APPENDIX A
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
BETWEEN
BFH MERGER CORP.
AND
BIG FLOWER HOLDINGS, INC.
DATED AS OF OCTOBER 11, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE I
THE MERGER
SECTION 1.01 The Merger..................................................................... A-9
SECTION 1.02 Effective Time................................................................. A-9
SECTION 1.03 Effects of the Merger.......................................................... A-10
SECTION 1.04 Certificate of Incorporation and By-Laws of the
Surviving Corporation.......................................................... A-10
SECTION 1.05 Directors...................................................................... A-10
SECTION 1.06 Officers....................................................................... A-10
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
SECTION 2.01 Effect on Capital Stock........................................................ A-10
SECTION 2.02 Options; Stock Plans........................................................... A-12
SECTION 2.03 Modification of Merger Consideration........................................... A-13
SECTION 2.04 Payment for Shares............................................................. A-14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization and Qualification; Subsidiaries................................... A-16
SECTION 3.02 Capitalization; Subsidiaries................................................... A-16
SECTION 3.03 Authority Relative to this Agreement........................................... A-17
SECTION 3.04 No Violations of Law........................................................... A-18
SECTION 3.05 No Defaults or Violations Arising from the Merger.............................. A-18
SECTION 3.06 Absence of Certain Changes..................................................... A-19
SECTION 3.07 SEC Reports and Financial Statements........................................... A-19
SECTION 3.08 Information.................................................................... A-19
SECTION 3.09 Litigation..................................................................... A-20
SECTION 3.10 Material Contracts............................................................. A-20
SECTION 3.11 Taxes.......................................................................... A-20
SECTION 3.12 Employee Benefits.............................................................. A-21
SECTION 3.13 Labor Relations and Employment................................................. A-23
SECTION 3.14 Environmental Matters.......................................................... A-24
SECTION 3.15 Intellectual Property.......................................................... A-26
SECTION 3.16 Year 2000 Compliance........................................................... A-26
SECTION 3.17 Rights Agreement............................................................... A-27
SECTION 3.18 Board Recommendation........................................................... A-27
SECTION 3.19 Required Company Vote.......................................................... A-27
SECTION 3.20 Related Party Transactions..................................................... A-28
SECTION 3.21 State Takeover Statutes........................................................ A-28
SECTION 3.22 ▇▇▇▇▇▇▇ and Finders............................................................ A-28
SECTION 3.23 Opinions of Investment Banking Firms........................................... A-28
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGECO
SECTION 4.01 Organization and Qualification................................................. A-29
SECTION 4.02 Authority Relative to this Agreement........................................... A-29
SECTION 4.03 No Violation................................................................... A-29
SECTION 4.04 Information.................................................................... A-29
SECTION 4.05 Financing...................................................................... A-30
SECTION 4.06 Delaware Law................................................................... A-30
SECTION 4.07 Newly Organized................................................................ A-30
ARTICLE V
COVENANTS
SECTION 5.01 Conduct of Business of the Company............................................. A-30
SECTION 5.02 Access to Information.......................................................... A-32
SECTION 5.03 Efforts........................................................................ A-32
SECTION 5.04 Public Announcements........................................................... A-34
SECTION 5.05 Indemnification; Directors' and Officers' Insurance............................ A-34
SECTION 5.06 Notification of Certain Matters................................................ A-35
SECTION 5.07 Rights Agreement............................................................... A-35
SECTION 5.08 State Takeover Laws............................................................ A-36
SECTION 5.09 No Solicitation................................................................ A-36
SECTION 5.10 ISRA Requirements.............................................................. A-37
SECTION 5.11 Reports........................................................................ A-37
SECTION 5.12 Stockholders' Meeting.......................................................... A-38
SECTION 5.13 Employee Benefit Arrangements.................................................. A-39
SECTION 5.14 Acquisition of Columbine JDS Systems........................................... A-39
SECTION 5.15 Treatment of Certain Investments............................................... A-39
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.01 Conditions..................................................................... A-40
SECTION 6.02 Conditions to Obligations of MergeCo........................................... A-41
SECTION 6.03 Conditions to Obligation of the Company........................................ A-42
ARTICLE VII
TERMINATION; AMENDMENTS; WAIVER
SECTION 7.01 Termination.................................................................... A-42
SECTION 7.02 Effect of Termination.......................................................... A-43
SECTION 7.03 Fees and Expenses.............................................................. A-44
SECTION 7.04 Amendment...................................................................... A-44
SECTION 7.05 Extension; Waiver.............................................................. A-44
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 Non-Survival of Representations and Warranties................................. A-45
SECTION 8.02 Entire Agreement; Assignment................................................... A-45
SECTION 8.03 Validity....................................................................... A-45
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SECTION 8.04 Notices........................................................................ A-45
SECTION 8.05 Governing Law.................................................................. A-46
SECTION 8.06 Descriptive Headings........................................................... A-46
SECTION 8.07 Counterparts................................................................... A-46
SECTION 8.08 Parties in Interest............................................................ A-46
SECTION 8.09 Certain Definitions............................................................ A-46
SECTION 8.10 Specific Performance........................................................... A-47
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SCHEDULES
Schedule 2.01(c)(ii)......................... Holders of Retained Shares
Schedule 5.14................................ Acquisition of Columbine JDS Systems, Inc.
Schedule 5.15(a)............................. Treatment of Private Internet Investments
Schedule 5.15(b)............................. Treatment of Public Internet Investments
Schedule 6.02(d)............................. Financing Commitments
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TABLE OF DEFINED TERMS
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401(k) Plans............................................................................................... 14
Acquisition Transactions................................................................................... 46
affiliate.................................................................................................. 63
Agreement.................................................................................................. 1
Aggregate Spread........................................................................................... 6
Bona Fide Proposal......................................................................................... 48
Business................................................................................................... 27
Cash Consideration......................................................................................... 4
Certificate Amendments..................................................................................... 2
Certificates............................................................................................... 10
Code....................................................................................................... 22
Common Shares.............................................................................................. 1
Company.................................................................................................... 1
Company Affiliated Group................................................................................... 20
Company Board.............................................................................................. 1
Company Disclosure Schedule................................................................................ 13
Company Representatives.................................................................................... 39
Company Stock Plan......................................................................................... 14
Company Stockholder Approval............................................................................... 15
Confidentiality Agreement.................................................................................. 40
Consent.................................................................................................... 40
control.................................................................................................... 63
DGCL....................................................................................................... 1
Dissenting Shares.......................................................................................... 5
Effective Time............................................................................................. 2
Environmental Laws......................................................................................... 28
Environmental Liabilities and Costs........................................................................ 28
Environmental Permits...................................................................................... 28
ERISA...................................................................................................... 22
ERISA Affiliate............................................................................................ 23
Excess Shares.............................................................................................. 16
Exchange Act............................................................................................... 15
Exchange Agent............................................................................................. 10
Exchange Fund.............................................................................................. 10
Exchanged Option........................................................................................... 7
Exchanged Option Merger Consideration...................................................................... 7
Exchanged Share............................................................................................ 4
Exchanged Share Certificates............................................................................... 16
Evercore................................................................................................... 7
Financial Statements....................................................................................... 18
Form 10-K.................................................................................................. 18
Governmental Entity........................................................................................ 16
Hazardous Substances....................................................................................... 28
HSR Act.................................................................................................... 16
Indemnified Parties........................................................................................ 43
Injunction................................................................................................. 53
Intellectual Property...................................................................................... 30
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Interested stockholder..................................................................................... 41
Investment Consideration................................................................................... 8
Investment Instrument...................................................................................... 52
ISRA....................................................................................................... 29
Junior Preferred Stock..................................................................................... 14
Laws....................................................................................................... 63
LNA........................................................................................................ 48
Material Adverse Effect on MergeCo......................................................................... 34
Material Adverse Effect on the Company..................................................................... 13
Material Contracts......................................................................................... 34
MergeCo.................................................................................................... 1
MergeCo Representatives.................................................................................... 40
Merger..................................................................................................... 1
Merger Consideration....................................................................................... 5
Offeror.................................................................................................... 47
Option..................................................................................................... 6
Order...................................................................................................... 53
Original Agreement......................................................................................... 1
Other Filings.............................................................................................. 19
PBGC....................................................................................................... 23
Person..................................................................................................... 63
Persons.................................................................................................... 63
Plans...................................................................................................... 22
Preferred Stock............................................................................................ 14
Proxy Statement............................................................................................ 49
Purchase Agreement......................................................................................... 8
QUIPS...................................................................................................... 14
Release.................................................................................................... 29
Relevant Period............................................................................................ 9
Relevant Purchaser......................................................................................... 7
Remedial Action............................................................................................ 29
Representatives............................................................................................ 46
Retained Option............................................................................................ 7
Retained Share............................................................................................. 5
Rights Agreement........................................................................................... 1
Rights Amendment........................................................................................... 31
SEC........................................................................................................ 18
SEC Reports................................................................................................ 18
Securities Act............................................................................................. 53
Shares..................................................................................................... 1
Significant Subsidiary..................................................................................... 15
Special Meeting............................................................................................ 49
Subsidiaries............................................................................................... 63
Subsidiary................................................................................................. 63
Surviving Corporation...................................................................................... 2
Tax Return................................................................................................. 21
Taxes...................................................................................................... 21
Terminating Company Breach................................................................................. 58
Terminating MergeCo Breach................................................................................. 58
Termination Date........................................................................................... 58
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Termination Fee............................................................................................ 59
THL........................................................................................................ 7
Title IV Plans............................................................................................. 22
Total Post-Merger Common Shares............................................................................ 4
Trust Agreement............................................................................................ 14
WARN....................................................................................................... 25
Year 2000 Compliant........................................................................................ 31
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated
as of October 11, 1999, between BFH Merger Corp., a Delaware corporation
("MERGECO"), and Big Flower Holdings, Inc., a Delaware corporation (the
"COMPANY").
WHEREAS, the respective Boards of Directors of MergeCo and the Company have
approved the merger of MergeCo with and into the Company, as set forth below
(the "MERGER"), in accordance with the General Corporation Law of the State of
Delaware (the "DGCL").
WHEREAS, MergeCo and the Company previously entered into an Agreement and
Plan of Merger (the "ORIGINAL AGREEMENT"), dated as of June 29, 1999, providing
for the Merger upon certain terms and conditions.
WHEREAS, ▇▇▇▇▇▇▇ and the Company have agreed to revise the terms of the
Merger and to amend and restate the Original Agreement (as amended) to reflect
these amendments to the terms of the Merger.
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, in the Merger, the holders of shares of common stock of the Company,
par value $.01 per share (the "COMMON SHARES"), issued and outstanding
immediately prior to the Effective Time (as defined in Section 1.02), including
the associated Rights issued pursuant to, and defined in, the Rights Agreement,
dated as of November 28, 1995, between the Company and The Bank of New York, as
Rights Agent (the "RIGHTS AGREEMENT", which Rights, together with the Common
Shares, are hereinafter referred to as the "SHARES"), will be entitled to either
(i) receive cash in exchange for their Shares, or (ii) retain a certain number
of their Shares and receive cash and possibly certain other consideration in
exchange for the remainder of their Shares.
WHEREAS, the Board of Directors of the Company (the "COMPANY BOARD") has, in
light of and subject to the terms and conditions set forth herein: (i)
determined that (A) the consideration to be paid for each Share in the Merger is
fair to the stockholders of the Company, and (B) the Merger is advisable and
otherwise in the best interests of the Company and its stockholders, and (ii)
resolved to approve and adopt this Agreement and the transactions contemplated
hereby and to recommend approval and adoption by the stockholders of the Company
of this Agreement.
WHEREAS, MergeCo and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger, and also to
prescribe various conditions to the Merger.
WHEREAS, it is intended that the Merger be recorded as a recapitalization
for financial reporting purposes.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, MergeCo
and the Company agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 THE MERGER. Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the DGCL, at the Effective Time (as defined in
Section 1.02), MergeCo shall be merged with and into the Company. Following the
Merger, the separate corporate existence of MergeCo shall cease and the Company
shall continue as the surviving corporation (the "SURVIVING CORPORATION").
SECTION 1.02 EFFECTIVE TIME. As soon as practicable after the satisfaction
or waiver of the conditions set forth in Article VI, the Company shall execute,
in the manner required by the DGCL,
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and deliver to the Secretary of State of the State of Delaware, a duly executed
and verified certificate of merger, and the parties shall take such other and
further actions as may be required by Law to make the Merger effective. The time
the Merger becomes effective in accordance with applicable Law is referred to
herein as the "EFFECTIVE TIME."
SECTION 1.03 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and MergeCo shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and MergeCo
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.04 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION.
(a) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended in
accordance with the provisions thereof and applicable Law.
(b) The by-laws of the Company in effect immediately prior to the Effective
Time shall be the by-laws of the Surviving Corporation until amended in
accordance with the provisions thereof and applicable Law.
SECTION 1.05 DIRECTORS. Subject to applicable Law, the directors of MergeCo
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier death, resignation or removal.
SECTION 1.06 OFFICERS. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
SECTION 2.01 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any Shares or any
shares of capital stock of MergeCo:
(a) COMMON STOCK OF MERGECO. All of the shares of common stock of MergeCo,
par value $0.01 per share, issued and outstanding immediately prior to the
Effective Time shall be converted into a number of Common Shares following the
Merger equal to:
(i) the Total Post-Merger Common Shares (defined below), minus
(ii) the number of Retained Shares together with the number of Common
Shares, if any, issued in the Merger in exchange for Options (as defined
in Section 2.02) pursuant to Section 2.03(c).
The "TOTAL POST-MERGER COMMON SHARES" shall be 12,194,449 Common Shares,
which number is based on an assumption that the transactions set forth in
Sections 5.14, 5.15(a) and 5.15(b) will be consummated on the terms set forth in
such Sections; PROVIDED THAT such number of Common Shares shall be subject to
appropriate adjustments if any of the transactions set forth in Sections 5.14,
5.15(a) or 5.15(b) are not consummated on the terms set forth in such Sections;
PROVIDED FURTHER THAT the maximum possible number of Total Post-Merger Common
Shares shall be no more than 14,526,481.
(b) CANCELLATION OF TREASURY STOCK. Each Share that is owned by the Company
shall automatically be cancelled and retired and shall cease to exist, and no
cash or other consideration shall be delivered or deliverable in exchange
therefor.
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(c) TREATMENT OF COMMON SHARES. Each Share issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger, be
treated as follows:
(i) Subject to Section 2.03, each Share held by a Person not listed in
the table set forth on Schedule 2.01(c)(ii), other than Dissenting
Shares (as defined in Section 2.01(d)) and shares owned by any
subsidiary of the Company, (each of such Shares, together with each
of the Shares described in Section 2.01(c)(ii)(B), an "EXCHANGED
SHARE") shall be converted into the right to receive from the Company
after the Merger cash in an amount equal to $31.50 (the "CASH
CONSIDERATION"), and each such Exchanged Share shall no longer be
outstanding, shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any
such Exchanged Shares shall, to the extent such certificate
represents such Exchanged Shares, cease to have any rights with
respect thereto, except the right to receive the Cash Consideration
applicable thereto, upon surrender of such certificate in accordance
with Section 2.04.
(ii) Subject to Section 2.03, in respect of the Shares held by each
Person listed in the table set forth on Schedule 2.01(c)(ii):
(A) that number of such Person's Shares which is set forth in the
column of such table headed "Retained Shares" shall be retained
by such Person as such number of fully paid and nonassessable
Common Shares (each of such Common Shares, a "RETAINED SHARE");
and
(B) each of such Person's Shares which is not a Retained Share shall
be an Exchanged Share and shall be converted into the right to
receive from the Company after the Merger the Cash Consideration
for each such Share, and each such Exchanged Share shall no
longer be outstanding, shall automatically be cancelled and
retired and shall cease to exist, and each holder of a
certificate representing any such Exchanged Shares shall, to the
extent such certificate represents such Exchanged Shares, cease
to have any rights with respect thereto, except the right to
receive the Cash Consideration applicable thereto, upon surrender
of such certificate in accordance with Section 2.04.
The Retained Shares, together with the Cash Consideration, the Exchanged
Option Merger Consideration (as defined in Section 2.02(c)), and any other
consideration agreed to be provided to holders of Shares or Options pursuant to
Section 2.03 in exchange for such Shares or Options, shall be referred to as the
"MERGER CONSIDERATION".
(d) DISSENTING SHARES. Notwithstanding Section 2.01(c), Shares outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
appraisal for such Shares in accordance with the DGCL prior to the Effective
Time ("DISSENTING SHARES") shall not be converted into a right to receive the
Cash Consideration relating to such Shares, unless such holder fails to perfect,
withdraws or otherwise loses such holder's right to appraisal. If, after the
Effective Time, such holder fails to perfect, withdraws or loses such holder's
right to appraisal, such Shares shall be treated as if they had been converted
as of the Effective Time into a right to receive the Cash Consideration relating
to such Shares. The Company shall give MergeCo prompt notice of any demands
received by the Company for appraisal of Shares, and MergeCo shall have the
right to participate in all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of
MergeCo, make any payment with respect to, or settle or offer to settle, any
such demands.
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SECTION 2.02 OPTIONS; STOCK PLANS.
(a) With respect to any outstanding option to acquire Common Shares granted
under any stock option or other similar plan of the Company, whether or not
exercisable (each such option, an "OPTION"), it is the intention of the parties
that, subject to Sections 2.02(d) and 2.03(c):
(i) each Option shall be surrendered by the holder thereof prior to the
Effective Time in exchange for that number of Shares equal to the
Aggregate Spread (as defined below) of such Option divided by $31.50,
(ii) the Shares issued to the holder of such Option in such exchange
shall be deemed to be Exchanged Shares and shall be converted into
the right to receive the Cash Consideration in accordance with
Section 2.01(c), and
(iii) no fractional Shares shall be issued in the exchange but the
Company shall pay the holder cash in lieu of the fractional interest.
"AGGREGATE SPREAD" as to any Option shall mean an amount (which shall in no
event be less than zero) equal to $31.50 minus the per Share exercise price of
such Option multiplied by the number of Shares issuable upon exercise of such
Option.
(b) Promptly after the execution of this Agreement, the Company shall use
its best efforts to obtain the consent from the holders of Options to the
treatment of such Options as set forth in Section 2.02(a), unless the Company,
MergeCo and any such holder of an Option or Options agree to a different
treatment of such holder's Option or Options pursuant to Section 2.03(c).
(c) In the event that the Company obtains the legal, valid and binding
consent of the holder of an Option or Options to the treatment of such Option or
Options as set forth in Section 2.02(a), then:
(i) the Company shall, immediately prior to the Effective Time:
(A) take such steps as are necessary to effect the exchange of each
such Option into that number of Shares equal to the Aggregate
Spread of each such Option divided by $31.50, and
(B) shall pay the relevant holder cash in lieu of any fractional
interest of a Share; and
(ii) at the Effective Time, the Shares issued to the holder of such
Option in such exchange shall be deemed to be Exchanged Shares and
shall be converted into the right to receive the Cash Consideration
in accordance with Section 2.01(c).
(d) In the event that, as of the Effective Time:
(i) the Company has not obtained the consent of the holder of an Option
or Options to the treatment of such Option or Options as set forth in
Section 2.02(a), and
(ii) the Company, MergeCo and such holder have not agreed to a different
treatment of such holder's Option or Options pursuant to Section
2.03(c),
then, as of the Effective Time, by virtue of the Merger and without any
action on the part of such holder of such Option or Options, each such Option
shall be designated as an "EXCHANGED OPTION" and shall be cancelled in exchange
for the right to receive from the Company after the Merger cash in an amount
equal to (such consideration being the "EXCHANGED OPTION MERGER CONSIDERATION"):
(iii) the Cash Consideration less the per share exercise price of such
Exchanged Option, multiplied by
(iv) the number of Common Shares subject to such Exchanged Option.
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(e) Prior to the Effective Time, the Company shall amend the terms of its
equity incentive plans or arrangements, in each case as is necessary to give
effect to the provisions of this Section 2.02 and any other arrangements made in
respect of the Options pursuant to Section 2.03(c).
SECTION 2.03 MODIFICATION OF MERGER CONSIDERATION.
(a) If, prior to the Effective Time, ▇▇▇▇▇▇ ▇. ▇▇▇ Company ("THL"), Evercore
Capital Partners LP ("EVERCORE") or any of their affiliates (any such entity
being a "RELEVANT PURCHASER") enters into an agreement with any of the Persons
listed on Schedule 2.01(c)(ii) (as amended pursuant to Section 2.03(c)) to
purchase from such Person any of such Person's Exchanged Shares at the Effective
Time in exchange for consideration equal to the Cash Consideration with respect
to such Exchanged Shares (any such agreement, a "PURCHASE AGREEMENT"):
(i) MergeCo and the Company shall modify this Agreement (including,
without limitation, Section 2.01(c) and any schedule attached to this
Agreement) on or prior to such date as appropriate to reflect the
terms of such Purchase Agreement, and
(ii) the Company shall take such other actions reasonably requested by
the Relevant Purchaser so that such Purchase Agreement can be
effected.
(b) The parties agree that, prior to the Effective Time, Schedule
2.01(c)(ii) may be amended by MergeCo, without the consent of the Company, in
the following manner:
(i) MergeCo and any Person holding Shares may agree at any time prior to
the Effective Time as to:
(A) the number of such Person's Shares which shall be Exchanged
Shares,
(B) the number of such Person's Shares which shall be Retained
Shares, and
(C) with respect to the first Person listed on Schedule 2.01(c)(ii)
on the date hereof only, the number of such Person's Shares, if
any, which shall be exchanged in the Merger in consideration for
an interest in an Investment Instrument (as defined in Section
5.15) (such per Share interest in an Investment Instrument being
the "INVESTMENT CONSIDERATION" for such Share),
and MergeCo shall provide the Company with reasonable evidence of any
such agreement.
(ii) Schedule 2.01(c)(ii) shall be amended to reflect such an agreement
reached between MergeCo and a Person holding Shares as follows:
(A) To the extent such Person is not listed on Schedule 2.01(c)(ii)
and such Person has agreed to a number of such Person's Shares
being Retained Shares, such Person shall be added to Schedule
2.01(c)(ii).
(B) The number of such Person's Shares that such Person and MergeCo
agree shall become Retained Shares shall be inserted in the
column in the table set forth in Schedule 2.01(c)(ii) headed
"Retained Shares" beside such Person's name and shall be treated
in the Merger as set forth in Section 2.01(c)(ii)(A), subject to
further adjustments under Section 2.03(b)(i).
(C) The number of such Person's Shares that such Person and MergeCo
agree shall be Exchanged Shares shall be treated in the Merger as
set forth in Section 2.01(c)(ii)(B), subject to further
adjustments under Section 2.03(b)(i).
(D) With respect to the first Person listed on Schedule 2.01(c)(ii)
on the date hereof only, the number of such Person's shares that
MergeCo and such Person agree shall
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be exchanged in consideration for an interest in the Investment
Instrument shall be treated in the Merger as set forth in such
agreement, subject to further adjustments under Section
2.03(b)(i).
(c) The parties agree that, prior to the Effective Time, the treatment of a
Person's Options in the Merger may be amended by MergeCo, with the consent of
the Company, such consent not to be unreasonably withheld, if MergeCo and such
Person agree that all or a portion of such Person's Options shall be treated
differently than the Options which are surrendered in exchange for Shares, or
are treated in the Merger as Exchanged Options, each as set forth in Section
2.02, or a combination of both, and this Agreement shall be amended, if
necessary, to reflect such agreement, PROVIDED THAT the Exchanged Option Merger
Consideration with respect to an Exchanged Option at the Effective Time, as set
forth in Section 2.02(d), shall not in any event be amended. MergeCo shall
provide the Company with reasonable evidence of any such agreement.
SECTION 2.04 PAYMENT FOR SHARES.
(a) APPOINTMENT OF EXCHANGE AGENT AND DEPOSIT OF MERGER CONSIDERATION. From
and after the Effective Time, such bank or trust company as shall be mutually
acceptable to MergeCo and the Company shall act as exchange agent (the "EXCHANGE
AGENT"). At or prior to the Effective Time, the Company and MergeCo shall
deposit, or the Company and MergeCo shall otherwise take all steps necessary to
cause to be deposited, with the Exchange Agent in an account (the "EXCHANGE
FUND") the aggregate Merger Consideration to which holders of Shares and Options
shall be entitled after the Effective Time pursuant to Sections 2.01(c), 2.02
and 2.03 (including, with respect to the aggregate Cash Consideration, the
financing arranged by MergeCo in accordance with Section 5.03(c) which is
necessary to effect the payment of the aggregate Cash Consideration).
Notwithstanding the foregoing, nothing in this Section 2.04(a) is intended to
detract from, or limit, MergeCo's obligations in Section 5.03(c), or impose any
obligation on the Company with respect thereto.
(b) MAILING OF TRANSMITTAL LETTER. Promptly after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each record
holder of certificates (the "CERTIFICATES") that immediately prior to the
Effective Time represented Shares a form of letter of transmittal which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and instructions for use in surrendering such Certificates and
receiving the Merger Consideration in respect thereof.
(c) DELIVERY OF MERGER CONSIDERATION FOR SHARES UNDER SECTION 2.01(C)(I). In
effecting the delivery of the Cash Consideration in respect of Exchanged Shares
represented by Certificates entitled to the Cash Consideration pursuant to
Section 2.01(c)(i), upon the surrender of each such Certificate, and in
consideration for such Certificate, the Exchange Agent shall pay the holder of
such Certificate the Cash Consideration multiplied by the number of such
Exchanged Shares. Upon such payment by the Exchange Agent, such Certificate
shall forthwith be cancelled and retired, and shall cease to exist.
(d) DELIVERY OF MERGER CONSIDERATION FOR SHARES UNDER SECTION 2.01(C)(II).
In effecting the:
(i) retention of the Retained Shares,
(ii) delivery of the Cash Consideration, and
(iii) delivery of the Investment Consideration, if any,
in respect of the Shares held by a holder listed in the table set forth on
Schedule 2.01(c)(ii), upon surrender of the Certificate or Certificates in
respect of such Shares, the Exchange Agent shall:
(A) in respect of the Shares which are set forth in the column of
such table headed "Retained Shares" relating to such holder,
deliver to such holder a certificate
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representing that number of Retained Shares which such holder has
the right to retain pursuant to Section 2.01(c)(ii)(A),
(B) in respect of such holder's Exchanged Shares, pay such holder the
Cash Consideration multiplied by the number of such holder's
Exchanged Shares.
(C) in respect of the shares, if any, which are being exchanged for
an interest in the Investment Instrument, deliver to such holder
such documents which reflect such holder's interest in the
Investment Instrument.
Upon such actions by the Exchange Agent, each such Certificate so
surrendered shall forthwith be cancelled and retired, and shall cease to exist.
(e) DELIVERY OF MERGER CONSIDERATION FOR OPTIONS UNDER SECTION 2.02(D). In
effecting the delivery of the Exchanged Option Merger Consideration, in respect
of each Person entitled to such consideration in the Merger pursuant to Section
2.02(d), the Exchange Agent shall pay such Person cash in an amount to which
such Person is entitled pursuant to Section 2.02(d). Upon such payment by the
Exchange Agent, each such Exchanged Option shall be cancelled and shall cease to
exist.
(f) DELIVERY OF MERGER CONSIDERATION FOR OPTIONS UNDER REVISED TREATMENT.
If:
(i) an Option shall be treated differently than that set forth in Section
2.02 pursuant to Section 2.03(c), and
(ii) the consideration to be received by a holder of an Option is of a
type which is appropriate for the Exchange Agent to deliver to such
holder,
then after the deposit with the Exchange Agent of such consideration
pursuant to Section 2.04(a), the Exchange Agent shall deliver such consideration
to the holder of such Option. Upon such action by the Exchange Agent, each such
Option for which consideration has been delivered to each holder shall be
cancelled and shall cease to exist.
(g) RIGHTS UNTIL SURRENDER. Until surrendered in accordance with Sections
2.04 (c) or (d) above, each Certificate (other than Certificates representing
(i) Shares held by MergeCo or any of its affiliates, (ii) Shares held in the
treasury of the Company, (iii) Shares held by any subsidiary of the Company or
(iv) Dissenting Shares) shall represent solely the right to receive the
aggregate Merger Consideration relating thereto. No interest or dividends shall
be paid or accrued on the Merger Consideration. If the Merger Consideration (or
any portion thereof) is to be delivered to any Person other than the Person in
whose name the Certificate formerly representing Shares surrendered therefor is
registered, it shall be a condition to such right to receive such Merger
Consideration that the Certificate so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person surrendering such
Shares shall pay to the Exchange Agent any transfer or other taxes required by
reason of the payment of the Merger Consideration to a Person other than the
registered holder of the Certificate surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
(h) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED SHARES. No dividends or
other distributions with respect to Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the Shares represented thereby.
(i) TERMINATION OF EXCHANGE AGENT'S DUTIES. Promptly following the date
which is 180 days after the Effective Time, the Exchange Agent shall deliver to
the Surviving Corporation all cash, Certificates and other documents in its
possession relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of a
Certificate formerly representing a Share may surrender such Certificate to the
Surviving Corporation and (subject to applicable
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abandoned property, escheat and similar Laws) receive in consideration therefor
the aggregate Merger Consideration relating thereto, without any interest or
dividends thereon.
(j) NO TRANSFERS OF SHARES. After the Effective Time, there shall be no
transfers on the stock transfer books of the Surviving Corporation of any Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates formerly representing Shares are presented to the
Surviving Corporation or the Exchange Agent, they shall be surrendered and
cancelled in return for the payment of the aggregate Merger Consideration
relating thereto, as provided in this Article II.
(k) NO LIABILITY. None of MergeCo, the Company or the Exchange Agent shall
be liable to any Person in respect of any Retained Shares (or dividends or
distributions with respect thereto), any cash from the Exchange Fund or any
other Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law. If any Certificates shall
not have been surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any Retained Shares (or any
dividends or distributions with respect thereto), any cash from the Exchange
Fund or any other Merger Consideration would otherwise escheat to or become the
property of any Governmental Entity (as defined in Section 3.03(b)), any such
shares, cash, dividends, distributions or other considerations in respect of
such Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any Person previously entitled thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to MergeCo as follows:
SECTION 3.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company and
each of its Subsidiaries (as defined in Section 8.09), which Subsidiaries are
listed on Section 3.01 of the disclosure schedule delivered to MergeCo by the
Company on the date hereof (the "COMPANY DISCLOSURE SCHEDULE"), is a
corporation, partnership or a limited liability company duly organized, validly
existing and in good standing under the Laws of its state or jurisdiction of
incorporation and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
is in good standing in each jurisdiction where the properties owned, leased or
operated, or the business conducted, by it require such qualification and where
failure to be in good standing or to so qualify would have a Material Adverse
Effect on the Company. The term "MATERIAL ADVERSE EFFECT ON THE COMPANY," as
used in this Agreement, means any change in or effect on the business, financial
condition, results of operations or reasonably foreseeable prospects of the
Company or any of its Subsidiaries that would be materially adverse to the
Company and its Subsidiaries taken as a whole. The Company has heretofore made
available to MergeCo a complete and correct copy of its current certificate of
incorporation and by-laws.
SECTION 3.02 CAPITALIZATION; SUBSIDIARIES.
(a) The authorized capital stock of the Company consists of 50,000,000
Common Shares and 10,000,000 shares of preferred stock, par value $.01 per share
("PREFERRED STOCK"), of which 250,000 shares are designated Series A Junior
Preferred Stock, par value $.01 per share ("JUNIOR PREFERRED STOCK").
(b) As of the close of business on October 8, 1999, 19,723,349 Common Shares
were issued and outstanding, all of which are entitled to vote on this
Agreement, and no Common Shares were held in treasury. The Company has no shares
of Preferred Stock issued and outstanding.
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(c) As of October 8, 1999, except as set forth in Section 3.02(c) of the
Company Disclosure Schedule and except for:
(i) 3,606,921 Common Shares reserved for issuance pursuant to options
granted under the Company Restated 1993 Stock Award and Incentive
Plan (the "COMPANY STOCK PLAN") which options are outstanding on the
date hereof,
(ii) 3,937,144 Common Shares subject to issuance upon conversion of the
6% Convertible Quarterly Income Preferred Securities due October 15,
2027 (the "QUIPS") issued pursuant to the Amended and Restated Trust
Agreement (the "TRUST AGREEMENT") dated as of October 14, 1997 among
the Company, The Bank of New York, The Bank of New York (Delaware)
and the Administrative Trustees named therein,
(iii) 250,000 shares of Junior Preferred Stock reserved for issuance upon
exercise of the Rights, and
(iv) 483,150 Common Shares reserved for issuance pursuant to Big Flower
Holdings, Inc. and Subsidiaries Savings Plus 401(k) Plan and 489,645
Common Shares reserved for issuance pursuant to Webcraft, Inc.
Employees Accumulated Savings Trust Plan and pursuant to Webcraft
Employee Savings Trust Plan (collectively, the "401(K) PLANS"),
there are not now, and at the Effective Time there will not be, any existing
options, warrants, calls, subscriptions, or other rights, or other agreements or
commitments, obligating the Company to issue, transfer or sell any shares of
capital stock of the Company or any of its Subsidiaries. Following the Effective
Time, in respect of a Trust Security (as such term is defined in the Trust
Agreement), if a holder of such a Trust Security exercises its conversion right
pursuant to Section 4.3 of the Trust Agreement, the conversion rate will be such
that such holder will be entitled, in respect of such Trust Security, to 1.7344
times the Cash Consideration to which an Exchanged Share is entitled pursuant to
Section 2.01(c)(i).
(d) All issued and outstanding Common Shares are validly issued, fully paid,
nonassessable and free of preemptive rights.
(e) The Significant Subsidiaries of the Company are set forth on Section
3.02(e)(i) of the Company Disclosure Schedule. All of the outstanding shares of
capital stock of each of the Company's Significant Subsidiaries have been
validly issued and are fully paid and non-assessable and, except as set forth on
Section 3.02(e)(ii) of the Company Disclosure Schedule, are owned by either the
Company or another of its Significant Subsidiaries free and clear of all liens,
charges, claims or encumbrances. A "SIGNIFICANT SUBSIDIARY" of any Person means
any subsidiary or Person that constitutes a significant subsidiary of such
Person within the meaning of Rule 1-02(w) of Regulation S-X promulgated pursuant
to the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT").
(f) The information set forth on Section 3.02(f) of the Company Disclosure
Schedule with respect to the Company and its Subsidiaries is true, complete and
correct in all material respects.
SECTION 3.03 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) The Company has the requisite corporate power and authority to execute
and deliver this Agreement and, except for the approval of this Agreement by a
vote of a majority of the issued and outstanding Common Shares (the "COMPANY
STOCKHOLDER APPROVAL"), to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Company Board and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the Company Stockholder Approval). This Agreement has
been duly and validly executed and delivered by the Company, and, assuming this
Agreement constitutes a valid and binding obligation of MergeCo, this Agreement
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
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(b) Other than in connection with, or in compliance with, the provisions of
the DGCL with respect to the transactions contemplated hereby, the Exchange Act,
the securities Laws of the various states, ISRA (as defined in Section 3.14(c)
below) and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR ACT"), no authorization, consent or approval of, or filing with, any
Governmental Entity (as defined in this Section 3.03(b)) is necessary for the
consummation by the Company of the transactions contemplated by this Agreement
other than authorizations, consents and approvals the failure to obtain, or
filings the failure to make, which would not, in the aggregate, have a Material
Adverse Effect on the Company. As used in this Agreement, the term "GOVERNMENTAL
ENTITY" means any government or subdivision thereof, domestic, foreign or
supranational or any administrative, governmental or regulatory authority,
agency, commission, tribunal or body, domestic, foreign or supranational.
SECTION 3.04 NO VIOLATIONS OF LAW.
Except as identified in Section 3.04 of the Company Disclosure Schedule:
(a) except for matters relating to Taxes, employee benefit arrangements,
labor relations and employment and environmental matters (which matters are
covered in Sections 3.11, 3.12, 3.13 and 3.14, respectively), the business
operations of the Company and its Subsidiaries have been conducted in compliance
with all applicable federal, state and local statutes, codes, ordinances, rules
and regulations, judgments, decrees, orders, writs and injunctions of the United
States and all other countries and subdivisions thereof to the extent
applicable, and
(b) the Company and its Subsidiaries hold all permits, licenses and
approvals of all Governmental Entities necessary for the conduct of the
businesses of the Company and its Subsidiaries,
except in the case of clause (a) for possible violations, and except in the case
of clause (b) for such permits, licenses and approvals, that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
SECTION 3.05 NO DEFAULTS OR VIOLATIONS ARISING FROM THE MERGER.
Except as set forth in Section 3.05 of the Company Disclosure Schedule, the
execution and delivery of this Agreement by the Company does not, and the
consummation by the Company of the transactions contemplated by this Agreement
and compliance by the Company with the provisions of this Agreement will not:
(a) constitute a breach of,
(b) conflict with,
(c) result in any violation of,
(d) constitute any default (or an event which, with notice or lapse of time,
or both would constitute a default) under,
(e) constitute a "change of control" under,
(f) require consent from, or the giving of notice to, a third party pursuant
to,
(g) give rise to a right of termination, purchase, repurchase, cancellation
or acceleration of any obligation or to loss of any property, rights or
benefits under,
(h) result in the imposition of any additional obligation under, or
(i) result in the creation of any lien or encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries, in each
case above as applicable under:
(i) the organizational documents of the Company or any of its
Subsidiaries,
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(ii) any contract, instrument, permit, concession, franchise, license,
loan or credit agreement, note, bond, mortgage, indenture, deed of
trust, lease or other property agreement, partnership or joint
venture agreement or other legally binding agreement, whether oral or
written, to which the Company or any of its Subsidiaries is bound, or
(iii) subject to the government filings and other matters referred to in
Section 3.03(b), any judgment, order, decree, statute, Law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such breaches,
conflicts, violations, defaults, terminations, accelerations, obligations,
rights, encumbrances, liens or adverse consequences resulting from a change of
control or the failure to obtain consents or provide notices that individually
or in the aggregate would not have a Material Adverse Effect on the Company.
SECTION 3.06 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the SEC
Reports (as defined in Section 3.07(a)) filed prior to the date hereof, and
except as set forth in Section 3.06 of the Company Disclosure Schedule, since
the date of the latest balance sheet in the Form 10-K:
(a) there has not been any Material Adverse Effect on the Company, whether
or not arising from transactions in the ordinary course of business, and
(b) the Company has conducted its business only in the ordinary course
consistent with past practice.
SECTION 3.07 SEC REPORTS AND FINANCIAL STATEMENTS. (a) Since January 1,
1998, the Company has filed all forms, reports and documents ("SEC REPORTS")
with the Securities and Exchange Commission ("SEC") required to be filed by it
pursuant to the federal securities Laws and the SEC rules and regulations
thereunder. Copies of all such SEC Reports have been made available to MergeCo
or its affiliates by the Company. None of such SEC Reports (as of their
respective filing dates) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(b) The audited and unaudited consolidated financial statements of the
Company included in the SEC Reports (collectively, the "FINANCIAL STATEMENTS"),
including without limitation the financial statements included in the Annual
Report on Form 10-K of the Company for the year ended December 31, 1998 (the
"FORM 10-K"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as otherwise stated
in such financial statements, including the related notes) and fairly present
the financial position of the Company and its consolidated Subsidiaries as of
the dates thereof and the results of their operations and changes in financial
position for the periods then ended, subject, in the case of the unaudited
financial statements, to year-end audit adjustments. Except as set forth in the
SEC Reports, at the date of the most recent audited financial statements of the
Company included in the SEC Reports, neither the Company nor any of its
Subsidiaries had, and since such date neither the Company nor any of such
Subsidiaries has incurred, any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which, individually or in the
aggregate, would be required to be disclosed in a balance sheet prepared in
accordance with generally accepted accounting principles and would reasonably be
expected to have a Material Adverse Effect on the Company except liabilities
incurred in the ordinary and usual course of business and consistent with past
practice and liabilities incurred in connection with the transactions
contemplated by this Agreement.
SECTION 3.08 INFORMATION. None of the information supplied by the Company in
writing (other than projections of future financial performance) specifically
for inclusion or incorporation by reference in (i) the Proxy Statement or (ii)
any other document to be filed with the SEC or any other
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Governmental Entity in connection with the transactions contemplated by this
Agreement (the "OTHER FILINGS") will:
(a) at the respective times filed with the SEC or other Governmental Entity
and,
(b) in the case of the Proxy Statement, at the date the Proxy Statement or
any amendment or supplement to the Proxy Statement is mailed to stockholders, at
the time of the Special Meeting, and at the Effective Time,
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
made therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, no representation is made by the
Company with respect to (i) any forward-looking information which may have been
supplied by the Company, whether or not included in the Proxy Statement or (ii)
statements made in any of the foregoing documents based upon information
supplied by MergeCo.
SECTION 3.09 LITIGATION. Except as set forth on Schedule 3.09 of the Company
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened, against
the Company or any of its Subsidiaries, individually or in the aggregate, which
would have a Material Adverse Effect on the Company or would prevent or
materially delay the consummation of the transactions contemplated by this
Agreement. Except as disclosed in the SEC Reports filed prior to the date of
this Agreement, neither the Company nor any of its Subsidiaries is subject to
any outstanding order, writ, injunction or decree which, individually or in the
aggregate, would have a Material Adverse Effect on the Company or would prevent
or materially delay the consummation of the transactions contemplated hereby.
SECTION 3.10 MATERIAL CONTRACTS.
The Company has heretofore furnished or made available to MergeCo or its
affiliates complete and true copies of all material contracts (together, the
"MATERIAL CONTRACTS"), each of which is listed in Section 3.10 of the Company
Disclosure Schedule. Neither the Company nor any of its Subsidiaries is, or has
received any notice or has any knowledge that any other party is, in default
under any such Material Contract, except for those defaults that would not
reasonably be likely, either individually or in the aggregate, to have a
Material Adverse Effect on the Company; and there has not occurred any event
that, with the lapse of time or the giving of notice or both, would constitute
such a material default.
SECTION 3.11 TAXES.
(a) The Company, each of its Subsidiaries and each affiliated, combined,
consolidated, unitary or aggregate group of which the Company or any of its
Subsidiaries is a member (a "COMPANY AFFILIATED GROUP") (i) has, within the time
and in the manner prescribed by applicable Law, filed all Tax Returns (as
hereinafter defined) required to be filed by it, and all such Tax Returns are
true, complete and correct in all material respects, (ii) has timely paid or
caused to be paid all Taxes (as hereinafter defined) required to be paid except
for Taxes contested in good faith and for which adequate reserves have been
established in the Company's financial statements, and (iii) has made adequate
provision in the Company's financial statements for the payment of all Taxes not
yet due and payable (including deferred Taxes), except in each case where the
failure to file, pay or make adequate provision, as applicable, would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(b) Except as set forth in Section 3.11(b) of the Company Disclosure
Schedule, there are no outstanding agreements, consents, waivers or requests to
extend (i) the application of the statute of limitations with respect to any
Taxes or Tax Return of the Company, any of its Subsidiaries or any Company
Affiliated Group, or (ii) the time within which to file any Tax Returns of the
Company, any of its Subsidiaries or any Company Affiliated Group, which Tax
Return has not since been timely filed.
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(c) Except as set forth on Section 3.11(c) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries (i) has been a member
of a group filing consolidated returns for federal income tax purposes (except
for any group of which the Company is the common parent or the Subsidiary was
the common parent at the time such Subsidiary was acquired by the Company), (ii)
is a party to a Tax sharing or Tax indemnity agreement or any other agreement of
a similar nature that remains in effect or (iii) has any liability for Taxes of
any party (other than the Company or any of its Subsidiaries) under Treasury
Regulation Section 1.1502-6 or any similar provision of state, local or foreign
Law, as a transferee or successor, by contract or otherwise.
(d) Except as set forth on Section 3.11(d) of the Company Disclosure
Schedule, no audits or other administrative proceedings or court proceedings are
presently pending or threatened with regard to any Taxes or Tax Return of the
Company, any of its Subsidiaries or any Company Affiliated Group (other than
those being contested in good faith and for which adequate reserves have been
established) and no material issues have been raised by any Tax authority in
connection with any Tax or Tax Return.
(e) There are no material Tax liens upon any assets or properties of the
Company or any of its Subsidiaries except for statutory liens for Taxes not yet
due.
(f) The Company, each of its Subsidiaries and each Company Affiliated Group
have complied in all material respects with all applicable rules and regulations
relating to the withholding of Taxes.
(g) For purposes of this Agreement, the term "TAXES" means all taxes,
charges, fees, levies or other assessments, including, without limitation, all
income, gross receipts, excise, property, sales, use, occupation, transfer,
license, ad valorem, gains, profits, gift, estimated, social security,
unemployment, disability, premium, recapture, credit, payroll, withholding,
severance, stamp, capital stock, franchise and other taxes or similar charges of
any kind imposed by any Governmental Entity, including any interest and
penalties on or additions to or in respect of a failure to comply with any
requirement relating to any Tax Return. For purposes of this Agreement, the term
"TAX RETURN" means any report, return or other information or document required
to be supplied to a Tax authority or jurisdiction in connection with Taxes,
including, without limitation, combined, unitary or consolidated returns for any
group of entities.
SECTION 3.12 EMPLOYEE BENEFITS.
(a) Section 3.12(a) of the Company Disclosure Schedule includes a complete
list of all material employee benefit plans and programs providing
benefits to any employee or former employee of the Company and its
subsidiaries sponsored or maintained by the Company or any of its
subsidiaries or to which the Company or any of its subsidiaries
contributes or is obligated to contribute ("PLANS"). Without limiting the
generality of the foregoing, the term "Plans" includes all employee
welfare benefit plans within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended and the regulations
thereunder ("ERISA"), and all employee pension benefit plans within the
meaning of Section 3(2) of ERISA. Each of the Plans that is subject to
Section 302 or Title IV of ERISA or Section 412 of the Internal Revenue
Code of 1986, as amended (the "CODE") is identified on Section 3.12(a) of
the Company Disclosure Schedule (the "TITLE IV PLANS"). Neither the
Company nor any of its Subsidiaries has any commitment or formal plan,
whether legally binding or not, to create any additional material
employee benefit plan or modify or change any existing Plan that would
affect any employee or former employee of the Company or any Subsidiary
in any material respect.
(b) With respect to each Plan, the Company has heretofore delivered or made
available to MergeCo or its affiliates true and complete copies of each of the
following documents:
(i) a copy of the Plan and any amendments thereto (or if the Plan is not
a written Plan, a description of the material terms thereof);
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(ii) a copy of the two most recent annual reports and actuarial reports,
if required under ▇▇▇▇▇, and the most recent report prepared with
respect thereto in accordance with Statement of Financial Accounting
Standards No. 87;
(iii) a copy of the most recent Summary Plan Description required under
ERISA with respect thereto;
(iv) if the Plan is funded through a trust or any third party funding
vehicle, a copy of the trust or other funding agreement and the
latest financial statements thereof; and
(v) the most recent determination letter received from the Internal
Revenue Service with respect to each Plan intended to qualify under
section 401 of the Code.
(c) No material liability under Title IV or Section 302 of ERISA or Sections
412 or 4871 of the Code has been incurred by the Company with respect to any
Plan or any "single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, of any trade or business (whether or not incorporated) which would be
considered one employer with the Company under Section 4001 of ERISA or Section
414 of the Code (an "ERISA AFFILIATE") that has not been satisfied in full, and
to the knowledge of the Company no condition exists that presents a material
risk to the Company or any ERISA Affiliate of incurring any such liability,
other than liability for premiums due the Pension Benefit Guaranty Corporation
("PBGC") (which premiums have been paid when due). Without limiting the
generality of the foregoing, none of the Company, its Subsidiaries nor any ERISA
Affiliate of the Company or any of its Subsidiaries has engaged in any
transaction described in Section 4069 or Section 4204 or 4212 of ERISA.
(d) All contributions required to be made with respect to any Plan on or
prior to the Effective Time have been timely made or are reflected on the
Company's balance sheet, except for instances where failure to make such
contributions would not, either individually or in the aggregate, have a
Material Adverse Effect on the Company.
(e) Except as disclosed in Section 3.12(e) of the Company Disclosure
Schedule, No Title IV Plan is a "multiemployer pension plan," as defined in
section 3(37) of ERISA, nor is any Title IV Plan a plan described in section
4063(a) of ERISA.
(f) Neither the Company nor any Subsidiary has engaged in a transaction with
respect to any Plan or any trust created thereunder in connection with which the
Company or any Subsidiary, could be subject to either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975 or 4976 of the Code in an amount which would be material.
(g) Except as set forth in Section 3.12(g) of the Company Disclosure
Schedule, the Company and each of its subsidiaries has complied, and is now in
compliance, in all material respects with all provisions of ERISA, the Code, and
all Laws and regulations applicable to the Plans. With respect to each Plan that
is intended to be a "qualified plan" within the meaning of section 401(a) of the
Code, the IRS has issued a favorable determination letter.
(h) Except as set forth on Section 3.12(a) of the Company Disclosure
Schedule, no Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Company or any Subsidiary for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable Law, (ii)
death benefits under any "pension plan," or (iii) benefits the full cost of
which is borne by the current or former employee (or his beneficiary). No
condition exists that would prevent the Company or any Subsidiary from amending
or terminating any Plan providing health or medical benefits in respect of any
active employee of the Company or any Subsidiary.
(i) Except as set forth on Section 3.12(i) of the Company Disclosure
Schedule, or in the SEC Reports, no amounts payable by the Company to Persons
who are "covered persons" within the meaning of Section 162(M) of the Code or
"disqualified individuals" within the meaning of Section 280G of the Code will
fail to be deductible for federal income tax purposes by virtue of Section
162(M) or 280G of the Code.
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SECTION 3.13 LABOR RELATIONS AND EMPLOYMENT.
(a) Except (x) as disclosed in the SEC Reports filed on or before the date
hereof, (y) as set forth on Section 3.13(a) of the Company Disclosure Schedule,
and (z) for matters which would not (other than in the case of clause (iii) or
(iv) of this sentence) result in a Material Adverse Effect:
(i) there is no labor strike, dispute, slowdown, stoppage or lockout
actually pending, or, to the best knowledge of the Company,
threatened against the Company or any of its Subsidiaries, and
during the past three years there has not been any such action;
(ii) to the best knowledge of the Company, no union claims to represent
the employees of the Company or any of its Subsidiaries;
(iii) neither the Company nor any of its Subsidiaries is a party to or
bound by any collective bargaining or similar agreement with any
labor organization, or work rules or practices agreed to with any
labor organization or employee association applicable to employees
of the Company or any of its Subsidiaries;
(iv) none of the employees of the Company or any of its Subsidiaries is
represented by any labor organization and the Company does not have
any knowledge of any current union organizing activities among the
employees of the Company or any of its Subsidiaries, nor does any
question concerning representation exist concerning such employees;
(v) the Company and its Subsidiaries are, and have at all times been, in
material compliance with all applicable Laws respecting employment
and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health, and are not
engaged in any unfair labor practices as defined in the National
Labor Relations Act or other applicable Law, ordinance or
regulation;
(vi) there is no unfair labor practice charge or complaint against the
Company or any of its Subsidiaries pending or, to the knowledge of
the Company, threatened before the National Labor Relations Board
or any similar state or foreign agency;
(vii) there is no grievance arising out of any collective bargaining
agreement or other grievance procedure;
(viii) no charges with respect to or relating to the Company or any of its
Subsidiaries are pending before the Equal Employment Opportunity
Commission or any other agency responsible for the prevention of
unlawful employment practices;
(ix) neither the Company nor any of its Subsidiaries has received notice
of the intent of any federal, state, local or foreign agency
responsible for the enforcement of labor or employment Laws to
conduct an investigation with respect to or relating to the Company
or any of its Subsidiaries and no such investigation is in
progress;
(x) there are no complaints, lawsuits or other proceedings pending or to
the best knowledge of the Company threatened in any forum by or on
behalf of any present or former employee of the Company or any of
its Subsidiaries alleging breach of any express or implied contract
of employment, any Law or regulation governing employment or the
termination thereof or other discriminatory, wrongful or tortious
conduct in connection with the employment relationship.
(b) Except as set forth in Section 3.13(b) of the Company Disclosure
Schedule, to the best knowledge of the Company, since the enactment of the
Worker Adjustment and Retraining Notification ("WARN") Act, there has not been
(i) a "plant closing" (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of the Company or any of its Subsidiaries; or (ii) a
"mass layoff" (as defined in the WARN Act)
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affecting any site of employment or facility of the Company or any of its
Subsidiaries; nor has the Company or any of its Subsidiaries been affected by
any transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local Law. To the best
knowledge of the Company, none of the employees of the Company or any of its
Subsidiaries has suffered an "employment loss" (as defined in the WARN Act)
since three months prior to the date of this Agreement.
SECTION 3.14 ENVIRONMENTAL MATTERS. (a) Except as disclosed in Section 3.14
of the Company Disclosure Schedule:
(i) The Company and its Subsidiaries have been and are in compliance
with all applicable Environmental Laws as in effect on the date
hereof, except for such violations and defaults as would not,
individually or in the aggregate, have a Material Adverse Effect on
the Company.
(ii) The Company and its Subsidiaries possess all Environmental Permits
required for the current operation of the Business pursuant to
Environmental Laws as in effect on the date hereof, all such
Environmental Permits are in effect, there are no pending or, to
the best knowledge of the Company, threatened proceedings to revoke
such Environmental Permits and the Company and its Subsidiaries
are, to the best knowledge of the Company, in compliance with all
terms and conditions thereof, except for such failures to possess
or comply with Environmental Permits as would not, individually or
in the aggregate, have a Material Adverse Effect on the Company. In
connection with any pending applications or proceedings for new,
renewal or modified Environmental Permits, the Company has not
received written notice that modifications to the terms, conditions
and requirements of such Environmental Permits may be imposed or
required that, individually or in the aggregate, would have a
Material Adverse Effect on the Company.
(iii) Except for matters which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, neither
the Company nor any Subsidiary has received any written
notification that the Company or any Subsidiary, as a result of any
of the current or past operations of the Business, or any property
currently or formerly owned or leased in connection with the
Business, is or may be the subject of any proceeding,
investigation, claim, lawsuit or order by any Governmental Entity
or other person, relating to (A) any violation or alleged violation
of Environmental Laws; (B) any Remedial Action; (C) any Release or
threatened Release of Hazardous Substances, whether or not such
Release or threatened Release has occurred or is occurring at
properties currently or formerly owned or operated by the Company
or its Subsidiaries; or (D) any Environmental Liabilities and
Costs.
(iv) Except as would not have a Material Adverse Effect on the Company,
none of the Company and its Subsidiaries has entered into any
written agreement with any Governmental Entity, or is subject to
any Order or decree, by which the Company or any subsidiary has
assumed responsibility or is responsible, either directly or as a
guarantor or surety, for the remediation of any Release of
Hazardous Substances into the environment in connection with the
Business, including for cost recovery with respect to such
Releases.
(v) There is not now and has not been at any time in the past, a Release
of Hazardous Substances for which the Company or any Subsidiary is
required or is reasonably likely to be required to perform a
Remedial Action pursuant to applicable Environmental Laws as
currently in effect, or will incur Environmental Liabilities and
Costs that, with respect to any matter covered by this Section
3.14(a)(v) would, individually or in the aggregate, have a Material
Adverse Effect on the Company.
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(b) This Section contains the only representations and warranties concerning
the Company or any Subsidiary relating to any Environmental Law, Environmental
Liabilities and Costs, or Environmental Permits.
(c) For purposes of this Agreement:
(i) "BUSINESS" means the current and former businesses of the Company
and its Subsidiaries including, but not limited to, businesses or
Subsidiaries that have been previously sold by the Company, its
Subsidiaries or any predecessors thereto.
(ii) "ENVIRONMENTAL LAWS" shall mean all foreign, federal, state and
local Laws, regulations, rules and ordinances relating to pollution
or protection of the environment or human health and safety as it
relates to Hazardous Substances, including, without limitation,
Laws relating to Releases or threatened Releases of Hazardous
Substances in the environment (including, without limitation,
ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Substances and all Laws and
regulations with regard to record keeping, notification, disclosure
and reporting requirements respecting Hazardous Substances, and all
Laws relating to endangered or threatened species of fish, wildlife
and plants and the management or use of natural resources.
(iii) "ENVIRONMENTAL LIABILITIES AND COSTS" means all damages, natural
resource damages, claims, losses, expenses, costs, obligations, and
liabilities (collectively, "Losses"), whether direct or indirect,
known or unknown, current or potential, past, present or future,
imposed by, under or pursuant to Environmental Laws, including, but
not limited to, all Losses related to Remedial Actions, and all
fees, capital costs, disbursements, penalties, fines and expenses
of counsel, experts, contractors, personnel and consultants.
(iv) "ENVIRONMENTAL PERMITS" means any federal, state, foreign or local
permit, license, registration, consent, certificate, approval or
other authorization necessary for the conduct of the Business as
currently conducted under any Environmental Law.
(v) "HAZARDOUS SUBSTANCES" means any substance that (A) is defined,
listed or identified or otherwise regulated as a "hazardous waste,"
"hazardous material" or "hazardous substance" "toxic substance,"
"hazardous air pollutant," "pollutant" or "contaminant" or words of
similar meaning and regulatory effect under any Environmental Law
(including, without limitation, radioactive substances,
polychlorinated biphenyls, petroleum and petroleum derivatives and
products) or (B) requires investigation, removal or remediation
under applicable Environmental Law.
(vi) "ISRA" means the New Jersey Industrial Site Recovery Act, N.J.S.A.
13:IK-6 ET SEQ.
(vii) "RELEASE" shall mean any release, spill, emission, discharge,
leaking, pumping, injection, deposit, discharge, dispersal,
leaching or migration into the environment (including, without
limitation, ambient air, surface water, groundwater, and surface or
subsurface strata) or into or out of any property, including the
movement of Hazardous Substances through the air, soil, surface
water, groundwater or property, but not including any discharge or
emission in compliance with an Environmental Permit.
(viii) "REMEDIAL ACTION" means all actions required by Governmental Entity
pursuant to Environmental Law or otherwise taken as necessary to
comply with Environmental Law to (A) clean up, remove, treat or in
any other way remediate any Hazardous Substances; (B) prevent the
release of Hazardous Substances so that they do not migrate or
endanger
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or threaten to endanger public health or welfare or the
environment; or (C) perform studies, investigations or monitoring
in respect of any such matter.
SECTION 3.15 INTELLECTUAL PROPERTY.
(a) The Company and its Subsidiaries own or possess valid and adequate
licenses or other legal rights to use all material Intellectual Property as are
necessary to permit the Company and its Subsidiaries to conduct the business as
presently conducted, free and clear of all liens, claims, and encumbrances, and
except for those licenses issued to third parties in the ordinary course of
business, free and clear of all material licenses to third parties.
(b) The conduct of the business as presently conducted does not infringe on
the Intellectual Property rights of any Person except for such infringements
which, individually or in the aggregate, would not have a Material Adverse
Effect on the Company.
(c) To the Company's knowledge, all filings, registrations and issuances
pertaining to the material Intellectual Property owned by the Company and its
Subsidiaries, including any and all patents, registered trademarks and copyright
registrations, are in full force and effect and the Company and its Subsidiaries
have good and marketable title thereto.
(d) To the Company's knowledge, there are no threats of claims or challenges
to the validity or effectiveness of the Intellectual Property as are necessary
to permit the Company and its Subsidiaries to conduct the business as presently
conducted, which individually or in the aggregate would have a Material Adverse
Effect on the Company.
(e) As employed herein, the term "INTELLECTUAL PROPERTY" shall mean:
(i) registered and unregistered trademarks, service marks, slogans,
trade names, logos, Internet domain names and trade dress together
with the goodwill associated therewith;
(ii) patents, patent applications and invention disclosures;
(iii) registered and unregistered copyrights, including, but not limited
to, copyrights in software and databases;
(iv) software programs and databases;
(v) trade secrets, proprietary information and other proprietary
intellectual property rights, and
(vi) agreements pursuant to which the Company or a Subsidiary has
obtained the right to use any of the foregoing.
SECTION 3.16 YEAR 2000 COMPLIANCE.
(a) Except as set forth in Section 3.16 of the Company Disclosure Schedule,
all software, systems and hardware owned or used by the Company and its
Subsidiaries are substantially Year 2000 Compliant and are reasonably expected
to be Year 2000 Compliant by December 31, 1999, except for such software,
systems and hardware the failure of which to be Year 2000 Compliant would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(b) The Company and its Subsidiaries have taken, or are taking, commercially
reasonable steps to determine whether all material third party software, systems
and hardware used by, for, or on behalf of the Company and its Subsidiaries are
Year 2000 Compliant or are reasonably expected to be Year 2000 Compliant by
December 31, 1999.
(c) As used herein, "YEAR 2000 COMPLIANT" means for all dates and times,
including, without limitation, dates and times before, on and after December 31,
1999, when used on a stand-alone system or in combination with other software or
systems of the Company and its Subsidiaries, other than any
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errors or malfunctions which are the result of any incorrect date and time
information incorporated into calculations from systems external to the Company
and its Subsidiaries:
(i) the application system consistently functions and receives and
processes dates and times correctly without abnormal results;
(ii) no date related calculations are incorrect (including, without
limitation, age calculations, duration calculations and scheduling
calculations) as a result of the advent of the year 2000;
(iii) all manipulations and comparisons of date-related data produce
correct and consistent results for all valid date values within the
scope of the application;
(iv) there is no century ambiguity;
(v) all reports and displays are sorted correctly; and
(vi) leap years are accounted for and correctly identified (including,
without limitation, that the year 2000 is recognized as a leap
year).
SECTION 3.17 RIGHTS AGREEMENT.
(a) The Company and the Company Board have taken all action to amend the
Rights Agreement (the "RIGHTS AMENDMENT") so that the execution and delivery of
this Agreement (and any amendments thereto by the parties hereto) and the
consummation of the Merger and the transactions contemplated thereby, will not
cause:
(i) the Rights (as defined in the Rights Agreement) to become
exercisable pursuant to Section 11(a)(ii) thereof or otherwise,
(ii) MergeCo or any of its affiliates to constitute an "Acquiring
Person" (as defined in the Rights Agreement),
(iii) a "Distribution Date," a "Triggering Event," or a "Stock
Acquisition Date" (as each term is defined in the Rights Agreement)
to occur, or
(iv) the Rights to otherwise be operative with respect to the
transactions contemplated by this Agreement, and
such amendment will be in full force and effect from and after the date
hereof.
(b) As a result of the Rights Amendment, the Rights will expire as of
immediately before the Effective Time.
SECTION 3.18 BOARD RECOMMENDATION. The Company Board, at a meeting duly
called and held, has:
(a) determined that this Agreement and the transactions contemplated hereby,
taken together, are advisable and in the best interests of the Company and its
stockholders; and
(b) subject to the other provisions hereof, resolved to recommend that the
holders of the Shares approve this Agreement, and the transactions contemplated
hereby, including the Merger.
SECTION 3.19 REQUIRED COMPANY VOTE. The Company Stockholder Approval, being
the affirmative vote of a majority of the Shares, is the only vote of the
holders of any class or series of the Company's securities necessary to approve
this Agreement, the Merger and the other transactions contemplated hereby.
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SECTION 3.20 RELATED PARTY TRANSACTIONS. Except as previously disclosed to
MergeCo in writing or as disclosed in the SEC Reports, no director, officer,
partner, "affiliate" or "associate" (as such terms are defined in Rule 12b-2
under the Exchange Act) of the Company or any of its Subsidiaries, to the
knowledge of the Company:
(i) has outstanding any indebtedness or other similar obligations to the
Company or any of its Subsidiaries in excess of $60,000;
(ii) owns any direct or indirect interest of any kind in (other than a DE
MINIMUS interest), or is a director, officer, employee, partner,
affiliate or associate of, or consultant or lender to, or borrower
from, or has the right to participate in the management, operations
or profits of, any person or entity which is:
(A) a competitor, supplier, customer, distributor, lessor, tenant,
creditor or debtor of the Company or any of its Subsidiaries,
(B) engaged in a business related to the business of the Company or
any of its Subsidiaries,
(C) participating in any transaction to which the Company or any of
its Subsidiaries is a party, or
(iii) is otherwise a party to any contract, arrangement or understanding
with the Company or any of its Subsidiaries except as contemplated by
Section 2.03 and except for any such contract, arrangement or
understanding providing for (A) such Person's employment by the
Company or one of its Subsidiaries, or (B) employee or other fringe
benefits, or (C) options or other rights, granted pursuant to the
Company Stock Plan.
SECTION 3.21 STATE TAKEOVER STATUTES. The Company Board has taken such
action so that no statute, takeover statute or similar statute or regulation of
the State of Delaware, including the provisions of Section 203 of the DGCL (and,
to the knowledge of the Company after due inquiry, of any other state or
jurisdiction), applies to this Agreement, the Merger, or any of the other
transactions contemplated hereby. Except for the Rights Agreement, neither the
Company nor any of its Subsidiaries has any rights plan, preferred stock or
similar arrangement which have any of the aforementioned consequences in respect
of the transactions contemplated hereby.
SECTION 3.22 BROKERS AND FINDERS. Except for the engagement of ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Company, none of the Company, any of its
Subsidiaries, or any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement.
SECTION 3.23 OPINIONS OF INVESTMENT BANKING FIRMS. The Company has received
the opinions of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Company, each dated
the date hereof, to the effect that, the Cash Consideration to be received by
the holders of Shares pursuant to the Merger is fair to the Company's
stockholders (other than holders of Retained Shares, as to which ▇▇▇▇▇▇▇, ▇▇▇▇▇
& Co. and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Company express no opinion) from a financial point
of view.
SECTION 3.24 CERTAIN LIMITATIONS. Notwithstanding anything in this Article
III to the contrary, the Company makes no representation or warranty with
respect to the specific transactions contemplated by Sections 5.14 and 5.15, or
the effects thereof; PROVIDED THAT, to the extent applicable, the
representations and warranties set forth in Sections 3.02(e) and 3.03 shall
apply with respect to such specific transactions and the effects thereof; and
PROVIDED FURTHER THAT, the business, assets and operations which are the subject
of Sections 5.14 and 5.15 shall be treated as part of business, assets and
operations of the Company and its Subsidiaries for all purposes of this
Agreement (including,
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without limitation, Article III) whether or not the transactions contemplated by
Sections 5.14 and 5.15 are consummated or are expected to be consummated.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGECO
MergeCo represents and warrants to the Company as follows:
SECTION 4.01 ORGANIZATION AND QUALIFICATION. MergeCo is a corporation duly
organized, validly existing and in good standing under the Laws of its state or
jurisdiction of incorporation and is in good standing as a foreign corporation
in each other jurisdiction where the properties owned, leased or operated, or
the business conducted, by it require such qualification and where failure to be
in good standing or to so qualify would have a Material Adverse Effect on
MergeCo. The term "MATERIAL ADVERSE EFFECT ON MERGECO", as used in this
Agreement, means any change in or effect on the business, financial condition,
results of operations or reasonably foreseeable prospects of MergeCo or any of
its Subsidiaries that would be materially adverse to MergeCo.
SECTION 4.02 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) MergeCo has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of MergeCo and no other corporate proceedings on the part of
MergeCo are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by MergeCo and, assuming this Agreement constitutes a valid and
binding obligation of the Company, this Agreement constitutes a valid and
binding agreement of MergeCo, enforceable against MergeCo in accordance with its
terms.
(b) Other than in connection with, or in compliance with, the provisions of
the DGCL with respect to the transactions contemplated hereby, the Exchange Act,
the securities Laws of the various states and the HSR Act, no authorization,
consent or approval of, or filing with, any Governmental Entity is necessary for
the consummation by MergeCo of the transactions contemplated by this Agreement
other than authorizations, consents and approvals the failure to obtain, or
filings the failure to make, which would not, in the aggregate, have a Material
Adverse Effect on MergeCo.
SECTION 4.03 NO VIOLATION. Neither the execution or delivery of this
Agreement by MergeCo nor the consummation by MergeCo of the transactions
contemplated hereby will:
(a) constitute a breach or violation of any provision of the certificate of
incorporation or by-laws of MergeCo, or
(b) constitute a breach, violation or default (or any event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in the
creation of any lien or encumbrance upon any of the properties or assets of
MergeCo under, any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument to which MergeCo is a party or by which it
or any of its properties or assets are bound, other than breaches, violations,
defaults, terminations, accelerations or creation of liens and encumbrances
which, in the aggregate, would not have a Material Adverse Effect on MergeCo.
SECTION 4.04 INFORMATION. None of the information supplied by ▇▇▇▇▇▇▇ in
writing (other than projections of future financial performance) specifically
for inclusion or incorporation by reference in (i) the Proxy Statement or (ii)
the Other Filings will:
(a) at the respective times filed with the SEC or other Governmental Entity
and,
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(b) in the case of the Proxy Statement, at the date the Proxy Statement or
any amendment or supplement to the Proxy Statement is mailed to stockholders, at
the time of the Special Meeting and at the Effective Time,
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
made therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, no representation is made by MergeCo
with respect to statements made in any of the foregoing documents based upon
information supplied by the Company.
SECTION 4.05 FINANCING. Schedule 6.02(d) sets forth true and complete copies
of written documentation from third parties which provides for financing in
amounts sufficient to consummate the transactions contemplated hereby as
contemplated by Section 6.02(d). As of the date hereof, none of MergeCo., its
representatives or its affiliates has any reason to believe that the financing
contemplated by such written documentation will not be obtained on the terms and
subject to the conditions set forth in such documentation, or that such
conditions will not be satisfied.
SECTION 4.06 DELAWARE LAW. MergeCo was not immediately prior to the
execution of this Agreement, an "interested stockholder" within the meaning of
Section 203 of the DGCL and neither MergeCo, nor any of its "affiliates" or
"associates" (as such terms are defined in the Rights Agreement) beneficially
owns any Common Shares on the date hereof.
SECTION 4.07 NEWLY ORGANIZED. MergeCo was formed solely for the purpose of
engaging in the Merger and the other transactions contemplated by this Agreement
and has engaged in no other business activities.
ARTICLE III
COVENANTS
SECTION 5.01 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by
this Agreement (including Sections 5.14 and 5.15) or as expressly agreed to in
writing by MergeCo, during the period from the date of this Agreement to the
Effective Time, the Company shall, and shall cause each of its Subsidiaries to,
conduct its operations according to its ordinary and usual course of business
and consistent with past practice and use its and their respective reasonable
best efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licensees,
advertisers, distributors and others having business dealings with them and to
preserve goodwill. Without limiting the generality of the foregoing, and except
as (x) otherwise expressly provided in this Agreement, (y) required by Law, or
(z) set forth on Section 5.01 of the Company Disclosure Schedule, prior to the
Effective Time, the Company shall not, and shall cause its Subsidiaries not to,
without the consent of MergeCo (which consent shall not be unreasonably
withheld):
(a) except (i) with respect to annual bonuses made in the ordinary course of
business consistent with past practice, or (ii) as required by Law, adopt or
amend in any material respect any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, pension,
retirement, employment or other employee benefit agreement, trust, plan or other
arrangement for the benefit or welfare of any director, officer or employee of
the Company or any of its Subsidiaries or increase in any manner the
compensation or fringe benefits of any director, officer or employee of the
Company or any of its Subsidiaries or pay any benefit not required by any
existing agreement or place any assets in any trust for the benefit of any
director, officer or employee of the Company or any of its Subsidiaries not
required by any existing agreement (in each case, except with respect to
employees and directors in the ordinary course of business consistent with past
practice);
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(b) incur any indebtedness for borrowed money in excess of $1,000,000 on an
aggregate basis, other than indebtedness under existing lines of credit drawn to
fund working capital (defined as current assets (excluding cash and cash
equivalents) minus current liabilities, each as determined in accordance with
generally acceptable accounting principles applied on a consistent basis) in the
ordinary course of business and consistent with past practice;
(c) expend funds for capital expenditures (including capitalized software
and lease-buybacks but other than expenditures permitted pursuant to Section
5.01(i)) that in the aggregate would cause total capital expenditure (including
capitalized software and lease-buybacks but other than expenditures permitted
pursuant to Section 5.01(i)) for the period from January 1, 1999 to the
Effective Time to exceed an amount equal to $115,000,000;
(d) sell, lease, license, mortgage or otherwise encumber or subject to any
lien or otherwise dispose of any of its properties or assets other than
immaterial properties or assets (or immaterial portions of properties or
assets), except in the ordinary course of business consistent with past
practice;
(e) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock (except (A) as
contemplated by the Rights Agreement and (B) for dividends paid by Subsidiaries
to the Company with respect to capital stock), (ii) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) except as set forth in Section 5.01(e)(iii) of the
Company Disclosure Schedule, purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its Subsidiaries or any other securities
thereof or any rights, warrants or options to acquire any such shares or other
securities;
(f) except for issuances (i) upon exercise of presently outstanding awards
under the Company Stock Plan, (ii) upon conversion of the QUIPS, (iii) of up to
50,000 Common Shares pursuant to the 401(k) Plans, or (iv) as previously
disclosed in writing to MergeCo or its affiliates, authorize for issuance,
issue, deliver, sell or agree or commit to issue, sell or deliver (whether
through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise), pledge or otherwise encumber
any shares of its capital stock or the capital stock of any of its Subsidiaries,
any other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities or any other securities or equity equivalents (including
without limitation stock appreciation rights);
(g) amend its certificate of incorporation, by-laws or equivalent
organizational documents or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership of
any material subsidiary of the Company;
(h) except as provided in Section 5.01(c), make or agree to make any
acquisition of assets which is material to the Company and its Subsidiaries,
taken as a whole, except for (i) purchases of inventory and supplies in the
ordinary course of business or (ii) pursuant to purchase orders entered into in
the ordinary course of business which do not call for payments in excess of
$5,000,000 per annum;
(i) except as previously disclosed to MergeCo in writing, acquire any
business (whether by merger, consolidation, purchase of assets or otherwise) or
acquire any equity interest in any person not an affiliate (whether through a
purchase of stock, establishment of a joint venture or otherwise);
(j) change its principles of accounting in effect at December 31, 1998,
except as required by changes in generally accepted accounting principles or Law
or regulation or as discussed in the SEC Reports, or change any of its methods
of reporting income and deductions for federal income tax purposes from those
employed in the preparation of the federal income tax returns of the Company for
the taxable year ending December 31, 1998, except as required by changes in Law
or regulation;
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(k) settle or compromise any shareholder derivative suits arising out of the
transactions contemplated hereby or any other material litigation (whether or
not commenced prior to the date of this Agreement) or settle, pay or compromise
any claims not required to be paid, other than in consultation and cooperation
with MergeCo, and, with respect to any such settlement, with the prior written
consent of MergeCo (which consent will not be unreasonably withheld);
(l) enter into or amend in a manner adverse to MergeCo any new agreement
which has a non-competition, geographical restriction or similar covenant that
would be material to the Company;
(m) make or rescind any material election relating to Taxes, or settle any
material claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes; or
(n) authorize, or commit or agree to take, any of the foregoing actions.
SECTION 5.02 ACCESS TO INFORMATION. From the date of this Agreement until
the Effective Time, the Company shall, and shall cause its Subsidiaries, and
each of their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "COMPANY REPRESENTATIVES") to, give MergeCo
and their respective officers, employees, counsel, advisors, representatives
(collectively, the "MERGECO REPRESENTATIVES") and representatives of financing
sources identified by MergeCo reasonable access, upon reasonable notice and
during normal business hours, to the offices and other facilities and to the
books and records of the Company and its Subsidiaries and will cause the Company
Representatives and the Company's Subsidiaries to furnish MergeCo and the
MergeCo Representatives and representatives of financing sources identified by
MergeCo with such financial and operating data and such other information with
respect to the business and operations of the Company and its Subsidiaries as
MergeCo and representatives of financing sources identified by MergeCo may from
time to time reasonably request. ▇▇▇▇▇▇▇ agrees that any information furnished
pursuant to this Section 5.02 shall be subject to the provisions of the letter
agreement dated March 11, 1999 between THL and the Company (the "CONFIDENTIALITY
AGREEMENT").
SECTION 5.03 EFFORTS.
(a) Each of the Company and MergeCo shall, and the Company shall cause each
of its Subsidiaries to, make all necessary filings with Governmental Entities as
promptly as practicable in order to facilitate prompt consummation of the
transactions contemplated by this Agreement. In addition, each of MergeCo and
the Company shall use its reasonable best efforts (including, without
limitation, payment of any required fees) and shall cooperate fully with each
other to:
(i) comply as promptly as practicable with all governmental requirements
applicable to the transactions contemplated by this Agreement,
including the making of all filings necessary or proper under
applicable Laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, but not
limited to, cooperation in the preparation and filing of the Proxy
Statement and any actions or filings related thereto, and any
amendments to any thereof,
(ii) obtain promptly all consents, waivers, approvals, authorizations or
permits of, or registrations or filings with or notifications to (any
of the foregoing being a "CONSENT"), any (x) Governmental Entity
necessary for the consummation of the transactions contemplated by
this Agreement, or (y) third party necessary for the consummation of
the transactions contemplated by Sections 5.14 and 5.15, except for
such Consents the failure of which to obtain would not prevent or
materially delay the consummation of the Merger, and
(iii) take such other reasonable actions to implement the transactions
contemplated hereby on a reasonably prompt basis.
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Subject to the Confidentiality Agreement, MergeCo and the Company shall
furnish to one another such necessary information and reasonable assistance as
MergeCo or the Company may reasonably request in connection with the foregoing.
(b) Without limiting Section 5.03(a), MergeCo and the Company shall each:
(i) promptly make or cause to be made the filings, if required, of such
party under the HSR Act with respect to the Merger or the
transactions contemplated by Sections 5.14 and/or Section 5.15;
(ii) use its reasonable best efforts to avoid the entry of, or to have
vacated or terminated, any decree, order, or judgment that would
restrain, prevent or delay the consummation of the Merger or the
other transactions contemplated by this Agreement, including without
limitation defending through litigation on the merits any claim
asserted in any court by any party; and
(iii) take any and all steps which, in such party's judgment, are
commercially reasonable to avoid or eliminate each and every
impediment under any antitrust, competition, or trade regulation Law
that may be asserted by any Governmental Entity with respect to the
Merger or the other transactions contemplated by this Agreement so as
to enable consummation thereof to occur as soon as reasonably
possible.
Each party hereto shall promptly notify the other party of any communication
to that party from any Governmental Entity and permit the other party to review
in advance any proposed communication to any Governmental Entity. MergeCo and
the Company shall not (and shall cause their respective affiliates and
representatives not to) agree to participate in any meeting with any
Governmental Entity in respect of any filings, investigation or other inquiry
unless it consults with the other party in advance and, to the extent permitted
by such Governmental Entity, give the other party the opportunity to attend and
participate therein. Subject to the Confidentiality Agreement, each party hereto
shall coordinate and cooperate fully with the other party hereto in exchanging
such information and providing such assistance as such other party may
reasonably request in connection with the foregoing and in seeking early
termination of any applicable waiting periods under the HSR Act or in connection
with other Consents. Each of the Company and ▇▇▇▇▇▇▇ agrees to respond promptly
to and comply fully with any request for additional information or documents
under the HSR Act. Subject to the Confidentiality Agreement, the Company shall
provide MergeCo, and MergeCo shall provide the Company, with copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between such party or any of its representatives, on the one
hand, and any Governmental Entity or members of its staff, on the other hand,
with respect to this Agreement and the transactions contemplated hereby.
(c) MergeCo shall use its best efforts to cause the financing necessary for
satisfaction of the condition in Section 6.02(d) to be obtained on the terms set
forth in the commitment letters attached as Schedule 6.02(d); PROVIDED, HOWEVER,
THAT MergeCo shall be entitled to:
(i) enter into commitments for equity and debt financing with other
nationally recognized financial institutions, which commitments will
have substantially the same terms as those set forth in the
commitment letters and which commitments may be substituted for such
commitment letters, and
(ii) modify the capital structure set forth in such commitment letters so
long as:
(A) the total committed common equity equals at least $457,584,138
(including (1) the Retained Shares, (2) the portion of any
Options which at the time of the Merger is exchanged for, or
converted into, direct or indirect equity interests, which will
remain outstanding after the Effective Time, of the Company or
its Subsidiaries (including
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Columbine JDS Systems, Inc., whether or not Columbine JDS
Systems, Inc. is sold pursuant to Section 5.14), (3) the funds
utilized by MergeCo or its affiliates with respect to the
transactions contemplated by Sections 5.14 and 5.15),
(B) the aggregate Cash Consideration paid to all stockholders of the
Company is no less than otherwise would have been paid in
accordance with this Agreement, and
(C) such modified financing is no less certain than that set forth in
such commitment letter.
(d) Unless otherwise agreed to by the parties hereto, MergeCo shall obtain
such additional debt financing commitments, or shall provide such additional
equity commitment, as is necessary to obtain commitments for any increased
financing required as a result of any acquisition by the Company and its
Subsidiaries approved by MergeCo pursuant to Section 5.01(i).
(e) Each of the Company and MergeCo agrees to use its best efforts to
promptly hold the Special Meeting (as defined in Section 5.12) and to close the
Merger promptly after the receipt of the Company Stockholder Approval; PROVIDED
THAT this obligation shall not require any party to waive any condition under
Article VI.
SECTION 5.04 PUBLIC ANNOUNCEMENTS. The Company and MergeCo:
(a) agree to consult promptly with each other prior to issuing any press
release or otherwise making any public statement with respect to the Merger and
the other transactions contemplated hereby,
(b) agree to provide to the other party for review a copy of any such press
release or statement, and
(c) shall not issue any such press release or make any such public statement
prior to such consultation and review, unless required by applicable Law or any
listing agreement with a securities exchange.
SECTION 5.05 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time, MergeCo shall and shall cause the
Surviving Corporation to indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of the Company and its
Subsidiaries (the "INDEMNIFIED PARTIES") against all losses, claims, damages,
expenses or liabilities arising out of or related to actions or omissions or
alleged actions or omissions occurring at or prior to the Effective Time:
(i) to the full extent permitted by the DGCL or,
(ii) if the protections afforded thereby to an Indemnified Party are
greater, to the same extent and on the same terms and conditions
(including with respect to advancement of expenses) provided for in
the Company's certificate of incorporation and by-laws and agreements
in effect at the date hereof (to the extent consistent with
applicable Law), which provisions will survive the Merger and
continue in full force and effect after the Effective Time.
Without limiting the foregoing:
(i) MergeCo shall and shall cause the Surviving Corporation to
periodically advance expenses (including attorney's fees) as incurred
by an Indemnified Party with respect to the foregoing to the full
extent permitted under applicable Law, and
(ii) any determination required to be made with respect to whether an
Indemnified Party shall be entitled to indemnification shall, if
requested by such Indemnified Party, be made
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by independent legal counsel selected by the Surviving Corporation
and reasonably satisfactory to such Indemnified Party.
(b) ▇▇▇▇▇▇▇ agrees that the Company, and, from and after the Effective Time,
the Surviving Corporation, shall cause to be maintained in effect for not less
than six years from the Effective Time the current policies of the directors'
and officers' liability insurance maintained by the Company subject to the
following:
(i) the Surviving Corporation may substitute therefor other policies of
at least the same coverage amounts and which are underwritten by
insurers of at least equal claims paying ratings and which contain
terms and conditions not less advantageous to the beneficiaries of
the current policies; PROVIDED, THAT such substitution shall not
result in any gaps or lapses in coverage with respect to matters
occurring prior to the Effective Time; and
(ii) the Surviving Corporation shall not be required to pay an annual
premium in excess of 250% of the last annual premium paid by the
Company prior to the date hereof and if the Surviving Corporation is
unable to obtain the insurance required by this Section 5.05(b) it
shall obtain as much comparable insurance as possible for an annual
premium equal to such maximum amount; and
(iii) MergeCo and the Surviving Corporation shall be entitled to purchase
and maintain tail insurance coverage for such six year period, which
insurance coverage shall comply with the coverage amount requirement,
and the other requirements, of Section 5.05(b)(i), and the purchase
and maintenance of such tail insurance coverage by MergeCo or the
Surviving Corporation, as the case may be, shall be deemed to fulfill
MergeCo's and the Surviving Corporation's obligations under this
Section 5.05(b).
(c) This Section 5.05 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation
and the Indemnified Parties, shall be binding on all successors and assigns of
MergeCo and the Surviving Corporation, and shall be enforceable by the
Indemnified Parties.
SECTION 5.06 NOTIFICATION OF CERTAIN MATTERS. MergeCo and the Company shall
promptly notify each other of:
(a) the occurrence or non-occurrence of any fact or event which would be
reasonably likely:
(i) to cause any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect at any time from
the date hereof to the Effective Time, or
(ii) to cause any covenant, condition or agreement under this Agreement
not to be complied with or satisfied, and
(b) any failure of the Company, or MergeCo, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder;
PROVIDED, HOWEVER, THAT no such notification shall affect the
representations or warranties of any party or the conditions to the obligations
of any party hereunder. Each of the Company and MergeCo shall give prompt notice
to the other of any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement.
SECTION 5.07 RIGHTS AGREEMENT. Subject to the provisions of Section 3.17,
the Company covenants and agrees that it shall not (i) redeem the Rights prior
to the Effective Time, (ii) amend the Rights Agreement, or (iii) take any action
which would allow any Person (as defined in the Rights Agreement) other than
MergeCo to acquire beneficial ownership of 15% or more of the Common
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Shares without causing a "Distribution Date," a "Triggering Event" or a "Stock
Acquisition Date" (as each term is defined in the Rights Agreement) to occur.
Notwithstanding the foregoing, the Company may take any of the actions described
in the preceding sentence, if the Company Board determines in good faith, after
consultation with counsel, that taking such action is necessary for the Company
Board to comply with its fiduciary duties to stockholders under applicable Law.
SECTION 5.08 STATE TAKEOVER LAWS. The Company shall, upon the request of
▇▇▇▇▇▇▇, take all reasonable steps to assist in any challenge by MergeCo to the
validity or applicability to the transactions contemplated by this Agreement,
including the Merger, of any state takeover Law.
SECTION 5.09 NO SOLICITATION.
(a) From and after the date hereof until the termination of this Agreement,
the Company and its Subsidiaries (x) shall not, (y) shall use their best efforts
to cause their respective affiliates not to, and (z) shall instruct their
respective officers, directors, employees, agents or other representatives
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or its Subsidiaries) (the "REPRESENTATIVES") not to:
(i) directly or indirectly solicit, initiate, or encourage (including by
way of furnishing nonpublic information or assistance), or take any
other action to facilitate, any inquiries or proposals from any
person that constitute, or may reasonably be expected to lead to, an
acquisition, purchase, merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction
involving 15% or more of the assets or any securities of, any merger
consolidation or business combination with, or any public
announcement of a proposal, plan, or intention to do any of the
foregoing by, the Company or any of its Subsidiaries (such
transactions being referred to herein as "ACQUISITION TRANSACTIONS"),
(ii) enter into, maintain, or continue discussions or negotiations with
any person in furtherance of such inquiries or to obtain a proposal
for an Acquisition Transaction,
(iii) agree to or endorse any proposal for an Acquisition Transition, or
(iv) authorize or permit the Company's or any of its affiliates'
Representatives to take any such action.
Notwithstanding the foregoing, nothing in this Agreement shall prohibit the
Company Board from:
(A) furnishing information to, and engaging in discussions or
negotiations with, any Person (an "OFFEROR") that makes an
unsolicited and written Bona Fide Proposal (as defined below) to
acquire the Company and/or its Subsidiaries pursuant to a merger,
consolidation, share exchange, tender offer or other similar
transaction, but only to the extent that independent legal
counsel (who may be the Company's regularly engaged outside legal
counsel) advises the Company Board in good faith that furnishing
such information to, or engaging in such discussions or
negotiations with, such Offeror is necessary for the Company
Board to comply with its fiduciary duties to stockholders under
applicable Law; PROVIDED, THAT prior to taking such action, the
Company Board notifies MergeCo of its intentions and obtains an
executed confidentiality agreement from the Offeror and such
other appropriate parties substantially similar to the
Confidentiality Agreement (other than with respect to the
standstill provisions of the Confidentiality Agreement in a
situation where the Offeror has commenced a tender offer to
acquire at least 15% or more of the Common Shares prior to the
date of the furnishing of information, and the discussions or
negotiations, referenced above),
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(B) failing to make or withdrawing or modifying its recommendation
referred to in Section 5.12 if the Company Board, after
consultation with and based upon the advice of independent legal
counsel (who may be the Company's regularly engaged outside legal
counsel), determines in good faith that such action is necessary
for the Company Board to comply with its fiduciary duties to
stockholders under applicable Law, and
(C) disclosing to the Company's shareholders a position contemplated
by Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
respect to any tender offer, or taking any other legally required
action (including, without limitation, the making of public
disclosure as may be necessary or advisable under applicable
securities Laws); and
PROVIDED, FURTHER, THAT the Company's or the Company Board's exercise of its
rights under clause (A), (B) or (C) above shall not constitute a breach by the
Company of this Agreement. For the purposes of this Agreement, "BONA FIDE
PROPOSAL" means a proposal which the Company Board determines in good faith, and
after receipt and consideration of advice from its legal and financial advisors,
is reasonably capable of being consummated by the Person making the proposal,
taking into account regulatory, legal, financial and other relevant matters.
(b) The Company shall promptly notify MergeCo of the receipt of any proposal
for an Acquisition Transaction, the terms and conditions of such proposal and
the identity of the person making it. The Company also shall promptly notify
MergeCo of any change to or modification of such proposal for an Acquisition
Transaction and the terms and conditions thereof.
(c) The Company shall immediately cease and cause its affiliates and its and
their Representatives to cease any and all existing activities, discussions or
negotiations with any parties (other than MergeCo) conducted heretofore with
respect to any of the matters set forth in Section 5.09(a)(i) to (iv) and shall
use its reasonable best efforts to cause any such parties in possession of
confidential information about the Company that was furnished by or on behalf of
the Company to return or destroy all such information in the possession of any
such party (other than MergeCo or its affiliates) or in the possession of any
Representative of any such party.
SECTION 5.10 ISRA REQUIREMENTS. Prior to the Effective Time, the Company
shall commence compliance with the requirements of ISRA applicable to this
transaction by submitting all required filings for each property subject to ISRA
in order to obtain authorizations that will allow the transactions contemplated
by this Agreement to be effected pursuant to N.J.S.A. 13:1K-11.2 or pursuant to
N.J.S.A. 13:1K-11.5, as the case may be. If the Company is unable to obtain an
ISRA authorization for any property subject to ISRA prior to the Effective Time,
then the Company shall seek a letter of non-applicability (a "LNA") if, in the
reasonable judgment of MergeCo and the Company, there is a reasonable
probability of obtaining a LNA in order to effect the transactions contemplated
by this Agreement according to the time schedule desired by MergeCo and the
Company. If it is determined not to seek a LNA, or an application to seek a LNA
is denied, then the Company shall obtain a Remediation Agreement with respect to
such property or properties in order to allow the transactions contemplated by
this Agreement to be effected. The Company shall consult with MergeCo with
respect to its ISRA filings and strategy, including allowing MergeCo to comment
on such filings, and shall provide copies of all correspondence to and from the
DEP with respect to ISRA compliance. MergeCo shall cooperate with the Company in
connection with the ISRA applications and filings by the Company relating to
approval and allow the transactions contemplated by this Agreement to be
effected in a timely manner, including, without limitation, signing any
documents reasonably requested by the Company and providing any information
within the possession, custody or control of MergeCo.
SECTION 5.11 REPORTS. During the period from the date of this Agreement to
the Effective Time, the Company shall provide MergeCo with monthly financial
statements (balance sheet, cash flow
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statement, income statement and, if available, notes thereto), broken out by
operating unit (except as to the cash flow statement, which shall be a
consolidated statement), no later than the fifteenth business day following the
end of each calendar month following the date of this Agreement; PROVIDED, THAT
for calendar months that are also the end of a calendar quarter, the Company may
provide such financial information to MergeCo on the same date such information
is publicly released in accordance with the past practice of the Company.
SECTION 5.12 STOCKHOLDERS' MEETING.
(a) The Company, acting through the Company Board, shall, in accordance with
applicable Law:
(i) duly call, give notice of, convene and hold a special meeting of its
stockholders (the "SPECIAL MEETING") as soon as practicable following
the execution of this Agreement for the purpose of considering and
taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy statement relating
to this Agreement, and use its best efforts:
(A) to obtain and furnish the information required to be included by
the SEC in a definitive proxy statement (the "PROXY STATEMENT")
and, after consultation with MergeCo, to respond promptly to any
comments made by the SEC with respect to the preliminary Proxy
Statement and cause the Proxy Statement to be mailed to its
stockholders, and
(B) to obtain the necessary approvals of the Merger and this
Agreement by its stockholders; and
(iii) subject to the fiduciary duties of the Company Board as provided in
Section 5.09, the Company Board shall declare that this Agreement is
advisable and recommend that the Agreement and the transactions
contemplated hereby be approved and adopted by the stockholders of
the Company and include in the Proxy Statement a copy of such
recommendations; PROVIDED, HOWEVER, THAT the Company Board shall, if
requested to do so in writing by MergeCo, submit this Agreement to
the Company's stockholders whether or not the Company Board
determines at any time subsequent to declaring its advisability that
this Agreement is no longer advisable and recommends that the
stockholders of the Company reject it.
(b) Unless the Company Board has withdrawn its recommendation of this
Agreement in compliance with Section 5.09, the Company shall use its best
efforts to solicit from stockholders of the Company proxies in favor of the
Merger and shall use its best efforts to take all other action necessary or
advisable to secure the vote or consent of stockholders required by the DGCL to
effect the Merger.
(c) The Company represents that the Proxy Statement will comply in all
material respects with the provisions of applicable federal securities Laws
except that no representation is made by the Company with respect to information
supplied by MergeCo or its affiliates for inclusion in the Proxy Statement. Each
of the Company, on the one hand, and MergeCo, on the other hand, agree promptly
to correct any information provided by either of them for use in the Proxy
Statement if and to the extent that it shall have become false or misleading,
and the Company further agrees to take all steps necessary to cause the Proxy
Statement as so corrected to be filed with the SEC and to be disseminated to the
holders of Shares, in each case, as and to the extent required by applicable
federal securities Laws.
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SECTION 5.13 EMPLOYEE BENEFIT ARRANGEMENTS.
(a) MergeCo agrees that the Company shall honor, and, from and after the
Effective Time, MergeCo shall cause the Surviving Corporation to honor, in
accordance with their respective terms as in effect on the date hereof, the
employment, severance and bonus arrangements to which the Company is a party and
which have been previously disclosed in writing to MergeCo or its affiliates.
(b) MergeCo agrees that for a period of two years following the Effective
Time, the Surviving Corporation shall continue the (i) compensation (including
bonus and incentive awards) programs and plans, and (ii) employee benefit and
welfare plans, programs, contracts, agreements and policies (including insurance
and pension plans), fringe benefits and vacation policies, which are currently
provided by the Company; PROVIDED, THAT notwithstanding anything in this
Agreement to the contrary the Surviving Corporation shall not be required to
maintain any individual plan or program so long as the benefit plan and
agreements maintained by the Surviving Corporation are, in the aggregate, not
materially less favorable than those provided by the Company immediately prior
to the date of this Agreement, and; PROVIDED, FURTHER, THAT this provision shall
terminate with respect to the participation in any plans or programs by
employees of any business transferred to any third party after the Effective
Time.
SECTION 5.14 ACQUISITION OF COLUMBINE JDS SYSTEMS. The Company agrees to
cause Big Flower Digital Services, Inc. to transfer all the outstanding shares
of Columbine JDS Systems, Inc., a Delaware corporation and an indirect
wholly-owned subsidiary of the Company (which shares the Company represents and
warrants to MergeCo are currently owned as of record by Big Flower Digital
Services, Inc.) on substantially the terms and conditions set forth on Schedule
5.14. Prior to the Merger, the Company shall, and shall cause Big Flower Digital
Services, Inc. to, enter into on a prompt basis any agreements (including a
stock purchase agreement) which MergeCo reasonably requests such party to enter
into with respect to the transactions contemplated in this Section 5.14 and
Schedule 5.14; PROVIDED THAT no such agreement shall result in any cost or
liability to the Company or any of its Subsidiaries if the Merger is not
effected or result in any delay in the Effective Time. The Company agrees to
amend the terms and conditions set forth in Schedule 5.14 in any manner
reasonably requested by MergeCo; PROVIDED THAT no such amendment shall result in
any cost or liability to the Company or any of its Subsidiaries if the Merger is
not effected or result in any delay in the Effective Time or otherwise makes
less likely the consummation of the Merger.
SECTION 5.15 TREATMENT OF CERTAIN INVESTMENTS. The Company and MergeCo
agree:
(a) that an affiliate of MergeCo shall purchase all of the investments in
the businesses set forth in Schedule 5.15(a) on the terms, and subject to the
conditions, set forth in Schedule 5.15(a), and that, prior to the Merger, the
Company shall, and shall cause the owner of the investments set forth in
Schedule 5.15(a) to, enter into on a prompt basis any agreements which MergeCo
reasonably requests such party to enter into with respect to the transactions
contemplated in this Section 5.15(a) and Schedule 5.15(a), PROVIDED THAT no such
agreement shall result in any cost or liability to the Company or any of its
Subsidiaries if the Merger is not effected or result in any delay in the
Effective Time or otherwise makes less likely the consummation of the Merger,
(b) to effect the transactions contemplated in Schedule 5.15(b) on the terms
and subject to the conditions set forth in Schedule 5.15(b), and, prior to the
Merger, the Company shall, and shall cause the owner of the investments set
forth in Schedule 5.15(b) to, enter into on a prompt basis any agreements which
MergeCo reasonably requests such party to enter into with respect to the
transactions contemplated in this Section 5.15(b) and Schedule 5.15(b); PROVIDED
THAT no such agreement shall result in any cost or liability to the Company or
any of its Subsidiaries if the Merger is not effected or result in any delay in
the Effective Time or otherwise make less likely the consummation of the Merger,
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(c) to amend the terms and conditions set forth in Schedules 5.15(a) and (b)
in any manner reasonably requested by MergeCo; PROVIDED THAT no such amendment
shall result in any cost or liability to the Company or any of its Subsidiaries
if the Merger is not effected or result in any delay in the Effective Time or
otherwise make less likely the consummation of the Merger,
(d) that, if reasonably requested by MergeCo, the Company shall take
commercially reasonable actions to implement an Investment Instrument at the
Effective Time, the terms of which shall be established by MergeCo, PROVIDED
THAT no such Investment Instrument shall result in any cost or liability to the
Company or any of its Subsidiaries if the Merger is not effected or result in
any delay in the Effective Time or otherwise make less likely the consummation
of the Merger.
An "INVESTMENT INSTRUMENT" shall mean such securities, instruments or
arrangements which replace a portion of the equity commitment set forth in
Schedule 6.02(d) by means of (x) redeemable stock, (y) prepaid forward
contracts, or (z) some other securities, instruments or arrangements, including,
without limitation, arrangements which include the establishment of an entity or
entities to be funded by (1) a cash contribution or contributions by MergeCo or
any of its affiliates and (2) subject to the Company's existing agreements, a
contribution or contributions by the Company of assets identified by MergeCo, in
each case in exchange for equity interests in such entity or entities.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.01 CONDITIONS. The respective obligations of MergeCo and the
Company to consummate the Merger are subject to the satisfaction, at or before
the Effective Time, of each of the following conditions:
(a) STOCKHOLDER APPROVAL. The stockholders of the Company shall have duly
approved this Agreement and transactions contemplated by this Agreement.
(b) SOLVENCY LETTERS. Each of the Company Board and the Board of Directors
of MergeCo shall have received a solvency letter, in form and substance and from
an independent evaluation firm reasonably satisfactory to each such board, as to
the solvency of each of: (i) the Company, (ii) Big Flower Press Holdings, Inc.,
(iii) Big Flower Digital Services, Inc. and (iv) any other Subsidiary which the
Company or MergeCo reasonably requests the solvency letter to address, and each
of such companies' respective Subsidiaries on a consolidated basis, after giving
effect to the transactions contemplated by this Agreement, including all
financings contemplated hereby.
(c) ORDERS AND INJUNCTIONS. No order shall have been entered in any action
or proceeding before any United States federal or state court or governmental
agency or other United States regulatory or administrative agency or commission
(an "ORDER"), or a preliminary or permanent injunction by a United States court
of competent jurisdiction shall have been issued and remain in effect (an
"INJUNCTION"), which, in either case, would have the effect of (i) preventing
consummation of the Merger, or (ii) imposing material limitations on the ability
of MergeCo effectively to acquire or hold the business of the Company and its
Subsidiaries taken as a whole or to exercise full rights of ownership of the
Common Shares acquired by it; PROVIDED, HOWEVER, THAT in order to invoke this
condition, MergeCo shall have used in its good faith judgment, its commercially
reasonable best efforts to prevent such Order or Injunction or ameliorate the
effects thereof.
(d) ILLEGALITY. There shall not have been any United States federal or state
statute, rule or regulation enacted or promulgated after the date of this
Agreement that could, in the reasonable judgment of MergeCo, result in any of
the adverse consequences referred to in Section 6.01(c).
(e) HSR ACT. Any waiting period (and any extension thereof) under the HSR
Act applicable to the Merger shall have expired or terminated.
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SECTION 6.02 CONDITIONS TO OBLIGATIONS OF MERGECO. The obligations of
MergeCo to effect the Merger are further subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company set forth in this Agreement shall be true and correct in all
respects in each case as of the date of this Agreement and as of the Effective
Time as though made on and as of the Effective Time; PROVIDED, HOWEVER, THAT,
with respect to representations and warranties other than Sections 3.02 and
3.03(a) and representations and warranties otherwise qualified by Material
Adverse Effect, for purposes of this Section 6.02(a), such representations and
warranties and statements shall be deemed to be true and correct in all respects
unless the failure or failures of such representations and warranties and
statements to be so true and correct, individually or in the aggregate, would
result in a Material Adverse Effect on the Company. ▇▇▇▇▇▇▇ shall have received
a certificate signed on behalf of the Company by its Executive Vice
President--Office of the Chairman, or such other executive officer of the
Company reasonably satisfactory to MergeCo to the effect set forth in this
paragraph.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed the obligations required to be performed by it under this Agreement at
or prior to the Effective Time, except for such failures to perform as have not
had or would not, individually or in the aggregate, have a Material Adverse
Effect with respect to the Company or materially adversely affect the ability of
the Company to consummate the transactions contemplated hereby.
(c) NO LITIGATION. There shall not be pending by any Governmental Entity any
suit, action or proceeding (or by any other person any suit, action or
proceeding which has a reasonable likelihood of success):
(i) challenging or seeking to restrain or prohibit the consummation of
the Merger or any of the other transactions contemplated by this
Agreement or seeking to obtain from MergeCo, the Company or any of
their affiliates any damages that would have a Material Adverse
Effect on the Company,
(ii) seeking to prohibit or limit the ownership or operation by the
Company or any of its Subsidiaries of any material portion of the
business or assets of the Company or any of its Subsidiaries, taken
as a whole, to dispose of or hold separate any material portion of
the business or assets of the Company or any of its Subsidiaries
taken as a whole, as a result of the Merger or any of the other
transactions contemplated by this Agreement, or
(iii) seeking to impose limitations on the ability of MergeCo (or any
designee of MergeCo), to acquire or hold, or exercise full rights of
ownership of, any Common Shares, including, without limitation, the
right to vote Common Shares on all matters properly presented to the
stockholders of the Company.
(d) FINANCING. The Company, its Subsidiaries and MergeCo shall have received
the proceeds of financing pursuant to the commitment letters set forth on
Schedule 6.02(d) on terms and conditions set forth therein (or, as modified in
accordance with Section 5.03(c), on such other terms and conditions, or
involving such other financing sources, as MergeCo and the Company shall
reasonably agree and are not materially more onerous) in amounts sufficient to
consummate the transactions contemplated by this Agreement, including, without
limitation:
(i) to pay, with respect to all Exchanged Shares, the Cash Consideration
pursuant to Section 2.01(c),
(ii) to pay, with respect to all Exchanged Options, the Exchanged Option
Merger Consideration pursuant to Section 2.02, and to make any cash
payments required as a result of a treatment of Options pursuant to
Section 2.03(c) requiring such payments,
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(iii) to refinance the outstanding indebtedness of the Company (other
than that indebtedness which the commitment letters set forth in
Schedule 6.02(d) contemplate will remain outstanding),
(iv) to pay any fees and expenses in connection with the transactions
contemplated by this Agreement or the financing thereof, and
(v) to provide for the working capital needs of the Company following the
Merger.
(e) TOTAL FUNDED INDEBTEDNESS. MergeCo shall be reasonably satisfied that
the total funded indebtedness of the Company on a consolidated basis immediately
prior to the Effective Time (including the current portion of indebtedness but
net of (i) cash, (ii) cash equivalents and (iii) indebtedness in respect of the
QUIPS) is less than an amount equal to $1,028 million (being the $970 million
set forth in Section 6.02(f) of the Original Agreement plus $58 million relating
to indebtedness incurred in consummating certain acquisitions permitted by
Section 5.01(i) between the date of the Original Agreement and the date of this
Agreement) plus indebtedness incurred in consummating subsequent to the date of
this Agreement the acquisitions permitted by Section 5.01(i) which have not
closed prior to the date of this Agreement.
SECTION 6.03 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to effect the Merger is further subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
MergeCo set forth in this Agreement shall be true and correct in all respects,
in each case as of the date of this Agreement and as of the Effective Time as
though made on and as of the Effective Time; PROVIDED, THAT for purposes of this
Section 6.03(a), with respect to representations and warranties other than
Section 3.02(a) and the representations and warranties otherwise qualified by
Material Adverse Effect, such representations and warranties shall be deemed to
be true and correct in all respects unless the failure or failures of such
representations and warranties to be so true and correct, individually or in the
aggregate, would result in a Material Adverse Effect on MergeCo. The Company
shall have received certificates signed on behalf of MergeCo, by an authorized
officer of MergeCo, to the effect set forth in this paragraph.
(b) PERFORMANCE OF OBLIGATIONS OF MERGECO. MergeCo shall have performed the
obligations required to be performed by it under this Agreement at or prior to
the Effective Time, except for such failures to perform as have not had or could
not reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect on MergeCo or adversely affect the ability of MergeCo to
consummate the transactions herein contemplated or perform its obligations
hereunder.
ARTICLE VII
TERMINATION; AMENDMENTS; WAIVER
SECTION 7.01 TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company:
(a) by the mutual written consent of ▇▇▇▇▇▇▇ and the Company, by action of
their respective Boards of Directors;
(b) by MergeCo or the Company if the Merger shall not have been consummated
on or before the Termination Date (as defined below) and; PROVIDED, THAT neither
MergeCo nor the Company may terminate this Agreement pursuant to this Section
7.01(b) if such party shall have materially breached this Agreement;
(c) by MergeCo or the Company if any court of competent jurisdiction in the
United States or other United States Governmental Entity has issued an order,
decree or ruling or taken any other
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action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable;
PROVIDED, HOWEVER, THAT the party seeking to terminate this Agreement shall have
used its reasonable best efforts to remove or lift such order, decree, ruling or
other action;
(d) by the Company if, prior to the Effective Time, any Person has made a
Bona Fide Proposal relating to an Acquisition Transaction, or has commenced a
tender or exchange offer for the Common Shares, and the Company Board determines
in good faith (i) after consultation with its financial advisors, that such
transaction constitutes a superior offer from a financial point of view to the
offer constituted by this Agreement and (ii) after consultation with counsel,
that the approval of such Bona Fide Proposal and termination of this Agreement
is necessary for the Company Board to comply with its fiduciary duties to the
Company's stockholders under applicable Law; PROVIDED, HOWEVER, THAT
notwithstanding anything in this Agreement to the contrary, the termination of
this Agreement by the Company in compliance with this Section 7.01(d) shall not
be deemed to violate any other obligations of the Company under this Agreement;
(e) by MergeCo if (i) the Company breaches its covenant in Section 5.07, or
(ii) takes an action pursuant to the second sentence of Section 5.07;
(f) by MergeCo, if the Company Board shall have (i) failed to recommend to
the stockholders of the Company that they give the Company Stockholder Approval,
(ii) withdrawn or modified in a manner adverse to MergeCo its approval or
recommendation of this Agreement or the Merger, (iii) shall have approved or
recommended an Acquisition Transaction (other than the Acquisition Transaction
contemplated by this Agreement), (iv) shall have resolved to effect any of the
foregoing or (v) shall have otherwise taken steps to impede the Company
Stockholder Approval;
(g) by either MergeCo or the Company, 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 a duly held meeting of stockholders or at any
adjournment thereof;
(h) by MergeCo, upon a material breach of any covenant or agreement on the
part of the Company set forth in this Agreement, or if any representation or
warranty of the Company hereunder shall become untrue or inaccurate, in any case
such that the conditions set forth in Section 6.02(a) or Section 6.02(b) would
not be satisfied (a "TERMINATING COMPANY BREACH"); PROVIDED, THAT if such
Terminating Company Breach is curable by the Company through the exercise of its
reasonable efforts, and the Company continues to exercise such reasonable
efforts, MergeCo may not terminate this Agreement under this Section 7.01(h) if
such Terminating Company Breach has been cured prior to the Termination Date; or
(i) by the Company, upon material breach of any covenant or agreement on the
part of MergeCo set forth in this Agreement, or if any representation or
warranty of MergeCo shall be or become untrue or inaccurate, in any case such
that the conditions set forth in Section 6.03(a) or Section 6.03(b) would not be
satisfied (a "TERMINATING MERGECO BREACH"); PROVIDED, THAT if such Terminating
MergeCo Breach is curable by MergeCo through the exercise of its reasonable
efforts, the Company may not terminate this Agreement under this Section 7.01(i)
if such Terminating MergeCo Breach has been cured prior to the Termination Date.
"TERMINATION DATE" shall mean the later of (i) October 31, 1999 and (ii) the
date determined by adding to October 31, 1999 the number of days after September
1, 1999 that the Proxy Statement is first mailed to stockholders; PROVIDED,
HOWEVER, THAT the Termination Date shall not be later than December 31, 1999.
SECTION 7.02 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 7.01, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions of the last
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sentence of Section 5.02 and the provisions of this Section 7.02 and Section
7.03, which shall survive any such termination. Nothing contained in this
Section 7.02 shall relieve any party from liability for any breach of this
Agreement.
SECTION 7.03 FEES AND EXPENSES.
(a) If this Agreement is terminated for any reason other than a material
breach by MergeCo, and the Company has not paid previously to MergeCo the
Termination Fee in accordance with Section 7.03(b), the Company shall promptly
reimburse THL, Evercore and MergeCo, as the case may be, collectively, an
aggregate amount of up to $10 million, for out-of-pocket expenses and fees
(including, without limitation, expenses payable to all banks, investment
banking firms and other financial institutions, (which shall include, without
limitation, fees and expenses of such banks', firms' and institutions' legal
counsel), and all fees and expenses of counsel, accountants, financial printers,
experts and consultants to THL, Evercore and their affiliates), whether incurred
prior to, on or after the date hereof, in connection with the Merger and the
consummation of all transactions contemplated by this Agreement, and the
financing thereof; PROVIDED, THAT the Company shall be entitled to pay MergeCo
the total amount of such out-of-pocket expenses and fees and MergeCo shall be
obligated to forward to THL and Evercore the portion of such amount for
out-of-pocket expenses and fees owing to THL and Evercore in the circumstances.
Except as otherwise specifically provided for herein, whether or not the Merger
is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses.
(b) If:
(i) this Agreement is terminated pursuant to Section 7.01(d), (e)(i) or
(f), or
(ii) any Person (other than THL, Evercore or any of their affiliates)
shall have made, or proposed, communicated or disclosed in a manner
which is or otherwise becomes public a proposal for an Acquisition
Transaction prior to the Special Meeting, the Stockholder Approval
has not been obtained and, thereafter, this Agreement is terminated,
then the Company shall promptly pay MergeCo a termination fee of $30 million
(the "TERMINATION FEE"), less amounts paid under Section 7.03(a); PROVIDED, THAT
if this Agreement is terminated pursuant to Section 7.01(g) in a situation other
than that set forth in Section 7.03(b)(ii), then the Company shall promptly pay
MergeCo the Termination Fee, but such Termination Fee shall be $10 million, and
such amount shall be credited against any expense reimbursement payable pursuant
to Section 7.03(a); PROVIDED, FURTHER, THAT in no event shall more than one
Termination Fee be payable by the Company under this Section 7.03, and;
PROVIDED, FURTHER, THAT MergeCo shall be obligated to forward to THL and
Evercore that share of such Termination Fee owing to THL and Evercore in the
circumstances.
SECTION 7.04 AMENDMENT. This Agreement may be amended by the Company and
MergeCo at any time before or after any approval of this Agreement by the
stockholders of the Company but, after any such approval, no amendment shall be
made which decreases the Merger Consideration or which adversely affects the
rights of the Company's stockholders hereunder without the approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of all the parties.
SECTION 7.05 EXTENSION; WAIVER. At any time prior to the Effective Time,
MergeCo, on the one hand, and the Company, on the other hand, may, subject to
applicable Law, (i) extend the time for the performance of any of the
obligations or other acts of the other, (ii) waive any inaccuracies in the
representations and warranties contained herein of the other or in any document,
certificate or writing delivered pursuant hereto by the other or (iii) waive
compliance by the other with any of the agreements or conditions. Any agreement
on the part of any party to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Article II, the last sentence of Section 5.02, Section 5.05 and Section 5.13
shall survive the Effective Time indefinitely (except to the extent a shorter
period of time is explicitly specified therein).
SECTION 8.02 ENTIRE AGREEMENT; ASSIGNMENT.
(a) This Agreement (including the documents and the instruments referred to
herein) and the Confidentiality Agreement constitute the entire agreement and
supersede all prior agreements (including, without limitation, the Original
Agreement, as amended) and understandings, both written and oral, among the
parties with respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any of the parties hereto (whether by operation of
Law or otherwise) without the prior written consent of the other party (except
that MergeCo may assign its rights, interest and obligations to any affiliate or
direct or indirect subsidiary of MergeCo without the consent of the Company;
PROVIDED, THAT such assignee is an affiliate of THL and no such assignment shall
relieve MergeCo of any liability for any breach by such assignee). Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
SECTION 8.03 VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
SECTION 8.04 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to MergeCo:
c/o ▇▇▇▇▇▇ ▇. ▇▇▇ Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
A-45
with a copy to:
Evercore Capital Partners LP.
▇▇ ▇▇▇▇ ▇▇(▇▇) ▇▇▇▇▇▇, ▇▇(▇▇) ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Big Flower Holdings, Inc.
▇ ▇▇▇▇ ▇▇(▇▇) ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
PROVIDED, THAT notice of any change of address shall be effective only upon
receipt thereof.
SECTION 8.05 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without
reference to principles of conflicts or choice of Laws, or any other Law that
would make the Laws of any jurisdiction other than the State of Delaware
applicable hereto.
SECTION 8.06 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 8.07 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 8.08 PARTIES IN INTEREST. Except with respect to Sections 2.01,
2.02, 2.03, 2.04, 5.05 and 5.13 (which are intended to be for the benefit of the
persons identified therein, and may be enforced by such persons), this Agreement
shall be binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
SECTION 8.09 CERTAIN DEFINITIONS. As used in this Agreement:
(a) the term "AFFILIATE", as applied to any person, shall mean any other
person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this Agreement, "CONTROL"
(including, with correlative meanings, the terms "CONTROLLING," "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH"), as applied to any person, means the
possession, directly or
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indirectly, of the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting securities, by
contract or otherwise;
(b) the term "LAWS" means all (A) constitutions, treaties, statutes, Laws
(including, but not limited to, the common Law), rules, regulations, ordinances,
executive orders or codes of any Governmental Entity, (B) Environmental Permits,
and (C) orders, decisions, injunctions, judgments, awards and decrees of any
Governmental Entity;
(c) the term "PERSON" or "PERSONS" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act); and
(d) the term "SUBSIDIARY" or "SUBSIDIARIES" means, with respect to MergeCo,
the Company or any other person, any corporation, partnership, joint venture or
other legal entity of which MergeCo, the Company or such other person, as the
case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, stock or other equity interests the holders of
which are generally entitled to more than 50% of the vote for the election of
the board of directors or other governing body of such corporation or other
legal entity or otherwise controls such corporation or other legal entity.
SECTION 8.10 SPECIFIC PERFORMANCE. The parties hereto 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 this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at Law or in equity.
IN WITNESS WHEREOF, each of the parties has caused this Amended and Restated
Agreement to be executed on its behalf by its respective officer thereunto duly
authorized, all as of the day and year first above written.
BIG FLOWER HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President--Office
of the Chairman
BFH MERGER CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board
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SCHEDULE 2.01(C)(II)
HOLDERS OF RETAINED SHARES
NAME RETAINED SHARES
-------------------------------------------------------- --------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.......................................... 2,000,000
Acquisition LLC, an entity to be formed pursuant to
Section 5.14 of the Agreement......................... 1 or more Shares constituting part of, and
correspondingly reducing, ▇▇. ▇▇▇▇▇'▇ 2,000,000 Retained
Shares, such Shares being obtained by Acquisition LLC
pursuant to Section 5.14 of the Agreement
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SCHEDULE 5.14
ACQUISITION OF COLUMBINE JDS SYSTEMS, INC.
NOTE: THE PROVISIONS OF SECTION 5.14 OF THE AMENDED AND RESTATED MERGER
AGREEMENT AND THIS SCHEDULE 5.14 SHALL CONSTITUTE A BINDING AGREEMENT TO
UNDERTAKE THE TRANSACTIONS CONTEMPLATED BY SUCH SECTION 5.14 AND THIS SCHEDULE
5.14 UNLESS DOING SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT PROVISIONS
(INCLUDING SECTIONS 4.12 AND 4.13) OF THE 8 5/8% AND THE 8 7/8% BOND INDENTURES
RELATING TO THE ENTERING INTO OF TRANSACTIONS OF THE TYPE CONTEMPLATED BY SUCH
SECTION 5.14 AND THIS SCHEDULE 5.14, IN WHICH CASE SUCH PROVISIONS SHALL
CONSTITUTE SUCH A BINDING AGREEMENT ONLY UPON COMPLIANCE WITH SUCH SECTIONS OF
THE 8 5/8% AND THE 8 7/8% BOND INDENTURES; PROVIDED THAT, IN SUCH EVENT, BIG
FLOWER AND MERGECO AGREE TO USE THEIR RESPECTIVE BEST EFFORTS TO CAUSE
COMPLIANCE WITH SUCH SECTIONS OF THE 8 5/8% AND THE 8 7/8% BOND INDENTURES ON A
PROMPT BASIS.
TRANSACTIONS: At or after the Effective Time, subject to satisfaction of
the conditions set forth below, the following shall occur:
1. Columbine JDS Systems, Inc. ("CJDS") will borrow $135
million (the "LOAN") as follows: $100 million in bank
financing, and $35 million in mezzanine financing from
▇▇▇▇▇▇ ▇. ▇▇▇ Equity Fund IV or its affiliate ("THL").
2. CJDS will dividend the proceeds of the Loan, minus $7
million, to its parent, Big Flower Digital Services, Inc.
("BIG FLOWER DIGITAL"), which will dividend these
proceeds to its parent, Big Flower Press Holdings, Inc.
("BFP"), which, if necessary, will dividend these
proceeds to Big Flower Holdings, Inc. ("BIG FLOWER").
3. Contributions will be made to an affiliate of MergeCo
("ACQUISITION LLC") in exchange for interests in
Acquisition LLC. Acquisition LLC will be organized by
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), and the members of Acquisition
LLC will be THL, Evercore Capital Partners, or its
affiliate ("EVERCORE"), and ▇▇▇▇▇. The contributions will
be in the form of (i) cash in an aggregate amount equal
to $37 million from THL and Evercore, and (ii) shares of
Big Flower common stock from ▇▇▇▇▇. THL will have in
excess of 50% of the voting and profits interest in
Acquisition LLC, subject to membership arrangements in
effect at the Effective Time among the members of
Acquisition LLC.
4. Acquisition LLC will form an entity ("ACQUISITION SUB
LLC"), which will receive contributions from Acquisition LLC
in the form of cash in an amount equal to $37 million. In
addition, Acquisition Sub LLC may receive additional
contributions from members of CJDS management in the form
of shares of Big Flower common stock.
5. Acquisition Sub LLC will form an entity ("HOLDCO"), and
will receive shares of HoldCo in exchange for cash in an
amount equal to $37 million. In addition, certain members
of management of CJDS may agree to cancel certain of
their options to purchase Big Flower common stock in
exchange for an
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unfunded, unsecured obligation of HoldCo to deliver
shares of HoldCo representing approximately 2% of the
aggregate outstanding HoldCo shares to such members of
CJDS management pursuant to a deferred compensation plan
or rabbi trust (the "PLAN/TRUST"). The interests of such
members of CJDS management in the Plan/Trust will be
fully vested.
6. HoldCo will purchase all the outstanding shares of CJDS
(the "SHARES") from Big Flower Digital for $37 million, and
Big Flower Digital will dividend these proceeds to BFP,
which, if necessary, will dividend these proceeds to Big
Flower.
TERMINATION: Right to purchase shares of CJDS will terminate upon
termination of Amended and Restated Merger Agreement.
CONDITIONS TO ACQUISITION: Standard conditions to the closing of this acquisition,
including the following conditions to purchasers'
obligations:
1. Satisfaction of all conditions under the Amended and
Restated Merger Agreement, and simultaneous or prior
occurrence of the Effective Time.
2. Compliance with all relevant provisions of the 8 5/8% and
the 8 7/8% bond indentures, including opinions from a
nationally-recognized financial advisor, and
determinations by the Big Flower board, as appropriate,
pursuant to Sections 4.12 and 4.13 of such indentures.
3. All necessary ▇▇▇▇-▇▇▇▇▇ filings shall have been made and
all other governmental and other consents and approvals
obtained.
4. No injunction or similar act of any government entity in
effect preventing the transaction.
5. Receipt of an opinion addressed to the Board of Directors
of Big Flower, from a nationally-recognized financial
advisor, in form and substance reasonably satisfactory to
such Board, that the purchase price for CJDS is fair to
Big Flower from a financial point of view.
DEFINED TERMS: Capitalized terms used but not defined in this term sheet
have the meanings given to them in the Amended and Restated
Merger Agreement (the "AMENDED AND RESTATED MERGER
AGREEMENT") between Big Flower and BFH Merger Corp. dated as
of October 11, 1999.
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SCHEDULE 5.15(A)
TREATMENT OF PRIVATE INTERNET INVESTMENTS
NOTE: THE PROVISIONS OF SECTION 5.15(A) OF THE AMENDED AND RESTATED MERGER
AGREEMENT AND THIS SCHEDULE 5.15(A) SHALL CONSTITUTE A BINDING AGREEMENT TO
UNDERTAKE THE TRANSACTIONS CONTEMPLATED BY SUCH SECTION 5.15(A) AND THIS
SCHEDULE 5.15(A) UNLESS DOING SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT
PROVISIONS (INCLUDING SECTIONS 4.12 AND 4.13) OF THE 8 5/8% AND THE 8 7/8% BOND
INDENTURES RELATING TO THE ENTERING INTO OF TRANSACTIONS OF THE TYPE
CONTEMPLATED BY SUCH SECTION 5.15(A) AND THIS SCHEDULE 5.15(A), IN WHICH CASE
SUCH PROVISIONS SHALL CONSTITUTE SUCH A BINDING AGREEMENT ONLY UPON COMPLIANCE
WITH SUCH SECTIONS OF THE 8 5/8% AND THE 8 7/8% BOND INDENTURES; PROVIDED THAT,
IN SUCH EVENT, BIG FLOWER AND MERGECO AGREE TO USE THEIR RESPECTIVE BEST EFFORTS
TO CAUSE COMPLIANCE WITH SUCH SECTIONS OF THE 8 5/8% AND THE 8 7/8% BOND
INDENTURES ON A PROMPT BASIS.
PURCHASE OF INVESTMENTS: At or after the Effective Time, subject to the conditions
set forth below, an Affiliate of MergeCo ("PURCHASER") shall
purchase the following (together, the "INVESTMENTS"):
(1) each of the investments in the businesses set forth on
the attached Exhibit A (the "CURRENT INVESTMENTS") from the
entity set forth on the attached Exhibit A which holds
such investment and which itself is owned directly or
indirectly by Big Flower, and
(2) each of the investments made by Big Flower and its
subsidiaries in non-public Internet businesses after the
date of the Amended and Restated Merger Agreement (the
"POST-SIGNING INVESTMENTS").
Each purchase of an Investment by Purchaser shall be a
separate and distinct purchase, and shall be subject to the
conditions set forth below. The purchases of a particular
Investment shall not be conditioned on the purchase of any
other Investment.
PURCHASE PRICE OF
INVESTMENTS: The purchase price of the Current Investments shall be as
set forth on Exhibit A. The purchase price for each
Post-Signing Investment made by Big Flower and its
subsidiaries shall be the price paid by Big Flower/its
subsidiary for such investment. Each holder of an Investment
will dividend the purchase price it receives to its parent,
with the intention of the parties being that such proceeds
shall be dividended up-stream to Big Flower Press Holdings,
Inc. ("BFP"), which, if necessary, will dividend these
proceeds to Big Flower.
CONDITIONS: The following shall be conditions to the acquisition of each
Investment:
1. Compliance with the transfer provisions of the agreements
relating to such Investment by which the entity holding
such Investment is bound.
2. Satisfaction of all conditions under the Amended and
Restated Merger Agreement, and simultaneous or prior
occurrence of the Effective Time.
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3. In respect of the Current Investments held by CJDS
Ventures, LLC and any Post-Signing Investment held by an
entity owned directly or indirectly by Big Flower Press
Holdings, Inc., compliance with all relevant provisions
of the 8 5/8% and the 8 7/8% bond indentures, including
opinions from a nationally-recognized financial advisor,
and determinations by the Big Flower board, as
appropriate, pursuant to Sections 4.12 and 4.13 of such
indentures.
4. All necessary ▇▇▇▇-▇▇▇▇▇ filings shall have been made and
all other governmental and other consents and approvals
obtained, including such consents and approvals to
transfer the Investments from the entities which hold the
Investments.
5. No injunction or similar act of any government entity in
effect preventing the acquisition.
6. Receipt of an opinion addressed to the Board of Directors
of Big Flower, from a nationally-recognized financial
advisor, in form and substance reasonably satisfactory to
such Board, that the purchase price for each Investment
is fair to Big Flower from a financial point of view.
CONSEQUENCES OF NO TRANSFER: Subject to the terms and conditions of the Amended and
Restated Merger Agreement, if the transfer of an Investment
cannot be effected as a result of the inability to obtain a
third party consent or approval, Big Flower shall ensure
that Purchaser receives the economic benefit it would have
received had the transfer of such Investment been completed
as intended by this Schedule 5.15(a).
CAPITALIZATION OF PURCHASER: MergeCo shall cause Purchaser to be capitalized with an
amount of cash or a demand note from a solvent entity equal
to at least 10% of the aggregate purchase prices for the
Current Investments.
CONTROL OF PURCHASER: Purchaser shall be controlled by THL.
DEFINED TERMS: Capitalized terms used but not defined in this term sheet
have the meanings given to them in the Amended and Restated
Merger Agreement (the "AMENDED AND RESTATED MERGER
AGREEMENT") between Big Flower Holdings, Inc. ("BIG FLOWER")
and BFH Merger Corp. dated as of October 11, 1999.
A-52
EXHIBIT A--INVESTMENTS
NAME OF COMPANY IN NAME OF ENTITY
WHICH INVESTMENT WHICH HOLDS NATURE OF INVESTMENT, AND (IF
HAS BEEN MADE INVESTMENT APPLICABLE) NUMBER OF SHARES COST OF INVESTMENT PURCHASE PRICE
------------------------------ --------------------- ---------------------------------- ------------------ --------------
Dawntreader Fund I, LP XL Ventures, LLC 1 partnership unit $250,000 100% of cost
Nutel Corp. XL Ventures, LLC A convertible bridge note $500,000 100% of cost
convertible into a minimum of 8.2%
of the equity of Nutel Corp. and a
warrant for 2.68% of the equity of
Nutel Corp.
Solbright, Inc. CJDS Ventures, LLC 1,085,283 shares of Series C $2,876,000 100% of cost
convertible preferred
Galileo Communications Ltd. XL Ventures, LLC 3,000,000 shares of convertible $3,000,000 100% of cost
preferred
InterAdNet, Inc. CJDS Ventures, LLC 335,121 shares of convertible $2,500,000 100% of cost
preferred
Naviant, Inc. XL Ventures, LLC 7,407,407 shares of convertible $10,000,000 100% of cost
preferred
A-53
SCHEDULE 5.15(B)
TREATMENT OF PUBLIC INTERNET INVESTMENTS
NOTE: THE PROVISIONS OF SECTION 5.15(B) OF THE AMENDED AND RESTATED MERGER
AGREEMENT AND THIS SCHEDULE 5.15(B) SHALL CONSTITUTE A BINDING AGREEMENT TO
UNDERTAKE THE TRANSACTIONS CONTEMPLATED BY SUCH SECTION 5.15(B) AND THIS
SCHEDULE 5.15(B) UNLESS DOING SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT
PROVISIONS (INCLUDING SECTIONS 4.12 AND 4.13) OF THE 8 5/8% AND THE 8 7/8% BOND
INDENTURES RELATING TO THE ENTERING INTO OF TRANSACTIONS OF THE TYPE
CONTEMPLATED BY SUCH SECTION 5.15(B) AND THIS SCHEDULE 5.15(B), IN WHICH CASE
SUCH PROVISIONS SHALL CONSTITUTE SUCH A BINDING AGREEMENT ONLY UPON COMPLIANCE
WITH SUCH SECTIONS OF THE 8 5/8% AND THE 8 7/8% BOND INDENTURES; PROVIDED THAT,
IN SUCH EVENT, BIG FLOWER AND MERGECO AGREE TO USE THEIR RESPECTIVE BEST EFFORTS
TO CAUSE COMPLIANCE WITH SUCH SECTIONS OF THE 8 5/8% AND THE 8 7/8% BOND
INDENTURES ON A PROMPT BASIS.
ACQUISITION OF LLC INTERESTS: At or after the Effective Time, subject to the satisfaction
of the conditions set forth below, an Affiliate of MergeCo
("NEW PARTNER") will contribute cash to each of the LLCs set
forth on the attached Exhibit A, which lists the LLCs
currently holding the public Internet investments (the
"INVESTMENTS"), in exchange for a common interest in each
such LLC (a "COMMON INTEREST") with the terms described
below.
The amount of each cash contribution will equal each LLC's
original cost of its Investment (the "CONTRIBUTIONS") or
such other amount which is determined to be appropriate in
the circumstances.
Each Contribution by New Partner in exchange for a Common
Interest shall be a separate and distinct transaction, and
shall be subject to the conditions set forth below. Each
Contribution with respect to an Investment shall not be
conditioned on any other Contribution with respect to any
other Investment.
TERMS OF NEW PARTNER COMMON
INTEREST CASH DISTRIBUTIONS
TO BIG FLOWER In exchange for each Contribution, New Partner's Common
Interest in the applicable LLC will entitle New Partner to
90% of any future gain in the Investments held by such LLC.
In addition, New Partner will be allocated 90% of any future
loss in the Investments.
The Contributions will be distributed by the LLCs to Big
Flower (the "DISTRIBUTIONS"), which currently holds,
directly or through subsidiaries, an interest in each of the
LLCs.
BIG FLOWER'S LLC INTEREST: On a going forward basis, Big Flower would be entitled to
(i) a 5% annual return on the excess of (x) the value of the
interest in each LLC, over (y) the Distribution by such LLC,
and (ii) 10% of any future gain in the Investments less the
amount in (i). In addition, Big Flower would continue to be
entitled to its distributive share of the appreciation in
the Investments prior to the Contributions. Big Flower will
be allocated 10% of any future loss in the Investments.
CONDITIONS: The following shall be conditions to each Contribution in
exchange for a Common Interest:
A-54
1. Compliance with the provisions of the agreements relating
to such Investment by which the entity holding such
Investment is bound.
2. Satisfaction of all conditions under the Amended and
Restated Merger Agreement, and simultaneous or prior
occurrence of the Effective Time.
3. With respect to the Investment held by Big Flower
Digital, LLC, compliance with all relevant provisions of the
8 5/8% and the 8 7/8% bond indentures, including opinions
from a nationally-recognized financial advisor, and
determinations by the Big Flower board, as appropriate,
pursuant to Sections 4.12 and 4.13 of such indentures.
4. All necessary ▇▇▇▇-▇▇▇▇▇ filings shall have been made and
all other governmental and other consents and approvals
obtained, including such consents and approvals to the
contributions by New Partner.
5. No injunction or similar act of any government entity in
effect preventing the contribution.
6. Receipt of an opinion addressed to the Board of Directors
of Big Flower, from a nationally-recognized financial
advisor, in form and substance reasonably satisfactory to
such Board, that the Contribution and Distribution in
respect of such Investment is fair to Big Flower from a
financial point of view.
CONSEQUENCES OF NO TRANSFER: Subject to the terms and conditions set forth in the Amended
and Restated Merger Agreement, if a Contribution to an LLC
cannot be effected as a result of the inability to obtain a
third party consent or approval, Big Flower shall ensure
that New Partner receives the economic benefit it would have
received had such Contribution been completed as intended by
this Schedule 5.15(b).
CONTROL OF NEW PARTNER: New Partner shall be controlled, directly or indirectly, by
THL.
DEFINED TERMS: Capitalized terms used but not defined in this term sheet
have the meanings given to them in the Amended and Restated
Merger Agreement (the "AMENDED AND RESTATED MERGER
AGREEMENT") between Big Flower Holdings, Inc. ("BIG FLOWER")
and BFH Merger Corp. dated as of October 11, 1999.
A-55
EXHIBIT A--INVESTMENTS
LLCS TO RECEIVE NAME OF INVESTMENTS COST OF
CONTRIBUTIONS HELD BY LLC NUMBER OF SHARES OF STOCK INVESTMENTS
--------------------------- ------------------------- ------------------------------------- ------------------
XL Ventures, LLC Worldgate, Inc. 181,820 shares of common stock $ 3,000,000
▇▇▇▇▇.▇▇▇, Inc. 737,864 shares of common stock $ 4,000,000
▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. 1,666,667 shares of common stock $ 7,000,000
Big Flower Digital, LLC 24/7 Media, Inc. 875,352 shares of common stock, Class $ 3,333,333
A warrants for 437,676 shares of
common stock, and Class B warrants
for 437,676 shares of common stock
A-56
