================================================================================
RECAPITALIZATION AGREEMENT
among
THOR ACQUISITIONS L.L.C., as Investor,
CDW HOLDING CORPORATION
and
CERTAIN SECURITYHOLDERS OF
CDW HOLDING CORPORATION, as Participating Securityholders
Dated as of March 27, 1998
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
RECAPITALIZATION; CLOSING.........................2
1.1 Sale and Purchase of Shares................................2
1.2 Surrendered Options........................................3
1.3 Rolled-Over Options........................................4
1.4 Offer Notice...............................................4
1.5 Purchase and Sale of Newly Issued Shares...................6
1.6 Closing....................................................6
ARTICLE II
DEFINITIONS................................8
2.1 Specific Definitions.......................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES AS TO
THE PARTICIPATING SECURITYHOLDERS................... 16
3.1 Authorization, etc....................................... 16
3.2 Conflicts; Consents...................................... 16
3.3 Title to Repurchased Shares, Investor Purchased
Shares and Surrendered Options........................... 17
3.4 Litigation............................................... 18
3.5 Brokers and Finders...................................... 18
3.6 Unregistered Shares...................................... 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES..................... 19
4.1 Corporate Status, etc.................................... 19
4.2 Capitalization........................................... 19
4.3 Conflicts; Consents...................................... 21
4.4 Financial Statements..................................... 22
4.5 Events Subsequent to Latest Financial Statements......... 22
4.6 Tax Matters.............................................. 23
4.7 Litigation............................................... 25
4.8 Compliance with Laws..................................... 25
4.9 Employee Benefits........................................ 26
4.10 Permits.................................................. 27
4.11 Owned Real Property...................................... 28
4.12 Leases................................................... 29
4.13 Personal Property; Condition of Assets................... 29
4.14 Intellectual Property.................................... 30
4.15 Contracts................................................ 31
4.16 Insurance................................................ 32
4.17 Environmental Matters.................................... 33
4.18 Labor Matters............................................ 34
4.19 Information in Form S-1.................................. 34
4.20 Brokers and Finders...................................... 34
Page
----
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR............. 34
5.1 Investor's Corporate Status.............................. 34
5.2 Authorization, etc....................................... 34
5.3 Conflicts, Consents...................................... 35
5.4 Litigation............................................... 35
5.5 Purchase for Investment.................................. 35
5.6 Financing................................................ 36
5.7 Brokers and Finders...................................... 36
5.8 Investment Canada Act.................................... 36
ARTICLE VI
COVENANTS............................... 36
6.1 Conduct of the Company and its Subsidiaries.............. 36
6.2 Efforts to Consummate Transaction........................ 38
6.3 Access and Information................................... 38
6.4 Non-Solicitation......................................... 39
6.5 Publicity................................................ 39
6.6 Employee Matters......................................... 40
6.7 Transfer Taxes........................................... 40
6.8 Employment Agreements and Other Benefits................. 40
6.9 Financing................................................ 41
6.10 Restrictions on Participating Securityholders............ 41
6.11 Waiver of Participation Rights........................... 41
6.12 Actions with respect to Equity Agreements................ 42
6.13 Actions with respect to Management Loans................. 42
6.14 Financing Commitments.................................... 43
ARTICLE VII
CONDITIONS TO CLOSING......................... 43
7.1 Conditions to the Obligation of the Investor............. 43
7.2 Conditions to the Obligation of the Participating
Securityholders and the Company.......................... 45
7.3 Conditions to the Obligations of All Parties............. 46
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES............... 46
8.1 Survival of Representations and Warranties............... 46
ARTICLE IX
TERMINATION.............................. 47
9.1 Termination.............................................. 47
9.2 Effect of Termination.................................... 48
10.1 Expenses................................................. 48
10.2 Amendments to Schedules.................................. 48
10.3 Notices.................................................. 49
ii
Page
----
10.4 Governing Law............................................ 50
10.5 Assignment; Successors; Binding Effect................... 50
10.6 Amendment; Waivers, etc.................................. 51
10.7 Entire Agreement......................................... 51
10.8 Severability............................................. 51
10.9 Headings................................................. 52
10.10 Counterparts............................................. 52
iii
Page
----
EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Form of Securityholder Acceptance (Non-Management)
Exhibit B Form of Securityholder Acceptance (Management)
Exhibit C Form of Custody Agreement (Non-Management)
Exhibit D Form of Custody Agreement (Management)
Exhibit E Form of Amended and Restated Registration and
Participation Agreement
SCHEDULES
Schedule 1.1 Securityholders, Shares, Repurchased Shares
and Investor Purchased Shares
Schedule 1.2 Option Holders, Options and Exercise Price
Schedule 3.2(a) Conflicts
Schedule 3.2(b) Consents
Schedule 4.1 Subsidiaries of the Company
Schedule 4.2(b) Authorized Capital Stock of the Subsidiaries;
Equity Interests
Schedule 4.2(d) Agreements with Respect to Common Stock
Schedule 4.3(a) Conflicts
Schedule 4.3(b) Consents
Schedule 4.5 Events Subsequent to Latest Financial Statements
Schedule 4.6(a) Filing of Returns and Payment of Interest
Schedule 4.6(b) Extensions, etc.
Schedule 4.6(c) Tax Filing Groups; Income Tax Jurisdictions
Schedule 4.6(d) Assessments, Deficiencies, etc.
Schedule 4.6(f) Tax Sharing Agreements
Schedule 4.7 Litigation
Schedule 4.8 Compliance with Laws
Schedule 4.9(a) Employee Benefits
Schedule 4.9(b) Litigation Relating to the Benefit Plans
Schedule 4.9(g) Effect of Consummation on Employee Benefits
Schedule 4.11(a) Owned Real Property
Schedule 4.11(b) Liens
Schedule 4.11(c) Options/Rights of First Refusal
Schedule 4.11(f) Violations of Real Property Laws
Schedule 4.12 Leases
Schedule 4.13 Personal Property
Schedule 4.14(a) Intellectual Property
Schedule 4.14(b) Licenses
Schedule 4.15 Contracts
Schedule 4.16 Insurance
Schedule 4.17 Environmental Matters
Schedule 4.18 Labor Matters
iv
Page
----
Schedule 6.1 Conduct of the Company and its Subsidiaries
v
RECAPITALIZATION AGREEMENT
RECAPITALIZATION AGREEMENT, dated as of March 27, 1998, among Thor
Acquisitions L.L.C., a Delaware limited liability company (the "Investor"), CDW
Holding Corporation, a Delaware corporation (the "Company"), and each party
(each, a "Participating Securityholder") that either (a) is listed on the
signature pages hereof under the heading "Participating Securityholders" or (b)
becomes party to this Agreement as a Participating Securityholder after the date
hereof pursuant to Section 1.4.
W I T N E S S E T H :
WHEREAS, the parties listed in Schedule 1.1 (each, a
"Securityholder") own all of the issued and outstanding capital stock of the
Company, consisting of 1,026,510 shares (each a "Share") of Class A Common
Stock, par value $.01 per share ("Class A Common Stock"), of which (a) 958,282
Shares are owned by the parties listed in Part A of Schedule 1.1 (each, a "Non-
Management Securityholder") and (b) 68,228 Shares are owned by the parties
listed in Part B of Schedule 1.1, as such Schedule may be amended prior to the
Closing in accordance with Section 1.4 (each, a "Management Securityholder");
WHEREAS, the parties listed in Schedule 1.2 (each, an "Option
Holder") hold all of the issued and outstanding options to acquire additional
shares of capital stock of the Company, consisting of 230,844 options, each to
acquire one share of Class A Common Stock (each, an "Option"), of which (a)
110,284 Options are held by the parties listed in Part A of Schedule 1.2 (each,
a "Non-Management Option Holder"), (b) 95,460 Options are held by the parties
listed in Part B of Schedule 1.2, as such Schedule may be amended prior to the
Closing in accordance with Section 1.4 (each, a "Management Option Holder") and
(c) 25,100 Options (each, a "Branch Option") are held by the parties listed in
Part C of Schedule 1.2;
WHEREAS, the Company desires, on the terms and conditions and for
the consideration set forth in this Agreement, to (a) repurchase the aggregate
number of Shares set forth in the column entitled "Number of Repurchased Shares"
in Part A of Schedule 1.1 (the "Repurchased Shares"), (b) cancel in exchange for
the payment provided herein (i) the aggregate number of Options set forth in the
column entitled "Number of Surrendered Options" in Part A of Schedule 1.2, and
(ii) the aggregate number of Options set forth in the column entitled "Number of
Surrendered Options" in Part B of Schedule 1.2, as such Part B of Schedule 1.2
may be amended prior to the Closing in accordance with Section 1.4 (such Options
so cancelled as contemplated by the preceding clauses (i) and (ii), the
"Surrendered Options"), and (c) to maintain outstanding after the Closing all of
the Branch Options (without acceleration of the vesting schedule for
2
such Options);
WHEREAS, the Investor desires, on the terms and conditions and for
the consideration set forth in this Agreement, to (a) purchase from the Company,
and the Company desires to issue and sell to the Investor, the number of newly
issued shares of Class A Common Stock equal to the Number of Newly Issued Shares
(the "Newly Issued Shares"), and (b) purchase from the Management
Securityholders the aggregate number of Shares set forth in the column entitled
"Number of Investor Purchased Shares" in Part B of Schedule 1.1, as such
Schedule may be amended prior to the Closing in accordance with Section 1.4 (the
"Investor Purchased Shares"); and
WHEREAS, each Management Securityholder that is a Participating
Securityholder (a "Management Participating Securityholder") desires to hold,
and not sell to (or have cashed-out by) the Company, each Share owned by such
Securityholder that is not an Investor Purchased Share and each Option owned by
such Securityholder that is not a Surrendered Option, and, to the extent
provided herein, such Securityholder desires to maintain his or her remaining
equity interests in the Company after giving effect to all of the transactions
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made herein and of the mutual benefits to be
derived therefrom, the parties hereto agree as follows:
ARTICLE I
RECAPITALIZATION; CLOSING
1.1 Sale and Purchase of Shares. (a) Repurchased Shares. Subject to
the terms and conditions hereof, at the Closing, each Non-Management
Securityholder that is a Participating Securityholder (a "Non-Management
Participating Securityholder") will sell to the Company, and the Company will
purchase from such Securityholder, the number of Repurchased Shares set forth
opposite such Securityholder's name in the column entitled "Number of
Repurchased Shares" in Part A of Schedule 1.1, which Shares shall constitute
such Securityholder's Repurchased Shares, for a purchase price (such
Securityholder's "Purchase Price for Repurchased Shares") equal to the product
of (i) $621.08 (the "Per Share Purchase Price") and (ii) the number of such
Repurchased Shares. Unless the Company and the Investor otherwise agree, the
aggregate Purchase Price for Repurchased Shares payable for all Repurchased
Shares (the "Aggregate Purchase Price for Repurchased Shares") shall in no event
exceed $595,169,785.
(b) Investor Purchased Shares. Subject to the terms and conditions
hereof, at the Closing, each Management
3
Participating Securityholder will sell to the Investor, and the Investor will
purchase from such Securityholder, the number of Investor Purchased Shares set
forth opposite such Securityholder's name in the column entitled "Number of
Investor Purchased Shares" in Part B of Schedule 1.1, which Shares shall
constitute such Securityholder's Investor Purchased Shares, for a purchase price
(such Securityholder's "Purchase Price for Investor Purchased Shares") equal to
the product of (i) the Per Share Purchase Price and (ii) the number of such
Investor Purchased Shares. Unless the Company and the Investor otherwise agree,
the aggregate Purchase Price for Investor Purchased Shares payable for all
Investor Purchased Shares (the "Aggregate Purchase Price for Investor Purchased
Shares") shall in no event exceed $10,680,713.
1.2 Surrendered Options. (a) Non-Management Options. Subject to the
terms and conditions hereof, at the Closing, the Company will pay for the
account of each Non-Management Option Holder, in exchange for the cancellation
of the number of Options set forth opposite such Option Holder's name in the
column entitled "Number of Surrendered Options" in Part A of Schedule 1.2, which
Options shall constitute such Option Holder's Surrendered Options, an amount
(such Option Holder's "Option Cancellation Amount") equal to the product of (i)
the number of such Surrendered Options and (ii) the amount by which the Per
Share Purchase Price exceeds the per share exercise price of such Options set
forth opposite such Option Holder's name in the column entitled "Exercise Price"
in Part A of Schedule 1.2. Unless the Company and the Investor otherwise agree,
the aggregate Option Cancellation Amount payable in respect of all
Non-Management Options shall in no event exceed $57,466,787.
(b) Management Options. Subject to the terms and conditions hereof,
at the Closing, the Company will pay for the account of each Management Option
Holder, in exchange for the cancellation of the number of Options set forth
opposite such Option Holder's name in the column entitled "Number of Surrendered
Options" in Part B of Schedule 1.2, which Options shall constitute such Option
Holder's Surrendered Options, an Option Cancellation Amount equal to the product
of (i) the number of such Surrendered Options and (ii) the amount by which the
Per Share Purchase Price exceeds the per share exercise price of such Options
set forth opposite such Option Holder's name in the column entitled "Exercise
Price" in Part B of Schedule 1.2. Unless the Company and the Investor otherwise
agree, the aggregate Option Cancellation Amount payable in respect of all
Management Options shall in no event exceed $7,082,811.
(c) Release. The surrender by an Option Holder of an Option for
cancellation in exchange for the payment provided in this Section 1.2 shall
constitute a release of any and all rights such Option Holder has or may have
had in such Option.
4
1.3 Rolled-Over Options. Each Option held by a Management Option
Holder that is not a Surrendered Option and each Branch Option (each, a " Rolled
Over Option") shall (a) continue to be held, and not surrendered for payment at
the Closing, by the Option Holder holding such Option and (b) continue to be an
option to acquire shares of Class A Common Stock on the terms and conditions
provided in the Option Plans and the Management Stock Option Agreements,
provided that, in the case of each Management Option that is a Rolled Over
Option, subject to Section 6.8, all conditions to vesting of any such Options
that are then unvested shall be terminated.
1.4 Offer Notice. (a) Delivery of Offer Notice. Promptly following
the execution and delivery of this Agreement by the Company, the Investor and
Fund IV, the Company and the Investor shall prepare and deliver a joint offer
notice (an "Offer Notice") to each Securityholder that is not an original
signatory to this Agreement, pursuant to which (i) if such Securityholder is a
Non-Management Securityholder, the Company will offer (A) to purchase from such
Securityholder his, her or its Repurchased Shares and (B) to cash out such
Securityholder's Surrendered Options, in each case, on the terms and conditions
provided in Sections 1.1(a) and 1.2(a), and (ii) if such Securityholder is a
Management Securityholder, (A) the Investor will offer to purchase from such
Securityholder his or her Investor Purchased Shares on the terms and conditions
provided in Section 1.1(b) and (B) the Company will offer to cash out his or her
Surrendered Options on the terms and conditions provided in Section 1.2(b). The
Offer Notice shall contain such information (financial and otherwise) as the
Company and the Investor shall determine to be appropriate so that the Offer
Notice, as of its date, shall not contain an untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) Acceptance of Offer Notice. Each Securityholder receiving an
Offer Notice may accept such Offer Notice and thereby become a Participating
Securityholder by delivering to the Company, the Investor and the Custodian, not
later than the last day of the Participation Election Period a written notice
substantially in the form of, if such Securityholder is a Non-Management
Securityholder, Exhibit A hereto or, if such Securityholder is a Management
Securityholder, Exhibit B hereto (each a "Securityholder Acceptance"), duly
executed by such Securityholder. Each Management Securityholder delivering a
Securityholder Acceptance shall specify in such Securityholder Acceptance (i)
the number of Shares owned by such Securityholder that are to constitute
Investor Purchased Shares, which shall not be greater than the number of Shares
originally specified in Part B of Schedule 1.1 on the date hereof as such
Securityholder's Investor Purchased Shares, and (ii) the number of Options owned
by such Securityholder that are to constitute Surrendered Options, which shall
not be greater than the number of Options
5
originally specified in Part B of Schedule 1.2 on the date hereof as such
Securityholder's Surrendered Options. Upon timely delivery by a Securityholder
of a duly executed Securityholder Acceptance, such Securityholder shall become a
Participating Securityholder for all purposes, and bound by all provisions, of
this Agreement. Upon timely delivery by a Securityholder (other than CBS) of a
duly executed Securityholder Acceptance, such Securityholder shall be deemed to
have executed and delivered, and to be bound by all provisions of, a Power of
Attorney and Custody Agreement, in the form of, if such Securityholder is a
Non-Management Securityholder, Exhibit C hereto, or if such Securityholder is a
Management Securityholder, Exhibit D hereto (each a "Custody Agreement"),
including, but not limited to, the appointment, on the terms and condition of
such Custody Agreement, of (A) Xxxxxxx, Dubilier & Rice, Inc. ("CD&R") and each
of the other persons named therein as such Securityholder's attorney-in-fact and
(B) CD&R as custodian (the "Custodian") of such Securityholder's Repurchased
Shares or Investor Purchased Shares, as the case may be.
(c) Additional Shares and Options. Prior to the expiration of the
Participation Election Period, the Company may, in compliance with applicable
securities laws, issue to a limited number of members of WESCO's management
(each, a "New Securityholder") up to an additional 600 shares of Class A Common
Stock (each, a "New Share") in the aggregate and grant to such New
Securityholders up to an additional 780 options, each to acquire one share of
Class A Common Stock (each, a "New Option"), in the aggregate, provided that (i)
each such New Securityholder shall enter into a stock subscription agreement and
stock option agreement substantially in the form of the Management Stock
Subscription Agreements and Management Stock Option Agreements, (ii) such shares
shall be issued and sold to such New Securityholders for a per share purchase
price equal to the Per Share Purchase Price and such options shall have a per
share exercise price equal to the Per Share Purchase Price and (iii) each such
New Securityholder shall, at the time of the issuance of such shares and the
grant of such options, execute and deliver to the Company, Investor and the
Custodian a Securityholder Acceptance substantially in the form Exhibit B
hereto. Upon timely delivery by a New Securityholder of a Securityholder
Acceptance, for all purposes of this Agreement, such New Securityholder shall
become a Securityholder and a Participating Securityholder and such New
Securityholder's New Shares and New Options shall become Shares and Options.
(d) Amendment of Schedules 1.1 and 1.2. Upon timely delivery by a
Management Securityholder of a duly executed Securityholder Acceptance, if such
Securityholder Acceptance has specified a number of Investor Purchased Shares or
Surrendered Options that is less than the number set forth in Part B of Schedule
1.1 or Part B of Schedule 1.2, as the case may be, on the date hereof, (i) Part
B of Schedule 1.1 shall be amended to insert opposite such Securityholder's name
in the column entitled
6
"Number of Investor Purchased Shares" in such Part B of Schedule 1.1 the number
of such Securityholder's Investor Purchased Shares specified in such
Securityholder Acceptance, and (ii) Part B of Schedule 1.2 shall be deemed to be
amended to insert opposite such Securityholder's name in the column entitled
"Number of Surrendered Options" in such Part B of Schedule 1.2 the number of
such Securityholder's Surrendered Options specified in such Securityholder
Acceptance. Upon timely delivery by a New Securityholder of a duly executed
Securityholder Acceptance pursuant to Section 1.4(c), (A) Part B of Schedule 1.1
shall be deemed to be amended to (1) insert such New Securityholder's name in
the appropriate position in the column entitled "Securityholder", (2) insert
opposite such New Securityholder's name in the column entitled "Number of
Shares" the number of such New Securityholder's New Shares and (3) insert
opposite such Securityholder's name in the column entitled "Number of Investor
Purchased Shares" the number of such New Shares that are to constitute Investor
Purchased Shares pursuant to such New Securityholder's Securityholder
Acceptance, which shall not be greater than 25% of such New Shares, and (B) Part
B of Schedule 1.2 shall be deemed to be amended to (1) insert such New
Securityholder's name in the appropriate position in the column entitled
"Management Option Holder", (2) insert opposite such New Securityholder's name
in the column entitled "Number of Options" the number of such New
Securityholder's New Options, (3) insert opposite such Securityholder's name in
the column entitled "Exercise Price" the per share exercise price of such New
Options and (4) insert opposite such New Securityholder's name in the column
entitled "Number of Surrendered Options" the number of such New Options that are
to constitute Surrendered Options pursuant to such New Securityholder's
Securityholder Acceptance, which shall not be greater than 15% of such New
Options. Promptly following the expiration of the Participation Election Period,
Part B of Schedule 1.1 and Part B of Schedule 1.2 shall be revised to reflect
any amendments thereto deemed to have been made pursuant to this Section 1.4(d),
provided that all such amendments deemed to have been made pursuant to this
Section 1.4(d) shall be effective whether or not such revisions are actually
made. Except as provided in this Section 1.4(d), Schedules 1.1 and 1.2 may not
be amended without the prior written consent of the Investor, the Company and
the Participating Securityholder affected by such amendment.
1.5 Purchase and Sale of Newly Issued Shares. Subject to the terms
and conditions hereof, at the Closing, the Company will sell to the Investor,
and the Investor will purchase from the Company, the Newly Issued Shares for a
purchase price equal to the product of (a) the Per Share Purchase Price and (b)
the Number of the Newly Issued Shares. Unless the Company and the Investor
otherwise agree, the aggregate purchase price to be paid by the Investor for the
Newly Issued Shares (the "Purchase Price for Newly Issued Shares") shall in no
event exceed $310,000,000.
1.6 Closing. Unless this Agreement shall have been
7
terminated pursuant to Section 9.1, and subject to the satisfaction or waiver of
the conditions set forth in Article VII, the closing of the sale and purchase of
the Repurchased Shares, Investor Purchased Shares, Surrendered Options and Newly
Issued Shares (the "Closing") will take place at the offices of Debevoise &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 a.m. on the date that
is 74 days after the date of this Agreement, or such later date as may be agreed
pursuant to Section 9.1(b), but in no event earlier than the second Business Day
following the date on which the last of the conditions to be fulfilled or waived
set forth in Article VII shall be fulfilled or waived in accordance with this
Agreement, or such other time as the parties hereto may agree in writing (the
"Closing Date"). At the Closing:
(a) each Non-Management Participating Securityholder will deliver to
the Company, free and clear of all Liens, certificates representing all of
the Repurchased Shares set forth opposite such Securityholder's name in
Part A of Schedule 1.1, duly endorsed in blank or accompanied by stock
powers or other instruments of transfer duly executed in blank, and
bearing or accompanied by all requisite stock transfer stamps;
(b) each Management Participating Securityholder will deliver to the
Investor, free and clear of all Liens, certificates representing all of
the Investor Purchased Shares set forth opposite such Securityholder's
name in Part B of Schedule 1.1, duly endorsed in blank or accompanied by
stock powers or other instruments of transfer duly executed in blank, and
bearing or accompanied by all requisite stock transfer stamps;
(c) the Investor will pay:
(i) to the Company the Purchase Price for Newly Issued Shares
by wire transfer of immediately available funds to such account as
shall be designated in writing by the Company to the Investor at
least two Business Days prior to the Closing Date; and
(ii) to the Custodian the Aggregate Purchase Price for
Investor Purchased Shares by wire transfer of immediately available
funds to such account as shall be designated in writing by the
Custodian to the Investor at least two Business Days prior to the
Closing Date, and such payment to the Custodian shall constitute
payment in full to each Management Participating Securityholder of
such Securityholder's Purchase Price for Investor Purchased Shares;
(d) the Company will:
(i) deliver to the Investor certificates
8
representing all of the Newly Issued Shares, registered in the name
of the Investor (or its nominee), all of which Newly Issued Shares
will have been duly authorized and validly issued and, upon payment
as provided in clause (c)(i) above, will be fully paid and
nonassessable;
(ii) pay to the Custodian the Aggregate Purchase Price for
Repurchased Shares (excluding CBS' Purchase Price for Repurchased
Shares) by wire transfer of immediately available funds to such
account as shall be designated in writing by the Custodian to the
Company at least two Business Days prior to the Closing Date, and
such payment to the Custodian shall constitute payment in full to
each Non-Management Participating Securityholder (other than CBS) of
such Securityholder's Purchase Price for Repurchased Shares;
(iii) pay to CBS CBS' Purchase Price for Repurchased Shares
and CBS' Option Cancellation Amount by wire transfer of immediately
available funds to such account as shall be designated in writing by
CBS to the Company in writing at least two Business Days prior to
the Closing Date; and
(iv) pay to each Non-Management Option Holder (other than CBS)
and each Management Option Holder an amount equal to such Option
Holder's Option Cancellation Amount.
Upon consummation of the Closing, (1) all Options held by CBS shall
be cancelled and terminated and (2) all other Options that are Surrendered
Options shall, pursuant to the terms of the related Management Stock Option
Agreement and Stock Option Plan, be cancelled and terminated. All payments made
pursuant to this Section 1.6 shall be made net of applicable Employment and
Withholding Taxes and any such withheld amounts shall be deemed to have been
received by the person entitled to payment pursuant to this Section 1.6. Each
Option Holder holding any Surrendered Options shall execute and deliver such
agreements, receipts or acknowledgments as the Company may reasonably request to
confirm cancellation of such Option Holder's Surrendered Options (including, but
not limited to, an appropriate amendment to any applicable Management Stock
Option Agreement).
ARTICLE II
DEFINITIONS
2.1 Specific Definitions. As used in this Agreement and the
Schedules hereto, the following terms have the following meanings:
Acquisition Proposal: the meaning set forth in
9
Section 6.4.
Affiliate: with respect to any Person, a Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with such Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
Agreement: this Recapitalization Agreement, including the Exhibits
and Schedules hereto.
Aggregate Purchase Price for Investor Purchased Shares: the meaning
set forth in Section 1.1(b).
Aggregate Purchase Price for Repurchased Shares: the meaning set
forth in Section 1.1(a).
Antitrust Division: the meaning set forth in Section 7.3(a).
Branch Option: the meaning set forth in the recitals.
Branch Option Plan: the CDW Holding Corporation Stock Option Plan
for Branch Employees.
Business Day: any day other than a Saturday or Sunday or other day
on which commercial banks in New York City are authorized or required by law to
close.
CBS: CBS Corporation, formerly known as Westinghouse Electric
Corporation.
CBS Equity Agreement: the Stock Subscription, Stock Option and
Stockholders Agreement, dated as of February 28, 1994, among the Company, Fund
IV and CBS.
Class A Common Stock: the meaning set forth in the recitals.
Closing: the meaning set forth in Section 1.6.
Closing Date: the meaning set forth in Section 1.6.
Code: the Internal Revenue Code of 1986, as amended.
Company: the meaning set forth in the preamble.
Company Taxes: the meaning set forth in Section 4.6(a).
10
Confidentiality Agreement: the meaning set forth in Section 6.3.
Consent: any consent, approval, authorization, order, notice,
filing, registration or qualification of or with or waiver from any Person.
Contracts: the meaning set forth in Section 4.15(a).
Custodian: the meaning set forth in Section 1.4(b).
Custody Agreement: the meaning set forth in Section 1.4(b).
Employment and Withholding Taxes: any federal, state, provincial,
local, foreign or other employment, unemployment insurance, social security,
disability, workers' compensation, payroll, health care or other similar tax,
duty or other governmental charge or assessment or deficiencies thereof and all
Taxes required to be withheld by or on behalf of each of the Company and each of
its Subsidiaries in connection with amounts paid or owing to any employee,
independent contractor, creditor or other Person, in each case, on or in respect
of the business or assets thereof.
Environmental Law: any foreign, federal, state, provincial or local
law, statute, rule, regulation, order, judgment or decree relating to (a) the
manufacture, transport, use, treatment, storage, recycling, disposal release or
threatened release of Hazardous Substances, or (b) the protection of human
health or the environment (including, without limitation, natural resources,
structures, air, and surface or subsurface land or waters).
Equity Agreements: the CBS Equity Agreement, the Fund IV Stock
Subscription Agreement, the Management Stock Option Agreements, the Management
Stock Subscription Agreements, the Option Plans, the Stock Purchase Plan and the
Registration and Participation Agreement.
ERISA: the meaning set forth in Section 4.9(b).
Financial Statements: the meaning set forth in Section 4.4(a).
Financing: the meaning set forth in Section 5.6(a).
Financing Commitments: the meaning set forth in Section 5.6(b).
Form S-1: the meaning set forth in Section 3.6.
FTC: the meaning set forth in Section 7.3(a).
11
Fund IV: The Xxxxxxx & Dubilier Private Equity Fund IV Limited
Partnership.
Fund IV Stock Subscription Agreement: the Stock Subscription
Agreement, dated as of February 28, 1994, between the Company and Fund IV.
GAAP: the meaning set forth in Section 4.4(a).
Governmental Entity: any governmental or regulatory authority,
agency, court, commission or other entity, domestic or foreign.
Hazardous Substance: any material or substance that is either: (a)
listed, defined, classified or regulated as a waste, hazardous or toxic or any
other term of similar import pursuant to any applicable Environmental Law, or
(b) any petroleum, petroleum product or by-product, asbestos containing
material, polychlorinated biphenyls or radioactive materials.
HSR Act: the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
Income Tax: any federal, state, provincial, local or foreign income,
alternative, minimum, accumulated earnings, personal holding company, franchise,
capital stock, net worth, capital, profits or windfall profits tax or other
similar tax, estimated tax, duty or other governmental charge or assessment or
deficiencies thereof.
Income Tax Return: any Tax Return relating to Income Taxes.
Intellectual Property: the meaning set forth in Section 4.14(a).
Investor: the meaning set forth in the preamble.
Investor Purchased Shares: the meaning set forth in the recitals.
IRS: the Internal Revenue Service.
Leased Real Property: all real property interests leased by the
Company or its Subsidiaries pursuant to the Leases.
Leases: the meaning set forth in Section 4.12(a).
Licenses: the meaning set forth in Section 4.14(b).
Lien: any mortgage, pledge, deed of trust, hypothecation, claim,
security interest, title defect, encumbrance, burden, charge or other similar
restriction, lease,
12
sublease, claim, title retention agreement, option, easement, covenant,
encroachment or other adverse claim.
Management Option Holder: the meaning set forth in the recitals.
Management Participating Securityholder: the meaning set forth in
the recitals.
Management Securityholder: the meaning set forth in the recitals.
Management Stock Option Agreements: the stock option agreements
which have been entered into between the Company and each Option Holder other
than CBS with respect to the issuance of such Option Holder's Options.
Management Stock Subscription Agreements: the stock subscription
agreements which have been entered into between the Company and each
Securityholder other than Fund IV and CBS with respect to the issuance of such
Securityholder's Shares.
Material Adverse Change: since any specified date, a material
adverse change (a) in the properties, assets, liabilities, business, financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole or (b) that would have a material adverse effect on the ability of the
Company to consummate the transactions contemplated by this Agreement, in each
case, other than as a result of general economic conditions in the industry in
which the Company and its Subsidiaries operate.
Material Adverse Effect: a material adverse effect (a) on the
properties, assets, liabilities, business, financial condition or results of
operations of the Company and its Subsidiaries taken as a whole or (b) that
would have a material adverse effect on the ability of the Company to consummate
the transactions contemplated by this Agreement, in each case, other than as a
result of general economic conditions in the industry in which the Company and
its Subsidiaries operate.
New Option: the meaning set forth in Section 1.4(c).
New Securityholder: the meaning set forth in Section 1.4(c).
New Share: the meaning set forth in Section 1.4(c).
Newly Issued Shares: the meaning set forth in the recitals.
Non-Management Option Holder: the meaning set forth in the recitals.
13
Non-Management Participating Securityholder: the meaning set forth
in Section 1.1(a).
Non-Management Securityholder: the meaning set forth in the
recitals.
Number of Newly Issued Shares: a number (rounded to the nearest
whole number) equal to (a) the quotient obtained by dividing the Aggregate
Investment by Investor by the Per Share Purchase Price minus (b) the aggregate
number of Investor Purchased Shares. The term "Aggregate Investment by Investor"
means an amount equal to (i) if the Actual Rollover is equal to or less than $90
million, $310 million, and (ii) if the Actual Rollover is greater than $90
million, an amount equal to $400 million minus the Actual Rollover. The term
"Actual Rollover" means an amount equal to the sum of (A) the product of the
aggregate number of Rolled Over Shares and the Per Share Purchase Price, and (B)
the product of the aggregate number of Rolled Over Options and the Per Share
Purchase Price, and subtracting from such product the aggregate exercise price
in respect of such Rolled Over Options. The Actual Rollover amount will be
determined based on, and following, the elections made by the Securityholders
pursuant to the Securityholder Acceptances delivered hereunder.
Offer Notice: the meaning set forth in Section 1.4(a).
Option: the meaning set forth in the recitals.
Option Cancellation Amount: the meaning set forth in Section 1.2(a).
Option Holder: the meaning set forth in the recitals.
Option Plans: the Branch Option Plan and the Stock Option Plan.
Ordinary Course of Business: the meaning set forth in Section 4.5.
Organizational Documents: (a) with respect to any corporation, its
articles or certificate of incorporation or memorandum and articles of
association and by-laws, and (b) with respect to any a partnership, its
partnership agreement.
Owned Real Property: the meaning set forth in Section 4.11(a).
Participating Securityholder: the meaning set forth in the preamble.
Participating Securityholder Signing Date: the later to occur of (a)
the date on which all Securityholders have become Participating Securityholders
in accordance with the terms of
14
this Agreement and (b) the date on which the Participation Election Period ends.
Participation Election Period: the period commencing on the Offer
Date and ending at the end of the day that is the 20th Business Day from and
including the Offer Date, or, if the Offer Date is not a Business Day, from and
including the first Business Day after the Offer Date. The term "Offer Date"
means the date on which the Offer Notice is first published or sent to
Securityholders.
Pension Plan: the meaning set forth in Section 4.9(b).
Permits: the meaning set forth in Section 4.10.
Permitted Liens: the meaning set forth in Section 4.11(b).
Per Share Purchase Price: the meaning set forth in Section 1.1(a).
Person: any natural person, firm, partnership, association,
corporation, company, trust, business trust, Governmental Entity or other
entity.
Plans: the meaning set forth in Section 4.9(a).
Pro Forma Balance Sheet: the meaning set forth in Section 4.4(b).
Purchase Price for Investor Purchased Shares: the meanings set forth
in Section 1.1(b).
Purchase Price for Newly Issued Shares: the meaning set forth in
Section 1.5.
Purchase Price for Repurchased Shares: the meaning set forth in
Section 1.1(a).
Real Property: the meaning set forth in Section 4.11(d).
Real Property Laws: the meaning set forth in Section 4.11(f).
Registration and Participation Agreement: the Registration and
Participation Agreement, dated as of February 28, 1994, among the Company, Fund
IV, CBS and Xxx X. Xxxxx.
Repurchased Shares: the meaning set forth in the recitals.
Required Participating Securityholders: Participating
Securityholders holding at least a majority of all Shares held by
15
Participating Securityholders.
Rolled Over Option: the meaning set forth in Section 1.3.
Rolled Over Share: each Share owned by a Management Securityholder
that is not an Investor Purchased Share.
Securityholder: the meaning set forth in the recitals.
Securityholder Acceptance: the meaning set forth in Section 1.4(b).
Share: the meaning set forth in the recitals.
Stock Option Plan: the CDW Holding Corporation Stock Option Plan.
Stock Purchase Plan: the CDW Holding Corporation Stock Purchase
Plan.
Subsidiary: with respect to any Person (the "Parent"), any other
Person (other than a natural person), whether incorporated or unincorporated, of
which at least a majority of the securities or ownership interests having by
their terms ordinary voting power to elect a majority of the board of directors
or other persons performing similar functions is directly or indirectly owned or
controlled by the Parent or by one or more of its respective Subsidiaries or by
the Parent and any one or more of its respective Subsidiaries.
Surrendered Options: the meaning set forth in the recitals.
Tax: any federal, state, provincial, local or foreign income,
alternative, minimum, accumulated earnings, personal holding company, franchise,
capital stock, profits, windfall profits, gross receipts, sales, use, value
added, transfer, registration, stamp, premium, excise, customs duties,
severance, real property, personal property, ad valorem, occupancy, license,
occupation, employment, payroll, social security, disability, unemployment,
workers' compensation, withholding, estimated or other similar tax, assessment
or other governmental charge.
Tax Return: any return, report, declaration, form, claim for refund
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof that relates to the
Company or any of its Subsidiaries.
Treasury Regulations: the regulations prescribed under the Code.
WESCO: WESCO Distribution, Inc.
16
2.2 Other Definitional Provisions. (a) The words "hereof", "herein"
and "hereunder" and words of similar import, when used in this Agreement, refer
to this Agreement as a whole and not to any particular provision of this
Agreement.
(b) Terms defined in the singular have the same meaning when used in
the plural, and vice versa.
(c) References to "Sections", "Exhibits" and "Schedules" refer to
Sections of, and Exhibits and Schedules to, this Agreement (as each of the same
may be amended in accordance with the terms hereof), unless otherwise specified.
ARTICLE III
REPRESENTATIONS AND WARRANTIES AS TO
THE PARTICIPATING SECURITYHOLDERS
With respect to Sections 3.1 through 3.5, each Participating Securityholder, and
with respect to Section 3.6, each Management Participating Securityholder, as to
itself, severally and not jointly represents and warrants to the Investor and
the Company as follows:
3.1 Authorization, etc. Such Securityholder has full power,
authority and legal capacity to enter into this Agreement and any Custody
Agreement to which such Securityholder is a party and to perform such
Securityholder's obligations hereunder and thereunder. If such Securityholder is
not a natural person, the execution and delivery by such Securityholder of this
Agreement and any Custody Agreement to which such Securityholder is a party, and
the consummation by such Securityholder of the transactions contemplated hereby
and thereby have been duly authorized by all requisite partnership or corporate
action, as the case may be, of such Securityholder. This Agreement and any
Custody Agreement to which such Securityholder is a party have been duly
executed and delivered by such Securityholder and constitute the legal, valid
and binding obligations of such Securityholder enforceable against such
Securityholder in accordance with their respective terms.
3.2 Conflicts; Consents. (a) Conflicts. Except as set forth in
Schedule 3.2(a), the execution and delivery by such Securityholder of this
Agreement and any Custody Agreement to which such Securityholder is a party, and
the consummation by such Securityholder of the transactions contemplated hereby
and thereby, do not and will not conflict with, or result in any violation of,
or default under (or any event that, with notice or lapse of time or both, would
constitute a default under), or give rise to any right of termination,
cancellation or acceleration of any obligation or loss of material benefit
under, or result in the creation of a Lien on any property or assets of such
Securityholder pursuant to, any provision of (i) if such
17
Securityholder is not a natural person, such Securityholder's Organizational
Documents, (ii) any mortgage, indenture, loan agreement, note, bond, deed of
trust, other agreement, commitment or obligation for the borrowing of money or
the obtaining of credit, lease or other agreement, contract, license, franchise,
permit or instrument to which such Securityholder is a party or by which such
Securityholder or such Securityholder's Shares may be bound, or (iii) any
judgment, order, decree, law, statute, rule or regulation applicable to such
Securityholder or to such Securityholder's Shares, other than, in the case of
clause (ii) or (iii), any conflicts, violations, defaults, terminations,
cancellations, accelerations, losses of benefits or Liens that, individually or
in the aggregate, would not reasonably be expected to have a material adverse
effect on such Securityholder's ability to consummate the transactions
contemplated by this Agreement or any Custody Agreement to which such
Securityholder is a party.
(b) Consents. Except (i) as set forth in Schedule 3.2(b), (ii) as
may be required under the HSR Act or the Competition Act (Canada) and (iii) for
any Consents where the failure to obtain such Consents, either in any individual
case or in the aggregate, would not reasonably be expected to have a material
adverse effect on such Securityholder's ability to consummate the transactions
contemplated by this Agreement or any Custody Agreement to which such
Securityholder is a party: no Consent of or with any court, Governmental Entity
or third person is required to be obtained or made by such Securityholder in
connection with the execution and delivery by such Securityholder of this
Agreement or any Custody Agreement to which such Securityholder is a party or
consummation by such Securityholder of the transactions contemplated herein or
therein.
3.3 Title to Repurchased Shares, Investor Purchased Shares and
Surrendered Options. Such Securityholder owns beneficially and of record and
free and clear of any Liens, (a) if such Securityholder is a Non-Management
Securityholder, the number of Repurchased Shares set forth opposite such
Securityholder's name in the column entitled "Number of Repurchased Shares" in
Part A of Schedule 1.1, (b) if such Securityholder is a Management
Securityholder, the number of Investor Purchased Shares set forth opposite such
Securityholder's name in the column entitled "Number of Investor Purchased
Shares" in Part B of Schedule 1.1, (c) if such Securityholder is a
Non-Management Option Holder, the number of Options set forth opposite such
Securityholder's name in the column entitled "Number of Surrendered Options" in
Part A of Schedule 1.2, and (d) if such Securityholder is a Management Option
Holder, the number of Options set forth opposite such Securityholder's name in
the column entitled "Number of Surrendered Options" in Part B of Schedule 1.2.
Upon the delivery of, and payment for, such Securityholder's Surrendered Options
at the Closing as provided in this Agreement, such Securityholder will transfer
to the Company good and valid title
18
to such Surrendered Options, free and clear of any Lien. If such Securityholder
is a Non-Management Securityholder, upon the delivery of, and payment for, such
Securityholder's Repurchased Shares at the Closing as provided in this
Agreement, such Securityholder will transfer to the Company good and valid title
to such Repurchased Shares, free and clear of any Lien. If such Securityholder
is a Management Securityholder, upon the delivery of, and payment for, such
Securityholder's Investor Purchased Shares at the Closing as provided in this
Agreement, such Securityholder will transfer to the Investor good and valid
title to such Investor Purchased Shares, free and clear of any Lien.
3.4 Litigation. There is no action, claim, suit, arbitration or
proceeding pending or, to such Securityholder's knowledge, threatened against
such Securityholder and there is no investigation pending or, to such
Securityholder's knowledge, threatened against such Securityholder, in each
case, before any court or Governmental Entity, that could have a material
adverse effect on such Securityholder's ability to consummate the transactions
contemplated by this Agreement or any Custody Agreement to which such
Securityholder is a party.
3.5 Brokers and Finders. Such Securityholder has not employed any
broker, finder or investment banker in connection with the transactions
contemplated herein so as to give rise to any claim against the Company or the
Investor for any brokerage, finder's or investment banker's commission, fee or
similar compensation.
3.6 Unregistered Shares. Such Securityholder (a) has received from
or on behalf of the Company and the Investor all information (financial and
otherwise) necessary for such Securityholder to have a material understanding of
the Company and its Subsidiaries, their respective businesses and the merits and
risks of consummating the transactions contemplated by this Agreement to be
consummated by such Securityholder, including, but not limited to, (i) a copy of
the Company's Registration Statement on Form S-1 (file no. 333-43225), as
amended by the Amendment No. 1 to Registration Statement on Form S-1 filed with
the Securities and Exchange Commission (the "SEC") on March 10, 1998 (the "Form
S-1"), and (ii) a copy of the Offer Notice, (b) is retaining his or her Rolled
Over Shares and Rolled Over Options for his or her account for investment and
not with a view to the distribution thereof, (c) has such knowledge and
experience in financial and business matters that he or she is capable of
evaluating the merits and risks of the retention of his or her Rolled Over
Shares and Rolled Over Options, (d) has had the opportunity to ask questions and
receive answers concerning the terms and conditions of the transactions
contemplated by this Agreement and to obtain any additional information which
the Company or the Investor possesses or can acquire without unreasonable effort
or expense that is necessary to verify the accuracy of the information furnished
to such Securityholder in connection with this Agreement and
19
(e) understands that neither his or her Rolled Over Shares nor Rolled Over
Options have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and therefore such Shares and Options cannot be resold unless
they are registered under the Securities Act or an exemption from such
registration is available.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
AS TO THE COMPANY AND ITS SUBSIDIARIES
The Participating Securityholders and the Company jointly and
severally represent and warrant to the Investor as follows:
4.1 Corporate Status, etc. (a) Organization. Schedule 4.1 lists all
of the Company's Subsidiaries and their respective jurisdictions of
incorporation. Each of the Company and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has full corporate power and authority to
own, lease and operate its properties and to carry on its business as presently
conducted.
(b) Qualification. Each of the Company and its Subsidiaries is duly
qualified to do business and in good standing as a foreign corporation in all
jurisdictions in which the failure to be so qualified would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(c) Organizational Documents. The Company has made available to the
Investor complete and correct copies of the Organizational Documents of the
Company and each of its Subsidiaries, as in effect on the date hereof.
(d) Corporate Records. The Investor has been given the opportunity
to inspect the corporate minutes and stock transfer books of the Company and
each of its Subsidiaries.
(e) Authorization, etc. The Company has full corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.
The execution and delivery by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby have been duly authorized
by all requisite corporate action on the part of the Company. This Agreement has
been duly executed and delivered by the Company and constitutes the legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with its terms.
4.2 Capitalization. (a) The Company. The authorized capital stock of
the Company consists of (i) 2,000,000 shares of
20
Class A Common Stock, of which (A) as of the date hereof, there are issued and
outstanding 1,026,510 shares, (B) as of the Closing Date, there will be issued
and outstanding 1,026,510 shares plus the number of any New Shares issued
pursuant to Section 1.4(c), which shall not exceed 600, (C) as of the date
hereof, there are subject to issuance upon exercise of the outstanding Options
230,844 shares, (D) as of the Closing Date, there will be subject to issuance
upon exercise of the outstanding Options 230,844 shares plus the number of
shares issuable upon exercise of any New Options granted pursuant to Section
1.4(c), which shall not exceed 780, and (E) 1,290 shares are held by the Company
in its treasury, and (ii) 2,000,000 shares of Class B Common Stock, par value
$.01 per share, none of which shares are outstanding. The Shares constitute all
of the issued and outstanding capital stock of the Company, have been duly
authorized and validly issued and are fully paid and nonassessable. The Newly
Issued Shares to be issued and sold to the Investor have been duly authorized
and, when issued and sold to the Investor in accordance with the terms of this
Agreement, such shares will be validly issued, fully paid and nonassessable.
Schedule 1.1 lists all Persons owning of record any Shares and specifying for
each such Person the number of Shares owned by such Person.
(b) Subsidiaries. Schedule 4.2(b) lists for each Subsidiary of the
Company the shares of capital stock of such Subsidiary that are authorized, the
shares of capital stock of such Subsidiary that are issued and outstanding and
the Persons owning such issued and outstanding shares. All issued and
outstanding shares of capital stock of the Company's Subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable and are owned
by the Persons listed in Schedule 4.2(b), free and clear of any Liens. Except
for the shares of capital stock of the Company's Subsidiaries and except as
listed on Schedule 4.2(b), the Company does not own any capital stock or other
equity interest in any other Person.
(c) Options. As of the date hereof, there are outstanding options to
acquire 230,844 shares of Class A Common Stock. As of the Closing Date, there
will be outstanding options to acquire 230,844 shares plus the number of shares
issuable upon exercise of any New Options granted pursuant to Section 1.4(c),
which shall not exceed 780. The Options constitute all of the outstanding
options to acquire any shares of capital stock of the Company. Schedule 1.2
lists all Persons owning of record any Options, the number of shares of Class A
Common Stock issuable upon exercise of the Options owned by such Person and the
exercise price of the Options owned by such Person. There are no options
outstanding to acquire any shares of capital stock of any of the Company's
Subsidiaries. Except for the Rolled Over Options, no Options will be outstanding
after the Closing.
(d) Agreements with Respect to Securities of the Company and its
Subsidiaries. Except (i) as set forth in
21
Schedule 1.2 and Schedule 4.2(d) and (ii) as provided in this Agreement and the
Equity Agreements, there are no (A) preemptive or similar rights on the part of
any holders of any class of securities of the Company or any of its
Subsidiaries; (B) subscriptions, options, warrants, conversion, exchange or
other rights, agreements or commitments of any kind obligating the Company or
any of its Subsidiaries to issue or sell, or cause to be issued and sold, any
shares of capital stock of the Company or any of its Subsidiaries or any
securities convertible into or exchangeable for any such shares; (C) stockholder
agreements, voting trusts or other agreements or understandings to which the
Company or any of its Subsidiaries or any Securityholder is a party or to which
the Company or any of its Subsidiaries or any Securityholder is bound relating
to the voting, registration, transfer, purchase, redemption or other acquisition
of any shares of the capital stock of the Company or any of its Subsidiaries;
(D) outstanding dividends, whether current or accumulated, due or payable on any
of the capital stock of the Company or any of its Subsidiaries; or (E) issued
and outstanding bonds, debentures, notes or other indebtedness of the Company or
any of its Subsidiaries that have the right to vote (or are convertible into, or
exchangeable for, any securities that have the right to vote) on any matters on
which the stockholders of the Company or any of its Subsidiaries may vote.
4.3 Conflicts; Consents. (a) Conflicts. Except as set forth in
Schedule 4.3(a), the execution and delivery of this Agreement by the
Participating Securityholders and the Company, and the consummation by the
Participating Securityholders and the Company of the transactions contemplated
hereby, do not and will not conflict with, or result in any violation of, or
default under (or any event that, with notice or lapse of time or both, would
constitute a default under), or give rise to any right of termination,
cancellation or acceleration of any obligation or loss of material benefit
under, or result in the creation of a Lien on any property or assets of the
Company or any of its Subsidiaries pursuant to, any provision of (i) the
Organizational Documents of the Company or any of its Subsidiaries, (ii) any
mortgage, indenture, loan agreement, note, bond, deed of trust, other agreement,
commitment or obligation for the borrowing of money or the obtaining of credit,
lease (including the Leases) or other agreement, contract, license, franchise,
permit or instrument to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries may be bound, or (iii) any
judgment, order, decree, law, statute, rule or regulation applicable to the
Company or any of its Subsidiaries, other than, in the case of clause (ii) or
(iii), any conflicts, violations or defaults, terminations, cancellations,
accelerations, losses of benefits or Liens that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
(b) Consents. Except (i) as set forth in Schedule 4.3(b), (ii) as
may be required under the XXX Xxx xxx
00
xxx Xxxxxxxxxxx Xxx (Xxxxxx) and (iii) for any Consents where the failure to
obtain such Consents, either in any individual case or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect: no Consent of or
with any court, Governmental Entity or third person is required to be obtained
by the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby or the ownership and operation by the
Company and its Subsidiaries of their respective businesses and properties
subsequent to the Closing in substantially the same manner as previously owned
and operated by the Company and its Subsidiaries (assuming no circumstance
peculiar to the Investor unknown to the Participating Securityholders and not
applicable to the Securityholders).
4.4 Financial Statements. (a) The Company has delivered to the
Investor complete and correct copies of audited consolidated statements of
operations, changes in stockholders' equity and cash flows of the Company and
its Subsidiaries for the fiscal years ended December 31, 1995, December 31, 1996
and December 31, 1997 and audited consolidated balance sheets of the Company and
its Subsidiaries as at such dates (the "Financial Statements"), together with
the notes thereto, in each case audited by Coopers & Xxxxxxx, the Company's
certified public accountants. The Financial Statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied throughout the periods indicated and present fairly in all material
respects the financial condition of the Company and its Subsidiaries on a
consolidated basis at the respective dates indicated and the results of
operations and cash flows of the Company and its Subsidiaries on a consolidated
basis for the respective periods indicated.
(b) The Company has delivered to the Investor a pro forma unaudited
consolidated balance sheet of the Company and its Subsidiaries as at December
31, 1997 (the "Pro Forma Balance Sheet"), giving effect as of such date to the
acquisitions of the electrical distribution business of Avon Electrical
Supplies, Inc. and its affiliates and Xxxxx Wholesale Electric Company (the
"Acquired Companies"). The Pro Forma Balance Sheet (i) presents fairly in all
material respects the financial position of the Company and its Subsidiaries on
a consolidated basis at such date on such pro forma basis and (ii) has been
prepared on bases reflecting the best estimates and judgments of the Company, at
the time of preparation and delivery of the Pro Forma Balance Sheet, as to the
operations and financial condition of the Acquired Companies.
4.5 Events Subsequent to Latest Financial Statements. Except as set
forth in Schedule 4.5, since December 31, 1997, the business of the Company and
its Subsidiaries has been operated only in the ordinary course of business
consistent with past custom and practice (including,
23
without limitation, with respect to quantity and frequency) (the "Ordinary
Course of Business") and there has not been any (a) Material Adverse Change, (b)
damage, destruction or other casualty loss with respect to any asset or property
owned, leased or otherwise used by the Company or any of its Subsidiaries,
whether or not covered by insurance, which has had, or would reasonably be
expected to have, a Material Adverse Effect, (c) strike, lockout, work stoppage
or slowdown by employees of the Company or any of its Subsidiaries, in each
case, whether actual or, to the knowledge of the Company and the Participating
Securityholders, threatened, which has had, or would reasonably be expected to
have, a Material Adverse Effect or (d) action or event that would be prohibited
under clause (f), (i), (j), (k), (l), (m), (n), (o)(i) or (p) of Section 6.1 had
such action or event been taken by the Company or any of its Subsidiaries after
the date hereof.
4.6 Tax Matters. (a) Filing of Returns and Payment of Taxes. Except
as set forth in Schedule 4.6(a), all material Tax Returns required to be filed
on or before the Closing Date have (or by the Closing Date will have) been duly
filed or the time for filing such Tax Returns shall have been validly extended
to a date after the Closing Date. Except for Taxes set forth in Schedule 4.6(a)
or as reflected or reserved against in the Financial Statements (other than in
respect of deferred taxes), the following Taxes (collectively, "Company Taxes")
have (or by the Closing Date will have) been duly paid: (i) all material Taxes
shown to be due on such Tax Returns and (ii) all material Taxes due and payable
on or before the Closing Date that are or may become payable by the Company or
any of its Subsidiaries or chargeable as a Lien upon the assets thereof (whether
or not shown on any Tax Return). Except as set forth in Schedule 4.6(a), all
material Employment and Withholding Taxes required to be withheld and paid on or
before the Closing Date have (or by the Closing Date will have) been duly paid
to the proper Governmental Entity or properly set aside in accounts for such
purpose.
(b) Extensions, etc. Except as set forth in Schedule 4.6(b), no
written agreement or other document extending, or having the effect of
extending, the period of assessment or collection of any Company Taxes or
Employment and Withholding Taxes, and no power of attorney with respect to any
such Taxes, has been executed or filed with the IRS or any other taxing
authority.
(c) Tax Filing Groups; Income Tax Jurisdictions. Except as set forth
in Schedule 4.6(c), neither the Company nor any of its Subsidiaries is or has
been at any time a member of any affiliated, consolidated, combined or unitary
group for purposes of filing Income Tax Returns or paying Income Taxes. Set
forth in Schedule 4.6(c) are all countries, states, provinces, cities or other
jurisdictions in which the Company and its Subsidiaries currently file or have
filed within the last
24
year an Income Tax Return.
(d) Copies of Returns; Audits; etc. The Company has (or by the
Closing Date will have) made available to the Investor complete and accurate
copies of all Tax Returns with respect to all periods beginning on or after
February 28, 1994 that have been filed or will be required to be filed (after
giving effect to all valid extensions of time for filing) on or before the
Closing Date. Except as set forth in Schedule 4.6(d), (i) no material Company
Taxes or material Employment and Withholding Taxes have been asserted in writing
by any Governmental Entity since February 28, 1994 to be due, (ii) no revenue
agent's report or written assessment for Taxes has been issued by any
Governmental Entity in the course of any audit that has been completed since
February 28, 1994 with respect to material Company Taxes or material Employment
and Withholding Taxes, and (iii) no material issue has been raised by any
Governmental Entity in the course of any audit that has not been completed with
respect to material Company Taxes or material Employment and Withholding Taxes,
which issue has been raised in a writing that has been received by the Company.
Schedule 4.6(d) sets forth the Tax Returns with respect to U.S. federal Income
Taxes that have been audited or are currently under audit. Except as set forth
in Schedule 4.6(d), no other Tax Return is currently under audit by any other
taxing authority, and no Employment and Withholding Taxes are currently under
audit by any taxing authority. Except as set forth in Schedule 4.6(d), neither
the IRS nor any other taxing authority is now asserting in writing against the
Company or any of its Subsidiaries any material deficiency or claim for
additional Taxes or any material adjustment of Taxes.
(e) Section 1445(a) of the Code. Neither the Company nor the
Investor will be required to deduct and withhold any amount pursuant to section
1445(a) of the Code upon the transfer of the Repurchased Shares to the Company
or the Investor Purchased Shares to the Investor pursuant to this Agreement.
(f) Tax Sharing Agreements. Except as set forth in Schedule 4.6(f)
(all of which agreements or arrangements will be terminated as of the Closing
Date), neither the Company nor any of its Subsidiaries is a party to or bound by
or has any obligation under any Tax sharing agreement or arrangement.
(g) No closing agreement pursuant to section 7121 of the Code (or
any predecessor provision) or any similar provision of any state, local, or
foreign law has been entered into by or with respect to the Company or any of
its Subsidiaries and no ruling has been received by the Company or any of its
Subsidiaries from any taxing authority.
(h) No consent to the application of section 341(f)(2) of the Code
(or any predecessor provision) has been made or filed by or with respect to the
Company or any of its Subsidiaries or any of their assets or properties. None of
the assets or
25
properties of the Company or any of its Subsidiaries is an asset or property
that is or will be required to be treated (i) as described in section 168(f)(8)
of the Internal Revenue Code of 1954, as amended and in effect immediately
before the enactment of the Tax Reform Act of 1986, or (ii) tax-exempt use
property within the meaning of section 168(h)(1) of the Code.
(i) The Company and each of its Subsidiaries have not agreed to make
and are not required to make any adjustment under Section 481(a) of the Code, by
reason of a change in accounting method or otherwise.
(j) Neither the Company nor any of its Subsidiaries has issued or
assumed (i) any obligations described in Section 279(a) of the Code, (ii) any
applicable high yield discount obligations, as defined in Section 163(i) of the
Code, or (iii) any registration-required obligations, within the meaning of
Section 163(f)(2) of the Code, that is not in registered form.
(k) Without limiting the foregoing representations in any way, the
Company and each of its Subsidiaries have collected all material sales and use
Taxes required to be collected, and have remitted, or will remit on a timely
basis, such amounts to the appropriate governmental authorities, or have been
furnished properly completed exemption certificates.
4.7 Litigation. Except as set forth in Schedule 4.7, there is no
action, claim, suit, arbitration or proceeding pending or, to the knowledge of
the Company and the Participating Securityholders, threatened against the
Company or any of its Subsidiaries and there is no investigation pending or, to
the knowledge of the Company and the Participating Securityholders, threatened
against the Company or any of its Subsidiaries, in each case, before any court
or Governmental Entity, that would reasonably be expected to have a Material
Adverse Effect.
4.8 Compliance with Laws. Except (a) as set forth in Schedule 4.8,
and (b) as to matters relating to Environmental Law, the businesses of each of
the Company and its Subsidiaries have not been, and are not being, conducted in
violation of their internal policies and procedures or of any law, ordinance,
regulation, judgment, order, decree, license or permit of any Governmental
Entity, except for possible violations which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect. Except (i)
as set forth in Schedule 4.8, and (ii) as to matters relating to Environmental
Law, no investigation or review by any Governmental Entity with respect to the
Company or any of its Subsidiaries is pending, or to the knowledge of the
Company and the Participating Securityholders, threatened, nor has any
Governmental Entity indicated an intention to conduct the same, in each case
other than those the outcome of which would not reasonably be expected to have a
Material Adverse Effect.
26
4.9 Employee Benefits. (a) Schedule 4.9(a) contains a complete and
accurate list of all material bonus, incentive or deferred compensation,
pension, retirement, profit-sharing, savings, stock purchase, stock option or
other equity-based, severance, welfare and fringe benefit plans, programs,
policies or arrangements, other than immaterial pay or similar policies,
sponsored by the Company or any of its Subsidiaries or to which the Company or
any of its Subsidiaries is required to contribute or under which any employee or
former employee of Company or any of its Subsidiaries has any present or future
benefits or under which the Company or any Subsidiary has any present or future
liability (the "Plans").
(b) Each Plan has been operated and administered in accordance with
its terms and with applicable law, including, but not limited to, the Employment
Retirement Income Security Act of 1974, as amended ("ERISA"), and the Code,
where applicable, except for any failure to so operate and administer any Plan
that would not reasonably be expected to have a Material Adverse Effect. Each
Plan which is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA (a "Pension Plan") and which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the IRS or an application is currently pending with the IRS, each Pension Plan
is so qualified and there are no circumstances likely to result in revocation of
any such favorable determination letter. With respect to Plans in Canada, each
such Plan, where applicable, is registered in compliance with all applicable
laws and the Company is not aware of any circumstances likely to result in a
revocation of the registration of any Plan in Canada. Except as set forth in
Schedule 4.9(b), there is no material pending or, to the knowledge of the
Company and the Participating Securityholders, threatened legal action, suit or
claim relating to the Plans. Neither the Company nor any of its Subsidiaries has
engaged in a transaction with respect to any Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would reasonably be
expected to subject the Company or any of its Subsidiaries to a tax or penalty
imposed by either section 4975 of the Code or section 502(i) of ERISA in an
amount which would be material.
(c) No Plan is (i) subject to Title IV of ERISA or section 302 of
the Code or, with respect to Plans in Canada, subject to an order by any
regulatory authority to wind up the Plans, or (ii) a "multi-employer pension
plan" within the meaning of Section 1 of the Ontario Pension Benefits Act, or
any similar applicable statute, or a multiple employer plan, within the meaning
of Section 4063 of ERISA.
(d) All material contributions required to be made under the terms
of any Plan or applicable law have been timely made.
(e) With respect to each Plan, the Company has
27
provided or made available to the Investor true and complete copies of the
following documents, to the extent applicable: (i) all of the most recent Plan
documents and all amendments thereto; (ii) all of the most recent trust
instruments and insurance contracts; (iii) the three most recent Forms 5500
filed with the IRS or with respect to Plans in Canada, evidence that the Plan is
duly registered with all applicable regulatory authorities; (iv) the most recent
summary plan description; and (v) the most recent determination letter issued by
the IRS.
(f) No event has occurred and no condition exists that would subject
the Company or its Subsidiaries, either directly or by reason of their
affiliation with any member of their "Controlled Group" (defined as any
organization which is a member of a controlled group of organizations within the
meaning of Code sections 414(b), (c), (m) or (o)), to any tax, fine, lien,
penalty or other liability imposed by ERISA, the Code or other applicable laws,
rules and regulations.
(g) Except as contemplated by Section 1.2(b) or set forth in
Schedule 4.9(g), the consummation of the transactions contemplated by this
Agreement will not: (i) entitle any employee to any severance pay, unemployment
compensation or other similar payment or (ii) result in the acceleration of the
timing of payment of any compensation payable to any employee or the vesting of
any benefit of any such employee.
(h) With respect to any multiemployer plan (within the meaning of
ERISA section 4001(a)(3)) to which the Company, its Subsidiaries or any member
of their Controlled Group has any liability or contributes (or has at any time
contributed or had an obligation to contribute): (i) none of the Company, its
Subsidiaries or any member of their Controlled Group has incurred any material
withdrawal liability under Title IV of ERISA or would be subject to such
material liability if, as of the Closing, the Company, its Subsidiaries or any
member of their Controlled Group were to engage in a complete withdrawal (as
defined in ERISA section 4203) or partial withdrawal (as defined in ERISA
section 4205) from any such multiemployer plan; and (ii) no such multiemployer
plan is in reorganization or insolvent (as those terms are defined in ERISA
sections 4241 and 4245, respectively).
4.10 Permits. The Company and each of its Subsidiaries have all
permits, licenses, franchises, rights, waivers and authorizations that are
necessary for them to own, lease or operate their properties and assets and to
conduct their operations in the manner in which they are presently conducted
(collectively, "Permits"), other than any Permits where the failure to have such
Permit, in any individual case or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. No event has occurred or other fact
exists with respect to the Permits that allows, or after notice or lapse of time
or both would allow, revocation or termination of any of the
28
Permits or would result in any other impairment of the rights of the holder of
any of the Permits that individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect. There is not pending or, to the
knowledge of the Company and the Participating Securityholders, threatened, any
application, petition, objection or other pleading with any Governmental Entity
that challenges or questions the validity of or any rights of the holder under
any Permit, except for such applications, petitions, objections or other
pleadings that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.11 Owned Real Property. (a) Schedule 4.11(a) contains a complete
and correct list of all real property currently owned by the Company or any of
its Subsidiaries (the "Owned Real Property").
(b) The Company or one of its Subsidiaries, as the case may be, has
good and marketable fee simple title to the Owned Real Property free and clear
of any Liens, except (i) those Liens set forth in Schedule 4.11(b), (ii) Liens
reflected or reserved against in the Financial Statements, (iii) (A) Liens for
taxes and assessments not yet due and payable or that are being contested in
good faith and by appropriate proceeding and (B) Liens of warehousemen,
mechanics and materialmen and other similar statutory Liens incurred in the
Ordinary Course of Business, which Liens, in the case of clauses (A) and (B),
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect, and (iv) Liens (other than consensual Liens securing
indebtedness) that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect (such Liens described in the
preceding clauses (i), (ii), (iii) and (iv), the "Permitted Liens").
(c) Except as set forth in Schedule 4.11(c), there are no
outstanding options or rights of first refusal to purchase the Owned Real
Property, or any portion thereof or interest therein.
(d) The Owned Real Property and the Leased Real Property
(collectively, the "Real Property"), together with easements appurtenant
thereto, include all of the real property used or held for use in connection
with or otherwise required to carry on the business of the Company and its
Subsidiaries.
(e) There are no proceedings in eminent domain or other similar
proceedings pending, or to the knowledge of the Company and the Participating
Securityholders, threatened affecting any portion of the Owned Real Property
that would reasonably be expected to have a Material Adverse Effect.
(f) Except with respect to matters relating to Environmental Law,
the current use and operation of the Owned Real Property does not violate any
applicable building, zoning, subdivision and other land use or similar laws,
codes,
29
ordinances, rules, regulations and orders of Governmental Entities
(collectively, the "Real Property Laws"), other than those violations (i)
disclosed in Schedule 4.11(f) or (ii) that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect, and neither
the Company nor any of its Subsidiaries has received any written notice of
violation or claimed violation of any Real Property Law relating to the Owned
Real Property, other than as disclosed in Schedule 4.11(f).
4.12 Leases. (a) Schedule 4.12 contains a complete and correct list
of all real property leases to which the Company or any of its Subsidiaries is a
party or is bound (the "Leases"). The Company has made available to Investor
correct and complete copies of the Leases. Pursuant to the Leases, the Company
or its Subsidiaries hold good and valid leasehold title to the Leased Real
Property, in each case in accordance with the provisions of the applicable
Lease, free and clear of all Liens, except for Permitted Liens, but subject to
Liens encumbering the fee title to the Leased Real Property. Except as disclosed
in Schedule 4.12, (i) each of the Leases is valid and legally binding,
enforceable and in full force and effect, and (ii) neither the Company nor any
of its Subsidiaries, and to the knowledge of the Company and the Participating
Securityholders no other party, is in default under any Lease, except (x) in the
case of clause (i), as such enforceability may be limited by bankruptcy,
insolvency, reorganization and similar laws affecting creditors generally and by
the availability of equitable remedies, and (y) in the cases of clauses (i) and
(ii), for such failures to be enforceable or such defaults as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has received
written notice of a proceeding in eminent domain or other similar proceeding
affecting the Leased Real Property that would reasonably be expected to have a
Material Adverse Effect.
(c) The present use and operation of the Leased Real Property does
not violate any Real Property Laws, except to the extent such violations would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and neither the Company nor any of its Subsidiaries has received
any notice of violation or claimed violation of any Real Property Law relating
to the Leases, except to the extent such violations would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
4.13 Personal Property; Condition of Assets. (a) Except as set forth
in Schedule 4.13 and except for intangible assets which are the subject of
Section 4.14, the Company or one of its Subsidiaries has good title to, or a
valid leasehold interest in, all personal properties and assets other than Real
Property that are material to the business and operations of the
30
Company and its Subsidiaries taken as a whole, free and clear of any Liens,
except for the Permitted Liens.
(b) All of the Company's and each of its Subsidiaries' equipment in
regular use has been well maintained and is in good and serviceable condition,
reasonable wear and tear excepted, except where the failure to be so maintained
or in such condition would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
4.14 Intellectual Property. (a) Schedule 4.14(a) sets forth a
complete and correct list, as of the date hereof, of all Intellectual Property
(as defined below). The term "Intellectual Property" means all trademarks,
service marks, trade names, copyrights, software (other than commercially
available software), proprietary technology, inventions and patents, including
registrations and applications to register or renew the registration of any of
the foregoing, that are owned by the Company or any of its Subsidiaries and are
material to the conduct of the business of the Company, but "Intellectual
Property" shall not include the name or xxxx "WESCO." To the knowledge of the
Company and the Participating Securityholders, except as set forth in Schedule
4.14(a), (i) the use of the Intellectual Property by the Company or any of its
Subsidiaries as currently used does not infringe on the rights of any third
party and (ii) there is no claim of any Person that challenges the rights of the
Company or any of its Subsidiaries in respect of any Intellectual Property;
except in each case for infringements or claims that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
The Company confirms that it and its Subsidiaries have been using and are using
the name and xxxx "WESCO" in commerce in the Ordinary Course of Business.
(b) Schedule 4.14(b) sets forth a complete and correct list, as of
the date hereof, of all Licenses (as defined below). The term "Licenses" means
all material written licenses to which the Company or any of its Subsidiaries is
a party, pursuant to which (i) the Company or such Subsidiary grants any Person
any royalty-bearing or exclusive right to use any of the Intellectual Property,
or (ii) any person or entity grants the Company or such Subsidiary the right to
use any trademarks, service marks, trade names, copyrights, software (other than
commercially available software), proprietary technology, inventions or patents
not owned by the Company or any of its Subsidiaries that are material to the
conduct of the business of the Company or any of its Subsidiaries as currently
conducted. The Company has furnished or made available to the Investor complete
and correct copies of the Licenses listed in Schedule 4.14(b). Neither the
Company nor any of its Subsidiaries, nor, to the knowledge of the Company and
the Participating Securityholders, any other party thereto, is in default under
any License, and each License is in full force and effect as to the Company or
Subsidiary thereof party thereto, and to the knowledge of the Company and the
Participating
31
Securityholders, as to each other party thereto, except for such defaults and
failures to be so in full force and effect as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.15 Contracts. (a) Schedule 4.15 contains a complete and correct
list, as of the date hereof, of all Contracts (as defined below). The term
"Contracts" means all of the following types of contracts and agreements to
which the Company or any of its Subsidiaries is a party, excluding any Leases,
Licenses and Plans:
(i) all contracts and agreements with current or former directors,
officers, other employees, consultants or advisors of the Company or a
Subsidiary thereof, which contract or agreements are in effect as of the
date hereof;
(ii) all contracts and agreements with sales representatives of the
Company or a Subsidiary thereof, other than (x) contracts and agreements
that by their terms may be terminated or canceled by the Company or a
Subsidiary thereof with notice of not more than 60 days, without penalty,
and (y) contracts and agreements that provide for payments based solely on
products sold and require no minimum payments;
(iii) all collective bargaining agreements with any labor union
currently representing employees of the Company or any of its
Subsidiaries;
(iv) all mortgages, pledges, conditional sales contracts,
indentures, security agreements, notes, loan agreements or guarantees of
the obligations of a third party (other than the Company or any of its
Subsidiaries);
(v) joint venture, limited partnership and limited liability company
agreements, shareholders agreements and other similar agreements;
(vi) contracts, agreements and other instruments and arrangements
(excluding individual purchase orders) for the purchase by the Company and
its Subsidiaries of materials, supplies, products or services, and
contracts, agreements and other instruments or arrangements (excluding
individual purchase orders) for the sale or provision by the Company and
its Subsidiaries of materials, supplies, products or services, in each
case, not terminable on notice of 60 days or less without penalty, and
under which the amount that would reasonably be expected to be paid or
received by the Company exceeds $500,000 per annum or $2,500,000 in the
aggregate;
(vii) all contracts, agreements or commitments relating to capital
expenditures in excess of $500,000;
32
(viii) all contracts or agreements with any Person containing any
provision or covenant prohibiting or materially limiting the ability of
the Company or any of its Subsidiaries to engage in any business activity
(or in any geographical area) or to compete with any Person;
(ix) all contracts or agreements that (A) limit or contain
restrictions on the ability of the Company or any of its Subsidiaries to
declare or pay dividends on, to make any other distributions in respect of
or to issue or purchase, redeem or otherwise acquire its capital stock; to
incur indebtedness, to incur or suffer to exist any Lien, to purchase any
properties or assets or (B) would be terminable by the other party
thereto, or result in any penalty or payment premium, upon consummation of
the transactions contemplated by this Agreement;
(x) all contracts or agreements (other than this Agreement and any
contract or agreement listed pursuant to clause (i) above) between the
Company or any of its Subsidiaries, on the one hand, and any director,
officer, stockholder or Affiliate of the Company or its Subsidiaries, on
the other hand; and
(xi) any contract or agreement entered into other than in the
ordinary course of business involving aggregate payments in excess of
$1,000,000, to be made by or to the Company or any of its Subsidiaries
after the date hereof, including, without limitation, any merger
agreement, stock or asset purchase agreement or other acquisition
agreement which contains "earn out", deferred payment or other delayed or
contingent payments to be made thereunder.
(b) The Company has furnished or made available to the Investor
complete and correct copies of the Contracts listed in Schedule 4.15, as in
effect on the date hereof. Neither the Company nor any of its Subsidiaries, nor,
to the knowledge of the Company and the Participating Securityholders, any other
party thereto, is in default under any Contract, and each Contract is in full
force and effect as to the Company or Subsidiary thereof party thereto, and to
the knowledge of the Company and the Participating Securityholders, as to each
other party thereto, except for such defaults and failures to be so in full
force and effect as would not reasonably be expected to have a Material Adverse
Effect.
4.16 Insurance. Schedule 4.16 sets forth a complete and correct list
and description of all of the policies of liability, property, workers'
compensation, life, employee fidelity, and other forms of insurance or bonds
carried by the Company or any of its Subsidiaries on the date of this Agreement
for the benefit of or in connection with the business of the Company and its
Subsidiaries and the applicable termination or renewal dates of such policies.
Each such policy is in full
33
force and effect and no notice of termination or cancellation of any such policy
has been received by the Company or any of its Subsidiaries. There is no breach
by the Company or any of its Subsidiaries or, to the knowledge of the Company
and the Participating Securityholders, by any other party of any term or
condition of any policy. All policy premiums due and payable prior to the
Closing have been or will be (on or prior to the Closing Date) paid up to and
through the Closing.
4.17 Environmental Matters. Except as disclosed in Schedule 4.17
(provided that any environmental assessments, audits or studies listed on
Schedule 4.17 shall qualify the representations and warranties in this Section
4.17 only to the extent that such assessment, audits and studies provide the
Investor with reasonable notice of the environmental condition upon which such
qualification is based), or as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect:
(a) The Company and its Subsidiaries are and have been in compliance
with all applicable Environmental Laws;
(b) The Company and its Subsidiaries have obtained, and are and have
been in compliance with, all permits and authorizations required under
applicable Environmental Laws;
(c) Neither the Company nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding Environmental Laws;
(d) No judicial proceeding or governmental or administrative action
or investigation is pending or, to the knowledge of the Company and the
Participating Securityholders, threatened, under or relating to any applicable
Environmental Law pursuant to which the Company or any of its Subsidiaries is or
will be named as a party or would otherwise incur liability;
(e) Neither the Company nor any of its Subsidiaries has entered into
any agreement with any Governmental Entity pursuant to which the Company or any
of its Subsidiaries has assumed or otherwise incurred responsibility for the
investigation, monitoring or remediation of any condition resulting from or
relating to the release, treatment, storage or disposal of Hazardous Substances
or any violation of Environmental Laws.
(f) There are no circumstances, conditions or events that could
result in claims or liability for the Company or any of its Subsidiaries
pursuant or relating to any Environmental Law;
(g) All environmental site assessments, compliance audits and
similar environmental studies relating to
34
environmental conditions at the Company or any of its Subsidiaries have been
made available to the Investor.
4.18 Labor Matters. Except as set forth in Schedule 4.18, (a) there
is no labor strike, dispute, or stoppage pending or, to the knowledge of the
Company and the Participating Securityholders, threatened against the Company or
its Subsidiaries, and, since February 28, 1994, neither the Company nor any of
its Subsidiaries has experienced any labor strike, dispute or stoppage or other
material labor difficulty; (b) the Company and its Subsidiaries have complied
with all applicable labor laws in connection with the employment of their
respective employees, except for any failure to comply that would not reasonably
be expected to have a Material Adverse Effect; and (c) except as set forth in
Schedule 4.18, neither the Company nor any of its Subsidiaries is a party to or
bound by any Contract or other agreement with any labor union or association
representing its respective employees.
4.19 Information in Form S-1. The Form S-1 (including any amendments
or supplements thereto) does not 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.
4.20 Brokers and Finders. Neither the Company nor any of its
Subsidiaries has employed any broker, finder or investment banker in connection
with the transactions contemplated herein so as to give rise to any claim
against the Investor for any brokerage, finder's or investment banker's
commission, fee or similar compensation, except that the Company has employed
Xxxxxxx, Xxxxx & Co. and Xxxxxxx Xxxxx & Co. as its financial advisers, the
arrangements with which have been disclosed in writing to the Investor prior to
the execution and delivery hereof, and the aggregate amount of fees to be paid
thereunder shall not exceed $12,000.000.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company and the
Participating Securityholders as follows:
5.1 Investor's Corporate Status. The Investor is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware.
5.2 Authorization, etc. The Investor has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and to perform its obligations hereunder. The
execution and
35
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on the part
of the Investor. This Agreement has been duly executed and delivered by the
Investor and constitutes the legal, valid and binding obligation of the Investor
enforceable against the Investor in accordance with its terms.
5.3 Conflicts, Consents. (a) Conflicts. The execution and delivery
of this Agreement by the Investor, and the consummation by the Investor of the
transactions contemplated hereby, do not and will not conflict with, or result
in any violation of or default under (or any event that, with notice or lapse of
time or both, would constitute a default under), or give rise to any right of
termination, cancellation or acceleration of any obligation or loss of material
benefit under, or result in the creation of a Lien on any property or assets of
the Investor pursuant to, any provision of (i) the Organizational Documents of
the Investor, (ii) any mortgage, indenture, loan agreement, note, bond, deed of
trust, other agreement, commitment or obligation for the borrowing of money or
the obtaining of credit, lease or other agreement, contract, license, franchise,
permit or instrument to which the Investor is a party or by which it may be
bound, or (iii) any judgment, order, decree, law, statute, rule or regulation
applicable to the Investor, other than, in the case of clauses (ii) or (iii),
any conflicts, violations, defaults, terminations, cancellations, accelerations,
losses of benefits or Liens that, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the Investor's
ability to consummate the transactions contemplated by this Agreement.
(b) Consents. Except (i) as may be required under the HSR Act and
the Competition Act (Canada) or (ii) for any Consents where the failure to
obtain such Consents, either in any individual case or in the aggregate, would
not reasonably be expected to have a material adverse effect on the Investor's
ability to consummate the transactions contemplated by this Agreement: no
Consent of or with any court, Governmental Entity or third person is required to
be obtained by the Investor in connection with the execution and delivery by the
Investor of this Agreement or the consummation by the Investor of the
transactions contemplated hereby.
5.4 Litigation. There is no action, claim, suit, arbitration or
proceeding pending or, to the Investor's knowledge, threatened against the
Investor and there is no investigation pending or, to the Investor's knowledge,
threatened against the Investor, in each case, before any court or Governmental
Entity, that could have a material adverse effect on the Investor's ability to
consummate the transactions contemplated by this Agreement.
5.5 Purchase for Investment. The Investor is
36
acquiring the Shares for its own account for investment and not with a view to
any distribution thereof. The Investor acknowledges receipt of advice from the
Company to the effect that the Shares have not been registered under the
Securities Act or any state securities laws.
5.6 Financing. (a) The Investor has or will have at the Closing
available cash or existing borrowing facilities that together are sufficient to
enable it and the Company to consummate the transactions contemplated by this
Agreement (the "Financing").
(b) To the extent any portion of the Financing is to consist of
borrowed funds, the Investor has delivered to the Company complete and correct
copies of binding commitment letters received by the Investor with respect to
such Financing (the "Financing Commitments").
5.7 Brokers and Finders. The Investor has not employed any broker,
finder or investment banker in connection with the transactions contemplated
herein so as to give rise to any claim against any Participating Securityholder
for any brokerage, finder's or investment banker's commission, fee or similar
compensation.
5.8 Investment Canada Act. The Investor is a "WTO Investor" within
the meaning of that term under the Investment Canada Act.
ARTICLE VI
COVENANTS
6.1 Conduct of the Company and its Subsidiaries. Except as set forth
in Schedule 6.1 or with the prior written consent of the Investor, from the date
hereof to the Closing, the Company will, and will cause its Subsidiaries to:
(a) conduct their businesses only in the Ordinary Course of
Business;
(b) maintain and keep their properties and equipment in the same
manner as heretofore maintained and kept;
(c) keep in full force and effect insurance comparable in amount and
scope of coverage to that now maintained by them (to the extent available
on commercially reasonable terms in the case of any renewal or replacement
policies);
(d) perform in all material respects all of their obligations under
all contracts and commitments applicable to their businesses or
properties;
37
(e) use their best reasonable efforts to maintain and preserve their
business organizations intact, and maintain their relationships with their
suppliers and customers so that they will be preserved after the Closing;
(f) maintain their books of account and records in the usual and
regular manner;
(g) comply in all material respects with all laws and regulations
applicable to them and to the conduct of their businesses;
(h) not amend their certificates of incorporation or by-laws;
(i) not merge or consolidate with, or agree to merge or consolidate
with, or purchase or otherwise acquire, or agree to purchase or otherwise
acquire, substantially all of the assets of, any other Person;
(j) not sell, lease or otherwise dispose of, or mortgage or
otherwise subject to any consensual Lien, any of their assets having a
value in excess of $250,000 in any individual case or $2,500,000 in the
aggregate other than in the Ordinary Course of Business;
(k) not incur any indebtedness, or enter into any guarantee of any
indebtedness of any other Person, other than indebtedness incurred, and
guarantees entered into, in the Ordinary Course of Business and
indebtedness incurred pursuant to credit facilities in effect as of the
date hereof;
(l) not make any loans or advances to any other Person, other than
in the Ordinary Course of Business or to the Company or any of its wholly
owned Subsidiaries;
(m) not make capital expenditures, other than in accordance with the
Company's 1998 Capital Plan (as previously provided to the Investor), but
in no event shall such capital expenditures exceed $3,000,000 in the
aggregate;
(n) not (i) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, (ii) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, (iii) purchase, redeem or
otherwise acquire any shares of its capital stock or any other securities
thereof or any rights, warrants or options to acquire any such shares or
other securities, or (iv) except as provided in Section 1.4(c), authorize
for issuance, sell, deliver or agree or
38
commit to issue, sell or deliver any capital stock or any other
securities;
(o) not (i) increase the compensation or fringe benefits of any of
its current or former directors, officers or employees (except for
increases in salary or wages in the Ordinary Course of Business), (ii)
grant any severance or termination pay not currently required to be paid
under existing Plans, or (iii) establish, adopt, enter into or amend or
terminate any Plan (except as required by Law) or any plan, agreement,
program, policy, trust, fund or other arrangement that would be a Plan if
it were in existence as of the date of this Agreement;
(p) not propose or adopt any changes to the accounting methods,
principles or practices used by the Company or its Subsidiaries, except as
otherwise required by law or GAAP;
(q) not make any election with respect to any Taxes (or computation
thereof) affecting the Company or any of its Subsidiaries without the
consent of the Investor, which consent shall not be unreasonably withheld
or delayed; and
(r) promptly advise the Investor in writing of any change or effect
that results in or has, or would reasonably be expected to result in or
have, a Material Adverse Change or Material Adverse Effect.
6.2 Efforts to Consummate Transaction. The parties hereto shall use
their best reasonable efforts to take or cause to be taken all actions required
to consummate the transactions contemplated hereby. The parties hereto shall
file or supply, or cause to be filed or supplied, all material applications,
notifications and information required to be filed or supplied by them pursuant
to applicable law in connection with the transactions contemplated hereby,
including filings and reports pursuant to the HSR Act and the Competition Act
(Canada). Each party hereto shall use its best reasonable efforts to obtain all
consents and approvals from Governmental Entities and third parties required to
be obtained by such party for the consummation of the transactions contemplated
hereby, other than any Consents where the failure to obtain such Consent, either
in any individual case or in the aggregate, could not have a material adverse
effect on the transactions contemplated hereby. Each party hereto shall
cooperate in good faith with the other parties hereto in the obtaining of all
Consents from Governmental Entities and third parties required to be obtained
for the consummation of the transactions contemplated hereby.
6.3 Access and Information. Prior to the Closing, and subject to the
restrictions set forth in the Confidentiality Agreement, the Company shall
permit the Investor and its representatives after the date of execution of this
Agreement to have reasonable access, during regular business hours, to the
39
properties, books, records, contracts and agreements and officers, employees and
tax advisors of the Company and its Subsidiaries, and shall furnish, or cause to
be furnished, to the Investor and its representatives any financial and
operating data and other information (including, without limitation, tax returns
and accountants' work papers with respect to the Company or any of its
Subsidiaries) that is available with respect to the business, properties,
financial condition and operations of the Company and its Subsidiaries as the
Investor may reasonably request from time to time. All information provided or
obtained pursuant to the foregoing shall be held by Investor in accordance with
and subject to the terms of the Confidentiality Agreement, dated January 6,
1998, between the Company and The Cypress Group L.L.C. (the "Confidentiality
Agreement").
6.4 Non-Solicitation. The Company and the Participating
Securityholders agree that neither the Company nor any of its Subsidiaries nor
any Participating Securityholder nor any of their respective officers, directors
and employees shall, and the Participating Securityholders shall direct and use
their best efforts to cause the Company's employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of its Subsidiaries) not to, (a) file any further
amendment to the Form S-1 or undertake any selling efforts, including, but not
limited to, initiating any "roadshow", in connection with any possible offering
of securities of the Company, or (b) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to stockholders of the Company) with
respect to a merger, consolidation, recapitalization or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, the Company or any of its Subsidiaries (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal") or
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal. The Participating Securityholders will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing. The
Participating Securityholders will take the necessary steps to inform the
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.4. The Participating Securityholders
will notify the Investor immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with the Company and will
immediately deliver to the Investor any written documentation relating thereto.
6.5 Publicity. Except as required by applicable law,
40
the Investor shall not, directly or indirectly, make or cause any public
announcement or issue any notice in respect of this Agreement or the
transactions contemplated hereby without the prior written consent of the
Company and Fund IV, and none of the Participating Securityholders or the
Company shall, directly or indirectly, make or cause to be made any such public
announcement or issue any notice without the prior written consent of the
Investor. The Participating Securityholders, the Company and the Investor shall
consult with each other prior to issuing any press releases or otherwise making
public statements with respect to the transactions contemplated hereby and prior
to making any filings with any Governmental Entity or with any national
securities exchange with respect thereto.
6.6 Employee Matters. (a) From and after the Closing Date, the
Investor shall cause the Company and its Subsidiaries to honor, pay, perform and
satisfy any and all liabilities, obligations and responsibilities to or in
respect to each current or former employee of the Company or any such Subsidiary
under the terms of (x) each Plan as in effect immediately prior to the Closing
and (y) each agreement or other written arrangement between the Company or any
such Subsidiary and any such employee, in each case, which has been disclosed to
the Investor on Schedule 4.9(a) or Schedule 4.15.
(b) Notwithstanding the foregoing provisions, nothing in this
Section 6.6 shall (i) prevent the Company or its Subsidiaries from terminating
or amending any Plan to the extent permitted by applicable law, (ii) obligate
the Investor, the Company or its Subsidiaries to offer or provide any benefit
related to the equity securities of the Investor, the Company or its
Subsidiaries or (iii) guarantee the continued employment of any person employed
by the Company or its Subsidiaries or interfere with their right to terminate
such employment at any time (except to the extent of any such person's agreement
with the Company or its Subsidiaries disclosed on Schedule 4.9(a) or Schedule
4.15).
6.7 Transfer Taxes. The Company shall be liable for all transfer
Taxes (including, without limitation, any real property transfer gains Taxes)
arising from the sale of the Repurchased Shares and the Newly Issued Shares.
6.8 Employment Agreements and Other Benefits. Upon the reasonable
request of the Investor, prior to the Closing Date, the Company shall seek
shareholder approval of, and the Participating Securityholders shall approve (if
permitted under applicable law), any compensation payments or acceleration of
benefits under any employment agreements, option plans, bonus plans or other
benefit arrangements in a manner sufficient to satisfy Section 28OG(b)(5)(A)(ii)
of the Code and not constitute "parachute payments" (within the meaning of
Section 280G of the Code) provided that, in the event such approval is not
obtained, notwithstanding any other provision of this Agreement, the Company
shall have no obligation to make such payments or
41
accelerate such benefits.
6.9 Financing. The Company agrees to provide, and will cause its
Subsidiaries and its and their respective officers and employees to provide, all
reasonable cooperation in connection with the arrangement of the Financing,
including, but not limited to, the preparation of audited financial statements
in a form meeting the requirements of Regulation S-X of the Securities Act, the
execution and delivery of any commitment letters, underwriting or placement
agreements, pledge and security documents, other definitive financing documents,
or other requested agreements, certificates or documents, including any
indemnity agreements or any certificates of officers of the Company with respect
to solvency matters, as may be reasonably requested by the Investor, in each
case, provided that neither the Company nor any Subsidiary shall thereby incur,
or become obligated to incur, any material obligation or liability to any Person
for which the Company or any of its Subsidiaries would be liable in the event
this Agreement is terminated pursuant to Section 9.1 (other than by reason of a
breach of this Agreement by the Company or any Participating Securityholder).
The Company agrees to use its best reasonable efforts to (i) cause Coopers &
Xxxxxxx LLP to assist in the preparation of any financial statements required
with respect to the Financing and (ii) obtain from Coopers & Xxxxxxx LLP its
consent to the inclusion of any statements or reports prepared by it in
documents that may be filed with the SEC pursuant to the Securities Act by any
of the parties hereto or their respective Affiliates. The Company shall
cooperate with any reasonable requests of the Investor or the SEC related to the
recording of the transactions contemplated hereby as a recapitalization for
financial reporting purposes. In conjunction with the obtaining of any such
Financing, the Company agrees, at the request of the Investor, to call for
prepayment or redemption, or to prepay, redeem and/or renegotiate, as the case
may be, any then existing indebtedness of the Company, provided that no such
prepayment or redemption shall themselves actually be made until
contemporaneously with the Closing.
6.10 Restrictions on Participating Securityholders. Each
Participating Securityholder hereby covenants and agrees that, prior to the
Closing, such Participating Securityholder shall not sell, transfer or otherwise
dispose of all or any part of the Repurchased Shares, Investor Purchased Shares
or Surrendered Options owned by such Participating Securityholder.
6.11 Waiver of Participation Rights. Each Participating
Securityholder agrees, with respect to any Shares owned by such Participating
Securityholder that are not Repurchased Shares or Investor Purchased Shares,
that such Shares shall not be repurchased by the Company or purchased by the
Investor pursuant to this Agreement and hereby waives all rights under Section 4
of the Registration and Participation Agreement with respect to such Shares in
connection with the consummation of the transaction contemplated by this
Agreement.
42
6.12 Actions with respect to Equity Agreements. (a) Fund IV hereby
waives, effective upon the Closing, its rights under Section 5 of the Management
Stock Subscription Agreements in connection with the consummation of the
transactions contemplated by this Agreement.
(b) Fund IV hereby assigns, effective upon the Closing, all of its
rights under each of the Stock Purchase Plan, the Management Stock Subscription
Agreements, the Stock Option Plans, the Management Stock Option Agreements and
the Registration and Participation Agreement to the Investor, and each of the
Company and the Participating Securityholders hereby agree and acknowledge that
the Investor shall be entitled to enforce all such rights to the full extent
provided thereunder. The Company, the Participating Securityholders and the
Investor agree, effective upon the Closing, (i) to the amendment of the Stock
Option Plans, the Management Stock Option Agreements, the Stock Purchase Plan
and the Management Stock Subscription Agreements to (A) replace each reference
therein to "The Xxxxxxx & Dubilier Private Equity Fund IV Limited Partnership"
or "Fund IV" to be a reference to the Investor, and to make such conforming
changes as are necessary to properly reflect the other transactions contemplated
by this Agreement, (B) subject to Section 6.8, terminate all conditions to
vesting of any Options granted to Management Option Holders under the Stock
Option Plan that are not yet vested and (C) terminate the right of the Company
and the Investor under the Management Stock Subscription Agreements, Stock
Option Agreements, Stock Purchase Plan and Option Plans to repurchase the shares
of Class A Common Stock and options to purchase shares of Class A Common Stock
issued thereunder from the holder thereof upon the termination of such holder's
employment with WESCO or the Company, and (ii) to the amendment and restatement
of the Registration and Participation Agreement to be in the form of Exhibit E
hereto. The Company and each Participating Securityholder agrees that, upon the
request of the Investor, he, she or it will execute and deliver a counterpart
signature page to any amendment (or amendment and restatement) of the agreements
referred to in the preceding sentence as necessary to effect the amendments
thereof contemplated by the preceding sentence.
(c) Each of the Company, Fund IV and each Participating
Securityholder consents (to the extent required) to the termination at the
Closing of each of the CBS Equity Agreements, the Fund IV Stock Subscription
Agreement and the CBS-Fund IV Governance Side Letter, dated as of February 28,
1994 and, effective upon the Closing (without any further action required), each
such agreement shall be terminated and no longer in force and effect.
6.13 Actions with respect to Management Loans. The Company shall
take such actions as are reasonably requested by any Management Borrower to
maintain payment of such Management Borrower's Management Loan on the terms, and
at the scheduled
43
maturities, that would apply absent the consummation of the transactions
contemplated hereby, and the Management Borrowers shall take all reasonable
actions necessary to have their Management Loan agreements amended to reflect
the substitution of references therein to Fund IV to be references to the
Investor. The term "Management Borrower" means any Management Participating
Securityholder that has incurred loans ("Management Loans") guaranteed by the
Company in connection with the initial acquisition of such Securityholder's
Shares.
6.14 Financing Commitments. The Investor will execute each of the
Financing Commitments not later than the next Business Day following the earlier
to occur of (a) the day on which the Participation Election Period expires and
(b) the day on which the Company delivers to the Investor written confirmation
that the Participating Securityholder Signing Date has occurred.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to the Obligation of the Investor. The obligation of
the Investor to consummate the transactions contemplated hereby shall be subject
to the satisfaction or waiver by the Investor on or prior to the Closing Date of
each of the following conditions:
(a) Each of the representations and warranties of the Participating
Securityholders and of the Company contained in Articles III and IV shall be
true, in the case of any representation or warranty that is qualified as to
materiality, in all respects, and in the case of any representation or warranty
that is not so qualified, in all material respects, in each case, when made and
as of the Closing Date, with the same effect as though those representations and
warranties had been made on and as of the Closing Date; each of the covenants
and agreements of the Participating Securityholders and the Company to be
performed on or prior to the Closing Date shall have been duly performed in all
material respects; and the Investor shall have received at the Closing
certificates to that effect dated as of the Closing Date and executed on behalf
of the Participating Securityholders and the Company.
(b) There shall not have been issued and be in effect any order,
decree or judgment of or in any court or tribune of competent jurisdiction
preventing the consummation of the transactions contemplated hereby.
(c) (i) All directors of the Company or any of its Subsidiaries
whose resignations shall have been requested in writing by the Investor not less
than 5 days prior to the Closing Date shall have submitted their resignations or
been removed from
44
office effective as of the Closing Date and (ii) the persons designated, in
writing not less than 5 days prior to the Closing Date, by the Investor to
become directors of the Company and any of its Subsidiaries shall be elected as
such directors effective as of the Closing Date.
(d) All corporate, partnership and other proceedings of each
Participating Securityholder and the Company in connection with the transactions
contemplated by this Agreement and all documents and instruments incident
thereto, shall be reasonably satisfactory in substance and form to the Investor,
and the Investor shall have received all such documents and instruments, or
copies thereof, certified if requested, as may be reasonably requested.
(e) The Consulting Agreement, dated as of February 28, 1994, by and
among the Company, WESCO and Xxxxxxx, Dubilier & Rice, Inc. shall have been
terminated.
(f) (i) The CBS Equity Agreements, the Fund IV Stock Subscription
Agreement and the CBS-Fund IV Governance Side Letter dated as of February 28,
1994 shall have been terminated, (ii) each of the Equity Agreements shall have
been amended in the manner contemplated by Section 6.12(b) and (iii) the
Compensation Committee of the Company's Board of Directors shall have duly
adopted (A) a resolution pursuant to and in accordance with Section 8 of the
Option Plans and the Management Stock Option Agreements, in which the
Compensation Committee has reasonably determined in good faith that, following
the Closing Date (and after giving effect to all the transactions contemplated
hereby), all of the Rolled Over Options shall be "Alternative Options", as
defined in the Option Plans and the Management Stock Agreements, (B) a
resolution providing that no further shares of Class A Common Stock may be
issued and sold pursuant to the Stock Purchase Plan and no further options to
acquire shares of Class A Common Stock may be granted under the Stock Option
Plan and (C) a resolution providing that there shall be no acceleration of the
vesting schedule for the Branch Options in connection with the consummation of
the transactions contemplated by this Agreement.
(g) (i) All Non-Management Securityholders shall be Non-Management
Participating Securityholders and (ii) and each Non-Management Participating
Securityholder shall have delivered to the Company (A) certificates evidencing
such Securityholder's Repurchased Shares, duly endorsed in blank or accompanied
by stock transfer powers duly executed in blank, if any, with all necessary
stock transfer tax stamps attached thereto, if any, and cancelled, and (B)
certificates meeting the requirements of Treasury Regulation ' 1.1445-2 to the
effect that (x) such Securityholder is not a foreign person within the meaning
of section 1445(b)(2) of the Code and the Treasury Regulations hereunder or (y)
such Securityholder's interest in the Company is not a "United States real
property interest" within the meaning of Section 897(c) of the Code and the
Treasury regulations
45
thereunder.
(h) Each Management Securityholder shall have delivered to the
Investor (i) certificates evidencing such Securityholder's Investor Purchased
Shares, duly endorsed in blank or accompanied by stock transfer powers duly
executed in blank, if any, with all necessary stock transfer tax stamps attached
thereto, if any, and cancelled, and (ii) certificates meeting the requirements
of Treasury Regulation ' 1.1445-2 to the effect that (x) such Securityholder is
not a foreign person within the meaning of section 1445(b)(2) of the Code and
the Treasury Regulations hereunder or (y) such Securityholder's interest in the
Company is not a "United States real property interest" within the meaning of
Section 897(c) of the Code and the Treasury regulations thereunder.
(i) Since the Participating Securityholder Signing Date, there shall
have been no material adverse change in the participation by Management
Securityholders in the transactions contemplated by this Agreement, either in
respect of the continued participation by Management Securityholders as
Management Participating Securityholders or in respect of the aggregate number
of the Participating Management Securityholders' Rolled Over Shares.
7.2 Conditions to the Obligation of the Participating
Securityholders and the Company. The obligation of the Participating
Securityholders and the Company to consummate the transactions contemplated
hereby shall be subject to the satisfaction or waiver by the Required
Participating Securityholders and the Company on or prior to the Closing Date of
each of the following conditions:
(a) Each of the representations and warranties of the Investor
contained in Article V shall be true, in the case of any representation or
warranty that is qualified as to materiality, in all respects, and in the case
of any representation or warranty that is not so qualified, in all material
respects, in each case, when made and as of the Closing Date, with the same
effect as though those representations and warranties had been made on and as of
the Closing Date; each of the covenants and agreements of the Investor to be
performed on or prior to the Closing Date shall have been duly performed in all
material respects; and the Participating Securityholders and the Company shall
have received at the Closing certificates to that effect dated as of the Closing
Date and executed on behalf of the Investor.
(b) There shall not have been issued and be in effect any order,
decree or judgment of or in any court or tribunal of competent jurisdiction
preventing the consummation of the transactions contemplated hereby.
(c) All corporate proceedings of the Investor in
46
connection with the transactions contemplated by this Agreement and all
documents and instruments incident thereto, shall be reasonably satisfactory in
substance and form to the Participating Securityholders and their counsel, and
the Participating Securityholders and their counsel shall have received all such
documents and instruments, or copies thereof, certified if requested, as may be
reasonably requested.
7.3 Conditions to the Obligations of All Parties. The obligations of
the parties to consummate the transactions contemplated hereby shall be subject
to the satisfaction or waiver by the Investor, the Company and the Required
Participating Securityholders on or prior to the Closing Date of the following
conditions:
(a) Each party shall have duly filed with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") the notification and report
form required under the HSR Act with respect to the consummation of the
transactions contemplated hereby. The waiting period required by the HSR Act
shall have expired or been terminated by the FTC and the Antitrust Division.
(b) Either (i) an advance ruling certificate pursuant to section 102
of the Competition Act (Canada) shall have been issued by the Director of
Investigation and Research appointed under such Act to the effect that such
Director is satisfied that he or she would not have sufficient grounds upon
which to apply to the Competition Tribunal for an order under section 92 of such
Act with respect to the transactions contemplated by this Agreement, or (ii) the
waiting period under section 123 of the Competition Act (Canada) shall have
expired.
(c) Subject to the provisions of Section 7.3(a) and (b), all
consents, authorizations, clearances, orders and approvals of, and filings and
registrations with, any federal, state or foreign Governmental Entity which are
required for or in connection with the execution and delivery of this Agreement
and the consummation by each party hereto of the transactions contemplated
hereby shall have been obtained or made.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.1 Survival of Representations and Warranties. (a) Except as set
forth in Section 8.1(b), the representations and warranties and the covenants to
be performed at or prior to Closing of the Participating Securityholders, the
Company and the Investor contained in this Agreement or in any certificate
delivered in connection with this Agreement shall not survive the Closing, and
any and all breaches of such representations and warranties and covenants shall
be deemed waived as of the
47
Closing.
(b) Notwithstanding Section 8.1(a), (i) the representations and
warranties of the Participating Securityholders contained in Sections 3.3 and
3.5 and the representations and warranties of the Participating Securityholders
and the Company contained in Sections 4.1 and 4.2 shall survive the Closing
without limitation as to time, and (ii) this Section 8.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Closing.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated (or, in the case
of clause (d) below, shall be terminated) at any time prior to the Closing Date:
(a) By the written agreement of the Investor and the Required
Participating Securityholders;
(b) By the Required Participating Securityholders on the one hand or
the Investor on the other hand by written notice to the other party after 5:00
p.m. New York City time on the date that is 74 days after the date of this
Agreement (or such later date up to 84 days after the date of this Agreement as
Fund IV may consent upon the request of the Investor, such consent not to be
unreasonably withheld), if the transactions contemplated hereby shall not have
been consummated pursuant hereto, unless such date is extended by the mutual
written consent of the Required Participating Securityholders;
(c) By either the Investor, on the one hand, or the Required
Participating Securityholders, on the other hand, by written notice to the other
party if:
(i) the other party has (and the terminating party shall not have)
failed to perform and comply with, in all material respects, all
agreements, covenants and conditions hereby required to have been
performed or complied with by such party prior to the time of such
termination, and such failure shall not have been cured within 30 days
following notice of such failure; or
(ii) any event shall occur after the date hereof that shall have
made it impossible to satisfy a condition precedent to the terminating
party's obligations to consummate the transactions contemplated by this
Agreement, unless the occurrence of such event shall be due to the failure
of the terminating party to perform or comply with any of the agreements,
covenants or conditions hereof to be
48
performed or complied with by such party prior to the Closing;
(d) At the expiration of the Participating Election Period unless
(i) Management Participating Securityholders hold Rolled Over Shares at least
equal to the sum of (A) 51,181 and (B) the number equal to 75% of any New Shares
issued pursuant to Section 1.4(c), or (ii) the Company, the Investor and Fund IV
shall otherwise agree in writing; or
(e) By the Required Participating Securityholders if the Investor
shall have failed to comply with Section 6.14.
9.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to the provisions of Section 9.1, this Agreement shall become
void and have no effect, without any liability to any Person in respect hereof
or of the transactions contemplated hereby on the part of any party hereto, or
any of its directors, officers, representatives, stockholders or Affiliates,
except as provided in Sections 6.5, Article X and this Section 9.2. Nothing in
this Section 9.2 shall relieve any party of any liability for willful breach of
this Agreement prior to the date of termination.
ARTICLE X
MISCELLANEOUS
10.1 Expenses. Except as otherwise specifically provided for in this
Agreement, each party hereto shall bear their respective expenses, costs and
fees (including attorneys', auditors' and financing fees, if any) in connection
with the transactions contemplated hereby, including the preparation, execution
and delivery of this Agreement and compliance herewith, whether or not the
transactions contemplated hereby shall be consummated.
10.2 Amendments to Schedules. Schedules 1.1 and 1.2 may be amended
only as provided in Section 1.4. The Participating Securityholders and the
Company may amend or supplement any other Schedule hereto (other than Schedule
6.1) by delivery of a written amendment or supplement thereto to the Investor at
any time or from time to time prior to the fifth business day before the
Closing, and any such amendment or supplement shall have the effect, subject to
the provisos below, of modifying the representations and warranties of the
Participating Securityholders and the Company made herein (and shall be deemed
to modify any such representation or warranty not previously qualified as to
exceptions contained in such Schedule to include such qualification), provided,
however, that no such supplement or amendment shall be delivered unless (i) (A)
such supplement or amendment is delivered because the information contained
therein, in the Participating Securityholders' or
49
Company's judgment, is necessary to make such Schedule complete and was
inadvertently omitted from the Schedule previously delivered or (B) such
supplement or amendment is being delivered because the information contained
therein results from events occurring subsequent to the date hereof and (ii) the
information contained in any such supplement or amendment either individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect, provided, further, that, unless and until the Investor consents thereto
(which consent will not be unreasonably withheld), the delivery of any such
amendment or supplement by the Participating Securityholders or the Company
shall not be deemed to be effective for purposes of Section 7.1 or 9.1
hereunder.
10.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
sent by next-day or overnight mail or delivery or (d) sent by telecopy or
telegram, as follows:
(i) if to the Participating Securityholders,
Xxxxxxx, Dubilier & Rice, Inc.
As Attorney-in-Fact and Custodian
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxx X.X. Xxxxxxx, Esq.
(ii) if to the Company,
CDW Holding Corporation
c/o WESCO Distribution, Inc.
Commerce Court
0 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
50
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxx X.X. Xxxxxxx, Esq.
(iii) if to the Investor,
c/o The Cypress Group L.L.C.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (w) if by personal delivery
on the day after such delivery, (x) if by certified or registered mail, on the
seventh business day after the mailing thereof, (y) if by next-day or overnight
mail or delivery, on the day delivered or (z) if by telecopy or telegram, on the
next day following the day on which such telecopy or telegram was sent, provided
that a copy is also sent by personal delivery, overnight courier or certified or
registered mail.
10.4 Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
RULES THEREOF.
10.5 Assignment; Successors; Binding Effect. This Agreement shall
not be assignable by any party hereto without the prior written consent of all
of the other parties and any attempt to assign this Agreement without such
consent shall be void and of no effect, except that the Investor may assign, at
least five days prior to the Closing, its entire interest in this Agreement,
including the right to purchase the Newly Issued Shares and the Investor
Purchased Shares, to any direct or indirect wholly-owned Subsidiary of the
Investor pursuant to an assignment under which
51
such assignee assumes and agrees to perform all of the obligations of the
Investor hereunder; provided, that, notwithstanding any such assignment, the
Investor shall remain liable to perform all obligations hereunder. This
Agreement shall become effective and binding upon the execution and delivery of
a counterpart hereof by each of the Company, the Investor and Fund IV and shall
become binding on each Participating Securityholder other than Fund IV on the
execution and delivery of a Securityholder Acceptance by such Securityholder.
This Agreement shall inure to the benefit of, and be binding on and enforceable
against, the successors and assigns of the respective parties hereto. Nothing in
this Agreement, expressed or implied, is intended or shall be construed to
confer upon any person other than the parties and successors and assigns
permitted by this Section 10.5 any right, remedy or claim under or by reason of
this Agreement.
10.6 Amendment; Waivers, etc. No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by or on behalf of the Company,
the Investor and the Required Participating Securityholders, provided that,
notwithstanding the foregoing, no such amendment, modification, discharge or
waiver shall be effective to change the number of any Participating
Securityholder's Repurchased Shares, Investor Purchased Shares or Surrendered
Option or the amount of any Participating Securityholder's Purchased Price for
Repurchased Shares, Purchase Price for Investor Purchased Shares or Option
Cancellation Amount without the written consent of such Participating
Securityholder. Any such waiver shall constitute a waiver only with respect to
the specific matter described in such writing and shall in no way impair the
rights of the party granting such waiver in any other respect or at any other
time. Neither the waiver by any of the parties hereto of a breach of or a
default under any of the provisions of this Agreement or to exercise any right
or privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
none is exclusive of any other, or of any rights or remedies that any party may
otherwise have at law or in equity.
10.7 Entire Agreement. This Agreement (including the Exhibits and
Schedules referred to herein or delivered hereunder), the Custody Agreements and
the Confidentiality Agreement constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
10.8 Severability. If any provision, including any phrase, sentence,
clause, section or subsection, of this Agreement is invalid, inoperative or
unenforceable for any reason, such circumstances shall not have the effect of
rendering
52
such provisions in question invalid, inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
10.9 Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
10.10 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
53
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
THOR ACQUISITIONS L.L.C.
By /s/ XXXXX X. XXXXXXXXX
---------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Member
CDW HOLDING CORPORATION
By /s/ XXX X. XXXXX
---------------------------
Name: Xxx X. Xxxxx
Title: President and CEO
Participating Securityholders
(and as parties to the Amended
and Restated Registration
Rights Agreement):
THE XXXXXXX & DUBILIER PRIVATE
EQUITY FUND IV LIMITED
PARTNERSHIP
By: Xxxxxxx & Dubilier
Associates IV Limited
Partnership, the General
Partner
By /s/ XXXXXXX X. XXXXX
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: A General Partner
For the Purposes of Accepting the
Appointments Under Each Custody
Agreement as such Custody Agreement
is Deemed to be Executed and
Delivered to Pursuant to
Section 1.4(b):
54
Accepted by
XXXXXXX X. XXXXX,
As Attorney-in-Fact
/s/ XXXXXXX X. XXXXX
---------------------------
Accepted by
XXXXXX X. XXXXX,
as Attorney-in-Fact
/s/ XXXXXX X. XXXXX
---------------------------
Accepted by
XXXXXX X. XXXX, III,
as Attorney-in-Fact
/s/ XXXXXX X. XXXX, III
---------------------------
Accepted on behalf of
XXXXXXX, DUBILIER & RICE, INC.,
as Attorney-in-Fact
By: /s/ XXXXXXX X. XXXXX
-----------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President,
Secretary and Treasurer
Accepted on behalf of
XXXXXXX, DUBILIER & RICE, INC.,
as the Custodian
By: /s/ XXXXXXX X. XXXXX
-----------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President,
Secretary and Treasurer
