[CONFORMED COMPOSITE COPY]
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INVESTMENT AGREEMENT
between
U.S. OFFICE PRODUCTS COMPANY
and
CDR-PC ACQUISITION, L.L.C.
This is a conformed composite copy of the Investment
Agreement, dated as of January 12, 1998, between U.S. Office Products Company
and CDR-PC Acquisition, L.L.C., as amended by Amendment No. 1 thereto, dated as
of February 3, 1998.
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TABLE OF CONTENTS
Page
ARTICLE I Purchase and Sale of Shares, Special Warrants and Warrants.......................5
1.01 Purchase and Sale of Shares, Special Warrants and Warrants.......................5
1.02 Time and Place of the Closing....................................................5
1.03 Transactions at the Closing......................................................5
ARTICLE II Covenants........................................................................6
2.01 Covenants of the Company.........................................................6
(a) Financial Statements and Other Reports....................................6
(b) Inspection of Property....................................................8
ARTICLE III Representations and Warranties...................................................9
3.01 Representations and Warranties of the Company....................................9
(a) Corporate Organization....................................................9
(b) Corporate Authority......................................................10
(c) No Violations; Consents and Approvals....................................11
(d) Capital Stock............................................................13
(e) Subsidiaries.............................................................14
(f) SEC Filings..............................................................15
(g) Retained Business Financial Statements...................................16
(h) Undisclosed Liabilities..................................................19
(i) Absence of Certain Events and Changes....................................19
(j) Compliance with Applicable Laws..........................................20
(k) Title to Assets..........................................................20
(l) Litigation...............................................................21
(m) Contracts................................................................22
(n) Taxes....................................................................24
(o) Employee Benefit Plans and Related Matters; ERISA........................26
(p) Environmental Matters....................................................29
(q) Delaware Law.............................................................30
i
(r) Status of Shares.........................................................30
(s) Intellectual Property....................................................30
(t) Guarantees...............................................................32
(u) Brokers or Finders.......................................................32
(v) Acquisitions.............................................................32
(w) Disclosure...............................................................32
(x) Fairness Opinion.........................................................33
3.02 Representations and Warranties of Purchaser.....................................33
(a) Organization.............................................................33
(b) Authority................................................................33
(c) Conflicting Agreements and Other Matters.................................34
(d) Acquisition for Investment...............................................34
(e) Ownership of Securities..................................................35
(f) Brokers or Finders.......................................................35
(g) Future Acquisitions......................................................35
ARTICLE IV Corporate Governance............................................................35
4.01 Composition of the Board of Directors...........................................35
4.02 Supermajority Voting Provisions.................................................37
4.03 Committees......................................................................39
4.04 By-laws.........................................................................39
4.05 Termination of Article IV.......................................................39
ARTICLE V Equity Purchases from the Company...............................................40
5.01 Subscription Rights.............................................................40
5.02 Issuance and Delivery of New Securities and Voting Stock........................41
ARTICLE VI Limitations on Purchases of Additional Equity Securities........................41
6.01 Purchases of Equity Securities..................................................41
6.02 Additional Limitations..........................................................42
ARTICLE VII Transfer of Common Stock........................................................43
7.01 Transfer of Common Stock........................................................43
ii
ARTICLE VIII Covenants and Additional Agreements.............................................45
8.01 Covenants of the Company........................................................45
(a) Ordinary Course..........................................................45
(b) No Acquisitions..........................................................45
(c) No Dispositions..........................................................46
(d) Other Transactions.......................................................46
(e) Employee Benefits........................................................49
8.02 Transaction Proposals...........................................................50
8.03 Modification of Transaction Agreements; Abandonment of Distributions............53
8.04 Transaction Agreements and Schedules............................................53
8.05 Company Stockholder Approval; Proxy Statement...................................54
8.06 Retained Companies Financing....................................................56
8.07 Tender Offer....................................................................56
8.08 Information Statements..........................................................58
8.09 [Intentionally omitted.]........................................................59
8.10 Tax Standstill..................................................................59
8.11 Access and Information..........................................................60
8.12 Further Actions.................................................................60
8.13 Further Assurances..............................................................61
ARTICLE IX Conditions Precedent............................................................62
9.01 Conditions to Each Party's Obligations..........................................62
(a) HSR and Other Approvals..................................................62
(b) No Litigation, Injunctions, or Restraints................................62
(c) Stockholders Vote........................................................62
(d) Nasdaq Listing...........................................................62
(e) Consummation of Distributions............................................63
(f) Tax Allocation Agreement.................................................63
9.02 Conditions to the Obligations of the Company....................................65
(a) Representations and Warranties...........................................65
(b) Opinion of Purchaser's Counsel...........................................66
(c) Registration Rights Agreement............................................66
9.03 Conditions to the Obligations of Purchaser......................................66
(a) Representations and Warranties...........................................66
(b) Transaction Agreements...................................................66
iii
(c) Performance of Obligations of the Company................................67
(d) Opinion of the Company's Counsel.........................................67
(e) Registration Rights Agreement............................................67
(f) Financings...............................................................67
(g) Tender Offer.............................................................67
(h) Consulting Agreement; Transaction Fee....................................67
(i) Other Parties............................................................68
(j) Corporate Proceedings....................................................68
(k) Management Plan..........................................................68
(l) Board of Directors.......................................................69
(m) Material Adverse Effect..................................................69
(n) Debt Amounts.............................................................69
(o) Options..................................................................69
ARTICLE X Termination.....................................................................70
10.01 Termination.....................................................................70
10.02 Effect of Termination...........................................................72
ARTICLE XI Indemnification.................................................................73
11.01 Indemnification of Purchaser....................................................73
11.02 Indemnification Procedures......................................................74
11.03 Survival of Representations and Warranties......................................75
ARTICLE XII Interpretation; Definitions.....................................................76
12.01 Interpretation..................................................................76
12.02 Definitions.....................................................................76
ARTICLE XIII Miscellaneous...................................................................90
13.01 Severability....................................................................90
13.02 Specific Enforcement............................................................91
13.03 Entire Agreement................................................................91
13.04 Counterparts....................................................................91
13.05 Notices.........................................................................91
13.06 Amendments......................................................................93
13.07 Cooperation.....................................................................93
13.08 Successors and Assigns..........................................................93
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13.09 Expenses and Remedies...........................................................94
13.10 Transfer of Shares and Warrants.................................................95
13.11 Governing Law...................................................................96
13.12 Publicity.......................................................................96
13.13 No Third Party Beneficiaries....................................................97
13.14 Consent to Jurisdiction.........................................................97
EXHIBITS
Exhibit 1 Terms of Special Warrants
Exhibit 2 Terms of Warrants
Exhibit 3 Terms of Registration Rights Agreement
v
THIS INVESTMENT AGREEMENT (this "Agreement"), dated as of
January 12, 1998, is entered into between CDR-PC Acquisition, L.L.C., a Delaware
limited liability company ("Purchaser"), and U.S. Office Products Company, a
Delaware corporation (the "Company").
WHEREAS the Board of Directors of the Company has approved a
series of transactions pursuant to which:
(a) the Company will conduct a tender offer (the "Tender
Offer") to repurchase 37,037,037 shares of common stock, par value
$.001 per share, of the Company (the "Common Stock"), at $27 per share,
(b) the Company will enter into arrangements for new
high-yield and bank financing in connection with the Tender Offer and
the other transactions contemplated hereby (the "Proposed Financings"),
(c) the Company will distribute all of the issued and
outstanding shares of common stock of a corporation that will own,
following the Pre-Distribution Transactions (as defined herein), the
Subsidiaries of the Company comprising the Company's education division
("School"), to the holders of record of the Common Stock after
completion of the Tender Offer on a pro rata basis (the "School
Distribution"),
(d) the Company will distribute all of the issued and
outstanding shares of common stock of a corporation that will own,
following the Pre-Distribution Transactions (as defined herein), the
Subsidiaries of the Company comprising the Company's corporate travel
services division ("Travel"), to the holders of record of the Common
Stock after completion of the Tender Offer on a pro rata basis (the
"Travel Distribution"),
(e) the Company will distribute all of the issued and
outstanding shares of common stock of a corporation that will own,
following the Pre-Distribution Transactions (as defined herein), the
Subsidiaries of the Company comprising the Company's technology
solutions division ("Technology"), to the holders of record of the
Common Stock after completion of the Tender Offer on a pro rata basis
(the "Technology Distribution"), and
(f) the Company will distribute all of the issued and
outstanding shares of common stock of a corporation that will own,
following the Pre-Distribution Transactions (as defined herein), the
Subsidiaries of the Company comprising the Company's print management
division ("Print"), to the holders of record of the Common Stock after
completion of the Tender Offer on a pro rata basis (the "Print
Distribution", and, together with the School Distribution, the Travel
Distribution and the Technology Distribution, the "Distributions");
WHEREAS, in connection with the Distributions, the Company
expects:
(a) (i) to execute and deliver a distribution agreement to
effect the School Distribution (the "School Distribution Agreement"),
(ii) to cause School to execute and deliver the School Distribution
Agreement, and (iii) after the satisfaction or waiver of all of the
conditions to the Company's obligation to consummate the School
Distribution set forth in the School Distribution Agreement, and
pursuant to the terms of the School Distribution Agreement, to effect
the School Distribution,
(b) (i) to execute and deliver a distribution agreement to
effect the Travel Distribution (the "Travel Distribution Agreement"),
(ii) to cause Travel to execute and deliver the Travel Distribution
Agreement, and (iii) after the satisfaction or waiver
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of all of the conditions to the Company's obligation to consummate the
Travel Distribution set forth in the Travel Distribution Agreement, and
pursuant to the terms of the Travel Distribution Agreement, to effect
the Travel Distribution,
(c) (i) to execute and deliver a distribution agreement to
effect the Technology Distribution (the "Technology Distribution
Agreement"), (ii) to cause Technology to execute and deliver the
Technology Distribution Agreement, and (iii) after the satisfaction or
waiver of all of the conditions to the Company's obligation to
consummate the Technology Distribution set forth in the Technology
Distribution Agreement, and pursuant to the terms of the Technology
Distribution Agreement, to effect the Technology Distribution,
(d) (i) to execute and deliver a distribution agreement to
effect the Print Distribution (the "Print Distribution Agreement", and,
together with the School Distribution Agreement, the Travel
Distribution Agree ment and the Technology Distribution Agreement, the
"Distribution Agreements"), (ii) to cause Print to execute and deliver
the Print Distribution Agreement, and (iii) after the satisfaction or
waiver of all of the conditions to the Company's obligation to consum-
mate the Print Distribution set forth in the Print Distribution
Agreement, and pursuant to the terms of the Print Distribution
Agreement, to effect the Print Distribution, and
(e) to execute and deliver, and to cause each of School,
Travel, Technology and Print (together, the "Distributed Companies") to
execute and deliver, a tax allocation agreement (the "Tax Allocation
Agreement") and certain other Transaction Agreements;
WHEREAS, prior to the Distributions and pursuant
to the terms of the Distribution Agreements, the Company
3
and the Distributed Companies will consummate the Pre-Distribution Transactions
(as herein defined);
WHEREAS, following the Pre-Distribution Transactions and the
record date for the Distributions:
(a) Purchaser wishes to purchase from the Company, and the
Company wishes to sell to Purchaser, shares of Common Stock and
warrants having the terms and conditions set forth in Exhibit 1 (the
"Special Warrants") entitling the holder thereof to purchase shares of
Common Stock together representing 24.9% of the shares of Common Stock
as of the Closing Date (as herein defined) that would be outstanding
after giving effect to the issuance of such shares (and assuming the
conversion into Common Stock of all of the Company's issued and
outstanding 5 1/2% Convertible Subordinated Notes Due 2001 issued
pursuant to an Indenture, dated as of February 7, 1996, between the
Company and State Street Bank and Trust Company (the "2001 Notes") that
are outstanding on the Closing Date, and after giving effect to the
issuance of any Contingent Stock (as defined herein)), and warrants
entitling the holder thereof to purchase one share of Common Stock for
each share and Special Warrant so purchased on the terms and subject to
the conditions set forth in Exhibit 2 (the "Warrants"), and
(b) the Company and Purchaser wish to enter into a
registration rights agreement (the "Registration Rights Agreement"),
the principal terms of which are attached hereto as Exhibit 3;
WHEREAS Purchaser and the Company are entering into this
Agreement to provide for such purchase and sale and to establish various rights
and obligations in connection therewith;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein set forth, the parties agree as follows:
4
ARTICLE I
Purchase and Sale of Shares, Special Warrants and Warrants
SECTION 1.01 Purchase and Sale of Shares, Special Warrants and
Warrants. Upon the terms and subject to the conditions set forth herein, the
Company agrees to sell to Purchaser and Purchaser agrees to purchase from the
Company for an aggregate purchase price of $270 million (the "Purchase Price")
(a) shares of Common Stock representing 24.9% of the outstanding shares of
Common Stock as of the Closing Date after giving effect to the issuance of such
shares (the "Shares"), (b) Special Warrants representing the right to acquire a
number of shares of Common Stock equal to the difference between (i) 24.9% of
the sum of (A) the outstanding shares of Common Stock as of the Closing Date
after giving effect to the issuance of the Shares and the exercise of the
Special Warrants, and assuming the conversion into Common Stock of all the 2001
Notes outstanding on the Closing Date at the conversion price resulting from
adjustments made as a result of the Tender Offer and the Distributions and (B)
the number of any shares of Contingent Stock that are issued, and (ii) 24.9% of
the outstanding shares of Common Stock as of the Closing Date after giving
effect to the issuance of the Shares and (c) Warrants to purchase one share of
Common Stock for each Share so purchased and for each share into which the
Special Warrants become exercisable.
SECTION 1.02 Time and Place of the Closing. The closing (the
"Closing") shall take place at the offices of Debevoise & Xxxxxxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, at 10:00 A.M., New York time, on the third
Business Day following the first date on which the conditions to Closing set
forth in Article IX have first been satisfied or waived, or at such other place,
time and date as the parties may agree. The Company shall give Purchaser ten
Business Days prior written notice of the date the Closing
5
is scheduled to occur. The "Closing Date" shall be the date the Closing occurs.
SECTION 1.03 Transactions at the Closing. At the Closing,
subject to the terms and conditions of this Agreement, (a) the Company shall
issue and sell to Purchaser and Purchaser shall purchase the Shares, the
Special Warrants and the Warrants; (b) the Company shall deliver to Purchaser
a certificate representing the Shares and certificates representing the Special
Warrants and the Warrants, in each case registered in the name of Purchaser
against payment of the Purchase Price with respect thereto by wire transfer of
immediately available funds to an account or accounts previously designated by
the Company; and (c) the Company and Purchaser shall enter into the
Registration Rights Agreement.
ARTICLE II
Covenants
SECTION 2.01 Covenants of the Company. (a) Financial
Statements and Other Reports. The Company covenants that it will deliver to
Purchaser so long as Purchaser's Percentage Interest exceeds 10%:
(i) as soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, a consolidated statement of income and a
consolidated statement of cash flow of the Retained Companies for the
period from the beginning of the then current fiscal year to the end of
such quarterly period, and a consolidated balance sheet of the Retained
Companies as of the end of such quarterly period, setting forth in each
case in comparative form figures for the corresponding period or date
in the preceding fiscal year, all in reasonable detail and certified by
the principal financial officer of the Company as presenting fairly, in
accordance with GAAP
6
applied (except as specifically set forth therein) on a basis
consistent with such prior fiscal period, the information contained
therein, subject to changes resulting from year-end closing and audit
adjustments; provided, however, that delivery pursuant to clause (iii)
below of a copy of the Quarterly Report on Form 10-Q of the Company for
such quarterly period filed with the SEC shall be deemed to satisfy the
requirements of this clause (i);
(ii) as soon as practicable and in any event within 90 days after
the end of each fiscal year, a consolidated statement of income, a
consolidated statement of cash flow and a consolidated statement of
stockholders equity of the Retained Companies for such year, and a
consolidated balance sheet of the Retained Companies as of the end of
such year, setting forth in each case in comparative form the
corresponding figures from the preceding fiscal year, all in reason-
able detail and examined and reported on by independent public
accountants of recognized national standing selected by the Company,
which report shall state that such consolidated financial statements
present fairly the financial position of the Retained Companies as at
the dates indicated and the results of their operations and changes in
their financial position for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years (except as
otherwise specified in such report) and that the audit by such
accountants in connection with such consolidated financial statements
has been made in accordance with generally accepted auditing standards;
provided, however, that delivery pursuant to clause (iii) below of a
copy of the Annual Report on Form 10-K of the Company for such fiscal
year filed with the SEC shall be deemed to satisfy the requirements of
this clause (ii);
(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall
send to its stockholders
7
and copies of all such registration statements (without exhibits), and
all such regular and periodic reports as it shall file with the SEC;
(iv) promptly upon receipt thereof, copies of all reports submitted
to the Retained Companies by independent public accountants in
connection with each annual, interim or special audit of the books of
the Retained Companies made by such accountants, including the comment
letter submitted by such accountants to management in connection with
their annual audit; and
(v) with reasonable promptness, such other financial data of
the Retained Companies as Purchaser may reasonably request.
(b) Inspection of Property. The Company covenants that so
long as Purchaser's Percentage Interest exceeds 10%, it will permit
representatives of Purchaser to visit and inspect, at Purchaser's expense, any
of the properties of the Retained Companies, to examine the corporate books and
make copies or extracts therefrom and to discuss the affairs, finances and
accounts of the Retained Companies with the officers and employees of the
Retained Companies and independent public accountants (and by this provision the
Company authorizes such accountants to discuss with such representatives the
affairs, finances and accounts of the Retained Companies), all at such
reasonable times and as often as Purchaser may reasonably request. Purchaser
agrees not to disclose to any Person any information or data obtained by it
pursuant to this Section 2.01(b) or Section 2.01(a)(iv) or (a)(v) until such
information or data otherwise becomes publicly available or except pursuant to a
valid subpoena, judicial process or its equivalent or in connection with a claim
against the Company; provided that Purchaser shall have used its reasonable best
efforts to give the Company advance notice of such subpoena or judicial process
so that the Company may seek an appropriate protective order. Purchaser
acknowledges that information obtained pursuant to the rights granted hereby may
constitute material non-public
8
information and agrees that it will comply with all applicable laws relating to
the purchase or sale of securities of the Company while in possession of such
information.
ARTICLE III
Representations and Warranties
SECTION 3.01 Representations and Warranties of the Company.
The Company hereby represents and warrants to Purchaser as follows:
(a) Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Each Retained Subsidiary having assets or annual
revenues of $500,000 or more or which is otherwise material to the
Retained Business (each a "Material Subsidiary") is duly organized and
validly existing and, if applicable, except as set forth in Schedule
3.01(a), is in good standing, under the laws of the jurisdiction of its
incorporation or organization. Each of the Retained Companies is duly
qualified or licensed and, if applicable, is in good standing as a
foreign corporation, in each jurisdiction in which the properties
owned, leased or operated, or the business conducted, by it require
such qualification or licensing, except for any such failure so to
qualify or be in good standing which, individually or in the aggregate,
would not have a Material Adverse Effect on the Retained Companies,
taken as a whole. Each of the Material Subsidiaries has the requisite
power and authority to carry on its businesses as they are now being or
will be (immediately after the Distributions) conducted. The Company
has heretofore made available to Purchaser complete and correct copies
of the Certificate of Incorporation of the Company (the "Company
Charter") and the By-laws of the Company (the "Company By-laws") and
the certificate of incorporation and by-laws, or the comparable
9
organizational documents, of each of the Material Subsidiaries, each as
amended to date and currently in full force and effect.
(b) Corporate Authority. Each of the Company, School, Travel,
Technology and Print has (or will have at the time of such act) the
requisite corporate power and authority to execute, deliver and perform
each Transaction Agreement to which it is or will be a party and to
consummate the transactions contemplated thereby other than, with
respect to the Distributions, formal declaration of the Distributions
by the Company's Board of Directors (provided that, with respect to the
issuance and sale by the Company of the Shares, the Special Warrants
and the Warrants, the Company shall obtain pursuant to Nasdaq Stock
Market rules the approval of such issuance and sale by the affirmative
vote of the holders of a majority of the shares of Common Stock
represented at the Company Meeting and entitled to vote thereon (the
"Company Stockholder Approval")). The execution, delivery and
performance of each Transaction Agreement by the Company and the
consummation by the Company of the Pre-Distribution Transactions, the
Distributions, the Proposed Financings, the Tender Offer and the
issuance and sale by the Company of the Shares, Special Warrants and
Warrants and of the other transactions contemplated by the Transaction
Agreements have been duly authorized (or will have been duly authorized
at the time of such act) by the Company's Board of Directors, and no
other corporate proceedings on the part of the Company are necessary to
authorize any Transaction Agreement or for the Company to consummate
the Transactions so contemplated (other than, with respect to the
issuance and sale by the Company of the Shares, the Special Warrants
and the Warrants, the Company Stockholder Approval and, with respect to
the Distributions, formal declaration of the Distributions by the
Company's Board of Directors). The execution, delivery and performance
by each of School, Travel, Technology and Print of each Transaction
Agreement to
10
which it will be party and the consummation by it of the Transactions
contemplated thereby will be duly authorized at the time of such act by
the Board of Directors and the stockholders of each, if required, and
no other corporate proceedings on the part of School, Travel,
Technology or Print will be necessary to authorize the execution,
delivery and performance of any Transaction Agreement to which they
will be a party or for them to consummate the Transactions so
contemplated. Each Transaction Agreement to which the Company, School,
Travel, Technology or Print is or will be a party is, or when executed
and delivered will be, a valid and binding agreement of such party,
enforceable against such party in accordance with the terms thereof,
assuming (in the case of this Agreement and the Registration Rights
Agreement) that each Transaction Agreement to which Purchaser is a
party is a valid and binding agreement of Purchaser.
(c) No Violations; Consents and Approvals. (i) None of the
execution, delivery or performance by the Company, School, Travel,
Technology or Print of each Transaction Agreement to which any of them
is or will be a party or the consummation by the Company or School,
Travel, Technology or Print of the transactions contemplated thereby
(A) will result in a violation or breach of the Company Charter or the
Company By-laws, the articles of incorporation or by-laws of School,
Travel, Technology or Print or the organizational documents of any of
the Retained Subsidiaries or (B) will result in a violation or breach
of (or give rise to any right of termination, revocation, cancellation
or acceleration under or increased payments under), or constitute a
default (with or without due notice or lapse of time or both) under, or
result in the creation of any lien, charge, encumbrance or security
interest of any kind (a "Lien") upon any of the properties or assets of
the Retained Companies under, (1) subject to the govern mental filings
and other matters referred to in clause (ii) below, any of the terms,
conditions or
11
provisions of any note, bond, mortgage, indenture, contract, agreement,
obligation, instrument, offer, commitment, understanding or other
arrangement (each a "Contract") or of any license, waiver, exemption,
order, franchise, permit or concession (each a "Permit") to which any
of the Retained Companies is a party or by which any of their
properties or assets may be bound (except for the Company's credit
facility with Bankers Trust Company in effect on the date hereof), or
(2) subject to the governmental filings and other matters referred to
in clause (ii) below, any judgment, order, decree, statute, law,
regulation or rule applicable to the Retained Companies, except, in the
case of clause (B), for violations, breaches, defaults, rights of
cancellation, termination, revocation or acceleration or Liens that
would not, individually or in the aggregate, have a Material Adverse
Effect on the Retained Companies, taken as a whole.
(ii) Except for consents, approvals, orders, authorizations,
registrations, declarations or filings as may be required under, and
other applicable requirements of, the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), filings under
state securities or "blue sky" laws and filings or consents referred to
in Schedule 3.01(c)(ii), no consent, approval, order or authorization
of, or registration, declaration or filing with, any government or any
court, administrative agency or commission or other governmental
authority or agency, federal, state or local or foreign (a
"Governmental Entity"), is required with respect to the Company,
School, Travel, Technology or Print or any of their respective
Subsidiaries, in connection with the execution, delivery or performance
by each of the Company, School, Travel, Technology and Print of each
Transaction Agreement to which any of them is or will be a party or the
consummation by the Company and
12
School, Travel, Technology and Print of the Transactions contemplated
thereby (except where the failure to obtain such consents, approvals,
orders or authorizations, or to make such registrations, declarations,
filings or agreements would not, individually or in the aggregate, have
a Material Adverse Effect on the Retained Companies, taken as a whole).
(d) Capital Stock. As of the date hereof, the authorized
capital stock of the Company consists of (i) 500,000,000 shares of
Common Stock, of which an aggregate of 132,958,606 shares of Common
Stock were issued and outstanding as of the close of business on
January 9, 1998, and (ii) 500,000 shares of preferred stock, $.001 par
value per share, of which none were issued and outstanding as of the
close of business on January 9, 1998. As of the close of business on
January 9, 1998, there were outstanding under the Company's 1994
Long-Term Incentive Plan, the 1994 Amended and Restated Long-Term
Incentive Plan, the 1996 Non-Employee Directors' Stock Plan, the 1997A
Stock Option Plan for Employees of Mail Boxes Etc., the 1997B Stock
Option Plan for Employees of Mail Boxes Etc. and the 1997 Stock Option
Plan for former Non-Employee Directors of Mail Boxes Etc.
(collectively, the "Company Stock Plans") options to acquire an
aggregate of 21,236,778 shares of Common Stock (subject to adjustment
on the terms set forth therein) of which 706,778 are subject to
allocation pursuant to option pools, as set forth on Schedule
3.01(d)(ii). As of the close of business on January 9, 1998,
there were outstanding under the Company Stock Plans no shares of
restricted stock and 3,220 deferred shares had been reserved for
issuance pursuant to the 1996 Non-Employee Directors Stock Plan. As of
the close of business on January 9, 1998, the Company had no shares of
Common Stock reserved for issuance of restricted stock. All of the
outstanding shares of Common Stock have been duly authorized and
validly issued, and are fully paid and nonassessable. As of the date
hereof
13
the Company has outstanding $230,000,000 in 5 1/2% Convertible
Subordinated Notes Due 2003 issued pursuant to an Indenture, dated as
of May 22, 1996, between the Company and The Chase Manhattan Bank, N.A.
(the "2003 Notes") and $143,750,000 in 2001 Notes, convertible into
shares of Common Stock at any time prior to maturity at a conversion
price of $31.60 and $19.00 per share, respectively. Except as set forth
on Schedule 3.01(d), there are no preemptive or similar rights on the
part of any holders of any class of securities of the Company or of any
of the Retained Subsidiaries. Except for the Common Stock, the 2003
Notes and the 2001 Notes, as set forth above, the Company has
outstanding no bonds, debentures, notes or other obligations or
securities the holders of which have the right to vote (or are
convertible or exchangeable into or exercisable for securities having
the right to vote) with the stockholders of the Company on any matter.
Except as set forth above or on Schedule 3.01(d), as of the date of
this Agreement, there are no securities convertible into or
exchangeable for, or options, warrants, calls, subscriptions, rights,
contracts, commitments, arrangements or understandings of any kind to
which the Company or any of its Subsidiaries is a party or by which any
of them is bound obligating the Company or any of its Subsidiaries
contingently or otherwise to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other
voting securities of the Company or of any of the Retained
Subsidiaries. Except (y) with respect to the withholding of exercise
price or withholding taxes under any Company Stock Plan or (z) pursuant
to the Tender Offer, there are no outstanding Contracts of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or of any of the Retained
Subsidiaries.
(e) Subsidiaries. (i) Schedule 3.01(e)
contains a complete and correct description of the
14
shares of stock or other equity interests that are authorized, or
issued and outstanding, of each of the Retained Companies (other than
the Company). Except for Subsidiaries that will not be Subsidiaries of
the Company after the Distributions, the Company has no equity
interests with a value of $500,000 or more in any Person other than the
Retained Companies, and there are no commitments on the part of the
Company or any Material Subsidiary to contribute additional capital in
respect of any equity interest in any Person. Each of the outstanding
shares of capital stock of each of the Retained Subsidiaries has been
duly authorized and validly issued, and is fully paid and
nonassessable. Except as set forth on Schedule 3.01(e)(i), all of the
outstanding shares of capital stock of each Retained Subsidiary are
owned, either directly or indirectly, by the Company free and clear of
all Liens.
(ii) Schedule 3.01(e)(ii) contains a complete and correct list of
all Material Subsidiaries of the Company.
(iii) Schedule 3.01(e)(iii) contains a complete and correct list
setting forth the respective Material Subsidiaries of each of the
Company, School, Travel, Technology and Print immediately following the
Distributions.
(f) SEC Filings. The Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed
by it with the SEC under the Securities Act and the Exchange Act since
June 30, 1995 (the "Company SEC Documents"). As of its filing date,
each Company SEC Document filed, as amended or supplemented, if
applicable, (i) complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as applicable,
and the rules and regulations thereunder and (ii) did not, at the time
it was filed, contain any untrue statement of a material fact or
15
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(g) Retained Business Financial Statements. (i) Attached
hereto as Annex A(i) are a consolidated balance sheet as of April 26,
1997 (the "Balance Sheet") and a consolidated balance sheet as of April
30, 1996 and consolidated statements of income, consolidated statements
of cash flow and consolidated statements of stockholders' equity for
the years ended April 30, 1995 and 1996 and April 26, 1997, in each
case for the Company (such financial statements, including the notes
thereto, the "Company Business Financial Statements"), together with
the report of the Company's independent accountants thereon. Each of
the Balance Sheet and the consolidated balance sheet as of April 30,
1996 (including any related notes and schedules) presents fairly in all
material respects the consolidated financial position of the Company as
of their respective dates, and each of the consolidated statements of
income, consolidated statements of cash flow and consolidated
statements of stockholders' equity included in the Company Business
Financial Statements (including any related notes and schedules) fairly
presents in all material respects the income, cash flows and
stockholders equity, as the case may be, of the Company for the periods
set forth therein, in each case in accordance with GAAP applied on a
consistent basis throughout the periods presented therein except as
indicated in the notes thereto, prior to the announcement of the
Transactions. Upon announcement of the Transactions, the Company
Business Financial Statements will require adjustment to reflect (i)
the change in the accounting treatment of certain acquisitions from the
pooling-of-interests method to the purchase method; (ii) the treatment
of certain of the Distributions as discontinued operations, and (iii)
certain footnote disclosure regarding the Transactions.
16
(ii) Attached hereto as Annex A(ii) are the unaudited consolidated
balance sheet for the Company as of October 25, 1997 and the unaudited
consolidated statement of income of the Company for the six months then
ended (such financial statements, including the notes thereto, the
"Unaudited Company Business Financial Statements"). The Unaudited
Company Business Financial Statements have been prepared in all
material respects in accordance with GAAP consistently applied and on
that basis fairly present the consolidated financial condition and
results of operations of the Company as of the date thereof and for the
period indicated, except that the Company Business Financial Statements
omit footnote disclosures required by GAAP and are subject to normal,
recurring year-end closing and audit adjustments, prior to the
announcement of the Transactions. Upon announcement of the
Transactions, the Unaudited Company Business Financial Statements will
require adjustment to reflect (i) the change in the accounting
treatment of certain acquisitions from the pooling-of-interests method
to the purchase method; (ii) the treatment of certain of the
Distributions as discontinued operations, and (iii) certain footnote
disclosure regarding the Transactions.
(iii) Attached hereto as Annex A(iii) are the unaudited pro forma
combined balance sheet for the Retained Business as of October 25, 1997
(the "Pro Forma Balance Sheet"), the unaudited pro forma combined
statement of income for the Retained Business for the fiscal year ended
April 26, 1997 and the six month period ended October 25, 1997 (the
"Pro Forma Income Statements"), and the notes to such unaudited pro
forma financial statements (the "Notes to Pro Forma Financial
Statements", and, together with the Pro Forma Balance Sheet and the Pro
Forma Income Statements, the "Pro Forma Retained Business Financial
Statements"). The Pro Forma Retained Business Financial Statements have
been prepared in accordance with Article 11 of Regulation S-X; reflect
the
17
adjustments necessary to change accounting treatment for certain past
acquisitions from the pooling of interests method to the purchase
method; and give effect to the Proposed Financings, the Tender Offer,
the Distributions and the purchase of the Shares, Special Shares and
Warrants by Purchaser. The Pro Forma Income Statements have been
prepared as if all such Transactions had occurred at the beginning of
fiscal 1997 and the Pro Forma Balance Sheet has been prepared as if all
such transactions had occurred as of October 25, 1997.
(iv) Attached hereto as Annex A(iv) are a consolidated balance
sheet for the Retained Business as of April 26, 1997 (the "Audited
Balance Sheet") and the consolidated statements of income of the
Retained Business for the fiscal year then ended (such financial
statements, including the notes thereto, the "Audited Retained Business
Financial Statements"), together with the report of the Company's
independent accountants thereon. The Audited Retained Business
Financial Statements (including any related notes and schedules) will
fairly present in all material respects the consolidated financial
position of the Retained Business as of the date thereof, and fairly
present in all material respects the income of the Retained Business
for the period set forth therein, in accordance with GAAP applied on a
consistent basis throughout the periods presented therein except as
indicated in the notes thereto.
(v) The balance sheets included in the Pro Forma Retained
Business Financial Statements do not include any material assets or
liabilities not intended to constitute a part of the Retained Business
after giving effect to the Transactions. The statements of income,
statements of stockholders equity and statements of cash flows included
in the Pro Forma Retained Business Financial Statements do not reflect
the operations of any entity or business not intended to constitute a
part of the Retained Business after
18
giving effect to all such Transactions. The statements of income
included in the Pro Forma Retained Business Financial Statements
reflect all of the material costs and expenses incurred in connection
with the Retained Business, including those incurred in generating the
revenues reflected in the Pro Forma Retained Business Financial
Statements, in each case, for the periods covered thereby, that would
be required to be so reflected under GAAP in consolidated financial
statements of the Retained Business prepared on a pro forma basis after
giving effect to all such transactions.
(h) Undisclosed Liabilities. Except (i) for the items listed
in Schedule 3.01(h) hereto, (ii) as and to the extent disclosed or
reserved against on the Balance Sheet, the Pro Forma Balance Sheet and
the Audited Balance Sheet or in the footnotes thereto and (iii) as
incurred after the date of the Pro Forma Balance Sheet in the ordinary
course of the Retained Business consistent with prior practice and not
prohibited by this Agreement, the Retained Companies do not have any
liabilities or obligations of any nature, whether known or unknown,
absolute, accrued, contingent or otherwise and whether due or to become
due, that, individually or in the aggregate, are or would be material
to the Retained Companies, taken as a whole.
(i) Absence of Certain Events and Changes. Except as disclosed
in the Company SEC Documents filed with the SEC and publicly available
prior to the date hereof and any amendments filed with respect thereto
prior to the date hereof (the "Filed Company SEC Documents") or as
otherwise contemplated or permitted by this Agreement or the other
Transaction Agreements, and except for any items referred to in
Schedule 3.01(i), since October 25, 1997, the Company and its
Subsidiaries have conducted the Retained Business in the ordinary
course consistent with past practice and there has not been any event,
change or
19
development which, individually or in the aggregate, would have a
Material Adverse Effect on the Retained Companies, taken as a whole.
(j) Compliance with Applicable Laws. Except as disclosed in
the Filed Company SEC Documents, each of the Retained Companies is in
compliance with all statutes, laws, regulations, rules, judgments,
orders and decrees of all Governmental Entities applicable to it that
relate to the Retained Business, and neither the Company nor any of the
Retained Companies has received any notice alleging noncompliance
except, with reference to all the foregoing, where the failure to be in
compliance would not, individually or in the aggregate, have a Material
Adverse Effect on the Retained Companies, taken as a whole. This
Section 3.01(j) does not relate to employee benefits matters (for which
Section 3.01(o) is applicable), environmental matters (for which
Section 3.01(p) is applicable) or tax matters (for which Section
3.01(n) is applicable). Each of the Retained Companies has all Permits
that are required in order to permit it to carry on its business as it
is presently conducted, except where the failure to have such Permits
or rights would not, individually or in the aggregate, have a Material
Adverse Effect on the Retained Companies, taken as a whole. All such
Permits are in full force and effect and the Retained Companies are in
compliance with the terms of such Permits, except where the failure to
be in full force and effect or in compliance would not, individually or
in the aggregate, have a Material Adverse Effect on the Retained
Companies, taken as a whole.
(k) Title to Assets. (i) Except as set forth in Schedule
3.01(k)(i), each of the Retained Companies owns and has good and valid
title to, or a valid leasehold interest in, or otherwise has sufficient
and legally enforceable rights to use, all of the properties and
assets (real, personal or mixed, tangible or intangible), used by the
Retained Business or held for
20
use by the Retained Business in connection with the conduct of, or
otherwise material to, the Retained Business (the "Assets"), including
Assets reflected on the Balance Sheet or acquired since the date
thereof, except for Assets disposed of in the ordinary course of
business consistent with past practice and in accordance with this
Agreement and except for such defects in title which, individually or
in the aggregate, would not have a Material Adverse Effect on the
Retained Companies, taken as a whole, in each case free and clear of
any Liens except for Permitted Liens. This Section 3.01(k) does not
relate to intellectual property (for which Section 3.01(s) is
applicable). A list of all owned real property and leased real property
having an annual base rental of more than $20,000 or having square
footage in excess of 5,000 square feet relating to the Retained
Business is set forth on Schedule 3.01(k) and such owned and leased
real property constitutes all the fee and leasehold interests meeting
such description held by the Retained Companies, except for any such
fee or leasehold interests acquired or disposed of in the ordinary
course of business consistent with past practice after the date hereof
and in accordance with this Agreement, and constitutes all the fee and
leasehold interests meeting such description used by the Retained
Business or held for use by the Retained Business in connection with
the conduct of the Retained Business.
(ii) Except as referred to in Schedule 3.01(k)(ii), each Retained
Company has (A) good and insurable title to its owned real properties
and (B) valid and subsisting leasehold interests in its leased real
properties, in each case, free and clear of any Liens, except for (1)
Permitted Liens and (2) easements, covenants, rights-of-way, other
matters of record and other matters subject to which the leases of the
Retained Companies' real properties are granted.
21
(l) Litigation. Except as disclosed in the Filed Company SEC
Documents or referred to on Schedule 3.01(l), as of the date hereof
there are no civil, criminal or administrative actions, suits or
proceedings pending or, to the knowledge of the Company, threatened,
against any of the Retained Companies that, individually or in the
aggregate, are likely to have a Material Adverse Effect on the Retained
Companies, taken as a whole. Except as disclosed in the Company SEC
Documents, there are no outstanding judgments, orders, decrees, or
injunctions of any Governmental Entity against any of the Retained
Companies that, insofar as can reasonably be foreseen, individually or
in the aggregate, in the future would have a Material Adverse Effect on
the Retained Com panies, taken as a whole.
(m) Contracts. (i) Schedule 3.01(m) contains a complete and
correct list, as of the date hereof, of all Contracts that are of the
types listed in clauses (A) through (G) below to which any of the
Retained Companies is a party (the "Material Contracts"):
(A) employment, consulting, severance, and other
material Contracts relating to or for the benefit of current,
future or former employees, officers or directors (excluding
sales persons) of the Retained Business requiring annual base
payments going forward in excess of $250,000;
(B) Contracts relating to the borrowing of money or
obtaining of or extension of credit (other than in the
ordinary course of business), including letters of credit,
guarantees and material security agreements;
(C) joint venture, partnership and similar Contracts
(excluding joint purchasing arrangements with no minimum
purchase requirements), involving a sharing of profits or
22
expenses, that are material or involve any obligation on the
part of the Company to commit capital (excluding commitments
not exceeding $100,000 in the aggregate);
(D) Contracts prohibiting or materially restricting
the ability of any Retained Company to conduct its business,
to engage in any business or operate in any geographical area
or to compete with any Person;
(E) Contracts that are material to the business,
operations, results of operations, condition (financial or
otherwise), assets or properties of the Retained Companies
taken as a whole;
(F) any employment agreement (and any other agreement
involving annual payments in excess of $150,000) with change
of control or "event risk" provisions relating to the Company;
and
(G) any employment agreement or other agreement
requiring the Company to compensate any employee for any tax
imposed as a result of any excess parachute payment under
Section 280G of the Code.
(ii) All Material Contracts are legal, valid, binding, in full
force and effect and enforceable against each party thereto, except to
the extent that any failure to be enforceable, individually and in the
aggregate, would not reasonably be expected to have or result in a
Material Adverse Effect on the Retained Companies, taken as a whole,
provided that no representation is made as to the enforceability of any
non-competition provision in any employment agreements. Except as set
forth in Schedule 3.01(n), there does not exist under any Material
Contract any violation, breach or event of default, or event or
condition that, after notice or lapse of time or both,
23
would constitute a violation, breach or event of default thereunder, on
the part of any of the Retained Companies or, to the knowledge of the
Company, any other Person, other than such violations, breaches or
events of default as would not, individually or in the aggregate, have
a Material Adverse Effect on the Retained Companies, taken as a whole.
Except as set forth in Schedule 3.01(m), the enforceability of all
Material Contracts will not be adversely affected in any manner by the
execution, delivery or performance of this Agreement or the
consummation of the Transactions, and no Material Contract contains any
change in control or other terms or conditions that will become
applicable or inapplicable as a result of the consummation of the
Transactions.
(n) Taxes. (i) Except as set forth on Schedule 3.01(n), (A)
all Tax Returns required to be filed by or on behalf of each of the
Company and the Retained Subsidiaries have been filed except to the
extent that a failure to file, individually or in the aggregate, would
not have a Material Adverse Effect on the Retained Companies, taken as
a whole; (B) all such Tax Returns filed are complete and accurate in
all respects, other than any incompleteness or any inaccuracy that
would not, individually or in the aggregate, have a Material Adverse
Effect on the Retained Companies taken as a whole, and all Taxes shown
to be due on such Tax Returns have been paid; (C) no written claim
(other than a claim that has been finally settled) has been made by a
taxing authority that any of the Company or the Retained Subsidiaries
is subject to an obligation to file Tax Returns or to pay or collect
Taxes imposed by any jurisdiction in which such Retained Company does
not file Tax Returns or pay or collect Taxes, other than any such claim
that would not have a Material Adverse Effect on such Retained Company
or for which adequate reserves have been provided on the balance sheet
contained in the Unaudited Company Business Financial Statements and
the Pro Forma Balance Sheet; (D) there is no
24
deficiency with respect to any Taxes which would, individually or in
the aggregate, have a Material Adverse Effect on the Retained
Companies, taken as a whole, other than any such deficiency for which
adequate reserves have been provided on the balance sheet contained in
the Unaudited Company Business Financial Statements and the Pro Forma
Balance Sheet; and (E) all material assessments for Taxes due with
respect to completed and settled examinations or concluded litigation
have been paid which, individually or in the aggregate (with respect to
any Retained Company), exceed $100,000. As used in this Agreement,
"Taxes" shall include all federal, state, local and foreign income,
franchise, property, sales, excise and other taxes, tariffs or
governmental charges of any nature whatsoever, including interest and
penalties, and additions thereto; and "Tax Returns" shall mean all
federal, state, local and foreign tax returns, declarations,
statements, reports, schedules, forms and information returns relating
to Taxes.
(ii) Except as set forth in Schedule 3.01(n), each of the Company
and the Retained Subsidiaries has duly and timely withheld all Taxes
required to be withheld in connection with its business and assets, and
such withheld Taxes have been either duly and timely paid to the proper
governmental authorities or properly set aside in accounts for such
purpose, except to the extent that any failure to do so would not have
a Material Adverse Effect on the Retained Companies, taken as a whole.
(iii) Except as set forth in Schedule 3.01(n), (A) none of the
Company and the Retained Subsidiaries is a party to or bound by or has
any obligation under any Tax allocation, sharing, indemnification or
similar agreement or arrangement (other than any agreement for the
acquisition of one or more of the Retained Subsidiaries) with any
Person other than any of the Retained Companies, which might result in
a
25
Material Adverse Effect to the Retained Company which entered into such
agreement or arrangement; and (B) none of the Company and the Retained
Subsidiaries is or has been at any time a member of any group of
companies filing a consolidated, combined or unitary income tax return
other than any such group (1) the common parent of which is the Company
or any Retained Subsidiary or (2) the common parent of which has not
held any asset other than shares of one or more of the Retained
Subsidiaries.
(iv) Except as set forth in Section 3.01(n) of the Disclosure
Schedule, (A) all taxable periods of each of the Company and the
Retained Subsidiaries ending before December 31, 1993 are closed or no
longer subject to audit; (B) none of the Company and the Retained
Subsidiaries is currently under any audit by any taxing authority as to
which such taxing authority has asserted in writing any claim which, if
adversely determined, could have a Material Adverse Effect on such
Retained Company; and (C) no waiver of the statute of limitations is in
effect with respect to any taxable year of the Company or any of the
Retained Subsidiaries.
(o) Employee Benefit Plans and Related Matters; ERISA. (i)
Employee Benefit Plans. Each Employee Benefit Plan that provides for
equity-based compensation or that has associated costs that are
expected to be material to the Company or the Retained Companies in the
aggregate and that is expected to provide for contributions to be made
by any of the Retained Companies or their Employees after the date
hereof or to permit the accrual of additional benefits by any Employee
of the Retained Companies after the date hereof is either listed on
Schedule 3.01(o) or has been filed with the SEC as a material contract
(collectively, the "Retained Plans"). Except as set forth on Schedule
3.01(o), neither the Company nor any of its Subsidiaries has
communicated to any Employee any intention or commitment to modify any
Retained
26
Plan or to establish or implement any other employee or retiree benefit
or compensation plan or arrangement which would, if it existed on the
date hereof, be a Retained Plan.
(ii) Qualification. Except to the extent that failure to meet the
requirements of section 401(a) of the Code would not result in any
material liability as to which adequate reserves have not been
established, each Employee Benefit Plan intended to be qualified under
section 401(a) of the Code, and the trust (if any) forming a part
thereof, (A) has received a favorable determination letter from the IRS
as to its qualification under the Code and to the effect that each such
trust is exempt from taxation under section 501(a) of the Code, and
nothing has occurred since the date of such determination letter that
could adversely affect such qualification or tax-exempt status or (B) a
timely application for such a favorable determination letter was filed
and the Company has no reason to believe that such a favorable
determination letter will not be granted.
(iii) Compliance; Liability. (A) No liability has been or is
reasonably expected to be incurred under or pursuant to Title I or IV
of ERISA or the penalty, excise Tax or joint and several liability
provisions of the Code relating to employee benefit plans that is or
would be material to the Company or, following the Closing, to the
Retained Companies in the aggregate.
(B) Each of the Employee Benefit Plans has been operated and
administered in all respects in compliance with its terms, all
applicable laws and all applicable collective bargaining agreements,
except for any failure so to comply that, individually and in the
aggregate, could not reasonably be expected to result in a material
liability or obligation on the part of the Retained Companies in the
aggregate. There are no pending or threatened claims by or on
27
behalf of any of the Employee Benefit Plans, by any Employee or
otherwise involving any such Employee Benefit Plan or the assets of any
Employee Benefit Plan (other than routine claims for benefits, all of
which have been fully reserved for on the regularly prepared balance
sheets of the Company) which would reasonably be expected to result in
any material liability to the Retained Companies in the aggregate.
(C) Except to the extent that it would not give rise to a
material liability or obligation on the part of the Company or the
Retained Companies, no Employee is or will become entitled to
post-employment benefits of any kind by reason of employment with the
Company or its Subsidiaries, including, without limitation, death or
medical benefits (whether or not insured), other than (x) coverage
mandated by section 4980B of the Code, (y) retirement benefits payable
under any Plan qualified under section 401(a) of the Code or (z)
accrued deferred compensation. The consummation of the Transactions
will not result in an increase in the amount of compensation or
benefits or the acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of any Employee by
any of the Retained Companies.
(iv) Employees, Labor Matters, etc. Except as set forth on Schedule
3.01(o), neither the Company nor any of its Subsidiaries is a party to
or bound by any collective bargaining agreement, and there are no labor
unions or other organizations representing, purporting to represent or
attempting to represent any employees employed by the Company or any of
its Subsidiaries. Since April 26, 1997, there has not occurred or been
threatened any strike, slowdown, picketing, work stoppage, concerted
refusal to work overtime or other similar labor activity with respect
to any employees of the Company or any of its Subsidiaries. Except as
set forth on Schedule 3.01(o), there are no labor disputes currently
subject to any grievance procedure, arbitration or litigation
28
and there is no petition pending or threatened with respect to any
employee of any the Company or its Subsidiaries. The Company and its
Subsidiaries has complied with all applicable Laws pertaining to the
employment or termination of employment of their respective employees,
including, without limitation, all such laws relating to labor
relations, equal employment opportunities, fair employment practices,
prohibited discrimination or distinction and other similar employment
activities, except for any failure so to comply that, individually and
in the aggregate, could not result in any material liability to the
Retained Companies in the aggregate.
(p) Environmental Matters. Except as disclosed in the Filed
Company SEC Documents or as set forth on Schedule 3.01(p) and except
for such matters that, individually or in the aggregate, would not have
a Material Adverse Effect on the Retained Companies, taken as a whole,
(i) the Retained Companies are in compliance with all applicable
Environmental Laws (as defined below), (ii) the Retained Companies have
all Permits required under Environmental Laws for the operation of the
Retained Business as presently conducted ("Environmental Permits"),
(iii) none of the Retained Companies has received notice from any
Governmental Entity asserting that any of the Retained Companies may be
in violation of, or liable under, any Environmental Law, and (iv) there
are no actions, proceedings or claims pending (or, to the knowledge of
the Retained Companies, threatened) seeking to impose any liability on
the Retained Companies in respect of any Environmental Laws,
Environmental Permits or Hazardous Substances.
For purposes of this Agreement, "Environmental Law" means any
federal, state, local or foreign law, statute, regulation or decree
relating to (x) the protection of the environment or (y) the use,
storage, treatment, generation, transportation, processing, handling,
release or disposal of Hazardous Substances,
29
in each case as in effect on the date hereof. "Hazardous Substance"
means any waste, substance, material, pollutant or contaminant listed,
defined, designated or classified as hazardous, toxic or radioactive,
or otherwise regulated, under any Environmental Law.
(q) Delaware Law. The Company has taken all action necessary
to ensure that the provisions of Section 203 of the Delaware General
Corporation Law (the "DGCL") will not be applicable to Purchaser or its
Affiliates as a result of the transactions
contemplated by this Agreement.
(r) Status of Shares. The Shares being issued at the Closing
have been duly authorized by all necessary corporate action on the part
of the Company, and at Closing such Shares will have been validly
issued and, assuming payment therefor has been made, will be fully paid
and nonassessable, and the issuance of such Shares will not be subject
to preemptive rights of any other stockholder of the Company. The
Warrant Shares and the Special Warrant Shares have been duly authorized
by all necessary corporate action on the part of the Company, and such
shares of Common Stock have been validly reserved for issuance, and,
assuming payment therefor has been made, upon issuance and exercise of
the Warrants or the Special Warrants, as the case may be, will be
validly issued and outstanding, fully paid and nonassessable. Assuming
the Company Stockholder Approval has been obtained, the Shares,
Warrants and Special Warrants will be eligible for listing on the
Nasdaq Stock Market.
(s) Intellectual Property. The Intellectual Property that is
owned by the Retained Companies constitutes all of the Intellectual
Property that is material to the Retained Companies as a whole, except
for Intellectual Property subject to written or oral licenses,
agreements or arrangements pursuant to which the use of Intellectual
Property by any Retained
30
Company is permitted by any Person (the "Company Intellectual
Property"). The Company Intellectual Property that is owned by the
Retained Companies is owned free from any Liens (other than Permitted
Liens). Except as set forth in Schedule 3.01(s), all material
Intellectual Property Licenses are in full force and effect in
accordance with their terms, and are free and clear of any Liens
(other than Permitted Liens). Except as set forth in Schedule 3.01(s),
immediately after the Closing, the Retained Companies will own or have
the right to use all the Company Intellectual Property, in each case
free from Liens (except for Permitted Liens incurred in the ordinary
course of business) and on the same terms and conditions as in effect
prior to the Closing. Except as set forth in Schedule 3.01(s), the
conduct of the Retained Business does not infringe or conflict with
the rights of any third party in respect of any Intellectual Property,
except where such conduct would not materially affect the ability of
the Retained Companies to conduct their business as presently
conducted. Except as set forth in Schedule 3.01(s), to the knowledge
of the Company, none of the Company Intellectual Property is being
infringed by any third party except where such infringement would not
have a Material Adverse Effect on the Retained Companies taken as a
whole. Except as set forth in Schedule 3.01(s), there is no claim or
demand of any Person pertaining to, or any proceeding which is pending
or, to the knowledge of the Company, threatened, that challenges the
rights of any of the Retained Companies in respect of any Company
Intellectual Property, or that claims that any default exists under
any Intellectual Property License, except where such claim, demand or
proceeding would not materially affect the ability of the Retained
Companies to conduct their business as presently conducted. Except as
set forth in Schedule 3.01(s), none of the Company Intellectual
Property is subject to any outstanding order, ruling, decree, judgment
or stipulation by or with any court, tribunal, arbitrator, or other
Governmental
31
Entity materially adverse to the Company. Except as set forth in
Schedule 3.01(s), the Intellectual Property owned by the Retained
Companies and material to the Retained Companies taken as a whole has
been duly registered with, filed in or issued by, as the case may be,
the appropriate filing offices, domestic or foreign, to the extent
necessary or desirable to ensure usual and customary protection for
the Company Intellectual Property in the relevant jurisdiction under
any applicable law, and the same remain in full force and effect. The
Retained Companies have taken all necessary actions to ensure usual
and customary protection for the Company Intellectual Property in the
relevant jurisdiction of the Company Intellectual Property (including
maintaining the secrecy of all confidential Intellectual Property)
under any applicable law.
(t) Guarantees. Except as set forth on Schedule 3.01(t), none
of the obligations or liabilities of any of the Distributed Companies
will be guaranteed by or subject to a contingent obligation of any of
the Retained Companies following the Distributions (excluding lease
guarantees involving obligations in an aggregate amount not to exceed
$100,000).
(u) Brokers or Finders. Except as set forth on Schedule
3.01(u), no agent, broker, investment banker or other firm is or will
be entitled to any broker's or finder's fee or any other commission or
similar fee in connection with any of the transactions contemplated by
this Agreement.
(v) Acquisitions. Schedule 3.01(v) sets forth a true and
correct list of the 25 largest acquisitions (in terms of aggregate
consideration) of businesses made by the Company since its inception.
The Company has provided Purchaser with copies of the acquisition
agreements and all schedules thereto for each acquisition listed on
Schedule 3.01(v).
32
(w) Disclosure. No representation or warranty by the Company
contained in this Agreement or in any certificate to be furnished by or
on behalf of the Company pursuant hereto contains or will contain any
untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading with respect to the Retained Business as a whole or the
transactions contemplated by this Agreement.
(x) Fairness Opinion. The Board of Directors of the Company
has received a fairness opinion, customary in form and substance, from
Xxxxxx, Xxxxxxx & Co., Incorporated.
SECTION 3.02 Representations and Warranties of Purchaser.
Purchaser represents and warrants as of the date hereof as follows:
(a) Organization. Purchaser is a limited liability company
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, with all requisite power and
authority to own, lease and operate its properties and to conduct its
business as now being conducted.
(b) Authority. Purchaser has the requisite limited liability
company power and authority to execute, deliver and perform each
Transaction Agreement to which it is a party and to consummate the
Transactions. All necessary action required to have been taken by or
on behalf of Purchaser by applicable law, its limited liability company
agreement or otherwise to authorize the approval, execution, delivery
and performance by Purchaser of this Agreement and the consummation by
it of the Transactions have been duly authorized, and no other
proceedings on its part are or will be necessary to authorize this
Agreement or for it to consummate the Transactions. This Agreement
33
is a valid and binding agreement of Purchaser, enforceable against
Purchaser in accordance with the terms hereof, assuming that this
Agreement is a valid and binding agreement of the Company.
(c) Conflicting Agreements and Other Matters. Neither the
execution and delivery of this Agreement nor the performance by
Purchaser of its obligations hereunder will conflict with, result in a
breach of the terms, conditions or provisions of, constitute a default
under, result in the creation of any mortgage, security interest,
encumbrance, lien or charge of any kind upon any of the properties or
assets of Purchaser pursuant to, or require any consent, approval or
other action by or any notice to or filing with any court or
administrative or governmental body pursuant to, the organizational
documents or agreements of Purchaser or any agreement, instrument,
order, judgment, decree, statute, law, rule or regulation by which
Purchaser is bound (assuming that the Company shall have made or
obtained all consents, approvals, orders, authorizations,
registrations, declarations or filings referred to in Section
3.01(c)(ii)), except for filings after the Closing under Section 13(d)
of the Exchange Act and filings under the HSR Act.
(d) Acquisition for Investment. Purchaser is acquiring the
Shares, Warrants and Special Warrants being purchased by it for its own
account for the purpose of investment and not with a view to or for
sale in connection with any distribution thereof, and Purchaser has no
present intention or plan to effect any distribution of Shares,
Warrants, Special Warrants, Warrant Shares or Special Warrant Shares;
provided that the disposition of such Purchaser's property shall at all
times be and remain within its control and subject to the provisions of
this Agreement and the Registration Rights Agreement. Purchaser has
delivered to the Company a complete and correct copy of a commitment
letter from the Fund for $270 million of common equity financing. The
Fund
34
constitutes a "venture capital operating company" within the meaning of
Section 2510.3-101(d) of the regulations promulgated under ERISA and
the transactions contemplated by this Agreement shall not adversely
affect such status.
(e) Ownership of Securities. At the date hereof Purchaser does
not Beneficially Own, directly or, to the knowledge of Purchaser,
indirectly (or have any option or other right to acquire), any
securities of the Company other than the Shares, Warrants and Special
Warrants being purchased by it hereunder.
(f) Brokers or Finders. Except as set forth in Schedule
3.02(f), no agent, broker, investment banker or other firm is or will
be entitled to any broker's or finder's fee or any other commission or
similar fee from Purchaser in connection with any of the transactions
contemplated by this Agreement.
(g) Future Acquisitions. Purchaser has no present plan or
intention to acquire, directly or indirectly, shares of capital stock
comprising 50% or more of the Total Voting Power or 50% or more of the
total fair market value of all shares of outstanding capital stock of
the Company.
ARTICLE IV
Corporate Governance
SECTION 4.01 Composition of the Board of Directors. (a) At
and after the Closing, the Board of Directors of the Company shall consist of
nine directors (subject to the right to increase the Board of Directors pursuant
to Section 4.01(b)(iii)). Three members of the Board of Directors shall
initially be designated by the Purchaser (the "Investor Directors"). Six members
of the Board (the "Non-Investor Directors") shall initially be designated by the
Company, subject to the conditions set
35
forth in Section 9.03(l), and shall include the chief executive officer of the
Company. So long as Purchaser shall have the right to nominate at least two
directors pursuant to clause (i) below, Purchaser shall be entitled to designate
the Chairman of the Board of Directors, provided that the Chairman of the Board,
if designated by Xxxxxxxxx, shall be an Investor Director.
(b) Purchaser shall be entitled to nominate three directors
for election, provided:
(i) if the total number of shares of Common Stock represented
by the Shares, the Special Warrants and the Warrants ("Purchaser's
Total Securities") declines by more than 33 1/3% but less than 66 2/3%
from Purchaser's Total Securities at Closing by reason of sales or
other dispositions of Common Stock, Warrants or Special Warrants by
Purchaser, Purchaser shall have the right to nominate two directors;
(ii) if Purchaser's Total Securities declines by 662/3% or more
from Purchaser's Total Securities at Closing, but Purchaser's
Percentage Interest remains at least 5% of the outstanding Voting
Securities, by reason of sales or other dispositions of Common Stock,
Warrants or Special Warrants by Purchaser, Purchaser shall have the
right to nominate one director;
(iii) in the event that the size of the Board of Directors shall be
increased, Purchaser shall have the right to at least proportionate
representation on the Board following such increase based on the
composition of the Board as between Investor Directors and Non-Investor
Directors immediately prior to such increase; provided that in no event
shall the Board consist of more than 12 directors; and
(iv) if the chief executive officer of the Company is not then a
member of the Board of Directors or a nominee for membership thereon,
the Purchaser
36
shall be entitled to approve an additional nominee to
the Board of Directors.
(c) The Company shall not, and shall not permit its Affiliates
to, solicit proxies (as such terms are used in the proxy rules of the SEC) of
the stockholders of the Company to vote against any of the nominees selected by
the Purchaser or for the approval of any stockholder or other proposals that are
inconsistent with the rights afforded the Purchaser pursuant to this Agreement
and the other Transaction Agreements.
SECTION 4.02 Supermajority Voting Provisions. So long as
Purchaser has the right to designate at least two nominees to the Board of
Directors of the Company pursuant to Section 4.01(b):
(a) neither the Company nor the Board of Directors shall cause
or permit to occur any of the following events without the affirmative
vote of not less than three-fourths of the members of the Board of
Directors of the Company:
(i) any issuance of Equity Securities other than (A)
issuances pursuant to employee stock option or incentive
compensation plans of Equity Securities (other than in respect
of options outstanding as of the date hereof) in an aggregate
amount not to exceed 5% of the Common Stock outstanding
immediately following the Closing on a fully diluted basis
("Permitted Options"), or (B) issuances pursuant to
acquisitions or in public offerings, such issuances not to
exceed 5% of the Common Stock outstanding immediately
following the Closing on a fully diluted basis in any one
issuance or 20% in the aggregate, provided, however, that no
such issuance shall be permitted if as a result thereof any
Person would own 10% of the Common Stock outstanding
immediately following such issuance on a fully diluted basis;
37
(ii) (A) any merger, consolidation or other business
combination to which the Company is a party or any decision
whether to approve a tender offer involving the Company's
Equity Securities, in any case other than a Cash Transaction
(as defined in Section 4.02(b)(i) below) or a Permitted
Securities Transaction (as defined in Section 4.02(b)(ii))
below, or (B) any amendment of any shareholder rights plan (or
"poison pill") maintained by the Company and any redemption of
the rights issued thereunder, except to permit a Cash
Transaction or a Permitted Securities Transaction;
(iii) any sale, lease, transfer or other disposition in one
transaction or a series of related transactions of all or
substantially all the assets of the Company, in any case other
than a Cash Transaction or Permitted Securities Transaction;
or
(iv) any major recapitalization or similar transaction or
series of transactions involving the Company;
(v) any dissolution or complete or partial
liquidation of the Company; or
(vi) any amendment or modification of the Company Charter
or the Company By-laws that is inconsistent with the
provisions of this Agreement and the rights afforded to
Purchaser hereunder.
(b) For purposes of this Agreement:
(i) "Cash Transaction" means any merger,
consolidation or other business combination or sale of all or
substantially all the assets of the Company to which the
Company is a party or any decision whether to approve a tender
offer
38
for all of the Company's Equity Securities, in
any case if the consideration involved in such
transaction is all cash;
(ii) "Permitted Securities Transaction" means any merger,
consolidation or other business combination to which the
Company is a party or any decision whether to approve a tender
or exchange offer for all of the Company's Equity Securities,
in any case if all consideration involved in such transaction
is cash and/or shares of a registered, freely tradeable,
listed common equity security for which there was an aggregate
public market capitalization equal to at least the greater of
$5 billion or the market capitalization of the Company's
Equity Securities, in each case determined immediately prior
to the approval of such transaction by the Board of Directors
of the Company.
SECTION 4.03 Committees. Subject to any law or stock exchange
rule prohibiting committee membership by Affiliates of the Company, Purchaser
shall be entitled to at least proportionate representation by Investor Directors
on any committee of the Board of Directors, based on the composition of the
Board as between Investor Directors and Non-Investor Directors.
SECTION 4.04 By-laws. The Company and Purchaser shall take or
cause to be taken all lawful action necessary to ensure at all times as of and
following the Closing Date that the Company By-laws are not inconsistent with
the provisions of this Agreement or the transactions contemplated hereby.
SECTION 4.05 Termination of Article IV. This Article IV shall
terminate and be of no further force or effect on the earlier to occur of (a)
the fifth anniversary of the Closing and (b) the date on which the percentage of
the Total Voting Power represented by the aggregate voting power of all Voting
Securities then owned by Purchaser
39
(other than any Voting Securities acquired in violation of this Agreement) is
greater than 50%.
ARTICLE V
Equity Purchases from the Company
SECTION 5.01 Subscription Rights. So long as Purchaser has the
right to nominate an Investor Director pursuant to Section 4.01, if the
Company's Board of Directors shall authorize the issuance of New Securities for
cash (other than any New Securities issued (i) to officers, employees or
directors of the Company or any of its Subsidiaries pursuant to any employee
stock offering, plan or arrangement (x) in effect on the date hereof, (y) which
constitutes Permitted Options or (z) approved by any Investor Director, (ii) in
connection with any acquisition transaction, (iii) in any public offering
registered under the Securities Act or in any financing transaction in which
sales or resales are effected through Rule 144A or Regulation S under the
Securities Act or any successor or comparable provisions thereto and (iv) to
Purchaser or its Affiliates (other than the Company and its Subsidiaries)),
then, prior to each such issuance of New Securities, the Company shall offer to
Purchaser a Pro Rata Share of such New Securities. Any offer of New Securities
made to Purchaser under this Section 5.01 shall be made by notice in writing
(the "Subscription Notice") at least 10 Business Days prior to the date on which
the meeting of the Company's Board of Directors is held to authorize the
issuance of such New Securities. The Subscription Notice shall set forth (i) the
number of New Securities proposed to be issued to Persons other than Purchaser
and the terms of such New Securities, (ii) the consideration (or manner of
determining the consideration), if any, for which such New Securities are
proposed to be issued and the terms of payment, (iii) the number of New
Securities offered to Purchaser in compliance with the provisions of this
Section 5.01 and (iv) the proposed date of issuance of such New Securities. Not
later than 20 Business Days after its
40
receipt of a Subscription Notice, Purchaser shall notify the Company in writing
whether it elects to purchase all or any portion of the New Securities offered
to Purchaser pursuant to the Subscription Notice. If Purchaser shall elect to
purchase any such New Securities, the New Securities which it shall have elected
to purchase shall be issued and sold to Purchaser by the Company at the same
time and on the same terms and conditions as the New Securities are issued and
sold to third parties. If, for any reason, the issuance of New Securities to
third parties is not consummated, Purchaser's right to its Pro Rata Share of
such issuance shall lapse, subject to Purchaser's ongoing subscription right
with respect to issuances of New Securities at later dates or times.
SECTION 5.02 Issuance and Delivery of New Securities and
Voting Stock. The Company represents and covenants to Purchaser that (i) upon
issuance, all the shares of New Securities sold to Purchaser pursuant to this
Article V shall be duly authorized, validly issued, fully paid and nonassessable
and will be approved (if outstanding securities of the Company of the same type
are at the time already approved) for listing on the Nasdaq Stock Market or for
quotation or listing on the principal trading market for the securities of the
Company at the time of issuance, (ii) upon delivery of such shares, they shall
be free and clear of all claims, Liens, encumbrances, security interests and
charges of any nature and shall not be subject to any preemptive right of any
stockholder of the Company and (iii) in connection with any such issuance, the
Company shall take such actions as are specified in Section 3.01(q) with respect
to such shares. Each share issued or delivered by the Company hereunder shall
bear the legend set forth in Section 13.11.
41
ARTICLE VI
Limitations on Purchases of Additional Equity Securities
SECTION 6.01 Purchases of Equity Securities. (a) Except as
permitted by Section 6.01(b) or 6.01(c), neither Purchaser nor its Affiliates
will directly or indirectly acquire any securities (including by exercise of the
Warrants or Special Warrants) or take any other action that would cause the
percentage of the Total Voting Power represented by the aggregate voting power
of all Voting Securities then held by Purchaser to equal or exceed 25%.
(b) Nothing herein shall prevent Purchaser from purchasing any
Securities pursuant to the terms of this Agreement (including through exercise
of the Warrants and the Special Warrants in accordance with their respective
terms) and the Purchaser shall not be treated as having breached any covenant in
this Agreement solely as a result of such purchase.
(c) This Section 6.01 shall terminate and be of no further
force or effect on the earlier to occur of (i) the fifth anniversary of the
Closing and (ii) the date on which the percentage of the Total Voting Power
represented by the aggregate voting power of all Voting Securities then owned by
Purchaser (other than any Voting Securities acquired in violation of this
Agreement) is greater than 50%.
SECTION 6.02 Additional Limitations. Other than in connection
with a Buyout Transaction that is not solicited or proposed by Purchaser or its
Affiliates or as specifically approved by a majority of the Non-Investor
Directors, during the five-year period beginning on the date of this Agreement,
Purchaser shall not, and shall not permit its Affiliates to:
(i) contrary to the recommendation of the Company's Board of
Directors, in any "solicitation" of "proxies" (as such terms are used
in the proxy rules
42
of the SEC), vote any shares of capital stock of the Company, initiate,
propose or otherwise solicit stockholders of the Company for the
approval of one or more stockholder proposals or induce or attempt to
induce any other individual, firm, corporation, partnership or other
entity to initiate any stockholder proposal, provided, however, that
this clause shall be inapplicable to any solicitation of proxies, or
inducement or attempt to induce any other entity to initiate any
stockholder proposal, in respect of any Cash Transaction or Permitted
Securities Transaction approved by the Board of Directors of the
Company without the approval of at least one Investor Director;
(ii) deposit any Voting Securities into a voting trust or subject
any Voting Securities to any arrangement or agreement with respect to
the voting of such securities or form, join a partnership, limited
partnership, syndicate or other group, or otherwise act in concert with
any other Person, for the purpose of acquiring, holding, voting or
disposing of Voting Securities, or otherwise become a "person" within
the meaning of Section 13(d)(3) of the Exchange Act; or
(iii) make a public request to the Company (or its directors,
officers, stockholders, employees or agents) to amend or waive any
provisions of this Section 6.02.
ARTICLE VII
Transfer of Common Stock
SECTION 7.01 Transfer of Common Stock. (a) Other than as
specifically approved by a majority of the Non-Investor Directors, prior to the
second anniversary of the Closing, Purchaser will not, directly or indirectly,
sell, transfer or otherwise dispose of any Shares, Special
43
Warrants or Warrants (except to any Affiliate of Purchaser).
(b) Other than as specifically approved by a majority of the
Non-Investor Directors, prior to the fifth anniversary of the Closing, Purchaser
will not, directly or indirectly, sell, transfer or otherwise dispose of any
Shares except (i) pursuant to a registered underwritten public offering intended
to achieve a broad distribution in accordance with the Registration Rights
Agreement, (ii) in accordance with the volume and manner-of-sale limitations of
Rule 144 promulgated under the Securities Act (regardless of whether such
limitations are applicable), (iii) in a transaction exempt from the registration
requirements of the Securities Act to any Person or group (within the meaning of
Section 13(d)(3) of the Exchange Act) of Persons, if, prior to and after giving
effect to such sale, such Person or group of Persons (A) does not or would not
to Purchaser's knowledge after due inquiry, Beneficially Own (provided that for
purposes of this Section 7.01(a) a Person shall be deemed to Beneficially Own
all shares that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time) 5% or more of the
then outstanding shares of Common Stock or (B) is an investment company
registered under the Investment Company Act of 1940, as amended, or (iv) in
connection with a Buyout Transaction. Purported transfers of shares of Common
Stock that are not in compliance with this Article VII shall be of no force or
effect.
(c) The provisions of clauses (a) and (b) of this Article VII
shall terminate and be of no further force or effect on the earlier to occur of
(i) the fifth anniversary of the Closing and (ii) the date on which the
percentage of the Total Voting Power represented by the aggregate voting power
of all Voting Securities then owned by Purchaser (other than any Voting
Securities acquired in violation of this Agreement) is greater than 50%.
44
(d) Prior to the seventh anniversary of the Closing, the
Purchasers will not, directly or otherwise dispose of Shares representing 15% or
more of the then outstanding Common Stock to any Person or group (within the
meaning of Section 13(d)(3) of the Exchange Act) without first offering the
Company the right to make an offer to purchase the Shares proposed to be so
sold, transferred or otherwise disposed of. The provisions of the previous
sentence shall terminate and be of no effect on the date on which the percentage
of the Total Voting Power represented by the aggregate voting power of all
Voting Securities then owned by Purchaser (other than any Voting Securities
acquired in violation of this Agreement) is greater than 50%.
ARTICLE VIII
Covenants and Additional Agreements
SECTION 8.01 Covenants of the Company. During the period from
the date of this Agreement and continuing until the Closing, the Company agrees
as to itself and the Retained Subsidiaries that, except as set forth in the
Distribution Agreements or in Schedule 8.01, or to the extent that Purchaser
otherwise consents in writing:
(a) Ordinary Course. The Retained Business will be conducted
in the ordinary course in substantially the same manner as presently
conducted and the Company will use commercially reasonable efforts to
keep available the services of the current officers and employees
engaged primarily in the Retained Business and to preserve the
relationships with customers, suppliers and others having business
dealings with the Retained Business.
(b) No Acquisitions. The Company will not, nor will it permit
any of the Retained Subsidiaries to, acquire or agree to acquire
(excluding any non-binding letters of intent) by merging or
consolidating with,
45
or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets (other than inventory) involving
aggregate consideration having a value in excess of $25 million in any
case or $150 million in the aggregate (in either case whether payable
in cash, stock or a combination thereof); provided that (i) no such
consideration shall be payable in Common Stock or stock of any Retained
Subsidiary and (ii) any such consideration payable in stock of a
Distributed Company shall not be payable prior to completion of the
Distributions; and provided, further, that this paragraph (b) shall not
limit the ability of the Company or the Retained Subsidiaries to make
acquisitions in respect of businesses which will constitute part of a
Distributed Company if all acquisition debt associated therewith is
allocated to such Distributed Company.
(c) No Dispositions. The Company will not, nor will it permit
any of the Retained Subsidiaries to, sell, lease, license, encumber or
otherwise dispose of, or agree to sell, lease, license, encumber or
otherwise dispose of, any of the Assets of the Retained Business other
than at fair market value in the ordinary course of business consistent
with past practice.
(d) Other Transactions. The Company will not, nor will it
permit any of the Retained Subsidiaries to, do any of the following
(except as otherwise expressly provided herein or in any other
Transaction Agreement):
(i) Amend its Certificate of Incorporation (except to
the extent necessary to implement a shareholder rights plan
pursuant to clause (ii) below), By-laws or other
organizational documents (except for immaterial amendments to
the
46
Certificate of Incorporation or By-laws of any Subsidiaries,
provided such amendments in no way adversely affect Purchaser
or the rights granted to Purchaser hereunder);
(ii) declare or pay any non-cash dividend or make any
non-cash distribution with respect to the Assets; provided,
however, that the Company shall be permitted to issue rights
under a customary shareholder rights plan or "poison pill"
that (A) expires at Closing and (B) expressly exempts
Purchaser and its Affiliates from its operation;
(iii) redeem or otherwise acquire any shares of its capital
stock or issue any capital stock (except upon exercise of
options issued prior to the date hereof under a Company Stock
Plan), or any option, or warrant or right relating thereto
(other than grants under the Company's 1994 Amended and
Restated Long Term Incentive Plan of options to acquire not
more than 685,778 shares of Common Stock in the aggregate from
the separate "pools" of options that the Company has
heretofore allocated in connection with certain acquisitions
that the Company has made for award to employees of such
acquired companies; provided that each such option shall (A)
have a per share exercise price that is not less than the fair
market value per share of Common Stock at the date of grant,
(B) vest and become exercisable no more rapidly than 25% on
each of the first four anniversaries of the date of grant, and
(C) shall not vest or become earlier exercisable as a result
of the consummation of the Transactions);
(iv) incur any liabilities, obligations or indebtedness
for borrowed money or guarantee any such liabilities,
obligations or indebtedness, other than in the ordinary course
of business consistent with past practice (except as
47
otherwise provided herein with respect to the Proposed
Financings or as incurred in connection with acquisitions to
the extent permitted hereby) and in an aggregate amount that
would not be material to the Company;
(v) permit, allow or suffer any assets of the
Retained Business to be subject to any Lien other than
Permitted Liens;
(vi) guarantee or otherwise become
contingently liable for any obligation of any of
the Distributed Companies;
(vii) cancel any material indebtedness (individually or in
the aggregate) relating to the Retained Business or waive any
claims or rights of substantial value relating to the Retained
Business;
(viii) pay, loan or advance any amount to, or sell, transfer
or lease any of its assets relating to the Retained Business,
or enter into any agreement or arrangement relating to the
Retained Business with, any of the Distributed Companies or
any of their respective Affiliates other than in the ordinary
course of business consistent with past practice;
(ix) make any change in any method of accounting or
accounting practice or policy, except as may be required by
GAAP;
(x) modify, amend, terminate or permit the lapse of
any lease of real property used in connection with, and which
is material to, the Retained Business (except modifications or
amendments associated with renewals of such leases in the
ordinary course of business consistent with past practice of
the Retained
48
Companies with respect to which Purchaser shall
have the right to participate and to approve);
(xi) enter into, terminate, renew or modify any Contract
to which the Company or any Retained Subsidiary is a party or
by which any of their assets are bound and which is material
to the Company;
(xii) enter into any agreement or take any action in
violation of the terms of this Agreement or any of the other
Transaction Agreements;
(xiii) settle any material tax audit, make or change any tax
election or amend any Tax Returns; or
(xiv) agree, whether in writing or otherwise, to do any of
the foregoing.
(e) Employee Benefits. Except (w) as set forth in Schedule
8.01(e), (x) in connection with acquisitions to the extent permitted by
this Agreement or (y) in the ordinary course of business and as
consistent with past practice (which shall include normal periodic
performance reviews and related benefit increases) or (z) pursuant to
the existing terms of any collective bargaining agreement, the Company
will not, nor will it permit any of the Retained Subsidiaries to (i)
increase in any manner the compensation of any of the officers or other
employees of the Retained Companies; (ii) pay or agree to pay any
pension, retirement allowance or other employee benefit not required by
any existing plan, agreement or arrangement to any such officer or
employee, whether past or present; (iii) enter into, or negotiate, any
collective bargaining agreement with respect to employees of the
Retained Companies except as required by law, in which case the Company
or such Retained Subsidiary shall first notify Purchaser; or
49
(iv) commit itself to any additional pension, profit-sharing, bonus,
incentive, deferred compensation, stock purchase, stock option, equity
purchase (or other equity based plan), stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan,
policy, program, understanding, agreement or arrangement, or to any
employment agreement or consulting agreement (arising out of prior
employment), regardless of the applicable funding arrangements, with or
for the benefit of any officer or employee of the Retained Companies,
or amend, renew or extend any of such plan or any of such agreements in
existence on the date hereof in any manner which would, in the case of
clauses (i), (ii), (iii) and (iv) above, result in liabilities that are
material to the Retained Companies taken as a whole.
SECTION 8.02 Transaction Proposals. (a) Subject to Section
8.02(d), the Company shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize or permit any officer, director or employee of, or
any investment banker, attorney, accountant or other advisor, agent or
representative of, the Company or any of its Subsidiaries to, (i) solicit or
initiate, or encourage (including by furnishing non-public information) the
submission of, any Transaction Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Transaction Proposal; provided,
however, that prior to the Company Meeting, in response to an unsolicited
written bona fide Transaction Proposal that in the good faith opinion of the
Board of Directors of the Company could reasonably be expected to result in a
Superior Proposal (as defined below), if the Board of Directors of the
Company determines in good faith, after consultation with outside counsel,
that failure to do so could reasonably be expected to result in a breach of
its fiduciary duties to stockholders under applicable law, the Company may,
subject to
50
compliance with Section 8.02(c), (A) furnish information with respect to the
Company to such Person making such proposal pursuant to a customary
confidentiality and standstill agreement with such Person and (B) participate in
negotiations regarding such Transaction Proposal. For purposes of this
Agreement, "Transaction Proposal" means any inquiry, proposal or offer from any
Person relating to (x) any purchase or other acquisition from the Company of
assets representing 25% or more of the net revenues, net income or profits of
the Company and its Subsidiaries, taken as a whole, (y) any purchase or other
acquisition of 10% or more of any class of Equity Securities of the Company, or
(z) any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company (or any
Subsidiary whose business constitutes 25% or more of the net revenues, net
income or assets of the Company and its Subsidiaries, taken as a whole), in each
case other than the transactions contemplated by this Agreement. Immediately
after the execution and delivery of this Agreement, the Company will, and will
cause its Subsidiaries and Affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to, cease
and terminate any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any possible Transaction Proposal.
(b) Nothing contained in this Section 8.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act; provided that except as
set forth in this Section 8.02(b) or as permitted by Section 8.02(d), neither
the Board of Directors of the Company nor any committee thereof shall (A)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Purchaser, the approval or recommendation by such Board of Directors or any such
committee of this Agreement or the Transactions, (B) approve or recommend, or
propose to approve or recommend, any Transaction Proposal (C) cause or permit
the Company or any of its Subsidiaries
51
to enter into any agreement with respect to any Transaction Proposal or (D)
terminate this Agreement in response to a Transaction Proposal. Notwithstanding
the foregoing, if prior to the Company Meeting the Company has received a
Transaction Proposal that the Board determines in good faith is a Superior
Proposal, then the Board of Directors of the Company, if it determines in good
faith, after consultation with outside counsel, that failure to do so could
reasonably be expected to result in a breach of its fiduciary duties to
stockholders under applicable law, may (subject to the terms of this sentence
and compliance with the following sentence) (i) withdraw or modify its
recommendation of this Agreement, or the transactions contemplated hereby, (ii)
approve or recommend such Superior Proposal, (iii) cause the Company to enter
into an agreement with respect to a Superior Proposal and (iv) terminate this
Agreement, in each case (as contemplated by this Section 8.02(b)) no earlier
than five Business Days following Purchaser's receipt of a written notice from
the Company advising Purchaser that the Board of Directors of the Company has
received a Superior Proposal, specifying the terms and conditions of such
Superior Proposal and identifying the person making such Superior Proposal;
provided, however, that neither the Company nor its Board of Directors shall
take any of the actions specified in such clauses (i), (ii), (iii) or (iv)
unless the Company shall have furnished Purchaser with written notice on a date
prior to the date any such actions are proposed to be taken specifying such
actions to be taken. In addition, if the Company or the Board of Directors of
the Company proposes to take any of the actions permitted by the preceding
sentence with respect to any Transaction Proposal, then the Company shall, prior
to the taking of any such action, pay, or cause to be paid, to Purchaser,
Purchaser's Expenses and the Termination Fee (each as defined in Section 12.09).
The term "Superior Proposal" shall mean any bona fide written Transaction
Proposal that has the following characteristics: (1) it is a proposal to
acquire, directly or indirectly, for consideration consisting of cash and/or
readily marketable securities, (x) shares of Common Stock representing at least
20% of the Total Voting
52
Power, or (y) at least 25% of the assets of the Retained Subsidiaries and (2)
the terms of such proposal in the good faith judgment of the Board of Directors
of the Company, based on advice from the Company's financial adviser, provide
consideration to the Company or the Company's stockholders that is superior to
the consideration provided pursuant to this Agreement (after taking into account
any modifications to this Agreement proposed by Purchaser).
(c) The Company shall immediately advise Purchaser orally and
in writing of (i) any request for information which may relate to a Transaction
Proposal, (ii) any Transaction Proposal, (iii) any inquiry with respect to or
that could lead to any Transaction Proposal or (iv) any action taken in
accordance with Section 8.02(a)(A) or (B), and in each case the material terms
and conditions of such request, Transaction Proposal, inquiry or action and the
identity of the Person making any such request, Transaction Proposal or inquiry
with respect to which such action is taken. The Company will keep Purchaser
reasonably informed of material developments concerning the status and details
(including amendments or proposed amendments) of any such request, Transaction
Proposal, inquiry or action.
SECTION 8.03 Modification of Transaction Agreements;
Abandonment of Distributions. Notwithstanding anything to the contrary in this
Agreement, the Company may in its sole discretion modify each of the Transaction
Agreements relating to the Distributions and, if the Board of Directors of the
Company determines in good faith that it is in the best interest of the Company
to do so, abandon the Distributions.
SECTION 8.04 Transaction Agreements and Schedules. The Company
shall use reasonable best efforts to cause (i) each of the Transaction
Agreements to be entered into by the Company, School, Travel, Technology or
Print, as the case may be, in connection with the Distributions, and each of
the Annexes called for in this Agreement that have not been provided to
Purchaser prior to the execution of this Agreement, to be delivered to Purchaser
53
and its counsel by 7:00 p.m., New York Time, February 13, 1998 (the "Agreement
Delivery Cut-Off Time"); and (ii) each of the Schedules called for in this
Agreement that have not been provided to Purchaser prior to execution of this
Agreement (and prior to the Schedule Review Cut-Off Time (as defined below) may
supplement Schedules that have previously been supplied or may unilaterally
amend this Agreement to add additional Schedules) to be delivered to Purchaser
and its counsel by 7:00 p.m., New York time, January 20, 1998 (the "Schedule
Delivery Cut-off Time"). Purchaser shall review such Transaction Agreements,
Schedules and Annexes in good faith. Prior to the applicable Review Cut-off Time
(as defined below) the Company shall make available to Purchaser and its counsel
at their request all documentation related to any item set forth on any Schedule
or Annex. Purchaser shall complete its review of the Transaction Agreements, and
the Annexes and notify the Company that such review is complete by 7:00 p.m.,
New York time, on February 27, 1998 (the "Agreement Review Cut-off Time") and
shall complete its review of the Schedules and notify the Company that such
review is complete by 7:00 p.m., New York time, on February 3, 1998 (the
"Schedule Review Cut-Off Time"); provided, however, that if any Transaction
Agreement, Schedule or Annex is delivered after the applicable Delivery Cut-off
Time, the applicable Review Cut-off Time for all Transaction Agreements and
Annexes and for the Schedules, as the case may be shall be extended by the
number of days elapsed (which, in any case, shall not be less than one) between
the date of such Delivery Cut-off Time and the date of receipt by Purchaser and
its counsel of such Transaction Agreement or Annex or such Schedule, as the case
may be; and provided further, however, that if (A) the Transaction Agreements
are not satisfactory to Purchaser in its good faith reasonable judgment, (B) the
Audited Retained Business Financial Statements reflect financial information
materially different from that presented in the Pro Forma Retained Business
Financial Statements, or (C) any new Schedule or change or addition to the
Schedules made after the date hereof is not satisfactory to Purchaser in its
good faith reasonable judgment, Purchaser may terminate
54
this Agreement upon written notice to the Company without further liability on
the part of Purchaser or the Company other than pursuant to Sections 10.02 and
13.09.
SECTION 8.05 Company Stockholder Approval; Proxy Statement.
(a) The Company shall call a meeting of its stockholders (the "Company Meeting")
for the purpose, among others, of voting upon the issuance (the "Issuance") of
the Shares, the Special Warrants and the Warrants to Purchaser (the "Company
Meeting Proposal").
(b) The Company will prepare and file with the SEC a proxy
statement relating to the Company Meeting (as amended or supplemented and
including documents incorporated by reference therein, the "Proxy Statement")
and shall use its reasonable best efforts to respond to any comments of the SEC
or its staff and to cause the Proxy Statement to be cleared by the SEC. The
Company shall notify Purchaser of the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and shall
supply Purchaser and its counsel with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement. The Company shall
give Purchaser and its counsel the opportunity to review the Proxy Statement
prior to its being filed with the SEC and shall give Purchaser and its counsel
the opportunity to review all amendments and supplements to the Proxy Statement
and all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC. Each of the Company and
Purchaser agrees to use its reasonable best efforts, after consultation with the
other party hereto, to respond promptly to all such comments of and requests by
the SEC. After the Proxy Statement has been cleared by the SEC, the Company
shall mail the Proxy Statement to the stockholders of the Company. If at any
time prior to the Company Meeting there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement, the Company
55
will prepare and mail to its stockholders such an amendment
or supplement.
(c) The Proxy Statement will not, at the date mailed to the
Company's stockholders and at the date of the Company Meeting, 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, except
that no representation is made by the Company with respect to statements made
therein based on information concerning Purchaser or its Affiliates supplied in
writing by Purchaser or any of its Affiliates specifically for inclusion in the
Proxy Statement. The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
(d) Subject to Section 8.02(b), the Board of Directors of the
Company shall recommend that the Company's stockholders approve the Company
Meeting Proposal and the Company shall use its best efforts to obtain the
necessary approvals by its stockholders of the Company Meeting Proposal.
SECTION 8.06 Retained Companies Financing. In connection with
the Proposed Financings, the Company and Purchaser shall jointly select all
sources of the Proposed Financings, including determining the respective roles
of such sources; provided, however, that Bankers Trust Company shall have the
opportunity to be a lead in the bank financing with economics at least as
favorable as any other lead in the bank financing if Bankers Trust Company's
pricing is competitive. In addition, (i) Purchaser and its - counsel shall have
the right to participate in any discussions or negotiations between the Company
and any of its representatives, on the one hand, and its prospective lenders and
their counsel, on the other, and to comment on draft loan and other
documentation in respect of any such Proposed Financings and (ii) the Company
shall provide -- Purchaser and its counsel copies of all correspondence
56
between the Company and its lenders relating thereto. If, prior to the execution
of any definitive documentation with respect to the Proposed Financings, based
on its review of such definitive documentation, Purchaser determines in the good
faith exercise of its reasonable judgment not to proceed with the transactions
contemplated by this Agreement, Purchaser may terminate this Agreement upon
written notice to the Company.
SECTION 8.07 Tender Offer. (a) The Company shall cause the
commencement (as such term is defined in Rule 13e-4(a)(4) under the Exchange
Act) of the Tender Offer to purchase 37,037,037 shares of Common Stock, at a
price per share equal to $27, net to the seller in cash, no later than the date
specified in Schedule 8.07. Unless Purchaser shall otherwise agree, the
Company's obligation to complete the Tender Offer shall be subject only to the
conditions (the "Offer Conditions") set forth in Schedule 8.07. Subject to the
provisions hereof, the Tender Offer shall expire on the date set forth in
Schedule 8.07; provided that the Tender Offer shall be extended from time to
time if the Offer Conditions shall not have been satisfied, so long as this
Agreement shall remain in effect.
(b) On the date of commencement of the Tender Offer, the
Company shall file with the SEC an Issuer Tender Offer Statement on Schedule
13E-4 with respect to the Tender Offer (the "Tender Offer Statement"), which
shall contain an offer to purchase and a related letter of transmittal (such
Tender Offer Statement and the documents therein pursuant to which the Tender
Offer will be made, together with any supplements or amendments thereto, are
referred to hereinafter as the "Offer Documents"). After the Offer Documents are
filed with the SEC, the Company shall disseminate the Offer Documents to the
stockholders of the Company. If at any time prior to the expiration of the
Tender Offer there shall occur any event that should be set forth in an
amendment or supplement to the Offer Documents, the Company will prepare and
file with the SEC
57
and disseminate to its stockholders such an amendment or
supplement.
(c) The Company shall give Purchaser and its counsel the
opportunity to review the Offer Documents prior to their being filed with the
SEC and shall give Purchaser and its counsel the opportunity to review all
amendments and supplements to the Offer Documents and all responses to requests
for additional information and replies to comments prior to their being filed
with, or sent to, the SEC. The Company shall notify Purchaser of the receipt of
any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Offer Documents or for additional
information and shall supply Purchaser and its counsel with copies of all
correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Offer
Documents.
(d) The Offer Documents will not, on the date filed with the
SEC and as of the date first published, sent or given to the Company's
stockholders, 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 except that no representation is made by the Company with respect
to statements made therein based on information concerning Purchaser or its
Affiliates supplied in writing by Purchaser or any of its Affiliates
specifically for inclusion in the Offer Documents. The Offer Documents will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
SECTION 8.08 Information Statements. (a) The Company shall
give Purchaser and its counsel the opportunity to review the information
statements to be disseminated to stockholders of the Company in connection with
the Distributions (the "Information Statements") prior to its being filed with
the SEC and shall give Purchaser
58
and its counsel the opportunity to review all amendments and supplements to the
Information Statements and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC.
The Company shall notify Purchaser of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the Information Statements or for additional information and
shall supply Purchaser and its counsel with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Information Statements. If at any
time prior to completion of the Distributions there shall occur any event that
should be set forth in an amendment or supplement to the Information Statement,
the Company will prepare and file with the SEC and disseminate to its
stockholders such an amendment or supplement.
(b) The Information Statements will not, on the date filed
with the SEC and as of the date first disseminated to the Company's
stockholders, 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 except that no representation is made by the Company with respect
to statements made therein based on information concerning Purchaser or its
Affiliates supplied in writing by Purchaser or any of its Affiliates
specifically for inclusion in the Information Statements. The Information
Statements will comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder.
SECTION 8.09 [Intentionally omitted.]
SECTION 8.10 Tax Standstill. Except as permitted by Section
6.01(b) or 6.01(c), during the period ending two years after the date of the
Distributions, (i) Purchaser shall not acquire any Securities or take any
59
other action that would cause Purchaser's Percentage Interest to equal or exceed
50%, (ii) none of Purchaser, the Fund or CD&R shall act in concert with any
other Person to acquire any Securities if aggregating such acquisition with the
Purchaser's holdings would cause the Purchaser's Percentage Interest to equal or
exceed 50%, and (iii) none of Purchaser, the Fund or CD&R shall solicit the
acquisition of any Securities, provided that the provision by the Fund to its
limited partners of customary reports and information, and customary
communication with such limited partners on behalf of the Fund, with respect to
the Fund's investment in the Company that, in either case, do not recommend any
such acquisition, shall not be treated as a solicitation by the Purchaser within
the meaning of this clause (iii).
SECTION 8.11 Access and Information. (a) So long as this
Agreement remains in effect, prior to the Closing, the Company will (and will
cause each of the Retained Companies, and each of their respective accountants,
counsel, consultants, officers, directors, employees, agents and representatives
of or to any of the Retained Companies, to) give Purchaser and its
Representatives, full access during reasonable business hours to all of their
respective properties, assets, books, contracts, commitments, reports and
records relating to the Retained Companies, and furnish to them all such
documents, records and information with respect to the properties, assets and
business of the Retained Companies and copies of any work papers relating
thereto as Purchaser shall from time to time reasonably request. The Company
will keep Purchaser generally informed as to the affairs of the Retained
Business.
(b) In addition, the Company shall deliver to Purchaser, not
later than the 35th day following the end of each fiscal month prior to the
Closing, updated Pro Forma Retained Business Financial Statements as of the end
of such fiscal month.
60
SECTION 8.12 Further Actions. (a) The Company shall, and
shall cause each of the Retained Companies to, use reasonable best 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 in order for each of the
Retained Companies to fulfill and perform its obligations in respect of this
Agreement and the Transaction Agreements to which it is a party, or otherwise
to consummate and make effective the transactions contemplated hereby and
thereby.
(b) The Company shall (and shall cause each of the Retained
Companies to), as promptly as practicable, (i) make, or cause to be made, all
filings and submissions (including but not limited to under the HSR Act and
foreign antitrust filings) required under any law applicable to any of the
Retained Companies, and give such reasonable undertakings as may be required in
connection therewith, and (ii) use all reasonable efforts to obtain or make, or
cause to be obtained or made, all Permits necessary to be obtained or made by
any of the Retained Companies, in each case in connection with this Agreement or
the Transaction Agreements, the sale and transfer of the Shares, the Special
Warrants and the Warrants pursuant hereto, or the consummation of the other
transactions contemplated hereby or thereby.
(c) The Company shall, and shall cause each of the Retained
Companies to, coordinate and cooperate with Purchaser in exchanging such
information and supplying such reasonable assistance as may be reasonably
requested by Purchaser in connection with the filings and other actions
contemplated by this Agreement.
(d) At all times prior to the Closing Date, the Company
shall promptly notify Purchaser in writing of any fact, condition, event or
occurrence that could reasonably be expected to result in the failure of any
of the conditions contained in Article IX to be satisfied, promptly upon
becoming aware of the same.
61
SECTION 8.13 Further Assurances. Following the Closing Date,
the Company shall, and shall cause each of the Retained Companies to, from time
to time, execute and deliver such additional instruments, documents, conveyances
or assurances and take such other actions as shall be necessary, or otherwise
reasonably be requested by Purchaser, to confirm and assure the rights and
obligations provided for in this Agreement and the Transaction Agreements and
render effective the consummation of the transactions contemplated hereby and
thereby, or otherwise to carry out the intent and purposes of this Agreement.
ARTICLE IX
Conditions Precedent
SECTION 9.01 Conditions to Each Party's Obligations. The
obligations of the Company and Purchaser to consummate the transactions
contemplated to occur at the Closing shall be subject to the satisfaction prior
to the Closing of each of the following conditions, each of which may be waived
only if it is legally permissible to do so:
(a) HSR and Other Approvals. Any applicable waiting period
under the HSR Act relating to the transactions contemplated hereby
shall have expired or been terminated, and all other material
authorizations, consents, orders or approvals of, or regulations,
declarations or filings with, or expirations of applicable waiting
periods imposed by, any Governmental Entity (including, without
limitation, any foreign antitrust filing) necessary for the
consummation of the transactions contemplated hereby, shall have been
obtained or filed or shall have occurred.
(b) No Litigation, Injunctions, or Restraints. No statute,
rule, regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order enacted, entered,
62
promulgated, enforced or issued by any Governmental Entity or other
legal restraint or prohibition preventing the consummation of the
transactions contemplated by this Agreement or any of the Transaction
Agreements shall be in effect.
(c) Stockholders Vote. The Company Stockholder Approval shall
have been obtained.
(d) Nasdaq Listing. The Shares shall have been approved for
listing on the Nasdaq Stock Market, subject only to official notice of
issuance.
(e) Consummation of Distributions. The distribution of the
businesses of School, Travel, Technology, Print and their respective
Subsidiaries shall have occurred pursuant to the Distribution
Agreements, which shall contain provisions:
(i) effecting the Pre-Distribution
Transactions;
(ii) allocating assets and liabilities among
the Distributed Companies and the Retained
Companies;
(iii) allocating among the Distributed Companies an
aggregate of $130 million of corporate debt, in addition to
acquisition debt incurred in respect of acquisitions effected
after the date hereof;
(iv) allocating among the Distributed Companies and the
Company on a pro rata basis all liabilities of the Distributed
Companies not properly allocable to any specific Distributed
Company or to the Company;
(v) with respect to current and planned
cross-selling opportunities between the
63
Distributed Companies and the Retained Companies;
and
(vi) allocating on a pro rata basis the transaction costs
associated with the Transactions.
(f) Tax Allocation Agreement. The Tax Allocation Agreement
shall have been executed and shall contain the following provisions:
(i) a joint and several indemnity from the
Distributed Companies in favor of the Company and the Retained
Subsidiaries from and against any Losses with respect to Taxes
resulting from any Adverse Tax Act of any of the Distributed
Companies or their Subsidiaries;
(ii) an indemnity from each of the Distributed Companies
in favor of the Company from and against any Losses with
respect to Taxes resulting from the Pre-Distribution
Transactions or the Distributions, as a result of the failure
of the Pre-Distribution Transactions or the Distributions to
qualify under sections 355 or 368 of the Code or otherwise,
including, without limitation, by reason of any stock or
securities of any Distributed Company failing to qualify as
"qualified property" within the meaning of section 355(c)(2)
of the Code, except to the extent such Losses result from any
Adverse Tax Act by any of the Company, the Retained
Subsidiaries, the Distributed Companies or any of their
Subsidiaries, provided that each Distributed Company shall be
only liable for the portion of such Losses that bears the same
ratio to the aggregate amount of such Losses as the Market
Capitalization of such Distributed Company bears to the
aggregate Market Capitalization of the Company and the
Distributed Companies and provided, further, that each
Distributed Company
64
shall be liable for 100% of any such Losses attributable to
any "deferred intercompany transaction" to the extent such
Loss is attributable to any "intercompany item" that such
Distributed Company or any of its Subsidiaries is required to
take into account immediately prior to the Distributions
pursuant to Treasury Regulations section 1.1502-13;
(iii) customary provisions providing for control and
participation rights with respect to any administrative and
judicial proceedings with respect to Taxes, including the
right of the Person primarily responsible for the relevant
indemnification obligation thereunder to control any such
proceeding. Notwithstanding anything to the contrary in the
preceding sentence, no Distributed Company shall be entitled
to assume control of any portion of any administrative or
judicial proceeding with respect to Taxes unless such
Distributed Company shall have theretofore acknowledged in
writing its liability for such Taxes pursuant to the Tax
Allocation Agreement; and
(iv) Any tax saving or other benefit attributable to any
compensation deduction arising from or in connection with the
exercise by any Employee of the Company or any of its
Subsidiaries of any option granted under any of the Company
Stock Plans shall be apportioned to the entity whose shares
were issued upon the exercise of such option, provided that
any compensation deduction arising from or in connection with
any such exercise on or prior to the Closing Date by any
Employee of any Distributed Company or any of its Subsidiaries
shall be apportioned to such Distributed Company.
SECTION 9.02 Conditions to the Obligations of
the Company. The obligations of the Company to consummate
65
the transactions contemplated to occur at the Closing shall be subject to the
satisfaction or waiver thereof prior to the Closing of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser that are qualified as to materiality shall be
true and correct, and those that are not so qualified shall be true and
correct in all material respects, as of the date of this Agreement and
as of the time of the Closing as though made at and as of such time,
except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and
warranties that are qualified as to materiality shall be true and
correct, and those that are not so qualified shall be true and correct
in all material respects, on and as of such earlier date) and the
Company shall have received a certificate signed by an authorized
officer of Purchaser to such effect.
(b) Opinion of Purchaser's Counsel. The Company shall have
received an opinion dated as of the Closing of Debevoise & Xxxxxxxx,
counsel to Purchaser, in form and substance reasonably satisfactory to
the Company.
(c) Registration Rights Agreement. Purchaser
shall have executed and delivered the Registration
Rights Agreement.
SECTION 9.03 Conditions to the Obligations of Purchaser. The
obligations of Purchaser to consummate the transactions contemplated to occur at
the Closing shall be subject to the satisfaction or waiver thereof prior to the
Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement that are
qualified as to materiality shall be true and correct, and those that
are not so qualified shall be true and correct in all material
respects, as of the date of this Agreement and as of
66
the time of the Closing as though made at and as of such time, except
to the extent such representations and warranties expressly relate to
an earlier date (in which case such representations and warranties that
are qualified as to materiality shall be true and correct, and those
that are not so qualified shall be true and correct in all material
respects, on and as of such earlier date), and Purchaser shall have
received a certificate signed by the chief executive officer and chief
financial officer of the Company to such effect.
(b) Transaction Agreements. Each Transaction Agreement to
which the Company is a party shall have been executed without
modification from the forms as in existence at the Review Cut-off Time
or such earlier date as Purchaser completed its review of such
agreement.
(c) Performance of Obligations of the Company. The Company
shall have performed or complied in all material respects with all
obligations and covenants required to be performed or complied with by
the Company under this Agreement, and Purchaser shall have received a
certificate signed by the chief executive officer and chief financial
officer of the Company to such effect.
(d) Opinion of the Company's Counsel. Purchaser shall have
received opinions dated as of the Closing of the general counsel of the
Company, and Xxxxxx, Xxxxxx & Xxxxxxxxx, counsel to the Company, in
form and substance reasonably satisfactory to Purchaser.
(e) Registration Rights Agreement. The Company
shall have executed and delivered the Registration
Rights Agreement.
(f) Financings. The Company shall have entered into definitive
documentation for the Proposed
67
Financings and such definitive documentation shall be satisfactory in
form and substance to Purchaser.
(g) Tender Offer. The Company shall have consummated the
Tender Offer as provided for herein.
(h) Consulting Agreement; Transaction Fee. The Company shall
have (A) entered into a consulting agreement with CD&R providing for an
annual fee of $500,000 (plus reasonable out-of-pocket expenses) in
connection with consulting and advisory services and a related
indemnification agreement and (B) authorized payment to CD&R of the
Transaction Fee and the Transaction Fee shall have been paid to CD&R.
The consulting agreement shall terminate at the later of (i) the fifth
anniversary of the Closing Date and (ii) such time as Purchaser is
entitled to nominate only one Investor Director.
(i) Other Parties. (A) No Person or "group" (as defined in the
Exchange Act), other than Purchaser, shall have acquired beneficial
ownership of more than 15% of the outstanding shares of Voting
Securities, and (B) no Person (other than Purchaser or one or more of
its Affiliates) shall have entered into an agreement in principle or
definitive agreement with the Company with respect to a tender or
exchange offer for any shares of Common Stock or a merger,
consolidation or other business combination with or involving the
Company.
(j) Corporate Proceedings. All corporate proceedings of the
Company in connection with the transactions contemplated by this
Agreement and the Transaction Agreements, and all documents and
instruments incident thereto, shall be satisfactory in form and
substance to Purchaser and its counsel, and Purchaser and its counsel
shall have received all such documents and instruments, or copies
thereof, certified or requested, as may be reasonably requested.
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(k) Management Plan. Purchaser shall have completed
discussions with management which satisfactorily confirm to Purchaser
that the operating prospects of the Retained Business (exclusive of
acquisitions), are, taken as a whole, not materially inconsistent with
the Company's forecasts (excluding (i) the impact on the Company's
earnings for fiscal quarters ending prior to or including the Closing
caused by the inability of the Company to complete acquisitions
following announcement of the Transactions and/or to account for
acquisitions as poolings of interest and (ii) the effect on the Company
of being required as a result of the Transactions to change accounting
treatment for past acquisitions from poolings of interests to
purchases); provided, however, that this condition shall be deemed
satisfied if Purchaser shall not have given notice to the Company on or
prior to February 3, 1998 that Purchaser has concluded that this
condition has not been satisfied.
(l) Board of Directors. The Board of Directors of the Company
shall consist of 9 persons, including the chief executive officer of
the Company, three designees of Purchaser, three persons selected by
the current Board of Directors and two persons who shall be
satisfactory to both Purchaser and the current Board of Directors of
the Company.
(m) Material Adverse Effect. No event, change or development
shall exist or have occurred since October 25, 1997 which has had or is
reasonably likely to have a Material Adverse Effect on the Retained
Companies, taken as a whole.
(n) Debt Amounts. The outstanding debt of the Retained
Companies shall not exceed $1.4 billion (after giving effect to the
Transactions and assuming conversion of all issued and outstanding 2001
Notes) and the outstanding debt of the Distributed Companies shall be
at least $130 million plus the expenditures
69
by the entities comprising such Distributed Companies
for acquisitions after the date hereof.
(o) Options. The Company's arrangements with respect to
Management options shall be satisfactory to Purchaser in its good faith
reasonable judgment.
ARTICLE X
Termination
SECTION 10.01 Termination. This Agreement may be terminated at
any time prior to the Closing, whether before or after the Company Stockholder
Approval has been obtained:
(a) by mutual written consent of Xxxxxxxxx and
the Company;
(b) by Purchaser or the Company:
(i) if the Closing shall not have occurred prior to
September 30, 1998, provided, that the right to terminate this
Agreement pursuant to this clause (i) shall not be available
to any party whose failure to fulfill any obligation under
this Agreement results in the failure of the Closing to occur;
(ii) if the Company Stockholder Approval shall not have
been obtained by reason of the failure to obtain the required
vote upon a vote held at the Company Meeting, or such meeting
shall not have been held by September 30, 1998;
(iii) if there shall be any statute, law, regulation or
rule that makes consummating the transactions contemplated
hereby illegal or if any court or other Governmental Entity of
competent jurisdiction shall have issued a
70
judgment, order, decree or ruling, or shall have taken such
other action restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby and
such judgment, order, decree or ruling shall have become final
and non-appealable;
(c) by Purchaser:
(i) if the Company shall have failed to perform in
any material respect any of its obligations hereunder or shall
have breached in any respect any representation or warranty
contained herein qualified by materiality or shall have
breached in any material respect any representation or
warranty not so qualified, and the Company has failed to
perform such obligation or cure such breach, within 30 days of
its receipt of written notice thereof from Purchaser, and such
failure to perform shall not have been waived in accordance
with the terms of this Agreement;
(ii) if the Board of Directors of the Company or any
committee thereof withdraws or modifies (or publicly announces
its intention to do so, or resolves to do so) in a manner
adverse to Purchaser (as determined by Purchaser in its
reasonable judgment) its approval or recommendation of this
Agreement or the transactions contemplated hereby or approves
or recommends a Transaction Proposal;
(iii) if the Board of Directors of the Company publicly
announces its determination not to effect the Distributions;
(iv) if any of the conditions set forth in Section 9.01 or
9.03 shall become impossible to fulfill (other than as a
result of any breach by Purchaser of the terms of this
Agreement) and
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shall not have been waived in accordance with the
terms of this Agreement;
(v) if permitted pursuant to Section 8.04
or 8.06;
(vi) if the Company shall make any substantive amendment
to any Transaction Agreement after the Review Cut-Off Time
without Purchaser's consent;
(d) by the Company:
(i) if Purchaser shall have failed to perform in any
material respect any of its obligations hereunder or shall
have breached in any respect any representation or warranty
contained herein qualified by materiality or shall have
breached in any material respect any representation or
warranty not so qualified, and Purchaser has failed to perform
such obligation or cure such breach, within 30 days of its
receipt of written notice thereof from the Company, and such
failure to perform shall not have been waived in accordance
with the terms of this Agreement;
(ii) if any of the conditions set forth in Section 9.01 or
9.02 shall become impossible to fulfill (other than as a
result of any breach by the Company of the terms of this
Agreement) and shall not have been waived in accordance with
the terms of this Agreement;
(iii) if permitted pursuant to Section 8.02(b).
SECTION 10.02 Effect of Termination. In the event of
termination of this Agreement by either the Company or Purchaser as provided in
Section 10.01, this Agreement shall forthwith become void and have no effect,
72
without any liability or obligation on the part of Purchaser or the Company,
other than the provisions of this Section 10.02, Section 13.09 and Article XI
and except to the extent that such termination results from the wilful and
material breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
ARTICLE XI
Indemnification
SECTION 11.01 Indemnification of Purchaser. The Company
covenants and agrees to defend, indemnify and hold harmless each of Purchaser,
its Affiliates (other than the Company and any Retained Companies), and their
respective officers, directors, partners, employees, agents, advisers and
representatives including, without limitation, the Fund, CD&R Investment
Associates, Inc., a Delaware corporation, and CD&R Associates V Limited
Partnership, a Cayman Islands exempted limited partnership, and CD&R
(collectively, the "Purchaser Indemnitees") from and against, and pay or
reimburse the Purchaser Indemnitees for, any and all claims, demands,
liabilities, obligations, losses, costs, expenses, fines or damages (whether
absolute, accrued, conditional or otherwise and whether or not resulting from
third party claims), including interest and penalties with respect thereto and
out-of-pocket expenses and reasonable attorneys' and accountants' fees and
expenses incurred in the investigation or defense of any of the same or in
asserting, preserving or enforcing any of their respective rights hereunder
(collectively, "Losses"), resulting from or based on (or allegedly resulting
from or based on):
(i) any actions (including by any shareholders of the Company
in connection with any derivative actions) resulting from or based on
(or allegedly resulting from or based on) any of the Transactions,
provided that the indemnity provided in this clause
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(i) shall not include (A) actions brought by any limited partner of the
Fund against Purchaser or any of its Affiliates relating to the
transactions contemplated by this Agreement, (B) Losses resulting from
or based on the acts or omissions of a Purchaser Indemnitee following
the Closing, (C) claims resulting from or based on (1) a breach by
Purchaser of its obligations under this Agreement, (2) any contract,
agreement, obligation, commitment, understanding or other arrangement
between the claimant and any Purchaser Indemnitee, (3) any intentional
tort by a Purchaser Indemnitee or (4) any fee, compensation or other
payment to be paid to any Purchaser Indemnitee;
(ii) subject to the limitations set forth in Section 11.03, any
breach by the Company of any representation, warranty, covenant or
obligation of the Company hereunder; and
(iii) any failure of any of the Distributed Companies to satisfy its
stated obligations and liabilities under the Distribution Agreements,
the Tax Allocation Agreement or any of the other Transaction Agreements
to which it is a party, whether by virtue of such agreement's
unenforceability, the Distributed Company's bankruptcy or otherwise.
The Losses described in clauses (i), (ii) and (iii) of this Section 11.01(a) are
herein referred to as "Purchaser Indemnifiable Losses". The Company shall
reimburse the Purchaser Indemnitees for any legal or other expenses incurred by
such Purchaser Indemnitees in connection with investigating or defending any
such Purchaser Indemnifiable Losses as such expenses are incurred.
SECTION 11.02 Indemnification Procedures. Promptly after
receipt by a Purchaser Indemnitee of notice of the commencement of any action or
the written assertion of any claim, such Purchaser Indemnitee shall, if a claim
in respect thereof is to be made against the Company, as the case may be (the
"Indemnifying Person"), notify the
74
Indemnifying Person in writing of the commencement or the written assertion
thereof. Failure by a Purchaser Indemnitee to so notify the Indemnifying
Person shall relieve the Indemnifying Person from the obligation to indemnify
such Purchaser Indemnitee only to the extent that the Indemnifying Person
suffers actual and material prejudice as a result of such failure but in no
event shall such failure to notify the Indemnifying Person (i) constitute
prejudice suffered by the Indemnifying Person if it has otherwise received
notice of the actions giving rise to such obligation to indemnify or (ii)
relieve it from any liability or obligation that it may otherwise have to
such Purchaser Indemnitee. In case any such action or claim shall be brought
or asserted against any Purchaser Indemnitee and it shall notify the
Indemnifying Person of the commencement or assertion thereof, the
Indemnifying Person shall be entitled to participate therein but the defense
of such action or claim shall be conducted by counsel to the Purchaser
Indemnitee, provided, however, that the Indemnifying Person shall not, in
connection with any one such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same general
allegations, be liable for the fees and expenses of more than one separate
firm of attorneys at any time for all Purchaser Indemnitees, except to the
extent that local counsel, in addition to regular counsel, is required in
order to effectively defend against such action or proceeding and provided
further that a Purchaser Indemnitee shall not enter into any settlement of
any such claim without the prior consent of the Company, such consent not to
be unreasonably withheld or delayed.
SECTION 11.03 Survival of Representations and Warranties. The
representations and warranties of the Company contained in this Agreement shall
expire for all purposes on the first anniversary of the Closing Date, except for
the representations and warranties contained in Sections 3.01(n), 3.01(o) and
3.01(p), which shall expire for all purposes upon expiration of the applicable
statute of limitations.
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ARTICLE XII
Interpretation; Definitions
SECTION 12.01 Interpretation. As used in this
Agreement:
(a) any reference to the Company and its
Subsidiaries means the Company and each of its
Subsidiaries;
(b) any reference to the "Retained Company" and its
Subsidiaries or the "Retained Companies" means the Company and those of
its Subsidiaries included in the Retained Business;
(c) any reference to the "Retained Subsidiaries"
means the Subsidiaries of the Company included in the
Retained Business;
(d) any reference to School, Travel, Technology or Print and
their Subsidiaries means School, Travel, Technology or Print
immediately after completion of the Distributions and those entities
that immediately after the completion of the Distributions will be
Subsidiaries of School, Travel, Technology or Print.
SECTION 12.02 Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
"2001 Notes" is defined in the recitals to this
Agreement.
"2003 Notes" is defined in Section 3.01(d).
"Adverse Tax Act" means, for any Person, any action of such
Person, or any omission by such Person of an action reasonably
available to it, after the date of the Distributions, that materially
contributes to a Final Determination that the Pre-Distribution
76
Transactions or any of the Distributions results in the recognition of
gain to the Company by virtue of the Pre-Distribution Transactions or
any of the Distributions failing to qualify under sections 355 or 368
of the Code, including, without limitation, by reason of any stock or
securities of any Distributed Company failing to qualify as "qualified
property" within the meaning of section 355(c)(2) of the Code, or
otherwise.
"Affiliate" shall have the meaning set forth in Rule 12b-2
under the Exchange Act (as in effect on the date of this Agreement).
"Agreement" is defined in the recitals to this
agreement.
"Assets" is defined in Section 3.01(k).
"Audited Balance Sheet" is defined in Section
3.01(g)(iv).
"Audited Retained Business Financial Statements"
is defined in 3.01(g)(iv).
"Balance Sheet" is defined in Section 3.01(g)(i).
"Beneficially Own" with respect to any securities means having
"beneficial ownership" of such securities (as determined pursuant to
Rule 13d-3 under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing.
"Business Day" means any day on which banking institutions are
open in the City of New York.
"Buyout Transaction" means a tender offer, merger, sale of all
or substantially all the Company's assets or any similar transaction
that offers each holder of Voting Securities (other than, if
77
applicable, the Person proposing such transaction) the opportunity to
dispose of Voting Securities Beneficially Owned by each such holder for
the same consideration or otherwise contemplates the acquisition of
Voting Securities Beneficially Owned by each such holder for the same
consideration.
"Cash Transaction" is defined in Section
4.02(b)(i).
"CD&R" means Xxxxxxx, Xxxxxxxx & Xxxx, Inc., a
Delaware corporation.
"Closing" is defined in Section 1.02.
"Closing Date" is defined in Section 1.02.
"Code" means the Internal Revenue Code of 1986,
as amended.
"Common Stock" is defined in the recitals to this
Agreement.
"Company" is defined in the recitals to this
Agreement.
"Company Business Financial Statements" is
defined in Section 3.01(g)(i).
"Company By-laws" is defined in Section 3.01(a).
"Company Charter" is defined in Section 3.01(a).
"Company Intellectual Property" is defined in
Section 3.01(s).
"Company Meeting" is defined in Section 8.05(a).
"Company Meeting Proposal" is defined in Section
8.05(a).
78
"Company SEC Documents" is defined in Section
3.01(f).
"Company Stock Plans" is defined in Section
3.01(d).
"Company Stockholder Approval" is defined in
Section 3.01(b).
"Contingent Stock" means Common Stock issued after the Closing
Date pursuant to (i) the Amendment to Stock Purchase Agreement, dated
as of June 20, 1996, by and between the Company and Xxxx Xxxxxx or (ii)
any security, option, warrant, call, subscription, right, contract,
commitment, arrangement or understanding required to be disclosed on
Schedule 3.01(d) but not disclosed thereon.
"Contract" is defined in Section 3.01(c)(i).
"Delivery Cut-off Time" is defined in Section
8.04.
"DGCL" is defined in Section 3.01(q).
"Distribution Agreements" is defined in the
recitals to this Agreement.
"Distributions" is defined in the recitals to
this Agreement.
"Distributed Companies" is defined in the
recitals to this Agreement.
"Employee" means any employee or former employee of any member
of the Company or any of its Subsidiaries or any beneficiary or
dependent of any such employee or former employee.
"Employee Benefit Plans" means all defined
contribution, defined benefit, welfare benefit, bonus,
79
incentive compensation, stock option, stock purchase, stock
appreciation right, stock bonus, incentive, deferred compensation,
insurance, medical, dental, vision, life, death benefit, fringe benefit
or other employee benefit plans, programs, policies or arrangements,
including without limitation, any employment, consulting, offer,
secondment, severance or other termination agreement, whether or not an
employee benefit plan within the meaning of section 3(3) of ERISA,
maintained by the Company or any of its Subsidiaries.
"Environmental Law" is defined in Section
3.01(p).
"Environmental Permits" is defined in Section
3.01(p).
"Equity Security" means (i) any Common Stock or other Voting
Securities, (ii) any securities of the Company convertible into or
exchangeable for Common Stock or other Voting Securities or (iii) any
options, rights or warrants (or any similar securities) issued by the
Company to acquire Common Stock or other Voting Securities.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"Exchange Act" is defined in Section 3.01(c)(ii).
"Filed Company SEC Documents" is defined in
Section 3.01(i).
"Final Determination" means the final resolution of liability
for any Tax for any taxable period, including any related interest or
penalties, by or as a result of: (i) a final and unappealable decision,
judgment, decree or other order of a court of competent jurisdiction;
(ii) a closing agreement or accepted offer in compromise under Section
7121 or
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7122 of the Code, or comparable agreement under the laws of other
jurisdictions, which resolves the entire tax liability for any tax
period; (iii) any allowance of a refund or credit in respect of an
overpayment of Tax, but only after the expiration of all periods during
which such refund may be recovered (including by way of offset) by the
applicable taxing jurisdiction; or (iv) any other final disposition,
including by reason of the expiration of the applicable statute of
limitations.
"Fund" means Xxxxxxx, Xxxxxxxx & Xxxx Fund V
Limited Partnership, a Cayman Islands exempted limited
partnership.
"GAAP" means United States generally accepted
accounting principles.
"Governmental Entity" is defined in Section
3.01(c)(ii).
"Hazardous Substance" is defined in Section
3.01(p).
"HSR Act" is defined in Section 3.01(c)(ii).
"Indemnifying Person" is defined in Section
11.02.
"Information Statement" is defined in Section
8.08(a).
"Intellectual Property" means trademarks, trade names, trade
dress, service marks, copyrights, domain names, and similar rights
(including registrations and applications to register or renew the
registration of any of the foregoing), patents and patent applications,
trade secrets, ideas, inventions, improvements, practices, processes,
formulas, designs, know-how, confidential business or technical
information, computer software, firmware, data and
81
documentation, licenses of or agreements relating to any of the
foregoing, rights of privacy and publicity, moral rights, and any other
similar intellectual property rights and tangible embodiments of any of
the foregoing (in any medium including electronic media).
"Investor Directors" is defined in Section 4.01.
"Issuance" is defined in Section 8.05(a).
"knowledge of the Company" or any like expression
means to the knowledge of the persons listed on
Schedule 12.02 after due inquiry.
"Lien" is defined in Section 3.01(c)(i).
"Losses" is defined in Section 11.01(a).
"Market Capitalization" means, for any entity, the market
capitalization of such entity determined on the basis of the average
closing price for the common stock of such entity for the five-day
period ending on the tenth day after the date of the Distributions.
"Material Adverse Effect" on or with respect to an entity (or
group of entities taken as a whole) means any state of facts, event,
change or effect that has had, or would reasonably be expected to have,
a material adverse effect on the business, properties, results of
operations or financial condition of such entity (or, if with respect
thereto, of such group of entities taken as a whole), or on the ability
of such entity (or group of entities) to consummate the transactions
contemplated hereby, including the Pre-Distribution Transactions and
the Distributions, or to perform its obligations under the Transaction
Agreements to which it is or will be a party; provided, however, that a
"Material Adverse Effect" shall exclude (i) the impact on the Company's
earnings for fiscal quarters ending prior to or including the Closing
caused by the inability of the Company to
82
complete acquisitions following the announcement of the Transactions
and/or to account for acquisitions as poolings of interest and (ii) the
effect on the Company of being required as a result of the Transactions
to change accounting treatment for past acquisitions from poolings of
interests to purchases.
"Material Contracts" is defined in Section
3.01(m).
"Material Subsidiary" is defined in Section
3.01(a).
"New Security" means any Equity Security issued by the Company
after the Closing; provided that "New Security" shall not include (i)
any securities issuable upon conversion of any convertible Equity
Security, (ii) any securities issuable upon exercise of any option,
warrant or other similar Equity Security or (iii) any securities
issuable in connection with any stock split, stock dividend or
recapitalization of the Company where such securities are issued to all
stockholders of the Company on a pro rata basis.
"Non-Investor Directors" is defined in Section
4.01.
"Notes to Pro Forma Financial Statements" is
defined in Section 3.01(g)(iii).
"Offer Conditions" is defined in Section 8.07(a).
"Offer Documents" is defined in Section 8.07(b).
"Other Holders" means the holders of the Other
Shares.
"Other Shares" means Voting Securities not
Beneficially Owned by Purchaser or its Affiliates.
83
"Permit" is defined in Section 3.01(c)(i).
"Permitted Liens" shall mean those Liens (A) securing debt
that is reflected on the Balance Sheet or the notes thereto or securing
debt incurred as part of the Proposed Financings, (B) referred to in
Schedule 3.01(l), (C) for Taxes not yet due or payable or being
contested in good faith and for which adequate reserves have been
established in accordance with GAAP, (D) that constitute mechanics',
carriers', workmens' or like liens, liens arising under original
purchase price conditional sales contracts and equipment leases with
third parties entered into in the ordinary course, (E) Liens incurred
or deposits made in the ordinary course of business consistent with
past practice in connection with workers' compensation, unemployment
insurance and social security, retirement and other legislation and (F)
easements, covenants, declarations, rights of way, encumbrances, or
similar restrictions in connection with real property owned by certain
of the Retained Subsidiaries that do not materially impair the use of
such real property by such Retained Subsidiaries, and in the case of
Liens described in clauses (B), (C), (D), (E) or (F) that, individually
or in the aggregate, would not have a Material Adverse Effect on the
Retained Companies, taken as a whole.
"Permitted Options" is defined in Section
4.02(a)(i).
"Permitted Securities Transaction" is defined in
Section 4.02(b)(ii).
"Person" means any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated
organization, government or department or agency of a government.
"Plans" is defined in Section 3.01(o)(ii).
84
"Pre-Distribution Transactions" means the contribution of
certain assets, the assumption of certain liabilities and other
transfers contemplated by the respective Distribution Agreements,
pursuant to which the respective businesses of School, Travel,
Technology and Print will be consolidated under such corporations prior
to the Distributions.
"Print" is defined in the recitals to this
Agreement.
"Print Distribution" is defined in the recitals
to this Agreement.
"Print Distribution Agreement" is defined in the
recitals to this Agreement.
"Pro Forma Balance Sheet" is defined in Section
3.01(g)(iii).
"Pro Forma Income Statements" is defined in
Section 3.01(g)(iii).
"Pro Forma Retained Business Financial
Statements" is defined in Section 3.01(g)(iii).
"Pro Rata Share" means the fraction of an entire issuance of
New Securities, the numerator of which shall be the number of shares of
Common Stock owned or receivable upon exercise of the Warrant and the
Special Warrant by Purchaser and its Affiliates (other than the Company
and its Subsidiaries) immediately prior to such issuance of such New
Securities and the denominator of which shall be the aggregate number
of shares of Common Stock outstanding immediately prior to such
issuance of such New Securities and receivable upon exercise of the
Warrant and the Special Warrant.
"Proposed Charter Amendments" is defined in
Section 4.05.
85
"Proposed Financings" is defined in the recitals
to this Agreement.
"Proxy Statement" is defined in Section 8.05(b).
"Purchase Price" is defined in Section 1.01.
"Purchaser" is defined in the recitals to this
Agreement.
"Purchaser Indemnifiable Losses" is defined in
Section 11.01(a).
"Purchaser Indemnitees" is defined in Section
11.01(a).
"Purchaser's Expenses" is defined in Section
13.09(b).
"Purchaser's Percentage Interest" means the greater of (i) the
percentage of Total Voting Power, determined on the basis of the number
of Voting Securities actually outstanding, that is controlled directly
or indirectly by Purchaser or any Subsidiary or Affiliate of Purchaser
(other than the Company and its Subsidiaries), including by beneficial
ownership and (ii) the percentage of the total Fair Market Value of all
classes of outstanding capital stock of the Company that is owned
directly or indirectly by Purchaser or any Subsidiary or Affiliate of
Purchaser (other than the Company and its Subsidiaries), including by
beneficial ownership. For purposes of determining Purchaser's
Percentage Interest, (a) any options, rights, warrants (including the
Warrants and the Special Warrants) and similar securities that entitle
the holder thereof to acquire shares of any class of capital stock of
the Company, whether voting or non-voting, shall be treated as
exercised; (b) any debt security that is convertible into shares of any
class of capital stock of the Company, whether voting or non-voting,
shall be treated as converted; and
86
(c) any equity security that is convertible into shares of any class of
capital stock of the Company, whether voting or non-voting, shall be
treated as converted, but only to the extent that such conversion would
result in Purchaser's Percentage Interest being greater than such
interest would be if such conversion had not been deemed to occur.
"Purchaser's Total Securities" is defined in
Section 4.01(b)(i).
"Registration Rights Agreement" is defined in the
recitals to this Agreement.
"Retained Business" means the business and
operation of the Retained Companies.
"Retained Companies" is defined in Section
12.01(b).
"Retained Plans" is defined in Section
3.01(O)(i).
"Retained Subsidiaries" is defined in Section
12.01(c).
"Review Cut-off Time" is defined in Section 8.04.
"School" is defined in the recitals to this
Agreement.
"School Distribution" is defined in the recitals
to this Agreement.
"School Distribution Agreements" is defined in
the recitals to this Agreement.
"SEC" means the Securities and Exchange
Commission.
87
"Securities Act" is defined in Section
3.01(c)(ii).
"Security" means at any time Equity Securities and any shares
of any class of capital stock of the Company.
"Shares" is defined in Section 1.01.
"Special Warrants" is defined in the recitals to
this Agreement.
"Special Warrant Shares" means shares of Common Stock issuable
upon exercise of the Special Warrants.
"Subscription Notice" is defined in Section 5.01.
"Subsidiary" means, as to any Person, any corporation at least
a majority of the shares of stock of which having general voting power
under ordinary circumstances to elect a majority of the Board of
Directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency) is, at the
time as of which the determination is being made, owned by such Person,
or one or more of its Subsidiaries or by such Person and one or more of
its Subsidiaries.
"Superior Proposal" is defined in Section
8.02(b).
"Tax Allocation Agreement" is defined in the
recitals to this Agreement.
"Tax Returns" is defined in Section 3.01(n)(i).
"Taxes" is defined in Section 3.01(n)(i).
"Technology" is defined in the recitals to this
Agreement.
88
"Technology Distribution" is defined in the
recitals to this Agreement.
"Technology Distribution Agreement" is defined in
the recitals to this Agreement.
"Tender Offer" is defined in the recitals to this
Agreement.
"Tender Offer Statement" is defined in Section
8.07(b).
"Termination Fee" is defined in Section 13.09(b).
"Total Voting Power" means at any time the total combined
voting power in the general election of directors of all the Voting
Securities then outstanding.
"Transactions" means the execution, delivery and performance
of each Transaction Agreement by the Company and the consummation by
the Company of the Pre-Distribution Transactions, the Distributions,
the Proposed Financings, the Tender Offer, the issuance and sale by the
Company of the Shares, the Special Warrants and the Warrants, and of
the other transactions contemplated by the Transaction Agreements.
"Transaction Agreements" means, collectively, this Agreement,
the Special Warrant, the Warrant, the Registration Rights Agreement,
the Distribution Agreements, the Tax Allocation Agreement, the tax
representation letters to be delivered in connection with the
Distributions and such other agreements as are entered into to effect
the Pre-Distribution Transactions, including, without limitation, any
employee benefits agreement, intellectual property agreement and
transitional services agreement.
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"Transaction Fee" means an amount equal to
$15 million plus out-of-pocket expenses.
"Transaction Proposal" is defined in Section
8.02.
"Travel" is defined in the recitals to this
Agreement.
"Travel Distribution" is defined in the recitals
to this Agreement.
"Travel Distribution Agreement" is defined in the
recitals to this Agreement.
"Unaudited Company Business Financial Statements"
is defined in Section 3.01(g)(ii).
"Voting Securities" means at any time shares of any class of
capital stock of the Company which are then entitled to vote generally
in the election of directors.
"Warrants" is defined in the recitals to this
Agreement.
"Warrant Shares" means the shares of Common Stock issuable
upon exercise of the Warrants.
ARTICLE XIII
Miscellaneous
SECTION 13.01 Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
90
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable.
SECTION 13.02 Specific Enforcement. Purchaser, on the one
hand, and the Company, on the other, acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state thereof having jurisdiction, this being
in addition to any other remedy to which they may be entitled at law or equity.
SECTION 13.03 Entire Agreement. This Agreement (including the
documents set forth in the Exhibits and Schedules hereto) and the other
Transaction Agreements contain the entire understanding of the parties with
respect to the transactions contemplated hereby.
SECTION 13.04 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more of the counterparts have
been signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
SECTION 13.05 Notices. All notices, consents, requests,
instructions, approvals and other communications provided for herein and all
legal process in regard hereto shall be validly given, made or served, if in
writing and delivered personally, by telecopy (except for legal process) or sent
by registered mail, postage prepaid, if to:
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The Company:
U.S. Office Products Company
0000 Xxxxxx Xxxxxxxxx Xxxxxx, X.X.
Suite 000 Xxxx
Xxxxxxxxxx, X.X. 00000
Attention of: Xxxx X. Director
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Washington, D.C. 20037
Attention of: Xxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
Purchaser:
c/o Clayton, Xxxxxxxx & Xxxx Fund V
Limited Partnership
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx
with a copy to:
Xxxxxxx, Xxxxxxxx & Xxxx, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention of: Xxxxx X. Xxxx
Telecopy No.: (000) 000-0000
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with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention of: Xxxxxx X. Xxxxxxxxx
Telecopy No.: (000) 000-0000
or to such other address or telex number as any party may, from time to time,
designate in a written notice given in a like manner.
SECTION 13.06 Amendments. This Agreement may be amended as to
Purchaser and their successors and assigns (determined as provided in Section
13.08), and the Company may take any action herein prohibited, or omit to
perform any act required to be performed by it, if the Company shall obtain the
written consent of Purchaser. This Agreement may not be waived, changed,
modified, or discharged orally, but only by an agreement in writing signed by
the party or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right to consent to
such waiver, change, modification or discharge on behalf of such party.
SECTION 13.07 Cooperation. Purchaser and the Company agree to
take, or cause to be taken, all such further or other actions as shall
reasonably be necessary to make effective and consummate the transactions
contemplated by this Agreement, including, without limitation, making all
required filings under the HSR Act, if any; provided, however, that the
foregoing shall not limit the ability of the Company to abandon the
Distributions pursuant to Section 8.03.
SECTION 13.08 Successors and Assigns. All covenants and
agreements contained herein shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns; provided, however, that
93
neither party may assign any of its rights under this Agreement without the
written consent of the other party.
SECTION 13.09 Expenses and Remedies. (a) Whether or not the
Closing takes place, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the party
incurring such expense, except as set forth in the next seven paragraphs.
(b) Notwithstanding Section 13.09(a), if Purchaser terminates
this Agreement pursuant to Section 10.01(c)(ii), (c)(iii) or (c)(vi) the Company
shall reimburse Purchaser for the reasonable out-of-pocket expenses (including
reasonable fees and expenses of legal counsel) incurred by Purchaser in
connection with this Agreement or the matters contemplated hereby ("Purchaser's
Expenses") and shall pay CD&R a termination fee of $25 million (the "Termination
Fee").
(c) Notwithstanding Section 13.09(a), if the Company
terminates this Agreement pursuant to Section 10.01(d)(iii), the Company shall
pay Purchaser's Expenses to Purchaser and the Termination Fee to CD&R.
(d) Notwithstanding Section 13.09(a), if Purchaser terminates
this Agreement pursuant to any provision of Section 10.01 other than those
referred to in Sections 13.09(b) or the Company terminates this Agreement
pursuant to any provision of Section 10.01 other than those referred to in
Section 13.09(c) and other than pursuant to Section 10.01(d)(i), the Company
shall pay Purchaser's Expenses to Purchaser; provided that if Purchaser
terminates this Agreement pursuant to Section 10.01(c)(iv) by reason of the
failure to be satisfied of the condition set forth in Section 9.03(k),
Purchaser's Expenses shall be limited to $2,000,000.
(e) Notwithstanding Section 13.09(a), if (i) the Company
terminates this Agreement pursuant to any provision of Section 10.01 other than
those referred to in Sections
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13.09(c) or Purchaser terminates this Agreement pursuant to Section
10.01(b)(ii), (ii) a Transaction Proposal was made prior to September 30, 1998
and (iii) during the period ending 12 months after termination the Company
enters into an agreement relating to or publicly announces, a transaction
including the sale or other disposition of Equity Securities representing in
excess of 20% of the Total Voting Power or 20% of the assets of the Company and
its Subsidiaries, taken as a whole, then upon consummation of such transaction,
the Company shall pay Purchaser's Expenses (without duplication of any
Purchaser's Expenses paid pursuant to Section 13.09(d)) and the Termination Fee
to CD&R.
(f) Notwithstanding Section 13.09(a), upon the occurrence of
the Closing, the Company shall pay Purchaser's Expenses to Purchaser.
(g) Notwithstanding Section 13.09(a), if Purchaser terminates
this Agreement pursuant to Section 10.01(c)(i) the Company shall reimburse
Purchaser for Purchaser's Expenses and shall pay CD&R a termination fee of $10
million.
SECTION 13.10 Transfer of Shares and Warrants. Purchaser
understands and agrees that neither any shares of Common Stock or any Warrants,
Special Warrants, Warrant Shares or Special Warrant Shares have been registered
under the Securities Act or the securities laws of any state and that they may
be sold or otherwise disposed of only in one or more transactions registered
under the Securities Act and, where applicable, such laws or as to which an
exemption from the registration requirements of the Securities Act and, where
applicable, such laws is available. Purchaser acknowledges that except as
provided in the Registration Rights Agreement, Purchaser has no right to require
the Company to register shares of Common Stock, the Warrants, the Special
Warrants, the Warrant Shares or the Special Warrant Shares. Purchaser
understands and agrees that each certificate representing shares of Common
Stock, Warrants, Special Warrants, Warrant Shares or
95
Special Warrant Shares (other than, with respect to the first legend, shares of
Common Stock, Warrants, Special Warrants, Warrant Shares or Special Warrant
Shares that are no longer subject to the provisions of Article VII and other
than, with respect to the second legend, shares of Common Stock, Warrants,
Special Warrants, Warrant Shares or Special Warrant Shares which have been
transferred in a transaction registered under the Securities Act or exempt from
the registration requirements of the Securities Act pursuant to Rule 144
thereunder or any similar rule or regulation) shall bear the following legends:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED BY AN AGREEMENT ON FILE
AT THE OFFICES OF THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
and Xxxxxxxxx agrees to transfer shares of Common Stock, Warrants and Warrant
Shares only in accordance with the provisions of such legends.
SECTION 13.11 Governing Law. This Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the State
of New York, except to the extent that Delaware law mandatorily governs.
SECTION 13.12 Publicity. The Company and Purchaser will
consult and cooperate with each other before issuing, and provide each other the
opportunity to review and comment upon, any press releases or otherwise making
public statements with respect to the transactions contemplated by this
Agreement.
96
SECTION 13.13 No Third Party Beneficiaries. (a) Nothing
contained in this Agreement is intended to confer upon any person or entity
other than the parties hereto and their respective successors and permitted
assigns, any benefit, right or remedies under or by reason of this Agreement;
provided, however, that the parties hereto hereby acknowledge and agree that the
Distributed Companies are each third party beneficiaries of Section 6.01 of this
Agreement and that the Purchaser Indemnitees (other than Purchaser) are third
party beneficiaries of Article XI of this Agreement.
(b) Purchaser shall cooperate with the Company in connection
with any tax audits or administrative or judicial proceedings with respect to
the application of Section 355(e) (as ultimately enacted), including in
rebutting any presumption arising under Section 355(e) of the Code.
SECTION 13.14 Consent to Jurisdiction. Each of the Company and
Purchaser irrevocably submits to the personal exclusive jurisdiction of the
United States District Court for the Southern District of New York for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby (and, to the extent permitted under
applicable rules of procedure, agrees not to commence any action, suit or
proceeding relating hereto except in such court). Each of the Company and
Purchaser further agrees that service of any process, summons, notice or
document hand delivered or sent by registered mail to such party's respective
address set forth in Section 13.05 will be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction as set forth in the immediately preceding
sentence. Each of the Company and Purchaser irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in the
United States District Court for the Southern District of New York, and
97
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in such court that any such action, suit or proceeding brought in such
court has been brought in an inconvenient forum.
98
IN WITNESS WHEREOF, Purchaser and the Company have caused this
Agreement to be duly executed as of the day and year first above written.
U.S. OFFICE PRODUCTS COMPANY
By: /s/ Xxxxxx Xxxxxx
-------------------------
Name: Xxxxxx Xxxxxx
Title: President - CEO
CDR-PC ACQUISITION, L.L.C.
By: /s/ Xxxxx X. Xxxx
------------------------
Name: Xxxxx X. Xxxx
Title: Executive Vice
President
99
EXHIBIT 1
TO INVESTMENT AGREEMENT
TERMS OF SPECIAL WARRANTS
Exercise Price: $.01 per share.
Expiration Date: 12 years from date of issuance.
Exercisability: To the extent of 24.9% of the sum of
(A) the number of shares of Common
Stock issued upon conversion of the
2001 Notes, (B) the number of any
shares of Contingent Stock that are
issued, and (C) the number of shares of
Common Stock issuable pursuant to this
Special Warrant in respect of shares
described in clauses (A) and (B) above;
or after the second anniversary of the
issuance of this Special Warrant,
whichever is earlier.
Shares Subject to Equal to the number of shares of
Warrant: Common Stock that is the difference
between (i) 24.9% of the sum of (A) the
outstanding shares of Common Stock as
of the Closing Date after giving effect
to the issuance of the Shares and the
exercise of this Special Warrant, and
assuming the conversion into Common
Stock of all the 2001 Notes outstanding
on the Closing Date at the conversion
price resulting from adjustments made
as a result of the Tender Offer and the
Distributions and (B) the number of any
shares of Contingent Stock that are
issued, and (ii) 24.9% of the
outstanding shares of Common Stock as
of the Closing after giving effect to
the issuance of the Shares.
EXHIBIT 1
TO INVESTMENT AGREEMENT
Transferability: Transferable to the same extent as
Shares.
Cashless Exercise: Permitted.
Antidilution Customary.
Protection:
Registration Rights: Same as for Shares.
Listing of Warrants: Upon request of Purchaser.
Listing of Shares Prior to Closing.
issuable upon
exercise of Warrants:
Listing of Special The Company will not be permitted to
Covenants: repurchase Common Stock if as a
result thereof the exercisability of
the Special Warrant will be limited.
2
EXHIBIT 2
TO INVESTMENT AGREEMENT
TERMS OF WARRANTS
Exercise Price: 1.5 times $270 million divided by the
total number of Shares and shares of
Common Stock subject to Special
Warrants.
Expiration Date: 12 years from date of issuance.
Exercisability: Only after the second anniversary of
issuance.
Shares Subject to Equal to the number of the Shares
Warrant: plus the number of shares subject to
the Special Warrant.
Transferability: Transferable to the same extent as
the Shares under Section 7.01.
Cashless Exercise: Permitted.
Antidilution Customary.
Protection:
Registration Rights: Same as for Shares.
Listing of Warrants: Upon request of Purchaser.
Listing of Shares Prior to Closing.
issuable upon
exercise of Warrants:
Listing of Special The Company will not be permitted to
Covenants: repurchase Common Stock if as a
result thereof the exercisability of
the Warrant will be limited.
EXHIBIT 3
TO INVESTMENT AGREEMENT
TERMS OF REGISTRATION RIGHTS AGREEMENT
Registrable Shares issued under Investment Agreement
Securities: ment, Warrants, Special Warrants and other
Common Stock purchased by Purchaser in
compliance with the Investment Agreement.
Demand Registrations: Four.
Piggyback Unlimited.
Registrations:
Registration Fees Payable by the Company, including
and Expenses: counsel for selling stockholder.
Selection of Purchaser selects underwriters for
Underwriters: Demand Registrations subject to Company's
consent which shall not be unreasonably
withheld. Company selects underwriters
for Piggyback Registrations subject to
Purchaser's consent which shall not be
unreasonably withheld.
Priority in Exercise In the event of cutbacks, securities
of Registration of to be registered for the account of
Rights: the Purchaser shall have priority
over other securities to be registered
in connection with Demand Registrations
and over other securities to be
registered for the account of other
selling stockholders in Piggyback
Registrations.
Indemnification: Customary.
Registration Customary including, without limitation,
Procedures: provision of opinions of counsel and
comfort letter.
