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EXHIBIT 11(c)(2)
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of May 27, 1998, by
and between Xxxxx & Co., Inc., a New York corporation ("Purchaser"), and X.X.
Xxxxxxxxx & Sons Company, a Delaware corporation ("Seller").
RECITALS
Concurrently herewith, Purchaser, DESI Acquisition, Inc., a Delaware
corporation and a wholly-owned subsidiary of Purchaser ("Acquisition"), and
Donnelley Enterprise Solutions Incorporated (the "Company"), a Delaware
corporation, are entering into an Agreement and Plan of Merger of even date
herewith attached hereto (the "Merger Agreement"; capitalized terms used but
not defined herein shall have the meanings set forth in the Merger Agreement),
pursuant to which Sub agrees to make a tender offer (the "Offer") for all
outstanding shares of common stock, $.01 par value per share (the "Common
Stock"), of the Company, at $21.00 per share (the "Offer Price"), net to the
seller in cash, to be followed by a merger (the "Merger") of Sub with and into
the Company.
As a condition to their willingness to enter into the Merger Agreement and
make the Offer, Purchaser and Sub have required that the Seller agree, and
Seller has agreed, among other things, to tender in the Offer and to otherwise
grant to Purchaser the Option and irrevocable proxy with respect to 2,140,000
shares of Common Stock together with any additional shares when and if they are
acquired (such shares, and any additional shares when and if they are acquired,
being referred to herein as the "Shares") on the terms and conditions provided
for herein.
The Board of Directors of the Company has approved the Purchaser becoming
an "interested shareholder" for purposes of Section 203 of the Delaware General
Corporation Law.
AGREEMENT
To implement the foregoing and in consideration of the mutual agreements
contained herein, the parties agree as follows:
1. Option to Purchase Shares.
1.1 Grant of Option. Seller hereby grants to Purchaser an irrevocable
option (the "Option") to purchase all of the Shares at a purchase price of
$21.00 per share (the "Exercise Price") in cash (subject to adjustment pursuant
to Section 7 below) for each Share purchased.
1.2 Exercise of Option. (a) Subject to applicable law (including Rule
10b-13 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), the Option may be exercised by Purchaser as to all of the Shares, at
any time, commencing upon the Exercise Date and prior to the Expiration Date
(as hereinafter defined). As used herein, the term "Exercise Date" means the
first to occur of any of the following dates:
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(i) the Seller fails to perform any agreement or covenant of Seller
contained herein; or
(ii) the Merger Agreement is terminated and Purchaser is entitled to
the payment of the fees or expenses pursuant to Section 8.6 of the Merger
Agreement.
As used herein, the term "Expiration Date" means the first to occur of any
of the following dates:
(1) the Effective Time (as defined in the Merger Agreement);
(2) 10 business days after the termination of the Merger Agreement
in accordance with Article VIII of the Merger Agreement because the
Federal Trade Commission, the Antitrust Division of the Department of
Justice or any state, federal or foreign court or other governmental body
of competent jurisdiction shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
(3) the earliest of (i) the consummation of a third party
transaction that triggered the payment of the termination fee pursuant to
Section 1.2 and (ii) the first anniversary of the date of the termination
of the Merger Agreement, except as set forth in clause (2) above; or
(4) written notice of termination of this Agreement by Purchaser to
the Seller.
(b) In the event Purchaser wishes to exercise the Option, Purchaser shall
send a written notice to Seller of its intention to so exercise the Option (a
"Notice"), specifying the place, time and date of the closing of such purchase
(the "Closing"), which date shall not be less than two business days nor more
than five business days from the date on which a Notice is delivered; provided,
that the Closing shall be held only if such purchase would not otherwise then
violate or cause the violation of, any applicable law or regulations
(including, without limitation, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 0000 (xxx "XXX Xxx")) or any decree, order or injunction of any
governmental agency, authority or court, whether temporary, preliminary or
permanent. If the Closing shall be violative of any such laws or rules or any
such decree, order or injunction, then such Notice shall be deemed rescinded
and of no effect and Purchaser shall send a new Notice at such time as the
Closing is not violative of such laws, rules, decrees, orders or injunctions.
Notwithstanding the occurrence of such rescission, this Agreement shall remain
in full force and effect.
(c) At the Closing, Seller shall deliver to Purchaser all of the Shares
to be purchased by delivery of a certificate or certificates evidencing such
Shares so purchased by Purchaser duly endorsed or with executed blank stock
power attached, in either event with signature guaranteed such that registered
ownership of the Shares may be registered for transfer on the books of the
Company and Purchaser will make payment to Seller of the aggregate Exercise
Price for the Shares being purchased upon exercise of the Option by wire
transfer of immediately available funds to an account designated by Seller in
the amount equal to the Exercise Price multiplied by the number of Shares
purchased pursuant to this Section 1.
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1.3 Effectiveness. This Agreement shall be of no force and effect, and
shall be void ab initio, in the event that the Merger Agreement is not executed
by all parties thereto by 9:00 a.m., Central time, on May 28, 1998.
2. Agreement to Tender. Seller hereby agrees to validly tender pursuant
to the Offer and not withdraw all Shares, except to the extent that the tender
of Shares pursuant to the Offer would subject any profit realized on the
transaction by Seller to recovery by the Company under Section 16(b) of the
Exchange Act.
3. Irrevocable Proxy. The Seller hereby irrevocably appoints Purchaser
or any designee of Purchaser the lawful agent, attorney and proxy of such
shareholder, during the term of this Agreement, to (a) vote the Shares in favor
of the Merger; (b) vote the Shares against any action or agreement that would
result in a breach in any material respect of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement; and (c) vote the Shares against any action or agreement (other than
the Merger Agreement or the transactions contemplated thereby) that would
impede, interfere with, delay, postpone or attempt to discourage the Merger or
the Offer, including, but not limited to: (i) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company and its subsidiaries; (ii) a sale or transfer of a
material amount of assets of the Company and its subsidiaries or a
reorganization, recapitalization or liquidation of the Company and its
subsidiaries; (iii) any change in the management or board of directors of the
Company, except as otherwise agreed to in writing by Purchaser; (iv) any
material change in the present capitalization or dividend policy of the
Company; or (v) any other material change in the Company's corporate structure
or business. Seller intends this proxy to be irrevocable and coupled with an
interest and will take such further action or execute such other instruments as
may be necessary to effectuate the intent of this proxy and hereby revokes any
proxy previously granted by it with respect to the Shares.
4. Representations and Warranties.
4.1 Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller as follows:
(a) Due Authorization. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of
Purchaser, and no other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed
and delivered by Purchaser and constitutes a valid and binding agreement
of Purchaser, enforceable against Purchaser in accordance with its terms,
except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
(b) No Conflicts. Except for (i) filings under the HSR Act, if
applicable, (ii) the applicable requirements of the Exchange Act and the
Securities Act of 1933, as amended (the "Securities Act"), (iii) the
applicable requirements of state securities, takeover or Blue Sky laws and
(iv) such notifications, filings, authorizing actions, orders and
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approvals as may be required under other laws, (A) no filing with, and no
permit, authorization, consent or approval of, any state, federal or
foreign public body or authority is necessary for the execution of this
Agreement by Purchaser and the consummation by Purchaser of the
transactions contemplated hereby and (B) neither the execution and
delivery of this Agreement by Purchaser nor the consummation by Purchaser
of the transactions contemplated hereby nor compliance by Purchaser with
any of the provisions hereof shall (1) conflict with or result in any
breach of any provision of the certificate of incorporation or by-laws (or
similar documents) of Purchaser, (2) result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
agreement or other instrument or obligation to which Purchaser is a party
or by which it or any of its properties or assets may be bound or (3)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Purchaser or any of its properties or assets, except in the
case of (2) or (3) for violations, breaches or defaults which would not in
the aggregate materially impair the ability of Purchaser to perform its
obligations hereunder.
(c) Good Standing. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of New York and has
all requisite corporate power and authority to execute and deliver this
Agreement.
(d) Investment Intent. Purchaser hereby represents that any
securities it purchases pursuant to this Agreement are being purchased
for its own account for purposes of investment and not with a view to, or
for sale in connection with, any public distribution thereof. In
addition, Purchaser acknowledges that the Shares which are subject to the
Option have not been registered and will not be registered under the
Securities Act of 1933, as amended, and may not be resold without
registration under such Act or an exemption therefrom.
4.2 Representations and Warranties of Seller. The Seller hereby
represents and warrants to Purchaser as follows:
(a) Ownership of Shares. The Seller is the registered owner of the
Shares and the Shares are all of the Shares of the capital stock of the
Company owned beneficially or of record by Seller. To the Seller's
knowledge, the Shares are validly issued, fully paid and nonassessable,
with no personal liability attaching to the ownership thereof. The
Seller has good title to the Shares, free and clear of any agreements,
liens, adverse claims or encumbrances whatsoever with respect to the
ownership of or the right to vote the Shares.
(b) Power; Binding Agreement. Seller has the legal capacity, power
and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by
Seller will not violate any other agreement to which Seller is a party
including, without limitation, any voting agreement, stockholders
agreement or voting trust. This Agreement has been duly and validly
executed and delivered by Seller and constitutes a valid and binding
agreement of Seller, enforceable against Seller in accordance with its
terms, except that such
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enforceability (i) may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors'
rights generally and (ii) is subject to general principles of equity.
(c) No Conflicts. Except for (i) filings under the HSR Act, if
applicable, (ii) the applicable requirements of the Exchange Act and the
Securities Act, (iii) the applicable requirements of state securities,
takeover or Blue Sky laws, (x) such notifications, filings, authorizing
actions, orders and approvals as may be required under other laws, (A) no
filing with, and no permit, authorization, consent or approval of, any
state, federal or foreign public body or authority is necessary for the
execution of this Agreement by Seller and the consummation by Seller of
the transactions contemplated hereby and (B) neither the execution and
delivery of this Agreement by Seller nor the consummation by Seller of
the transactions contemplated hereby nor compliance by Seller with any of
the provisions hereof shall (1) conflict with or result in any breach of
any provision of the certificate of incorporation, by-laws, trust or
charitable instruments (or similar documents) of Seller, (2) result in a
violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation
to which Seller is a party or by which he or any of his properties or
assets may be bound or (3) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Seller or any of his properties
or assets, except in the case of (2) or (3) for violations, breaches or
defaults which would not in the aggregate materially impair the ability
of Seller to perform his obligations hereunder.
5. Certain Covenants of Seller. Seller hereby covenants and agrees as
follows:
5.1 No Solicitation. Seller shall not, directly or indirectly, solicit,
encourage, participate in or initiate any inquiries or the making of any
proposal by any person or entity (other than Purchaser or any affiliate of
Purchaser) which constitutes, or may reasonably be expected to lead to, (a) any
sale of the Shares or (b) any acquisition or purchase of a material portion of
the Company's assets or any equity interest in, or any merger, consolidation or
business combination with, the Company or any of its subsidiaries; provided,
however, that the foregoing shall not apply to any directors of the Company in
their capacity as such who are also employees, officers, representatives or
agents of Seller, it being understood that the terms of the Merger Agreement
set forth any and all limitations on solicitation applicable to such persons in
their capacity as directors of the Company. If Seller receives an inquiry or
proposal with respect to the sale of Shares, then Seller shall promptly inform
Purchaser of the terms and conditions, if any, of such inquiry or proposal and
the identity of the person making it. Seller 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.
5.2 Restriction on Transfer, Proxies and Non-Interference. Seller hereby
agrees, while this Agreement is in effect, and except as contemplated hereby,
not to (a) sell, transfer, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, pledge, encumbrance, assignment or other
disposition of, any of the Shares or (b) grant any proxies, deposit any Shares
into a voting trust or enter into a voting agreement with respect to any Shares
or (c) take any
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action that would make any representation or warranty of Seller contained
herein untrue or incorrect or have the effect of preventing or disabling Seller
from performing his obligations under this Agreement.
5.3 Legending of Certificates; Nominees Shares. The Seller agrees to
submit to Purchaser contemporaneously with or promptly following execution of
this Agreement all certificates representing the Shares so that Purchaser may
note thereon a legend referring to the Option and proxy granted to it by this
Agreement. If any of the Shares beneficially owned by the Seller are held of
record by a brokerage firm in "street name" or in the name of any other nominee
(a "Nominee," and, as to such Shares, "Nominee Shares"), the Seller agrees
that, upon written notice by Purchaser requesting it, the Seller will within
five days of the giving of such notice execute and deliver to Purchaser a
limited power of attorney in such form as shall be reasonably satisfactory to
Purchaser enabling Purchaser to require the Nominee to (i) grant to Purchaser
an option and irrevocable proxy to the same effect as Sections 1 and 3 hereof
with respect to the Nominee Shares held by such Nominee, (ii) tender such
Nominee Shares in the Offer pursuant to Section 2 hereof and (iii) submit to
Purchaser the certificates representing such Nominee Shares for notation of the
above-referenced legend thereon.
5.4 Stop Transfer Order. In furtherance of this Agreement, concurrently
herewith, Seller shall and hereby does authorize the Company's counsel to
notify the Company's transfer agent that there is a stop transfer order with
respect to all of the Shares (and that this Agreement places limits on the
voting and transfer of such shares), except that such order shall not apply to
transfers to Purchaser or Acquisition.
5.5 Other Actions. Until the termination of this Agreement, the Seller
will at all times use its best efforts to prevent the Company from taking any
action in violation of the Merger Agreement.
6. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate the transactions contemplated by this Agreement,
including, without limitation, to vest in Purchaser good title to any Shares
purchased hereunder.
7. Adjustments to Prevent Dilution, Etc. In the event of a stock
dividend or distribution, or any change in the Company's Common Stock by reason
of any stock dividend, split-up, recapitalization, combination or the exchange
of shares, the term "Shares" shall be deemed to refer to and include the Shares
as well as all such stock dividends and distributions and any shares into which
or for which any or all of the Shares may be changed or exchanged. In such
event, the amount to be paid per share by Purchaser shall be proportionately
adjusted.
8. Termination. This Agreement shall terminate upon the Expiration Date.
9. Obligation to Purchase Shares. In the event that pursuant to the
Offer there is tendered a number of shares of Common Stock that together with
the Shares tendered pursuant to this Agreement equals 50.1% or more of the
voting power of the Company, and the conditions to the Offer as set forth in
the Merger Agreement are otherwise satisfied, Purchaser
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will purchase all the Shares immediately upon the purchase of the other shares
pursuant to the Offer.
10. Miscellaneous.
10.1 Entire Agreement; Assignment. This Agreement (i) constitutes the
entire agreement among the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise, provided that Purchaser
may assign its rights and obligations hereunder to any direct or indirect
wholly owned parent company or subsidiary of Purchaser, but no such assignment
shall relieve Purchaser of its obligations hereunder if such assignee does not
perform such obligations.
10.2 Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
10.3 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered
to the respective parties at the following addresses:
If to the Seller:
X.X. Xxxxxxxxx & Sons Company
00 X. Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
If to Purchaser: Xxxxx & Co., Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
10.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
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10.5 Cooperation as to Regulatory Matters. If so requested by Purchaser,
promptly after the date hereof, the Seller will use its best efforts to make
any filings which are required under the HSR Act and applicable requirements
and to seek all regulatory approvals required in connection with the
transactions contemplated hereby. The parties shall furnish to each other such
necessary information and reasonable assistance as may be requested in
connection with the preparation of filings and submissions to any governmental
agency, including, without limitation, filings under the provisions of the HSR
Act.
10.6 Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore, each of
the parties hereto agrees that in the event of any such breach the aggrieved
party shall be entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
10.7 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but both of which shall
constitute one and the same Agreement.
10.8 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
10.9 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
10.9 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee in connection with the transactions
contemplated hereby, except for Xxxxxxx, Xxxxx & Co., whose fees will be paid
by Purchaser, and Xxxxxxx Xxxxx & Company, LLC, whose fees will be paid by the
Company.
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IN WITNESS WHEREOF, the Seller and Purchaser have caused this Agreement to
be duly executed as of the day and year first above written.
X.X. XXXXXXXXX & SONS COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice
President & Chief
Financial Officer
XXXXX & CO., INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman & Chief
Executive Officer
