist,
including steps to integrate the operations of the Surviving Corporation and the
operations of Fitch IBCA. In parallel, Parent plans to give consideration to any
potential avenues that may be open for further strengthening the Company's
marketing and financial position, including through possible alliances, or
partnership or joint venture arrangements with third parties.
Except as described in this Offer to Purchase, neither Parent nor Purchaser
has any present plans or proposals that would relate to or result in (i) any
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries, (ii) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, (iii) any change in the Board or management, (iv) any material
change in the Company's capitalization or (v) any other material change in the
Company's corporate structure or business. Parent envisages modifying the
Company's current dividend policy of $.03 per quarter, although it has not yet
been decided what the new policy, if any, will be.
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Parent and Purchaser intend to cause the Company to make an application for
termination of registration of the Shares as soon as possible after consummation
of the Offer if the Shares are then eligible for such termination. In such
event, following the consummation of the Merger, there will be no publicly
traded Shares outstanding. See Section 13.
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company will
have the right under the Illinois Law to dissent, and demand appraisal of, and
to obtain payment for the fair value of their Shares. Such rights, if the
statutory procedures are complied with, could lead to a judicial determination
of the fair value of the Shares (excluding any appreciation or depreciation in
anticipation of the Merger unless such exclusion would be inequitable) required
to be paid in cash to such dissenting stockholders for their Shares. In
addition, such dissenting stockholders would be entitled to receive payment of a
fair rate of interest from the date of consummation of the Merger on the amount
determined to be the fair value of their Shares. In determining the fair value
of the Shares, an Illinois court would be required to take into account all
relevant factors. Accordingly, such determination could be based upon
considerations other than, or in addition to, the market value of the Shares,
including, among other things, asset value and earning capacity. Therefore, the
value so determined in any appraisal proceeding could be higher or lower than
the Offer Price.
13. CERTAIN EFFECTS OF THE OFFER.
EFFECT ON THE MARKET FOR THE SHARES. The purchase of Shares pursuant to the
Offer will reduce the number of holders of Shares and the number of Shares that
might otherwise trade publicly. Consequently, depending upon the number of
Shares purchased and the number of remaining holders of Shares, the purchase of
Shares pursuant to the Offer may adversely affect the liquidity and market value
of the remaining Shares held by the public. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or marketability of,
the Shares or whether it would cause future market prices to be greater or less
than the Offer Price.
STOCK QUOTATIONS. The Shares are currently listed and traded on the NYSE,
which constitutes the principal trading market for the Shares. Depending upon
the aggregate market value and the number of Shares not purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued listing on
the NYSE. According to its published guidelines, the NYSE would give
consideration to delisting the Shares if, among other things, the number of
publicly held Shares falls below 600,000, the number of holders of round lots of
Shares falls below 400 (or below 1,200 if the average monthly trading volume is
below 100,000 for the last twelve months) or the aggregate market value of such
publicly held Shares falls below $8,000,000. Shares held by officers or
directors of the Company or their immediate families, or by any beneficial owner
of more than 10% or more of the Shares, ordinarily will not be considered as
being publicly held for this purpose.
If, as a result of the purchase of Shares pursuant to the Offer, the Shares
no longer meet the requirements for continued listing on the NYSE, the market
for the Shares could be adversely affected. In the event the Shares are no
longer eligible for listing on the NYSE, quotations might still be available
from other sources. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
holders of such Shares at such time, the interest in maintaining a market in
such Shares on the part of securities firms, the possible termination of
registration of such Shares under the Exchange Act as described below and other
factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the SEC if such Shares are not
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listed on a national securities exchange and there are fewer than 300 holders of
record of the Shares. The termination of the registration of the Shares under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the SEC, and would make
certain of the provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b) and the requirement of furnishing a proxy
statement in connection with stockholders meetings and the related requirement
of an annual report to stockholders, and the requirements of Rule 13e-3 with
respect to going private transactions, no longer applicable with respect to the
Shares or to the Company. Furthermore, if registration of the Shares under the
Exchange Act were terminated, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended, may be impaired or, with respect to certain persons, eliminated. If the
Shares were no longer registered under the Exchange Act, the Shares would no
longer be eligible for NYSE listing. Parent and Purchaser intend to cause the
Company to make an application for termination of registration of the Shares as
soon as possible after consummation of the Offer if the Shares are then eligible
for such termination.
MARGIN SECURITIES. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on such Shares as collateral. Depending on factors
similar to those described above regarding listing and market quotations, it is
possible the Shares would no longer constitute "margin securities" for purposes
of the Federal Reserve Board's margin regulations and therefore could no longer
be used as collateral for loans made by brokers. If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be "margin
securities."
14. DIVIDENDS AND DISTRIBUTIONS.
As discussed in Section 11, pursuant to the Merger Agreement, without the
prior approval of Parent or as otherwise contemplated in the Merger Agreement,
the Company has agreed not to (i) declare, set aside, make or pay any dividend
or other distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except for the payment of the
Company's regular quarterly cash dividend of $0.03 per share declared prior to
the date of the Merger Agreement, except that a wholly owned subsidiary of the
Company may declare and pay a dividend or make advances to its parent or the
Company, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (iii) amend the terms
or change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, or permit any subsidiary to purchase, repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
including, without limitation, shares of Common Stock or any option, warrant,
convertible or exchangeable securities or other right, directly or indirectly,
to acquire shares of Common Stock, or propose to do any of the foregoing, except
for the acceleration or termination of stock options pursuant to the terms of
the Company stock option plans and the exercise of such stock options or the
termination of any other arrangement providing for the issuance of shares
thereunder.
15. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, Purchaser will not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange
Act, pay for, and (subject to any such rules or regulations) may delay the
acceptance for payment of or the payment for any tendered Shares and (except as
provided in the Agreement) amend or terminate the Offer if:
(1) the Minimum Condition has not been satisfied;
(2) any applicable waiting period under the HSR Act has not expired or been
terminated;
36
<PAGE>
(3) Purchaser shall not have been reasonably satisfied that the provisions
of Sections 7.85 and 11.75 of the Illinois Law are inapplicable to the
Offer and Merger, or
(4) at any time on or after the announcement of the Offer and prior to the
acceptance for payment of Shares pursuant to the Merger Agreement, or
payment for the Shares, any of the following conditions occurs:
(a) there shall have been any action or proceeding brought or threatened by
any Governmental Authority or any other Person (other any action or
proceeding brought or threatened by a Person, other than a Governmental
authority that would not reasonably be expected to have a Material
Adverse Effect) or any statute, regulation, legislation, judgment, decree
or order, enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to the Offer or the Merger by any Governmental
Authority that would have the effect of: (i) making illegal, or otherwise
directly or indirectly restraining or prohibiting or imposing material
penalties or fines or requiring the payment of material damages in
connection with the making of, the Offer, the acceptance for payment of,
the payment for, or the ownership, directly or indirectly, of, some or
all of the Shares by Parent or Purchaser or the consummation of the Offer
or the Merger; (ii) prohibiting or materially limiting, the direct or
indirect ownership or operation by the Company or by Parent of all or any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or compelling Parent to dispose of or
hold separate all or any material portion of the business or assets of
the Company or Parent or their respective subsidiaries, taken as a whole,
as a result of the transactions contemplated by the Merger Agreement;
(iii) imposing or confirming material limitations on the ability of
Parent effectively to hold or to exercise full rights of ownership of
Shares, including, without limitation, the right to vote any Shares on
all matters properly presented to the stockholders of the Company,
including, without limitation, the approval and adoption of the Merger
Agreement and the transactions contemplated thereby; (iv) requiring
divestiture by Parent, Fimalac-U.S. or Purchaser, directly or indirectly,
of any Shares; or (v) which would reasonably be likely to result in a
Material Adverse Effect; or
(b) the Company shall have breached or failed to perform in any material
respect any of its covenants or agreements under the Merger Agreement or
any of the representations and warranties of the Company set forth in the
Merger Agreement that are qualified by reference to materiality shall not
be true and correct or any of the representations and warranties of the
Company set forth in the Merger Agreement that are not so qualified by
reference to materiality shall not be true and correct in all material
respects, in each case, when made and as of the date of consummation of
the Offer (except to the extent such representations and warranties of
the Company address matters only as of a particular date, in which case
as of such date), except where the failure to perform such covenants or
agreements or the failure of such representations and warranties to be so
true and correct would not have a Material Adverse Effect; or
(c) the Merger Agreement shall have been terminated in accordance with its
terms; or
(d) there shall have occurred any Material Adverse Effect, or any
development that is reasonably likely to result in a Material Adverse
Effect, on the Company or the Offer; or
(e) the Board shall have (i) withdrawn or modified in a manner adverse to
Parent, Fimalac-U.S. or Purchaser, or publicly taken a position
materially inconsistent with, its approval or recommendation of the
Offer, the Merger or the transactions contemplated by the Merger
Agreement, (ii) approved, endorsed or recommended an Acquisition Proposal
or (iii) publicly disclosed any intention to do any of the foregoing; or
(f) there shall have occurred (i) any general suspension of, or limitation
on prices (other than suspensions or limitations triggered by price
fluctuations on a trading day) for, trading in
37
<PAGE>
securities on any national securities exchange in the United States,
France, the United Kingdom or Germany that lasts for more than one
trading day, (ii) the declaration of a banking moratorium or any
limitation or suspension of payments in respect of the extension of
credit by banks or other lending institutions in the United States,
France, the United Kingdom, Germany or any other member country of the
European Monetary Union where such moratorium or limitation in such other
member country has a significant adverse effect on the functionality of
the banking markets in the United States, the United Kingdom, Germany or
France, (iii) any commencement of war, armed hostilities or other
international or national calamity directly involving the United States,
France or any member countries of the European Union, having a
significant adverse effect on the functionality (which shall not be
deemed to include market average) of financial markets in the United
States, France, the United Kingdom or Germany, (iv) any catastrophic
decline in (A) the Dow Jones Industrial Average or the Standard & Poor's
Index of 500 Industrial Companies and (B) the Nasdaq Stock Market, in
each case by an amount in excess of 25% measured from the close of
business on the date of the Merger Agreement to any date after March 20,
2000; provided that such decline, as so measured, is sustained for a
period of 5 consecutive trading days or exists as of the date of
acceptance for payment of the Shares or (v) in the case of any of the
foregoing (other than clause (iv)) existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
provided, that the foregoing conditions set forth in this clause (f)
shall only be a condition if the consequence of the failure of such
condition to be satisfied is to cause Parent's and the Purchaser's
financing for the Offer to be withdrawn or otherwise unavailable; or
(g) all consents and approvals necessary to the consummation of the Offer,
including without limitation consents from parties to loans, leases and
other agreements and consents from any Governmental Authority shall not
have been obtained other than consents and approvals the failure to
obtain which would not, individually or in the aggregate, have a Material
Adverse Effect on the Offer or on the Company or on Parent;
which, in the absolute discretion of Purchaser in any such case, and regardless
of the circumstances (including any action or omission by Purchaser not
inconsistent with the Merger Agreement) giving rise to any such condition, makes
it inadvisable to proceed with such acceptance for payment or payment of Shares.
The foregoing conditions are for the sole benefit of Purchaser and its
affiliates (except for the Minimum Condition, which is also for the benefit of
the Company) and may be asserted by Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser in whole or in
part at any time or from time to time in its sole discretion (except for the
Minimum Condition, which cannot be waived without the Company's consent). The
failure by Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right, the waiver of any such right with
respect to particular facts or circumstances shall not be deemed a waiver with
respect to any other facts or circumstances, and each such right shall be deemed
an ongoing right that may be asserted at any time or from time to time.
16. CERTAIN LEGAL MATTERS.
GENERAL. Except as described in this Section 16, based on a review of
publicly available filings by the Company with the SEC and other publicly
available information concerning the Company, Purchaser is not aware of any
license or regulatory permit that appears to be material to the business of the
Company and that might be adversely affected by Purchaser's acquisition of
Shares pursuant to the Offer, or of any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required for the acquisition or ownership of Shares by
Purchaser pursuant to the Offer. Should any such approval or other action be
required, it is presently contemplated that such approval or action would be
sought, except as described below under "--State Takeover Laws." While
38
<PAGE>
Purchaser does not currently intend to delay acceptance for payment of Shares
tendered pursuant to the Offer pending the outcome of any such matter, there can
be no assurance that any such approval or other action, if required, would be
obtained without substantial conditions or that adverse consequences would not
result to the Company's business or that certain parts of the Company's business
would not have to be disposed of in the event that such approvals were not
obtained or such other actions were not taken in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, Purchaser may decline to accept for
payment or pay for any Shares tendered. See Section 15.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the State
of Illinois. In general, Section 11.75 of the Illinois Law ("Section 11.75")
prevents an "interested shareholder" (including a person who owns or has the
right to acquire 15% or more of the outstanding voting shares of a corporation)
from engaging in a "business combination" (defined to include mergers and
certain other actions with an Illinois corporation) for a period of three years
following the date such person became an interested shareholder unless, among
other things, the "business combination" is approved by the Board of Directors
of such corporation prior to such date. The Company's Board of Directors has
approved the Offer and the Merger. Accordingly, Section 11.75 is inapplicable to
the Offer and the Merger.
The Company and certain of its subsidiaries conduct business in a number of
states throughout the United States, some of which have adopted laws and
regulations applicable to offers to acquire shares of corporations that are
incorporated or have substantial assets, stockholders and/or a principal place
of business in such states. In EDGAR V. MITE CORP., the Supreme Court of the
United States held that the Illinois Business Takeover Statute, which involved
state securities laws that made the takeover of certain corporations more
difficult, imposed a substantial burden on interstate commerce and was therefore
unconstitutional. In CTS CORP. V. DYNAMICS CORP. OF AMERICA, however, the
Supreme Court of the United States held that a state may, as a matter of
corporate law and, in particular, those laws concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of a
target corporation without prior approval of the remaining stockholders,
provided that such laws were applicable only under certain conditions, in
particular, that the corporation has a substantial number of stockholders in and
is incorporated under the laws of such state. Subsequently, in TLX ACQUISITION
CORP. V. TELEX CORP., a federal district court in Oklahoma ruled that the
Oklahoma statutes were unconstitutional insofar as they applied to corporations
incorporated outside Oklahoma in that they would subject such corporations to
inconsistent regulations. Similarly, in TYSON FOODS, INC. V. MCREYNOLDS, a
federal district court in Tennessee ruled that four Tennessee takeover statutes
were unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the Sixth
Circuit.
Neither Parent nor Purchaser has determined whether any other state takeover
laws and regulations will by their terms apply to the Offer or the Merger, and,
except as set forth above, neither Parent nor Purchaser has presently sought to
comply with any state takeover statute or regulation. Parent and Purchaser
reserve the right to challenge the applicability or validity of any state law or
regulation purporting to apply to the Offer or the Merger, and neither anything
in this Offer to Purchase nor any action taken in connection herewith is
intended as a waiver of such right. In the event it is asserted that one or more
state takeover statutes is applicable to the Offer or the Merger and an
appropriate court does not determine that such statute is inapplicable or
invalid as applied to the Offer or the Merger, Parent or Purchaser might be
required to file certain information with, or to receive approval from, the
relevant state authorities, and Purchaser might be unable to accept for payment
or pay for Shares tendered pursuant to the Offer, or be delayed in consummating
the Offer.
ANTITRUST IN THE UNITED STATES. Under the HSR Act and the rules that have
been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the
39
<PAGE>
Department of Justice (the "Antitrust Division") and the FTC and certain waiting
period requirements have been satisfied. The purchase of Shares pursuant to the
Offer is subject to such requirements.
Pursuant to the requirements of the HSR Act, Purchaser filed a Notification
and Report Form with respect to the Offer and Merger with the Antitrust Division
and the FTC on March 9, 2000. As a result, the waiting period applicable to the
purchase of Shares pursuant to the Offer is scheduled to expire at 11:59 p.m.,
New York City time, fifteen (15) days after such filing. However, prior to such
time, the Antitrust Division or the FTC may extend the waiting period by
requesting additional information or documentary material relevant to the Offer
from Purchaser. If such a request is made, the waiting period will be extended
until 11:59 p.m., New York City time, on the tenth day after substantial
compliance by Purchaser with such request. Thereafter, such waiting period can
be extended only by court order.
A request has been made pursuant to the HSR Act for early termination of the
waiting period applicable to the Offer. There can be no assurance, however, that
the applicable 15-day HSR Act waiting period will be terminated early. Shares
will not be accepted for payment or paid for pursuant to the Offer until the
expiration or early termination of the applicable waiting period under the HSR
Act. See Section 15. Any extension of the waiting period will not give rise to
any withdrawal rights not otherwise provided for by applicable law. See
Section 3. If Purchaser's acquisition of Shares is delayed pursuant to a request
by the Antitrust Division or the FTC for additional information or documentary
material pursuant to the HSR Act, the Offer will be extended in certain
circumstances. See Section 1.
The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by Purchaser
pursuant to the Offer. At any time before or after the consummation of any such
transactions, the Antitrust Division or the FTC could take such action under the
antitrust laws of the United States as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant to
the Offer or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of Parent or the Company. Private parties (including
individual States) may also bring legal actions under the antitrust laws of the
United States. Purchaser does not believe that the consummation of the Offer
will result in a violation of any applicable antitrust laws. However, there can
be no assurance that a challenge to the Offer on antitrust grounds will not be
made, or if such a challenge is made, what the result will be. See Section 15
for certain conditions to the Offer, including conditions with respect to
certain governmental actions and Section 11 for certain termination rights.
EUROPEAN ANTITRUST APPROVAL. The acquisition of Shares will not amount to a
concentration with a Community dimension and will therefore not be subject to
the requirement of notification to, and approval by, the European Commission.
OTHER FILINGS. There is a possibility that filings may have to be made with
other foreign governments under their merger notification statutes. The filing
requirements of various nations are being analyzed by the parties and, where
necessary, such filings will be made.
17. FEES AND EXPENSES.
Lazard Freres is acting as the Dealer Manager in connection with the Offer.
Lazard Freres will receive reasonable and customary compensation for its
services relating to the Offer and will be reimbursed for certain out-of-pocket
expenses including reasonable expenses of counsel and other advisors. Parent and
Purchaser have agreed to indemnify Lazard Freres and certain related persons
against certain liabilities and expenses in connection with its engagement,
including certain liabilities under the federal securities laws. Lazard Freres
and its affiliates may actively trade the equity securities of the Company for
their own account and for the account of customers and, accordingly, may at any
time hold a long or short position in such securities.
40
<PAGE>
Parent and Purchaser have retained Morrow & Co., Inc. to be the Information
Agent and Harris Trust Company of New York to be the Depositary in connection
with the Offer. The Information Agent may contact holders of Shares by mail,
telephone, telecopy, telegraph and personal interview and may request banks,
brokers, dealers and other nominees to forward materials relating to the Offer
to beneficial owners of Shares.
The Information Agent and the Depositary each will receive reasonable and
customary compensation for their respective services in connection with the
Offer, will be reimbursed for reasonable out-of-pocket expenses, and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under federal securities laws.
None of Parent or Purchaser will pay any fees or commissions to any broker
or dealer or to any other person (other than to the Dealer Manager, the
Depositary and the Information Agent) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and
trust companies will, upon request, be reimbursed by Purchaser for customary
mailing and handling expenses incurred by them in forwarding offering materials
to their customers.
18. MISCELLANEOUS.
The Offer is being made to all holders of Shares. Purchaser is not aware of
any jurisdiction where the making of the Offer is prohibited by administrative
or judicial action pursuant to any valid state statute. If Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto, Purchaser will make a good faith effort
to comply with any such state statute or seek to have such statute declared
inapplicable to the Offer. If, after such good faith effort, Purchaser cannot
comply with any such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such state.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to be
made on behalf of Purchaser by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE RELATED LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Parent and Purchaser have filed with the SEC a Tender Offer Statement on
Schedule TO, together with all exhibits thereto, pursuant to Rule 14d-3 of the
General Rules and Regulations under the Exchange Act (the "Exchange Act Rules"),
furnishing certain additional information with respect to the Offer. In
addition, the Company has filed a Solicitation/Recommendation Statement on
Schedule 14D-9, together with all exhibits thereto, pursuant to Rule 14d-9 of
the Exchange Act Rules setting forth its recommendation with respect to the
Offer and the reasons for such recommendations and furnishing certain additional
related information. Such Schedules and any amendments thereto, including
exhibits, may be inspected and copies may be obtained from the offices of the
SEC in the manner set forth in Section 7 (except that they will not be available
at the regional offices of the SEC).
FSA Acquisition Corp.
March 15, 2000
41
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth in the table below are
the names, present principal occupations or employment and material
occupations, positions, offices or employments for the past five years of
each member of Board of Directors and each executive officer of Parent. The
principal address of Fimalac S.A. and, unless indicated below, the current
business address for each individual listed below is c/o Fimalac S.A., 97
rue de Lille, 75007 Paris, France. Telephone: 33-1-47-53-61-71. Each such
person is, unless indicated below, a citizen of France.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL POSITIONS HELD DURING
NAME AND CURRENT BUSINESS ADDRESS THE PAST FIVE YEARS.
- --------------------------------- ---------------------------------------------
<S> <C>
Marc Ladreit de Lacharriere President of Parent since 1991. Business
Manager of Banque de Suez et de l'Union des
Mines (now Credit Agricole Indosuez)
(1970-1976). Finance Director, then Vice
President in charge of Administration and
Finance Manager, then Group Executive Vice
President of L'Oreal (1976-1991). Director of
L'Oreal, Canal +, Groupe Flo, Euris and
Groupe Andre.
Pierre Castres Saint-Martin Director of Parent since 1998. Manager,
Finance and Legal Affairs of L'Oreal Group
(1979), Vice President in charge of
Administration and Finance of L'Oreal since
January 1991. Group Executive Vice President
at L'Oreal (1997-1999). Director of L'Oreal
(1994-present).
Georges Charpak Director of Parent since 1997. Physicist,
member of the French Academy of Sciences
since 1985. Nobel Prize for Physics (1992).
Head of research of the French national
scientific research center (CNRS)
(1948-1959), then of the European
Organization for Nuclear Research (CERN) in
Geneva (1959-present). Director of Cogema and
Biospace.
Alain Gomez Director and member of the Executive
Committee of Parent since 1996. Finance
Director of Saint-Gobain, Director of the
Packaging Department then the Containers
Division of Saint-Gobain Pont-a-Mousson
(1970-1982). CEO of Thomson-CSF and
Thomson S.A. (1982-1996).
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL POSITIONS HELD DURING
NAME AND CURRENT BUSINESS ADDRESS THE PAST FIVE YEARS.
- --------------------------------- ---------------------------------------------
<S> <C>
Bernard Mirat Director of Parent since 1993. Chairman of
Fitch IBCA France. Deputy Secretary General
of the Compagnie des Agents de Change
(1961-1987). Deputy General Manager then
Vice-President-CEO of Societe des Bourses
Francaises (1987-1992). Member of the
Supervisory Board of Lagardere s.c.a.
Robin Monro-Davies Director of Parent since 1998. Chief
Executive Officer of Fitch IBCA since 1997.
Former Royal Navy pilot in the Royal Navy,
then financial analyst on Wall Street. Since
1976, President of IBCA, a credit rating
agency based in London acquired by Parent in
1997. Mr. Monro-Davies is a British citizen.
Bernard Pierre Director of Parent since 1997. Member of the
Executive Committee of Parent since 1996.
Chairman and Chief Executive Officer of
Engelhard-CLAL since 1997. Manager of the
cable division at Alcatel (1961-1996). Deputy
Managing Director of Alcatel-Alsthom
(1986-1992), Chairman and CEO of Saft
(1992-1994), Deputy Chairman-CEO then
Chairman and CEO of Alcatel Cable
(1994-1996).
Gerard Mestrallet Director (as permanent representative of
Auxilex) of Parent since 1996. President of
the Management Board of Suez-Lyonnaise des
Eaux. Deputy Managing Director then Chairman
of Compagnie de Suez (1984-1997). Director of
Compagnie de Saint-Gobain and SAGEM. Member
of the Supervisory Boards of Credit Agricole
Indosuez, AXA, Casino and Societe du Louvre.
Veronique Morali Director (as permanent representative of
Fimalac & Cie.) of Parent since 1994. Member
of the Executive Committee of Parent since
1996. Director and General Manager in charge
of administration and finance at Parent since
1994.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL POSITIONS HELD DURING
NAME AND CURRENT BUSINESS ADDRESS THE PAST FIVE YEARS.
- --------------------------------- ---------------------------------------------
<S> <C>
Pierre Blayau Director (as permanent representative of
Fimalac Participations) of Parent since 1996.
President of the Management Board of
Moulinex. Strategic Planning Director of
Compagnie de Saint-Gobain, Finance Manager,
Managing Director then Chairman of
Pont-a-Mousson (1982-1993). President of the
Management Board of Pinault-
Printemps-Redoute (1993-1995). Director of
Suez Industrie.
Robert Gimenez Finance Manager of Parent since 1991.
Patrice Pailleret General Counsel of Parent since 1995.
Daniel Gerbi Chief Treasury Officer of Parent since 1999.
Director of the Finance Department of Strafor
Facom (1987-1999).
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. Set forth below is the name,
present principal occupation or employment and material occupations,
positions, offices or employment for the past five years of each member of
the board of directors and each executive officer of Purchaser. The
principal address of Purchaser and, unless indicated below, the current
business address for each individual listed below is FSA Acquisition Corp.,
One State Street Plaza, New York, NY 10004, USA. Telephone: (212) 908-0500.
Each such person is, unless indicated below, a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL POSITIONS HELD DURING
NAME AND CURRENT BUSINESS ADDRESS THE PAST FIVE YEARS.
- --------------------------------- ---------------------------------------------
<S> <C>
Steven Joynt President and Assistant Treasurer of
Purchaser. President and Chief Operating
Officer of Fitch IBCA since 1995 (formerly
Fitch Investors Service). Member of the team
that acquired and restructured Fitch
Investors in 1989.
David Kennedy Vice President and Treasurer of Purchaser.
Executive Vice President, Chief Financial
Officer and Treasurer of Fitch IBCA (formerly
Fitch Investors Service) since 1989.
Charles Brown Secretary and Assistant Treasurer of
Purchaser. Managing Director and General
Counsel of Fitch IBCA since 1998. Formerly
Vice President and Assistant General Counsel
and Chairman of the strategic planning
council of Beneficial Corp (1994-1998).
</TABLE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares should be sent or
delivered by each stockholder of the Company or his broker, dealer, commercial
bank, trust company or other nominee to the Depositary at one of its addresses
set forth below:
I-3
<PAGE>
THE DEPOSITARY FOR THE OFFER IS:
Harris Trust Company of New York
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER
<S> <C> <C>
Wall Street Station (FOR ELIGIBLE INSTITUTIONS ONLY) Receive Window
P.O. Box 1023 (212) 701-7636 or 7637 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
</TABLE>
FOR INFORMATION TELEPHONE (CALL COLLECT):
(212) 701-7624
Any questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth below. Requests for
additional copies of this Offer to Purchase and the Letter of Transmittal may be
directed to the Information Agent or the Depositary. Stockholders may also
contact their brokers, dealers, commercial banks, trust companies or other
nominees for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms, Please Call:
(800) 662-5200
SHAREHOLDERS PLEASE CALL: (800) 566-9061
THE DEALER MANAGER FOR THE OFFER IS:
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza
New York, NY 10020
(212) 632-6717
I-4
<PAGE>
Exhibit (a)(1)(B)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
DUFF & PHELPS CREDIT RATING CO.
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 15, 2000
BY
FSA ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FIMALAC S.A.
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, APRIL 11, 2000, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
</TABLE>
BY FACSIMILE:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(212) 701-7636 or 7637
CONFIRM BY TELEPHONE (CALL COLLECT):
(212) 701-7624
------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or if delivery of Shares is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Company ("DTC" or the "Book-Entry
Transfer Facility") pursuant to the book-entry transfer procedure described in
Section 2 of the Offer to Purchase (as defined below). Delivery of documents to
the Book-Entry Transfer Facility does not constitute delivery to the Depositary.
Stockholders whose certificates evidencing Shares ("Stock Certificates") are
not immediately available or who cannot deliver their Stock Certificates and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis and who wish to
tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 2 of the Offer to Purchase. See Instruction 2.
<PAGE>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
FOLLOWING:
Names(s) of Tendering Institution: _________________________________________
Account Number __________________ Transaction Code Number __________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Names(s) of Registered Holder(s): __________________________________________
Window Ticket No. (if any): ________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
Account Number ___________________Transaction Code Number __________________
2
<PAGE>
<TABLE>
DESCRIPTION OF SHARES TENDERED
<S> <C> <C> <C>
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDERS
(PLEASE FILL IN, IF BLANK, EXACTLY
AS NAME(S) APPEAR(S) ON STOCK STOCK CERTIFICATE(S) AND SHARE(S) TENDERED
CERTIFICATE(S) (ATTACH ADDITIONAL LIST, IF NECESSARY)
TOTAL NUMBER OF
SHARES EVIDENCED BY NUMBER OF
STOCK CERTIFICATE STOCK SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
TOTAL SHARES
</TABLE>
* Need not be completed by stockholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Stock Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
3
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to FSA Acquisition Corp., a Delaware
corporation (the "Purchaser"), the above-described shares of common stock, no
par value (the "Shares"), of Duff & Phelps Credit Rating Co., an Illinois
corporation (the "Company"), pursuant to the Purchaser's offer to purchase all
outstanding Shares, at $100.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
March 15, 2000 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, as amended from time to
time, together constitute the "Offer"). The undersigned understands that the
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of Purchaser, all right, title and interest in and to all the Shares that
are being tendered hereby and all dividends, distributions (including, without
limitation, distributions of additional "Shares") and rights declared, paid or
distributed in respect of such Shares on or after March 15, 2000, (collectively,
"Distributions"), and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares and
all Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Stock Certificates evidencing such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by the Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints each designee of the Purchaser
as the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to vote in such manner as each such attorney and proxy or his
substitute shall, in his sole discretion, deem proper and otherwise act (by
written consent or otherwise) with respect to all the Shares tendered hereby
which have been accepted for payment by the Purchaser prior to the time of such
vote or other action and all Shares and other securities issued in Distributions
in respect of such Shares, which the undersigned is entitled to vote at any
meeting of stockholders of the Company (whether annual or special and whether or
not an adjourned or postponed meeting) or consent in lieu of any such meeting or
otherwise. This proxy and power of attorney is coupled with an interest in the
Shares tendered hereby, is irrevocable and is granted in consideration of, and
is effective upon, the acceptance for payment of such Shares by the Purchaser in
accordance with the terms of the Offer. Such acceptance for payment shall revoke
all other proxies and powers of attorney granted by the undersigned at any time
with respect to such Shares (and all Shares and other securities issued in
Distributions in respect of such Shares), and no subsequent proxy or power of
attorney shall be given or written consent executed (and if given or executed,
shall not be effective) by the undersigned with respect thereto. The undersigned
understands that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance of such Shares for payment, the Purchaser must
be able to exercise full voting and other rights with respect to such Shares,
including, without limitation, voting at any meeting of the Company's
stockholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, and that when such Shares are accepted for payment
by the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto and to all Distributions, free and clear of all liens,
restrictions, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The
4
<PAGE>
undersigned, upon request, shall execute and deliver all additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Shares tendered hereby and all
Distributions. In addition, the undersigned shall remit and transfer promptly to
the Depositary for the account of the Purchaser all Distributions in respect of
the Shares tendered hereby, accompanied by appropriate documentation of
transfer, and, pending such remittance and transfer or appropriate assurance
thereof, the Purchaser shall be entitled to all rights and privileges as owner
of each such Distribution and may withhold the entire purchase price of the
Shares tendered hereby or deduct from such purchase price, the amount or value
of such Distribution as determined by Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchaser, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Stock Certificates evidencing Shares not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Stock Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Stock Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Stock Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions," please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased, by crediting the
account at the Book-Entry Transfer Facility. The undersigned recognizes that the
Purchaser has no obligation, pursuant to the Special Payment Instructions, to
transfer any Shares from the name of the registered holder(s) thereof if the
Purchaser does not purchase any of the Shares tendered hereby.
5
<PAGE>
- -------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Stock Certificates evidencing Shares not tendered or not
purchased are to be issued in the name of someone other than the
undersigned.
Issue (check appropriate box)
/ / Check / / Certificate(s) to:
Name: ______________________________________________________________________
(PLEASE PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
- ------------------------------------------------------
- ------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Stock Certificates evidencing Shares not tendered or not
purchased are to be mailed to someone other than the undersigned, or to the
undersigned at an address other than that shown under "Description of Shares
Tendered."
Mail (check appropriate box)
/ / Check / / Stock Certificate(s) to:
Name: ______________________________________________________________________
(PLEASE PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
- -----------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
____________________________________________________________________________
____________________________________________________________________________
SIGNATURE(S) OF HOLDER(S)
Dated: __________________, 2000
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Stock Certificates or on a security position listing or by a person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please provide the following
information. See Instruction 5.)
Name(s): ___________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _____________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _______________________________________________
Taxpayer Identification or Social Security No.: ____________________________
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
(PLEASE PRINT)
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _______________________________________________
Dated: __________________, 2000
----------------------------------------------------------------------------
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, signatures
on this Letter of Transmittal must be guaranteed by a member in good standing of
the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Program, the Stock Exchange Medallion Program or by any other
"Eligible Guarantor Institution" (bank, stockholder, savings and loan
association or credit union with membership approved signature guarantee
medallion program) as defined in Rule 17Ad-15 under the Exchange Act (each of
the foregoing constituting an "Eligible Institution"). No signature guarantee is
required on this Letter of Transmittal (a) if this Letter of Transmittal is
signed by the registered holder(s) (which term, for purposes of this document,
shall include any participant in the Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) of Shares
tendered herewith, unless such holder(s) has completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the reverse hereof, or (b) if such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND STOCK CERTIFICATES. This Letter
of Transmittal is to be used either if Stock Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to the
procedure set forth in Section 2 of the Offer to Purchase. Stock Certificates
evidencing all physically tendered Shares, or a confirmation of a book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility of
all Shares delivered by book-entry transfer as well as a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile thereof), or
an Agent's Message, in the case of a book-entry transfer, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the reverse hereof prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). If Stock
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Stockholders whose Stock Certificates are not immediately available,
who cannot deliver their Stock Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 2 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Stock Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees or an Agent's Message, in
the case of a book-entry transfer, and any other documents required by this
Letter of Transmittal, must be received by the Depositary within three New York
Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as described in Section 2 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, STOCK CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a manually signed facsimile hereof), all
8
<PAGE>
tendering stockholders waive any right to receive any notice of the acceptance
of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Stock Certificate numbers, the number of
Shares evidenced by such Stock Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Stock Certificates
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Stock Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Stock Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Stock Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Stock Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Stock Certificates or separate stock
powers are required, unless payment is to be made to, or Stock Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Stock
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Stock Certificate(s).
Signatures on such Stock Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Stock Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed as the name(s) of the registered
holder(s) or accompanied by appropriate stock powers, in either case signed as
the name(s) of the registered holder(s) appear(s) on such Stock Certificate(s).
Signatures on such Stock Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal or any Stock Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Stock
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such
9
<PAGE>
other person will be deducted from the purchase price of such Shares purchased,
unless evidence satisfactory to Purchaser of the payment of such taxes, or
exemption therefrom, is submitted. Except as provided in this Instruction 6, it
will not be necessary for transfer tax stamps to be affixed to the Stock
Certificates evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Stock Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal but at an address other than that
shown in the box entitled "Description of Shares Tendered" on the reverse
hereof, the appropriate boxes on the reverse of this Letter of Transmittal must
be completed. Stockholders delivering Shares tendered hereby by book-entry
transfer may request that Shares not purchased be credited to such account
maintained at the Book-Entry Transfer Facility.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent at its
address or telephone number set forth below. Additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
9. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering Stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such stockholder. If the tendering stockholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such stockholder until a TIN is provided to
the Depositary.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the Stockholder should
promptly notify the Depositary. The Stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR MANUALLY SIGNED FACSIMILE HEREOF),
PROPERLY COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE
GUARANTEES AND STOCK CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL
OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION
DATE (AS DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject
10
<PAGE>
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding of 31%.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as exempt recipient,
such individual must submit a statement, signed under penalties of perjury,
attesting to such individual's exempt status. Forms of such statements can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN), and (b) that
(i) such stockholder has not been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (ii) the Internal Revenue Service has
notified such stockholder that such stockholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied for" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I, and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
11
<PAGE>
<TABLE>
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--Taxpayer Identification --------------------
FORM W-9 Number--For all accounts, enter Social Security Number
Department of the Treasury taxpayer identification number OR ----------------
Internal Revenue Service in the box at right. (For most Employer Identification
individuals, this is your Number
social security number. If you (If awaiting TIN
do not have a number, see write "Applied For")
Obtaining a Number in the
enclosed Guidelines.) Certify
by signing and dating below.
Note: If the account is in more
than one name, see the chart in
the enclosed Guidelines to
determine which number to give
the payer.
- --------------------------------------------------------------------------------------------------------------
Payer's Request for Taxpayer PART II--For Payees Exempt From Backup Withholding, see the
Identification Number (TIN) enclosed Guidelines and complete as instructed therein.
- --------------------------------------------------------------------------------------------------------------
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or a Taxpayer Identification
Number has not been issued to me and either (a) I have mailed or delivered an application to receive a
Taxpayer Identification Number to the appropriate Internal Revenue Service ("IRS") or Social Security
Administration office or (b) I intend to mail or deliver an application in the near future. I understand
that if I do not provide a Taxpayer Identification Number within sixty (60) days, 31% of all reportable
payments made to me thereafter with be withheld until I provide a number), and
(2) I am not subject to backup withholding either because I have not been notified by the IRS that I am
subject to backup withholding as a result of failure to report all interest or dividends, or the IRS has
notified me that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are
subject to backup withholding because of underreporting interest or dividends on your tax return. However, if
after being notified by the IRS that you were subject to backup withholding you received another notification
from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see
instructions in the enclosed Guidelines.)
- --------------------------------------------------------------------------------------------------------------
SIGNATURE DATE , 2000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
445 Park Avenue, 5th Floor
New York, New York 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms, Please Call:
(800) 662-5200
SHAREHOLDERS PLEASE CALL: (800) 566-9061
March 15, 2000
12
<PAGE>
Exhibit (a)(1)(C)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
DUFF & PHELPS CREDIT RATING CO.
(Not To Be Used For Signature Guarantees)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) (i) if certificates ("Stock
Certificates") evidencing shares of common stock, no par value (the "Shares"),
of Duff & Phelps Credit Rating Co., an Illinois corporation (the "Company"), are
not immediately available, (ii) if Stock Certificates and all other required
documents cannot be delivered to Harris Trust Company of New York, as Depositary
(the "Depositary"), prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase (as defined below)) or (iii) if the procedure for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram
or facsimile transmission to the Depositary. See Section 2 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
Harris Trust Company of New York
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
</TABLE>
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(212) 701-7636 or 7637
FOR INFORMATION TELEPHONE (CALL COLLECT):
(212) 701-7624
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to FSA Acquisition Corp., a Delaware
corporation and an indirect, wholly owned subsidiary of Fimalac, a SOCIETE
ANONYME organized and existing under the laws of the Republic of France, upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated March 15, 2000 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"), receipt of each of which is hereby acknowledged, the number of Shares
specified below pursuant to the guaranteed delivery procedures described in
Section 2 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holder(s):
Certificate Nos. (if available)
(PLEASE PRINT)
Address(es):
(ZIP CODE)
Account Number: Company Area Code and Tel. No.:
Dated: Area Code and Tel. No.:
Signature(s):
</TABLE>
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member in good standing of the Security Transfer Agents
Medallion Program or the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program hereby guarantees to deliver to
the Depositary either the certificates representing the Shares tendered hereby,
in proper form for transfer, or a book-entry confirmation of a transfer of such
Shares, in any such case together with a properly completed and duly executed
Letter of Transmittal, or a manually signed facsimile thereof, with any required
signature guarantees, or an Agent's Message, in the case of the
Book-Entry-Transfer Facility and any other documents required by the Letter of
Transmittal within three New York Stock Exchange trading days after the date
hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:
(Authorized Signature)
Address: Name:
(Please type or print)
Title:
(Zip Code)
Area Code and Tel. No.: Date:
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. STOCK CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
Exhibit (a)(1)(D)
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
DUFF & PHELPS CREDIT RATING CO.
AT
$100.00 NET PER SHARE
BY
FSA ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FIMALAC S.A.
THE OFFER AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON TUESDAY, APRIL 11, 2000 UNLESS THE OFFER IS EXTENDED
TO BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES:
We are writing to you in connection with the offer by FSA Acquisition Corp.,
a Delaware corporation ("Purchaser") and an indirect wholly owned subsidiary of
Fimalac, a SOCIETE ANONYME organized and existing under the laws of the Republic
of France ("Fimalac"), to purchase any and all outstanding shares of Common
Stock, no par value (the "Shares"), of Duff & Phelps Credit Rating Co., an
Illinois corporation (the "Company"), at a price of $100.00 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated March 15, 2000 (the "Offer
to Purchase"), and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer")
enclosed herewith. The Offer is being made in connection with the Agreement and
Plan of Merger, dated as of March 6, 2000 (the "Merger Agreement"), among
Fimalac, Fimalac, Inc., Purchaser and the Company. Holders of Shares whose
certificates for such Shares (the "Certificates") are not immediately available
or who cannot deliver their Certificates and all other required documents to
Harris Trust Company of New York (the "Depositary") or complete the procedures
for book-entry transfer prior to the Expiration Date (as defined under
Section 1 of the Offer to Purchase) must tender their Shares according to the
guaranteed delivery procedures set forth under Section 2 of the Offer to
Purchase.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares in your name or in the name of your nominee.
Enclosed for your information and for forwarding to your clients are copies
of the following documents:
1. The Offer to Purchase dated March 15, 2000;
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to accept the Offer;
3. A printed form of letter which may be sent to your clients for whose
account you hold Shares in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
4. A Notice of Guaranteed Delivery to be used to accept the Offer if
Certificates are not immediately available or if the procedure for
book-entry transfer cannot be completed on a timely basis;
<PAGE>
5. Guidelines of the Internal Revenue Service for certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to Harris Trust Company of New York, the
Depositary.
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the Offer to their attention as
promptly as possible. None of Purchaser, Fimalac or Fimalac, Inc. will pay any
fees or commissions to any broker or dealer or any other person (other than the
Information Agent) for soliciting tenders of Shares pursuant to the Offer. You
will be reimbursed by the Purchaser for customary mailing expenses incurred by
you in forwarding any of the enclosed materials to your clients. The Purchaser
will pay or cause to be paid any stock transfer taxes payable on the sale and
transfer of Shares to it or its order, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK TIME, ON TUESDAY, APRIL 11, 2000 UNLESS THE
OFFER IS EXTENDED.
Please note the following:
1. The tender price is $100.00 per Share, net to the seller in cash,
without interest.
2. The Offer is being made for any and all of the outstanding Shares.
3. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer. However, federal income tax backup withholding at a rate of 31% may
be required unless an exemption is available or unless the required taxpayer
identification information is provided. See "Important Tax Information" of
the Letter of Transmittal.
4. The board of directors of the Company (the "Company Board") has by
unanimous vote of those present determined that the Offer and the Merger (as
defined in the Offer to Purchase) are fair and in the best interest of the
Company. The Company Board has approved the Offer and the Merger and
declared their advisability. The Company Board has also recommended that the
stockholders of the Company accept the Offer and tender their Shares.
5. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) Certificates pursuant to the
procedures set forth in Section 2 of the Offer to Purchase or a timely
book-entry confirmation with respect to such Shares, (b) a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantees or an Agent's
Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and (c) any other documents required by the
Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times depending upon when Certificates or book-entry confirmations
are actually received by the Depositary.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof) with
any signature guarantees or an Agent's Message in connection with book-entry
delivery of Shares, and, if necessary, any other required documents should be
sent to the Depositary and (ii) either Certificates should be delivered to the
Depositary, or such Shares should be tendered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as described in the
Offer to Purchase), all in accordance with the instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Certificates or other required documents to the Depositary prior
to the expiration of the Offer or to comply with the book-entry transfer
procedures on a timely basis, a tender may be effected by following the
guaranteed delivery procedures specified in Section 2 of the Offer to Purchase.
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent at the address and telephone number set forth on the back
cover page of the Offer to Purchase.
Additional copies of the above documents may be obtained from the
Information Agent, at the address and telephone number set forth on the back
cover of the Offer to Purchase.
Very truly yours,
FSA ACQUISITION CORP.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON THE AGENT OF THE PURCHASER, FIMALAC, THE COMPANY OR THE
DEPOSITARY, OR AS AGENT OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO, OR
USE ANY DOCUMENT IN CONNECTION WITH, THE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY
MADE IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL AND THE DOCUMENTS
INCLUDED HEREWITH.
<PAGE>
Exhibit (a)(1)(E)
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
DUFF & PHELPS CREDIT RATING CO.
AT
$100.00 NET PER SHARE
BY
FSA ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF
FIMALAC S.A.
THE OFFER AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON TUESDAY, APRIL 11, 2000 UNLESS THE OFFER IS EXTENDED.
To our Clients:
Enclosed for your consideration are an Offer to Purchase dated March 15,
2000 (the "Offer to Purchase"), and the related Letter of Transmittal relating
to an offer by FSA Acquisition Corp., a Delaware corporation (the "Purchaser"),
and an indirect wholly owned subsidiary of Fimalac, a SOCIETE ANONYME organized
and existing under the laws of the Republic of France, to purchase all of the
outstanding shares of common stock, no par value (the "Shares"), of Duff &
Phelps Credit Rating Co., an Illinois corporation (the "Company"), at a purchase
price of $100.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer"). We are (or our nominee is) the
holder of record of Shares held by us for your account. A TENDER OF SUCH SHARES
CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION
ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and conditions set forth in the Offer to Purchase.
Your attention is invited to the following:
1. The tender price is $100.00 per Share, net to you in cash, without
interest.
2. The Offer is being made for all of the outstanding Shares.
3. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON APRIL 11, 2000 UNLESS THE OFFER IS EXTENDED.
4. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer that
number of Shares which constitutes not less than 51% of the outstanding
Shares of the Company on a fully-diluted basis on the date of purchase,
(ii) the expiration or termination of any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder applicable to the
<PAGE>
purchase of Shares pursuant to the Offer and (iii) the satisfaction of the
other conditions described in Section 15 of the Offer to Purchase.
5. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer. However, federal income tax backup withholding at a rate of 31% may
be required, unless an exemption is provided or unless the required taxpayer
identification information is provided. (See "Important Tax Information" of
the Letter of Transmittal).
6. The board of directors of the Company (the "Company Board") has by
unanimous vote of those present determined that the Offer and the Merger (as
defined in the Offer to Purchase) are fair and in the best interest of the
Company. The Company Board has approved the Offer and the Merger and
declared their advisability. The Company Board has also recommended that the
stockholders of the Company accept the Offer and tender their Shares.
7. Notwithstanding any other provision of the Offer, payment for Shares
accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for Shares
pursuant to the procedures set forth in Section 2 of the Offer to Purchase,
or timely book-entry confirmation with respect to such Shares, (b) the
Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees or, in
the case of a book-entry transfer, an Agent's Message (as defined in
Section 2 of the Offer to Purchase), and (c) any other documents required by
the Letter of Transmittal. Accordingly, payment may not be made to all
tendering stockholders at the same time depending upon when certificates
representing Shares or book-entry confirmations are actually received by the
Depositary.
If you wish to have us tender any or all of the Shares held by us for your
account, please instruct us by completing, executing and returning to us the
instruction form contained in this letter. If you authorize us to tender your
Shares, all such Shares will be tendered unless otherwise specified in such
instruction form. YOUR INSTRUCTION SHOULD BE FORWARDED TO US IN AMPLE TIME TO
PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. The Offer is not being
made to, nor will tenders be accepted from, or on behalf of holders of Shares
residing in any jurisdiction in which the making or acceptance thereof would not
be in compliance with the laws of such jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
OF
DUFF & PHELPS CREDIT RATING CO.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer to
Purchase dated March 15, 2000 (the "Offer to Purchase") and the related Letter
of Transmittal pursuant to an offer by FSA Acquisition Corp., a Delaware
corporation, to purchase all of the outstanding shares of common stock, no par
value (the "Shares") of Duff & Phelps Credit Rating Co., an Illinois
corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares which are held by you for the
account of the undersigned), upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
<TABLE>
<S> <C>
Number of Shares SIGN HERE
to be tendered
..............Shares**
Signature
Please print name(s)
Address
Area Code and Telephone Number
Tax Identification or
Social Security Number(s)
Dated: , 2000
</TABLE>
- ------------------------
** Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
Exhibit (a)(1)(F)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
- ---------------------------------------------
GIVE THE
FOR THIS TYPE OF SOCIAL SECURITY
ACCOUNT: NUMBER OF --
- ---------------------------------------------
<S> <C> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Custodian account The minor(2)
of a minor (Uniform
Gift to Minors Act)
4. a. The usual The grantor-
revocable trustee(1)
savings trust
account (grantor
is also trustee)
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust
under state law
- ---------------------------------------------
GIVE THE
EMPLOYER
FOR THIS TYPE OF IDENTIFICATION
ACCOUNT: NUMBER OF --
<S> <C> <C>
- ---------------------------------------------
5. Sole proprietorship The owner(4)
account
6. A valid trust, The legal entity
estate, or pension (Do not furnish the
trust identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
7. Corporate account The corporation
8. Religious, The organization
charitable, or
educational
organization
account
9. Partnership account The partnership
held in the name of
the business
10. Association, club, The organization
or other tax-exempt
organization
11. A broker or The broker or
registered nominee nominee
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or
prison) that
receives
agricultural
program payments
</TABLE>
- ----------------------------------------
- ----------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your Social Security number or your Employer Identification
number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except (11). For broker transactions, payees listed in (1)
through (13) and a person registered under the Investment Advisers Act of 1940
who regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in item (2) through (6) are exempt from backup withholding
for barter exchange transactions and patronage dividends.
(1) A corporation.
(2) An organization exempt from tax under Section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
(3) The United States or any agency or instrumentality thereof.
(4) A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
(5) A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
(6) An international organization or any agency or instrumentality thereof.
(7) A foreign central bank of issue.
(8) A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
(9) A real estate investment trust.
(10) A common trust fund operated by a bank under Section 584(a) of the Code.
(11) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(12) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1) of the Code.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852 of the Code).
- - Payments described in Section 6049(b)(5) of the Code to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451 of the Code.
- - Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 OR W-8BEN (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041(a), 6045, 6050A and 6050N of
the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
EXHIBIT (A)(1)(G)
THIS ANNOUNCEMENT IS NOT AN OFFER TO PURCHASE OR A SOLICITATION OF AN OFFER TO
SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE DATED MARCH 15,
2000 AND THE RELATED LETTER OF TRANSMITTAL AND IS NOT BEING MADE TO, NOR WILL
TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF SHARES IN ANY
JURISDICTION IN WHICH THE MAKING OF THE OFFER OR ACCEPTANCE THEREOF WOULD NOT
BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IN THOSE JURISDICTIONS
WHERE THE APPLICABLE LAWS REQUIRE THAT THE OFFER BE MADE BY A LICENSED
BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON BEHALF OF
PURCHASER BY THE DEALER MANAGER OR ONE OR MORE REGISTERED BROKERS OR
DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
DUFF & PHELPS CREDIT RATING CO.
AT
$100.00 NET PER SHARE
BY
FSA ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
FIMALAC S.A.
FSA Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect
wholly owned subsidiary of Fimalac S.A., a French SOCIETE ANONYME ("Parent"), is
offering to purchase all outstanding shares of common stock, no par value (the
"Shares"), of Duff & Phelps Credit Rating Co., an Illinois corporation (the
"Company"), at a price of $100.00 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
March 15, 2000 (the "Offer to Purchase") and in the related Letter of
Transmittal (which together constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, APRIL 11, 2000 UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES THAT WOULD CONSTITUTE AT LEAST 51 PERCENT OF ALL OUTSTANDING SHARES ON A
FULLY-DILUTED BASIS.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of March 6, 2000 (the "Merger Agreement"), among the Company, Parent,
Fimalac, Inc. and Purchaser. The Merger Agreement provides, among other things,
that as soon as practicable after the consummation of the Offer, at the option
of Parent, either Purchaser will be merged with and into the Company, with the
Company continuing as the surviving corporation or the Company will be merged
with and into Purchaser, with the Purchaser continuing as the surviving
corporation (either, the "Merger"). Pursuant to the Merger, each outstanding
Share (other than Shares held by the Company as treasury shares or Shares owned
by Parent or its affiliates, which will in either case be canceled and no
payment made with respect thereto, and other than Shares, if any, held by
shareholders who have properly exercised dissenters' rights in accordance with
Illinois law) will be converted into the right to receive $100.00 in cash
without interest.
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY BY UNANIMOUS VOTE OF THOSE PRESENT
(I) DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY, (II) APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER AND THE
MERGER, AND DECLARED THEIR ADVISABILITY AND (III) RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER, TENDER THEIR SHARES THEREUNDER TO PURCHASER AND
IF REQUIRED BY APPLICABLE LAW, APPROVE AND ADOPT THE MERGER AGREEMENT AND THE
MERGER.
Purchaser reserves the right, at any time or from time to time, to extend
the period of time during which the Offer is open by giving oral or written
notice of such extension to Harris Trust Company of New York, the Depositary.
Any such extension will be followed as promptly as practicable by public
announcement.
For purposes of the Offer, Purchaser shall be deemed to have accepted for
payment tendered Shares when, as and if Purchaser gives oral or written notice
to the Depositary of its acceptance of the tenders of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for such Shares (or a confirmation of
a book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company ("DTC")), a properly completed and duly executed Letter
of Transmittal and any other required documents.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
until the Offer has expired, and may be withdrawn after May 15, 2000 until the
Shares are accepted for payment. To be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase and
must specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of such
Shares, if different from that of the person who tendered such Shares. If the
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, a signed notice of withdrawal with (except in the case of Shares
tendered by an Eligible Institution (as defined in the Offer to Purchase))
signatures guaranteed by an Eligible Institution must be submitted prior to the
release of such Shares. In addition, such notice must specify, in the case of
Shares tendered by delivery of certificates, the name of the registered holder
(if different from that of the tendering shareholder) and the serial numbers
shown on the particular certificates evidencing the Shares to be withdrawn or,
in the case of Shares tendered by book-entry transfer, the name and number of
the account at DTC to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (d)(1) of Rule 14d-6
under the Exchange Act is contained in the Offer to Purchase and is incorporated
by reference into this summary advertisement.
A request is being made to the Company for the use of its shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares and will be furnished to brokers,
banks and similar persons whose names, or the names of whose nominees, appear on
the shareholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
<PAGE>
THE OFFER TO PURCHASE AND LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
OFFER.
Requests for copies of the Offer to Purchase and the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent or the Dealer Manager as set forth below, and copies will be furnished
promptly at Purchaser's expense. Questions or requests for assistance may be
directed to the Information Agent.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, New York 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms, Please Call:
(800) 662-5200
Shareholders Please Call: (800) 566-9061
THE DEALER MANAGER FOR THE OFFER IS:
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza
New York, NY 10020
(212) 632-6717 (Call Collect)
March 15, 2000
<PAGE>
EXHIBIT (A)(1)(H)
FITCH IBCA AND DUFF & PHELPS ANNOUNCE
MERGER AGREEMENT
Fitch IBCA, a subsidiary of FIMALAC, S.A., a diversified French operating
company, and DUFF & PHELPS CREDIT RATING CO. (NYSE: DCR) announced today that
they have entered into a definitive merger agreement pursuant to which a
subsidiary of Fitch IBCA will acquire Duff & Phelps Credit Rating Co. for $100
per share, for a total price of $528 million. The acquisition will be completed
through a cash tender offer, followed by a cash merger.
FIMALAC, S.A., which is traded on the Paris stock exchange, has interests in a
variety of service activities, such as hand tools and garage equipment through
its subsidiary FACOM, chemical product storage through its subsidiaries LBC and
PETROUNITED, mailing equipment machines through its subsidiary SECAP, FIMALAC's
total revenues in 1999 were approximately 1.58 billion euros (US$1.54 billion).
The merger of Fitch IBCA and Duff & Phelps will create a company with combined
annual revenues of $260 million and a staff of 1,100. Fitch IBCA's key strengths
have been in U.S. securitization markets, global banking, European rating
activities and U.S. public finance. Duff & Phelps brings to Fitch IBCA an
expanded corporate rating capability and broader coverage of the insurance
sector, in addition to a strong structured finance group and international
network. We will accelerate our investment in technology and Internet delivery
needed to bring credit research and ratings to global markets.
Marc de Lacharriere, Chairman of Fitch IBCA, will become chairman of the new
entity and has designated Robin Monro-Davies as CEO and Stephen W. Joynt as
President and COO. Paul McCarthy, Chairman and CEO, and Philip Maffei,
President, of Duff & Phelps will become directors of the new company. The new
company will maintain major operations in London, New York, and Chicago.
Mr. de Lacharriere said, "For many years now FIMALAC has been interested in
developing a European owned alternative to the major US agencies. Through the
development of Fitch IBCA and with the acquisition of Duff & Phelps, we now have
achieved our goal. I believe the outlook for the company is excellent and
FIMALAC will ensure that it has all the necessary backing to continue the
dynamic growth that Fitch IBCA and Duff & Phelps have achieved in the past. I
would also like to welcome the staff of D&P who I expect to play a key role in
our new enterprise. I am very happy that Paul and Phil have accepted to become
directors of the board of the new company and to continue to support its
development."
Mr. Monro-Davies said, "This merger enables us to offer a full service
alternative to S&P and Moody's and allows us to be a strong competitor to the
industry giants. I also look forward to meeting and working with the many
talented people at D&P."
Mr. Joynt commented, "Our key to success continues to be providing the most
accurate ratings supported by the highest quality research with the best service
orientation for investors. We will have a very experienced and analytical staff,
a special position as the European rating agency, and local analysts with local
expertise around the globe."
The Chairman of Duff & Phelps, Mr. Paul, McCarthy said, "We are confident that
the merger with Fitch IBCA is in the best long term interests of the company and
the industry. We will be doing all in our power to ensure the transition is a
successful one."
FOR INFORMATION AT FITCH IBCA IN NEW YORK CONTACT STEPHEN W. JOYNT OR JAMES
JOCKLE AT (212) 908-0547; IN LONDON, ROBIN MONRO-DAVIES OR KRIS ANDERSON AT
44-171-417-4222; AT FIMALAC IN PARIS CONTACT VERONIQUE MORALI AT
33-1-47-53-61-71; AT DUFF & PHELPS, PHIL MAFFEI OR JOHN TEALL AT 212-908-0200.
<PAGE>
Exhibit 99.(d)(1)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
Fimalac, S.A.
Fimalac, INC.
FSA Acquisition Corp.
and
Duff & Phelps Credit Rating Co.
Dated as of March 6, 2000
<PAGE>
TABLE OF CONTENTS
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ARTICLE I
THE OFFER.......................................................................................2
Section 1.1 The Offer.........................................................................2
Section 1.2 Company Action....................................................................4
Section 1.3 Boards of Directors and Committees; Section 14(f).................................5
ARTICLE II
THE MERGER......................................................................................6
Section 2.1 The Merger........................................................................6
Section 2.2 Effective Date....................................................................7
Section 2.3 Effect of the Merger..............................................................7
Section 2.4 Articles of Incorporation, By-Laws................................................7
Section 2.5 Directors and Officers............................................................7
Section 2.6 Effect on Capital Stock...........................................................8
Section 2.7 Exchange of Certificates.........................................................10
Section 2.8 Stock Transfer Books.............................................................11
Section 2.9 No Further Ownership Rights in Common Stock......................................11
Section 2.10 Lost, Stolen or Destroyed Certificates...........................................12
Section 2.11 Taking of Necessary Action; Further Action.......................................12
Section 2.12 Stockholders' Meeting............................................................12
Section 2.13 Material Adverse Effect..........................................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................14
Section 3.1 Organization and Qualification; Subsidiaries.....................................14
Section 3.2 Articles of Incorporation and By-Laws............................................15
Section 3.3 Capitalization...................................................................15
Section 3.4 Authority Relative to this Agreement.............................................16
Section 3.5 Material Contracts; No Conflict; Required Filings and
Consents.....................................................................16
Section 3.6 Compliance, Permits..............................................................18
Section 3.7 SEC Filings; Financial Statements................................................18
Section 3.8 Absence of Certain Changes or Events.............................................19
Section 3.9 No Undisclosed Liabilities.......................................................20
Section 3.10 Absence of Litigation............................................................20
Section 3.11 Employee Benefit Plans, Employment Agreements....................................21
Section 3.12 Employment and Labor Matters.....................................................23
Section 3.13 Schedule 14D-9; Offer Documents; Proxy Statement.................................23
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Section 3.14 Restrictions on Business Activities..............................................24
Section 3.15 Title to Property................................................................24
Section 3.16 Taxes............................................................................25
Section 3.17 Environmental Matters............................................................27
Section 3.18 Intellectual Property............................................................28
Section 3.19 Interested Party Transactions....................................................29
Section 3.20 Insurance........................................................................29
Section 3.21 Opinion of Financial Adviser.....................................................29
Section 3.22 Brokers..........................................................................29
Section 3.23 Sections 7.85 and 11.75 of Illinois Law Not Applicable...........................30
Section 3.24 Vote Required....................................................................30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT, Fimalac-U.S. AND ACQUISITION SUB.......................................................30
Section 4.1 Organization and Qualification; Subsidiaries.....................................30
Section 4.2 Authority Relative to this Agreement.............................................31
Section 4.3 No Conflict, Required Filings and Consents.......................................31
Section 4.4 Offer Documents; Schedule 14D-9; Proxy Statement.................................32
Section 4.5 No Prior Activities; Financing...................................................32
Section 4.6 Ownership of Shares..............................................................33
ARTICLE V
CONDUCT OF BUSINESS............................................................................33
Section 5.1 Conduct of Business by the Company Pending the Merger............................33
Section 5.2 No Solicitation; Acquisition Proposals...........................................36
ARTICLE VI
ADDITIONAL AGREEMENTS..........................................................................39
Section 6.1 HSR Act..........................................................................39
Section 6.2 Access to Information; Confidentiality...........................................39
Section 6.3 Consents; Approvals..............................................................39
Section 6.4 Indemnification and Insurance....................................................40
Section 6.5 Notification of Certain Matters..................................................42
Section 6.6 Further Action...................................................................42
Section 6.7 Public Announcements.............................................................42
Section 6.8 Conveyance Taxes.................................................................42
Section 6.9 Employee Benefit Plans...........................................................43
Section 6.10 Delisting of Securities..........................................................43
Section 6.11 Audited Financial Statements.....................................................43
Section 6.12 State Takeover Laws..............................................................43
Section 6.13 Financing Efforts................................................................44
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ii
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ARTICLE VII
CONDITIONS TO THE MERGER.......................................................................44
Section 7.1 Conditions to Obligation of Each Party to Effect the
Merger.......................................................................44
Section 7.2 Conditions to Obligation of Parent, Fimalac-U.S. and
Acquisition Sub..............................................................45
ARTICLE VIII
TERMINATION....................................................................................45
Section 8.1 Termination......................................................................45
Section 8.2 Effect of Termination............................................................47
Section 8.3 Fees and Expenses................................................................47
ARTICLE IX
GENERAL PROVISIONS.............................................................................48
Section 9.1 Effectiveness of Representations, Warranties and
Agreements...................................................................48
Section 9.2 Notices..........................................................................48
Section 9.3 Certain Definitions..............................................................49
Section 9.4 Amendment........................................................................50
Section 9.5 Waiver...........................................................................50
Section 9.6 Headings.........................................................................51
Section 9.7 Severability.....................................................................51
Section 9.8 Entire Agreement.................................................................51
Section 9.9 Assignment; Guarantee of Acquisition Sub Obligations.............................51
Section 9.10 Parties in Interest..............................................................51
Section 9.11 Failure or Indulgence Not Waiver; Remedies Cumulative............................51
Section 9.12 Governing Law....................................................................52
Section 9.13 Counterparts.....................................................................52
Section 9.14 Interpretation...................................................................52
Annex A - Offer Conditions
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 6, 2000,
is among Duff & Phelps Credit Rating Co., an Illinois corporation (the
"COMPANY"), Fimalac, S.A., a French SOCIETE ANONYME ("PARENT"), Fimalac, Inc., a
Delaware corporation ("FIMALAC-U.S."), and FSA Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Fimalac-U.S. ("ACQUISITION SUB").
WHEREAS, the Boards of Directors of Parent, Fimalac-U.S.,
Acquisition Sub and the Company have each approved the acquisition of the
Company by Parent, by means of a tender offer by Acquisition Sub to acquire all
outstanding shares (the "SHARES") of common stock, no par value per share, of
the Company (the "COMMON STOCK") for a cash amount of $100.00 per Share (such
amount, or any greater amount per Share paid pursuant to the tender offer, as
such amount may be adjusted from time to time pursuant to the third paragraph of
Section 1.1(a), being hereinafter referred to as the "PER SHARE AMOUNT") in
accordance with the terms and subject to the conditions provided for herein,
which shall include any subsequent offering period thereof (the "OFFER") and a
merger of Acquisition Sub and the Company (the "MERGER") following the Offer,
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors of the Company (the "BOARD")
has (i) determined that the consideration to be paid for each Share in the Offer
and the Merger is fair to and in the best interests of the stockholders of the
Company and (ii) approved this Agreement and the transactions contemplated
hereby and declared the advisability and resolved to recommend acceptance of the
Offer, approval of the Merger and approval and adoption of this Agreement by the
stockholders of the Company in accordance with the Illinois Business Corporation
Act of 1983, as amended (the "ILLINOIS LAW"), upon the terms and subject to the
conditions set forth herein; and
WHEREAS the Boards of Directors of Parent, Fimalac-U.S. and
Acquisition Sub have each approved the Offer and the Merger of Acquisition Sub
with and into the Company following the Offer in accordance with the Delaware
General Corporation Law (the "DELAWARE LAW") upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, the Company, Parent, Fimalac-U.S. and Acquisition Sub hereby agree
as follows:
<PAGE>
2
ARTICLE I.
THE OFFER
Section 1.1 THE OFFER.
(a). COMMENCEMENT. Provided that this Agreement
shall not have been terminated in accordance with Section 8.1, as promptly as
practicable following the public announcement by Parent and the Company of
the terms of this Agreement, Parent shall cause Acquisition Sub to commence
the Offer. The obligation of Acquisition Sub to accept for payment and pay
for Shares tendered pursuant to the Offer shall be subject to (i) the
condition that a number of Shares representing not less than 51% of the
Company's outstanding voting power (assuming the exercise of all outstanding
options, warrants, convertible or exchangeable securities or other rights to
purchase shares of Common Stock which have an exercise price less than the
Per Share Amount and which have not been canceled as described in Section
2.6(b)) shall have been validly tendered and not withdrawn prior to the
expiration date of the Offer (the "MINIMUM CONDITION"), and (ii) the
satisfaction or waiver by Acquisition Sub of all the other conditions set
forth in ANNEX A hereto. It is agreed that the conditions set forth in ANNEX
A hereto are for the sole benefit of Acquisition Sub and that the Minimum
Condition and the other conditions set forth in ANNEX A may be asserted by
Acquisition Sub regardless of the circumstances giving rise to any such
condition unless Parent, Fimalac-U.S., Acquisition Sub or their affiliates
shall have caused the circumstances giving rise to such condition.
Acquisition Sub expressly reserves the right in its sole discretion to waive,
in whole or in part at any time or from time to time, any such condition, to
increase the price per Share payable in the Offer, to extend the Offer or
provide for a subsequent offering period or to make any other changes in the
terms and conditions of the Offer; provided that, unless previously approved
by the Company in writing, no change may be made that decreases the Per Share
Amount payable in the Offer, changes the form of consideration payable in the
Offer, reduces the maximum number of Shares to be purchased in the Offer,
imposes conditions to the Offer in addition to those set forth in this
Agreement, including in ANNEX A hereto, or waives or decreases below 51% the
Minimum Condition.
Subject to the conditions of the Offer set forth in
this Agreement, including in ANNEX A hereto, Parent shall cause Acquisition Sub
to, and Acquisition Sub shall, accept for payment and pay for Shares which have
been validly tendered and not withdrawn pursuant to the Offer as soon as it is
permitted to do so under applicable law. The initial expiration date of the
Offer shall be 20 business days after the date of its commencement. If all
conditions set forth in ANNEX A are not satisfied on the initial expiration date
of the Offer, Acquisition Sub may extend (and re-extend) the Offer to provide
additional time to satisfy such conditions. Without limiting the right of
Acquisition Sub to extend the Offer pursuant to the immediately preceding
sentence, in the event that a condition set forth in paragraphs
<PAGE>
3
(a) or (g) of ANNEX A is not satisfied at the scheduled initial expiration date
of the Offer, Acquisition Sub shall, and Parent shall cause Acquisition Sub to,
extend the expiration date of the Offer for an additional 10 business days. In
addition, Acquisition Sub shall have the right to extend the Offer for a
subsequent offering period of up to an additional 20 business days (the
"SUBSEQUENT OFFERING PERIOD") pursuant to Rule 14d-11 of the Exchange Act (as
defined below).
The Per Share Amount payable in the Offer shall be
paid to the sellers in cash, upon the terms and subject to the conditions of the
Offer. Notwithstanding the foregoing, if between the date of this Agreement and
the Effective Time (as defined below) the outstanding Shares shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Per Share Amount shall be correspondingly
adjusted on a per-share basis to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
(b) FILING OFFER DOCUMENTS. On the date of
commencement of the Offer, Parent, Fimalac-U.S. and Acquisition Sub shall
file or cause to be filed with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule TO with respect to the Offer,
which will contain the offer to purchase and form of the related letter of
transmittal and other ancillary offer documents and instruments pursuant to
which the Offer will be made (together with any supplements or amendments
thereto, the "OFFER DOCUMENTS") and which shall comply as to form in all
material respects with the provisions of applicable U.S. federal securities
laws. In addition, Parent, Fimalac-U.S. and Acquisition Sub shall file or
cause to be filed with the SEC under cover of Schedule TO any
pre-commencement press release or other written communications relating to
the Offer no later than the date of communication. The Company will promptly
supply to Parent, Fimalac-U.S. and Acquisition Sub in writing, for inclusion
in the Offer Documents, all information concerning the Company required under
the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "EXCHANGE ACT"). Parent,
Fimalac-U.S., Acquisition Sub and the Company each agree promptly to correct
any information provided by it for use in the Offer Documents if and to the
extent that any such information shall have become false or misleading in any
material respect and Parent, Fimalac-U.S. and Acquisition Sub each further
agrees to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable U.S. federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents prior to their
filing with the SEC and shall be provided with any comments Parent,
Fimalac-U.S., Acquisition Sub and their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after receipt of such
comments.
<PAGE>
4
Section 1.2 COMPANY ACTION.
(a) BOARD APPROVAL. The Company hereby approves of
and consents to the Offer and represents and warrants that the Board, at a
meeting duly called and held on March 6, 2000, by unanimous vote of those
present, (i) determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, are fair to and in the best
interests of the Company, (ii) approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and declared their
advisability and (iii) resolved to recommend that the stockholders of the
Company accept the Offer, tender their Shares thereunder to Acquisition Sub
and, if required by applicable law, approve and adopt this Agreement and the
Merger; provided, that such recommendation may be withdrawn or modified in
accordance with Section 5.2(a). The Company further represents and warrants
that Peter J. Solomon Company has delivered to the Board its written opinion
that, as of the date hereof, the Per Share Amount in the Offer is fair, from
a financial point of view, to the Company's stockholders, a copy of which has
been provided to Parent. The Company has been authorized by Peter J. Solomon
Company to permit the inclusion of such opinion in its entirety in the
Schedule 14D-9 referred to below and the Proxy Statement referred to in
Section 3.13, so long as such inclusion is in form and substance reasonably
satisfactory to Peter J. Solomon Company and its counsel. Subject to the
fiduciary duties of the Board under applicable law as determined and
exercised in good faith by the Board in a manner consistent with Section 5.2,
the Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the Board described in this Section 1.2(a).
(b) SCHEDULE 14D-9. Simultaneously with the filing
by Parent, Fimalac-U.S. and Acquisition Sub of the Offer Documents, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 and other ancillary documents and instruments required to be
filed pursuant thereto (together with any amendments or supplements thereto,
the "SCHEDULE 14D-9") and shall mail the Schedule 14D-9 to the stockholders
of the Company promptly after the commencement of the Offer. The Schedule
14D-9 shall, subject to the fiduciary duties of the Board under applicable
law as determined and exercised in good faith by the Board in a manner
consistent with Section 5.2, at all times contain the determination,
approvals and recommendations described in Section 1.2(a). Parent,
Fimalac-U.S. and Acquisition Sub each agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that any such information shall have become false or misleading in any
material respect and the Company further agrees to take all steps necessary
to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to
be disseminated to holders of Shares, in each case as and to the extent
required by applicable U.S. federal securities laws. Parent, Fimalac-U.S.,
Acquisition Sub and their counsel shall be given a reasonable opportunity to
review and comment on the Schedule 14D-9 prior to its filing with the SEC and
shall be provided with any comments the Company and its counsel may
<PAGE>
5
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after receipt of such comments.
(c) DISSEMINATION OF THE OFFER. In connection with
the Offer, the Company will promptly furnish Parent with mailing labels,
security position listings and any available listing or computer file
containing the names and addresses of the record holders of the Shares as of
a recent date and shall furnish Parent with such additional information and
assistance (including, without limitation, updated lists of stockholders,
mailing labels and lists of securities positions) as Parent or its agents may
reasonably request in communicating the Offer to the record and beneficial
holders of Shares. Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any
other documents necessary to consummate the Merger, Parent, Fimalac-U.S.,
Acquisition Sub, and their affiliates and associates shall hold in confidence
the information contained in any such labels, listings and files, will use
such information only in connection with the Offer and the Merger, and, if
this Agreement shall be terminated, will deliver to the Company all copies of
such information then in their possession and not use such information for
any purpose whatsoever.
Section 1.3 BOARDS OF DIRECTORS AND COMMITTEES; SECTION 14(F).
(a) BOARD REPRESENTATION. Promptly upon the
purchase by Acquisition Sub of Shares pursuant to the Offer and from time to
time thereafter, Parent shall be entitled to designate up to such number of
directors, rounded up to the next whole number on the Board that equals the
product of (i) the total number of directors on the Board (giving effect to
the election of any additional directors pursuant to this Section) and (ii)
the percentage that the number of Shares owned by Acquisition Sub and its
affiliates (including any Shares purchased pursuant to the Offer) bears to
the total number of outstanding Shares, and the Company shall upon request by
Parent, subject to the provisions of Section 1.3(b), promptly either increase
the size of the Board (and shall, if necessary, amend the Company's by-laws
to permit such an increase) or use its reasonable best efforts to secure the
resignation of such number of directors as is necessary to enable Parent's
designees to be elected to the Board and shall cause Parent designees to be
so elected; provided, that, at all times prior to the Effective Time, the
Company's Board shall include at least two members who are not designees of
Parent. Promptly upon request by Parent, the Company will, subject to the
provisions of Section 1.3(b), use its reasonable best efforts to cause
persons designated by Parent to constitute the same percentage as the number
of Parent's designees to the Board bears to the total number of directors on
the Board on (i) each committee of the Board, (ii) each board of directors or
similar governing body or bodies of each subsidiary of the Company designated
by Parent and (iii) each committee of each such board or body.
(b) COMPLIANCE WITH SECTION 14(F). The Company's
obligations to appoint Parent's designees to the Board shall be subject to
Section 14(f)
<PAGE>
6
of the Exchange Act, and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.3 and shall include in the
Schedule 14D-9 or a separate Rule 14f-1 Statement provided to shareholders such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1. Parent or Acquisition Sub will
supply to the Company in writing and be solely responsible for any information
with respect to either of them and their nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
(c) ACTION BY DISINTERESTED DIRECTORS. Following
the election or appointment of Parent's designees pursuant to this Section
1.3 and prior to the Effective Time (as defined below), any amendment of this
Agreement or any amendment to the articles of incorporation or by-laws of the
Company inconsistent with this Agreement, any termination of this Agreement
by the Company, any extension by the Company of the time for the performance
of any of the obligations or other acts of Parent or Acquisition Sub, any
waiver of any of the Company's rights hereunder or any other action by the
Company under or in connection with this Agreement that would adversely
affect the ability of the stockholders of the Company to receive the Merger
Consideration will require the concurrence of two-thirds of the directors of
the Company then in office who are not designees of Parent.
ARTICLE II.
THE MERGER
Section 2.1 THE MERGER.
(a) EFFECTIVE TIME. At the Effective Time (as
defined below), and subject to and upon the terms and conditions of this
Agreement, pursuant to and in accordance with the requirements of the
Illinois Law and the Delaware Law, at the option of the Parent, either (i)
Acquisition Sub shall be merged with and into the Company; the separate
corporate existence of Acquisition Sub shall cease and the Company shall
continue as the surviving corporation or (ii) the Company shall be merged
with and into Acquisition Sub, the separate corporate existence of the
Company shall cease and the Acquisition Sub shall continue as the surviving
corporation. In either case, the surviving corporation after the Merger is
hereinafter sometimes referred to as the "SURVIVING CORPORATION."
(b) CLOSING. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 8.1 and subject to the satisfaction or waiver of the
conditions set forth in Article VII, the consummation of the Merger will take
place as promptly as practicable (and in any event within two business days)
after satisfaction or waiver of
<PAGE>
7
the conditions set forth in Article VII, at the principal offices of Paul,
Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New
York 10019, unless another date and time or place is agreed to in writing by the
parties hereto.
Section 2.2 EFFECTIVE DATE. As promptly as practicable
after the satisfaction or waiver of the conditions set forth in Article VII
(and in any event within two business days thereafter), the parties hereto
shall cause the Merger to be consummated by (i) filing a certificate of
merger as contemplated by the Delaware Law (the "DELAWARE CERTIFICATE OF
MERGER"), together with any required related certificate, with the Secretary
of State of the State of Delaware, in such form as required by, and executed
in accordance with, the relevant provisions of the Delaware Law and (ii)
filing a certificate of merger as contemplated by the Illinois Law (the
"ILLINOIS CERTIFICATE OF MERGER"), together with any required related
certificate, with the Secretary of State of the State of Illinois, in such
form as required by, and executed in accordance with, the relevant provisions
of the Illinois Law (the time at which both such filings shall have been made
being the "EFFECTIVE TIME").
Section 2.3 EFFECT OF THE MERGER. At the Effective Time,
the effect of the Merger shall be as provided in this Agreement, the Delaware
Certificate of Merger, the Illinois Certificate of Merger, and the applicable
provisions of the Delaware Law and the Illinois Law. Without limiting the
generality of the foregoing and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of the Company and
Acquisition Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Acquisition Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 2.4 ARTICLES OF INCORPORATION, BY-LAWS.
(a) ARTICLES OF INCORPORATION. Unless otherwise
determined by Parent prior to the Effective Time, at the Effective Time the
articles of incorporation of the Acquisition Sub, as in effect immediately
prior to the Effective Time, shall be the articles of incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
articles of incorporation.
(b) BY-LAWS. Unless otherwise determined by Parent
prior to the Effective Time, at the Effective Time the by-laws of the
Acquisition Sub, as in effect immediately prior to the Effective Time, shall
be the by-laws of the Surviving Corporation until thereafter amended as
provided by law, the articles of incorporation of the Surviving Corporation
and such by-laws.
Section 2.5 DIRECTORS AND OFFICERS. At the Effective Time,
the directors of Acquisition Sub immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the articles of incorporation and by-laws of the
Surviving Corporation, and the executive officers of Acquisition Sub
immediately prior to the Effective Time shall be
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8
the initial executive officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified.
Section 2.6 EFFECT ON CAPITAL STOCK. At the Effective Time,
by virtue of the Merger and without any action on the part of the Parent,
Fimalac-U.S., Acquisition Sub, the Company, or the holders of any of the
following securities:
(a) CONVERSION OF SECURITIES. Each Share issued
and outstanding immediately prior to the Effective Time (excluding any Shares
to be canceled pursuant to Section 2.6(b) and any Dissenting Shares (as
defined in Section 2.6(e)) shall immediately cease to be outstanding and
shall automatically be canceled and retired and shall cease to exist and be
converted into the right to receive the Per Share Amount, without any
interest thereon (the "MERGER CONSIDERATION"), in accordance with Section 2.7
and each holder of any such Share shall cease to have any rights with respect
thereto arising therefrom (including without limitation the right to vote),
except for the right to receive the Merger Consideration in accordance with
Section 2.7. Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding Shares shall have been
changed into a different number of shares or a different class, by reason of
any stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Merger Consideration shall be
correspondingly adjusted on a per-share basis to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares, unless such adjustment shall already have been made
pursuant to the third paragraph of Section 1.1(a).
(b) CANCELLATION. Each Share held in the treasury
of the Company and each Share owned by the Parent, Fimalac-U.S., Acquisition
Sub or any direct or indirect wholly owned subsidiary of the Company or
Parent immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, cease to be
outstanding, and be canceled and retired without payment of any consideration
therefor and cease to exist.
(c) STOCK OPTIONS. On the date Acquisition Sub
purchases Shares pursuant to the Offer, each outstanding option to purchase
Common Stock (a "STOCK OPTION") granted under the Company's 1994 Long-Term
Stock Incentive Plan or pursuant to any other employee stock option plan or
agreement entered into by the Company with any employee of the Company or any
subsidiary thereof and listed on Section 3.3 of the Company Disclosure
Schedule (the "COMPANY STOCK OPTION PLAN"), whether or not then exercisable,
shall become exercisable, subject to the terms of the Company Stock Option
Plan pursuant to which such Stock Option was issued. If and to the extent
that a Stock Option shall not have been exercised at the Effective Time, such
Stock Option shall be automatically canceled. Each holder of a canceled Stock
Option shall be entitled to receive as soon as practicable after the first
date payment can be made without liability to such person under Section 16(b)
of the Exchange Act from the Company in consideration for such cancellation
an amount in
<PAGE>
9
cash (less applicable withholding taxes) equal to the product of (i) the number
of shares of Common Stock previously subject to such Stock Option multiplied by
(ii) the excess, if any, of the Per Share Amount over the exercise price per
share of Common Stock previously subject to such Stock Option (the "OPTION
CONSIDERATION") upon surrender of such Stock Option to the Company or an
affidavit of loss in the form requested by Parent, together with such additional
documentation as may be reasonably required by Parent or the Company. The
surrender of a Stock Option in exchange for the Option Consideration in
accordance with the terms of this Section 2.6(c) shall be deemed a release of
any and all rights the holder had or may have had in respect of such Stock
Option. Prior to the purchase by Acquisition Sub of Shares pursuant to the
Offer, the Company shall use its reasonable best efforts to obtain all necessary
consents or releases from holders of Stock Options under the Company Stock
Option Plan and take all such other lawful action as may be necessary to give
effect to the transactions contemplated by this Section 2.6(c). Except as
otherwise agreed to by the parties, the Company shall use its reasonable best
efforts to assure that following the purchase by Acquisition Sub of Shares
pursuant to the Offer no participant in the Company Stock Option Plan or other
plans, programs or arrangements shall have any right thereunder to acquire any
equity securities of the Company, the Surviving Corporation or any subsidiary
thereof and to terminate all such plans.
(d) CAPITAL STOCK OF ACQUISITION SUB. At the
Effective Time, if Acquisition Sub is merged into the Company, each share of
common stock, par value $0.01 per share, of Acquisition Sub issued and
outstanding immediately prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and nonassessable share of
the common stock, no par value, of the Surviving Corporation.
(e) DISSENTING SHARES. Notwithstanding anything in
this Agreement to the contrary, Shares issued and outstanding immediately
prior to the Effective Time held by any person (a "DISSENTING SHAREHOLDER")
who objects to the Merger and complies with all of the provisions of the
Illinois Law concerning the right of holders of Shares to dissent from the
Merger and obtain payment for their Shares (the "DISSENTING SHARES") shall
not be converted into the right to receive the Merger Consideration, but
shall be converted into the right to receive such consideration as may be
determined to be due to such Dissenting Shareholder pursuant to the Illinois
Law. If, after the Effective Time, such Dissenting Shareholder withdraws his
demand for payment or fails to perfect or otherwise loses his right of
payment in accordance with Illinois Law, the Dissenting Shares shall be
deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give prompt notice to Parent of any
demands received by the Company for payment and Parent shall have the right
to participate in and direct all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any
such demands.
<PAGE>
10
Section 2.7 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT AND PROCEDURES. Within 21
calendar days following the date of this Agreement, Parent shall, with the
Company's prior approval, which approval shall not be unreasonably withheld
or delayed, appoint a paying agent (the "PAYING AGENT") to receive, hold and
distribute, for the benefit of the holders of Shares, all funds deposited
pursuant to Section 2.7(b) hereof (such cash being referred to as the
"EXCHANGE FUND"). Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each record holder, as of the
Effective Time, of a certificate or certificates (the "CERTIFICATES") that,
prior to the Effective Time, represented Shares (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Paying Agent, and shall be in such form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates for payment of the Merger
Consideration therefor. Upon the surrender of each such Certificate formerly
representing Shares, together with such letter of transmittal and any
additional documents as may reasonably be required by Parent or the Paying
Agent, in each case duly completed and validly executed in accordance with
the instructions thereto, the Paying Agent shall pay the holder of such
Certificate the Merger Consideration multiplied by the number of Shares
formerly represented by such Certificate, in exchange therefor, and such
Certificate shall forthwith be canceled. Until so surrendered and exchanged,
each such Certificate (other than Shares held by Parent, Fimalac-U.S.,
Acquisition Sub or the Company, or any direct or indirect subsidiary thereof)
shall represent solely the right to receive the Merger Consideration. No
interest shall be paid or accrue on the Merger Consideration. If the Merger
Consideration (or any portion thereof) is to be delivered to any person other
than to the person in whose name the Certificate formerly representing Shares
surrendered in exchange therefor is registered, it shall be a condition to
such exchange that the Certificate so surrendered shall be properly endorsed
or otherwise be in proper form for transfer and that the person requesting
such exchange shall pay to the Paying Agent any transfer or other taxes
required by reason of the payment of the Merger Consideration to a person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid
or is not applicable.
(b) CONSIDERATION. Prior to the Effective Time,
Parent or Acquisition Sub shall deposit or cause to be deposited in trust
with the Paying Agent the aggregate Merger Consideration to which holders of
Shares shall be entitled at the Effective Time pursuant to Section 2.6(a)
hereof.
(c) INVESTMENT OF MERGER CONSIDERATION. The Merger
Consideration shall be invested by the Paying Agent, as directed by Parent,
provided that such investments shall be limited to (i) direct obligations of
the United States of America, (ii) obligations for which the full faith and
credit of the United States of
<PAGE>
11
America is pledged to provide for the payment of principal and interest, (iii)
commercial paper rated of the highest quality by a nationally recognized (in the
United States) rating service, or (iv) certificates of deposit issued by a
commercial bank having at least $1,000,000,000 in assets.
(d) TERMINATION OF DUTIES. Promptly following the
date which is six months after the Effective Time, Parent will cause the
Paying Agent to deliver to the Surviving Corporation all cash and documents
in its possession relating to the transactions described in this Agreement
and the Paying Agent's duties shall terminate thereafter. Thereafter each
holder of a Certificate formerly representing a Share may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor the Merger
Consideration, without any interest thereon.
(e) NO LIABILITY. None of Parent, Fimalac-U.S.,
Acquisition Sub or the Company shall be liable to any holder of Common Stock
for any Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(f) WITHHOLDING RIGHTS. Parent or the Paying Agent
shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of Common Stock
such amounts as Parent or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "CODE"), or any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by Parent or the Paying
Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by Parent or the Paying Agent.
Section 2.8 STOCK TRANSFER BOOKS. At the Effective Time,
the stock transfer books of the Company shall be closed, and there shall be
no further registration of transfers of the Common Stock thereafter on the
records of the Company.
Section 2.9 NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK.
The Merger Consideration delivered in exchange for the Shares in accordance
with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation
of Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided
in this Article II.
<PAGE>
12
Section 2.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the
event any Certificates shall have been lost, stolen or destroyed, the Paying
Agent shall deliver in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder
thereof, the Merger Consideration as may be required pursuant to Section 2.6;
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificate to deliver a bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against Parent or the
Paying Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed.
Section 2.11 TAKING OF NECESSARY ACTION; FURTHER ACTION.
Each of Parent, Fimalac-U.S., Acquisition Sub and the Company will use its
best efforts to take all such reasonable and lawful action as may be
necessary or appropriate in order to effectuate the Merger in accordance with
this Agreement as promptly as possible. If at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Acquisition Sub, the officers and
directors of the Company and Acquisition Sub immediately prior to the
Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and
necessary action.
Section 2.12 STOCKHOLDERS' MEETING.
(a) If approval by the Company's stockholders is
required by applicable law to consummate the Merger, the Company, acting
through the Board, shall, in accordance with applicable law and, subject to
the fiduciary duties of the Board under applicable law as determined and
exercised in good faith by the Board in a manner consistent with Section 5.2
and in consultation with Parent, as soon as practicable following the
consummation of the Offer:
(i) duly call, give notice of, convene and
hold an annual or special meeting of its stockholders (the
"STOCKHOLDERS' MEETING") for the purpose of considering and taking
action upon this Agreement;
(ii) prepare and file with the SEC a proxy
statement or information statement (together with any supplement or
amendment thereto, the "PROXY STATEMENT") relating to the Stockholders'
Meeting in accordance with the Exchange Act and include in the Proxy
Statement the recommendation of the Board that stockholders of the
Company vote in favor of the approval and adoption of this Agreement
and the transactions contemplated hereby; and
(iii) use its reasonable best efforts (A) to
obtain and furnish the information required to be included by it in the
Proxy Statement and, after consultation with Parent, respond promptly
to any comments made
<PAGE>
13
by the SEC with respect the Proxy Statement and any preliminary version
thereof and cause the Proxy Statement to be mailed to its stockholders
at the earliest practicable time following the consummation of the
Offer in accordance with SEC rules and regulations and (B) to obtain
the necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby.
At such meeting, Parent and Acquisition Sub will vote all Shares owned by them
to approve this Agreement and the transactions contemplated hereby.
(b) Notwithstanding the foregoing clause (a), in
the event that Acquisition Sub or any other wholly owned subsidiary of Parent
shall acquire at least 90% of the outstanding shares of Common Stock in or
following the Offer, the parties hereto shall, at the request of Acquisition
Sub, take all necessary actions to cause the Merger to become effective as
soon as practicable after the expiration of the Offer, without a meeting of
stockholders of the Company, in accordance with Section 11.30 of the Illinois
Law.
Section 2.13 MATERIAL ADVERSE EFFECT.
(a) When used in connection with the Company or
any of its subsidiaries, or Parent or any of its subsidiaries, as the case
may be, the term "MATERIAL ADVERSE EFFECT" means any change, effect or
circumstance that is, or is reasonably likely to be, materially adverse to
the business, assets, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, or Parent and its
subsidiaries, as the case may be, in each case taken as a whole, other than
any such changes, effects or circumstances (i) expressly set forth in Section
2.13 of the Company Disclosure Schedule or the Parent Disclosure Schedule
(each as hereinafter defined), as the case may be, or (ii) specifically set
forth or described in the Company SEC Reports (each as hereinafter defined),
other than general risk factors. The following, considered alone without
regard to any other effects, changes, events, circumstances or conditions,
shall not constitute a Material Adverse Effect: (i) a change in the trading
prices of either of the Parent's or the Company's securities between the date
hereof and the Effective Time; (ii) effects, changes, events, circumstances
or conditions generally affecting the industry in which either the Parent or
the Company operate or arising from changes in general business or economic
conditions; (iii) any effects, changes, events, circumstances or conditions
resulting from any change in law or generally accepted accounting principles;
(iv) any effects, changes, events, circumstances or conditions resulting from
the announcement or pendency of any of the transactions contemplated by this
Agreement other than a breach of a representation or warranty pursuant to
this Agreement which would occur except for this clause (iv) or clause (v) of
this definition of Material Adverse Effect; and (v) any effects, changes,
events, circumstances or conditions resulting from actions taken by the
Parent or the Company in order to comply with the terms of this Agreement
other than a breach of a representation or warranty pursuant to this
<PAGE>
14
Agreement which would occur except for this clause (v) or clause (iv) of this
definition of Material Adverse Effect.
(b) For purposes of this Agreement, a "MATERIAL
ADVERSE EFFECT ON THE OFFER" means any event, action, state, circumstance,
occurrence or development that would prevent, materially delay, or render
materially more onerous to Parent or Acquisition Sub the consummation of the
Offer and the other transactions contemplated by this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Acquisition Sub that on the date hereof, except as set forth in the section of
the written disclosure schedule delivered on or prior to the date hereof by the
Company to Parent (the "COMPANY DISCLOSURE SCHEDULE") corresponding to each
representation and warranty made hereunder by the Company (or except as set
forth in another section of the Company Disclosure Schedule if the applicability
and relevance of the disclosure under such other section to such representation
and warranty is apparent on its face):
Section 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
The Company and each of its subsidiaries are corporations duly organized,
validly existing and in good standing under the respective laws of the
jurisdictions of their incorporation. The Company and each of its
subsidiaries have the requisite corporate power and authority and are in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders (the "APPROVALS")
necessary to own, lease and operate the properties they purport to own, lease
or operate and to carry on their business as they are now being conducted,
except where the failure to be so organized, existing and in good standing or
to have such power, authority and Approvals would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or its subsidiaries.
The Company and each of its subsidiaries are duly qualified or licensed as a
foreign corporation to do business, and are in good standing in each
jurisdiction where the character of its properties owned, leased or operated
by them or the nature of their activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, individually or in the
aggregate, have a Material Adverse Effect. A true and complete list of all of
the Company's subsidiaries, together with the jurisdiction of incorporation
of each subsidiary and the percentage of each subsidiary's outstanding
capital stock owned by the Company or another subsidiary, is set forth in
Section 3.1-1 of the Company Disclosure Schedule. Except as set forth on
Section 3.1-2 of the Company Disclosure Schedule, the Company does not
directly or indirectly own any equity or similar
<PAGE>
15
interest in, or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in, any other person.
Section 3.2 ARTICLES OF INCORPORATION AND BY-LAWS. The
Company has heretofore furnished to Parent a true, complete and correct copy
of its articles of incorporation and by-laws, each as amended to date, and
has furnished or made available to Parent the articles of incorporation and
by-laws (or equivalent organizational documents) of each of its subsidiaries
(the "SUBSIDIARY DOCUMENTS"). Such articles of incorporation, by-laws and
Subsidiary Documents are in full force and effect. Neither the Company nor
any of its subsidiaries is in violation of any of the provisions of its
articles of incorporation or by-laws or Subsidiary Documents.
Section 3.3 CAPITALIZATION. The authorized capital stock of
the Company consists of (i) 15,000,000 shares of Common Stock and (ii)
3,000,000 shares of preferred stock, no par value per share, none of which is
issued and outstanding and none of which is held in treasury. As of March 3,
2000, (i) 4,644,121 shares of Common Stock were issued and outstanding, all
of which are validly issued, fully paid and nonassessable, and none of which
were held in treasury, (ii) no shares of Common Stock were held by
subsidiaries of the Company and (iii) 1,055,705 shares of Common Stock were
reserved for future issuance pursuant to outstanding Stock Options granted
under the Company Stock Option Plan and agreements listed in Section 3.3 of
the Company Disclosure Schedule. No material change in such capitalization
has occurred between March 3, 2000 and the date hereof. Section 3.3 of the
Company Disclosure Schedule sets forth a true and complete list of all
outstanding options, warrants and other rights for the purchase of, or
conversion into or exchange for Common Stock, the name of each holder
thereof, the number of shares purchasable thereunder or upon conversion or
exchange thereof and the per share exercise or conversion price or exchange
rate of each option, warrant and other right. There are no options, warrants
or other similar rights, agreements, arrangements, commitments or
understanding, whether or not in writing, of any character relating to the
issued or unissued capital stock or other securities of the Company or any of
its subsidiaries or obligating the Company or any of its subsidiaries to
issue (whether upon conversion, exchange or otherwise) or sell any share of
capital stock of, or other equity interests in or other securities of, the
Company or any of its subsidiaries other than those listed in Section 3.3 of
the Company Disclosure Schedule. All securities subject to issuance as
aforesaid upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable shall be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth on Section
3.3 of the Company Disclosure Schedule, there are no obligations, contingent
or otherwise, of the Company or any of its subsidiaries to repurchase, redeem
or otherwise acquire any shares of Common Stock or capital stock of any
subsidiary or any other securities of the Company or any of its subsidiaries
or to provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any such subsidiary or any other entity. Except
as set forth on Section 3.3 of the Company Disclosure Schedule, all of the
<PAGE>
16
outstanding shares of capital stock of each of the Company's subsidiaries are
duly authorized, validly issued, fully paid and nonassessable, and all such
shares are owned by the Company or another subsidiary of the Company free and
clear of all security interests, liens, claims, pledges, agreements, limitations
in the Company's voting rights, charges or other encumbrances of any nature
whatsoever (collectively, "LIENS"), other than Liens created by this Agreement.
Section 3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The
Company has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby, other than,
if required in accordance with Illinois Law, the adoption of this Agreement
by the holders of a majority of the outstanding shares of Common Stock
entitled to vote in accordance with the Illinois Law and the Company's
articles of incorporation and by-laws (the "REQUISITE COMPANY VOTE"). The
Board has determined that this Agreement and the transactions contemplated
hereby, including the Offer and the Merger upon the terms and subject to the
conditions of this Agreement, are fair to, advisable and in the best
interests of, the Company and its stockholders. This Agreement has been duly
and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Acquisition Sub, as
applicable, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
Section 3.5 MATERIAL CONTRACTS; NO CONFLICT; REQUIRED
FILINGS AND CONSENTS.
(a) Section 3.5(a) of the Company Disclosure
Schedule includes a list of all contracts, agreements, arrangements or
understanding, whether or not in writing, to which the Company or any of its
subsidiaries is a party or by which any of them is bound as of the date
hereof, (i) which are required to be filed as "material contracts" with the
SEC pursuant to the requirements of the Exchange Act; (ii) under which the
consequences of a default, nonrenewal or termination could have a Material
Adverse Effect; (iii) pursuant to which payments or acceleration of benefits
may be required in excess of $100,000 in the aggregate upon a "change of
control" of the Company or its subsidiaries; (iv) which require the consent
or waiver of a third party prior to the Company (or its subsidiary, if
applicable) consummating the transactions contemplated by this Agreement,
except where the failure to obtain such consent or waiver would not,
individually or in the aggregate, have a Material Adverse Effect; (v) whose
terms would have a Material Adverse Effect on the Offer; (vi) which pertain
to the rental by the Company or its subsidiaries of accommodations and
involve consideration in excess of $200,000 over the term of the Agreement or
<PAGE>
17
have a term that will expire more than six months from the date hereof; (vii)
which constitute contracts, agreements, arrangements or understandings between
the Company or its subsidiaries and any person for the rental by such person of
accommodations and represent individually in excess of $200,000 in annual
revenue to the Company or its subsidiaries, as applicable; or (viii) the
termination of which would require or result in individual payments by the
Company, Acquisition Sub, Fimalac-U.S., Parent or any of their subsidiaries or
affiliates in excess of $100,000 (the contracts, agreements, arrangements or
understandings referred to in clauses (i) through (viii) above are referred to
collectively herein as the "MATERIAL CONTRACTS") and, except as set forth in
Section 3.5(a) of the Company Disclosure Schedule, neither the Company nor any
of its subsidiaries is currently negotiating, in discussion with any person with
respect to, or a party to any non-binding agreement or understanding with
respect to, any Material Contract.
(b) The execution and delivery of this Agreement
by the Company does not, and the performance of this Agreement by the Company
will not, (i) conflict with or violate the articles of incorporation or
by-laws of the Company or any Subsidiary Document, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
the Company or any of its subsidiaries or by which its or any of their
respective properties is bound or affected, or (iii) except as set forth in
Section 3.5(b) of the Company Disclosure Schedule, result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or result in a modification of any right or
benefit under, or impair the Company's or any of its subsidiaries' rights or
alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration, repayment or repurchase,
or result in increased payments or cancellation under, or result in the
creation of a Lien on any of the properties or assets of the Company or any
of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except in the case of (ii) or
(iii) only for any such conflicts, violations, breaches, defaults or other
occurrences that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(c) Except as set forth in Section 3.5(c) of the
Company Disclosure Schedule, the execution and delivery of this Agreement by
the Company does not, and the performance of this Agreement by the Company
will not require any consent, approval, authorization or permit of, or filing
with or notification to, any national, federal, state, provincial or local
governmental regulatory or administrative authority, agency, commission,
court, tribunal, arbitral body or self-regulated entity, domestic or foreign
(collectively, the "GOVERNMENTAL AUTHORITIES"), except for applicable
requirements, if any, of the Securities Act, the Exchange Act, the Investment
Advisors Act of 1940, as amended, state securities laws ("BLUE SKY LAWS"),
the premerger notification requirements of the Hart-Scott-Rodino Antitrust
<PAGE>
18
Improvements Act of 1976, as amended (the "HSR ACT"), and the filing and
recordation of appropriate merger or other documents as required by the Delaware
Law or the Illinois Law.
Section 3.6 COMPLIANCE, PERMITS.
(a) Neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any
of its subsidiaries or by which its or any of their respective properties is
bound or affected or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for any such conflicts,
defaults or violations which, individually or in the aggregate, would not
have a Material Adverse Effect.
(b) The Company and its subsidiaries hold all
permits, licenses, easements, variances, exemptions, consents, certificates,
orders and approvals from Governmental Authorities that are necessary to the
operation of the business of the Company and its subsidiaries taken as a
whole as it is now being conducted (collectively, the "COMPANY PERMITS"),
except when the failure to have such Company Permits would not, individually
or in the aggregate, have a Material Adverse Effect. The Company and its
subsidiaries are in compliance with the terms of the Company Permits, and
neither the Company nor any of its subsidiaries is in conflict with, or in
default or violation of any applicable laws or regulations except, in each
case, where the failure to so comply would not, individually or in the
aggregate, have a Material Adverse Effect.
Section 3.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and
documents required to be filed with the SEC since January 1, 1997, including
(i) its Annual Reports on Form 10-K for the fiscal years ended December 31,
1997 and 1998, respectively, (ii) its Quarterly Reports on Form 10-Q for the
periods ended March 31, 1999, June 30, 1999 and September 30, 1999, (iii) all
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since January 1, 1999, (iv) all other reports or
registration statements filed by the Company with the SEC since January 1,
1999 and (v) all amendments and supplements to all such reports and
registration statements filed by the Company with the SEC since January 1,
1999 (collectively, the "COMPANY SEC REPORTS"). The Company SEC Reports (i)
were prepared in all material respects in accordance with the requirements of
the Securities Act or the Exchange Act, as the case may be, and (ii) did not
at the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order
<PAGE>
19
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. Except as set forth on Schedule 3.7(a) of the
Company Disclosure Schedule, none of the Company's subsidiaries is required to
file any forms, reports or other documents with the SEC or any national
securities exchange or quotation service or comparable Governmental Authority.
(b) The consolidated financial statements
(including, in each case, any related notes and schedules thereto) contained
in the Company SEC Reports were prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto), and
fairly present in all material respects the consolidated financial position
of the Company and its subsidiaries as at the respective dates thereof and
the consolidated results of their operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are
not expected to be material in amount.
(c) The unaudited consolidated financial
statements of the Company as of and for the period ending December 31, 1999
(including the related notes and schedules thereto) delivered to the Parent
prior to the date hereof (the "1999 FINANCIAL STATEMENTS") were prepared in
accordance with U.S. generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as may be indicated
in the notes thereto), and fairly present in all material respects the
consolidated financial position of the Company and its subsidiaries as at
December 31, 1999 and the consolidated results of their operations and cash
flows for the year then ended.
Section 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
set forth in the Company SEC Reports or in Section 3.8 of the Company
Disclosure Schedule, since September 30, 1999, the Company and its
subsidiaries have conducted their business in the ordinary course and there
has not occurred: (i) any Material Adverse Effect; (ii) any amendments or
changes in the articles of incorporation or By-laws of the Company; (iii) any
damage to, or destruction or loss of, any asset of the Company or its
subsidiaries (whether or not covered by insurance) that would have a Material
Adverse Effect; (iv) any material change by the Company or its subsidiaries
in their accounting methods, principles or practices; (v) any material
revaluation by the Company or its subsidiaries of any of their assets,
including, without limitation, writing down the value of inventory or writing
off notes or accounts receivable other than in the ordinary course of
business; (vi) any sale of a material amount of property of the Company or
any of its subsidiaries, except in the ordinary course of business; (vii) any
declaration, setting aside or payment of any dividend or distribution in
respect of Shares or any redemption, purchase or other acquisition of any of
the Company's securities (except as contemplated by this Agreement); (viii)
any increase in the compensation or benefits or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
<PAGE>
20
sharing, stock option (including, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers of the
Company or any subsidiary, in each case except in the ordinary course of
business consistent with past practice or except as required by applicable law;
(ix) any creation or assumption by the Company or any of its subsidiaries of any
Lien on any material asset of the Company or any of its subsidiaries, other than
in the ordinary course of business, consistent with past practice; (x) any
making of any loan, advance or capital contribution to or investment in any
person by the Company or any of its subsidiaries, other than advances to
employees to cover travel and other ordinary business-related expenses in the
ordinary course of business consistent with past practice; (xi) any incurrence
or assumption by the Company or any of its subsidiaries of any indebtedness for
borrowed money or any guarantee, endorsement or other incurrence or assumption
of a material liability (whether directly, contingently or otherwise) by the
Company or any of its subsidiaries for the obligations of any other person
(other than any wholly owned subsidiary of the Company), in each case other than
in the ordinary course of business consistent with past practice; or (xii) any
modification, amendment, assignment or termination of or relinquishment by the
Company or any of its subsidiaries of any rights under any Material Contract
that has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
Section 3.9 NO UNDISCLOSED LIABILITIES. Except as set forth
in Section 3.9 of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) except liabilities (a) in the aggregate adequately provided for in
the Company's unaudited balance sheet (including any related notes thereto)
included in the 1999 Financial Statements, (b) incurred in the ordinary
course of business and not required under U.S. generally accepted accounting
principles to be reflected on the 1999 Financial Statements, (c) incurred
since December 31, 1999 in the ordinary course of business consistent with
past practice, (d) incurred in connection with this Agreement, (e) disclosed
in the Company SEC Reports or (f) which would not have a Material Adverse
Effect.
Section 3.10 ABSENCE OF LITIGATION. Except as set forth in
Section 3.10 of the Company Disclosure Schedule, there are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries, or
any properties or rights of the Company or any of its subsidiaries, before
any Governmental Authority or body, domestic or foreign, nor are there, to
the Company's knowledge, any investigations or reviews by any Governmental
Authority pending or threatened against, relating to or affecting, the
Company or any of its subsidiaries that, if adversely determined, would,
individually or in the aggregate, have a Material Adverse Effect. Neither the
Company nor any of its subsidiaries is subject to any outstanding order,
writ, injunction or decree of any court or Governmental Authority
<PAGE>
21
which, individually or in the aggregate, has resulted or would reasonably be
expected to result in a Material Adverse Effect.
Section 3.11 EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS.
(a) Section 3.11(a) of the Company Disclosure
Schedule lists all employee pension plans (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended; ("ERISA")), all
employee welfare plans (as defined in Section 3(1) of ERISA) and all other
bonus, stock option, stock purchase, incentive or deferred compensation,
supplemental retirement, severance and other fringe or employee benefit
plans, programs, or arrangements, and any current or, to the extent the
Company or any subsidiary thereof may have any continuing liability
thereunder, former employment, executive compensation, stay, change in
control, consulting, noncompetition or severance agreements, programs or
policies, written or otherwise, for the benefit of, or relating to, any
employee of or consultant to, and which is maintained or contributed to, by
the Company, any trade or business (whether or not incorporated) which is a
member of a controlled group including the Company or which is under common
control with the Company (an "ERISA AFFILIATE") within the meaning of Section
414 of the Code, or any subsidiary of the Company (collectively the "COMPANY
EMPLOYEE PLANS"). There have been made available to Parent copies of (i) each
such written Company Employee Plan and (ii) the three most recent annual
reports on Form 5500, with accompanying schedules and attachments, filed with
respect to each Company Employee Plan required to make such a filing.
(b) (i) Except as set forth on Section 3.11(b) of the
Company Disclosure Schedule, none of the Company Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person
(other than post-employment benefits provided in accordance with the health
care continuation provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, or comparable state law).
(ii) None of the Company Employee Plans is (A) a
"multiemployer plan" as such term is defined in Section 3(37) of ERISA or (B) a
plan subject to Title IV of ERISA.
(iii) Except as set forth on Section 3.11(b) of the Company
Disclosure Statement, (A) there has been no "prohibited transaction," as such
term is defined in Section 406 of ERISA and Section 4975 of the Code, with
respect to any Company Employee Plan, which could result in any material
liability of the Company or any of its subsidiaries; (B) all Company Employee
Plans are in compliance in all material respects with the requirements
prescribed by any and all statutes (including ERISA and the Code), orders, or
governmental rules and regulations currently in effect with respect thereto
(including all applicable requirements for notification to participants or the
Department of Labor, the Internal Revenue Service (the "IRS") or
<PAGE>
22
Secretary of the Treasury), and the Company and each of its subsidiaries have
performed all material obligations required to be performed by them as of and
through the date hereof under, are not in any material respect in default under
or violation of, and have no knowledge of any default or violation by any other
party to, any of the Company Employee Plans; (C) each Company Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
determination letter from the IRS, and nothing has occurred which may reasonably
be expected to impair such determination; (D) there is no pending or, to the
knowledge of the Company, threatened litigation, administrative action or
proceeding relating to any Company Employee Plan (other than claims for benefits
in the ordinary course of business); (E) there has been no announcement or
commitment by the Company or any of its subsidiaries to create an additional
Company Employee Plan or to amend a Company Employee Plan except for amendments
required by applicable law or changes in the ordinary course, in each case which
do not materially increase the cost of such Company Employee Plan; and (F) the
Company has no liability, whether absolute or contingent, direct or indirect,
including any obligations under any Company Employee Plan, with respect to any
misclassification of a person as an independent contractor rather than as an
employee, or with respect to any employee leased from another employer.
(iv) Except as specifically identified in Section 3.11(b)
of the Company Disclosure Schedule, the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not (a)
increase the amount of, accelerate the time of payment of, or the vesting of
compensation payable to any employee of the Company or an ERISA Affiliate or (b)
result in any liability to any present or former employee established or
maintained in or under a non-U.S. jurisdiction, including but not limited to, as
a result of the Worker Adjustment Retraining and Notification Act. Neither the
Company nor any ERISA Affiliate maintains or contributes to any Employee Plan
established or maintained in or under a non-U.S. jurisdiction.
(c) Section 3.11(c) of the Company Disclosure Schedule sets
forth a true and complete list of each current or former employee, officer or
director of the Company or any of its subsidiaries who holds (i) any Stock
Option as of the date hereof, together with the number of shares of Common
Stock subject to such Stock Option, the exercise price of such Stock Option
(to the extent determined as of the date hereof), whether such Stock Option
is intended to qualify as an incentive stock option within the meaning of
Section 422(b) of the Code (an "ISO") and the expiration date of such option;
and (ii) any other right granted by the Company to acquire, directly or
indirectly, Common Stock, together with the number of shares of Common Stock
subject to such right. Section 3.11(c) of the Company Disclosure Schedule
also sets forth the total number of such ISOs, such nonqualified options and
such other rights. Upon the purchase by Acquisition Sub of Shares pursuant to
the Offer (i) the provisions in the Company Stock Option Plan with respect to
the right or
<PAGE>
23
obligation to issue or grant additional options or rights to acquire Common
Stock shall be terminated and (ii) the provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any subsidiary thereof shall be
cancelled.
Section 3.12 EMPLOYMENT AND LABOR MATTERS.
(a) Except as set forth in Section 3.12(a) of the
Company Disclosure Schedule, there are no controversies pending or, to the
knowledge of the Company, threatened, between the Company or any of its
subsidiaries and any of their respective employees, which controversies have
had or could have, individually or in the aggregate, a Material Adverse
Effect. Neither the Company nor any of its subsidiaries is a party to, any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or its subsidiaries, nor does the Company
know of any activities or proceedings of any labor union to organize any such
employees. The Company has no knowledge of any strikes or lockouts, or any
material slowdowns, work stoppages, or threats thereof, by or with respect to
any employees of the Company or any of its subsidiaries.
(b) Neither the Company nor any of its
subsidiaries has violated, in a manner that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, any
provision of federal or state law or any rule, regulation, order, ruling,
decree, judgment or arbitration award of any Governmental Authority regarding
the terms and conditions of employment of employees, former employees, or
prospective employees or other labor related matters, including without
limitation, laws, rules, regulations, orders, rulings, decrees, judgments and
awards relating to discrimination, fair labor standards and occupational
health and safety, wrongful discharge or violation of the personal rights of
employees, former employees or prospective employees.
Section 3.13 SCHEDULE 14D-9; OFFER DOCUMENTS; PROXY
STATEMENT. Neither the Schedule 14D-9, nor any of the information provided by
the Company or its auditors, legal counsel, financial advisors or other
consultants or advisors specifically for use in the Offer Documents, shall,
on the respective dates the Schedule 14D-9 or the Offer Documents are filed
with the SEC or on the date first published, sent or given to the Company's
stockholders, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy Statement
or similar materials distributed to the Company's stockholders in connection
with the Merger, including any amendments or supplements thereto, shall not,
at the time filed with the SEC, at the time mailed to the Company's
stockholders, at the time of the Stockholders' Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or
<PAGE>
24
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to
any information provided by Parent, Fimalac-U.S., Acquisition Sub or by their
auditors, legal counsel, financial advisors or other consultants or advisors
specifically for use in the Schedule 14D-9 or the Proxy Statement. The
Schedule 14D-9 and the Proxy Statement will comply in all material respects
with the provisions of the Exchange Act and any other applicable law.
Section 3.14 RESTRICTIONS ON BUSINESS ACTIVITIES.
(a) Except for this Agreement and except as set
forth on Section 3.14(a) of the Company Disclosure Schedule, to the Company's
knowledge, there is no material agreement, judgment, injunction, order or
decree binding upon the Company or any of its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or impairing any
material business practice of the Company or any of its subsidiaries, any
acquisition of property by the Company or any of its subsidiaries or the
conduct of business by the Company or any of its subsidiaries as currently
conducted or as proposed to be conducted by the Company, in any location in
the world, except for any prohibition or impairment as would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) To the Company's knowledge, none of the
Company's officers, directors or key employees is a party to any agreement
which, by virtue of such person's relationship with the Company, restricts in
any material respect the Company or any of its subsidiaries from, directly or
indirectly, engaging in any of the businesses described in paragraph (a)
above.
Section 3.15 TITLE TO PROPERTY. Except as set forth in
Section 3.15 of the Company Disclosure Schedule, the Company and each of its
subsidiaries have good and marketable title to all of their properties and
assets, free and clear of all Liens, except Liens for taxes not yet due and
payable and such Liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which would not, individually or in the
aggregate, have a Material Adverse Effect. Section 3.15(a) of the Company
Disclosure Schedule is a schedule of all leases of real property ("REAL
PROPERTY LEASES") (i) pursuant to which the Company or any of its
subsidiaries lease from others or (ii) pursuant to which third parties lease
from the Company or any of its subsidiaries. The Real Property Leases and all
leases of personal property by the Company or its subsidiaries from others
are in good standing, valid and effective in accordance with their respective
terms and there is not, to the knowledge of the Company, under any of such
leases, any existing default or event of default (or event which with notice
or lapse of time, or both, would constitute a default), except where the lack
of such good standing, validity and effectiveness or the existence of such
<PAGE>
25
default would not, individually or in the aggregate, have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries owns any real property.
Section 3.16 TAXES.
(a) For purposes of this Agreement, "AUDIT" shall
mean any audit, assessment, action, suit, claim or other examination relating
to Taxes by any tax authority or any judicial or administrative proceedings
related to Taxes; "TAX" or "TAXES" shall mean taxes, fees, levies, duties,
tariffs, imposts, and governmental impositions or charges of any kind in the
nature of (or similar to) taxes, payable to any federal, state, local or
foreign taxing authority, including (without limitation) (i) income,
franchise, profits, gross receipts, ad valorem, net worth, value added,
sales, use, service, real or personal property, special assessments, capital
stock, license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer and gains
taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "TAX RETURNS" shall mean returns, reports,
and information statements with respect to Taxes required to be filed with
the IRS or any other taxing authority, domestic or foreign, including,
without limitation, consolidated, combined and unitary tax returns.
(b) Except as set forth in Section 3.16(b) of the
Company Disclosure Schedule, the Company and its subsidiaries (for such
periods as each subsidiary was owned, directly or indirectly, by the Company)
have filed all income Tax Returns and all other material Tax Returns required
to be filed by them and all such Tax Returns are true and correct in all
material respects, and the Company and its subsidiaries have paid and
discharged all Taxes due in connection with or with respect to the periods or
transactions covered by such Tax Returns and have paid all other taxes as are
due, except such as are being contested in good faith by appropriate
proceedings (to the extent that any such proceedings are required) and except
as may be determined to be owed upon completion of any tax return not yet
filed based upon an extension of time to file, and there are no other taxes
that would be due if asserted by a taxing authority, except with respect to
which the Company is maintaining reserves to the extent currently required
and except to the extent the failure to do so would not, individually or in
the aggregate, have a Material Adverse Effect. Except as set forth on Section
3.16(b) of the Company Disclosure Schedule:
(i) there are no tax liens on any assets of
the Company or any subsidiary thereof, except to the extent that such a lien
would not have a Material Adverse Effect upon the Company or any of its
subsidiaries;
(ii) neither the Company nor any of its
subsidiaries has granted any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of, any Tax that is
currently in effect;
<PAGE>
26
(iii) as of the date hereof, no Federal,
state, local or foreign Audits are pending (A) with regard to any Taxes or Tax
Returns of the Company or its subsidiaries and (B) for which the Company or any
of its subsidiaries has received written notice. Neither the Company nor any of
its subsidiaries has received written notification that such an Audit may be
commenced, and, to the best knowledge of the Company and its subsidiaries, no
such Audit is threatened;
(iv) the United States Federal income Tax
Returns of the Company and its subsidiaries have been examined by the applicable
tax authorities or closed without audit by applicable statutes of limitations
for all periods through and including December 31, 1995, and as of the date
hereof no material adjustments have been asserted as a result of such
examinations which have not been (x) resolved and fully paid or (y) reserved on
the 1999 Financial Statements in accordance with U.S. generally accepted
accounting principles;
(v) neither the Company nor any of its
subsidiaries is a party to any agreement providing for the allocation,
indemnification or sharing of Taxes with any person other than the Company
and its subsidiaries, and the Company has provided Parent with copies of any
such agreement that the Company or any of its subsidiaries has entered into
with any other subsidiary of the Company;
(vi) neither the Company nor any of its
subsidiaries has been a member of any "affiliated group" (as defined in
section 1504(a) of the Code) other than the affiliated group of which the
Company is the "parent" and, except with respect to any group of which only
the Company and/or its subsidiaries are members, is not subject to Treas.
Reg. 1.1502-6 (or any similar provision under foreign, state or local law)
for any period;
(vii) neither the Company nor any of its
subsidiaries has constituted either a "distributing corporation" or a
"controlled corporation" (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock qualifying for tax-free treatment under
Section 355 of the Code (i) in the two years prior to the date of this
Agreement or (ii) in a distribution which otherwise constitutes part of a
"plan" or "series of related transactions" (within the meaning of Section
355(e) of the Code) in conjunction with the Merger;
(viii) proper and materially accurate
amounts have been duly and timely (x) withheld by the Company and its
subsidiaries from their employees in compliance with the tax withholding
provisions of applicable U.S. federal, state and local laws and (y) paid over
to appropriate taxing authorities;
(ix) neither the Company nor any of its
subsidiaries has been required to include in income any adjustment pursuant
to Section 481 of the Code (or any similar provision of state, local or
foreign tax law) by reason of a voluntary change in accounting method
initiated by the Company or any of its
<PAGE>
27
subsidiaries, and the IRS has not notified the Company in writing that it has
initiated or proposed any such adjustment or change in accounting method;
(x) no closing agreement that could
affect the Taxes of the Company or any of its subsidiaries for periods ending
after the Effective Time pursuant to Section 7121 of the Code (or any
predecessor provision) or any similar provision of any state, local or
foreign law has been entered into by or with respect to the Company or any of
its subsidiaries;
(xi) there is no contract, agreement,
plan or arrangement covering any person that, individually or collectively,
could give rise to the payment of any amount that would not be deductible by
the Company or any of its subsidiaries by reason of Section 162(m) or Section
280G of the Code and neither the Company nor any of its subsidiaries has made
any such payments;
(xii) neither the Company nor any of its
subsidiaries is, or has been, a United States real property holding corporation
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; and
(xiii) no material tax elections have been
made or filed by or with respect to the Company or any of its subsidiaries.
Section 3.17 ENVIRONMENTAL MATTERS. Except in all cases as,
in the aggregate, have not had and would not, individually or in the
aggregate, have a Material Adverse Effect, the Company and each of its
subsidiaries (i) to the Company's knowledge have obtained all applicable
permits, licenses and other authorizations (collectively, the "ENVIRONMENTAL
PERMITS") which are required to be obtained under all applicable U.S.
federal, state or local laws or any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes into
ambient air, surface water, ground water, or land or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("ENVIRONMENTAL LAWS") by the Company or its subsidiaries
(or their respective agents) which Environmental Permits are in full force
and effect; (ii) to the Company's knowledge are in compliance in all material
respects with all terms and conditions of such Environmental Permits; (iii)
are in compliance in all material respects with all limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in applicable Environmental Laws; (iv) as
of the date hereof, are not aware of nor have received notice of any past or
present violations of Environmental Laws or Environmental Permits or any
event, condition, circumstance, activity, practice, incident, action or plan
which is reasonably likely to
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28
interfere with or prevent continued compliance with Environmental Permits or
which would give rise to any common law or statutory liability, or otherwise
form the basis of any claim, action, suit or proceeding, against the Company or
any of its subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous toxic material or waste; and (v) to the Company's
knowledge, have taken all actions necessary under applicable Environmental Laws
to register any products or materials required to be registered by the Company
or its subsidiaries (or any of their respective agents) thereunder.
Section 3.18 INTELLECTUAL PROPERTY.
(a) Section 3.18(a) of the Company Disclosure
Schedule sets forth a true and complete list of all Intellectual Property (as
defined below) owned or used by the Company or its subsidiaries, excluding
over-the-counter shrink-wrapped software. The Company and each of its
subsidiaries owns free and clear of all Liens, or is licensed or otherwise
possesses legally enforceable right to use all patents, trademarks, trade
names, service marks, and any applications therefor, and computer software
programs or applications (the "INTELLECTUAL PROPERTY") that are used in its
respective business as currently conducted, and such rights constitute all
the rights necessary for the Company and its subsidiaries to conduct their
business as currently conducted except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, the Company is not, nor will it be
as a result of the execution and delivery of this Agreement or the
performance of its obligations hereunder, in violation of any licenses,
sublicenses and other agreements as to which the Company is a party and
pursuant to which the Company is authorized to use any third-party
Intellectual Property ("THIRD PARTY INTELLECTUAL PROPERTY RIGHTS"). After the
completion of the transactions contemplated by this Agreement, the Company
will continue to own all right, title and interest in, and to have a license
to use all Intellectual Property material to its or any of its subsidiaries'
business and operations on terms and conditions identical in all material
respects to those enjoyed by the Company immediately prior to such
transactions. No claims with respect to the Intellectual Property owned by
the Company or any of its subsidiaries (the "COMPANY INTELLECTUAL PROPERTY
RIGHTS"), any trade secret material to the Company, or Third Party
Intellectual Property Rights to the extent arising out of any use,
reproduction or distribution of such Third Party Intellectual Property Rights
by or through the Company or any of its subsidiaries, are currently pending
or, to the knowledge of the Company, are threatened by any person, except
claims that would not have a Material Adverse Effect. The Company does not
know of any valid grounds for any bona fide claims (i) against the use by the
Company or any of its subsidiaries of any Intellectual Property used in the
business of the Company or any of its subsidiaries as currently
<PAGE>
29
conducted or as proposed to be conducted; (ii) challenging the ownership,
validity or effectiveness of any of the Company Intellectual Property Rights or
other trade secret material to the Company or its subsidiaries; or (iii)
challenging the license or legally enforceable right to use of the Third Party
Property Rights by the Company or any of its subsidiaries, except claims that
would not have a Material Adverse Effect.
(c) To the Company's knowledge, all Company
Intellectual Property Rights are valid and subsisting, except as would not
have a Material Adverse Effect. To the Company's knowledge, there is no
material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property by any third party, including any employee or
former employee of the Company or any of its subsidiaries, except any use,
infringement or misappropriation that would not have a Material Adverse
Effect.
(d) All software, hardware, databases, and
embedded control systems (collectively, the "SYSTEMS") used by the Company
and its subsidiaries are Year 2000 Compliant (as defined below), except for
failures to be Year 2000 Compliant that, individually or in the aggregate,
have not resulted in a Material Adverse Effect. For purposes of this
Agreement, "Year 2000 Compliant" means that the Systems (i) accurately
process date and time data (including calculating, comparing, and sequencing)
from, into, and between the twentieth and twenty-first centuries, the years
1999 and 2000, and leap year calculations and (ii) operate accurately with
other software and hardware that use standard date format (4 digits) for
representation of the year.
Section 3.19 INTERESTED PARTY TRANSACTIONS. Except as set
forth in the Company SEC Reports, since January 1, 1999, no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by
the SEC.
Section 3.20 INSURANCE. All material fire and casualty,
general liability, business interruption, and sprinkler and water damage
insurance policies maintained by the Company or any of its subsidiaries are
with reputable insurance carriers, provide, to the Company's knowledge, full
and adequate coverage for all normal risks incident to the business of the
Company and its subsidiaries and their respective properties and assets and
are, to the Company's knowledge, in character and amount at least equivalent
to that carried by entities engaged in similar businesses and subject to the
same or similar perils or hazards, except as would not, individually or in
the aggregate, have a Material Adverse Effect.
Section 3.21 OPINION OF FINANCIAL ADVISER. The Board has
received the written opinion of the Company's financial advisor, Peter J.
Solomon Company, to the effect that, as of the date of this Agreement, the
Per Share Amount is fair to the Company's stockholders from a financial point
of view and the Company has delivered or will, promptly after receipt of such
written opinion, deliver a signed copy
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30
of that opinion to Parent.
Section 3.22 BROKERS. No broker, finder or investment
banker (other than Peter J. Solomon Company) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement. The Company has heretofore furnished to
Parent a complete and correct copy of all agreements between the Company and
Peter J. Solomon Company pursuant to which such firm would be entitled to any
payment relating to the transactions contemplated hereunder.
Section 3.23 SECTIONS 7.85 AND 11.75 OF ILLINOIS LAW NOT
APPLICABLE. The Board has taken all actions so that the restrictions
contained in Sections 7.85 and 11.75 of the Illinois Law applicable to a
"business combination" (as defined in such Section 11.75) will not apply to
the execution, delivery or performance of this Agreement or the consummation
of the Offer or the Merger or the other transactions contemplated by this
Agreement.
Section 3.24 VOTE REQUIRED. The Requisite Company Vote is
the only vote of the holders of any class or series of the Company's capital
stock necessary (under the charter documents of the Company, the Illinois
Law, other applicable law or otherwise) to approve this Agreement, the Offer,
the Merger or the other transactions contemplated by this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
PARENT, Fimalac-U.S. AND ACQUISITION SUB
Parent, Fimalac-U.S. and Acquisition Sub hereby, jointly and
severally, represent and warrant to the Company that, except as set forth in the
section of the written disclosure schedule delivered on or prior to the date
hereof, by Parent to the Company (the "PARENT DISCLOSURE SCHEDULE")
corresponding to each representation and warranty made hereunder by Parent,
Fimalac-U.S. and Acquisition Sub:
Section 4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
Each of Parent, Fimalac-U.S. and Acquisition Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each of Parent, Fimalac-U.S. and
Acquisition Sub has the requisite corporate power and authority and is in
possession of all Approvals necessary to own, lease and operate the
properties it purports to own, operate or lease and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power, authority and Approvals
would not, individually or in the aggregate, have a Material Adverse Effect
on Parent, Fimalac-U.S. or Acquisition Sub. Each of Parent, Fimalac-U.S. and
Acquisition Sub is duly
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31
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. Fimalac-U.S. is a wholly-owned
subsidiary of Parent and Acquisition Sub is a wholly-owned subsidiary of
Fimalac-U.S.
Section 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent, Fimalac-U.S. and Acquisition Sub has all necessary corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by each of Parent, Fimalac-U.S.
and Acquisition Sub and the consummation by each of Parent, Fimalac-U.S. and
Acquisition Sub of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Parent,
Fimalac-U.S. and Acquisition Sub, and no other corporate proceedings on the
part of Parent, Fimalac-U.S. or Acquisition Sub are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of Parent,
Fimalac-U.S. and Acquisition Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Parent, Fimalac-U.S. and Acquisition Sub enforceable against
each of them in accordance with its terms.
Section 4.3 NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement
by Parent, Fimalac-U.S. and Acquisition Sub do not, and the performance of
this Agreement by Parent, Fimalac-U.S. and Acquisition Sub will not, (i)
conflict with or violate the certificate of incorporation (or equivalent
organizational documents) or by-laws of Parent, Fimalac-U.S. or Acquisition
Sub, (ii) conflict with or violate any law, rule, regulation, order, judgment
or decree applicable to Parent or any of its subsidiaries or by which its or
their respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or modification in a manner
materially adverse to Parent or its subsidiaries of any right or benefit
under, or impair Parent's or any of its subsidiaries' rights or alter the
rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration, repayment or repurchase, increased
payments or cancellation under, or result in the creation of a Lien on any of
the properties or assets of Parent or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except in the case of (ii) or (iii) only, for any such conflicts,
violations, breaches, defaults or other
<PAGE>
32
occurrences that would not, individually or in the aggregate, have a Material
Adverse Effect on Parent or its subsidiaries.
(b) The execution and delivery of this Agreement
by each of Parent, Fimalac-U.S. and Acquisition Sub does not, and the
performance of this Agreement by each of Parent, Fimalac-U.S. and Acquisition
Sub will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except for
applicable requirements, if any, of the Securities Act, the Exchange Act, the
Blue Sky Laws, the pre-merger notification requirements of the HSR Act, and
the filing and recordation of appropriate merger or other documents as
required by the Delaware Law or the Illinois Law.
Section 4.4 OFFER DOCUMENTS; SCHEDULE 14D-9; PROXY
STATEMENT. Neither the Offer Documents, nor any of the information provided
by Parent, Fimalac-U.S. or Acquisition Sub or by their auditors, legal
counsel, financial advisors or other consultants or advisors specifically for
use in the Schedule 14D-9 shall, on the respective dates the Offer Documents
or the Schedule 14D-9 are filed with the SEC or on the date first published,
sent or given to the Company's stockholders, as the case may be, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, neither Parent, Fimalac-U.S. nor
Acquisition Sub makes any representation or warranty with respect to any
information provided by the Company or by its auditors, legal counsel,
financial advisors, or other consultants or advisors specifically for use in
the Offer Documents. None of the information provided by Parent, Fimalac-U.S.
or Acquisition Sub or by their auditors, legal counsel, financial advisors or
other consultants or advisors specifically for use in the Proxy Statement
shall, at the time filed with the SEC, at the time mailed to the Company's
stockholders, at the time of the Stockholders' Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Offer Documents will comply in all material respects with
the provisions of the Exchange Act and any other applicable law.
Section 4.5 NO PRIOR ACTIVITIES; FINANCING.
(a) Acquisition Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement. As of
the date hereof, except for obligations or liabilities incurred in connection
with its incorporation or organization and the transactions contemplated by
this Agreement and except for this Agreement and any other agreements or
arrangements contemplated by this Agreement, Acquisition Sub has not and will
not have incurred, directly or indirectly, through any subsidiary or
affiliate, any obligations or liabilities or engaged in any
<PAGE>
33
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
(b) Parent has available to it funding necessary
to satisfy Acquisition Sub's obligations hereunder including, without
limitation, the obligation to pay the aggregate Per Share Amount pursuant to
the Offer and the aggregate Merger Consideration pursuant to the Merger and
to pay all related fees and expenses in connection with the Offer and the
Merger. Parent shall make available (i) to Acquisition Sub sufficient cash to
purchase Shares to be purchased pursuant to the Offer prior to such purchase
and (ii) to Acquisition Sub, for deposit in the Exchange Fund, sufficient
cash to pay the aggregate Merger Consideration pursuant to the Merger prior
to the Effective Time.
Section 4.6 OWNERSHIP OF SHARES. As of the date hereof,
neither Parent nor any of its affiliates beneficially owns any Shares (except
that a subsidiary of Fimalac-U.S. owns 100 Shares) or is an "Interested
Shareholder" as defined in Section 7.85 or Section 11.75 of the Illinois Law.
ARTICLE V.
CONDUCT OF BUSINESS
Section 5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. The Company covenants and agrees that, during the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the time Parent's designees are elected as directors of the
Company pursuant to Section 1.3, unless Parent shall otherwise agree in
writing, which agreement shall not be unreasonably withheld, delayed, or
conditioned, the Company shall, unless expressly authorized to do otherwise
pursuant to paragraphs (a) through (o) below, in all material respects
conduct its business and shall cause the businesses of its subsidiaries to be
conducted only in the ordinary course of business consistent with past
practice, and the Company shall use reasonable commercial efforts to preserve
substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers,
employees and consultants of the Company and its subsidiaries and to preserve
the present relationships of the Company and its subsidiaries with customers,
suppliers and other persons with which the Company or any of its subsidiaries
has a significant business relations. Without limiting the foregoing, except
as contemplated by this Agreement or as set forth on Section 5.1 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries
shall, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the time Parent's
designees are elected as directors of the Company pursuant to Section 1.3,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Parent, which consent shall not be unreasonably
withheld or delayed:
<PAGE>
34
(a) amend or otherwise change the articles of
incorporation or by-laws of the Company or any of the Subsidiary Documents;
(b) issue, sell, pledge, dispose of or encumber,
or authorize the issuance, sale, pledge, disposition or encumbrance of, any
shares of capital stock of any class, or any options, warrants, convertible
securities, exchangeable securities or other rights of any kind to acquire
any shares of capital stock of any class, or any other ownership interest
(including, without limitation, any phantom interest) in the Company or any
of its subsidiaries or affiliates (except for (i) the issuance of shares of
Common Stock issuable pursuant to the Stock Options or agreements listed on
Section 3.3 of the Company Disclosure Schedule and (ii) the issuance of
shares of Company Common Stock required to be issued to participants in the
Company's Employee Plans pursuant to the terms thereof);
(c) sell, pledge, dispose or encumber any assets
of the Company or any of its subsidiaries (except for (i) sales of assets in
the ordinary course of business and in a manner consistent with past
practice, (ii) disposition of obsolete or worthless assets and (iii) sales of
immaterial assets not in excess of $100,000);
(d) (i) declare, set aside, make or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock, except for the
payment of the Company's regular quarterly cash dividend of $0.03 per share
declared prior to the date hereof except that a wholly owned subsidiary of
the Company may declare and pay a dividend or make advances to its parent or
the Company, (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or (iii)
amend the terms or change the period of exercisability of, purchase,
repurchase, redeem or otherwise acquire, or permit any subsidiary to
purchase, repurchase, redeem or otherwise acquire, any of its securities or
any securities of its subsidiaries, including, without limitation, shares of
Common Stock or any option, warrant, convertible or exchangeable securities
or other right, directly or indirectly, to acquire shares of Common Stock, or
propose to do any of the foregoing, except for the acceleration or
termination of Stock Options pursuant to the terms of the Company Stock
Option Plan and the exercise of such Stock Options or the termination of any
other arrangement providing for the issuance of shares thereunder;
(e) (i) acquire (by merger, consolidation, or
acquisition of stock or assets) any material property or assets, make any
investment in, or make any capital contributions to, any corporation,
partnership or other business organization or division thereof; (ii) incur
any indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse or otherwise as an accommodation become responsible for,
the obligations of any person or, except in the ordinary course of business
consistent with past practice or in connection with purchases of equipment or
<PAGE>
35
capital improvements, make any loans or advances (other than loans or advances
to or from direct or indirect wholly owned subsidiaries), (iii) enter into,
terminate or amend any Material Contract or agreement other than in the ordinary
course of business or where such contract, termination or amendment would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or its subsidiaries; (iv) authorize any capital expenditures or purchases of
fixed assets which are, in the aggregate, in excess of $300,000; or (v) enter
into or amend any contract, agreement, commitment or arrangement to effect any
of the matters prohibited by this Section 5.1(e);
(f) (i) increase the compensation or fringe
benefits payable or to become payable to its directors, officers or
employees, except for increases in salary or wages of employees of the
Company or its subsidiaries in accordance with past practice and in amounts
that are in the aggregate reflected in the budgets previously provided to
Parent, (ii) except pursuant to the existing agreements set forth on Section
3.11(a) of the Company Disclosure Schedule, grant any severance or
termination pay to, or enter into any severance agreement or other agreement
providing for severance payments with, any director, officer or other
employee of the Company or any of its subsidiaries, (iii) establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any current or former
directors, officers or employees, (iv) enter into any employment or
consulting agreement except with respect to new hires of employees who are
not executive officers or senior management personnel in the ordinary course
of business or (v) accelerate the payment, right to payment or vesting of any
bonus, severance, profit sharing, retirement, deferred compensation, stock
option, insurance or other compensation or benefits except as required under
the Company Employee Plans; except in each of (i) through (v), as may be
required by law;
(g) take any action to change material accounting
policies or procedures (including, without limitation, procedures with
respect to revenue recognition, payments of accounts payable and collection
of accounts receivable) except as required by U.S. generally accepted
accounting principles;
(h) make any material tax election inconsistent
with past practice or settle or compromise any material federal, state, local
or foreign tax liability or agree to an extension of a statute of
limitations, except to the extent the amount of any such settlement has been
reserved for in the 1999 Financial Statements;
(i) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction
in the ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the 1999
<PAGE>
36
Financial Statements or incurred in the ordinary course of business and
consistent with past practice;
(j) enter into any compromise or settlement of, or
take any material action with respect to, any litigation, action, suit,
claim, proceeding or investigation other than the prosecution, defense and
settlement of routine litigation, actions, suits, claims, proceedings or
investigations in the ordinary course of business;
(k) adopt or enter into a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other material reorganization or any agreement relating
to an Acquisition Proposal (as defined in Section 5.2 of this Agreement);
(l) enter into any agreement, understanding or
commitment that restrains, limits or impedes the Company's ability to compete
with or conduct any business or line of business;
(m) plan, announce, implement or effect any
reduction in force, lay-off, early retirement program, severance program or
other program or effort concerning the termination of employment of employees
of the Company or its subsidiaries, except, only with respect to employees
who do not exercise the functions of general manager, the equivalent or
higher, in the ordinary course of business consistent with past practice;
(n) enter into any new agreement to acquire or
rent accommodations (x) involving aggregate rental payments in an amount in
excess of $100,000 or which will remain in effect for longer than six months
from the date hereof or (y) on other than ordinary course of business terms;
or
(o) take, or agree in writing or otherwise to
take, any of the actions described in Sections 5.1(a) through (n) above, or
any action which would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect in any material
respect or prevent the Company from performing or cause the Company not to
perform its covenants hereunder.
Section 5.2 NO SOLICITATION; ACQUISITION PROPOSALS.
(a) The Company shall not, nor shall it permit any of
its subsidiaries to, nor shall it authorize or permit any officer, director or
representative or agent of the Company or any of its subsidiaries (including,
without limitation, any investment banker, financial advisor, attorney or
accountant retained by the Company or any of its subsidiaries) to, directly or
indirectly, (i) solicit, initiate or knowingly encourage (including by way of
furnishing information or assistance), or take any other action to facilitate
the initiation of any inquiries or proposals regarding an Acquisition Proposal
(as hereinafter defined), (ii) engage in negotiations or discussions concerning,
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37
or provide any nonpublic information to any person relating to, any Acquisition
Proposal, or (iii) agree to approve or recommend any Acquisition Proposal;
provided, however, that nothing contained in this Section 5.2 shall prohibit the
Company or the Board from taking and disclosing to stockholders a position
contemplated by Rule 14e-2 promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith reasonable
judgment of the Board after consultation with outside legal counsel, the failure
to so disclose would be inconsistent with its fiduciary obligations to
stockholders under applicable law; and provided, further, that, prior to the
time at which Acquisition Sub shall have accepted Shares for payment pursuant to
the Offer and to the extent that the Board determines in good faith (after
consultation with outside legal counsel) that not to do so would be inconsistent
with its fiduciary duties to stockholders under applicable law, (y) the Board on
behalf of the Company may, in response to an unsolicited bona fide written
Acquisition Proposal (as hereinafter defined), make such inquiries of the Third
Party (as hereinafter defined) making such unsolicited bona fide written
Acquisition Proposal as may be necessary to inform itself of the particulars of
the Acquisition Proposal and, if the Board reasonably believes that such
Acquisition Proposal may constitute a Superior Proposal (as hereinafter
defined), furnish information or data (including, without limitation,
confidential information or data) relating to the Company or its subsidiaries
to, and participate in negotiations with, the Third Party (as hereinafter
defined) making such unsolicited bona fide written Acquisition Proposal and (z)
following receipt of a Superior Proposal (as hereinafter defined), the Board may
withdraw or modify its recommendation relating to the Offer or the Merger if the
Board determines in good faith after consultation with outside legal counsel
that failure to take such action would be inconsistent with its fiduciary duties
to stockholders under applicable law. Subject to the Company's right to
terminate this Agreement pursuant to Section 8.1(f), nothing in this Agreement
and no action taken by the Board pursuant to this Section 5.2 will permit the
Company to enter into any agreement or undertaking providing for any transaction
contemplated by an Acquisition Proposal for so long as this Agreement remains in
effect.
As used in this Agreement, "ACQUISITION PROPOSAL" means a
proposal for either (i) a transaction pursuant to which any person (or group of
persons) other than the Parent or its affiliates (a "THIRD PARTY") would acquire
25% or more of the outstanding shares of the Common Stock of the Company
pursuant to a tender offer or exchange offer or otherwise, (ii) a merger or
other business combination involving the Company pursuant to which any Third
Party would acquire 25% or more of the outstanding shares of the Common Stock of
the Company or of the entity surviving such merger or business combination,
(iii) any other transaction pursuant to which any Third Party would acquire
control of assets (including for this purpose the outstanding equity securities
of subsidiaries of the Company, and the entity surviving any merger or business
combination including any of them) of the Company having a fair market value
equal to 25% or more of the fair market value of all the assets of the Company
immediately prior to such transaction, (iv) any public announcement by a Third
Party of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing, (v) a self tender offer, or (vi)
any transaction subject to Rule 13(e)-3 under the Exchange
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38
Act. No Acquisition Proposal received by the Company following the date of this
Agreement shall be deemed to have been solicited by the Company or any of its
officers, directors, employees, representatives and agents (including, without
limitation, any investment banker, attorney or accountant retained by the
Company) in violation of Section 5.2 solely by virtue of the fact that the
person or entity making such Acquisition Proposal made an Acquisition Proposal
prior to the date of this Agreement or the fact that the Company or any of its
officers, directors, employees, representatives and agents (including, without
limitation, any investment banker or attorney retained by the Company) solicited
such Acquisition Proposal prior to February 29, 2000.
As used in this Agreement, "SUPERIOR PROPOSAL" means an
Acquisition Proposal that (i) is not subject to any financing contingencies or
is, in the good faith judgment of the Board after consultation with a nationally
recognized financial advisor, reasonably capable of being financed and (ii) the
Board determines in good faith, based upon such matters as it deems relevant,
including an opinion of a nationally recognized financial advisor, would, if
consummated, result in a transaction more favorable to the Company's
stockholders from a financial point of view than the Offer and the Merger.
(b) Prior to providing any information to or entering
into discussions with any person in connection with an Acquisition Proposal by a
person as set forth in Section 5.2(a), the Company shall receive from such
person an executed confidentiality agreement in reasonably customary form and
shall notify Parent orally and in writing of any Acquisition Proposal
(including, without limitation, the material terms and conditions thereof and
the identity of the person making it) or any inquiries indicating that any
person is considering making or wishes to make an Acquisition Proposal, as
promptly as practicable (but in no case later than 24 hours) after its receipt
thereof, and shall provide Parent with a copy of any written Acquisition
Proposal, and shall thereafter inform Parent on a prompt basis of (i) any
material changes to the terms and conditions of such Acquisition Proposal, and
shall promptly give Parent a copy of any information provided to such person
which has not previously been provided to Parent and (ii) any request by any
person for nonpublic information relating to its or any of its subsidiaries'
properties, books or records.
(c) Subject to the foregoing provisions of this
Section 5.2, the Company shall immediately cease any existing discussions or
negotiations with any person (other than Parent and Acquisition Sub) conducted
heretofore with respect to any of the foregoing. The Company agrees not to
release any third party from the confidentiality provisions of any
confidentiality agreement to which the Company is a party.
(d) The Company shall ensure that the officers and
directors of the Company and its subsidiaries and any investment banker,
financial advisor, attorney, accountant or other advisor or representative
retained by the Company are aware of the restrictions described in this Section
5.2.
<PAGE>
39
VI.
ADDITIONAL AGREEMENTS
Section 6.1 HSR ACT. As promptly as practicable after the
date of this Agreement, the Company and Parent shall file notifications under
the HSR Act in connection with the Offer, the Merger and the transactions
contemplated hereby and shall respond as promptly as practicable to any
inquiries and requests received from the Federal Trade Commission (the "FTC")
and the Antitrust Division of the Department of Justice (the "ANTITRUST
DIVISION") for additional information or documentation and from any State
Attorney General or other Governmental Authority in connection with antitrust
matters.
Section 6.2 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon
reasonable notice and subject to (i) restrictions contained in
confidentiality agreements to which such party is subject (from which such
party shall use reasonable efforts to be released), and (ii) the Company's
written consent (which consent shall not be unreasonably withheld) with
respect to current or future prices of products and services or information
relating to specific customers or other competitively sensitive information,
the Company shall, and shall cause each of its subsidiaries to afford, to the
officers, employees, accountants, counsel, financial advisors and other
representatives of Parent, Fimalac-U.S., Acquisition Sub or the financing
sources of Parent or Acquisition Sub reasonable access during normal business
hours, during the period prior to the earlier of the termination of this
Agreement and the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its subsidiaries to) furnish promptly to Parent, Fimalac-U.S.
or Acquisition Sub all information concerning its business, properties and
personnel as Parent, Fimalac-U.S. or Acquisition Sub may reasonably request,
and each shall make available to Parent, Fimalac-U.S. and Acquisition Sub the
appropriate individuals (including attorneys, accountants, and other
professionals) for discussion of the Company's business, properties and
personnel as Parent, Fimalac-U.S. or Acquisition Sub may reasonably request.
Any such investigation by Parent, Fimalac-U.S. or Acquisition Sub shall not
affect the representations or warranties of the Company contained in this
Agreement. Parent, Fimalac-U.S. and Acquisition Sub shall keep such
information confidential in accordance with the terms of the confidentiality
letter dated January 25, 2000 (the "CONFIDENTIALITY LETTER"), between Parent
and the Company, which Confidentiality Letter shall survive termination of
this Agreement. Upon any termination of this Agreement, Parent shall, upon
written request of the Company, destroy or collect and deliver to the Company
all documents obtained by it or any of its representatives pursuant to this
Section 6.2 then in their possession and any copies thereof.
Section 6.3 CONSENTS; APPROVALS. Subject to Section 5.2,
the Company, Parent, Fimalac-U.S. and Acquisition Sub shall each use their
reasonable best efforts to take all appropriate action to do or cause to be
done all things
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40
necessary, proper or advisable under applicable laws and regulations to
consummate the Offer, the Merger and the other transactions contemplated by this
Agreement, including, without limitation, using their best efforts to obtain all
consents, waivers, approvals, authorizations or orders of Governmental
Authorities and parties to contracts with the Company or any of its
subsidiaries, and the Company, Parent, Fimalac-U.S. and Acquisition Sub shall
make all filings including, without limitation, all filings with Governmental
Authorities required in connection with the authorization, execution and
delivery of this Agreement by the Company, Parent, Fimalac-U.S. and Acquisition
Sub, the consummation by them of the transactions contemplated hereby and to
fulfill the conditions to the Offer and the Merger. The Company and Parent shall
furnish all information required to be included in the Proxy Statement, or for
any application or other filing to be made pursuant to the rules and regulations
of any United States or foreign governmental body in connection with the
transactions contemplated by this Agreement.
Section 6.4 INDEMNIFICATION AND INSURANCE.
(a) The articles of incorporation and by-laws of
the Surviving Corporation shall contain provisions with respect to
indemnification and exculpation at least as protective to any officer or
director as those set forth in the articles of incorporation and by-laws of
the Company, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at or prior
to the Effective Time were directors, officers, employees or agents of the
Company, unless such modification is required by law.
(b) The Company shall, to the fullest extent
permitted under applicable law or under the Company's articles of
incorporation or by-laws and regardless of whether the Merger becomes
effective, indemnify and hold harmless, and, after the Effective Time,
Fimalac-U.S. and the Surviving Corporation shall, to the fullest extent
permitted under applicable law or under the Surviving Corporation's articles
of incorporation or by-laws, indemnify and hold harmless, each present and
former director, officer or employee of the Company or any of its
subsidiaries (collectively, the "INDEMNIFIED PARTIES") against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims,
damages and liabilities incurred in connection with, and amounts paid in
settlement of, any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative and wherever asserted,
brought or filed, (x) arising out of or pertaining to the transactions
contemplated by this Agreement or (y) otherwise with respect to any acts or
omissions or alleged acts or omissions occurring at or prior to the Effective
Time, to the same extent as provided in the respective articles of
incorporation or by-laws of the Company or the subsidiaries or any applicable
contract or agreement as in effect on the date hereof, in each case for a
period of six years after the date hereof. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after
the Effective Time) in which there exists no conflict between the
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41
interests of the indemnifying party and the Indemnified Party, the indemnifying
party shall have a right to assume and direct all aspects of the defense
thereof, including settlement, and the Indemnified Party shall cooperate in the
defense of any such matter. The Indemnified Party shall have a right to
participate in (but not control) the defense of any such matter with its own
counsel and at its own expense. The indemnifying party shall not settle any such
matter unless (i) the Indemnified Party gives prior written consent, which shall
not be unreasonably withheld, or (ii) the terms of the settlement provide that
the Indemnified Party shall have no responsibility for the discharge of any
settlement amount and impose no other obligations or duties on the Indemnified
Party and the settlement provides the Indemnified Party with a full release and
discharges all rights against the Indemnified Party with respect to such matter.
In no event shall the indemnifying party be liable for any settlement effected
without its prior written consent; provided that if such indemnifying party
elected not to assume and direct the defense of such action, such indemnifying
party's consent to such settlement shall not be unreasonably withheld or
delayed. Any Indemnified Party wishing to claim indemnification under this
Section 6.4(b), upon learning of any such claim, action, suit, proceeding or
investigation, shall notify Fimalac-U.S. and the Surviving Corporation (but the
failure so to notify shall not relieve the indemnifying party from any liability
which it may have under this Section 6.4(b) except to the extent of any damages
caused by such failure to the indemnifying party), and shall deliver to
Fimalac-U.S. and the Surviving Corporation the undertaking contemplated by
Section 8.75(e) of the Illinois Law. If the indemnifying party does not assume
the defense of any such action, the Indemnified Parties as a group may retain
only one law firm in each jurisdiction to represent them with respect to any
single action unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two or
more Indemnified Parties. The indemnity agreements of Fimalac-U.S. and the
Surviving Corporation in this Section 6.4(b) shall extend, on the same terms to,
and shall inure to the benefit of and shall be enforceable by, each person or
entity who controls, or in the past controlled, any present or former director,
officer or employee of the Company or any of its subsidiaries.
(c) This Section shall survive the consummation of
the Merger at the Effective Time, is intended to benefit the Company, the
Surviving Corporation and the Indemnified Parties, shall be binding on all
successors and assigns of Fimalac-U.S. and the Surviving Corporation and
shall be enforceable by the Indemnified Parties. In the event that
Fimalac-U.S. or Surviving Corporation or any of their successors or assigns
(i) consolidates or merges into any other person or entity and shall not be
the continuing or surviving corporation or entity in such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any person or entity, then and in such case, proper provisions
shall be made so that the successors and assigns of Fimalac-U.S. or the
Surviving Corporation (as the case may be) assume the obligations of
Fimalac-U.S. and the Surviving Corporation set forth in this Section.
<PAGE>
42
Section 6.5 NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to
the Company, of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be materially
untrue or inaccurate, or (ii) any failure of the Company, Parent or
Acquisition Sub, as the case may be, materially to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 6.6 FURTHER ACTION. Upon the terms and subject to
the conditions hereof (including, without limitation, Section 5.2), each of
the parties shall use all reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all other things necessary,
proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement.
Parent and Fimalac-U.S. shall take all action necessary to cause Acquisition
Sub to perform its obligations under this Agreement and to make the Offer and
purchase Shares and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement.
Section 6.7 PUBLIC ANNOUNCEMENTS. Parent and the Company
shall consult with each other before issuing any press release with respect
to the Offer, the Merger or this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the
other party, which shall not be unreasonably withheld, delayed or
conditioned; provided, however, that a party may, without the prior consent
of the other part, issue such press release or make such public statement as
may upon the advice of counsel be required by law or the rules and
regulations of the New York Stock Exchange or the Paris BOURSE, if it has
used all reasonable efforts to consult with the other party.
Section 6.8 CONVEYANCE TAXES. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and
stamp taxes, any transfer, recording, registration and other fees, and any
similar taxes which become payable in connection with the transactions
contemplated hereby that are required or permitted to be filed on or before
the Effective Time.
<PAGE>
43
Section 6.9 EMPLOYEE BENEFIT PLANS. Parent agrees that the
employees of the Company will continue to be provided with benefits under
employee benefit plans (other than plans involving the potential issuance of
or investment in securities of the Company or similar performance-based
incentive plans) that in the aggregate are substantially comparable to those
currently provided by the Company to such employees. Following the Effective
Time, Parent shall cause service by employees of the Company to be taken into
account for purpose of eligibility to participate and vesting under any
benefit plans of Parent or its subsidiaries (including the Surviving
Corporation) which cover such employees, to the same extent such service was
counted under a similar plan of the Company. From and after the Effective
Time, Parent shall (i) cause to be waived any pre-existing condition
limitations and evidence of insurability requirements under benefit plans of
Parent or its subsidiaries in which employees of the Company participate, and
(ii) cause to be credited any deductibles and out-of-pocket expenses incurred
by such employees and their beneficiaries and dependents under the Company's
benefit plans during the portion of the calendar year prior to their
participation in the benefit plans provided by Parent and its subsidiaries.
Parent shall cause the Surviving Corporation to honor all employee benefit
obligations to current and former employees under the Company Employee Plans
accrued as of the Effective Time and all employee severance plans and all
employment or severance agreements set forth in Section 3.11(a) of the
Company Disclosure Schedule. Notwithstanding any of the foregoing to the
contrary, none of the provisions contained herein shall operate to duplicate
any benefit provided to any employee of the Company or the funding of any
such benefit or obligate Parent or any affiliate of Parent to (i) make any
particular benefit plan or benefit available to any employee, (ii) continue
any particular benefit plan or benefit or (iii) refrain from terminating or
amending any particular benefit plan or benefit.
Section 6.10 DELISTING OF SECURITIES. As soon as
practicable following the Effective Time, the parties hereto shall take all
action necessary to cause the Company's Common Stock to be de-listed from the
New York Stock Exchange and de-registered under the Exchange Act.
Section 6.11 AUDITED FINANCIAL STATEMENTS. As soon as
practicable but in any case five (5) business days prior to the initial
expiration date of the Offer, the Company shall provide to Parent and
Acquisition Sub copies of the fully audited consolidated financial statements of
the Company and its consolidated subsidiaries for the Company's fiscal year
ended December 31, 1999.
Section 6.12 STATE TAKEOVER LAWS. If any "fair price,"
"business combination" or "control share acquisition" statute or other similar
statute or regulation shall become applicable to the transactions contemplated
hereby, Parent and the Company and their respective boards of directors shall
use their reasonable best efforts to grant such approvals and take such actions
as are necessary so that the transactions contemplated hereby and thereby may be
consummated as promptly as practicable on the terms contemplated hereby and
thereby and otherwise act to
<PAGE>
44
minimize the effects of any such statute or regulation on the transactions
contemplated hereby and thereby.
Section 6.13 FINANCING EFFORTS. If an event of the type listed
in clause (f) of Annex A hereto shall have occurred and, as a consequence
thereof, the Parent's and the Acquisition Sub's financing for the Offer is
withdrawn or otherwise unavailable, and if the other conditions to the Offer
have otherwise been satisfied, the Parent will use reasonable best efforts to
arrange alternative financing for the Offer (provided that the terms thereof are
not materially worse than those available to it previously).
ARTICLE VII.
CONDITIONS TO THE MERGER
Section 7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO
EFFECT THE MERGER. The respective obligations of each party to effect the
Merger shall be subject to the satisfaction or waiver to the extent
permissible under law at or prior to the Effective Time of all the following
conditions:
(a) PURCHASE OF SHARES. Acquisition Sub shall have
accepted and purchased Shares pursuant to the Offer.
(b) HSR ACT. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
earlier terminated.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No
temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Merger shall be in effect;
and there shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger illegal; provided, however, that prior
to invoking this condition, the party so invoking this condition shall have
complied with its obligations under Section 6.3.
(d) GOVERNMENTAL ACTIONS. There shall not be in
effect any judgment, decree or order of any Governmental Authority,
administrative agency or court of competent jurisdiction prohibiting or
limiting Parent from exercising all material rights and privileges pertaining
to its ownership of the Surviving Corporation or the ownership or operation
by Parent or any of its subsidiaries of all or a material portion of the
business or assets of Parent or any of its subsidiaries, or compelling Parent
or any of its subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of Parent or any of its subsidiaries
(including the
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45
Surviving Corporation and its subsidiaries), as a result of the Merger or the
transactions contemplated by this Agreement.
(e) STOCKHOLDERS' APPROVAL. The Merger shall have
been approved by the shareholders of the Company, if and to the extent a vote
of the stockholders of the Company shall be required in respect of the Merger
in accordance with Illinois Law.
Section 7.2 CONDITIONS TO OBLIGATION OF PARENT,
FIMALAC-U.S. AND ACQUISITION SUB. The respective obligations of Parent,
Fimalac-U.S. and Acquisition Sub to effect the Merger shall be subject to the
satisfaction or waiver to the extent permissible under law at or prior to the
Effective Time of the following condition:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of the Company set forth in this Agreement
shall be true and correct in all material respects when made.
ARTICLE VIII.
TERMINATION
Section 8.1 TERMINATION. This Agreement may be terminated
at any time prior to the Effective Time, notwithstanding approval thereof by
the stockholders of the Company:
(a) by mutual written consent duly authorized by
the boards of directors or any committee thereof of Parent, Fimalac-U.S.,
Acquisition Sub and the Company, subject to compliance with Section 1.3(c);
(b) by either Parent or the Company if a court of
competent jurisdiction or Governmental Authority shall have issued a
nonappealable final order, decree or ruling or taken any other action having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Offer or the Merger (provided that the right to terminate this Agreement
under this Section 8.1(b) shall not be available to any party who has not
complied with its obligations under Sections 6.3 and 6.6 and such
noncompliance materially contributed to the issuance of any such order,
decree or ruling or the taking of such action);
(c) by either Parent or the Company if (A) as the
result of the failure of any of the conditions set forth in ANNEX A to this
Agreement, the Offer shall have expired or Acquisition Sub shall have
terminated the Offer in accordance with its terms without Acquisition Sub
having purchased any Shares pursuant to the Offer or (B) Acquisition Sub
shall have failed to accept for purchase and pay for Shares pursuant to the
Offer by May 12, 2000 unless such failure by Acquisition Sub
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46
is a result of the receipt by the Company of a bona fide unsolicited Acquisition
Proposal or a request for additional information under the HSR Act or the
failure to obtain any necessary governmental or regulatory approval, in which
case the date by which Acquisition Sub shall accept for purchase and pay for
Shares shall be extended to June 30, 2000 (provided that the right to terminate
this Agreement under this Section 8.1(c) shall not be available to any party
whose breach or failure to fulfill any obligation under this Agreement has been
the cause of or resulted in any of the circumstances described in clauses (A)
and (B) before such dates);
(d) by Parent, prior to the purchase of Shares
pursuant to the Offer, if the Board shall have (i) withdrawn or modified in a
manner adverse to Parent, Fimalac-U.S. or Acquisition Sub, or publicly taken
a position materially inconsistent with, its approval or recommendation of
the Offer, the Merger or the transactions contemplated by this Agreement,
(ii) approved, endorsed or recommended an Acquisition Proposal, or (iii)
publicly disclosed any intention to do any of the foregoing;
(e) by the Company, prior to the purchase of
Shares pursuant to the Offer, or the Parent, at any time prior to the
Effective Time, (i) if any representation or warranty of the Company or
Parent, respectively, set forth in this Agreement that are qualified by
reference to materiality shall not be true and correct when made or any
representation or warranty of the Company or Parent, respectively, set forth
in this Agreement that are not qualified by reference to materiality shall
not be true and correct in all material respects when made, or (ii) upon a
breach of or failure to perform in any material respect any covenant or
agreement on the part of the Company or Parent, respectively, set forth in
this Agreement except, in each of (i) and (ii) above, where the failure to
perform such covenants or agreements or the failure of such representations
and warranties to be so true and correct would not have a Material Adverse
Effect on the Company, Parent or the Offer (either (i) or (ii) above being a
"TERMINATING BREACH"); provided however, that, if such Terminating Breach is
curable by the Company or Parent, as the case may be, through the exercise of
its reasonable best efforts and for so long as the Company or Parent, as the
case may be, continues to exercise such reasonable best efforts, neither
Parent nor the Company, respectively, may terminate this Agreement under this
Section 8.1(e), and provided further that the right to terminate this
Agreement pursuant to this Section 8.1(e) shall not be available to any party
whose breach of or failure to fulfill its obligations under this Agreement
resulted in the failure of any such condition; or
(f) by the Company, following the receipt by the
Company after the date hereof, under circumstances not involving any breach
of the provisions of Section 5.2, of an unsolicited bona fide Superior
Proposal, if the Board, after consultation with outside legal counsel, shall
have determined in good faith that the failure to terminate this Agreement
would be inconsistent with its fiduciary duties to the Company's stockholders
under applicable law; provided that (i) the Company has complied with all
provisions of Section 5.2, including the notice provisions therein,
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47
(ii) such termination shall only be effective if the Company enters into a
definitive agreement providing for the transactions contemplated by such
Acquisition Proposal immediately following such termination; (iii) the Board
shall have given Parent at least two business days prior written notice of its
determination to terminate this Agreement pursuant to this Section 8.1(f) and
shall have afforded Parent a reasonable opportunity within such two business
day-period to amend its Offer; and (iv) the Company pays Parent the Termination
Fee (as defined below) in accordance with provisions of Section 8.3.
Section 8.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 8.1, there shall be no
liability on the part of any party hereto or any of its affiliates,
directors, officers, employees or stockholders except as set forth in
Sections 3.22, 6.2, 6.7, 8.1 and 8.3 and Article IX and this Agreement shall
otherwise forthwith become void. Except as otherwise provided in Section 8.3,
nothing herein shall relieve any party from liability for any willful breach
of any of its representations and warranties or the breach of any of its
covenants or agreements set forth in this Agreement.
Section 8.3 FEES AND EXPENSES.
(a) Except as otherwise set forth in this
Agreement, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated.
(b) The Company shall pay Parent a fee of
$16,000,000 (the "TERMINATION FEE") plus the amount of the actual
out-of-pocket expenses (not to exceed $2 million) incurred by Parent,
Fimalac-U.S. and Acquisition Sub in connection with this Agreement and the
transactions contemplated hereby if this Agreement is terminated (x) by
Parent pursuant to Section 8.1(d), or (y) by the Company pursuant to Section
8.1(f), or (z) by the Company or Parent pursuant to Section 8.1(c) if, at the
time of such termination pursuant to Section 8.1(c), the Minimum Condition
had not been satisfied and an Acquisition Proposal had been publicly
announced and, within twelve months of such termination pursuant to Section
8.1(c), any person or entity (other than Parent) has acquired, by purchase,
merger, consolidation, sale, assignment, lease, transfer or otherwise, in one
transaction or any related series of transactions, a majority of the voting
power of the outstanding securities of the Company or a majority of the
assets of the Company. The Termination Fee payable pursuant to this Section
8.3(b) shall be paid by wire transfer in immediately available funds
immediately upon termination of this
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48
Agreement as set forth above, except in the case of a termination pursuant to
Section 8.1(c), in which case it shall be paid immediately upon satisfaction of
the conditions to payment set forth in clause (z) of the preceding sentence. The
out-of-pocket expenses shall be paid promptly upon receipt of reasonable
documentation of such expenses. Except as provided in this Section 8.3(b), upon
termination of this Agreement pursuant to Sections 8.1(d) or 8.1(f), or upon
termination of this Agreement pursuant to Section 8.1(c) under circumstances in
which a Termination Fee is payable hereunder, none of the parties hereto shall
have any liability hereunder.
ARTICLE IX.
GENERAL PROVISIONS
Section 9.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS. Except as otherwise provided in this Section 9.1, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any other party hereto, any person controlling any such
party or any of their officers or directors, whether prior to or after the
execution of this Agreement. The representations, warranties, covenants and
agreements in this Agreement shall terminate at the Effective Time or upon
the termination of this Agreement pursuant to Section 8.l, as the case may
be, except that this Section 9.1 shall not limit any covenant or any
agreement of the parties which by its terms contemplates performance after
the Effective Time and which shall survive in accordance with its respective
terms. The Confidentiality Letter shall survive termination of this Agreement
as provided therein.
Section 9.2 NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made if and when delivered personally or by overnight
courier to the parties at the following addresses or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
below (or at such other address or telecopy number for a party as shall be
specified by like notice):
(a) If to Parent, Fimalac-U.S. or Acquisition Sub:
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Telecopier No.: (212) 480-4439
Telephone No.: (212) 908-0500
Attention: Stephen W. Joynt
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With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6014
Telecopier No.: (212) 357-3990
Telephone No.: (212) 373-3000
Attention: David K. Lakhdhir, Esq.
(b) If to the Company:
Duff & Phelps Credit Rating Co.
55 East Monroe Street
Chicago, Illinois 60603
Telecopier No.: (212) 908-7648
Telephone No.: (212) 908-0202
Attention: President
With a copy to:
Katten Muchin Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
USA
Telecopier No.: (312) 902-1061
Telephone No.: (312) 902-5200
Attention: Kurt W. Florian, Jr., Esq.
Section 9.3 CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) AFFILIATE means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
(b) BENEFICIAL OWNER with respect to any shares of
Common Stock means a person who shall be deemed to be the beneficial owner of
such shares (i) which such person or any of its affiliates or associates (as
such term is defined in Rule 12b-2 of the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the
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50
passage of time), pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding, or (iii) which are beneficially owned, directly or indirectly, by
any other persons with whom such person or any of its affiliates or associates
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares;
(c) BUSINESS DAY means any day other than a day on
which banks in New York or Paris are required or authorized to be closed;
(d) CONTROL (including the terms CONTROLLED BY,
and UNDER COMMON CONTROL WITH) means the possession, directly or indirectly
or as trustee or executor, of the power to direct or cause the direction of
the management or policies of a person, whether through the ownership of
stock, as trustee or executor, by contract or credit arrangement or otherwise;
(e) KNOWLEDGE means, with respect to any matter in
question, actual knowledge of any executive officer of the entity in question
with respect to such matter after making reasonable inquiry of officers and
other employees charged with senior administrative or operational
responsibility of such matters;
(f) PERSON means an individual, corporation,
partnership, limited liability company, association, joint venture, trust,
unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(g) SUBSIDIARY or SUBSIDIARIES of the Company, the
Surviving Corporation, Parent or any other person means any person or other
legal entity of which the Company, the Surviving Corporation, Parent or such
other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, more than 50% of the
stock or other equity interests the holders of which are generally entitled
to vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
Section 9.4 AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time, subject to compliance with
Section 1.3(c); provided, however, that, after approval of the Merger by the
stockholders of the Company, no amendment may be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
Section 9.5 WAIVER. At any time prior to the Effective
Time, any party hereto may with respect to any other party hereto (a) extend
the time for the
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51
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
Section 9.6 HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 9.7 SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
Section 9.8 ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement and supersedes all prior agreements and undertakings
(other than the Confidentiality Letter), both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and,
except as otherwise expressly provided herein.
Section 9.9 ASSIGNMENT; GUARANTEE OF ACQUISITION SUB
OBLIGATIONS. This Agreement shall not be assigned by operation of law or
otherwise, except that Parent, Fimalac-U.S. and Acquisition Sub may assign
all or any of their rights hereunder to any affiliate provided that no such
assignment shall relieve the assigning party of its obligations hereunder.
Section 9.10 PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement, including, without limitation, by way
of subrogation, other than Section 6.4 (which is intended to be for the
benefit of the Indemnified Parties and may be enforced by such Indemnified
Parties).
Section 9.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to be
a waiver of, or acquiescence in, any breach of any representation, warranty
or agreement herein, nor
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52
shall any single or partial exercise of any such right preclude other or further
exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
Section 9.12 GOVERNING LAW. This Agreement shall be
governed by, and construed in accordance with, the law of the State of New
York, without regard to any conflict of laws principles thereof that might
indicate the applicability of the law of any other jurisdiction.
Section 9.13 COUNTERPARTS. This Agreement may be executed
in one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
Section 9.14 INTERPRETATION. The parties hereto acknowledge
that certain matters set forth in the Company Disclosure Schedule and certain
matters set forth in the Parent Disclosure Schedule are included for
informational purposes only, notwithstanding the fact that, because they do
not rise above applicable materiality thresholds or otherwise, they would not
be required to be set forth therein by the terms of this Agreement. The
parties agree that disclosure of such matters shall not be taken as an
admission by the Company or Parent, as the case may be, that such disclosure
is required to be made under the terms of any provision of this Agreement and
in no event shall the disclosure of such matters be deemed or interpreted to
broaden or otherwise amplify the representations and warranties contained in
this Agreement or to imply that such matters are or are not material and
neither party shall use, in any dispute between the parties, the fact of any
such disclosure as evidence of what is or is not material for purposes of
this Agreement.
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53
IN WITNESS WHEREOF, Parent, Fimalac-U.S., Frank Acquisition
Sub and the Company have caused this Agreement to be executed as of the date
first written above by their respective officers thereunto duly authorized.
Fimalac, S.A.
By:
--------------------------------
Name: Veronique Morali
Title: Directeur General
Fimalac, Inc.
By:
--------------------------------
Name: Veronique Morali
Title: Chairman
FSA Acquisition Corp.
By:
--------------------------------
Name: Stephen W. Joynt
Title: President
Duff & Phelps Credit Rating Co.
By:
--------------------------------
Name: Paul J. McCarthy
Title: Chairman and Chief
Executive Officer
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54
ANNEX A
OFFER CONDITIONS
The capitalized terms used in this ANNEX A have the meanings
set forth in the attached Agreement and Plan of Merger among Duff & Phelps
Credit Rating Co., Fimalac, S.A., Fimalac, Inc. and FSA Acquisition Corp. except
that the term "Merger Agreement" shall be deemed to refer to the attached
Agreement and Plan of Merger and the term "Commission" shall be deemed to refer
to the SEC.
Notwithstanding any other provision of the Offer, Acquisition
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the Commission, including, without limitation, Rule
14e-1(c) under the Exchange Act, pay for any Shares tendered pursuant to the
Offer, and may postpone the acceptance for payment or, subject to the
restriction referred to above, payment for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer (whether or not any Shares have
theretofore been purchased or paid for pursuant to the Offer) and not accept for
payment any Shares, if (i) the Minimum Condition shall not have been satisfied,
or (ii) any applicable waiting period under the HSR Act shall not have expired
or been terminated; or (iii) Acquisition Sub shall not have been reasonably
satisfied that the provisions of Sections 7.85 and 11.75 of the Illinois Law are
inapplicable to the Offer and Merger, or (iv) at any time on or after the
announcement and prior to the acceptance for payment of Shares pursuant to the
Merger Agreement, or payment for, the Shares, any of the following conditions
occurs:
(a) there shall have been any action or proceeding
brought or threatened by any Governmental Authority or any other Person
(other than any action or proceeding brought or threatened by a Person other
than a Governmental Authority that would not reasonably be expected to have a
Material Adverse Effect) or any statute, regulation, legislation, judgment,
decree or order, enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to the Offer or the Merger by any Governmental Authority
that would have the effect of: (i) making illegal, or otherwise directly or
indirectly restraining or prohibiting or imposing material penalties or fines
or requiring the payment of material damages in connection with the making
of, the Offer, the acceptance for payment of, the payment for, or the
ownership, directly or indirectly, of, some or all of the Shares by Parent or
Acquisition Sub or the consummation of the Offer or the Merger; (ii)
prohibiting or materially limiting, the direct or indirect ownership or
operation by the Company or by Parent of all or any material portion of the
business or assets of the Company and its subsidiaries, taken as a whole, or
compelling Parent to dispose of or hold separate all or any material portion
of the business or assets of the Company or Parent or their respective
subsidiaries, taken as a whole, as a result of the transactions contemplated
by this Agreement; (iii) imposing or confirming material limitations on the
ability of
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55
Parent effectively to hold or to exercise full rights of ownership of Shares,
including, without limitation, the right to vote any Shares on all matters
properly presented to the stockholders of the Company, including, without
limitation, the approval and adoption of the Agreement and the transactions
contemplated thereby; (iv) requiring divestiture by Parent, Fimalac-U.S. or
Acquisition Sub, directly or indirectly, of any Shares; or (v) which would
reasonably be likely to result in a Material Adverse Effect;
(b) the Company shall have breached or failed to
perform in any material respect any of its covenants or agreements under the
Merger Agreement or any of the representations and warranties of the Company
set forth in the Merger Agreement that are qualified by reference to
materiality shall not be true and correct or any of the representations and
warranties of the Company set forth in the Merger Agreement that are not so
qualified by reference to materiality shall not be true and correct in all
material respects, in each case, when made and as of the date of consummation
of the Offer (except to the extent such representations and warranties of the
Company address matters only as of a particular date, in which case as of
such date), except where the failure to perform such covenants or agreements
or the failure of such representations and warranties to be so true and
correct would not have a Material Adverse Effect;
(c) the Merger Agreement shall have been
terminated in accordance with its terms;
(d) there shall have occurred any Material Adverse
Effect, or any development that is reasonably likely to result in a Material
Adverse Effect, on the Company or the Offer;
(e) the Board shall have (i) withdrawn or modified
in a manner adverse to Parent, Fimalac-U.S. or Acquisition Sub, or publicly
taken a position materially inconsistent with, its approval or recommendation
of the Offer, the Merger or the transactions contemplated by this Merger
Agreement, (ii) approved, endorsed or recommended an Acquisition Proposal, or
(iii) publicly disclosed any intention to do any of the foregoing;
(f) there shall have occurred (i) any general
suspension of, or limitation on prices (other than suspensions or limitations
triggered by price fluctuations on a trading day) for, trading in securities on
any national securities exchange in the United States, France, the United
Kingdom or Germany that lasts for more than one trading day, (ii) the
declaration of a banking moratorium or any limitation or suspension of payments
in respect of the extension of credit by banks or other lending institutions in
the United States, France, the United Kingdom, Germany or any other member
country of the European Monetary Union where such moratorium or limitation in
such other member country has a significant adverse effect on the functionality
of the banking markets in the United States, the United
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56
Kingdom, Germany or France, (iii) any commencement of war, armed hostilities or
other international or national calamity directly involving the United States,
France or any member countries of the European Union, having a significant
adverse effect on the functionality (which shall not be deemed to include market
average) of financial markets in the United States, France, the United Kingdom
or Germany, (iv) any catastrophic decline in (A) the Dow Jones Industrial
Average or the Standard & Poor's Index of 500 Industrial Companies and (B) the
Nasdaq Stock Market, in each case by an amount in excess of 25% measured from
the close of business on the date of the Merger Agreement to any date after
March 20, 2000; provided that such decline, as so measured, is sustained for a
period of 5 consecutive trading days or exists as of the date of acceptance for
payment of the Shares or (v) in the case of any of the foregoing (other than
clause (iv)) existing at time of the commencement of the Offer, a material
acceleration or worsening thereof; PROVIDED, that the foregoing conditions set
forth in this clause (f) shall only be a condition if the consequence of the
failure of such condition to be satisfied is to cause Parent's and the
Acquisition Sub's financing for the Offer to be withdrawn or otherwise
unavailable; or
(g) all consents and approvals necessary to the
consummation of the Offer, including without limitation consents from parties to
loans, leases and other agreements and consents from any Governmental Authority
shall not have been obtained other than consents and approvals the failure to
obtain which would not, individually or in the aggregate, have a Material
Adverse Effect on the Offer or on the Company or on Parent;
which, in the absolute discretion of Acquisition Sub in any such case, and
regardless of the circumstances (including any action or omission by Acquisition
Sub not inconsistent with the Merger Agreement) giving rise to any such
condition, makes it inadvisable to proceed with such acceptance for payment or
payment of Shares.
The foregoing conditions are for the sole benefit of
Acquisition Sub and its affiliates (except for the Minimum Condition, which is
also for the benefit of the Company) and may be asserted by Acquisition Sub
regardless of the circumstances giving rise to any such condition or may be
waived by Acquisition Sub in whole or in part at any time or from time to time
in its sole discretion (except for the Minimum Condition, which cannot be waived
without the Company's consent). The failure by Acquisition Sub at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time or from time to time.
