Exhibit 2
AGREEMENT
---------
AGREEMENT dated as of December 15, 1997 between X.X. Xxxxxxxxx & Sons
Company ("RRD") and Xxxx Capital, Inc. ("Xxxx").
WHEREAS, RRD and affiliates of Xxxx are principal stockholders of Stream
International Holdings, Inc., a Delaware corporation ("Stream"); and
WHEREAS, RRD, in its capacity as a significant stockholder and lender, and
Xxxx, on behalf of its affiliates in their capacity as significant stockholders,
desire to take steps to reorganize Stream and its subsidiaries and thus maximize
potential values for all stockholders of Stream.
NOW, THEREFORE, for valuable consideration, receipt of which is
acknowledged, RRD and Xxxx agree as follows:
1. Certain Definitions.
"CST" shall mean Corporate Software and Technology, Inc., a Delaware
corporation and wholly-owned subsidiary of CST Holdings.
"CST Assets" shall have the meaning set forth in the CST Contribution
Agreement.
"CST Assumed Liabilities" shall have the meaning set forth in the CST
Contribution Agreement.
"CST Compensation Agreement" shall have the meaning set forth in the CST
Contribution Agreement.
"CST Contribution Agreement" shall mean the Contribution Agreement among
Stream, SII, CST and CST Holdings in the form appended hereto as Exhibit A.
"CST Holdings" shall mean Corporate Software & Technology Holdings, Inc., a
Delaware corporation.
"CST Letter Agreement" shall mean the Letter Agreement referred to in the
CST Contribution Agreement.
"CST Per Share Value" shall mean the amount determined by subtracting from
$150 million all Third Party Debt directly attributable to CST as of September
30, 1997 and 33.3333% of the Net RRD Debt as of September 30, 1997 and then
dividing such remainder by the sum of (i) the Number of Stream Outstanding
Shares as of the Effective Date, and (ii) the number of shares of
non-voting Common Stock of CST Holdings to be issued to Xxxx pursuant to Section
4.1 of this Agreement.
"Effective Date" shall mean the effective date of the MMI Drop-Down and CST
Drop-Down (as defined in Subsection 3.1 and 4.1, respectively).
"MMI" shall mean Modus Media International, Inc., a Delaware corporation
and a wholly-owned subsidiary of MMI Holdings.
"MMI Assets" shall have the meaning set forth in the MMI Contribution
Agreement.
"MMI Assumed Liabilities" shall have the meaning set forth in the MMI
Contribution Agreement.
"MMI Compensation Agreement" shall have the meaning set forth in the MMI
Contribution Agreement.
"MMI Contribution Agreement" shall mean the Contribution Agreement among
Stream, MMI and MMI Holdings in the form appended hereto as Exhibit B.
"MMI Equity Value" shall mean the amount determined by subtracting from $99
million all Third Party Debt directly attributable to MMI as of September 30,
1997 and 22.2222% of the Net RRD Debt as of September 30, 1997.
"MMI Holdings" shall mean Modus Media International Holdings, Inc., a
Delaware corporation.
"MMI Letter Agreement" shall mean the Letter Agreement referred to in the
MMI Contribution Agreement.
"MMI Per Share Value" shall mean the amount determined by subtracting from
$100 million all Third Party Debt directly attributable to MMI as of September
30, 1997, and 22.2222% of the Net RRD Debt as of September 30, 1997, and then
dividing such remainder by the sum of (i) the Number of Stream Outstanding
Shares as of the Effective Date and (ii) the number of shares of non-voting
Common Stock of MMI Holdings to be issued to Xxxx pursuant to Section 3.1 of
this Agreement.
"MMI Holdings Preferred Stock" shall mean the 9.50% Series Senior
Cumulative Preferred Stock of MMI Holdings established upon effectiveness of the
Certificate of Designation referred to in Section 3.8.
2
"Net RRD Debt" shall mean all indebtedness of Stream and its subsidiaries
to RRD and its subsidiaries, net of any indebtedness from RRD and its
subsidiaries to Stream and its subsidiaries. In determining Net RRD Debt,
intercompany amounts currently in dispute as detailed in the RRD xxxx-up of the
memorandum dated August 8, 1997 from Xxxx Xxxxxxxx to Xxxxx Xxxxxxxxxxx and Xxx
Xxxxxx (totalling $25.9 million) shall be split 50/50 so that only half of all
such amounts shall be included in the calculation of Net RRD Debt. No
adjustments to the intercompany account will be made in respect of items arising
prior to December 31, 1996 other than those items already reflected in the
December 31, 1996 audit of the intercompany account, and any other adjustments
shall be made to accurately reflect intercompany transactions arising in the
ordinary operations of the businesses of OTS, CST and MMI after December 31,
1996. The total Net RRD Debt as of September 30, 1997 is $182,905,104, of which
$81,291,259 is attributable to OTS, $40,645,538 to MMI Holdings and $60,968,307
to CST Holdings. Such determination of the amount of Net RRD Debt as of
September 30, 1997 shall be final and binding on RRD, Stream, MMI Holdings, MMI,
CST Holdings and CST.
"Net RRD Ownership Percentage" shall mean a fraction, the numerator of
which shall be the number of shares of Class A Common Stock of Stream owned by
RRD and its affiliates (excluding any shares of Class A-1 Common Stock) and the
denominator of which shall be the Number of Stream Outstanding Shares.
"Number of Stream Outstanding Shares" shall mean the total number of
outstanding shares of Class A Common Stock of Stream (excluding any shares of
Class A-1 Common Stock), giving effect to the assumed mandatory conversion of
all outstanding shares of Class B-V and Class B-N Common Stock of Stream into
shares of Class A Common Stock at the conversion rate set forth in the
Certificate of Incorporation of Stream and also giving effect to the assumed
exercise of all outstanding options to purchase shares of Class B-V Common Stock
of Stream.
"OTS" shall mean Stream, as its business shall exist after the MMI Spin-Off
and CST Spin-Off.
"OTS Per Share Value" shall mean the amount determined by subtracting from
$200 million all Third Party Debt (if any) directly attributable to OTS as of
September 30, 1997 and 44.4445% of the Net RRD Debt as of September 30, 1997 and
then dividing the remainder by the Number of Stream Outstanding Shares as of the
Effective Date.
"Portland Assets" shall mean those assets set forth on Exhibit C appended
hereto.
3
"Reorganization" shall mean the transactions and events referred to in
Sections 3, 4, 5 (other than Subsection 5.4), 6, 7, 11 and 12 of this Agreement.
"SII" shall mean Stream International, Inc., a Delaware corporation and
wholly-owned indirect subsidiary of Stream (the name of which shall be changed
to Stream International Services Corp.).
"Spin-Off Date" shall mean the date on which Stream effects the MMI Spin-
Off (as defined in Section 3.3) and CST Spin-Off (as defined in Section 4.3).
"Stream IPO" shall mean the initial underwritten public offering of Common
Stock of Stream.
"Third Party Debt" shall mean all outstanding indebtedness for borrowed
money (including obligations under capital leases) of Stream and its
subsidiaries, other than indebtedness to RRD and its affiliates. The amounts of
Third Party Debt directly attributable to OTS, MMI Holdings and CST Holdings as
of September 30, 1997 shall be as set forth on Schedule G to the MMI Letter
Agreement, Schedule C to the MMI Letter Agreement and Schedule C to the CST
Letter Agreement, respectively, and such determination of the amount of Third
Party Debt as of September 30, 1997 shall be final and binding on RRD, Stream,
MMI Holdings, MMI, CST Holdings and CST.
2. Reorganization. RRD and Xxxx shall each use reasonable efforts to cause
Stream to effect the Reorganization and other transactions set forth herein. It
is understood that Stream, MMI Holdings, MMI, CST Holdings and CST are not
parties to this Agreement. Accordingly, any transactions comprising part of the
Reorganization or otherwise set forth herein that require approval by the Board
of Directors of Stream shall be subject to approval by the Board of Directors of
Stream and, notwithstanding anything to the contrary in this Agreement, Stream
shall have no obligation to effect any such transaction unless and until such
approval of its Board of Directors is obtained.
3. MMI.
3.1 MMI Contribution Agreement; MMI Drop-Down. Prior to the earlier of
(1) the consummation of the Stream IPO and (2) December 31, 1997, Stream, MMI
Holdings and MMI shall enter into the MMI Contribution Agreement pursuant to
which Stream shall transfer all of the MMI Assets and MMI Assumed Liabilities to
MMI Holdings, and MMI Holdings shall issue voting common stock and preferred
stock to Stream in a taxable transaction. Stream shall transfer to MMI Holdings:
(i) all then outstanding Third-Party Debt directly attributable to the MMI
business, and (ii) 40% of the increase in the Net RRD Debt from October 1, 1997
through the Effective Date, and MMI Holdings shall transfer to MMI the MMI
Assets and the MMI Assumed
4
Liabilities (collectively, the "MMI Drop-Down"). Immediately prior to, or
simultaneously with, the MMI Drop-Down, MMI Holdings shall issue to Xxxx, which
is not, directly or indirectly a stockholder of Stream, pursuant to the MMI
Compensation Agreement, a number of shares of non-voting Common Stock of MMI
Holdings equal to $1 million divided by the amount determined by (i) subtracting
from $99 million all Third Party Debt directly attributable to MMI as of
September 30, 1997 and 22.2222% of the Net RRD Debt as of September 30, 1997 and
(ii) dividing such remainder by the Number of Stream Outstanding Shares at such
time.
3.2 Exchange of Net RRD Debt. Immediately following the MMI Drop-Down,
RRD shall surrender to Stream 22.2222% of the Net RRD Debt as of September 30,
1997 for cancellation in exchange for a number of shares of MMI Holdings
Preferred Stock determined by dividing 22.2222% of such Net RRD Debt by $1,000.
3.3 MMI Spin-Off. Prior to the earlier of (i) the consummation of the
Stream IPO and (2) January 10, 1998, Stream shall distribute all of the shares
of MMI Holdings Common Stock held by it to the stockholders of Stream in a
taxable transaction (the "MMI Spin-Off"). Such shares shall be distributed on a
pro rata basis to holders of Class A Common Stock and Class B-V and Class B-N
Common Stock (collectively, "Class B Common Stock") of Stream, giving effect to
the assumed mandatory conversion of all Class B Common Stock into Class A Common
Stock at the conversion rate set forth in the Certificate of Incorporation of
Stream. No such distribution shall be made with respect to shares of Class A-1
Common Stock of Stream.
3.4 Exchange of RRD Equity in MMI Holdings. Immediately after the MMI
Spin-Off, RRD shall exchange all of the shares of Common Stock of MMI Holdings
held by it and its affiliates for a number of shares of MMI Holdings Preferred
Stock determined by multiplying the MMI Equity Value by the Net RRD Ownership
Percentage at such time, and then dividing such product by $1,000.
3.5 Indemnification. Upon the Effective Date, all indemnification
obligations of RRD set forth in the Contribution Agreement dated April 21, 1995
among RRD, Software Holdings, Inc. and others shall terminate.
3.6 Letter Agreement. Upon the Effective Date, MMI Holdings, CST Holdings
and certain stockholders affiliated with Xxxx shall enter into a letter
agreement in the form appended hereto as Exhibit Y.
3.7 Xxxx Management Agreement. Upon the Effective Date, MMI Holdings and
an affiliate of Xxxx shall enter into a Management Agreement in the form
appended hereto as Exhibit D.
5
3.8 Amendment to MMI Holdings Charter. Upon the Effective Date, the
Certificate of Incorporation of MMI Holdings shall be amended and restated as
set forth in Exhibit F-1 appended hereto, and the Certificate of Designation as
set forth in Exhibit F-2 appended hereto shall have become effective.
3.9 RRD Investor Rights Agreements. Upon the Effective Date, MMI Holdings
and RRD shall enter into an Investor Rights Agreement concerning information
rights and quarterly reviews, in the form appended hereto as Exhibit E.
3.10 Transition Services Agreement. RRD shall use its reasonable best
efforts to negotiate a transition services agreement between RRD and MMI to be
executed and delivered on or prior to the Spin-Off Date.
4. CST.
4.1 CST Drop-Down. Prior to the earlier of (1) the consummation of the
Stream IPO and (2) December 31, 1997 and concurrently with the MMI Drop-Down,
Stream, SII, CST Holdings and CST shall enter into the CST Contribution
Agreement pursuant to which SII shall transfer all of the CST Assets and CST
Assumed Liabilities to CST Holdings, and CST Holdings will issue voting common
stock to SII in a taxable transaction. Stream shall transfer to CST Holdings
(as a deemed transfer to SII and then by SII to CST Holdings) (i) all then
outstanding Third-Party Debt directly attributable to the CST business, and (ii)
60% of any increase in the Net RRD Debt from October 1, 1997 through the
Effective Date, and CST Holdings shall transfer to CST the CST Assets and the
CST Liabilities (collectively, the "CST Drop-Down"). Immediately prior to, or
simultaneously with, the CST Drop-Down, CST Holdings shall issue to Xxxx,
pursuant to the CST Compensation Agreement, a number of shares of non-voting
Common Stock of CST Holdings equal to $1,000,000 divided by the amount
determined by (i) subtracting from $149 million all Third Party Debt directly
attributable to CST as of September 30, 1997 and 33.3333% of the Net RRD Debt as
of September 30, 1997 and (ii) dividing such remainder by the Number of Stream
Outstanding Shares at such time. SII shall then transfer to Stream all of the
shares of CST Holdings Common Stock held by it.
4.2 Exchange of Net RRD Debt. Immediately following the CST Drop-Down,
RRD shall surrender to Stream 33.3333% of the Net RRD Debt as of September 30,
1997 for cancellation in exchange for a number of shares of CST Holdings Common
Stock equal to 33.3333% of the Net RRD Debt divided by the CST Per Share Value.
4.3 CST Spin-Off. Prior to the earlier of (1) the consummation of the
Stream IPO and (2) January 10, 1998 and concurrently with the MMI Spin-Off,
6
Stream shall distribute all of its shares of CST Holdings Common Stock to the
stockholders of Stream in a taxable transaction (such distribution by Stream,
the "CST Spin-Off"). Such shares shall be distributed on a pro-rata basis to
the holders of Class A Common Stock and Class B Common Stock, giving effect to
the assumed mandatory conversion of all Class B Common Stock into Class A Common
Stock at the conversion rate set forth in the Certificate of Incorporation of
Stream. No such distribution shall be made with respect to shares of Class A-1
Common Stock of Stream.
4.4 Xxxx Management Agreement. Upon the Effective Date, CST Holdings and
an affiliate of Xxxx shall enter into a Management Agreement in the form
appended hereto as Exhibit G.
4.5 Amendment to CST Holdings Charter. Upon the Effective Date, the
Certificate of Incorporation of CST Holdings shall be amended and restated, as
set forth in Exhibit H appended hereto.
4.6 Irrevocable Stockholders' Voting Agreement and Proxy. Upon the
Effective Date, RRD and certain stockholders shall enter into an Irrevocable
Stockholders' Voting Agreement and Proxy, in the form appended hereto as Exhibit
I.
4.7 RRD Investor Rights Agreement. Upon the Effective Date, CST Holdings
and RRD shall enter into an Investor Rights Agreement, in the form appended
hereto as Exhibit J, which shall provide for preemptive rights to RRD with
respect to the issuance of any securities by CST Holdings and certain rights to
information and quarterly management reviews.
4.8 CST Indemnity to RRD. Upon the Effective Date, CST shall enter into a
Reimbursement Agreement with RRD in the form appended hereto as Exhibit K.
4.9 Sharing of Proceeds Upon Sale of CST. After the Effective Date, CST
Holdings shall enter into an agreement with members of management of CST
providing for the payment of an amount equal to 1% of any proceeds received upon
a sale of all or substantially all of the business or assets of CST Holdings and
its subsidiaries (by merger, sale of stock, sale of assets or otherwise) prior
to June 30, 1999. Such agreement shall be in such form and upon such terms as
shall be approved by the Board of Directors of CST.
5. OTS.
5.1 Exchange of RRD Debt in OTS. Upon the Effective Date, RRD shall
surrender 44.4445% of any Net RRD Debt as of September 30, 1997 for cancellation
in exchange for a number of shares of Class A-1 Common Stock of Stream
determined by dividing 44.4445% of the Net RRD Debt as of
7
September 30, 1997 by the OTS Per Share Value. The terms of the Class A-1
Common Stock shall be as set forth in Exhibit L-1.
5.2 Amendment to Stream Charter. Upon the Effective Date, the Certificate
of Incorporation of Stream shall be amended and restated substantially as set
forth on Exhibit L-1 appended hereto. The Certificate of Incorporation of
Stream shall be further amended and restated immediately prior to the closing of
the Stream IPO as set forth on Exhibit L-2 appended hereto.
5.3 Irrevocable Stockholders' Voting Agreement and Proxy. Upon the
Effective Date, RRD and certain stockholders shall enter into an Irrevocable
Stockholders' Voting Agreement and Proxy in the form appended hereto as Exhibit
M.
5.4 Fee Upon Stream IPO. Upon the earlier of the closing of the Stream
IPO or any sale of all or substantially all of the business of Stream, MMI shall
pay to Xxxx (or an affiliate thereof) a fee of $296,000 and CST shall pay to
Xxxx (or an affiliate thereof) a fee of $440,000.
5.5 Shared Appreciation Agreement. Upon the Effective Date, RRD and Xxxx,
on behalf of the Class B Holders, shall enter into a Shared Appreciation
Agreement in the form appended hereto as Exhibit N.
5.6 RRD Investor Rights Agreement. Upon the Effective Date, Stream and
RRD shall enter into an Investor Rights Agreement, in the form appended hereto
as Exhibit O.
5.7 Working Capital.
(a) Xxxx will use reasonable efforts to arrange for working capital
and related lines of credit (the "Credit Lines") for each of MMI,
CST and OTS on or prior to the Effective Date. The Credit Lines
shall be in full force and effect upon the Effective Date.
(b) Prior to the Effective Date, the businesses of MMI, CST and OTS
will be operated in the ordinary course.
(c) Upon the Effective Date and immediately prior to the events set
forth in Sections 3.2 and 4.2, all cash of MMI, CST and OTS in
excess of $25,000,000 in the aggregate, as reflected on the
Stream balance sheet as of October 31, 1997, shall be applied
toward the repayment of the Net RRD Debt.
8
(d) From and after the Effective Date, RRD shall have no obligation
to advance funds to MMI, CST or OTS to finance their respective
businesses. In addition, upon the Effective Date, RRD, Stream,
MMI, and X.X. Xxxxxxxxx Receivables, Inc. ("DRI"), shall enter
into an agreement relating to the Operating Agreement dated as of
April 21, 1995, among Stream, RRD and DRI in the form set forth
on Exhibit T.
5.8 Potential Surrender of Class A-1 Common Stock. Pursuant to Section
5.1 hereof, RRD shall receive shares of Class A-1 Common Stock of Stream prior
to the Spin-Off Date. The percentage ownership interest in Stream represented
by such shares of Class A-1 Common Stock is intended to represent an interest
solely in OTS, and not in MMI or CST. Accordingly, if all or substantially all
of the business of Stream is sold to a third party (by merger, sale of assets or
otherwise) prior to such time as Stream has distributed to its stockholders or
otherwise disposed of all of the outstanding shares of common stock of MMI and
CST held directly or indirectly by Stream, RRD agrees that it shall, immediately
prior to such sale, surrender to Stream for cancellation, without consideration,
a number of shares of Class A-1 Common Stock such that the consideration
otherwise to be received by RRD with respect to its shares of Class A-1 Common
Stock upon such sale does not include the portion of any such consideration
attributable to the value of Stream's then ownership interest in MMI and/or CST,
as the case may be. The portion of any such consideration attributable to the
value of MMI and/or CST shall be determined by agreement of RRD and the Board of
Directors of Stream and, if the parties are unable to agree upon such portion,
the matter shall be submitted to an investment banking firm mutually selected by
RRD and the Board of Directors of Stream, whose determination shall be final and
binding on RRD and the Board of Directors of Stream.
6. Post-Effective Date Adjustment for Net RRD Debt.
(a) Within 60 days following the Effective Date, RRD and Xxxx shall
determine the amount of any indebtedness incurred by Stream and
its subsidiaries, including MMI and CST, to RRD and its
subsidiaries from October 1, 1997 through the Effective Date
("Debt to RRD") and the amount of any indebtedness incurred by
RRD and its subsidiaries to Stream and its subsidiaries,
including MMI and CST, from October 1, 1997 through the Effective
Date ("Debt to Stream"). If the parties are unable to agree upon
the amount of such indebtedness, the amount of such indebtedness
shall be determined by Xxxxxx Xxxxxxxx, whose determination shall
be binding on the parties.
9
(b) To the extent the Debt to Stream exceeds the Debt to RRD, (i) RRD
shall pay 60% of such excess to CST Holdings in cash or, at its
election, surrender to CST Holdings for cancellation a number of
shares of CST Holdings Common Stock equal to such excess divided
by the CST Per Share Value, and (ii) RRD shall pay 40% of such
excess to MMI Holdings in cash or, at its election, surrender to
MMI Holdings for cancellation a number of shares of MMI Holdings
Preferred Stock equal to such excess divided by $1,000.
(c) To the extent the Debt to RRD exceeds the Debt to Stream (such
excess being referred to as the "Excess Debt"), (i) CST Holdings
shall, in exchange for the cancellation of 60% of the Excess
Debt, at its election, pay to RRD an amount in cash equal to 60%
of the Excess Debt or issue to RRD a number of shares of CST
Holdings Common Stock equal to 60% of the Excess Debt divided by
the CST Per Share Value, and (ii) MMI Holdings shall, in exchange
for the cancellation of 40% of the Excess Debt, agree to reduce
the purchase price payable by RRD for the Portland Assets
pursuant to Section 9 by an amount equal to 40% of the Excess
Debt and, to the extent 40% of the Excess Debt exceeds such
reduction, issue to RRD a number of shares of MMI Holdings
Preferred Stock equal to such remaining excess divided by $1,000.
(d) RRD's sole right with respect to any Excess Debt shall be as set
forth in Subsection 6(c) above, and, from and after the Effective
Date, Stream shall have no liability for any Debt to RRD.
7. Options.
(a) The options for shares of Common Stock of Stream held by
employees and others (other than options held by Messrs. Leahy,
Moore, Xxxxxxxxx and Xxxxx and certain options held by Xx.
Xxxxxxx) shall be amended as of the Effective Date so that the
exercise price of such options shall equal the sum of the CST Per
Share Value, MMI Per Share Value and OTS Per Share Value,
provided that options with an exercise price lower than such sum
shall not be so amended.
(b) After the CST Spin-Off and the MMI Spin-Off, each holder of an
option to purchase shares of Stream Common Stock outstanding
immediately thereto shall receive options for an
10
equal number of shares of MMI Holdings and CST Holdings, and the
exercise prices of the options held by each employee for the
purchase of shares of Common Stock of MMI Holdings, CST Holdings
and Stream shall be equal to the MMI Per Share Value, CST Per
Share Value and OTS Per Share Value, respectively.
8. Tax Loans. MMI and CST will offer to make tax loans in an aggregate amount
of not more than $7,500,000 to employee stockholders of Stream in order to
enable such stockholders to pay taxes incurred by them in connection with the
CST Spin-Off and MMI Spin-Off. Such loans shall be made on a non-recourse
basis, secured by the shares of Common Stock of CST Holdings, MMI Holdings and
OTS held by such stockholders, and shall bear interest at a rate not less than
5% (which such interest shall accrue until the principal is due and payable).
The terms of such loans shall otherwise be determined by the Board of Directors
of OTS.
9. Portland Assets. Upon the Effective Date, X.X. Xxxxxxxxx Norwest, Inc. and
Stream shall enter into the Portland Asset Purchase Agreement, in the form set
forth on Exhibit U, and effect the transactions contemplated thereby. The
proceeds of the sale of assets effected thereby shall be distributed 60% to CST
Holdings and 40% to MMI Holdings.
10. RRD, CST and MMI Covenants.
10.1 Indemnity. On the Effective Date, RRD and Stream shall enter into
Guaranties and a Tax Reimbursement Agreement, in the forms attached hereto as
Exhibits P, Q and R, respectively.
10.2 Sale of Shares. In the Stream IPO, RRD will sell sufficient shares
of its Stream Common Stock so that its beneficial ownership of Stream Common
Stock after such offering shall be below 50%, on a primary basis.
10.3 Standstill. RRD agrees that, from the effective date of the Stream
IPO until the third anniversary of such effective date, RRD and its affiliates
will not purchase or otherwise acquire any securities that would cause RRD or
its affiliates to beneficially own (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934) more than 49.9%, by voting power, of the
outstanding capital stock of Stream.
11
11. Xxxx Purchase Option. RRD hereby grants to Xxxx an option to acquire from
RRD all of the indebtedness which it holds in Stream and all of its (and its
affiliates') shares of Class A Common Stock and Class A-1 Common Stock of Stream
for the Option Price. The Option Price shall be paid in cash. Such option must
be irrevocably exercised prior to the earlier of (i) the first date on which
preliminary prospectuses for the Stream IPO are circulated to prospective
investors and (ii) January 20, 1998 and, if such option is exercised, the
closing of the purchase must take place no later than March 31, 1998. The
exercise of such option must be without any financing condition, but the
exercise may be conditioned upon the satisfaction of conditions in any financing
relating to force majeure events, a material decline in the stock market and any
material adverse change in the business of Stream and its subsidiaries. The
Option Price shall be equal to the sum of: (A) the amount of the Net RRD Debt as
of the closing date, plus (B) the amount determined by subtracting from
$450,000,000 the then Net RRD Debt and the then Third Party Debt and by
multiplying such remainder by the Net RRD Ownership Percentage. At the closing
of any such option exercise, RRD shall assign and deliver to Xxxx all its rights
to the Net RRD Debt and certificates representing all of its (and its
affiliates') shares of Class A Common Stock and Class A-1 Common Stock of
Stream, against payment of the Option Price by certified check or wire transfer
to RRD. RRD shall make customary representations and warranties to Xxxx as to
the amount of the Net RRD Debt and its ownership of its shares of Class A Common
Stock and Class A-1 Common Stock.
12. Reorganization Documents. The consummation of the MMI Drop-Down and CST
Drop-Down shall be subject to the execution and delivery of (i) a Contribution
Agreement among Stream, SII, CST Holdings and CST, in the form appended hereto
as Exhibit A; (ii) a Contribution Agreement among Stream, MMI Holdings and MMI
in the form appended hereto as Exhibit B; (iii) a Tax Sharing Agreement among
Stream, MMI Holdings, and MMI, CST Holdings in the form appended hereto as
Exhibit S, and (iv) the other exhibits hereto to be executed and delivered on or
prior to the Effective Date, in each case with such changes as may be approved
by RRD and the other parties thereto. The MMI Drop-Down and CST Drop-Down shall
be subject to such other documentation as shall be approved by the Boards of
Directors of Stream, MMI and CST.
13. Coris. On or after the Effective Date, MMI and RRD shall enter into an
agreement with respect to Coris upon the terms set forth on Exhibit X hereto.
13.A Insurance. Following the Effective Date, RRD, Stream, MMI Holdings and
CST Holdings will negotiate in good faith an agreement regarding insurance
generally in accordance with the provisions of the draft Insurance Claims
Processing Agreement attached hereto as Exhibit W. Prior to, or in the absence
of, the execution of such an agreement, Stream, MMI and CST shall
12
continue to pay RRD for its actual losses and premium expenses for workers'
compensation claims made in respect of their employees prior to the Spin-Off
Date, such payments to be in accordance with current practice in effect on the
date hereof except that payments shall be in cash instead of as adjustments to
inter-company accounts.
14. Miscellaneous.
14.1 Rules of Construction. In the event and to the extent there shall be
any conflict between the provisions of this Agreement and the provisions of any
of the agreements appended hereto as Exhibits, the terms of such Exhibits, as
executed by the parties, shall govern and control.
14.2 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of the State of Delaware.
14.3 Notices. Any notice, request, demand, claim or other communication
hereunder shall be in writing and shall be delivered by registered or certified
mail, return receipt requested, and shall be deemed to have been duly given
three days after mailing if sent to the following addresses:
If to Stream:
------------
Stream International Inc.
000 Xxx Xxxx
Xxxxxx, XX 00000
Attn: President
If to RRD:
---------
X.X. Xxxxxxxxx & Sons Company
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Corporate Secretary
If to Xxxx:
----------
Xxxx Capital, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx
Notwithstanding the foregoing, any party may send any notice, request, demand,
claim or other communication hereunder to the intended recipient at the address
set forth above using any other means (personal delivery, expedited
13
courier, messenger service, telecopy, ordinary mail or electronic mail), but no
such notice, request, demand, claim or other communication shall have been
deemed to have been duly given unless and until it is actually received by the
intended recipient.
14.4 Amendments. This Agreement may not be modified or amended, except by
an agreement in writing, signed by RRD and Xxxx.
14.5 Third Party Beneficiaries. This Agreement is solely for the benefit
of the parties hereto and shall not be deemed to confer upon any third party any
remedy, claim, liability, reimbursement, claim or other right in excess of those
existing without reference to this Agreement, provided that, after the Effective
Date, Stream, CST and MMI may enforce the provisions of Section 6 and the
provisions set forth on the definition of "Net RRD Debt" and Stream may enforce
the provisions of Section 5.8.
14.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be original, and all of which
together shall be deemed to be one and the same instrument.
14.7 Entire Agreement. This Agreement represents the entire agreement
between the parties with respect to the subject matter hereof and supersedes
both the Agreement in Principle between the parties dated April 17, 1997 and the
Agreement in Principle between the parties dated September 17, 1997.
X.X. XXXXXXXXX & SONS COMPANY
By: /s/ C. A. Xxxxxxx
----------------------------------------
Title: Executive Vice President & CFO
XXXX CAPITAL, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------------------
Title: Principal
14
