Exhibit 99.1
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INVESTMENT AGREEMENT
Dated as of January 12, 1998
between
U.S. OFFICE PRODUCTS COMPANY
and
CDR-PC ACQUISITION, L.L.C.
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TABLE OF CONTENTS
Page
ARTICLE I
Purchase and Sale of Shares, Special Warrants and Warrants 5
1.01 Purchase and Sale of Shares, Special Warrants and Warrants. . . . 5
1.02 Time and Place of the Closing . . . . . . . . . . . . . . . . . . 5
1.03 Transactions at the Closing . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.01 Covenants of the Company. . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 9
3.01 Representations and Warranties of the Company . . . . . . . . . . 9
3.02 Representations and Warranties of Purchaser . . . . . . . . . . . 33
ARTICLE IV
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.01 Composition of the Board of Directors . . . . . . . . . . . . . . 36
4.02 Supermajority Voting Provisions. . . . . . . . . . . . . . . . . 39
4.03 Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.04 By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.05 Termination of Article IV . . . . . . . . . . . . . . . . . . . . 39
ARTICLE V
Equity Purchases from the Company. . . . . . . . . . . . . . . . . . . . 40
5.01 Subscription Rights . . . . . . . . . . . . . . . . . . . . . . . 40
5.02 Issuance and Delivery of New Securities
and Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VI
Limitations on Purchases of Additional Equity Securities . . . . . . . . 42
6.01 Purchases of Equity Securities. . . . . . . . . . . . . . . . . . 42
6.02 Additional Limitations. . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VII
Transfer of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 44
7.01 Transfer of Common Stock. . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VIII
Covenants and Additional Agreements. . . . . . . . . . . . . . . . . . . 45
8.01 Covenants of the Company. . . . . . . . . . . . . . . . . . . . . 45
8.02 Transaction Proposals . . . . . . . . . . . . . . . . . . . . . . 50
8.03 Modification of Transaction Agreements;
Abandonment of Distributions. . . . . . . . . . . . . . . . . . . 53
8.04 Transaction Agreements and Schedules. . . . . . . . . . . . . . . 54
8.05 Company Stockholder Approval; Proxy Statement . . . . . . . . . . 55
8.06 Retained Companies Financing. . . . . . . . . . . . . . . . . . . 56
8.07 Tender Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.08 Information Statements. . . . . . . . . . . . . . . . . . . . . . 59
8.09 [Intentionally omitted.]. . . . . . . . . . . . . . . . . . . . . 60
8.10 Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.11 Access and Information. . . . . . . . . . . . . . . . . . . . . . 60
8.12 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.13 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE IX
Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.01 Conditions to Each Party's Obligations. . . . . . . . . . . . . . 62
9.02 Conditions to the Obligations of the Company. . . . . . . . . . . 66
9.03 Conditions to the Obligations of Purchaser. . . . . . . . . . . . 67
ARTICLE X
Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ii
10.02 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE XI
Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
11.01 Indemnification of Purchaser . . . . . . . . . . . . . . . . . . 73
11.02 Indemnification Procedures . . . . . . . . . . . . . . . . . . . 75
ARTICLE XII
Interpretation; Definitions. . . . . . . . . . . . . . . . . . . . . . . 76
12.01 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 76
12.02 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE XIII
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.01 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.02 Specific Enforcement . . . . . . . . . . . . . . . . . . . . . . 90
13.03 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 91
13.04 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 91
13.05 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
13.06 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
13.07 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . 93
13.08 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 93
13.09 Expenses and Remedies. . . . . . . . . . . . . . . . . . . . . . 93
13.10 Transfer of Shares and Warrants. . . . . . . . . . . . . . . . . 95
13.11 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 96
13.12 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
13.13 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . 96
13.14 Consent to Jurisdiction. . . . . . . . . . . . . . . . . . . . . 97
EXHIBITS
Exhibit 1 Terms of Special Warrants
Exhibit 2 Terms of Warrants
Exhibit 3 Terms of Registration Rights Agreement
iii
THIS INVESTMENT AGREEMENT (this "Agreement"), dated as of January 12,
1998, is entered into between CDR-PC Acquisition, L.L.C., a Delaware limited
liability company ("Purchaser"), and U.S. Office Products Company, a Delaware
corporation (the "Company").
WHEREAS the Board of Directors of the Company has approved a series of
transactions pursuant to which:
(a) the Company will conduct a tender offer (the "Tender Offer") to
repurchase 37,037,037 shares of common stock, par value $.001 per share, of
the Company (the "Common Stock"), at $27 per share,
(b) the Company will enter into arrangements for new high-yield and
bank financing in connection with the Tender Offer and the other
transactions contemplated hereby (the "Proposed Financings"),
(c) the Company will distribute all of the issued and outstanding
shares of common stock of a corporation that will own, following the
Pre-Distribution Transactions (as defined herein), the Subsidiaries of the
Company comprising the Company's education division ("School"), to the
holders of record of the Common Stock after completion of the Tender Offer
on a pro rata basis (the "School Distribution"),
(d) the Company will distribute all of the issued and outstanding
shares of common stock of a corporation that will own, following the
Pre-Distribution Transactions (as defined herein), the Subsidiaries of the
Company comprising the Company's corporate travel services division
("Travel"), to the holders of record of the Common Stock after completion
of the Tender Offer on a pro rata basis (the "Travel Distribution"),
(e) the Company will distribute all of the issued and outstanding
shares of common stock of a corporation that will own, following the
Pre-Distribution Transactions (as defined herein), the Subsidiaries of the
Company comprising the Company's technology solutions division
("Technology"), to the holders of record of the Common Stock after
completion of the
Tender Offer on a pro rata basis (the "Technology Distribution"), and
(f) the Company will distribute all of the issued and outstanding
shares of common stock of a corporation that will own, following the
Pre-Distribution Transactions (as defined herein), the Subsidiaries of the
Company comprising the Company's print management division ("Print"), to
the holders of record of the Common Stock after completion of the Tender
Offer on a pro rata basis (the "Print Distribution", and, together with the
School Distribution, the Travel Distribution and the Technology
Distribution, the "Distributions");
WHEREAS, in connection with the Distributions, the Company expects:
(a) (i) to execute and deliver a distribution agreement to effect the
School Distribution (the "School Distribution Agreement"), (ii) to cause
School to execute and deliver the School Distribution Agreement, and (iii)
after the satisfaction or waiver of all of the conditions to the Company's
obligation to consummate the School Distribution set forth in the School
Distribution Agreement, and pursuant to the terms of the School
Distribution Agreement, to effect the School Distribution,
(b) (i) to execute and deliver a distribution agreement to effect the
Travel Distribution (the "Travel Distribution Agreement"), (ii) to cause
Travel to execute and deliver the Travel Distribution Agreement, and (iii)
after the satisfaction or waiver of all of the conditions to the Company's
obligation to consummate the Travel Distribution set forth in the Travel
Distribution Agreement, and pursuant to the terms of the Travel
Distribution Agreement, to effect the Travel Distribution,
(c) (i) to execute and deliver a distribution agreement to effect the
Technology Distribution (the "Technology Distribution Agreement"), (ii) to
cause Technology to execute and deliver the Technology Distribution
Agreement, and (iii) after the satisfaction or waiver of all of the
conditions to the
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Company's obligation to consummate the Technology Distribution set forth in
the Technology Distribution Agreement, and pursuant to the terms of the
Technology Distribution Agreement, to effect the Technology Distribution,
(d) (i) to execute and deliver a distribution agreement to effect the
Print Distribution (the "Print Distribution Agreement", and, together with
the School Distribution Agreement, the Travel Distribution Agreement and
the Technology Distribution Agreement, the "Distribution Agreements"), (ii)
to cause Print to execute and deliver the Print Distribution Agreement, and
(iii) after the satisfaction or waiver of all of the conditions to the
Company's obligation to consummate the Print Distribution set forth in the
Print Distribution Agreement, and pursuant to the terms of the Print
Distribution Agreement, to effect the Print Distribution, and
(e) to execute and deliver, and to cause each of School, Travel,
Technology and Print (together, the "Distributed Companies") to execute and
deliver, a tax allocation agreement (the "Tax Allocation Agreement") and
certain other Transaction Agreements;
WHEREAS, prior to the Distributions and pursuant to the terms of the
Distribution Agreements, the Company and the Distributed Companies will
consummate the Pre-Distribution Transactions (as herein defined);
WHEREAS, following the Pre-Distribution Transactions and the record
date for the Distributions:
(a) Purchaser wishes to purchase from the Company, and the Company
wishes to sell to Purchaser, shares of Common Stock and warrants having the
terms and conditions set forth in Exhibit 1 (the "Special Warrants")
entitling the holder thereof to purchase shares of Common Stock together
representing 24.9% of the shares of Common Stock as of the Closing Date (as
herein defined) that would be outstanding after giving effect to the
issuance of such shares (and assuming the conversion into Common Stock of
all of the Company's issued and outstanding 5 1/2% Convertible Subordinated
3
Notes Due 2001 issued pursuant to an Indenture, dated as of February 7,
1996, between the Company and State Street Bank and Trust Company (the
"2001 Notes")), and warrants entitling the holder thereof to purchase one
share of Common Stock for each share and Special Warrant so purchased on
the terms and subject to the conditions set forth in Exhibit 2 (the
"Warrants"), and
(b) the Company and Purchaser wish to enter into a registration
rights agreement (the "Registration Rights Agreement"), the principal terms
of which are attached hereto as Exhibit 3;
WHEREAS Purchaser and the Company are entering into this Agreement to
provide for such purchase and sale and to establish various rights and
obligations in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties agree as follows:
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ARTICLE I
Purchase and Sale of Shares, Special Warrants and Warrants
SECTION 1.01 Purchase and Sale of Shares, Special Warrants and
Warrants. Upon the terms and subject to the conditions set forth herein, the
Company agrees to sell to Purchaser and Purchaser agrees to purchase from the
Company (a) shares of Common Stock representing 24.9% of the outstanding shares
of Common Stock as of the Closing Date after giving effect to the issuance of
such shares (the "Shares"), (b) Special Warrants representing the right to
acquire a number of shares of Common Stock equal to the difference between (i)
24.9% of the outstanding shares of Common Stock as of the Closing Date after
giving effect to the issuance of the Shares and assuming the conversion into
Common Stock of all the 2001 Notes at a conversion price of $19.00, and (ii)
24.9% of the outstanding shares of Common Stock as of the Closing Date after
giving effect to the issuance of the Shares and (c) Warrants to purchase one
share of Common Stock for each Share so purchased and for each share into which
the Special Warrants are exercisable as of the Closing Date for an aggregate
purchase price of $270 million (the "Purchase Price").
SECTION 1.02 Time and Place of the Closing. The closing (the
"Closing") shall take place at the offices of Debevoise & Xxxxxxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, at 10:00 A.M., New York time, on the third
Business Day following the first date on which the conditions to Closing set
forth in Article IX have first been satisfied or waived, or at such other
place, time and date as the parties may agree. The Company shall give
Purchaser ten Business Days prior written notice of the date the Closing is
scheduled to occur. The "Closing Date" shall be the date the Closing occurs.
SECTION 1.03 Transactions at the Closing. At the Closing, subject to
the terms and conditions of this Agreement, (a) the Company shall issue and sell
to Purchaser and Purchaser shall purchase the Shares, the Special Warrants and
the Warrants; (b) the Company shall deliver to Purchaser a certificate
representing the Shares and certificates representing the Special Warrants and
the Warrants, in each case registered in the name of Purchaser against payment
of
5
the Purchase Price with respect thereto by wire transfer of immediately
available funds to an account or accounts previously designated by the Company;
and (c) the Company and Purchaser shall enter into the Registration Rights
Agreement.
ARTICLE II
Covenants
SECTION 2.01 Covenants of the Company.
(a) Financial Statements and Other Reports. The Company covenants
that it will deliver to Purchaser so long as Purchaser's Percentage Interest
exceeds 10%:
(i) as soon as practicable and in any event within 45 days after the
end of each quarterly period (other than the last quarterly period) in each
fiscal year, a consolidated statement of income and a consolidated
statement of cash flow of the Retained Companies for the period from the
beginning of the then current fiscal year to the end of such quarterly
period, and a consolidated balance sheet of the Retained Companies as of
the end of such quarterly period, setting forth in each case in comparative
form figures for the corresponding period or date in the preceding fiscal
year, all in reasonable detail and certified by the principal financial
officer of the Company as presenting fairly, in accordance with GAAP
applied (except as specifically set forth therein) on a basis consistent
with such prior fiscal period, the information contained therein, subject
to changes resulting from year-end closing and audit adjustments; provided,
however, that delivery pursuant to clause (iii) below of a copy of the
Quarterly Report on Form 10-Q of the Company for such quarterly period
filed with the SEC shall be deemed to satisfy the requirements of this
clause (i);
(ii) as soon as practicable and in any event within 90 days after the
end of each fiscal year, a consolidated statement of income, a consolidated
statement of cash flow and a consolidated statement of
6
stockholders equity of the Retained Companies for such year, and a
consolidated balance sheet of the Retained Companies as of the end of such
year, setting forth in each case in comparative form the corresponding
figures from the preceding fiscal year, all in reasonable detail and
examined and reported on by independent public accountants of recognized
national standing selected by the Company, which report shall state that
such consolidated financial statements present fairly the financial
position of the Retained Companies as at the dates indicated and the
results of their operations and changes in their financial position for the
periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise specified in such report) and that
the audit by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards; provided, however, that delivery pursuant to clause
(iii) below of a copy of the Annual Report on Form 10-K of the Company for
such fiscal year filed with the SEC shall be deemed to satisfy the
requirements of this clause (ii);
(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall
send to its stockholders and copies of all such registration statements
(without exhibits), and all such regular and periodic reports as it shall
file with the SEC;
(iv) promptly upon receipt thereof, copies of all reports submitted to
the Retained Companies by independent public accountants in connection with
each annual, interim or special audit of the books of the Retained
Companies made by such accountants, including the comment letter submitted
by such accountants to management in connection with their annual audit;
and
(v) with reasonable promptness, such other financial data of the
Retained Companies as Purchaser may reasonably request.
(b) Inspection of Property. The Company covenants that so long as
Purchaser's Percentage Interest exceeds 10%, it will permit representatives of
Purchaser to visit
7
and inspect, at Purchaser's expense, any of the properties of the Retained
Companies, to examine the corporate books and make copies or extracts therefrom
and to discuss the affairs, finances and accounts of the Retained Companies with
the officers and employees of the Retained Companies and independent public
accountants (and by this provision the Company authorizes such accountants to
discuss with such representatives the affairs, finances and accounts of the
Retained Companies), all at such reasonable times and as often as Purchaser may
reasonably request. Purchaser agrees not to disclose to any Person any
information or data obtained by it pursuant to this Section 2.01(b) or
Section 2.01(a)(iv) or (a)(v) until such information or data otherwise becomes
publicly available or except pursuant to a valid subpoena, judicial process or
its equivalent or in connection with a claim against the Company; provided that
Purchaser shall have used its reasonable best efforts to give the Company
advance notice of such subpoena or judicial process so that the Company may seek
an appropriate protective order. Purchaser acknowledges that information
obtained pursuant to the rights granted hereby may constitute material
non-public information and agrees that it will comply with all applicable laws
relating to the purchase or sale of securities of the Company while in
possession of such information.
ARTICLE III
Representations and Warranties
SECTION 3.01 Representations and Warranties of the Company. The
Company hereby represents and warrants to Purchaser as follows:
(a) Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Each Retained Subsidiary having assets or annual
revenues of $500,000 or more or which is otherwise material to the Retained
Business (each a "Material Subsidiary") is duly organized and validly
existing and, if applicable, except as set forth in Schedule 3.01(a), is in
good standing, under the laws of the jurisdiction of its incorporation or
organization.
8
Each of the Retained Companies is duly qualified or licensed and, if
applicable, is in good standing as a foreign corporation, in each
jurisdiction in which the properties owned, leased or operated, or the
business conducted, by it require such qualification or licensing, except
for any such failure so to qualify or be in good standing which,
individually or in the aggregate, would not have a Material Adverse Effect
on the Retained Companies, taken as a whole. Each of the Material
Subsidiaries has the requisite power and authority to carry on its
businesses as they are now being or will be (immediately after the
Distributions) conducted. The Company has heretofore made available to
Purchaser complete and correct copies of the Certificate of Incorporation
of the Company (the "Company Charter") and the By-laws of the Company (the
"Company By-laws") and the certificate of incorporation and by-laws, or the
comparable organizational documents, of each of the Material Subsidiaries,
each as amended to date and currently in full force and effect.
(b) Corporate Authority. Each of the Company, School, Travel,
Technology and Print has (or will have at the time of such act) the
requisite corporate power and authority to execute, deliver and perform
each Transaction Agreement to which it is or will be a party and to
consummate the transactions contemplated thereby other than, with respect
to the Distributions, formal declaration of the Distributions by the
Company's Board of Directors (provided that, with respect to the issuance
and sale by the Company of the Shares, the Special Warrants and the
Warrants, the Company shall obtain pursuant to Nasdaq Stock Market rules
the approval of such issuance and sale by the affirmative vote of the
holders of a majority of the shares of Common Stock represented at the
Company Meeting and entitled to vote thereon (the "Company Stockholder
Approval")). The execution, delivery and performance of each Transaction
Agreement by the Company and the consummation by the Company of the
Pre-Distribution Transactions, the Distributions, the Proposed Financings,
the Tender Offer and the issuance and sale by the Company of the Shares,
Special Warrants and Warrants and of the other transactions contemplated by
9
the Transaction Agreements have been duly authorized (or will have been
duly authorized at the time of such act) by the Company's Board of
Directors, and no other corporate proceedings on the part of the Company
are necessary to authorize any Transaction Agreement or for the Company to
consummate the Transactions so contemplated (other than, with respect to
the issuance and sale by the Company of the Shares, the Special Warrants
and the Warrants, the Company Stockholder Approval and, with respect to the
Distributions, formal declaration of the Distributions by the Company's
Board of Directors). The execution, delivery and performance by each of
School, Travel, Technology and Print of each Transaction Agreement to which
it will be party and the consummation by it of the Transactions
contemplated thereby will be duly authorized at the time of such act by the
Board of Directors and the stockholders of each, if required, and no other
corporate proceedings on the part of School, Travel, Technology or Print
will be necessary to authorize the execution, delivery and performance of
any Transaction Agreement to which they will be a party or for them to
consummate the Transactions so contemplated. Each Transaction Agreement to
which the Company, School, Travel, Technology or Print is or will be a
party is, or when executed and delivered will be, a valid and binding
agreement of such party, enforceable against such party in accordance with
the terms thereof, assuming (in the case of this Agreement and the
Registration Rights Agreement) that each Transaction Agreement to which
Purchaser is a party is a valid and binding agreement of Purchaser.
(c) No Violations; Consents and Approvals. (i) None of the
execution, delivery or performance by the Company, School, Travel,
Technology or Print of each Transaction Agreement to which any of them is
or will be a party or the consummation by the Company or School, Travel,
Technology or Print of the transactions contemplated thereby (A) will
result in a violation or breach of the Company Charter or the Company
By-laws, the articles of incorporation or by-laws of School, Travel,
Technology or Print or the organizational documents of any of the Retained
Subsidiaries or (B) will result in a violation or breach of (or give rise
to any
10
right of termination, revocation, cancellation or acceleration under or
increased payments under), or constitute a default (with or without due
notice or lapse of time or both) under, or result in the creation of any
lien, charge, encumbrance or security interest of any kind (a "Lien") upon
any of the properties or assets of the Retained Companies under,
(1) subject to the governmental filings and other matters referred to in
clause (ii) below, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, contract, agreement, obligation, instrument,
offer, commitment, understanding or other arrangement (each a "Contract")
or of any license, waiver, exemption, order, franchise, permit or
concession (each a "Permit") to which any of the Retained Companies is a
party or by which any of their properties or assets may be bound (except
for the Company's credit facility with Bankers Trust Company in effect on
the date hereof), or (2) subject to the governmental filings and other
matters referred to in clause (ii) below, any judgment, order, decree,
statute, law, regulation or rule applicable to the Retained Companies,
except, in the case of clause (B), for violations, breaches, defaults,
rights of cancellation, termination, revocation or acceleration or Liens
that would not, individually or in the aggregate, have a Material Adverse
Effect on the Retained Companies, taken as a whole.
(ii) Except for consents, approvals, orders, authorizations,
registrations, declarations or filings as may be required under, and other
applicable requirements of, the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), filings under state securities or
"blue sky" laws and filings or consents referred to in
Schedule 3.01(c)(ii), no consent, approval, order or authorization of, or
registration, declaration or filing with, any government or any court,
administrative agency or commission or other governmental authority or
agency, federal, state or local or foreign (a "Governmental Entity"), is
required with respect to the Company, School, Travel, Technology or Print
or any of their respective Subsidiaries, in
11
connection with the execution, delivery or performance by each of the
Company, School, Travel, Technology and Print of each Transaction Agreement
to which any of them is or will be a party or the consummation by the
Company and School, Travel, Technology and Print of the Transactions
contemplated thereby (except where the failure to obtain such consents,
approvals, orders or authorizations, or to make such registrations,
declarations, filings or agreements would not, individually or in the
aggregate, have a Material Adverse Effect on the Retained Companies, taken
as a whole).
(d) Capital Stock. As of the date hereof, the authorized capital
stock of the Company consists of (i) 500,000,000 shares of Common Stock, of
which an aggregate of 132,958,606 shares of Common Stock were issued and
outstanding as of the close of business on January 9, 1998, and (ii)
500,000 shares of preferred stock, $.001 par value per share, of which none
were issued and outstanding as of the close of business on January 9, 1998.
As of the close of business on January 9, 1998, there were outstanding
under the Company's 1994 Long-Term Incentive Plan, the 1994 Amended and
Restated Long-Term Incentive Plan, the 1996 Non-Employee Directors' Stock
Plan, the 1997A Stock Option Plan for Employees of Mail Boxes Etc., the
1997B Stock Option Plan for Employees of Mail Boxes Etc. and the 1997 Stock
Option Plan for former Non-Employee Directors of Mail Boxes Etc.
(collectively, the "Company Stock Plans") options to acquire an aggregate
of 21,236,778 shares of Common Stock (subject to adjustment on the terms
set forth therein) of which 706,778 are subject to allocation pursuant to
option pools, as set forth on Schedule 3.01(d)(ii). As of the close of
business on January 9, 1998, there were outstanding under the Company Stock
Plans no shares of restricted stock and 3,220 deferred shares had been
reserved for issuance pursuant to the 1996 Non-Employee Directors Stock
Plan. As of the close of business on January 9, 1998, the Company had no
shares of Common Stock reserved for issuance of restricted stock. All of
the outstanding shares of Common Stock have been duly authorized and
validly issued, and are fully paid and nonassessable. As of the date
hereof the Company
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has outstanding $230,000,000 in 5 1/2% Convertible Subordinated Notes Due
2003 issued pursuant to an Indenture, dated as of May 22, 1996, between the
Company and The Chase Manhattan Bank, N.A. (the "2003 Notes") and
$143,750,000 in 2001 Notes, convertible into shares of Common Stock at any
time prior to maturity at a conversion price of $31.60 and $19.00 per
share, respectively. Except as set forth on Schedule 3.01(d), there are no
preemptive or similar rights on the part of any holders of any class of
securities of the Company or of any of the Retained Subsidiaries. Except
for the Common Stock, the 2003 Notes and the 2001 Notes, as set forth
above, the Company has outstanding no bonds, debentures, notes or other
obligations or securities the holders of which have the right to vote (or
are convertible or exchangeable into or exercisable for securities having
the right to vote) with the stockholders of the Company on any matter.
Except as set forth above or on Schedule 3.01(d), as of the date of this
Agreement, there are no securities convertible into or exchangeable for, or
options, warrants, calls, subscriptions, rights, contracts, commitments,
arrangements or understandings of any kind to which the Company or any of
its Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries contingently or otherwise to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any
of the Retained Subsidiaries. Except (y) with respect to the withholding
of exercise price or withholding taxes under any Company Stock Plan or
(z) pursuant to the Tender Offer, there are no outstanding Contracts of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or of any of the
Retained Subsidiaries.
(e) Subsidiaries. (i) Schedule 3.01(e) contains a complete and
correct description of the shares of stock or other equity interests that
are authorized, or issued and outstanding, of each of the Retained
Companies (other than the Company). Except for Subsidiaries that will not
be Subsidiaries of the Company after the Distributions, the Company has no
equity interests with a value of $500,000 or more in any
13
Person other than the Retained Companies, and there are no commitments on
the part of the Company or any Material Subsidiary to contribute additional
capital in respect of any equity interest in any Person. Each of the
outstanding shares of capital stock of each of the Retained Subsidiaries
has been duly authorized and validly issued, and is fully paid and
nonassessable. Except as set forth on Schedule 3.01(e)(i), all of the
outstanding shares of capital stock of each Retained Subsidiary are owned,
either directly or indirectly, by the Company free and clear of all Liens.
(ii) Schedule 3.01(e)(ii) contains a complete and correct list of all
Material Subsidiaries of the Company.
(iii) Schedule 3.01(e)(iii) contains a complete and correct list
setting forth the respective Material Subsidiaries of each of the Company,
School, Travel, Technology and Print immediately following the
Distributions.
(f) SEC Filings. The Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
SEC under the Securities Act and the Exchange Act since June 30, 1995 (the
"Company SEC Documents"). As of its filing date, each Company SEC Document
filed, as amended or supplemented, if applicable, (i) complied in all
material respects with the applicable requirements of the Securities Act or
the Exchange Act, as applicable, and the rules and regulations thereunder
and (ii) did not, at the time it was filed, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(g) Retained Business Financial Statements. (i) Attached hereto as
Annex A(i) are a consolidated balance sheet as of April 26, 1997 (the
"Balance Sheet") and a consolidated balance sheet as of April 30, 1996 and
consolidated statements of income, consolidated statements of cash flow and
consolidated
14
statements of stockholders' equity for the years ended April 30, 1995 and
1996 and April 26, 1997, in each case for the Company (such financial
statements, including the notes thereto, the "Company Business Financial
Statements"), together with the report of the Company's independent
accountants thereon. Each of the Balance Sheet and the consolidated
balance sheet as of April 30, 1996 (including any related notes and
schedules) presents fairly in all material respects the consolidated
financial position of the Company as of their respective dates, and each of
the consolidated statements of income, consolidated statements of cash flow
and consolidated statements of stockholders' equity included in the Company
Business Financial Statements (including any related notes and schedules)
fairly presents in all material respects the income, cash flows and
stockholders equity, as the case may be, of the Company for the periods set
forth therein, in each case in accordance with GAAP applied on a consistent
basis throughout the periods presented therein except as indicated in the
notes thereto, prior to the announcement of the Transactions. Upon
announcement of the Transactions, the Company Business Financial Statements
will require adjustment to reflect (i) the change in the accounting
treatment of certain acquisitions from the pooling-of-interests method to
the purchase method; (ii) the treatment of certain of the Distributions as
discontinued operations, and (iii) certain footnote disclosure regarding
the Transactions.
(ii) Attached hereto as Annex A (ii) are the unaudited consolidated
balance sheet for the Company as of October 25, 1997 and the unaudited
consolidated statement of income of the Company for the six months then
ended (such financial statements, including the notes thereto, the
"Unaudited Company Business Financial Statements"). The Unaudited Company
Business Financial Statements have been prepared in all material respects
in accordance with GAAP consistently applied and on that basis fairly
present the consolidated financial condition and results of operations of
the Company as of the date thereof and for the period indicated, except
that the Company Business Financial Statements omit footnote disclosures
required by GAAP and are subject to normal, recurring year-end closing
15
and audit adjustments, prior to the announcement of the Transactions. Upon
announcement of the Transactions, the Unaudited Company Business Financial
Statements will require adjustment to reflect (i) the change in the
accounting treatment of certain acquisitions from the pooling-of-interests
method to the purchase method; (ii) the treatment of certain of the
Distributions as discontinued operations, and (iii) certain footnote
disclosure regarding the Transactions.
(iii) Attached hereto as Annex A(iii) are the unaudited pro forma
combined balance sheet for the Retained Business as of October 25, 1997
(the "Pro Forma Balance Sheet"), the unaudited pro forma combined statement
of income for the Retained Business for the fiscal year ended April 26,
1997 and the six month period ended October 25, 1997 (the "Pro Forma Income
Statements"), and the notes to such unaudited pro forma financial
statements (the "Notes to Pro Forma Financial Statements", and, together
with the Pro Forma Balance Sheet and the Pro Forma Income Statements, the
"Pro Forma Retained Business Financial Statements"). The Pro Forma
Retained Business Financial Statements have been prepared in accordance
with Article 11 of Regulation S-X; reflect the adjustments necessary to
change accounting treatment for certain past acquisitions from the pooling
of interests method to the purchase method; and give effect to the Proposed
Financings, the Tender Offer, the Distributions and the purchase of the
Shares, Special Shares and Warrants by Purchaser. The Pro Forma Income
Statements have been prepared as if all such Transactions had occurred at
the beginning of fiscal 1997 and the Pro Forma Balance Sheet has been
prepared as if all such transactions had occurred as of October 25, 1997.
(iv) Attached hereto as Annex A(iv) are a consolidated balance sheet
for the Retained Business as of April 26, 1997 (the "Audited Balance
Sheet") and the consolidated statements of income of the Retained Business
for the fiscal year then ended (such financial statements, including the
notes thereto, the "Audited Retained Business Financial Statements"),
together with the report of the Company's independent accountants thereon.
The Audited Retained Business Financial
16
Statements (including any related notes and schedules) will fairly present
in all material respects the consolidated financial position of the
Retained Business as of the date thereof, and fairly present in all
material respects the income of the Retained Business for the period set
forth therein, in accordance with GAAP applied on a consistent basis
throughout the periods presented therein except as indicated in the notes
thereto.
(v) The balance sheets included in the Pro Forma Retained Business
Financial Statements do not include any material assets or liabilities not
intended to constitute a part of the Retained Business after giving effect
to the Transactions. The statements of income, statements of stockholders
equity and statements of cash flows included in the Pro Forma Retained
Business Financial Statements do not reflect the operations of any entity
or business not intended to constitute a part of the Retained Business
after giving effect to all such Transactions. The statements of income
included in the Pro Forma Retained Business Financial Statements reflect
all of the material costs and expenses incurred in connection with the
Retained Business, including those incurred in generating the revenues
reflected in the Pro Forma Retained Business Financial Statements, in each
case, for the periods covered thereby, that would be required to be so
reflected under GAAP in consolidated financial statements of the Retained
Business prepared on a pro forma basis after giving effect to all such
transactions.
(h) Undisclosed Liabilities. Except (i) for the items listed in
Schedule 3.01(h) hereto, (ii) as and to the extent disclosed or reserved
against on the Balance Sheet, the Pro Forma Balance Sheet and the Audited
Balance Sheet or in the footnotes thereto and (iii) as incurred after the
date of the Pro Forma Balance Sheet in the ordinary course of the Retained
Business consistent with prior practice and not prohibited by this
Agreement, the Retained Companies do not have any liabilities or
obligations of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, that,
individually or
17
in the aggregate, are or would be material to the Retained Companies, taken
as a whole.
(i) Absence of Certain Events and Changes. Except as disclosed in the
Company SEC Documents filed with the SEC and publicly available prior to
the date hereof and any amendments filed with respect thereto prior to the
date hereof (the "Filed Company SEC Documents") or as otherwise
contemplated or permitted by this Agreement or the other Transaction
Agreements, and except for any items referred to in Schedule 3.01(i), since
October 25, 1997, the Company and its Subsidiaries have conducted the
Retained Business in the ordinary course consistent with past practice and
there has not been any event, change or development which, individually or
in the aggregate, would have a Material Adverse Effect on the Retained
Companies, taken as a whole.
(j) Compliance with Applicable Laws. Except as disclosed in the Filed
Company SEC Documents, each of the Retained Companies is in compliance
with all statutes, laws, regulations, rules, judgments, orders and decrees
of all Governmental Entities applicable to it that relate to the Retained
Business, and neither the Company nor any of the Retained Companies has
received any notice alleging noncompliance except, with reference to all
the foregoing, where the failure to be in compliance would not,
individually or in the aggregate, have a Material Adverse Effect on the
Retained Companies, taken as a whole. This Section 3.01(j) does not relate
to employee benefits matters (for which Section 3.01(o) is applicable),
environmental matters (for which Section 3.01(p) is applicable) or tax
matters (for which Section 3.01(n) is applicable). Each of the Retained
Companies has all Permits that are required in order to permit it to carry
on its business as it is presently conducted, except where the failure to
have such Permits or rights would not, individually or in the aggregate,
have a Material Adverse Effect on the Retained Companies, taken as a whole.
All such Permits are in full force and effect and the Retained Companies
are in compliance with the terms of such Permits, except where the failure
to be in full force and effect or in compliance would not, individually or
18
in the aggregate, have a Material Adverse Effect on the Retained Companies,
taken as a whole.
(k) Title to Assets. (i) Except as set forth in Schedule 3.01(k)(i),
each of the Retained Companies owns and has good and valid title to, or a
valid leasehold interest in, or otherwise has sufficient and legally
enforceable rights to use, all of the properties and assets (real, personal
or mixed, tangible or intangible), used by the Retained Business or held
for use by the Retained Business in connection with the conduct of, or
otherwise material to, the Retained Business (the "Assets"), including
Assets reflected on the Balance Sheet or acquired since the date thereof,
except for Assets disposed of in the ordinary course of business consistent
with past practice and in accordance with this Agreement and except for
such defects in title which, individually or in the aggregate, would not
have a Material Adverse Effect on the Retained Companies, taken as a whole,
in each case free and clear of any Liens except for Permitted Liens. This
Section 3.01(k) does not relate to intellectual property (for which
Section 3.01(s) is applicable). A list of all owned real property and
leased real property having an annual base rental of more than $20,000 or
having square footage in excess of 5,000 square feet relating to the
Retained Business is set forth on Schedule 3.01(k) and such owned and
leased real property constitutes all the fee and leasehold interests
meeting such description held by the Retained Companies, except for any
such fee or leasehold interests acquired or disposed of in the ordinary
course of business consistent with past practice after the date hereof and
in accordance with this Agreement, and constitutes all the fee and
leasehold interests meeting such description used by the Retained Business
or held for use by the Retained Business in connection with the conduct of
the Retained Business.
(ii) Except as referred to in Schedule 3.01(k)(ii), each Retained
Company has (A) good and insurable title to its owned real properties and
(B) valid and subsisting leasehold interests in its leased real properties,
in each case, free and clear of any Liens, except for (1) Permitted Liens
and (2) ease-
19
ments, covenants, rights-of-way, other matters of record and other matters
subject to which the leases of the Retained Companies' real properties are
granted.
(l) Litigation. Except as disclosed in the Filed Company SEC
Documents or referred to on Schedule 3.01(l), as of the date hereof there
are no civil, criminal or administrative actions, suits or proceedings
pending or, to the knowledge of the Company, threatened, against any of the
Retained Companies that, individually or in the aggregate, are likely to
have a Material Adverse Effect on the Retained Companies, taken as a whole.
Except as disclosed in the Company SEC Documents, there are no outstanding
judgments, orders, decrees, or injunctions of any Governmental Entity
against any of the Retained Companies that, insofar as can reasonably be
foreseen, individually or in the aggregate, in the future would have a
Material Adverse Effect on the Retained Companies, taken as a whole.
(m) Contracts. (i) Schedule 3.01(m) contains a complete and correct
list, as of the date hereof, of all Contracts that are of the types listed
in clauses (A) through (G) below to which any of the Retained Companies is
a party (the "Material Contracts"):
(A) employment, consulting, severance, and other material Contracts
relating to or for the benefit of current, future or former employees,
officers or directors (excluding sales persons) of the Retained Business
requiring annual base payments going forward in excess of $250,000;
(B) Contracts relating to the borrowing of money or obtaining of or
extension of credit (other than in the ordinary course of business),
including letters of credit, guarantees and material security agreements;
(C) joint venture, partnership and similar Contracts (excluding joint
purchasing arrangements with no minimum purchase requirements), involving a
sharing of profits or expenses, that are material or involve any obligation
on the part of the Company to commit capital
20
(excluding commitments not exceeding $100,000 in the aggregate);
(D) Contracts prohibiting or materially restricting the ability of any
Retained Company to conduct its business, to engage in any business or
operate in any geographical area or to compete with any Person;
(E) Contracts that are material to the business, operations, results
of operations, condition (financial or otherwise), assets or properties of
the Retained Companies taken as a whole;
(F) any employment agreement (and any other agreement involving annual
payments in excess of $150,000) with change of control or "event risk"
provisions relating to the Company; and
(G) any employment agreement or other agreement requiring the Company
to compensate any employee for any tax imposed as a result of any excess
parachute payment under Section 280G of the Code.
(ii) All Material Contracts are legal, valid, binding, in full force
and effect and enforceable against each party thereto, except to the extent
that any failure to be enforceable, individually and in the aggregate,
would not reasonably be expected to have or result in a Material Adverse
Effect on the Retained Companies, taken as a whole, provided that no
representation is made as to the enforceability of any non-competition
provision in any employment agreements. Except as set forth in Schedule
3.01(n), there does not exist under any Material Contract any violation,
breach or event of default, or event or condition that, after notice or
lapse of time or both, would constitute a violation, breach or event of
default thereunder, on the part of any of the Retained Companies or, to the
knowledge of the Company, any other Person, other than such violations,
breaches or events of default as would not, individually or in the
aggregate, have a Material Adverse Effect on the Retained Companies, taken
as a whole. Except as set forth in Schedule 3.01(m), the enforceability of
all Material Contracts will not be adversely affected in any manner by the
execution,
21
delivery or performance of this Agreement or the consummation of the
Transactions, and no Material Contract contains any change in control or
other terms or conditions that will become applicable or inapplicable as a
result of the consummation of the Transactions.
(n) Taxes. (i) Except as set forth on Schedule 3.01(n), (A) all Tax
Returns required to be filed by or on behalf of each of the Company and the
Retained Subsidiaries have been filed except to the extent that a failure
to file, individually or in the aggregate, would not have a Material
Adverse Effect on the Retained Companies, taken as a whole; (B) all such
Tax Returns filed are complete and accurate in all respects, other than any
incompleteness or any inaccuracy that would not, individually or in the
aggregate, have a Material Adverse Effect on the Retained Companies taken
as a whole, and all Taxes shown to be due on such Tax Returns have been
paid; (C) no written claim (other than a claim that has been finally
settled) has been made by a taxing authority that any of the Company or the
Retained Subsidiaries is subject to an obligation to file Tax Returns or to
pay or collect Taxes imposed by any jurisdiction in which such Retained
Company does not file Tax Returns or pay or collect Taxes, other than any
such claim that would not have a Material Adverse Effect on such Retained
Company or for which adequate reserves have been provided on the balance
sheet contained in the Unaudited Company Business Financial Statements and
the Pro Forma Balance Sheet; (D) there is no deficiency with respect to any
Taxes which would, individually or in the aggregate, have a Material
Adverse Effect on the Retained Companies, taken as a whole, other than any
such deficiency for which adequate reserves have been provided on the
balance sheet contained in the Unaudited Company Business Financial
Statements and the Pro Forma Balance Sheet; and (E) all material
assessments for Taxes due with respect to completed and settled
examinations or concluded litigation have been paid which, individually or
in the aggregate (with respect to any Retained Company), exceed $100,000.
As used in this Agreement, "Taxes" shall include all federal, state, local
and foreign income, franchise, property, sales, excise and
22
other taxes, tariffs or governmental charges of any nature whatsoever,
including interest and penalties, and additions thereto; and "Tax Returns"
shall mean all federal, state, local and foreign tax returns, declarations,
statements, reports, schedules, forms and information returns relating to
Taxes.
(ii) Except as set forth in Schedule 3.01(n), each of the Company and
the Retained Subsidiaries has duly and timely withheld all Taxes required
to be withheld in connection with its business and assets, and such
withheld Taxes have been either duly and timely paid to the proper
governmental authorities or properly set aside in accounts for such
purpose, except to the extent that any failure to do so would not have a
Material Adverse Effect on the Retained Companies, taken as a whole.
(iii) Except as set forth in Schedule 3.01(n), (A) none of the
Company and the Retained Subsidiaries is a party to or bound by or has any
obligation under any Tax allocation, sharing, indemnification or similar
agreement or arrangement (other than any agreement for the acquisition of
one or more of the Retained Subsidiaries) with any Person other than any of
the Retained Companies, which might result in a Material Adverse Effect to
the Retained Company which entered into such agreement or arrangement; and
(B) none of the Company and the Retained Subsidiaries is or has been at any
time a member of any group of companies filing a consolidated, combined or
unitary income tax return other than any such group (1) the common parent
of which is the Company or any Retained Subsidiary or (2) the common parent
of which has not held any asset other than shares of one or more of the
Retained Subsidiaries.
(iv) Except as set forth in Section 3.01(n) of the Disclosure
Schedule, (A) all taxable periods of each of the Company and the Retained
Subsidiaries ending before December 31, 1993 are closed or no longer
subject to audit; (B) none of the Company and the Retained Subsidiaries is
currently under any audit by any taxing authority as to which such taxing
authority has asserted in writing any claim which, if adversely
23
determined, could have a Material Adverse Effect on such Retained Company;
and (C) no waiver of the statute of limitations is in effect with respect
to any taxable year of the Company or any of the Retained Subsidiaries.
(o) Employee Benefit Plans and Related Matters; ERISA. (i) Employee
Benefit Plans. Each Employee Benefit Plan that provides for equity-based
compensation or that has associated costs that are expected to be material
to the Company or the Retained Companies in the aggregate and that is
expected to provide for contributions to be made by any of the Retained
Companies or their Employees after the date hereof or to permit the accrual
of additional benefits by any Employee of the Retained Companies after the
date hereof is either listed on Schedule 3.01(o) or has been filed with the
SEC as a material contract (collectively, the "Retained Plans"). Except as
set forth on Schedule 3.01(o), neither the Company nor any of its
Subsidiaries has communicated to any Employee any intention or commitment
to modify any Retained Plan or to establish or implement any other employee
or retiree benefit or compensation plan or arrangement which would, if it
existed on the date hereof, be a Retained Plan.
(ii) Qualification. Except to the extent that failure to meet the
requirements of section 401(a) of the Code would not result in any material
liability as to which adequate reserves have not been established, each
Employee Benefit Plan intended to be qualified under section 401(a) of the
Code, and the trust (if any) forming a part thereof, (A) has received a
favorable determination letter from the IRS as to its qualification under
the Code and to the effect that each such trust is exempt from taxation
under section 501(a) of the Code, and nothing has occurred since the date
of such determination letter that could adversely affect such qualification
or tax-exempt status or (B) a timely application for such a favorable
determination letter was filed and the Company has no reason to believe
that such a favorable determination letter will not be granted.
(iii) Compliance; Liability. (A) No liability has been or is
reasonably expected to be incurred under
24
or pursuant to Title I or IV of ERISA or the penalty, excise Tax or joint
and several liability provisions of the Code relating to employee benefit
plans that is or would be material to the Company or, following the
Closing, to the Retained Companies in the aggregate.
(B) Each of the Employee Benefit Plans has been operated and
administered in all respects in compliance with its terms, all applicable
laws and all applicable collective bargaining agreements, except for any
failure so to comply that, individually and in the aggregate, could not
reasonably be expected to result in a material liability or obligation on
the part of the Retained Companies in the aggregate. There are no pending
or threatened claims by or on behalf of any of the Employee Benefit Plans,
by any Employee or otherwise involving any such Employee Benefit Plan or
the assets of any Employee Benefit Plan (other than routine claims for
benefits, all of which have been fully reserved for on the regularly
prepared balance sheets of the Company) which would reasonably be expected
to result in any material liability to the Retained Companies in the
aggregate.
(C) Except to the extent that it would not give rise to a
material liability or obligation on the part of the Company or the Retained
Companies, no Employee is or will become entitled to post-employment
benefits of any kind by reason of employment with the Company or its
Subsidiaries, including, without limitation, death or medical benefits
(whether or not insured), other than (x) coverage mandated by section 4980B
of the Code, (y) retirement benefits payable under any Plan qualified under
section 401(a) of the Code or (z) accrued deferred compensation. The
consummation of the Transactions will not result in an increase in the
amount of compensation or benefits or the acceleration of the vesting or
timing of payment of any compensation or benefits payable to or in respect
of any Employee by any of the Retained Companies.
(iv) Employees, Labor Matters, etc. Except as set forth on Schedule
3.01(o), neither the Company nor any of its Subsidiaries is a party to or
bound by any collective bargaining agreement, and there are no labor unions
or other organizations representing, purporting to represent or attempting
to represent any employees employed by the Company or any of its
Subsidiaries.
25
Since April 26, 1997, there has not occurred or been threatened any strike,
slowdown, picketing, work stoppage, concerted refusal to work overtime or
other similar labor activity with respect to any employees of the Company
or any of its Subsidiaries. Except as set forth on Schedule 3.01(o), there
are no labor disputes currently subject to any grievance procedure,
arbitration or litigation and there is no petition pending or threatened
with respect to any employee of any the Company or its Subsidiaries. The
Company and its Subsidiaries has complied with all applicable Laws
pertaining to the employment or termination of employment of their
respective employees, including, without limitation, all such laws relating
to labor relations, equal employment opportunities, fair employment
practices, prohibited discrimination or distinction and other similar
employment activities, except for any failure so to comply that,
individually and in the aggregate, could not result in any material
liability to the Retained Companies in the aggregate.
(p) Environmental Matters. Except as disclosed in the Filed Company
SEC Documents or as set forth on Schedule 3.01(p) and except for such
matters that, individually or in the aggregate, would not have a Material
Adverse Effect on the Retained Companies, taken as a whole, (i) the
Retained Companies are in compliance with all applicable Environmental Laws
(as defined below), (ii) the Retained Companies have all Permits required
under Environmental Laws for the operation of the Retained Business as
presently conducted ("Environmental Permits"), (iii) none of the Retained
Companies has received notice from any Governmental Entity asserting that
any of the Retained Companies may be in violation of, or liable under, any
Environmental Law, and (iv) there are no actions, proceedings or claims
pending (or, to the knowledge of the Retained Companies, threatened)
seeking to impose any liability on the Retained Companies in respect of any
Environmental Laws, Environmental Permits or Hazardous Substances.
For purposes of this Agreement, "Environmental Law" means any federal,
state, local or foreign law, statute, regulation or decree relating to
(x) the protection of the environment or (y) the use, storage,
26
treatment, generation, transportation, processing, handling, release or
disposal of Hazardous Substances, in each case as in effect on the date
hereof. "Hazardous Substance" means any waste, substance, material,
pollutant or contaminant listed, defined, designated or classified as
hazardous, toxic or radioactive, or otherwise regulated, under any
Environmental Law.
(q) Delaware Law. The Company has taken all action necessary to
ensure that the provisions of Section 203 of the Delaware General
Corporation Law (the "DGCL") will not be applicable to Purchaser or its
Affiliates as a result of the transactions contemplated by this Agreement.
(r) Status of Shares. The Shares being issued at the Closing have
been duly authorized by all necessary corporate action on the part of the
Company, and at Closing such Shares will have been validly issued and,
assuming payment therefor has been made, will be fully paid and
nonassessable, and the issuance of such Shares will not be subject to
preemptive rights of any other stockholder of the Company. The Warrant
Shares and the Special Warrant Shares have been duly authorized by all
necessary corporate action on the part of the Company, and such shares of
Common Stock have been validly reserved for issuance, and, assuming payment
therefor has been made, upon issuance and exercise of the Warrants or the
Special Warrants, as the case may be, will be validly issued and
outstanding, fully paid and nonassessable. Assuming the Company
Stockholder Approval has been obtained, the Shares, Warrants and Special
Warrants will be eligible for listing on the Nasdaq Stock Market.
(s) Intellectual Property. The Intellectual Property that is owned by
the Retained Companies constitutes all of the Intellectual Property that is
material to the Retained Companies as a whole, except for Intellectual
Property subject to written or oral licenses, agreements or arrangements
pursuant to which the use of Intellectual Property by any Retained Company
is permitted by any Person (the "Company Intellectual Property"). The
Company Intellectual
27
Property that is owned by the Retained Companies is owned free from any
Liens (other than Permitted Liens). Except as set forth in
Schedule 3.01(s), all material Intellectual Property Licenses are in full
force and effect in accordance with their terms, and are free and clear of
any Liens (other than Permitted Liens). Except as set forth in
Schedule 3.01(s), immediately after the Closing, the Retained Companies
will own or have the right to use all the Company Intellectual Property, in
each case free from Liens (except for Permitted Liens incurred in the
ordinary course of business) and on the same terms and conditions as in
effect prior to the Closing. Except as set forth in Schedule 3.01(s), the
conduct of the Retained Business does not infringe or conflict with the
rights of any third party in respect of any Intellectual Property, except
where such conduct would not materially affect the ability of the Retained
Companies to conduct their business as presently conducted. Except as set
forth in Schedule 3.01(s), to the knowledge of the Company, none of the
Company Intellectual Property is being infringed by any third party except
where such infringement would not have a Material Adverse Effect on the
Retained Companies taken as a whole. Except as set forth in Schedule
3.01(s), there is no claim or demand of any Person pertaining to, or any
proceeding which is pending or, to the knowledge of the Company,
threatened, that challenges the rights of any of the Retained Companies in
respect of any Company Intellectual Property, or that claims that any
default exists under any Intellectual Property License, except where such
claim, demand or proceeding would not materially affect the ability of the
Retained Companies to conduct their business as presently conducted.
Except as set forth in Schedule 3.01(s), none of the Company Intellectual
Property is subject to any outstanding order, ruling, decree, judgment or
stipulation by or with any court, tribunal, arbitrator, or other
Governmental Entity materially adverse to the Company. Except as set forth
in Schedule 3.01(s), the Intellectual Property owned by the Retained
Companies and material to the Retained Companies taken as a whole has been
duly registered with, filed in or issued by, as the case may be, the
appropriate filing offices, domestic or foreign, to the extent necessary or
28
desirable to ensure usual and customary protection for the Company
Intellectual Property in the relevant jurisdiction under any applicable
law, and the same remain in full force and effect. The Retained Companies
have taken all necessary actions to ensure usual and customary protection
for the Company Intellectual Property in the relevant jurisdiction of the
Company Intellectual Property (including maintaining the secrecy of all
confidential Intellectual Property) under any applicable law.
(t) Guarantees. Except as set forth on Schedule 3.01(t), none of the
obligations or liabilities of any of the Distributed Companies will be
guaranteed by or subject to a contingent obligation of any of the Retained
Companies following the Distributions (excluding lease guarantees involving
obligations in an aggregate amount not to exceed $100,000).
(u) Brokers or Finders. Except as set forth on Schedule 3.01(u), no
agent, broker, investment banker or other firm is or will be entitled to
any broker's or finder's fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement.
(v) Acquisitions. Schedule 3.01(v) sets forth a true and correct list
of the 25 largest acquisitions (in terms of aggregate consideration) of
businesses made by the Company since its inception. The Company has
provided Purchaser with copies of the acquisition agreements and all
schedules thereto for each acquisition listed on Schedule 3.01(v).
(w) Disclosure. No representation or warranty by the Company
contained in this Agreement or in any certificate to be furnished by or on
behalf of the Company pursuant hereto contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein, in light of
the circumstances under which they were made, not misleading with respect
to the Retained Business as a whole or the transactions contemplated by
this Agreement.
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(x) Fairness Opinion. The Board of Directors of the Company has
received a fairness opinion, customary in form and substance, from Xxxxxx,
Xxxxxxx & Co., Incorporated.
SECTION 3.02 Representations and Warranties of Purchaser. Purchaser
represents and warrants as of the date hereof as follows:
(a) Organization. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with all requisite power and authority to
own, lease and operate its properties and to conduct its business as now
being conducted.
(b) Authority. Purchaser has the requisite limited liability company
power and authority to execute, deliver and perform each Transaction
Agreement to which it is a party and to consummate the Transactions. All
necessary action required to have been taken by or on behalf of Purchaser
by applicable law, its limited liability company agreement or otherwise to
authorize the approval, execution, delivery and performance by Purchaser of
this Agreement and the consummation by it of the Transactions have been
duly authorized, and no other proceedings on its part are or will be
necessary to authorize this Agreement or for it to consummate the
Transactions. This Agreement is a valid and binding agreement of
Purchaser, enforceable against Purchaser in accordance with the terms
hereof, assuming that this Agreement is a valid and binding agreement of
the Company.
(c) Conflicting Agreements and Other Matters. Neither the execution
and delivery of this Agreement nor the performance by Purchaser of its
obligations hereunder will conflict with, result in a breach of the terms,
conditions or provisions of, constitute a default under, result in the
creation of any mortgage, security interest, encumbrance, lien or charge of
any kind upon any of the properties or assets of Purchaser pursuant to, or
require any consent, approval or other action by or any notice to or filing
with any court or administrative or governmental body pursuant to, the
30
organizational documents or agreements of Purchaser or any agreement,
instrument, order, judgment, decree, statute, law, rule or regulation by
which Purchaser is bound (assuming that the Company shall have made or
obtained all consents, approvals, orders, authorizations, registrations,
declarations or filings referred to in Section 3.01(c)(ii)), except for
filings after the Closing under Section 13(d) of the Exchange Act and
filings under the HSR Act.
(d) Acquisition for Investment. Purchaser is acquiring the Shares,
Warrants and Special Warrants being purchased by it for its own account for
the purpose of investment and not with a view to or for sale in connection
with any distribution thereof, and Purchaser has no present intention or
plan to effect any distribution of Shares, Warrants, Special Warrants,
Warrant Shares or Special Warrant Shares; provided that the disposition of
such Purchaser's property shall at all times be and remain within its
control and subject to the provisions of this Agreement and the
Registration Rights Agreement. Purchaser has delivered to the Company a
complete and correct copy of a commitment letter from the Fund for $270
million of common equity financing. The Fund constitutes a "venture
capital operating company" within the meaning of Section 2510.3-101(d) of
the regulations promulgated under ERISA and the transactions contemplated
by this Agreement shall not adversely affect such status.
(e) Ownership of Securities. At the date hereof Purchaser does not
Beneficially Own, directly or, to the knowledge of Purchaser, indirectly
(or have any option or other right to acquire), any securities of the
Company other than the Shares, Warrants and Special Warrants being
purchased by it hereunder.
(f) Brokers or Finders. Except as set forth in Schedule 3.02(f), no
agent, broker, investment banker or other firm is or will be entitled to
any broker's or finder's fee or any other commission or similar fee from
Purchaser in connection with any of the transactions contemplated by this
Agreement.
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(g) Future Acquisitions. Purchaser has no present plan or intention
to acquire, directly or indirectly, shares of capital stock comprising 50%
or more of the Total Voting Power or 50% or more of the total fair market
value of all shares of outstanding capital stock of the Company.
ARTICLE IV
Corporate Governance
SECTION 4.01 Composition of the Board of Directors.
(a) At and after the Closing, the Board of Directors of the Company
shall consist of nine directors (subject to the right to increase the Board
of Directors pursuant to Section 4.01(b)(iii)). Three members of the Board
of Directors shall initially be designated by the Purchaser (the "Investor
Directors"). Six members of the Board (the "Non-Investor Directors") shall
initially be designated by the Company, subject to the conditions set forth
in Section 9.03(l), and shall include the chief executive officer of the
Company. So long as Purchaser shall have the right to nominate at least
two directors pursuant to clause (i) below, Purchaser shall be entitled to
designate the Chairman of the Board of Directors, provided that the
Chairman of the Board, if designated by Xxxxxxxxx, shall be an Investor
Director.
(b) Purchaser shall be entitled to nominate three directors for
election, provided:
(i) if the total number of shares of Common Stock represented by the
Shares, the Special Warrants and the Warrants ("Purchaser's Total Securities")
declines by more than 33 1/3% but less than 66 2/3% from Purchaser's Total
Securities at Closing by reason of sales or other dispositions of Common Stock,
Warrants or Special Warrants by Purchaser, Purchaser shall have the right to
nominate two directors;
32
(ii) if Purchaser's Total Securities declines by 662/3% or more from
Purchaser's Total Securities at Closing, but Purchaser's Percentage Interest
remains at least 5% of the outstanding Voting Securities, by reason of sales or
other dispositions of Common Stock, Warrants or Special Warrants by Purchaser,
Purchaser shall have the right to nominate one director;
(iii) in the event that the size of the Board of Directors shall be
increased, Purchaser shall have the right to at least proportionate
representation on the Board following such increase based on the composition of
the Board as between Investor Directors and Non-Investor Directors immediately
prior to such increase; provided that in no event shall the Board consist of
more than 12 directors; and
(iv) if the chief executive officer of the Company is not then a
member of the Board of Directors or a nominee for membership thereon, the
Purchaser shall be entitled to approve an additional nominee to the Board of
Directors.
(c) The Company shall not, and shall not permit its Affiliates to,
solicit proxies (as such terms are used in the proxy rules of the SEC) of the
stockholders of the Company to vote against any of the nominees selected by the
Purchaser or for the approval of any stockholder or other proposals that are
inconsistent with the rights afforded the Purchaser pursuant to this Agreement
and the other Transaction Agreements.
SECTION 4.02 Supermajority Voting Provisions. So long as Purchaser
has the right to designate at least two nominees to the Board of Directors of
the Company pursuant to Section 4.01(b):
(a) neither the Company nor the Board of Directors shall cause or
permit to occur any of the following events without the affirmative vote of
not less than three-fourths of the members of the Board of Directors of the
Company:
(i) any issuance of Equity Securities other than (A) issuances
pursuant to employee stock option or incentive compensation plans of Equity
Securities (other than in
33
respect of options outstanding as of the date hereof) in an aggregate amount not
to exceed 5% of the Common Stock outstanding immediately following the Closing
on a fully diluted basis ("Permitted Options"), or (B) issuances pursuant to
acquisitions or in public offerings, such issuances not to exceed 5% of the
Common Stock outstanding immediately following the Closing on a fully diluted
basis in any one issuance or 20% in the aggregate, provided, however, that no
such issuance shall be permitted if as a result thereof any Person would own 10%
of the Common Stock outstanding immediately following such issuance on a fully
diluted basis;
(ii) (A) any merger, consolidation or other business combination to
which the Company is a party or any decision whether to approve a tender offer
involving the Company's Equity Securities, in any case other than a Cash
Transaction (as defined in Section 4.02(b)(i) below) or a Permitted Securities
Transaction (as defined in Section 4.02(b)(ii)) below, or (B) any amendment of
any shareholder rights plan (or "poison pill") maintained by the Company and any
redemption of the rights issued thereunder, except to permit a Cash Transaction
or a Permitted Securities Transaction;
(iii) any sale, lease, transfer or other disposition in one
transaction or a series of related transactions of all or substantially all the
assets of the Company, in any case other than a Cash Transaction or Permitted
Securities Transaction; or
(iv) any major recapitalization or similar transaction or series of
transactions involving the Company;
(v) any dissolution or complete or partial liquidation of the
Company; or
(vi) any amendment or modification of the Company Charter or the
Company By-laws that is inconsistent with the provisions of this Agreement and
the rights afforded to Purchaser hereunder.
(b)For purposes of this Agreement:
34
(i) "Cash Transaction" means any merger, consolidation or other
business combination or sale of all or substantially all the assets of the
Company to which the Company is a party or any decision whether to approve a
tender offer for all of the Company's Equity Securities, in any case if the
consideration involved in such transaction is all cash;
(ii) "Permitted Securities Transaction" means any merger,
consolidation or other business combination to which the Company is a party or
any decision whether to approve a tender or exchange offer for all of the
Company's Equity Securities, in any case if all consideration involved in such
transaction is cash and/or shares of a registered, freely tradeable, listed
common equity security for which there was an aggregate public market
capitalization equal to at least the greater of $5 billion or the market
capitalization of the Company's Equity Securities, in each case determined
immediately prior to the approval of such transaction by the Board of Directors
of the Company.
SECTION 4.03 Committees. Subject to any law or stock exchange rule
prohibiting committee membership by Affiliates of the Company, Purchaser shall
be entitled to at least proportionate representation by Investor Directors on
any committee of the Board of Directors, based on the composition of the Board
as between Investor Directors and Non-Investor Directors.
SECTION 4.04 By-laws. The Company and Purchaser shall take or cause
to be taken all lawful action necessary to ensure at all times as of and
following the Closing Date that the Company By-laws are not inconsistent with
the provisions of this Agreement or the transactions contemplated hereby.
SECTION 4.05 Termination of Article IV. This Article IV shall
terminate and be of no further force or effect on the earlier to occur of (a)
the fifth anniversary of the Closing and (b) the date on which the percentage of
the Total Voting Power represented by the aggregate voting power of all Voting
Securities then owned by Purchaser (other than any Voting Securities acquired in
violation of this Agreement) is greater than 50%.
35
ARTICLE V
Equity Purchases from the Company
SECTION 5.01 Subscription Rights. So long as Purchaser has the right
to nominate an Investor Director pursuant to Section 4.01, if the Company's
Board of Directors shall authorize the issuance of New Securities for cash
(other than any New Securities issued (i) to officers, employees or directors of
the Company or any of its Subsidiaries pursuant to any employee stock offering,
plan or arrangement (x) in effect on the date hereof, (y) which constitutes
Permitted Options or (z) approved by any Investor Director, (ii) in connection
with any acquisition transaction, (iii) in any public offering registered under
the Securities Act or in any financing transaction in which sales or resales are
effected through Rule 144A or Regulation S under the Securities Act or any
successor or comparable provisions thereto and (iv) to Purchaser or its
Affiliates (other than the Company and its Subsidiaries)), then, prior to each
such issuance of New Securities, the Company shall offer to Purchaser a Pro Rata
Share of such New Securities. Any offer of New Securities made to Purchaser
under this Section 5.01 shall be made by notice in writing (the "Subscription
Notice") at least 10 Business Days prior to the date on which the meeting of the
Company's Board of Directors is held to authorize the issuance of such New
Securities. The Subscription Notice shall set forth (i) the number of New
Securities proposed to be issued to Persons other than Purchaser and the terms
of such New Securities, (ii) the consideration (or manner of determining the
consideration), if any, for which such New Securities are proposed to be issued
and the terms of payment, (iii) the number of New Securities offered to
Purchaser in compliance with the provisions of this Section 5.01 and (iv) the
proposed date of issuance of such New Securities. Not later than 20 Business
Days after its receipt of a Subscription Notice, Purchaser shall notify the
Company in writing whether it elects to purchase all or any portion of the New
Securities offered to Purchaser pursuant to the Subscription Notice. If
Purchaser shall elect to purchase any such New Securities, the New Securities
which it shall have elected to purchase shall be issued and sold to Purchaser by
the Company at the same time and on the same terms and conditions as the New
Securities are issued and
36
sold to third parties. If, for any reason, the issuance of New Securities to
third parties is not consummated, Purchaser's right to its Pro Rata Share of
such issuance shall lapse, subject to Purchaser's ongoing subscription right
with respect to issuances of New Securities at later dates or times.
SECTION 5.02 Issuance and Delivery of New Securities and Voting
Stock. The Company represents and covenants to Purchaser that (i) upon
issuance, all the shares of New Securities sold to Purchaser pursuant to this
Article V shall be duly authorized, validly issued, fully paid and nonassessable
and will be approved (if outstanding securities of the Company of the same type
are at the time already approved) for listing on the Nasdaq Stock Market or for
quotation or listing on the principal trading market for the securities of the
Company at the time of issuance, (ii) upon delivery of such shares, they shall
be free and clear of all claims, Liens, encumbrances, security interests and
charges of any nature and shall not be subject to any preemptive right of any
stockholder of the Company and (iii) in connection with any such issuance, the
Company shall take such actions as are specified in Section 3.01(q) with respect
to such shares. Each share issued or delivered by the Company hereunder shall
bear the legend set forth in Section 13.11.
ARTICLE VI
Limitations on Purchases of Additional Equity Securities
SECTION 6.01 Purchases of Equity Securities. (a) Except as
permitted by Section 6.01(b) or 6.01(c), neither Purchaser nor its Affiliates
will directly or indirectly acquire any securities (including by exercise of the
Warrants or Special Warrants) or take any other action that would cause the
percentage of the Total Voting Power represented by the aggregate voting power
of all Voting Securities then held by Purchaser to equal or exceed 25%.
(b) Nothing herein shall prevent Purchaser from purchasing any
Securities pursuant to the terms of this Agreement (including through exercise
of the Warrants and the Special Warrants in accordance with their respective
37
terms) and the Purchaser shall not be treated as having breached any covenant in
this Agreement solely as a result of such purchase.
(c) This Section 6.01 shall terminate and be of no further force or
effect on the earlier to occur of (i) the fifth anniversary of the Closing and
(ii) the date on which the percentage of the Total Voting Power represented by
the aggregate voting power of all Voting Securities then owned by Purchaser
(other than any Voting Securities acquired in violation of this Agreement) is
greater than 50%.
SECTION 6.02 Additional Limitations. Other than in connection with a
Buyout Transaction that is not solicited or proposed by Purchaser or its
Affiliates or as specifically approved by a majority of the Non-Investor
Directors, during the five-year period beginning on the date of this Agreement,
Purchaser shall not, and shall not permit its Affiliates to:
(i) contrary to the recommendation of the Company's Board of
Directors, in any "solicitation" of "proxies" (as such terms are used in
the proxy rules of the SEC), vote any shares of capital stock of the
Company, initiate, propose or otherwise solicit stockholders of the Company
for the approval of one or more stockholder proposals or induce or attempt
to induce any other individual, firm, corporation, partnership or other
entity to initiate any stockholder proposal, provided, however, that this
clause shall be inapplicable to any solicitation of proxies, or inducement
or attempt to induce any other entity to initiate any stockholder proposal,
in respect of any Cash Transaction or Permitted Securities Transaction
approved by the Board of Directors of the Company without the approval of
at least one Investor Director;
(ii) deposit any Voting Securities into a voting trust or subject any
Voting Securities to any arrangement or agreement with respect to the
voting of such securities or form, join a partnership, limited partnership,
syndicate or other group, or otherwise act in concert with any other
Person, for the purpose of acquiring, holding, voting or disposing of
Voting
38
Securities, or otherwise become a "person" within the meaning of Section
13(d)(3) of the Exchange Act; or
(iii) make a public request to the Company (or its directors,
officers, stockholders, employees or agents) to amend or waive any
provisions of this Section 6.02.
ARTICLE VII
Transfer of Common Stock
SECTION 7.01 Transfer of Common Stock. (a) Other than as specifically
approved by a majority of the Non-Investor Directors, prior to the second
anniversary of the Closing, Purchaser will not, directly or indirectly, sell,
transfer or otherwise dispose of any Shares, Special Warrants or Warrants
(except to any Affiliate of Purchaser).
(b) Other than as specifically approved by a majority of the
Non-Investor Directors, prior to the fifth anniversary of the Closing, Purchaser
will not, directly or indirectly, sell, transfer or otherwise dispose of any
Shares except (i) pursuant to a registered underwritten public offering intended
to achieve a broad distribution in accordance with the Registration Rights
Agreement, (ii) in accordance with the volume and manner-of-sale limitations of
Rule 144 promulgated under the Securities Act (regardless of whether such
limitations are applicable), (iii) in a transaction exempt from the registration
requirements of the Securities Act to any Person or group (within the meaning of
Section 13(d)(3) of the Exchange Act) of Persons, if, prior to and after giving
effect to such sale, such Person or group of Persons (A) does not or would not
to Purchaser's knowledge after due inquiry, Beneficially Own (provided that for
purposes of this Section 7.01(a) a Person shall be deemed to Beneficially Own
all shares that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time) 5% or more of the
then outstanding shares of Common Stock or (B) is an investment company
registered under the Investment Company Act of 1940, as amended, or (iv) in
connection with a Buyout Transaction. Purported transfers of shares of Common
Stock
39
that are not in compliance with this Article VII shall be of no force or effect.
(c) The provisions of clauses (a) and (b) of this Article VII shall
terminate and be of no further force or effect on the earlier to occur of (i)
the fifth anniversary of the Closing and (ii) the date on which the percentage
of the Total Voting Power represented by the aggregate voting power of all
Voting Securities then owned by Purchaser (other than any Voting Securities
acquired in violation of this Agreement) is greater than 50%.
(d) Prior to the seventh anniversary of the Closing, the Purchasers
will not, directly or otherwise dispose of Shares representing 15% or more of
the then outstanding Common Stock to any Person or group (within the meaning of
Section 13(d)(3) of the Exchange Act) without first offering the Company the
right to make an offer to purchase the Shares proposed to be so sold,
transferred or otherwise disposed of. The provisions of the previous sentence
shall terminate and be of no effect on the date on which the percentage of the
Total Voting Power represented by the aggregate voting power of all Voting
Securities then owned by Purchaser (other than any Voting Securities acquired in
violation of this Agreement) is greater than 50%.
ARTICLE VIII
Covenants and Additional Agreements
SECTION 8.01 Covenants of the Company. During the period from the
date of this Agreement and continuing until the Closing, the Company agrees as
to itself and the Retained Subsidiaries that, except as set forth in the
Distribution Agreements or in Schedule 8.01, or to the extent that Purchaser
otherwise consents in writing:
(a) Ordinary Course. The Retained Business will be conducted in the
ordinary course in substantially the same manner as presently conducted and
the Company will use commercially reasonable efforts to keep available the
services of the current officers and employees engaged primarily in the
Retained Business
40
and to preserve the relationships with customers, suppliers and others
having business dealings with the Retained Business.
(b) No Acquisitions. The Company will not, nor will it permit any of
the Retained Subsidiaries to, acquire or agree to acquire (excluding any
non-binding letters of intent) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire
any assets (other than inventory) involving aggregate consideration having
a value in excess of $25 million in any case or $150 million in the
aggregate (in either case whether payable in cash, stock or a combination
thereof); provided that (i) no such consideration shall be payable in
Common Stock or stock of any Retained Subsidiary and (ii) any such
consideration payable in stock of a Distributed Company shall not be
payable prior to completion of the Distributions; and provided, further,
that this paragraph (b) shall not limit the ability of the Company or the
Retained Subsidiaries to make acquisitions in respect of businesses which
will constitute part of a Distributed Company if all acquisition debt
associated therewith is allocated to such Distributed Company.
(c) No Dispositions. The Company will not, nor will it permit any of
the Retained Subsidiaries to, sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, license, encumber or otherwise dispose
of, any of the Assets of the Retained Business other than at fair market
value in the ordinary course of business consistent with past practice.
(d) Other Transactions. The Company will not, nor will it permit any
of the Retained Subsidiaries to, do any of the following (except as
otherwise expressly provided herein or in any other Transaction Agreement):
(i) Amend its Certificate of Incorporation (except to the extent
necessary to implement a shareholder rights plan pursuant to clause
(ii)
41
below), By-laws or other organizational documents (except for
immaterial amendments to the Certificate of Incorporation or By-laws
of any Subsidiaries, provided such amendments in no way adversely
affect Purchaser or the rights granted to Purchaser hereunder);
(ii) declare or pay any non-cash dividend or make any non-cash
distribution with respect to the Assets; provided, however, that the
Company shall be permitted to issue rights under a customary
shareholder rights plan or "poison pill" that (A) expires at Closing
and (B) expressly exempts Purchaser and its Affiliates from its
operation;
(iii) redeem or otherwise acquire any shares of its capital stock
or issue any capital stock (except upon exercise of options issued
prior to the date hereof under a Company Stock Plan), or any option,
or warrant or right relating thereto (other than grants under the
Company's 1994 Amended and Restated Long Term Incentive Plan of
options to acquire not more than 685,778 shares of Common Stock in the
aggregate from the separate "pools" of options that the Company has
heretofore allocated in connection with certain acquisitions that the
Company has made for award to employees of such acquired companies;
provided that each such option shall (A) have a per share exercise
price that is not less than the fair market value per share of Common
Stock at the date of grant, (B) vest and become exercisable no more
rapidly than 25% on each of the first four anniversaries of the date
of grant, and (C) shall not vest or become earlier exercisable as a
result of the consummation of the Transactions);
(iv) incur any liabilities, obligations or indebtedness for
borrowed money or guarantee any such liabilities, obligations or
indebtedness, other than in the ordinary course of business consistent
with past practice (except as otherwise provided herein with respect
to the Proposed Financings or as incurred in connection with
acquisitions to the extent permitted hereby) and
42
in an aggregate amount that would not be material to the Company;
(v) permit, allow or suffer any assets of the Retained Business
to be subject to any Lien other than Permitted Liens;
(vi) guarantee or otherwise become contingently liable for any
obligation of any of the Distributed Companies;
(vii) cancel any material indebtedness (individually or in the
aggregate) relating to the Retained Business or waive any claims or
rights of substantial value relating to the Retained Business;
(viii) pay, loan or advance any amount to, or sell, transfer or
lease any of its assets relating to the Retained Business, or enter
into any agreement or arrangement relating to the Retained Business
with, any of the Distributed Companies or any of their respective
Affiliates other than in the ordinary course of business consistent
with past practice;
(ix) make any change in any method of accounting or accounting
practice or policy, except as may be required by GAAP;
(x) modify, amend, terminate or permit the lapse of any lease of
real property used in connection with, and which is material to, the
Retained Business (except modifications or amendments associated with
renewals of such leases in the ordinary course of business consistent
with past practice of the Retained Companies with respect to which
Purchaser shall have the right to participate and to approve);
(xi) enter into, terminate, renew or modify any Contract to which
the Company or any Retained Subsidiary is a party or by which any of
their assets are bound and which is material to the Company;
43
(xii) enter into any agreement or take any action in violation of
the terms of this Agreement or any of the other Transaction
Agreements;
(xiii) settle any material tax audit, make or change any tax
election or amend any Tax Returns; or
(xiv) agree, whether in writing or otherwise, to do any of the
foregoing.
(e) Employee Benefits. Except (w) as set forth in Schedule 8.01(e),
(x) in connection with acquisitions to the extent permitted by this
Agreement or (y) in the ordinary course of business and as consistent with
past practice (which shall include normal periodic performance reviews and
related benefit increases) or (z) pursuant to the existing terms of any
collective bargaining agreement, the Company will not, nor will it permit
any of the Retained Subsidiaries to (i) increase in any manner the
compensation of any of the officers or other employees of the Retained
Companies; (ii) pay or agree to pay any pension, retirement allowance or
other employee benefit not required by any existing plan, agreement or
arrangement to any such officer or employee, whether past or present; (iii)
enter into, or negotiate, any collective bargaining agreement with respect
to employees of the Retained Companies except as required by law, in which
case the Company or such Retained Subsidiary shall first notify Purchaser;
or (iv) commit itself to any additional pension, profit-sharing, bonus,
incentive, deferred compensation, stock purchase, stock option, equity
purchase (or other equity based plan), stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan,
policy, program, understanding, agreement or arrangement, or to any
employment agreement or consulting agreement (arising out of prior
employment), regardless of the applicable funding arrangements, with or for
the benefit of any officer or employee of the Retained Companies, or amend,
renew or extend any of such plan or any of such agreements in existence on
the date hereof in any manner which would, in the case of clauses (i),
(ii), (iii) and (iv) above, result in
44
liabilities that are material to the Retained Companies taken as a whole.
SECTION 8.02 Transaction Proposals. (a) Subject to Section 8.02(d),
the Company shall not, nor shall it permit any of its Subsidiaries to, nor shall
it authorize or permit any officer, director or employee of, or any investment
banker, attorney, accountant or other advisor, agent or representative of, the
Company or any of its Subsidiaries to, (i) solicit or initiate, or encourage
(including by furnishing non-public information) the submission of, any
Transaction Proposal (as defined below) or (ii) participate in any discussions
or negotiations regarding, or furnish to any Person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Transaction Proposal; provided, however, that prior to the Company Meeting, in
response to an unsolicited written bona fide Transaction Proposal that in the
good faith opinion of the Board of Directors of the Company could reasonably be
expected to result in a Superior Proposal (as defined below), if the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that failure to do so could reasonably be expected to result in
a breach of its fiduciary duties to stockholders under applicable law, the
Company may, subject to compliance with Section 8.02(c), (A) furnish information
with respect to the Company to such Person making such proposal pursuant to a
customary confidentiality and standstill agreement with such Person and
(B) participate in negotiations regarding such Transaction Proposal. For
purposes of this Agreement, "Transaction Proposal" means any inquiry, proposal
or offer from any Person relating to (x) any purchase or other acquisition from
the Company of assets representing 25% or more of the net revenues, net income
or profits of the Company and its Subsidiaries, taken as a whole, (y) any
purchase or other acquisition of 10% or more of any class of Equity Securities
of the Company, or (z) any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company (or any Subsidiary whose business constitutes 25% or more of the net
revenues, net income or assets of the Company and its Subsidiaries, taken as a
whole), in each case other than the transactions contemplated by this Agreement.
Immediately after the
45
execution and delivery of this Agreement, the Company will, and will cause its
Subsidiaries and Affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to, cease
and terminate any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any possible Transaction Proposal.
(b) Nothing contained in this Section 8.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act; provided that except as set
forth in this Section 8.02(b) or as permitted by Section 8.02(d), neither the
Board of Directors of the Company nor any committee thereof shall (A) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Purchaser,
the approval or recommendation by such Board of Directors or any such committee
of this Agreement or the Transactions, (B) approve or recommend, or propose to
approve or recommend, any Transaction Proposal (C) cause or permit the Company
or any of its Subsidiaries to enter into any agreement with respect to any
Transaction Proposal or (D) terminate this Agreement in response to a
Transaction Proposal. Notwithstanding the foregoing, if prior to the Company
Meeting the Company has received a Transaction Proposal that the Board
determines in good faith is a Superior Proposal, then the Board of Directors of
the Company, if it determines in good faith, after consultation with outside
counsel, that failure to do so could reasonably be expected to result in a
breach of its fiduciary duties to stockholders under applicable law, may
(subject to the terms of this sentence and compliance with the following
sentence) (i) withdraw or modify its recommendation of this Agreement, or the
transactions contemplated hereby, (ii) approve or recommend such Superior
Proposal, (iii) cause the Company to enter into an agreement with respect to a
Superior Proposal and (iv) terminate this Agreement, in each case (as
contemplated by this Section 8.02(b)) no earlier than five Business Days
following Purchaser's receipt of a written notice from the Company advising
Purchaser that the Board of Directors of the Company has received a Superior
Proposal, specifying the terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal; provided, however, that
neither the Company nor its Board of Directors shall take any of the actions
46
specified in such clauses (i), (ii), (iii) or (iv) unless the Company shall have
furnished Purchaser with written notice on a date prior to the date any such
actions are proposed to be taken specifying such actions to be taken. In
addition, if the Company or the Board of Directors of the Company proposes to
take any of the actions permitted by the preceding sentence with respect to any
Transaction Proposal, then the Company shall, prior to the taking of any such
action, pay, or cause to be paid, to Purchaser, Purchaser's Expenses and the
Termination Fee (each as defined in Section 12.09). The term "Superior
Proposal" shall mean any bona fide written Transaction Proposal that has the
following characteristics: (1) it is a proposal to acquire, directly or
indirectly, for consideration consisting of cash and/or readily marketable
securities, (x) shares of Common Stock representing at least 20% of the Total
Voting Power, or (y) at least 25% of the assets of the Retained Subsidiaries and
(2) the terms of such proposal in the good faith judgment of the Board of
Directors of the Company, based on advice from the Company's financial adviser,
provide consideration to the Company or the Company's stockholders that is
superior to the consideration provided pursuant to this Agreement (after taking
into account any modifications to this Agreement proposed by Purchaser).
(c) The Company shall immediately advise Purchaser orally and in
writing of (i) any request for information which may relate to a Transaction
Proposal, (ii) any Transaction Proposal, (iii) any inquiry with respect to or
that could lead to any Transaction Proposal or (iv) any action taken in
accordance with Section 8.02(a)(A) or (B), and in each case the material terms
and conditions of such request, Transaction Proposal, inquiry or action and the
identity of the Person making any such request, Transaction Proposal or inquiry
with respect to which such action is taken. The Company will keep Purchaser
reasonably informed of material developments concerning the status and details
(including amendments or proposed amendments) of any such request, Transaction
Proposal, inquiry or action.
SECTION 8.03 Modification of Transaction Agreements; Abandonment of
Distributions. Notwithstanding anything to the contrary in this Agreement, the
Company may in its sole discretion modify each of the Transaction Agreements
relating to the Distributions and, if the Board
47
of Directors of the Company determines in good faith that it is in the best
interest of the Company to do so, abandon the Distributions.
SECTION 8.04 Transaction Agreements and Schedules. The Company shall
use reasonable best efforts to cause (i) each of the Transaction Agreements to
be entered into by the Company, School, Travel, Technology or Print, as the case
may be, in connection with the Distributions, and each of the Annexes called for
in this Agreement that have not been provided to Purchaser prior to the
execution of this Agreement, to be delivered to Purchaser and its counsel by
7:00 p.m., New York Time, February 13, 1998 (the "Agreement Delivery Cut-Off
Time"); and (ii) each of the Schedules called for in this Agreement that have
not been provided to Purchaser prior to execution of this Agreement (and prior
to the Schedule Review Cut-Off Time (as defined below) may supplement Schedules
that have previously been supplied or may unilaterally amend this Agreement to
add additional Schedules) to be delivered to Purchaser and its counsel by
7:00 p.m., New York time, January 20, 1998 (the "Schedule Delivery Cut-off
Time"). Purchaser shall review such Transaction Agreements, Schedules and
Annexes in good faith. Prior to the applicable Review Cut-off Time (as defined
below) the Company shall make available to Purchaser and its counsel at their
request all documentation related to any item set forth on any Schedule or
Annex. Purchaser shall complete its review of the Transaction Agreements, and
the Annexes and notify the Company that such review is complete by 7:00 p.m.,
New York time, on February 27, 1998 (the "Agreement Review Cut-off Time") and
shall complete its review of the Schedules and notify the Company that such
review is complete by 7:00 p.m., New York time, on February 3, 1998 (the
"Schedule Review Cut-Off Time"); provided, however, that if any Transaction
Agreement, Schedule or Annex is delivered after the applicable Delivery Cut-off
Time, the applicable Review Cut-off Time for all Transaction Agreements and
Annexes and for the Schedules, as the case may be shall be extended by the
number of days elapsed (which, in any case, shall not be less than one) between
the date of such Delivery Cut-off Time and the date of receipt by Purchaser and
its counsel of such Transaction Agreement or Annex or such Schedule, as the case
may be; and provided further, however, that if (A) the Transaction Agreements
are not satisfactory to Purchaser in its good faith reasonable
48
judgment, (B) the Audited Retained Business Financial Statements reflect
financial information materially different from that presented in the Pro Forma
Retained Business Financial Statements, or (C) any new Schedule or change or
addition to the Schedules made after the date hereof is not satisfactory to
Purchaser in its good faith reasonable judgment, Purchaser may terminate this
Agreement upon written notice to the Company without further liability on the
part of Purchaser or the Company other than pursuant to Sections 10.02 and
13.09.
SECTION 8.05 Company Stockholder Approval; Proxy Statement. (a) The
Company shall call a meeting of its stockholders (the "Company Meeting") for the
purpose, among others, of voting upon the issuance (the "Issuance") of the
Shares, the Special Warrants and the Warrants to Purchaser (the "Company Meeting
Proposal").
(b) The Company will prepare and file with the SEC a proxy statement
relating to the Company Meeting (as amended or supplemented and including
documents incorporated by reference therein, the "Proxy Statement") and shall
use its reasonable best efforts to respond to any comments of the SEC or its
staff and to cause the Proxy Statement to be cleared by the SEC. The Company
shall notify Purchaser of the receipt of any comments from the SEC or its staff
and of any request by the SEC or its staff for amendments or supplements to the
Proxy Statement or for additional information and shall supply Purchaser and its
counsel with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement. The Company shall give Purchaser and its
counsel the opportunity to review the Proxy Statement prior to its being filed
with the SEC and shall give Purchaser and its counsel the opportunity to review
all amendments and supplements to the Proxy Statement and all responses to
requests for additional information and replies to comments prior to their being
filed with, or sent to, the SEC. Each of the Company and Purchaser agrees to
use its reasonable best efforts, after consultation with the other party hereto,
to respond promptly to all such comments of and requests by the SEC. After the
Proxy Statement has been cleared by the SEC, the Company shall mail the Proxy
Statement to the stockholders of the Company. If at any time prior to the
Company Meeting
49
there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company will prepare and mail to its
stockholders such an amendment or supplement.
(c) The Proxy Statement will not, at the date mailed to the Company's
stockholders and at the date of the Company Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information concerning Purchaser or its Affiliates supplied in writing
by Purchaser or any of its Affiliates specifically for inclusion in the Proxy
Statement. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
(d) Subject to Section 8.02(b), the Board of Directors of the Company
shall recommend that the Company's stockholders approve the Company Meeting
Proposal and the Company shall use its best efforts to obtain the necessary
approvals by its stockholders of the Company Meeting Proposal.
SECTION 8.06 Retained Companies Financing. In connection with the
Proposed Financings, the Company and Purchaser shall jointly select all sources
of the Proposed Financings, including determining the respective roles of such
sources; provided, however, that Bankers Trust Company shall have the
opportunity to be a lead in the bank financing with economics at least as
favorable as any other lead in the bank financing if Bankers Trust Company's
pricing is competitive. In addition, (i) Purchaser and its counsel shall have
the right to participate in any discussions or negotiations between the Company
and any of its representatives, on the one hand, and its prospective lenders and
their counsel, on the other, and to comment on draft loan and other
documentation in respect of any such Proposed Financings and (ii) the Company
shall provide Purchaser and its counsel copies of all correspondence between the
Company and its lenders relating thereto. If, prior to the execution of any
definitive documentation with
50
respect to the Proposed Financings, based on its review of such definitive
documentation, Purchaser determines in the good faith exercise of its reasonable
judgment not to proceed with the transactions contemplated by this Agreement,
Purchaser may terminate this Agreement upon written notice to the Company.
SECTION 8.07 Tender Offer. (a) The Company shall cause the
commencement (as such term is defined in Rule 13e-4(a)(4) under the Exchange
Act) of the Tender Offer to purchase 37,037,037 shares of Common Stock, at a
price per share equal to $27, net to the seller in cash, no later than the
date specified in Schedule 8.07. Unless Purchaser shall otherwise agree, the
Company's obligation to complete the Tender Offer shall be subject only to
the conditions (the "Offer Conditions") set forth in Schedule 8.07. Subject
to the provisions hereof, the Tender Offer shall expire on the date set forth
in Schedule 8.07; provided that the Tender Offer shall be extended from time
to time if the Offer Conditions shall not have been satisfied, so long as
this Agreement shall remain in effect.
(b) On the date of commencement of the Tender Offer, the Company
shall file with the SEC an Issuer Tender Offer Statement on Schedule 13E-4 with
respect to the Tender Offer (the "Tender Offer Statement"), which shall contain
an offer to purchase and a related letter of transmittal (such Tender Offer
Statement and the documents therein pursuant to which the Tender Offer will be
made, together with any supplements or amendments thereto, are referred to
hereinafter as the "Offer Documents"). After the Offer Documents are filed with
the SEC, the Company shall disseminate the Offer Documents to the stockholders
of the Company. If at any time prior to the expiration of the Tender Offer
there shall occur any event that should be set forth in an amendment or
supplement to the Offer Documents, the Company will prepare and file with the
SEC and disseminate to its stockholders such an amendment or supplement.
(c) The Company shall give Purchaser and its counsel the opportunity
to review the Offer Documents prior to their being filed with the SEC and shall
give Purchaser and its counsel the opportunity to review all amendments and
51
supplements to the Offer Documents and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent to,
the SEC. The Company shall notify Purchaser of the receipt of any comments from
the SEC or its staff and of any request by the SEC or its staff for amendments
or supplements to the Offer Documents or for additional information and shall
supply Purchaser and its counsel with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Offer Documents.
(d) The Offer Documents will not, on the date filed with the SEC and
as of the date first published, sent or given to the Company's stockholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
except that no representation is made by the Company with respect to statements
made therein based on information concerning Purchaser or its Affiliates
supplied in writing by Purchaser or any of its Affiliates specifically for
inclusion in the Offer Documents. The Offer Documents will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
SECTION 8.08 Information Statements.(a) The Company shall give
Purchaser and its counsel the opportunity to review the information statements
to be disseminated to stockholders of the Company in connection with the
Distributions (the "Information Statements") prior to its being filed with the
SEC and shall give Purchaser and its counsel the opportunity to review all
amendments and supplements to the Information Statements and all responses to
requests for additional information and replies to comments prior to their being
filed with, or sent to, the SEC. The Company shall notify Purchaser of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Information Statements or for
additional information and shall supply Purchaser and its counsel with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the
Information
52
Statements. If at any time prior to completion of the Distributions there shall
occur any event that should be set forth in an amendment or supplement to the
Information Statement, the Company will prepare and file with the SEC and
disseminate to its stockholders such an amendment or supplement.
(b) The Information Statements will not, on the date filed with the
SEC and as of the date first disseminated to the Company's stockholders, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
except that no representation is made by the Company with respect to statements
made therein based on information concerning Purchaser or its Affiliates
supplied in writing by Purchaser or any of its Affiliates specifically for
inclusion in the Information Statements. The Information Statements will comply
as to form in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder.
SECTION 8.09 [Intentionally omitted.]
SECTION 8.10 Tax Standstill. Except as permitted by Section 6.01(b)
or 6.01(c), during the period ending two years after the date of the
Distributions, (i) Purchaser shall not acquire any Securities or take any other
action that would cause Purchaser's Percentage Interest to equal or exceed 50%,
(ii) none of Purchaser, the Fund or CD&R shall act in concert with any other
Person to acquire any Securities if aggregating such acquisition with the
Purchaser's holdings would cause the Purchaser's Percentage Interest to equal or
exceed 50%, and (iii) none of Purchaser, the Fund or CD&R shall solicit the
acquisition of any Securities, provided that the provision by the Fund to its
limited partners of customary reports and information, and customary
communication with such limited partners on behalf of the Fund, with respect to
the Fund's investment in the Company that, in either case, do not recommend any
such acquisition, shall not be treated as a solicitation by the Purchaser within
the meaning of this clause (iii).
53
SECTION 8.11 Access and Information. (a) So long as this Agreement
remains in effect, prior to the Closing, the Company will (and will cause each
of the Retained Companies, and each of their respective accountants, counsel,
consultants, officers, directors, employees, agents and representatives of or to
any of the Retained Companies, to) give Purchaser and its Representatives, full
access during reasonable business hours to all of their respective properties,
assets, books, contracts, commitments, reports and records relating to the
Retained Companies, and furnish to them all such documents, records and
information with respect to the properties, assets and business of the Retained
Companies and copies of any work papers relating thereto as Purchaser shall from
time to time reasonably request. The Company will keep Purchaser generally
informed as to the affairs of the Retained Business.
(b) In addition, the Company shall deliver to Purchaser, not later
than the 35th day following the end of each fiscal month prior to the Closing,
updated Pro Forma Retained Business Financial Statements as of the end of such
fiscal month.
SECTION 8.12 Further Actions. (a) The Company shall, and shall
cause each of the Retained Companies to, use reasonable best efforts to take or
cause to be taken all actions, and to do or cause to be done all other things,
necessary, proper or advisable in order for each of the Retained Companies to
fulfill and perform its obligations in respect of this Agreement and the
Transaction Agreements to which it is a party, or otherwise to consummate and
make effective the transactions contemplated hereby and thereby.
(b) The Company shall (and shall cause each of the Retained Companies
to), as promptly as practicable, (i) make, or cause to be made, all filings and
submissions (including but not limited to under the HSR Act and foreign
antitrust filings) required under any law applicable to any of the Retained
Companies, and give such reasonable undertakings as may be required in
connection therewith, and (ii) use all reasonable efforts to obtain or make, or
cause to be obtained or made, all Permits necessary to be obtained or made by
any of the Retained Companies, in each case in connection with this Agreement or
the Transaction Agreements, the sale and transfer of the Shares, the Special
54
Warrants and the Warrants pursuant hereto, or the consummation of the other
transactions contemplated hereby or thereby.
(c) The Company shall, and shall cause each of the Retained Companies
to, coordinate and cooperate with Purchaser in exchanging such information and
supplying such reasonable assistance as may be reasonably requested by Purchaser
in connection with the filings and other actions contemplated by this Agreement.
(d) At all times prior to the Closing Date, the Company shall promptly
notify Purchaser in writing of any fact, condition, event or occurrence that
could reasonably be expected to result in the failure of any of the conditions
contained in Article IX to be satisfied, promptly upon becoming aware of the
same.
SECTION 8.13 Further Assurances. Following the Closing Date, the
Company shall, and shall cause each of the Retained Companies to, from time to
time, execute and deliver such additional instruments, documents, conveyances or
assurances and take such other actions as shall be necessary, or otherwise
reasonably be requested by Purchaser, to confirm and assure the rights and
obligations provided for in this Agreement and the Transaction Agreements and
render effective the consummation of the transactions contemplated hereby and
thereby, or otherwise to carry out the intent and purposes of this Agreement.
ARTICLE IX
Conditions Precedent
SECTION 9.01 Conditions to Each Party's Obligations. The obligations
of the Company and Purchaser to consummate the transactions contemplated to
occur at the Closing shall be subject to the satisfaction prior to the Closing
of each of the following conditions, each of which may be waived only if it is
legally permissible to do so:
(a) HSR and Other Approvals. Any applicable waiting period under the
HSR Act relating to the transactions contemplated hereby shall have expired
or
55
been terminated, and all other material authorizations, consents, orders or
approvals of, or regulations, declarations or filings with, or expirations
of applicable waiting periods imposed by, any Governmental Entity
(including, without limitation, any foreign antitrust filing) necessary for
the consummation of the transactions contemplated hereby, shall have been
obtained or filed or shall have occurred.
(b) No Litigation, Injunctions, or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Governmental Entity or other legal
restraint or prohibition preventing the consummation of the transactions
contemplated by this Agreement or any of the Transaction Agreements shall
be in effect.
(c) Stockholders Vote. The Company Stockholder Approval shall have
been obtained.
(d) Nasdaq Listing. The Shares shall have been approved for listing
on the Nasdaq Stock Market, subject only to official notice of issuance.
(e) Consummation of Distributions. The distribution of the businesses
of School, Travel, Technology, Print and their respective Subsidiaries
shall have occurred pursuant to the Distribution Agreements, which shall
contain provisions:
(i) effecting the Pre-Distribution Transactions;
(ii) allocating assets and liabilities among the Distributed
Companies and the Retained Companies;
(iii) allocating among the Distributed Companies an aggregate of
$130 million of corporate debt, in addition to acquisition debt
incurred in respect of acquisitions effected after the date hereof;
56
(iv) allocating among the Distributed Companies and the Company
on a pro rata basis all liabilities of the Distributed Companies not
properly allocable to any specific Distributed Company or to the
Company;
(v) with respect to current and planned cross-selling
opportunities between the Distributed Companies and the Retained
Companies; and
(vi) allocating on a pro rata basis the transaction costs
associated with the Transactions.
(f) Tax Allocation Agreement. The Tax Allocation Agreement shall have
been executed and shall contain the following provisions:
(i) a joint and several indemnity from the Distributed Companies
in favor of the Company and the Retained Subsidiaries from and against
any Losses with respect to Taxes resulting from any Adverse Tax Act of
any of the Distributed Companies or their Subsidiaries;
(ii) an indemnity from each of the Distributed Companies in favor
of the Company from and against any Losses with respect to Taxes
resulting from the Pre-Distribution Transactions or the Distributions,
as a result of the failure of the Pre-Distribution Transactions or the
Distributions to qualify under sections 355 or 368 of the Code or
otherwise, including, without limitation, by reason of any stock or
securities of any Distributed Company failing to qualify as "qualified
property" within the meaning of section 355(c)(2) of the Code, except
to the extent such Losses result from any Adverse Tax Act by any of
the Company, the Retained Subsidiaries, the Distributed Companies or
any of their Subsidiaries, provided that each Distributed Company
shall be only liable for the portion of such Losses that bears the
same ratio to the aggregate amount of such Losses as the Market
57
Capitalization of such Distributed Company bears to the aggregate
Market Capitalization of the Company and the Distributed Companies and
provided, further, that each Distributed Company shall be liable for
100% of any such Losses attributable to any "deferred intercompany
transaction" to the extent such Loss is attributable to any
"intercompany item" that such Distributed Company or any of its
Subsidiaries is required to take into account immediately prior to the
Distributions pursuant to Treasury Regulations section 1.1502-13;
(iii) customary provisions providing for control and
participation rights with respect to any administrative and judicial
proceedings with respect to Taxes, including the right of the Person
primarily responsible for the relevant indemnification obligation
thereunder to control any such proceeding. Notwithstanding anything
to the contrary in the preceding sentence, no Distributed Company
shall be entitled to assume control of any portion of any
administrative or judicial proceeding with respect to Taxes unless
such Distributed Company shall have theretofore acknowledged in
writing its liability for such Taxes pursuant to the Tax Allocation
Agreement; and
(iv) Any tax saving or other benefit attributable any
compensation deduction arising from or in connection with the exercise
by any Employee of the Company or any of its Subsidiaries of any
option granted under any of the Company Stock Plans shall be
apportioned to the entity whose shares were issued upon the exercise
of such option, provided that any compensation deduction arising from
or in connection with any such exercise on or prior to the Closing
Date by any Employee of any Distributed Company or any of its
Subsidiaries shall be apportioned to such Distributed Company.
SECTION 9.02 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the
58
transactions contemplated to occur at the Closing shall be subject to the
satisfaction or waiver thereof prior to the Closing of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser that are qualified as to materiality shall be true
and correct, and those that are not so qualified shall be true and correct
in all material respects, as of the date of this Agreement and as of the
time of the Closing as though made at and as of such time, except to the
extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties that are qualified
as to materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, on and as
of such earlier date) and the Company shall have received a certificate
signed by an authorized officer of Purchaser to such effect.
(b) Opinion of Purchaser's Counsel. The Company shall have received
an opinion dated as of the Closing of Debevoise & Xxxxxxxx, counsel to
Purchaser, in form and substance reasonably satisfactory to the Company.
(c) Registration Rights Agreement. Purchaser shall have executed and
delivered the Registration Rights Agreement.
SECTION 9.03 Conditions to the Obligations of Purchaser. The
obligations of Purchaser to consummate the transactions contemplated to occur at
the Closing shall be subject to the satisfaction or waiver thereof prior to the
Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true and correct, and those that are not so qualified shall
be true and correct in all material respects, as of the date of this Agreement
and as of the time of the Closing as though made at and as of such time, except
to the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties that are qualified as to
materiality shall be true and correct,
59
and those that are not so qualified shall be true and correct in all material
respects, on and as of such earlier date), and Xxxxxxxxx shall have received
a certificate signed by the chief executive officer and chief financial
officer of the Company to such effect.
(b) Transaction Agreements. Each Transaction Agreement to which the
Company is a party shall have been executed without modification from the forms
as in existence at the Review Cut-off Time or such earlier date as Purchaser
completed its review of such agreement.
(c) Performance of Obligations of the Company. The Company shall
have performed or complied in all material respects with all obligations and
covenants required to be performed or complied with by the Company under this
Agreement, and Purchaser shall have received a certificate signed by the chief
executive officer and chief financial officer of the Company to such effect.
(d) Opinion of the Company's Counsel. Purchaser shall have received
opinions dated as of the Closing of the general counsel of the Company, and
Xxxxxx, Xxxxxx & Xxxxxxxxx, counsel to the Company, in form and substance
reasonably satisfactory to Purchaser.
(e) Registration Rights Agreement. The Company shall have executed
and delivered the Registration Rights Agreement.
(f) Financings. The Company shall have entered into definitive
documentation for the Proposed Financings and such definitive documentation
shall be satisfactory in form and substance to Purchaser.
(g) Tender Offer. The Company shall have consummated the Tender Offer
as provided for herein.
(h) Consulting Agreement; Transaction Fee. The Company shall have (A)
entered into a consulting agreement with CD&R providing for an annual fee of
$500,000 (plus reasonable out-of-pocket expenses) in connection with consulting
and advisory services and a related indemnification agreement and (B) authorized
payment to CD&R of the Transaction Fee and the Transaction Fee shall have
60
been paid to CD&R. The consulting agreement shall terminate at the later of (i)
the fifth anniversary of the Closing Date and (ii) such time as Purchaser is
entitled to nominate only one Investor Director.
(i) Other Parties. (A) No Person or "group" (as defined in the
Exchange Act), other than Purchaser, shall have acquired beneficial ownership of
more than 15% of the outstanding shares of Voting Securities, and (B) no Person
(other than Purchaser or one or more of its Affiliates) shall have entered into
an agreement in principle or definitive agreement with the Company with respect
to a tender or exchange offer for any shares of Common Stock or a merger,
consolidation or other business combination with or involving the Company.
(j) Corporate Proceedings. All corporate proceedings of the Company
in connection with the transactions contemplated by this Agreement and the
Transaction Agreements, and all documents and instruments incident thereto,
shall be satisfactory in form and substance to Purchaser and its counsel, and
Purchaser and its counsel shall have received all such documents and
instruments, or copies thereof, certified or requested, as may be reasonably
requested.
(k) Management Plan. Purchaser shall have completed discussions with
management which satisfactorily confirm to Purchaser that the operating
prospects of the Retained Business (exclusive of acquisitions), are, taken as a
whole, not materially inconsistent with the Company's forecasts (excluding (i)
the impact on the Company's earnings for fiscal quarters ending prior to or
including the Closing caused by the inability of the Company to complete
acquisitions following announcement of the Transactions and/or to account for
acquisitions as poolings of interest and (ii) the effect on the Company of being
required as a result of the Transactions to change accounting treatment for past
acquisitions from poolings of interests to purchases); provided, however, that
this condition shall be deemed satisfied if Purchaser shall not have given
notice to the Company on or prior to February 3, 1998 that Purchaser has
concluded that this condition has not been satisfied.
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(l) Board of Directors. The Board of Directors of the Company shall
consist of 9 persons, including the chief executive officer of the Company,
three designees of Purchaser, three persons selected by the current Board of
Directors and two persons who shall be satisfactory to both Purchaser and the
current Board of Directors of the Company.
(m) Material Adverse Effect. No event, change or development shall
exist or have occurred since October 25, 1997 which has had or is reasonably
likely to have a Material Adverse Effect on the Retained Companies, taken as a
whole.
(n) Debt Amounts. The outstanding debt of the Retained Companies
shall not exceed $1.4 billion (after giving effect to the Transactions and
assuming conversion of all issued and outstanding 2001 Notes) and the
outstanding debt of the Distributed Companies shall be at least $130 million
plus the expenditures by the entities comprising such Distributed Companies for
acquisitions after the date hereof.
(o) Options. The Company's arrangements with respect to Management
options shall be satisfactory to Purchaser in its good faith reasonable
judgment.
ARTICLE X
Termination
SECTION 10.01 Termination. This Agreement may be terminated at any
time prior to the Closing, whether before or after the Company Stockholder
Approval has been obtained:
(a) by mutual written consent of Xxxxxxxxx and the Company;
(b) by Purchaser or the Company:
(i) if the Closing shall not have occurred prior to September
30, 1998, provided, that the right to terminate this Agreement
pursuant to this clause (i) shall not be available to any party whose
failure to fulfill any obligation under this
62
Agreement results in the failure of the Closing to occur;
(ii) if the Company Stockholder Approval shall not have been
obtained by reason of the failure to obtain the required vote upon a
vote held at the Company Meeting, or such meeting shall not have been
held by September 30, 1998;
(iii) if there shall be any statute, law, regulation or rule
that makes consummating the transactions contemplated hereby illegal
or if any court or other Governmental Entity of competent jurisdiction
shall have issued a judgment, order, decree or ruling, or shall have
taken such other action restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby
and such judgment, order, decree or ruling shall have become final and
non-appealable;
(c) by Purchaser:
(i) if the Company shall have failed to perform in any material
respect any of its obligations hereunder or shall have breached in any
respect any representation or warranty contained herein qualified by
materiality or shall have breached in any material respect any
representation or warranty not so qualified, and the Company has
failed to perform such obligation or cure such breach, within 30 days
of its receipt of written notice thereof from Purchaser, and such
failure to perform shall not have been waived in accordance with the
terms of this Agreement;
(ii) if the Board of Directors of the Company or any committee
thereof withdraws or modifies (or publicly announces its intention to
do so, or resolves to do so) in a manner adverse to Purchaser (as
determined by Purchaser in its reasonable judgment) its approval or
recommendation of this Agreement or the transactions contemplated
hereby or approves or recommends a Transaction Proposal;
63
(iii) if the Board of Directors of the Company publicly announces
its determination not to effect the Distributions;
(iv) if any of the conditions set forth in Section 9.01 or 9.03
shall become impossible to fulfill (other than as a result of any
breach by Purchaser of the terms of this Agreement) and shall not have
been waived in accordance with the terms of this Agreement;
(v) if permitted pursuant to Section 8.04 or 8.06;
(vi) if the Company shall make any substantive amendment to any
Transaction Agreement after the Review Cut-Off Time without
Purchaser's consent;
(d) by the Company:
(i) if Purchaser shall have failed to perform in any material
respect any of its obligations hereunder or shall have breached in any
respect any representation or warranty contained herein qualified by
materiality or shall have breached in any material respect any
representation or warranty not so qualified, and Purchaser has failed
to perform such obligation or cure such breach, within 30 days of its
receipt of written notice thereof from the Company, and such failure
to perform shall not have been waived in accordance with the terms of
this Agreement;
(ii) if any of the conditions set forth in Section 9.01 or 9.02
shall become impossible to fulfill (other than as a result of any
breach by the Company of the terms of this Agreement) and shall not
have been waived in accordance with the terms of this Agreement;
(iii) if permitted pursuant to Section 8.02(b).
64
SECTION 10.02 Effect of Termination. In the event of termination of
this Agreement by either the Company or Purchaser as provided in Section 10.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Purchaser or the Company, other than the
provisions of this Section 10.02, Section 13.09 and Article XI and except to the
extent that such termination results from the wilful and material breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
ARTICLE XI
Indemnification
SECTION 11.01 Indemnification of Purchaser. The Company covenants
and agrees to defend, indemnify and hold harmless each of Purchaser, its
Affiliates (other than the Company and any Retained Companies), and their
respective officers, directors, partners, employees, agents, advisers and
representatives including, without limitation, the Fund, CD&R Investment
Associates, Inc., a Delaware corporation, and CD&R Associates V Limited
Partnership, a Cayman Islands exempted limited partnership, and CD&R
(collectively, the "Purchaser Indemnitees") from and against, and pay or
reimburse the Purchaser Indemnitees for, any and all claims, demands,
liabilities, obligations, losses, costs, expenses, fines or damages (whether
absolute, accrued, conditional or otherwise and whether or not resulting from
third party claims), including interest and penalties with respect thereto and
out-of-pocket expenses and reasonable attorneys' and accountants' fees and
expenses incurred in the investigation or defense of any of the same or in
asserting, preserving or enforcing any of their respective rights hereunder
(collectively, "Losses"), resulting from or based on (or allegedly resulting
from or based on):
(i) any actions (including by any shareholders of the Company in
connection with any derivative actions) resulting from or based on (or
allegedly resulting from or based on) any of the Transactions, provided
that the indemnity provided in this clause (i) shall not include
(A) actions brought by any limited partner of the Fund against Purchaser or
any of its Affiliates relating to
65
the transactions contemplated by this Agreement, (B) Losses resulting from
or based on the acts or omissions of a Purchaser Indemnitee following the
Closing, (C) claims resulting from or based on (1) a breach by Purchaser of
its obligations under this Agreement, (2) any contract, agreement,
obligation, commitment, understanding or other arrangement between the
claimant and any Purchaser Indemnitee, (3) any intentional tort by a
Purchaser Indemnitee or (4) any fee, compensation or other payment to be
paid to any Purchaser Indemnitee;
(ii) subject to the limitations set forth in Section 11.03, any
breach by the Company of any representation, warranty, covenant or
obligation of the Company hereunder; and
(iii) any failure of any of the Distributed Companies to satisfy its
stated obligations and liabilities under the Distribution Agreements, the
Tax Allocation Agreement or any of the other Transaction Agreements to
which it is a party, whether by virtue of such agreement's
unenforceability, the Distributed Company's bankruptcy or otherwise.
The Losses described in clauses (i), (ii) and (iii) of this Section 11.01(a) are
herein referred to as "Purchaser Indemnifiable Losses". The Company shall
reimburse the Purchaser Indemnitees for any legal or other expenses incurred by
such Purchaser Indemnitees in connection with investigating or defending any
such Purchaser Indemnifiable Losses as such expenses are incurred.
SECTION 11.02 Indemnification Procedures. Promptly after receipt by
a Purchaser Indemnitee of notice of the commencement of any action or the
written assertion of any claim, such Purchaser Indemnitee shall, if a claim in
respect thereof is to be made against the Company, as the case may be (the
"Indemnifying Person"), notify the Indemnifying Person in writing of the
commencement or the written assertion thereof. Failure by a Purchaser
Indemnitee to so notify the Indemnifying Person shall relieve the Indemnifying
Person from the obligation to indemnify such Purchaser Indemnitee only to the
extent that the Indemnifying Person suffers actual and material preju-
66
dice as a result of such failure but in no event shall such failure to notify
the Indemnifying Person (i) constitute prejudice suffered by the Indemnifying
Person if it has otherwise received notice of the actions giving rise to such
obligation to indemnify or (ii) relieve it from any liability or obligation that
it may otherwise have to such Purchaser Indemnitee. In case any such action or
claim shall be brought or asserted against any Purchaser Indemnitee and it shall
notify the Indemnifying Person of the commencement or assertion thereof, the
Indemnifying Person shall be entitled to participate therein but the defense of
such action or claim shall be conducted by counsel to the Purchaser Indemnitee,
provided, however, that the Indemnifying Person shall not, in connection with
any one such action or proceeding or separate but substantially similar actions
or proceedings arising out of the same general allegations, be liable for the
fees and expenses of more than one separate firm of attorneys at any time for
all Purchaser Indemnitees, except to the extent that local counsel, in addition
to regular counsel, is required in order to effectively defend against such
action or proceeding and provided further that a Purchaser Indemnitee shall not
enter into any settlement of any such claim without the prior consent of the
Company, such consent not to be unreasonably withheld or delayed.
SECTION 11.03 Survival of Representations and Warranties. The
representations and warranties of the Company contained in this Agreement shall
expire for all purposes on the first anniversary of the Closing Date, except for
the representations and warranties contained in Sections 3.01(n), 3.01(o) and
3.01(p), which shall expire for all purposes upon expiration of the applicable
statute of limitations.
ARTICLE XII
Interpretation; Definitions
SECTION 12.01 Interpretation. As used in this Agreement:
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(a) any reference to the Company and its Subsidiaries means the
Company and each of its Subsidiaries;
(b) any reference to the "Retained Company" and its Subsidiaries or
the "Retained Companies" means the Company and those of its Subsidiaries
included in the Retained Business;
(c) any reference to the "Retained Subsidiaries" means the
Subsidiaries of the Company included in the Retained Business;
(d) any reference to School, Travel, Technology or Print and their
Subsidiaries means School, Travel, Technology or Print immediately after
completion of the Distributions and those entities that immediately after
the completion of the Distributions will be Subsidiaries of School, Travel,
Technology or Print.
SECTION 12.02 Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
"2001 Notes" is defined in the recitals to this Agreement.
"2003 Notes" is defined in Section 3.01(d).
"Adverse Tax Act" means, for any Person, any action of such Person, or
any omission by such Person of an action reasonably available to it, after the
date of the Distributions, that materially contributes to a Final Determination
that the Pre-Distribution Transactions or any of the Distributions results in
the recognition of gain to the Company by virtue of the Pre-Distribution
Transactions or any of the Distributions failing to qualify under sections 355
or 368 of the Code, including, without limitation, by reason of any stock or
securities of any Distributed Company failing to qualify as "qualified property"
within the meaning of section 355(c)(2) of the Code, or otherwise.
68
"Affiliate" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act (as in effect on the date of this Agreement).
"Agreement" is defined in the recitals to this agreement.
"Assets" is defined in Section 3.01(k).
"Audited Balance Sheet" is defined in Section 3.01(g)(iv).
"Audited Retained Business Financial Statements" is defined in
3.01(g)(iv).
"Balance Sheet" is defined in Section 3.01(g)(i).
"Beneficially Own" with respect to any securities means having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
"Business Day" means any day on which banking institutions are open
in the City of New York.
"Buyout Transaction" means a tender offer, merger, sale of all or
substantially all the Company's assets or any similar transaction that offers
each holder of Voting Securities (other than, if applicable, the Person
proposing such transaction) the opportunity to dispose of Voting Securities
Beneficially Owned by each such holder for the same consideration or otherwise
contemplates the acquisition of Voting Securities Beneficially Owned by each
such holder for the same consideration.
"Cash Transaction" is defined in Section 4.02(b)(i).
"CD&R" means Xxxxxxx, Xxxxxxxx & Xxxx, Inc., a Delaware corporation.
"Closing" is defined in Section 1.02.
"Closing Date" is defined in Section 1.02.
69
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" is defined in the recitals to this Agreement.
"Company" is defined in the recitals to this Agreement.
"Company Business Financial Statements" is defined in Section
3.01(g)(i).
"Company By-laws" is defined in Section 3.01(a).
"Company Charter" is defined in Section 3.01(a).
"Company Intellectual Property" is defined in Section 3.01(s).
"Company Meeting" is defined in Section 8.05(a).
"Company Meeting Proposal" is defined in Section 8.05(a).
"Company SEC Documents" is defined in Section 3.01(f).
"Company Stock Plans" is defined in Section 3.01(d).
"Company Stockholder Approval" is defined in Section 3.01(b).
"Contract" is defined in Section 3.01(c)(i).
"Delivery Cut-off Time" is defined in Section 8.04.
"DGCL" is defined in Section 3.01(q).
"Distribution Agreements" is defined in the recitals to this
Agreement.
"Distributions" is defined in the recitals to this Agreement.
70
"Distributed Companies" is defined in the recitals to this Agreement.
"Employee" means any employee or former employee of any member of the
Company or any of its Subsidiaries or any beneficiary or dependent of any such
employee or former employee.
"Employee Benefit Plans" means all defined contribution, defined
benefit, welfare benefit, bonus, incentive compensation, stock option, stock
purchase, stock appreciation right, stock bonus, incentive, deferred
compensation, insurance, medical, dental, vision, life, death benefit, fringe
benefit or other employee benefit plans, programs, policies or arrangements,
including without limitation, any employment, consulting, offer, secondment,
severance or other termination agreement, whether or not an employee benefit
plan within the meaning of section 3(3) of ERISA, maintained by the Company or
any of its Subsidiaries.
"Environmental Law" is defined in Section 3.01(p).
"Environmental Permits" is defined in Section 3.01(p).
"Equity Security" means (i) any Common Stock or other Voting
Securities, (ii) any securities of the Company convertible into or exchangeable
for Common Stock or other Voting Securities or (iii) any options, rights or
warrants (or any similar securities) issued by the Company to acquire Common
Stock or other Voting Securities.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" is defined in Section 3.01(c)(ii).
"Filed Company SEC Documents" is defined in Section 3.01(i).
"Final Determination" means the final resolution of liability for any
Tax for any taxable period, including any related interest or penalties, by or
as a result of: (i) a final and unappealable decision, judgment, decree or other
order of a court of competent jurisdiction; (ii) a
71
closing agreement or accepted offer in compromise under Section 7121 or 7122 of
the Code, or comparable agreement under the laws of other jurisdictions, which
resolves the entire tax liability for any tax period; (iii) any allowance of a
refund or credit in respect of an overpayment of Tax, but only after the
expiration of all periods during which such refund may be recovered (including
by way of offset) by the applicable taxing jurisdiction; or (iv) any other final
disposition, including by reason of the expiration of the applicable statute of
limitations.
"Fund" means Xxxxxxx, Xxxxxxxx & Xxxx Fund V Limited Partnership, a
Cayman Islands exempted limited partnership.
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" is defined in Section 3.01(c)(ii).
"Hazardous Substance" is defined in Section 3.01(p).
"HSR Act" is defined in Section 3.01(c)(ii).
"Indemnifying Person" is defined in Section 11.02.
"Information Statement" is defined in Section 8.08(a).
"Intellectual Property" means trademarks, trade names, trade dress,
service marks, copyrights, domain names, and similar rights (including
registrations and applications to register or renew the registration of any of
the foregoing), patents and patent applications, trade secrets, ideas,
inventions, improvements, practices, processes, formulas, designs, know-how,
confidential business or technical information, computer software, firmware,
data and documentation, licenses of or agreements relating to any of the
foregoing, rights of privacy and publicity, moral rights, and any other similar
intellectual property rights and tangible embodiments of any of the foregoing
(in any medium including electronic media).
72
"Investor Directors" is defined in Section 4.01.
"Issuance" is defined in Section 8.05(a).
"knowledge of the Company" or any like expression means to the
knowledge of the persons listed on Schedule 12.02 after due inquiry.
"Lien" is defined in Section 3.01(c)(i).
"Losses" is defined in Section 11.01(a).
"Market Capitalization" means, for any entity, the market
capitalization of such entity determined on the basis of the average closing
price for the common stock of such entity for the five-day period ending on the
tenth day after the date of the Distributions.
"Material Adverse Effect" on or with respect to an entity (or group of
entities taken as a whole) means any state of facts, event, change or effect
that has had, or would reasonably be expected to have, a material adverse effect
on the business, properties, results of operations or financial condition of
such entity (or, if with respect thereto, of such group of entities taken as a
whole), or on the ability of such entity (or group of entities) to consummate
the transactions contemplated hereby, including the Pre-Distribution
Transactions and the Distributions, or to perform its obligations under the
Transaction Agreements to which it is or will be a party; provided, however,
that a "Material Adverse Effect" shall exclude (i) the impact on the Company's
earnings for fiscal quarters ending prior to or including the Closing caused by
the inability of the Company to complete acquisitions following the announcement
of the Transactions and/or to account for acquisitions as poolings of interest
and (ii) the effect on the Company of being required as a result of the
Transactions to change accounting treatment for past acquisitions from poolings
of interests to purchases.
"Material Contracts" is defined in Section 3.01(m).
"Material Subsidiary" is defined in Section 3.01(a).
73
"New Security" means any Equity Security issued by the Company after
the Closing; provided that "New Security" shall not include (i) any securities
issuable upon conversion of any convertible Equity Security, (ii) any securities
issuable upon exercise of any option, warrant or other similar Equity Security
or (iii) any securities issuable in connection with any stock split, stock
dividend or recapitalization of the Company where such securities are issued to
all stockholders of the Company on a pro rata basis.
"Non-Investor Directors" is defined in Section 4.01.
"Notes to Pro Forma Financial Statements" is defined in Section
3.01(g)(iii).
"Offer Conditions" is defined in Section 8.07(a).
"Offer Documents" is defined in Section 8.07(b).
"Other Holders" means the holders of the Other Shares.
"Other Shares" means Voting Securities not Beneficially Owned by
Purchaser or its Affiliates.
"Permit" is defined in Section 3.01(c)(i).
"Permitted Liens" shall mean those Liens (A) securing debt that is
reflected on the Balance Sheet or the notes thereto or securing debt incurred as
part of the Proposed Financings, (B) referred to in Schedule 3.01(l), (C) for
Taxes not yet due or payable or being contested in good faith and for which
adequate reserves have been established in accordance with GAAP, (D) that
constitute mechanics', carriers', workmens' or like liens, liens arising under
original purchase price conditional sales contracts and equipment leases with
third parties entered into in the ordinary course, (E) Liens incurred or
deposits made in the ordinary course of business consistent with past practice
in connection with workers' compensation, unemployment insurance and social
security, retirement and other legislation and (F) easements, covenants,
declarations, rights of way, encumbrances, or similar
74
restrictions in connection with real property owned by certain of the Retained
Subsidiaries that do not materially impair the use of such real property by such
Retained Subsidiaries, and in the case of Liens described in clauses (B), (C),
(D), (E) or (F) that, individually or in the aggregate, would not have a
Material Adverse Effect on the Retained Companies, taken as a whole.
"Permitted Options" is defined in Section 4.02(a)(i).
"Permitted Securities Transaction" is defined in Section 4.02(b)(ii).
"Person" means any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization,
government or department or agency of a government.
"Plans" is defined in Section 3.01(o)(ii).
"Pre-Distribution Transactions" means the contribution of certain
assets, the assumption of certain liabilities and other transfers contemplated
by the respective Distribution Agreements, pursuant to which the respective
businesses of School, Travel, Technology and Print will be consolidated under
such corporations prior to the Distributions.
"Print" is defined in the recitals to this Agreement.
"Print Distribution" is defined in the recitals to this Agreement.
"Print Distribution Agreement" is defined in the recitals to this
Agreement.
"Pro Forma Balance Sheet" is defined in Section 3.01(g)(iii).
"Pro Forma Income Statements" is defined in Section 3.01(g)(iii).
75
"Pro Forma Retained Business Financial Statements" is defined in
Section 3.01(g)(iii).
"Pro Rata Share" means the fraction of an entire issuance of New
Securities, the numerator of which shall be the number of shares of Common Stock
owned or receivable upon exercise of the Warrant and the Special Warrant by
Purchaser and its Affiliates (other than the Company and its Subsidiaries)
immediately prior to such issuance of such New Securities and the denominator of
which shall be the aggregate number of shares of Common Stock outstanding
immediately prior to such issuance of such New Securities and receivable upon
exercise of the Warrant and the Special Warrant.
"Proposed Charter Amendments" is defined in Section 4.05.
"Proposed Financings" is defined in the recitals to this Agreement.
"Proxy Statement" is defined in Section 8.05(b).
"Purchase Price" is defined in Section 1.01.
"Purchaser" is defined in the recitals to this Agreement.
"Purchaser Indemnifiable Losses" is defined in Section 11.01(a).
"Purchaser Indemnitees" is defined in Section 11.01(a).
"Purchaser's Expenses" is defined in Section 13.09(b).
"Purchaser's Percentage Interest" means the greater of (i) the
percentage of Total Voting Power, determined on the basis of the number of
Voting Securities actually outstanding, that is controlled directly or
indirectly by Purchaser or any Subsidiary or Affiliate of Purchaser (other than
the Company and its Subsidiaries), including by beneficial ownership and (ii)
the percentage of the total Fair Market Value of all classes of outstanding
76
capital stock of the Company that is owned directly or indirectly by Purchaser
or any Subsidiary or Affiliate of Purchaser (other than the Company and its
Subsidiaries), including by beneficial ownership. For purposes of determining
Purchaser's Percentage Interest, (a) any options, rights, warrants (including
the Warrants and the Special Warrants) and similar securities that entitle the
holder thereof to acquire shares of any class of capital stock of the Company,
whether voting or non-voting, shall be treated as exercised; (b) any debt
security that is convertible into shares of any class of capital stock of the
Company, whether voting or non-voting, shall be treated as converted; and
(c) any equity security that is convertible into shares of any class of capital
stock of the Company, whether voting or non-voting, shall be treated as
converted, but only to the extent that such conversion would result in
Purchaser's Percentage Interest being greater than such interest would be if
such conversion had not been deemed to occur.
"Purchaser's Total Securities" is defined in Section 4.01(b)(i).
"Registration Rights Agreement" is defined in the recitals to this
Agreement.
"Retained Business" means the business and operation of the Retained
Companies.
"Retained Companies" is defined in Section 12.01(b).
"Retained Plans" is defined in Section 3.01(O)(i).
"Retained Subsidiaries" is defined in Section 12.01(c).
"Review Cut-off Time" is defined in Section 8.04.
"School" is defined in the recitals to this Agreement.
"School Distribution" is defined in the recitals to this Agreement.
77
"School Distribution Agreements" is defined in the recitals to this
Agreement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" is defined in Section 3.01(c)(ii).
"Security" means at any time Equity Securities and any shares of any
class of capital stock of the Company.
"Shares" is defined in Section 1.01.
"Special Warrants" is defined in the recitals to this Agreement.
"Special Warrant Shares" means shares of Common Stock issuable upon
exercise of the Special Warrants.
"Subscription Notice" is defined in Section 5.01.
"Subsidiary" means, as to any Person, any corporation at least a
majority of the shares of stock of which having general voting power under
ordinary circumstances to elect a majority of the Board of Directors of such
corporation (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency) is, at the time as of which the determination is being made,
owned by such Person, or one or more of its Subsidiaries or by such Person and
one or more of its Subsidiaries.
"Superior Proposal" is defined in Section 8.02(b).
"Tax Allocation Agreement" is defined in the recitals to this
Agreement.
"Tax Returns" is defined in Section 3.01(n)(i).
"Taxes" is defined in Section 3.01(n)(i).
"Technology" is defined in the recitals to this Agreement.
78
"Technology Distribution" is defined in the recitals to this
Agreement.
"Technology Distribution Agreement" is defined in the recitals to this
Agreement.
"Tender Offer" is defined in the recitals to this Agreement.
"Tender Offer Statement" is defined in Section 8.07(b).
"Termination Fee" is defined in Section 13.09(b).
"Total Voting Power" means at any time the total combined voting power
in the general election of directors of all the Voting Securities then
outstanding.
"Transactions" means the execution, delivery and performance of each
Transaction Agreement by the Company and the consummation by the Company of the
Pre-Distribution Transactions, the Distributions, the Proposed Financings, the
Tender Offer, the issuance and sale by the Company of the Shares, the Special
Warrants and the Warrants, and of the other transactions contemplated by the
Transaction Agreements.
"Transaction Agreements" means, collectively, this Agreement, the
Special Warrant, the Warrant, the Registration Rights Agreement, the
Distribution Agreements, the Tax Allocation Agreement, the tax representation
letters to be delivered in connection with the Distributions and such other
agreements as are entered into to effect the Pre-Distribution Transactions,
including, without limitation, any employee benefits agreement, intellectual
property agreement and transitional services agreement.
"Transaction Fee" means an amount equal to $15 million plus
out-of-pocket expenses.
"Transaction Proposal" is defined in Section 8.02.
"Travel" is defined in the recitals to this Agreement.
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"Travel Distribution" is defined in the recitals to this Agreement.
"Travel Distribution Agreement" is defined in the recitals to this
Agreement.
"Unaudited Company Business Financial Statements" is defined in
Section 3.01(g)(ii).
"Voting Securities" means at any time shares of any class of capital
stock of the Company which are then entitled to vote generally in the election
of directors.
"Warrants" is defined in the recitals to this Agreement.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
ARTICLE XIII
Miscellaneous
SECTION 13.01 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable.
SECTION 13.02 Specific Enforcement. Purchaser, on the one hand, and
the Company, on the other, acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any
80
court of the United States or any state thereof having jurisdiction, this being
in addition to any other remedy to which they may be entitled at law or equity.
SECTION 13.03 Entire Agreement. This Agreement (including the
documents set forth in the Exhibits and Schedules hereto) and the other
Transaction Agreements contain the entire understanding of the parties with
respect to the transactions contemplated hereby.
SECTION 13.04 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been signed
by each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 13.05 Notices. All notices, consents, requests,
instructions, approvals and other communications provided for herein and all
legal process in regard hereto shall be validly given, made or served, if in
writing and delivered personally, by telecopy (except for legal process) or sent
by registered mail, postage prepaid, if to:
The Company:
U.S. Office Products Company
0000 Xxxxxx Xxxxxxxxx Xxxxxx, X.X.
Suite 000 Xxxx
Xxxxxxxxxx, X.X. 00000
Attention of: Xxxx X. Director
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Washington, D.C. 20037
Attention of: Xxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
81
Purchaser:
c/o Clayton, Xxxxxxxx & Xxxx Fund V
Limited Partnership
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx
with a copy to:
Xxxxxxx, Xxxxxxxx & Xxxx, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention of: Xxxxx X. Xxxx
Telecopy No.: (000) 000-0000
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention of: Xxxxxx X. Xxxxxxxxx
Telecopy No.: (000) 000-0000
or to such other address or telex number as any party may, from time to time,
designate in a written notice given in a like manner.
SECTION 13.06 Amendments. This Agreement may be amended as to
Purchaser and their successors and assigns (determined as provided in
Section 13.08), and the Company may take any action herein prohibited, or omit
to perform any act required to be performed by it, if the Company shall obtain
the written consent of Purchaser. This Agreement may not be waived, changed,
modified, or discharged orally, but only by an agreement in writing signed by
the party or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right to consent to
such waiver, change, modification or discharge on behalf of such party.
SECTION 13.07 Cooperation. Purchaser and the Company agree to take,
or cause to be taken, all such further or other actions as shall reasonably be
necessary to
82
make effective and consummate the transactions contemplated by this Agreement,
including, without limitation, making all required filings under the HSR Act, if
any; provided, however, that the foregoing shall not limit the ability of the
Company to abandon the Distributions pursuant to Section 8.03.
SECTION 13.08 Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, that neither party
may assign any of its rights under this Agreement without the written consent of
the other party.
SECTION 13.09 Expenses and Remedies. (a) Whether or not the Closing
takes place, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
such expense, except as set forth in the next seven paragraphs.
(b) Notwithstanding Section 13.09(a), if Purchaser terminates this
Agreement pursuant to Section 10.01(c)(ii), (c)(iii) or (c)(vi) the Company
shall reimburse Purchaser for the reasonable out-of-pocket expenses (including
reasonable fees and expenses of legal counsel) incurred by Purchaser in
connection with this Agreement or the matters contemplated hereby ("Purchaser's
Expenses") and shall pay CD&R a termination fee of $25 million (the "Termination
Fee").
(c)Notwithstanding Section 13.09(a), if the Company terminates this
Agreement pursuant to Section 10.01(d)(iii), the Company shall pay Purchaser's
Expenses to Purchaser and the Termination Fee to CD&R.
(d) Notwithstanding Section 13.09(a), if Purchaser terminates this
Agreement pursuant to any provision of Section 10.01 other than those referred
to in Sections 13.09(b) or the Company terminates this Agreement pursuant to any
provision of Section 10.01 other than those referred to in Section 13.09(c) and
other than pursuant to Section 10.01(d)(i), the Company shall pay Purchaser's
Expenses to Purchaser; provided that if Purchaser terminates this Agreement
pursuant to Section 10.01(c)(iv) by reason of
83
the failure to be satisfied of the condition set forth in Section 9.03(k),
Purchaser's Expenses shall be limited to $2,000,000.
(e) Notwithstanding Section 13.09(a), if (i) the Company terminates
this Agreement pursuant to any provision of Section 10.01 other than those
referred to in Sections 13.09(c) or Purchaser terminates this Agreement pursuant
to Section 10.01(b)(ii), (ii) a Transaction Proposal was made prior to September
30, 1998 and (iii) during the period ending 12 months after termination the
Company enters into an agreement relating to or publicly announces, a
transaction including the sale or other disposition of Equity Securities
representing in excess of 20% of the Total Voting Power or 20% of the assets of
the Company and its Subsidiaries, taken as a whole, then upon consummation of
such transaction, the Company shall pay Purchaser's Expenses (without
duplication of any Purchaser's Expenses paid pursuant to Section 13.09(d)) and
the Termination Fee to CD&R.
(f) Notwithstanding Section 13.09(a), upon the occurrence of the
Closing, the Company shall pay Purchaser's Expenses to Purchaser.
(g) Notwithstanding Section 13.09(a), if Purchaser terminates this
Agreement pursuant to Section 10.01(c)(i) the Company shall reimburse Purchaser
for Purchaser's Expenses and shall pay CD&R a termination fee of $10 million.
SECTION 13.10 Transfer of Shares and Warrants. Purchaser understands
and agrees that neither any shares of Common Stock or any Warrants, Special
Warrants, Warrant Shares or Special Warrant Shares have been registered under
the Securities Act or the securities laws of any state and that they may be sold
or otherwise disposed of only in one or more transactions registered under the
Securities Act and, where applicable, such laws or as to which an exemption from
the registration requirements of the Securities Act and, where applicable, such
laws is available. Purchaser acknowledges that except as provided in the
Registration Rights Agreement, Purchaser has no right to require the Company to
register shares of Common Stock, the Warrants, the Special Warrants, the Warrant
Shares or the Special
84
Warrant Shares. Purchaser understands and agrees that each certificate
representing shares of Common Stock, Warrants, Special Warrants, Warrant Shares
or Special Warrant Shares (other than, with respect to the first legend, shares
of Common Stock, Warrants, Special Warrants, Warrant Shares or Special Warrant
Shares that are no longer subject to the provisions of Article VII and other
than, with respect to the second legend, shares of Common Stock, Warrants,
Special Warrants, Warrant Shares or Special Warrant Shares which have been
transferred in a transaction registered under the Securities Act or exempt from
the registration requirements of the Securities Act pursuant to Rule 144
thereunder or any similar rule or regulation) shall bear the following legends:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED BY AN AGREEMENT ON FILE AT THE OFFICES OF THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
and Xxxxxxxxx agrees to transfer shares of Common Stock, Warrants and Warrant
Shares only in accordance with the provisions of such legends.
SECTION 13.11 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, except to the extent that Delaware law mandatorily governs.
SECTION 13.12 Publicity. The Company and Purchaser will consult and
cooperate with each other before issuing, and provide each other the opportunity
to review and comment upon, any press releases or otherwise making public
statements with respect to the transactions contemplated by this Agreement.
SECTION 13.13 No Third Party Beneficiaries. (a) Nothing contained in
this Agreement is intended to confer
85
upon any person or entity other than the parties hereto and their respective
successors and permitted assigns, any benefit, right or remedies under or by
reason of this Agreement; provided, however, that the parties hereto hereby
acknowledge and agree that the Distributed Companies are each third party
beneficiaries of Section 6.01 of this Agreement and that the Purchaser
Indemnitees (other than Purchaser) are third party beneficiaries of Article XI
of this Agreement.
(b) Purchaser shall cooperate with the Company in connection with any
tax audits or administrative or judicial proceedings with respect to the
application of Section 355(e) (as ultimately enacted), including in rebutting
any presumption arising under Section 355(e) of the Code.
SECTION 13.14 Consent to Jurisdiction. Each of the Company and
Purchaser irrevocably submits to the personal exclusive jurisdiction of the
United States District Court for the Southern District of New York for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby (and, to the extent permitted under
applicable rules of procedure, agrees not to commence any action, suit or
proceeding relating hereto except in such court). Each of the Company and
Purchaser further agrees that service of any process, summons, notice or
document hand delivered or sent by registered mail to such party's respective
address set forth in Section 13.05 will be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction as set forth in the immediately preceding
sentence. Each of the Company and Purchaser irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in the
United States District Court for the Southern District of New York, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in such court that any such action, suit or proceeding brought in such court has
been brought in an inconvenient forum.
86
IN WITNESS WHEREOF, Purchaser and the Company have caused this
Agreement to be duly executed as of the day and year first above written.
U.S. OFFICE PRODUCTS COMPANY
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
CDR-PC ACQUISITION, L.L.C.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
87
EXHIBIT 1
TO INVESTMENT AGREEMENT
TERMS OF SPECIAL WARRANTS
Exercise Price: $.01 per share
Expiration Date: 12 years from date of issuance.
Exercisability: To the extent of 24.9% of the shares
issued upon conversion of the 2001
Notes or after the second anniversary
of the issuance, whichever is
earlier.
Shares Subject to Warrant: Equal to the number of shares of
Common Stock that is the difference
between (i) 24.9% of the outstanding
shares of Common Stock as of the
Closing Date after giving effect to
the issuance of the Shares (assuming
the conversion into Common Stock of
all the 2001 Notes) and (ii) 24.9%
of the outstanding shares of Common
Stock as of the Closing after giving
effect to the issuance of the Shares.
Transferability: Transferable to the same extent as
Shares.
Cashless Exercise: Permitted.
Antidilution Protection: Customary.
Registration Rights: Same as for Shares.
Listing of Warrants: Upon request of Purchaser.
Listing of Shares issuable upon
exercise of Warrants: Prior to Closing.
Listing of Special Covenants: The Company will not be permitted to
repurchase Common Stock if as a
result thereof the exercisability of
the Special Warrant will be limited.
i
EXHIBIT 1
TO INVESTMENT AGREEMENT
ii
EXHIBIT 2
TO INVESTMENT AGREEMENT
TERMS OF WARRANTS
Exercise Price: 1.5 times $270 million divided by the
total number of Shares and shares of
Common Stock subject to Special
Warrants.
Expiration Date: 12 years from date of issuance.
Exercisability: Only after the second anniversary of
issuance.
Shares Subject to Warrant: Equal to the number of the Shares.
Transferability: Transferable to the same extent as
the Shares under Section 7.01.
Cashless Exercise: Permitted.
Antidilution Protection: Customary.
Registration Rights: Same as for Shares.
Listing of Warrants: Upon request of Purchaser.
Listing of Shares issuable upon
exercise of Warrants: Prior to Closing.
Listing of Special Covenants: The Company will not be permitted to
repurchase Common Stock if as a
result thereof the exercisability of
the Warrant will be limited.
EXHIBIT 3
TO INVESTMENT AGREEMENT
TERMS OF REGISTRATION RIGHTS AGREEMENT
Registrable Securities: Shares issued under Investment
Agreement, Warrants, Special Warrants
and other Common Stock purchased by
Purchaser in compliance with the
Investment Agreement.
Demand Registrations: Four.
Piggyback Registrations: Unlimited.
Registration Fees and Expenses: Payable by the Company, including
counsel for selling stockholder.
Selection of Underwriters: Purchaser selects underwriters for
Demand Registrations subject to
Company's consent which shall not be
unreasonably withheld. Company
selects underwriters for Piggyback
Registrations subject to Purchaser's
consent which shall not be
unreasonably withheld.
Priority in Exercise of
Registration of Rights: In the event of cutbacks, securities
to be registered for the account of
the Purchaser shall have priority
over other securities to be
registered in connection with Demand
Registrations and over other
securities to be registered for the
account other selling stockholders in
Piggyback Registrations.
Indemnification: Customary.
Registration Procedures: Customary including, without
limitation, provision of opinions of
counsel and comfort letter.
