AGREEMENT
EXHIBIT 2
Execution Copy
AGREEMENT
THIS AGREEMENT is made as of this 11th day of April, 2006 by and between School
Specialty, Inc., a Wisconsin corporation (“SSI”) and MSD Capital, L.P., a Delaware limited
partnership (together with its affiliates (other than portfolio companies of MSD which MSD does not
control and other than Dell Inc. and its subsidiaries), “MSD”).
WHEREAS, MSD is the beneficial owner of less than 10% of the outstanding shares of the $0.001
par value common stock of SSI (the “Common Stock”) as of the date of this Agreement;
WHEREAS, MSD has indicated to SSI its interest in being able to acquire more than 10% of the
issued and outstanding Common Stock in a single transaction or series of transactions (the
“Acquisition”) without being subject to certain restrictions applicable to shareholders of SSI
under the Wisconsin Business Corporation Law (the “WBCL”);
WHEREAS, the Board of Directors of SSI (the “Board”) has approved the Acquisition and related
exemption from certain provisions of the WBCL subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the representations, warranties, and
agreements contained herein, and other good and valuable consideration, the parties hereto mutually
agree as follows:
1. Representations and Warranties of MSD. MSD hereby represents and warrants to SSI
that: (i) as of the date of this Agreement, MSD is the “beneficial owner” (as defined by Section
180.1140(3) of the WBCL, with such definition applying to the use of such term throughout the
remainder of this Agreement as it may relate to any ownership of Common Stock) of less than 10% of
the issued and outstanding Common Stock, (ii) MSD has all requisite authority to enter into and
perform its obligations under this Agreement and to bind the entire number of shares of Common
Stock which it beneficially owns, (iii) the execution and delivery of this Agreement by MSD has
been duly authorized by all necessary action on the part of MSD, (iv) this Agreement constitutes a
valid and binding obligation of MSD, enforceable against MSD in accordance with its terms, (v)
neither the execution and delivery of this Agreement by MSD, nor the consummation of the
transactions contemplated hereby, will violate, conflict with or constitute a breach of any charter
or formation document, agreement, instrument or restriction to which MSD is a party or by which MSD
is bound, in each case (A) except as would not adversely affect MSD’s obligations hereunder, (B)
subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and (C) subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a proceeding at law or in
equity), and (vi) there are no arrangements, agreements or understandings between MSD and any third
party relating to the acquisition or ownership of shares of Common Stock or otherwise relating to
the subject matter of this Agreement, except, in the case of clause (vi) only, ordinary course
arrangements, agreements or understandings with brokerage firms, financial institutions, research
departments and other third parties customarily entered into by MSD in the course of its business
as presently conducted (which for purposes of clarity do not affect the accuracy of the
representations made in clauses (i) through (v) hereof).
2. Representations and Warranties of SSI. SSI hereby represents and warrants to MSD
that: (i) SSI has all requisite authority to enter into and perform its obligations under this
Agreement, (ii) the
execution and delivery of this Agreement by SSI has been duly authorized by the Board and no
further action of the Board or shareholders of SSI is necessary or required for SSI to perform its
obligations, (iii) this Agreement constitutes a valid and binding obligation of SSI, enforceable
against SSI in accordance with its terms, (iv) neither the execution and delivery of this Agreement
by SSI, nor the consummation of the transactions contemplated hereby, will violate, conflict with
or constitute a breach of any charter or formation document, agreement, instrument or restriction
to which SSI is a party or by which SSI is bound, in each case (A) except as would not adversely
affect SSI’s obligations hereunder, (B) subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and
(C) subject, as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and (v) the Board has approved the
Acquisition subject to the terms and conditions of this Agreement as set forth in the resolutions
of the Board attached hereto as Exhibit A.
3. Restrictions on Certain Actions. MSD agrees that on the date (the “Threshold
Date”) that MSD becomes the beneficial owner of more than 19.95% (the “Threshold”) of the then
issued and outstanding Common Stock, MSD shall be subject to Sections 180.1140-180.1144 of the WBCL
as if the Board’s approval of the Acquisition was not granted, provided that the “stock acquisition
date” (for the purpose of Section 180.1141 of the WBCL) shall be deemed to be the Threshold Date,
subject to the limitation in the next sentence. In the event that MSD exceeds the Threshold
directly as a result of a stock repurchase or other anti-dilutive action undertaken by SSI, or MSD
has unintentionally exceeded the Threshold due to inaccurate public reporting by SSI, the Threshold
shall be increased to a percentage equal to the quotient obtained by dividing the number of shares
of Common Stock beneficially owned by MSD, by the aggregate number of shares of Common Stock issued
and outstanding immediately following such action (or based on such public reporting, as the case
may be), effective immediately following the decrease in the number of shares of outstanding Common
Stock or on the date of such disclosure, as the case may be.
4. Material Nonpublic Information. MSD expressly acknowledges that federal and state
securities laws prohibit any person who misappropriates material nonpublic information about a
company from purchasing or selling securities of such company, or from communicating such
information to any other person under circumstances to which it is reasonably foreseeable that such
person is likely to purchase or sell such securities.
5. Remedies. If, as a direct result of MSD’s actions, MSD’s beneficial ownership of
the Common Stock exceeds the Threshold, the Board, acting by the majority vote of the Independent
Directors (as defined below), may require MSD to dispose, within 45 days of written notice to MSD,
of up to such number of shares of Common Stock as will restore MSD’s beneficial ownership to the
Threshold. SSI and MSD acknowledge and agree that a breach or threatened breach by either party
may give rise to irreparable injury inadequately compensable in damages, and accordingly each party
shall be entitled to injunctive relief to prevent a breach of the provisions hereof and to enforce
specifically the terms and provisions hereof in any state or federal court having jurisdiction, in
addition to any other remedy to which such aggrieved party may be entitled to at law or in equity.
In the event either party institutes any legal action to enforce such party’s rights under, or
recover damages for breach of, this Agreement, the prevailing party or parties in such action shall
be entitled to recover from the other party or parties all costs and expenses, including but not
limited to reasonable attorneys’ fees, court costs, witness fees, disbursements and any other
expenses of litigation or negotiation incurred by such prevailing party or parties.
6. Notices. All notice requirements and other communications shall be deemed given
when delivered, on the following business day after being sent by overnight courier with a
nationally recognized courier service such as Federal Express, or when sent by facsimile
transmission, receipt confirmed, in each case addressed to MSD and SSI as follows:
SSI:
|
School Specialty, Inc. | |
| X0000 Xxxxxx Xxxxx | ||
| Xxxxxxxxxx, Xxxxxxxxx 00000 | ||
| Attention: Xxxxx X. Xxxxxx Zanden, Chief Executive Officer | ||
| Facsimile: (000) 000-0000 | ||
With a copy to:
|
Xxxxxxx & Xxxxxxx, SC | |
| 000 Xxxxxx Xxxxxx | ||
| Xxxxxxx, Xxxxxxxxx 00000 | ||
| Attention: Xxxxxx X. Xxxxxxx XX, Esq. | ||
| Facsimile: (000) 000-0000 | ||
MSD:
|
MSD Capital, L.P. | |
| 000 Xxxxx Xxxxxx, 00xx Xxxxx | ||
| Xxx Xxxx, Xxx Xxxx 00000 | ||
| Attention: Xxxx X. Xxxxxx | ||
| Facsimile: (000) 000-0000 | ||
With a copy to:
|
Wachtell, Lipton, Xxxxx & Xxxx | |
| 00 Xxxx 00xx Xxxxxx | ||
| Xxx Xxxx, Xxx Xxxx 00000 | ||
| Attention: Xxxxxx X. Xxxxxxxx | ||
| Facsimile: (000) 000-0000 |
7. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereby pertaining to the subject matter hereof and supersedes all prior and contemporaneous
agreements, understandings, negotiations and discussions of the parties in connection therewith not
referred to herein.
8. Counterparts; Facsimile. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, and signature pages may be
delivered by facsimile, each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
9. Headings. The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
10. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Wisconsin, without regard to choice of law principles that
would compel the application of the laws of any other jurisdiction.
11. Consent to Jurisdiction. Each of the parties hereby irrevocably submits to the
exclusive jurisdiction and venue of the United States District Court for the Eastern District of
Wisconsin-Green Bay Division, or the state court sitting in Outagamie County, Wisconsin, in any
action or proceeding arising out of or relating to this Agreement and each of the parties hereby
irrevocably agrees that all claims in respect of such action or proceeding may be heard and
determined in any such court.
12. Severability. In the event one or more of the provisions of this Agreement
should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement,
and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been contained
herein to the maximum extent possible to achieve the substance of the agreements contained herein.
13. Assignment and Successors. This Agreement shall not be assignable by any of the
parties to this Agreement. This Agreement, however, shall be binding on successors of the parties
hereto.
14. Survival of Representations, Warranties and Agreements. All representations,
warranties, covenants and agreements made herein shall survive the execution and delivery of this
Agreement.
15. Amendments. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by all of the parties
hereto; provided, however, that no such modification, amendment, alteration or supplement shall be
effective unless approved by a majority of Independent Directors. For purposes of this Agreement,
“Independent Directors” shall mean those members of the Board who were not nominated for election
or appointment to the Board by or on behalf of a holder of any shares beneficially owned by MSD, or
any of such holders’ members, partners, trustees, managers, shareholders, officers, directors,
employees or agents.
16. Further Action. Each party agrees to execute any and all documents, and to do and
perform any and all acts and things necessary or proper to effectuate or further evidence the terms
and provisions of this Agreement.
17. Expenses. Each party agrees to bear its own expenses in connection with the
transactions contemplated hereby.
18. WBCL. All references to the WBCL shall mean the WBCL as in effect as of the date
of this Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.
| SCHOOL SPECIALTY, INC. | ||||
| By: | /s/ Xxxxx X. Xxxxxx Zanden, CEO | |||
| (Title) | ||||
| MSD CAPITAL, L.P. | ||||
| By: | MSD Capital Management LLC, its general partner | |||
| By: | /s/ Xxxx Xxxxxx, Manager | |||
| (Title) | ||||
Exhibit A
Resolutions of the Board of Directors of School Specialty, Inc.
RESOLVED, that any and all notice to take any action in adopting the following resolutions is
hereby waived by the undersigned pursuant to Section 180.0823 of the WBCL:
FURTHER RESOLVED, that, subject to the entry into the agreement described in the following
resolution, the purchase of common stock of the Corporation by MSD Capital (“MSD”) pursuant to
which MSD will become an “interested stockholder” (as defined in Section 180.1140(8) of the WBCL)
is hereby approved for purposes of Section 180.1141(1) of the WBCL;
FURTHER RESOLVED, that, as a condition to the approval granted in the foregoing resolution,
the Corporation shall enter into an agreement with MSD, a form which is materially similar to that
which is attached hereto as Exhibit A, and that the Chief Executive Officer and the Chief
Financial Officer are, and each of them hereby is, authorized, in the name and on behalf of the
Corporation, to execute and deliver such agreement in form and substance, and with such changes,
modifications and amendments thereto, as the officer or officers executing the same may approve as
necessary or appropriate, such approval to be conclusively evidenced by the execution and delivery
thereof;
FURTHER RESOLVED, that this consent may be signed in counterpart and/or by facsimile
signature;
FURTHER RESOLVED, that the Corporation be, and it hereby is, authorized and directed to enter
into such ancillary contracts and agreements as the Chief Executive Officer and Chief Financial
Officer of the Corporation may deem to be proper and appropriate in order to implement the
intendment of these resolutions and that each such contract and agreement is hereby adopted and
approved; and
FURTHER RESOLVED, that the Chief Executive Officer and Chief Financial Officer of the
Corporation be, and each hereby is, authorized, for and on behalf and in the name of the
Corporation to do and perform any and all further things and acts, and to execute, with or without
attesting signature, and deliver any and all contracts agreements, instruments, certificates or
other documents which they may determine to be necessary or convenient to implement or accomplish
the intendment of the foregoing resolutions, or any of them, any such determination to be
conclusively evidenced by the doing or performing of any such act or thing or the execution and
delivery of any such papers.
