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Sample Business ContractsHome: Sample Business Contracts:
EXECUTION COPY
==============================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of July 13, 2003,
Among
BOISE CASCADE CORPORATION,
CHALLIS CORPORATION
and
OFFICEMAX, INC.
==============================================================================
<PAGE>
Location of Defined Terms in Agreement
--------------------------------------
Term Location in Agreement
---- ---------------------
"Additional Cash Percentage" Section 2.01(a)
"Additional Cash Election" Section 2.01(b)
"affiliate" Section 8.03
"Agreement" Preamble
"Antitrust Laws" Section 5.05(b)
"Cash Election Shares" Section 2.01(b)
"Certificate of Merger" Section 1.03
"Closing" Section 1.02
"Closing Date" Section 1.02
"Code" Section 3.01(j)
"Company" Preamble
"Company Benefit Plans" Section 3.01(j)
"Company Board Designees" Section 1.08(a)
"Company Common Shares" Section 2.01(a)
"Company Disclosure Letter" Section 3.01(b)
"Company Employee Share Options" Section 3.01(c)
"Company Employee Share Plans" Section 3.01(c)
"Company Material Adverse Effect" Section 3.01(a)
"Company Material Contracts" Section 3.01(t)
"Company Option Plans" Section 3.01(c)
"Company Rights" Section 3.01(c)
"Company Rights Agreement" Section 3.01(c)
"Company SEC Documents" Section 3.01(e)
"Company Series A Preferred Shares" Section 3.01(c)
"Company Series B Preferred Shares" Section 3.01(c)
"Company Shareholder Approval" Section 3.01(k)
"Company Shareholders Meeting" Section 5.01(b)
"Company Significant Subsidiary" Section 4.02(a)
"Company Subsidiary" Section 3.01(a)
"Company Superior Proposal" Section 4.02(b)
"Company Takeover Proposal" Section 4.02(a)
"Company Voting Preferred Shares" Section 3.01(c)
"Confidentiality Agreement" Section 5.04
"Consideration" Section 2.01(a)
"Contract" Section 3.01(d)
"Converted Cash Election Share" Section 2.01(c)
"Converted Stock Election Share" Section 2.01(c)
"Dissenters' Shares" Section 2.06
"DSP" Section 3.01(c)
"Effective Time of the Merger" Section 1.03
"Election" Section 2.01(b)
<PAGE>
2
"Election Deadline" Section 2.04(a)
"Election Form" Section 2.01(b)
"Environmental Claim" Section 3.01(q)
"Environmental Laws" Section 3.01(q)
"Environmental Permits" Section 3.01(q)
"ERISA" Section 3.01(j)
"ESPP" Section 3.01(c)
"Exchange Act" Section 3.01(d)
"Exchange Agent" Section 2.01(b)
"Exchange Fund" Section 2.04(b)
"Exchange Ratio" Section 2.01(a)
"Filed Company SEC Documents" Section 3.01
"Filed Parent SEC Documents" Section 3.02
"Form S-4" Section 3.01(f)
"GAAP" Section 3.01(e)
"Governmental Entity" Section 3.01(d)
"Hazardous Materials" Section 3.01(q)
"HSR Act" Section 3.01(d)
"Indemnified Party" Section 5.09(c)
"Intellectual Property Section 3.01(v)
"Joint Proxy Statement" Section 3.01(d)
"Knowledge" Section 3.01(h)
"Liens" Section 3.01(b)
"Losses" Section 5.09(c)
"Maximum Premium" Section 5.09(b)
"Merger" Recitals
"MSP" Section 3.01(c)
"New Certificates" Section 2.04(b)
"No-Election Shares" Section 2.01(b)
"NYSE" Section 2.01(a)
"OGCL" Section 1.01
"Old Certificates" Section 2.04(a)
"Options" Section 3.01(c)
"Outside Date" Section 7.01(b)
"Parent" Preamble
"Parent Benefit Plans" Section 4.01(b)
"Parent Common Stock" Section 2.01(a)
"Parent Common Stock Value" Section 2.01(a)
"Parent Disclosure Letter" Section 3.02(b)
"Parent Employee Stock Options" Section 3.02(c)
"Parent Employee Stock Plans" Section 3.02(c)
"Parent Material Adverse Effect" Section 3.02(a)
"Parent Material Contracts" Section 3.02(j)
"Parent Rights" Section 3.02(c)
"Parent Rights Agreement" Section 3.02(c)
"Parent SEC Documents" Section 3.02(e)
<PAGE>
3
"Parent Series D Preferred Stock" Section 3.02(c)
"Parent Significant Subsidiary" Section 4.03(a)
"Parent Stockholder Approval" Section 3.02(m)
"Parent Stockholders Meeting" Section 5.01(c)
"Parent Subsidiary" Section 3.02(a)
"Parent Superior Proposal" Section 4.03(b)
"Parent Takeover Proposal" Section 4.03(a)
"Parent Units" Section 3.02(c)
"Per Share Cash Consideration" Section 2.01(a)
"Per Share Stock Consideration" Section 2.01(a)
"Permits" Section 3.01(o)
"person" Section 8.03
"Registration Rights Agreement" Section 5.15
"Release" Section 3.01(q)
"Restricted Shares" Section 2.04(a)
"SEC" Section 3.01(d)
"Securities Act" Section 3.01(e)
"Shareholder" Section 8.03
"Shelf Registration Statement" Section 5.15
"Software" Section 3.01(v)
"Stock Election Shares" Section 2.01(b)
"Stock Number" Section 2.01(b)
"Stock Percentage" Section 2.01(b)
"Stock-Selected No-Election Shares" Section 2.01(c)
"Sub" Preamble
"subsidiary" Section 8.03
"Surviving Corporation" Section 1.01
"Surviving Corporation Common Shares" Section 2.01(a)
"Tax Returns" Section 3.01(n)
"Taxes" Section 3.01(n)
"Termination Fee" Section 7.02(a)
"Treasury Shares" Section 2.01(a)
Exhibit A--Form of Affiliate Letter
<PAGE>
TABLE OF CONTENTS
ARTICLE I
The Merger
SECTION 1.01. The Merger.................................................1
SECTION 1.02. Closing....................................................1
SECTION 1.03. Effective Time of the Merger...............................1
SECTION 1.04. Effects of the Merger......................................2
SECTION 1.05. Articles of Incorporation and Code of Regulations..........2
SECTION 1.06. Directors of the Surviving Corporation.....................2
SECTION 1.07. Officers of the Surviving Corporation......................2
ARTICLE II
Effect of the Merger on the Shares of the Constituent Corporations
SECTION 2.01. Merger Consideration.......................................2
SECTION 2.02. Rights as Shareholders; Share Transfers....................5
SECTION 2.03. Fractional Shares..........................................6
SECTION 2.04. Exchange Procedures........................................6
SECTION 2.05. Anti-Dilution Adjustments..................................8
SECTION 2.06. Dissenting Shareholders....................................9
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company..............9
SECTION 3.02. Representations and Warranties of Parent and Sub..........21
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business.......................................30
SECTION 4.02. No Solicitation by the Company............................35
SECTION 4.03. No Solicitation by Parent.................................36
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of Form S-4 and the Joint Proxy Statement;
Shareholders Meetings.....................................38
SECTION 5.02. Letter of the Company's Accountants.......................39
SECTION 5.03. Letter of Parent's Accountants............................39
<PAGE>
ii
SECTION 5.04. Access to Information; Confidentiality....................40
SECTION 5.05. Reasonable Best Efforts; Notification.....................40
SECTION 5.06. Rights Agreements.........................................42
SECTION 5.07. Company Employee Share Options; Restricted Shares.........42
SECTION 5.08. Benefit Plans.............................................43
SECTION 5.09. Indemnification...........................................44
SECTION 5.10. Fees and Expenses.........................................45
SECTION 5.11. Public Announcements......................................45
SECTION 5.12. Affiliates................................................46
SECTION 5.13. NYSE Listing..............................................46
SECTION 5.14. Transfer Taxes............................................46
SECTION 5.15. Registration Rights Agreement/Shelf
Registration Statement....................................46
SECTION 5.16. Notice of Labor Issues....................................46
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation to
Effect the Merger.........................................47
SECTION 6.02. Conditions to Obligations of Parent and Sub...............47
SECTION 6.03. Conditions to Obligation of the Company...................48
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination...............................................48
SECTION 7.02. Effect of Termination.....................................50
SECTION 7.03. Amendment.................................................51
SECTION 7.04. Extension; Waiver.........................................51
SECTION 7.05. Procedure for Termination, Amendment, Extension
or Waiver.................................................52
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties.............52
SECTION 8.02. Notices...................................................52
SECTION 8.03. Definitions...............................................53
SECTION 8.04. Interpretation............................................53
SECTION 8.05. Severability..............................................54
SECTION 8.06. Counterparts..............................................54
SECTION 8.07. Entire Agreement; Third-Party Beneficiaries...............54
SECTION 8.08. Governing Law.............................................54
SECTION 8.09. Assignment................................................54
SECTION 8.10. Enforcement...............................................54
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of July 13,
2003 (this "Agreement"), among BOISE CASCADE CORPORATION,
a Delaware corporation ("Parent"), CHALLIS CORPORATION, an
Ohio corporation and a direct wholly owned subsidiary of
Parent ("Sub"), and OFFICEMAX, INC., an Ohio corporation
(the "Company").
WHEREAS the respective Boards of Directors of the Company and Sub
have approved, and the Board of Directors of Parent has approved and declared
advisable, the merger of Sub with and into the Company (the "Merger"), upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS Parent, Sub and the Company and each of their affiliates
intends to treat the Merger as a taxable acquisition of Company Common Shares
(as defined below); and
WHEREAS Parent, Sub 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.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
The Merger
----------
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Ohio
General Corporation Law (the "OGCL"), Sub shall be merged with and into the
Company at the Effective Time of the Merger. Following the Merger, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation") and shall succeed
to and assume all the rights, properties, liabilities and obligations of Sub
in accordance with the OGCL.
SECTION 1.02. Closing. Upon the terms and subject to the conditions
of this Agreement, the closing of the Merger (the "Closing") shall take place
at 9:00 a.m. (Chicago, Illinois time) on a date to be specified by the parties
(the "Closing Date"), which shall be no later than the second business day
after satisfaction (or waiver) of the conditions set forth in Article VI
(other than those conditions that by their nature are to be fulfilled at
Closing, but subject to the fulfillment or waiver of such conditions), at the
offices of Bell, Boyd & Lloyd LLC, 70 West Madison Street, Chicago, Illinois
60602, unless another time, date or place is agreed to in writing by the
parties hereto.
SECTION 1.03. Effective Time of the Merger. Upon the Closing, the
parties shall file with the Secretary of State of the State of Ohio a
certificate of merger (the "Certificate of Merger") executed in accordance
with the relevant provisions of the OGCL and shall make all other filings,
recordings or publications required under the
<PAGE>
2
OGCL in connection with the Merger. The Merger shall become effective on such
date as the Certificate of Merger is duly filed with the Ohio Secretary of
State, or on such later date as the parties may agree and specify in the
Certificate of Merger (the date the Merger becomes effective being the
"Effective Time of the Merger").
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 1701.82 of the OGCL.
SECTION 1.05. Articles of Incorporation and Code of Regulations. (a)
The Articles of Incorporation of Sub, as in effect immediately prior to the
Effective Time of the Merger, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable law.
(b) The Code of Regulations of Sub as in effect immediately prior to
the Effective Time of the Merger shall be the Code of Regulations of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable law.
SECTION 1.06. Directors of the Surviving Corporation. The
individuals who are the directors of Sub immediately prior to the Effective
Time of the Merger shall be the directors of the Surviving Corporation until
thereafter they cease to be directors in accordance with the OGCL and the
Articles of Incorporation and Code of Regulations of the Surviving
Corporation.
SECTION 1.07. Officers of the Surviving Corporation. The individuals
who are the officers of the Company immediately prior to the Effective Time of
the Merger shall be the officers of the Surviving Corporation until thereafter
they cease to be officers in accordance with the OGCL and the Articles of
Incorporation and Code of Regulations of the Surviving Corporation.
ARTICLE II
Effect of the Merger On the Shares of the
-----------------------------------------
Constituent Corporations
------------------------
SECTION 2.01. Merger Consideration. (a) Subject to the terms and
conditions of this Agreement, at the Effective Time of the Merger, by virtue
of the Merger and without any action on the part of Parent, Sub or any holder
of shares of the Company:
(i) Subject to Sections 2.01(b) and (c) and to Section 2.05, each
common share, without par value, of the Company ("Company Common Shares")
issued and outstanding immediately prior to the Effective Time of the
Merger (other than Company Common Shares held directly or indirectly by
the Company ("Treasury Shares"), Dissenters' Shares and Company Common
Shares held directly by Parent) will be converted into the right to
receive, at the election of each holder thereof, either: (A) a number of
fully paid and nonassessable shares of common stock, par value $2.50 per
share, of Parent ("Parent Common Stock")
<PAGE>
3
equal to the Exchange Ratio (as defined below), together with an equal
number of Parent Rights (the "Per Share Stock Consideration"), or (B) the
Per Share Cash Consideration. "Exchange Ratio" means $9.00 divided by the
Parent Common Stock Value; provided that (x) if the Parent Common Stock
Value is less than $21.09, the Exchange Ratio will be 0.4268 for all
purposes under this Agreement and (y) if the Parent Common Stock Value is
greater than $25.77, the Exchange Ratio shall be 0.3492 for all purposes
under this Agreement. "Parent Common Stock Value" means the average
closing sale prices for a share of Parent Common Stock on the New York
Stock Exchange, Inc. (the "NYSE") Composite Transactions Tape (as
reported by The Wall Street Journal (Northeast edition), or, if not
reported thereby, as reported by any other authoritative source) for each
of the ten consecutive trading days ending with the second complete
trading day prior to the Closing Date (not counting the Closing Date).
The Exchange Ratio shall be calculated to the nearest one-ten thousandth
of a share of Parent Common Stock and the Parent Common Stock Value shall
be calculated to the nearest one-tenth of one cent. "Consideration" means
the Per Share Cash Consideration and the Per Share Stock Consideration.
"Per Share Cash Consideration" means $9.00 in cash; provided that if
Parent makes the Additional Cash Election (as defined below) and either
(I) if the Parent Common Stock Value is greater than $25.77, then the Per
Share Cash Consideration shall equal $9.00 in cash plus an amount in cash
equal to the Additional Cash Percentage (as defined below) of the amount
by which the Parent Common Stock Value multiplied by the Exchange Ratio
is greater than $9.00 or (II) if the Parent Common Stock Value is less
than $21.09, then the Per Share Cash Consideration shall equal $9.00 in
cash less an amount in cash equal to the Additional Cash Percentage of
the amount by which $9.00 is more than the Parent Common Stock Value
multiplied by the Exchange Ratio. "Additional Cash Percentage" means
14.286% if the Stock Percentage (as defined below) is 65%, 25.000% if the
Stock Percentage is 60% and 33.333% if the Stock Percentage is 55%.
(ii) Each Company Common Share that, immediately prior to the
Effective Time of the Merger, is a Treasury Share or is owned directly by
Parent will be canceled and retired and will cease to exist, and no
exchange or payment will be made therefor.
(iii) At the Effective Time of the Merger, each common share,
without par value, of Sub issued and outstanding immediately prior to the
Effective Time of the Merger shall be converted into and become a number
of fully paid and nonassessable common shares, without par value, of the
Surviving Corporation (the "Surviving Corporation Common Shares") equal
to (x) the number of Company Common Shares outstanding immediately prior
to the Effective Time of the Merger divided by (y) 1000; provided,
however, that to the extent the aggregate number of Surviving Corporation
Common Shares into which the common shares of Sub is to be converted
pursuant to this Section 2.01(a)(iii) is not a whole number, such number
shall be rounded up to the next higher whole number.
<PAGE>
4
(b) Subject to the allocation procedures set forth in Section
2.01(c), each record holder of Company Common Shares will be entitled (i) to
elect to receive shares of Parent Common Stock and Parent Rights for all of
the Company Common Shares ("Stock Election Shares") held by such record
holder, (ii) to elect to receive cash for all of the Company Common Shares
("Cash Election Shares") held by such record holder or (iii) to indicate that
such holder makes no such election for all of the Company Common Shares
("No-election Shares") held by such record holder, provided, that
notwithstanding anything in this Agreement to the contrary, the number of
Company Common Shares to be converted into the right to receive the Per Share
Stock Consideration in the Merger (the "Stock Number") will equal as nearly as
practicable the Stock Percentage of the total number of Company Common Shares
outstanding immediately prior to the Effective Time of the Merger. All such
elections (each, an "Election") shall be made on a form designed for that
purpose by Parent and reasonably acceptable to the Company (an "Election
Form"). Any Company Common Shares for which the record holder has not, as of
the Election Deadline, properly submitted to the Exchange Agent a properly
completed Election Form (excluding any Dissenters' Shares) will be deemed
No-Election Shares. All Dissenters' Shares will be deemed Cash Election
Shares. A record holder acting in different capacities or acting on behalf of
other persons in any way will be entitled to submit an Election Form for each
capacity in which such record holder so acts with respect to each person for
which it so acts. The exchange agent (the "Exchange Agent") will be a bank or
trust company in the United States selected by Parent and reasonably
acceptable to the Company. "Stock Percentage" means 70%; provided that the
Stock Percentage shall mean 65%, 60% or 55% if Parent so elects by written
notice delivered to the Company specifying such new Stock Percentage and makes
a public announcement of such election in each case not less than ten trading
days prior to the date of the Company Shareholders Meeting (the "Additional
Cash Election").
(c) The allocation among the holders of Company Common Shares of
rights to receive the Per Share Stock Consideration or the Per Share Cash
Consideration in the Merger will be made as follows:
(i) Number of Stock Election Shares Less Than Stock Number. If the
number of Stock Election Shares (on the basis of Election Forms received
as of the Election Deadline) is less than the Stock Number, then (A) each
Stock Election Share will be, as of the Effective Time of the Merger,
converted into the right to receive the Per Share Stock Consideration;
(B) the Exchange Agent will allocate from among the No-Election Shares,
pro rata to the holders of No-Election Shares in accordance with their
respective numbers of No-Election Shares, a sufficient number of
No-Election Shares so that the sum of such number and the number of Stock
Election Shares equals as closely as practicable the Stock Number, and
each such allocated No-Election Share (each, a "Stock-selected
No-Election Share") will be, as of the Effective Time of the Merger,
converted into the right to receive the Per Share Stock Consideration,
provided that if the sum of all No-Election Shares and Stock Election
Shares is equal to or less than the Stock Number, all No-Election Shares
will be Stock-Selected No-Election Shares; (C) if the sum of Stock
Election Shares and No-Election Shares is less than the Stock Number, the
Exchange Agent will allocate from among the
<PAGE>
5
Cash Election Shares, pro rata to the holders of Cash Election Shares in
accordance with their respective numbers of Cash Election Shares, a
sufficient number of Cash Election Shares so that the sum of such number,
the number of all Stock Election Shares and the number of all No-Election
Shares equals as closely as practicable the Stock Number, and each such
allocated Cash Election Share (each, a "Converted Cash Election Share")
will be, as of the Effective Time of the Merger, converted into the right
to receive the Per Share Stock Consideration; and (D) each No-Election
Share and Cash Election Share that is not a Stock-Selected No-Election
Share or a Converted Cash Election Share (as the case may be) will be, as
of the Effective Time of the Merger, converted into the right to receive
the Per Share Cash Consideration;
(ii) Number of Stock Election Shares Greater Than Stock Number. If
the number of Stock Election Shares (on the basis of Election Forms
received by the Election Deadline) is greater than the Stock Number, then
(A) each Cash Election Share and No-Election Share will be, as of the
Effective Time of the Merger, converted into the right to receive the Per
Share Cash Consideration; (B) the Exchange Agent will allocate from among
the Stock Election Shares, pro rata to the holders of Stock Election
Shares in accordance with their respective numbers of Stock Election
Shares, a sufficient number of Stock Election Shares ("Converted Stock
Election Shares") so that the difference of (x) the number of Stock
Election Shares less (y) the number of the Converted Stock Election
Shares equals as closely as practicable the Stock Number, and each
Converted Stock Election Share will be, as of the Effective Time of the
Merger, converted into the right to receive the Per Share Cash
Consideration; and (C) each Stock Election Share that is not a Converted
Stock Election Share will be, as of the Effective Time of the Merger,
converted into the right to receive the Per Share Stock Consideration; or
(iii) Number of Stock Election Shares Equals the Stock Number. If
the number of Stock Election Shares (on the basis of Election Forms
received by the Election Deadline) equals the Stock Number, then (A) each
Stock Election Share will be, as of the Effective Time of the Merger,
converted into the right to receive the Per Share Stock Consideration and
(B) each No-Election Share and Cash Election Share will be, as of the
Effective Time of the Merger, converted into the right to receive the Per
Share Cash Consideration.
SECTION 2.02. Rights as Shareholders; Share Transfers. At the
Effective Time of the Merger, holders of Company Common Shares will cease to
be, and will have no rights as, shareholders of the Company, other than the
right to receive (a) any dividend or other distribution with respect to such
Company Common Shares with a record date occurring prior to the Effective Time
of the Merger, (b) pursuant to Section 2.03, any cash in lieu of any
fractional share of Parent Common Stock and (c) the Consideration provided
under this Article II; provided that in the case of holders of Dissenters'
Shares, such shareholders shall have the rights described in Section 2.06 in
lieu of any rights to the Consideration. After the Effective Time of the
Merger, there will be no transfers of Company Common Shares on the share
transfer books of the Company
<PAGE>
6
or the Surviving Corporation. If, after the Effective Time of the Merger, any
certificates formerly representing Company Common Shares are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
canceled and exchanged as provided in this Article II.
SECTION 2.03. Fractional Shares. Notwithstanding any other provision
in this Agreement, no fractional shares of Parent Common Stock or fractional
Parent Rights, and no certificates or scrip therefor, or other evidence of
ownership thereof, will be issued in the Merger. In lieu of such fractional
share interests to which a holder of Company Common Shares would otherwise be
entitled under Section 2.01, Parent shall pay to each such former holder of
Company Common Shares otherwise entitled to receive Parent Common Stock under
Section 2.01 an amount in cash equal to the product obtained by multiplying
(A) the fractional share interest to which such former holder (after taking
into account all Company Common Shares held at the Effective Time of the
Merger by such holder) would otherwise be entitled by (B) the Parent Common
Stock Value.
SECTION 2.04. Exchange Procedures. (a) At the time of mailing of the
Joint Proxy Statement to holders of record of Company Common Shares entitled
to vote at the Company Shareholders Meeting (including holders of Company
Common Shares subject to a transfer restriction or a risk of forfeiture in
favor of the Company ("Restricted Shares")), Parent will mail, or cause the
Exchange Agent to mail, therewith an Election Form and a letter of transmittal
(each in customary form) to each such holder. The Company will use its
commercially reasonable best efforts to make the Election Form and the Joint
Proxy Statement available to all persons who become record holders of Company
Common Stock during the period between such record date and the Election
Deadline. To be effective, an Election Form must be properly completed, signed
and actually received by the Exchange Agent not later than 5:00 p.m., New York
City time, on the business day that is two trading days prior to the Closing
Date (which date shall be publicly announced by Parent as soon as practicable
but in no event less than five trading days prior to the Closing Date) (the
"Election Deadline") and accompanied by the certificates representing all the
Company Common Shares ("Old Certificates") as to which such Election Form is
being made, duly endorsed in blank or otherwise in form acceptable for
transfer on the books of the Company (or accompanied by an appropriate
guarantee of delivery by an eligible organization). The Exchange Agent shall
make all computations contemplated by Section 2.01 hereof, and, after the
concurrence of the Company (not to be unreasonably withheld), all such
computations will be conclusive and binding on the former holders of Company
Common Shares absent manifest error. Any Election Form may be revoked, by the
holder who submitted such Election Form to the Exchange Agent, only by written
notice received by the Exchange Agent prior to the Election Deadline. In
addition, all Election Forms shall automatically be revoked if the Exchange
Agent is notified in writing by Parent and the Company that the Merger has
been abandoned. The Exchange Agent may, with the mutual agreement of Parent
and the Company, make such rules as are consistent with this Section 2.04 for
the implementation of the Elections provided for herein as shall be necessary
or desirable fully to effect such Elections. Prior to the Effective Time of
the Merger, Parent and Sub will enter into an exchange agent and nominee
agreement with the Exchange Agent, in a
<PAGE>
7
form reasonably acceptable to the Company, setting forth the procedures to be
used in accomplishing the deliveries and other actions contemplated by this
Section 2.04.
(b) At or prior to the Effective Time of the Merger, Parent will
deposit, or will cause to be deposited, with the Exchange Agent, for the
benefit of holders of Company Common Shares, certificates representing shares
of Parent Common Stock and Parent Rights ("New Certificates") and an amount of
cash sufficient to deliver to the holders of Company Common Shares (other than
Dissenters' Shares) the aggregate Consideration to which such holders are
entitled pursuant to Section 2.01, together with all cash and other property
to which such holders may be entitled pursuant to Section 2.02 in respect of
dividends and distributions (such New Certificates and cash, together with any
dividends or distributions with a record date occurring after the Effective
Time of the Merger with respect thereto, being hereinafter referred to as the
"Exchange Fund"). For the purposes of such deposit, Parent shall assume that
there will not be any fractional shares of Parent Common Stock or fractional
Parent Rights. In addition, from time to time as needed after the Effective
Time of the Merger, Parent shall deposit or shall cause to be deposited with
the Exchange Agent, for addition to the Exchange Fund, cash sufficient to pay
cash in lieu of fractional shares in accordance with Section 2.03. At the time
of such deposit, Parent will irrevocably instruct the Exchange Agent to
deliver such Consideration and other cash and property out of the Exchange
Fund after the Effective Time of the Merger to the holders of the Company
Common Shares (other than Dissenters' Shares) in accordance with this Article
II. The Exchange Fund shall not be used for any other purpose.
(c) The holder of each Old Certificate, upon the later of the
Effective Time of the Merger or the surrender by such holder to the Exchange
Agent of such Old Certificate, together with the letter of transmittal duly
executed by such holder, shall be entitled to receive in exchange for such Old
Certificate the Consideration into which the Company Common Shares theretofore
represented by such Old Certificate have been converted pursuant to Section
2.01 (together with any applicable cash in lieu of fractional shares and
dividends or distributions in respect of such Consideration), and such Old
Certificate shall forthwith thereafter be canceled. Until such time as a New
Certificate representing Parent Common Stock and Parent Rights is issued to or
at the direction of a holder of an Old Certificate entitled to receive Per
Share Stock Consideration pursuant to Section 2.01, such Parent Common Stock
and Parent Rights shall be deemed not outstanding, and such Parent Common
Stock shall not be entitled to vote on any matter. In the event of a transfer
of ownership of Company Common Shares that is not registered on the transfer
records of the Company, a New Certificate representing the appropriate number
of shares of Parent Common Stock and Parent Rights may be issued to a person
other than the person in whose name the Old Certificate so surrendered is
registered, if such Old Certificate shall be properly endorsed or otherwise be
in proper form for transfer and the person requesting such payment shall pay
any transfer or other taxes required by reason of the issuance of shares of
Parent Common Stock and Parent Rights to a person other than the registered
holder of such Old Certificate or shall establish to the satisfaction of
Parent that such tax has been paid or is not applicable. Each Old Certificate
shall be deemed at any time after the Effective Time of the Merger to
represent only the right to receive, upon exchange as contemplated in this
<PAGE>
8
Section 2.04(c), the Consideration into which the Company Common Shares
formerly represented by such Old Certificate are converted in the Merger. No
interest shall be paid or accrue on any cash payable upon surrender of any Old
Certificate.
(d) Notwithstanding the foregoing, neither the Exchange Agent nor
any party hereto will be liable to any former holder of Company Common Shares
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(e) No dividends or other distributions with respect to Parent
Common Stock with a record date after the Effective Time of the Merger shall
be paid to the holder of any Old Certificate with respect to the shares of
Parent Common Stock issuable in exchange therefor under this Article II, and
no cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.03, until the holder is entitled to receive, in exchange
for such Old Certificate pursuant to Section 2.04(c), the Per Share Stock
Consideration represented by such Old Certificate. Subject to applicable law,
after the holder of any Old Certificate becomes so entitled to receive the Per
Share Stock Consideration, there shall be paid to the holder of the New
Certificate representing whole shares of Parent Common Stock and Parent Rights
issued in exchange for such Old Certificate, without interest, (i) at the time
of such exchange, the amount of any cash payable in lieu of a factional share
of Parent Common Stock to which such holder is entitled pursuant to Section
2.03 and the amount of dividends or other distributions with a record date
after the Effective Time of the Merger theretofore paid with respect to such
whole shares of Parent Common Stock and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the
Effective Time of the Merger but prior to the time of such exchange and a
payment date subsequent to the time of such exchange payable with respect to
such whole shares of Parent Common Stock.
(f) Any portion of the Exchange Fund that remains unclaimed by the
holders of Old Certificates for twelve months after the Effective Time of the
Merger will be returned to Parent. Any holders of Old Certificates who have
not theretofore complied with this Article II thereafter shall look only to
Parent for, and, subject to Section 2.04(d), Parent shall remain liable for,
payment of their claim for Consideration, cash in lieu of any fractional share
interests and unpaid dividends and distributions on shares of Parent Common
Stock deliverable in respect of each Company Common Share represented by such
Old Certificates such holder holds as determined pursuant to this Agreement,
in each case without any interest thereon.
SECTION 2.05. Anti-dilution Adjustments. Should Parent change (or
establish a record date for changing) the number of shares of Parent Common
Stock issued and outstanding prior to the Effective Time of the Merger by way
of a split, dividend, combination, recapitalization, exchange of shares or
similar transaction with respect to the outstanding Parent Common Stock having
a record date preceding the Effective Time of the Merger, the Exchange Ratio
will be adjusted appropriately to provide to the holders of Company Common
Shares the same economic effect as contemplated by this Agreement prior to
such split, dividend, combination,
<PAGE>
9
recapitalization, exchange of shares or similar transaction. If any
Distribution Date or Business Combination (each as defined in the Company
Rights Agreement) occurs under the Company Rights Agreement, or any
Distribution Date, Stock Acquisition Date, Section 11(a)(ii) Event, Section 13
Event or Triggering Event (each as defined in the Parent Rights Agreement)
occurs under the Parent Rights Agreement, in each case at any time during the
period from the date of this Agreement to the Effective Time of the Merger,
the Company and Parent shall make such adjustment to the Consideration as the
Company and Parent shall mutually agree so as to preserve the economic
benefits that the Company and Parent each reasonably expected on the date of
this Agreement to receive as a result of the consummation of the Merger and
the other transactions contemplated by this Agreement.
SECTION 2.06. Dissenting Shareholders. Notwithstanding anything in
this Agreement to the contrary, Company Common Shares that are outstanding
immediately prior to the Effective Time of the Merger and the holders of which
shall have perfected and not withdrawn or lost their dissenters' rights in
accordance with Section 1701.85 of the OGCL ("Dissenters' Shares") will be
paid for by Parent in accordance with Section 1701.85 of the OGCL; provided
that if any such holder shall fail to perfect or otherwise shall waive,
withdraw or lose the right to receive payment of the fair value of its Company
Common Shares under Section 1701.85 of the OGCL, the right of such holder to
be paid such fair value of its Company Common Shares shall cease and shall be
deemed converted as of the Effective Time of the Merger into the right to
receive the Consideration as provided in this Article II. The Company shall
give Parent (a) prompt notice of any written demands for fair value received
by the Company, withdrawals of such demands, and any other related instruments
served pursuant to Section 1701.85 of the OGCL and received by the Company and
(b) the opportunity to direct all negotiations and proceedings with respect to
demands for fair value under the OGCL. The Company shall not, except with the
prior written consent of Parent, voluntarily make any payment with respect to
any demands for fair value for Dissenters' Shares or offer to settle, or
settle, any such demands.
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Representations and Warranties of the Company. Except
as set forth in the Company Disclosure Letter (with specific reference to the
relevant sections of the representations and warranties or covenants in this
Agreement or disclosure in such a way to make its relevance to the information
called for by the representations and warranties or covenants readily
apparent) or in the Company SEC Documents filed and publicly available prior
to the date of this Agreement (the "Filed Company SEC Documents") or as
otherwise expressly contemplated by this Agreement, the Company represents and
warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the Company
and each of its subsidiaries (each a "Company Subsidiary") is a corporation,
partnership or other legal entity duly organized, validly existing and in good
standing under the laws
<PAGE>
10
of the jurisdiction in which it is organized and has the requisite power and
authority to carry on its business as now being conducted. Each of the Company
and each Company Subsidiary is duly qualified or licensed to do business and
is in good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) would not (i) have
a material adverse effect on the business, properties, financial condition or
results of operations of the Company and the Company Subsidiaries, taken as a
whole (other than effects relating to (A) the office products industry in
general, (B) general economic, financial or securities market conditions in
the United States or elsewhere (including fluctuations, in and of themselves,
in the price of Company Common Shares), (C) the Merger, the announcement of
this Agreement or the consummation of any transaction contemplated by this
Agreement, (D) acts of war, insurrection, sabotage or terrorism or (E) the
failure, in and of itself, by the Company to meet any internal or published
projections, forecasts or revenue or earnings predictions for any period
ending on or after the date of this Agreement) or (ii) prevent the Company
from performing its obligations under this Agreement (a "Company Material
Adverse Effect"). The Company has made available to Parent complete and
correct copies of its Second Amended and Restated Articles of Incorporation
and Code of Regulations, in each case as amended to the date of this
Agreement.
(b) Company Subsidiaries. Section 3.01(b) of the letter from the
Company, dated the date of this Agreement, addressed to Parent (the "Company
Disclosure Letter") lists each Company Subsidiary and the ownership or
interest therein of the Company. All the outstanding shares of each Company
Subsidiary have been validly issued and are fully paid and nonassessable and
are owned by the Company, by another Company Subsidiary or by the Company and
another Company Subsidiary, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens").
(c) Capital Structure. The authorized shares of the Company consist
of (i) 200,000,000 Company Common Shares, (ii) 100,000,000 serial preferred
shares, without par value, of which 1,500,000 shares have been designated as
"Series A Participating Cumulative Serial Preferred Shares", without par value
(the "Company Series A Preferred Shares") and 2,000,000 shares have been
designated as "Series B Serial Preferred Shares", without par value (the
"Company Series B Preferred Shares"), and (iii) 10,000,000 voting preference
shares, without par value (the "Company Voting Preferred Shares"). The Company
Series A Preferred Shares are issuable in connection with the rights to
purchase Company Series A Preferred Shares (the "Company Rights") that were
issued pursuant to the Rights Agreement dated as of March 17, 2000 (as amended
from time to time, the "Company Rights Agreement"), between the Company and
First Chicago Trust Company of New York. At the close of business on June 27,
2003: (i) 124,505,032 Company Common Shares were outstanding, all of which
were validly issued, fully paid and nonassessable; (ii) there were 10,348,937
Treasury Shares; (iii) options to acquire 18,760,975 Company Common Shares
("Company Employee Share Options") from the Company pursuant to the Amended
and Restated Equity-Based Award Plan and any other plan or arrangement (other
than the ESPP (as defined below))
<PAGE>
11
providing for the grant of options to service providers (including employees,
directors and consultants) to the Company or any Company Subsidiary (the
"Company Option Plans") were issued and outstanding; (iv) 2,268,759 Company
Common Shares were reserved for issuance pursuant to the Company Director
Share Plan (the "DSP"), the Company Amended and Restated Management Share
Purchase Plan (the "MSP"), the Company Employee Share Purchase Plan (the
"ESPP") and the Company 401(k) Savings Plan (the "CSP" and, together with the
DSP, the MSP, the ESPP and the Company Option Plans, the "Company Employee
Share Plans"); (v) 1,500,000 Company Series A Preferred Shares were reserved
for issuance in con78nection with the Company Rights; (vi) no Company Series B
Preferred Shares were issued and outstanding; and (vii) no Company Voting
Preference Shares were issued and outstanding. Except as set forth above, at
the close of business on June 27, 2003, no shares or other voting securities
of the Company were issued, reserved for issuance or outstanding. There are
not any bonds, debentures, notes or other indebtedness of the Company having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which shareholders of the Company must
vote. Except as set forth above, as of the date of this Agreement there are
not any options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind (collectively, "Options") to which
the Company or any Company Subsidiary is a party or by which any of them is
bound relating to the issued or unissued shares of the Company or any Company
Subsidiary, or obligating the Company or any Company Subsidiary to issue,
transfer, grant or sell any shares or other equity interests in, or securities
convertible or exchangeable for any shares or other equity interests in, the
Company or any Company Subsidiary or obligating the Company or any Company
Subsidiary to issue, grant, extend or enter into any such Options. All Company
Common Shares that are subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instrument pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and
nonassessable. As of the date of this Agreement, there are not any outstanding
contractual obligations of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any shares of the Company or any
Company Subsidiary, or make any material investment (in the form of a loan,
capital contribution or otherwise) in, any person other than a Company
Subsidiary.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to enter into this Agreement and, subject to the
Company Shareholder Approval, to consummate the transactions contemplated by
this Agreement. The Board of Directors of the Company has unanimously approved
this Agreement and the transactions contemplated by this Agreement, and has
resolved to recommend to the Company's shareholders that they give the Company
Shareholder Approval. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action
on the part of the Company, subject to the Company Shareholder Approval. This
Agreement has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by each of the other parties
hereto, constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms (subject to bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights of
creditors
<PAGE>
12
generally and the availability of equitable remedies). The execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination or acceleration of any obligation or to loss of any
material rights under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any Company Subsidiary under, (i) the
Second Amended and Restated Articles of Incorporation or Code of Regulations
of the Company or the comparable organizational documents of any Company
Subsidiary, (ii) any contract, permit, license, loan or credit agreement,
note, bond, mortgage, indenture, lease or other property agreement,
partnership or joint venture agreement or other legally binding agreement,
whether oral or written (a "Contract"), applicable to the Company or any
Company Subsidiary or their respective properties or assets or (iii) subject
to the governmental filings and the obtaining of the Company Shareholder
Approval and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any Company Subsidiary or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights or Liens that individually or in
the aggregate would not have a Company Material Adverse Effect. No consent,
approval, order or authorization of, or registration or filing with, any
Federal, state or local government or any court, administrative agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company or any
Company Subsidiary in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), (ii) the filing with the Securities and Exchange Commission ( the
"SEC") of (A) a joint proxy statement relating to the Company Shareholders
Meeting and the Parent Stockholders Meeting (as amended or supplemented from
time to time, the "Joint Proxy Statement") and (B) such reports under Section
12 or 13(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the filing of the
Certificate of Merger with the Ohio Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company
is qualified to do business and such filings with Governmental Entities to
satisfy the applicable requirements of state securities or "blue sky" laws,
(iv) notifications to the NYSE, (v) those that may be required solely by
reason of Parent's or Sub's (as opposed to any other third party's)
participation in the Merger and the other transactions contemplated by this
Agreement and (vi) such other consents, approvals, orders, authorizations,
registrations, declarations and filings, including under applicable
Environmental Laws, (x) as may be required under the laws of any foreign
country in which the Company or any Company Subsidiary conducts any business
or owns any property or assets or (y) that, if not obtained or made, would
not, individually or in the aggregate, have a Company Material Adverse Effect.
(e) SEC Documents; Undisclosed Liabilities. The Company has filed
all required reports, schedules, forms, statements and other documents with
the SEC since
<PAGE>
13
January 26, 2002 (the "Company SEC Documents"). As of its date, each Company
SEC Document complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents, and did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein
(other than in the case of registration statements of the Company filed under
the Securities Act, in light of the circumstances under which they were made)
not misleading, except to the extent that such Company SEC Document has been
modified or superseded by a later filed Company SEC Document. The consolidated
financial statements of the Company included in the Company's (i) annual
report on Form 10-K for the fiscal year ended January 25, 2003 and (ii)
quarterly report on Form 10-Q for the quarterly period ended April 26, 2003,
complied at the time they were filed as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles in the United States ("GAAP") (except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and each fairly presented in all material respects the
consolidated financial position of the Company as of the dates thereof and the
consolidated results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except for liabilities incurred in connection with the
transactions contemplated by this Agreement or in the ordinary course of
business since the date of the most recent balance sheet included in the
Company SEC Documents, neither the Company nor any Company Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of the Company or the notes thereto which, individually or in
the aggregate, would have a Company Material Adverse Effect. None of the
Company Subsidiaries is subject to the informational reporting requirements of
Section 13 of the Exchange Act.
(f) Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of shares of Parent Common Stock and Parent
Rights in the Merger (the "Form S-4") will, at the time the Form S-4 is filed
with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) the Joint
Proxy Statement will, at the date the Joint Proxy Statement is first mailed to
the Company's shareholders and Parent's stockholders or at the time of the
Company Shareholders Meeting or the Parent Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Joint Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation or warranty
is made by
<PAGE>
14
the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub for inclusion or
incorporation by reference in the Joint Proxy Statement.
(g) Absence of Certain Changes or Events. From April 26, 2003 to the
date of this Agreement, the Company and the Company Subsidiaries taken as a
whole have conducted their business only in the ordinary course, and:
(i) there has not been any event, change, effect or development
which, individually or in the aggregate, would have a Company Material
Adverse Effect;
(ii) there has not been any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property)
with respect to any shares of the Company;
(iii) there has not been any split, combination or
reclassification of any shares of the Company or any issuance or
authorization of any issuance of any other securities in exchange or in
substitution for shares of the Company;
(iv) there has not been any issuance of Company Employee Share
Options or Restricted Shares of Company Common Stock; and
(v) there has not been (A) any granting by the Company or any
Company Subsidiary to any current or former director, officer or
divisional vice president of any increase in compensation, bonus,
perquisites, incentive payments or other benefits except in the ordinary
course of business and consistent with past practice, (B) any granting by
the Company or any Company Subsidiary to any such current or former
director, officer or divisional vice president of any increase in
severance, termination pay or retirement medical benefits, or (C) any
entry by the Company or any Company Subsidiary into, or any amendment of,
any employment, deferred compensation, consulting, severance,
change-in-control, termination or indemnification agreement with any such
current or former director, officer or divisional vice president.
(h) Litigation. As of the date of this Agreement, there is no suit,
action or proceeding pending or, to the Knowledge of the Company, threatened
against the Company or any Company Subsidiary that, individually or in the
aggregate, would have a Company Material Adverse Effect, and there is not any
judgment, decree, injunction, rule or order of any Governmental Entity
outstanding against the Company or any Company Subsidiary which, individually
or in the aggregate, would have a Company Material Adverse Effect. "Knowledge"
of a party shall mean knowledge of its executive officers, after due inquiry.
(i) Absence of Changes in Benefit Plans. Since January 25, 2003,
there has not been any adoption or amendment in any material respect by the
Company or any Company Subsidiary of any collective bargaining agreement or
any bonus, pension, profit sharing, deferred compensation, incentive
compensation, share ownership, share
<PAGE>
15
purchase, share option, phantom share, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding (whether or not legally binding) providing benefits to any
current or former officer or director of the Company or any Company
Subsidiary.
(j) Benefit Plan Compliance. Except as would not have a Company
Material Adverse Effect, all employee benefit, bonus, profit sharing, deferred
compensation, incentive compensation, share ownership, share purchase, share
option, phantom share and vacation plans or programs maintained for the
benefit of the current or former employees or directors of the Company or any
Company Subsidiary that are sponsored, maintained or contributed to by the
Company or any Company Subsidiary, or with respect to which the Company or any
Company Subsidiary has any liability, including any such plan that is an
"employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 ("ERISA") (collectively, "Company Benefit Plans"),
are in compliance with all applicable requirements of law, including ERISA and
the Internal Revenue Code of 1986, as amended (the "Code"). No Company Benefit
Plan is subject to Title IV of ERISA. The execution of, and performance of the
transactions contemplated by, this Agreement will not (either alone or upon
the occurrence of any additional or subsequent events) constitute an event
under any benefit plan, policy, arrangement or agreement or any trust or loan
that will or may result in any material payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
employee. The only material severance agreements or severance policies
applicable to the Company or the Company Subsidiaries are the agreements and
policies specifically described in Section 3.01(j) of the Company Disclosure
Letter. The Company has amended the ESPP to prohibit additional payroll
deductions by participants therein after the date hereof.
(k) Voting Requirements. The approval and adoption of this Agreement
by the holders of at least a majority of the outstanding Company Common Shares
(the "Company Shareholder Approval") is the only vote of the holders of any
class or series of shares of the Company necessary to approve or adopt this
Agreement and the transactions contemplated by this Agreement.
(l) Brokers. No broker, investment banker, financial advisor or
other person, other than Lehman Brothers Inc. and McDonald Investments Inc.,
is entitled to any broker's, finder's, financial advisor's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
Complete and correct copies of the Company's engagement letters with Lehman
Brothers Inc. and McDonald Investments Inc. regarding the transactions
contemplated by this Agreement have previously been furnished to Parent.
(m) Opinion of Financial Advisor. The Company has received the
opinions of Lehman Brothers Inc. and McDonald Investments Inc., each dated the
date of this Agreement, to the effect that, as of such date, the Consideration
is fair to the Company's shareholders from a financial point of view.
<PAGE>
16
(n) Taxes. (i) The Company and each Company Subsidiary have timely
filed (or have had timely filed on their behalf) or will file or cause to be
timely filed, all Tax Returns required by applicable law to be filed by any of
them prior to or as of the Effective Time of the Merger, in each case other
than such failures to file that would not have a Company Material Adverse
Effect. All such Tax Returns are, or will be at the time of filing, true,
complete and correct, other than such failures to be true, complete and
correct that would not have a Company Material Adverse Effect.
(ii) The Company and each Company Subsidiary have paid (or have
had paid on their behalf) or, where payment is not yet due, have
established (or have had established on their behalf and for their sole
benefit and recourse) or will establish or cause to be established on or
before the Effective Time of the Merger an adequate accrual for the payment
of all Taxes due with respect to any period ending prior to or as of the
Effective Time of the Merger, except where the failure to pay or
establish adequate reserves would not have a Company Material Adverse
Effect.
(iii) No deficiencies for any Taxes have been proposed, asserted
or assessed against the Company or any Company Subsidiary, and no requests
for waivers of the time to assess any such Taxes are pending, in each
case other than with respect to such deficiencies or Taxes that would not
have a Company Material Adverse Effect. The Federal income Tax Returns of
the Company and each Company Subsidiary consolidated in such Tax Returns
have been examined by and settled with the United States Internal Revenue
Service for all years through 1996.
(iv) Neither the Company nor any Company Subsidiary has
constituted either a "distributing corporation" or a "controlled
corporation" in a distribution of stock qualifying for tax-free treatment
under Section 355 of the Code in the two years prior to the date of this
Agreement.
(v) Neither the Company nor any Company Subsidiary has been a
United States real property holding company within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
(c)(1)(A)(ii) of the Code.
(vi) For purposes of this Agreement, the following terms shall
have the following meanings:
(A) "Taxes" shall mean all Federal, state, local and
foreign taxes, payments due under any applicable abandoned
property, escheat, or similar law and other assessments of a
similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or
penalties applicable thereto.
(B) "Tax Returns" shall mean all Federal, state, local
<PAGE>
17
and foreign tax returns, declarations, statements, reports,
schedules, forms and information returns and any amended tax
return relating to Taxes.
(o) Compliance With Laws. Neither the Company nor any Company
Subsidiary has violated or failed to comply with any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity
applicable to its business or operations, except for violations and failures
to comply that, individually or in the aggregate, would not have a Company
Material Adverse Effect. The Company and the Company Subsidiaries possess all
certificates, franchises, licenses, permits, authorizations and approvals
issued to or granted by Governmental Entities (collectively, "Permits")
necessary to conduct their respective businesses as such businesses are
currently conducted, except for such Permits the lack of possession of which
would not have a Company Material Adverse Effect. All such Permits are validly
held by the Company or the Company Subsidiaries, and the Company and the
Company Subsidiaries have complied in all respects with all terms and
conditions thereof, except for such instances where the failure to validly
hold such Permits or the failure to have complied with such Permits would not
have a Company Material Adverse Effect; and none of such Permits will be
subject to suspension, modification, revocation or nonrenewal as a result of
the execution and delivery of this Agreement or the consummation of the
Merger, other than such Permits the suspension, modification or nonrenewal of
which, individually or in the aggregate, would not have a Company Material
Adverse Effect. This Section 3.01(o) shall not apply to ERISA, Taxes or
Environmental Law, which are the subject of Sections 3.01(j), 3.01(n) and
3.01(q), respectively.
(p) No Excess Parachute Payments. Other than payments that may be
made to the persons listed in Section 3.01(p) of the Company Disclosure
Letter, any amount that could be received (whether in cash or property or the
vesting of property) as a result of any of the transactions contemplated by
this Agreement by any employee, officer or director of the Company or any of
its affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Company Benefit
Plan currently in effect would not be characterized as an "excess parachute
payment" (as such term is defined in Section 280G(b)(1) of the Code).
(q) Environmental Matters. Except for such matters that,
individually or in the aggregate, would not have a Company Material Adverse
Effect:
(i) The Company and each of the Company Subsidiaries are, and
have been, in compliance with all Environmental Laws, and neither the
Company nor any Company Subsidiary has received any (A) communication that
alleges that the Company or any Company Subsidiary is in violation of, or
has liability under, any Environmental Law, (B) written request for
information pursuant to any Environmental Law, or (C) notice regarding
any requirement that is proposed for adoption or implementation under any
Environmental Law and that would be applicable to the operations of the
Company or any Company Subsidiary;
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18
(ii) (A) the Company and each Company Subsidiary have obtained
and are in compliance with all permits, licenses and governmental
authorizations pursuant to Environmental Law (collectively,
"Environmental Permits") necessary for their operations as currently
conducted, (B) all such Environmental Permits are valid and in good
standing, and (C) neither the Company nor any Company Subsidiary has been
advised by any Governmental Entity of any actual or potential change in
the status or terms and conditions of any Environmental Permit;
(iii) there are no Environmental Claims pending or, to the
Knowledge of the Company, threatened, against the Company or any Company
Subsidiary;
(iv) there have been no Releases of any Hazardous Material that
could reasonably be expected to form the basis of any Environmental Claim
against the Company or any Company Subsidiary or against any person whose
liabilities for such Environmental Claims the Company or any Company
Subsidiary has, or may have, retained or assumed, either contractually or
by operation of law; and
(v) (A) neither the Company nor any Company Subsidiary has
retained or assumed, either contractually or by operation of law, any
liabilities or obligations that could reasonably be expected to form the
basis of any Environmental Claim against the Company or any Company
Subsidiary, and (B) to the Knowledge of the Company, no Environmental
Claims are pending against any person whose liabilities for such
Environmental Claims the Company or any Company Subsidiary has, or may
have, retained or assumed, either contractually or by operation of law.
As used in this Agreement: (A) "ENVIRONMENTAL CLAIM" means any and all
administrative, regulatory or judicial actions, suits, orders, demands,
directives, claims, investigations, proceedings or notices of violation by or
from any Person alleging liability of whatever kind or nature arising out of,
based on or resulting from (y) the presence or release of, or exposure to, any
Hazardous Materials at any location; or (z) the failure to comply with any
Environmental Law; (B) "ENVIRONMENTAL LAWS" means all applicable federal,
state, local and foreign laws, rules, regulations, orders, decrees, judgments,
legally binding agreements or Environmental Permits issued, promulgated or
entered into by or with any Governmental Entity, relating to pollution,
natural resources or protection of endangered or threatened species, human
health or the environment (including ambient air, surface water, groundwater,
land surface or subsurface strata); (C) "HAZARDOUS MATERIALS" means (y) any
petroleum or petroleum products, radioactive materials or wastes, asbestos in
any form, urea formaldehyde foam insulation and polychlorinated biphenyls; and
(z) any other chemical, material, substance or waste that in relevant form or
concentration is prohibited, limited or regulated under any Environmental Law;
and (D) "RELEASE" means any actual or threatened release, spill, emission,
leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal,
leaching or migration into or
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19
through the environment (including ambient air, surface water, groundwater,
land surface or subsurface strata) or within any building, structure, facility
or fixture.
(r) Rights Agreements. The Company has taken all necessary action to
(i) render the Company Rights inapplicable to the Merger and the other
transactions contemplated by this Agreement and (ii) ensure that (x) neither
Parent nor any of its affiliates is an Acquiring Person (as defined in the
Company Rights Agreement), (y) neither a Distribution Date nor a Business
Combination (each as defined in the Company Rights Agreement) shall occur by
reason of the approval, execution or delivery of this Agreement or the Merger
and (z) the Company Rights shall expire immediately prior to the Effective
Time of the Merger.
(s) Labor Matters. There are no collective bargaining agreements or
other labor union contracts applicable to any employees of the Company or any
Company Subsidiary. As of the date of this Agreement, except for such matters
that individually or in the aggregate would not have a Company Material
Adverse Effect, since July 1, 2002, there has not been any (i) labor dispute,
strike, work stoppage or lockout or, to the Knowledge of the Company, threat
thereof, by or with respect to any employee of the Company or any Company
Subsidiary, or (ii) unfair labor practice charge or complaint against the
Company or any Company Subsidiary pending or, to the Knowledge of the Company,
threatened before the National Labor Relations Board or any other comparable
Governmental Entity. As of the date of this Agreement, except for such matters
that individually or in the aggregate would not have a Company Material
Adverse Effect, since July 1, 2002, there has not been any demand for
recognition by any labor organization or petition for election pending with
the National Labor Relations Board or any other comparable Governmental
Entity, and to the Knowledge of the Company, there has been no effort by any
labor organization to organize any employees of the Company or any Company
Subsidiary into one or more collective bargaining units.
(t) Contracts.
(i) As of the date hereof, there are no Contracts to which the
Company or any Company Subsidiary is a party, or by which any of them is
bound, which are or would be required to be filed or listed as an exhibit
to the Company SEC Documents (any Contracts so filed or listed or
required to be so filed or listed collectively, the "Company Material
Contracts") which have not been so filed or listed. There are no
Contracts to which the Company or any Company Subsidiary is a party or by
which they are bound which contain provisions restricting or limiting the
Company's or any Company Subsidiary's ability to compete or otherwise
engage in specified lines of business, except for any such restrictions
or limitations that individually or in the aggregate would not have a
Company Material Adverse Effect.
(ii) Neither the Company nor any Company Subsidiary is in default
under any Company Material Contract, and there has not occurred any event
that, with the giving of notice or the lapse of time or both, would
constitute such a default by the Company or any Company Subsidiary or, to
the Knowledge
<PAGE>
20
of the Company, a default thereunder by any other party thereto, except
for any such defaults that individually or in the aggregate would not
have a Company Material Adverse Effect.
(u) Real Property.
(i) Each of the Company and the Company Subsidiaries has good
and marketable title to, or valid leasehold interests in, all of its
properties and assets except for such as are no longer used or useful in
the conduct of its business or as have been disposed of in the ordinary
course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances that individually or in
the aggregate would not have a Company Material Adverse Effect. All such
properties and assets, other than properties and assets in which the
Company or any Company Subsidiary has a leasehold interest, are free and
clear of all Liens, except for Liens that individually or in the
aggregate would not have a Company Material Adverse Effect.
(ii) Each of the Company and the Company Subsidiaries has
complied with the terms of all leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and effect,
except for such matters that individually or in the aggregate would not
have a Company Material Adverse Effect. The Company and the Company
Subsidiaries enjoy peaceful and undisturbed possession under all such
leases, except for failures to do so that individually or in the aggregate
would not have a Company Material Adverse Effect.
(v) Intellectual Property.
(i) The Company or a Company Subsidiary owns or has the valid
right to use all patents and patent applications, trademarks, service
marks, trademark or service mark registrations and applications, trade
names, logos, designs, Internet domain names, slogans and general
intangibles of like nature, together with all goodwill related to the
foregoing, copyrights, copyright registrations, renewals and applications,
Software (as defined below), technology, trade secrets and other
confidential information, know-how, proprietary processes, formulae,
algorithms, models and methodologies, licenses, agreements and all other
proprietary rights (collectively, the "INTELLECTUAL PROPERTY"), used in the
business of the Company or a Company Subsidiary as it currently is
conducted, except as would not have a Company Material Adverse Effect.
(ii) "Software" means any and all: (A) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (B) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (C) descriptions, flow-charts and other
work product used to design, plan, organize and develop any of the
foregoing, (D) the technology supporting and content contained on any
owned or operated Internet site(s) and
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21
(E) all documentation, including user manuals and training materials,
relating to any of the foregoing.
(iii) All of the Intellectual Property owned by the Company or a
Company Subsidiary is free and clear of all Liens, except for Liens that
individually or in the aggregate would not have a Company Material
Adverse Effect. None of the Intellectual Property owned by the Company or
a Company Subsidiary is owned by or registered in the name of any current
or former shareholder, director, executive, officer, employee, salesman,
agent, customer, representative or contractor of the Company or any
Company Subsidiary, nor does any such person have any interest therein or
rights thereto, including the right to royalty payments, except for such
matters that individually or in the aggregate would not have a Company
Material Adverse Effect.
(iv) Each material item of Software, which is used by the Company
or a Company Subsidiary is either: (A) owned by the Company or a Company
Subsidiary, (B) currently in the public domain or otherwise available to
the Company or a Company Subsidiary, without the need of a license, lease
or consent of any third party, or (C) used under rights granted to the
Company or a Company Subsidiary under a written agreement, license or
lease from a third party, except as would not have a Company Material
Adverse Effect.
(w) Transactions With Affiliates. There are no outstanding amounts
payable to or receivable from, or advances by the Company or any Company
Subsidiary to, and neither the Company nor any Company Subsidiary is otherwise
a creditor of or debtor to, any director or employee of the Company or any
Company Subsidiary, other than as part of the normal and customary terms of
such persons' employment or service with the Company or any Company
Subsidiary. Neither the Company nor any Company Subsidiary is a party to any
transaction or agreement with any director or officer of the Company or any
Company Subsidiary except for any such transactions or agreements that
individually or in the aggregate would not have a Company Material Adverse
Effect.
SECTION 3.02. Representations and Warranties of Parent and Sub.
Except as set forth in the Parent Disclosure Letter (with specific reference
to the relevant sections of the representations and warranties or covenants in
this Agreement or disclosure in such a way to make its relevance to the
information called for by the representations and warranties or covenants
readily apparent) or in the Parent SEC Documents filed and publicly available
prior to the date of this Agreement (the "Filed Parent SEC Documents") or as
otherwise expressly contemplated by this Agreement, Parent and Sub represent
and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent, Sub
and each of Parent's subsidiaries (each a "Parent Subsidiary") is a
corporation, partnership or other legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it
is organized and has the requisite power and authority to carry on its
business as now being conducted. Each of Parent, Sub and each Parent
Subsidiary is duly qualified or licensed to do business and is in good
standing in
<PAGE>
22
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed (individually or in the aggregate) would not (i) have a material
adverse effect on the business, properties, financial condition or results of
operations of Parent and the Parent Subsidiaries, taken as a whole (other than
effects relating to (A) the office products industry in general or other
industries in which the Parent operates in general, (B) general economic,
financial or securities market conditions in the United States or elsewhere
(including fluctuations, in and of themselves, in the price of shares of
Parent Common Stock), (C) the Merger, the announcement of this Agreement or
the consummation of any transaction contemplated by this Agreement, (D) acts
of war, insurrection, sabotage or terrorism or (E) the failure, in and of
itself, by Parent to meet any internal or published projections, forecasts or
revenue or earnings predictions for any period ending on or after the date of
this Agreement) or (ii) prevent Parent or Sub from performing their respective
obligations under this Agreement (a "Parent Material Adverse Effect"). Parent
has made available to the Company complete and correct copies of its Restated
Certificate of Incorporation and By-laws, and the Articles of Incorporation
and Code of Regulations of Sub, in each case as amended to the date of this
Agreement.
(b) Parent Subsidiaries. Section 3.02(b) of the letter from Parent,
dated the date of this Agreement, addressed to the Company (the "Parent
Disclosure Letter") lists each Parent Subsidiary and the ownership or interest
therein of Parent. All the outstanding shares of capital stock of each Parent
Subsidiary have been validly issued and are fully paid and nonassessable and
are owned by Parent, by another Parent Subsidiary or by Parent and another
Parent Subsidiary, free and clear of all Liens.
(c) Capital Structure. The authorized capital stock of Parent
consists of 200,000,000 shares of Parent Common Stock and 10,000,000 shares,
without par value, of preferred stock, of which 6,745,347 shares have been
designated as Convertible Preferred Stock, Series D ("Parent Series D
Preferred Stock"). Parent has issued rights to purchase shares of Parent
Common Stock (the "Parent Rights") that were issued pursuant to the Renewed
Rights Agreement dated as of September 25, 1997 (as amended from time to time,
the "Parent Rights Agreement"), between Parent and First Chicago Trust Company
of New York. At the close of business on June 30, 2003: (i) 58,313,553 shares
of Parent Common Stock and 4,146,255 shares of Parent Series D Preferred Stock
were outstanding, all of which were validly issued, fully paid and
nonassessable; (ii) no shares of Parent Common Stock were held by Parent in
its treasury; (iii) 3,331,806 shares of Parent Common Stock were issuable upon
the conversion or redemption of the Parent Series D Preferred Stock; (iv)
5,412,710 shares of Parent Common Stock were issuable upon the exercise of the
purchase contracts which form a part of Parent's Adjustable Conversion-Rate
Equity Security Units ("Parent Units"); and (v) 8,934,167 shares of Parent
Common Stock were issuable upon the exercise of outstanding employee or
director stock options (the "Parent Employee Stock Options") that were granted
pursuant to any stock plan, program or arrangement of Parent or any Parent
Subsidiary (the "Parent Employee Stock Plans"). Except as set forth above, at
the close of business on June 30, 2003, no shares of capital stock or other
voting securities of Parent were issued, reserved for issuance or outstanding.
Other than the Parent Units, there are no bonds,
<PAGE>
23
debentures, notes or other indebtedness of Parent having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of Parent must vote. Except as set forth
above, as of the date of this Agreement there are not any Options to which
Parent or any Parent Subsidiary is a party or by which any of them is bound
relating to the issued or unissued capital stock of Parent or any Parent
Subsidiary, or obligating Parent or any Parent Subsidiary to issue, transfer,
grant or sell any shares of capital stock or other equity interests in, or
securities convertible or exchangeable for any capital stock or other equity
interests in, Parent or any Parent Subsidiary or obligating Parent or any
Parent Subsidiary to issue, grant, extend or enter into any such Options. All
shares of Parent Common Stock that are subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instrument pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid
and nonassessable. All shares of Parent Common Stock that are subject to
issuance pursuant to the Merger, upon issuance pursuant to this Agreement,
will be duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. As of the date of this Agreement, there are not
any outstanding contractual obligations of Parent or any Parent Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of Parent
or any Parent Subsidiary, or make any material investment (in the form of a
loan, capital contribution or otherwise) in any person other than a Parent
Subsidiary. As of the date of this Agreement, the authorized shares of Sub
consist of 1,000 common shares, without par value, all of which have been
validly issued, are fully paid and nonassessable and are owned by Parent free
and clear of any Lien.
(d) Authority; Noncontravention. Parent and Sub have all requisite
corporate power and authority to enter into this Agreement and, subject to the
Parent Stockholder Approval, to consummate the transactions contemplated by
this Agreement. The Board of Directors of Parent has unanimously approved and
declared advisable this Agreement and the transactions contemplated by this
Agreement, and has resolved to recommend to Parent's stockholders that they
give the Parent Stockholder Approval. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement, in each case by Parent or by Parent and Sub, as the case may be,
have been duly authorized by all necessary corporate action on the part of
Parent and Sub, subject to the Parent Stockholder Approval. This Agreement has
been duly executed and delivered by Parent and Sub, respectively, and,
assuming the due authorization, execution and delivery by the Company,
constitutes a valid and binding obligation of Parent and Sub, respectively,
enforceable against each such party in accordance with its terms (subject to
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
the rights of creditors generally and the availability of equitable remedies).
The execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination or acceleration of any obligation or to loss of any
material rights under, or result in the creation of any Lien upon any of the
properties or assets of Parent, Sub or any other Parent Subsidiary under, (i)
the Certificate of Incorporation and By-laws of Parent, the Articles of
Incorporation and Code of Regulations of Sub, or the comparable
<PAGE>
24
organizational documents of any Parent Subsidiary, (ii) any Contract
applicable to Parent, Sub or any other Parent Subsidiary or their respective
properties or assets or (iii) subject to the governmental filings and the
obtaining of the Parent Stockholder Approval and other matters referred to in
the following sentence, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Parent, Sub or any other Parent Subsidiary or
their respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not have a Parent Material Adverse
Effect. No consent, approval, order or authorization of, or registration or
filing with, any Governmental Entity is required by or with respect to Parent,
Sub or any other Parent Subsidiary in connection with the execution and
delivery of this Agreement by Parent or Sub, as the case may be, or the
consummation by Parent or Sub, as the case may be, of the transactions
contemplated by this Agreement, except for (i) the filing of a premerger
notification and report form by Parent under the HSR Act, (ii) the filing with
the SEC of (A) the Form S-4, (B) the Joint Proxy Statement and (C) such
reports under Section 12 or 13(a) of the Exchange Act, as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement, (iii) the filing of the Certificate of Merger with the Ohio
Secretary of State and appropriate documents with the relevant authorities of
other states in which Parent is qualified to do business and such filings with
Governmental Entities to satisfy the applicable requirements of state
securities or "blue sky" laws, (iv) such filings with and approvals of the
NYSE to permit the shares of Parent Common Stock that are to be issued in the
Merger to be listed on the NYSE, (v) those that may be required solely by
reason of the Company's (as opposed to any other third party's) participation
in the Merger and the other transactions contemplated by this Agreement and
(vi) such other consents, approvals, orders, authorizations, registrations,
declarations and filings, including under applicable Environmental Laws, (x)
as may be required under the laws of any foreign country in which Parent or
any Parent Subsidiary conducts any business or owns any property or assets or
(y) that, if not obtained or made, would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
(e) SEC Documents; Undisclosed Liabilities. Parent has filed all
required reports, schedules, forms, statements and other documents with the
SEC since January 1, 2002 (the "Parent SEC Documents"). As of its date, each
Parent SEC Document complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules,
policy statements and regulations of the SEC promulgated thereunder applicable
to such Parent SEC Documents, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein (other than in the case
of registration statements of Parent filed under the Securities Act, in light
of the circumstances under which they were made) not misleading, except to the
extent that such Parent SEC Document has been modified or superseded by a
later filed Parent SEC Document. The consolidated financial statements of
Parent included in Parent's (i) annual report on Form 10-K for the fiscal year
ended December 31, 2002 and (ii) quarterly report on Form 10-Q for the
quarterly period ended March 31, 2003, complied at the time they were filed as
to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of unaudited
<PAGE>
25
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and each fairly presented in all material respects the consolidated
financial position of Parent as of the dates thereof and the consolidated
results of its operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).
Except for liabilities incurred in connection with the transactions
contemplated by this Agreement or in the ordinary course of business since the
date of the most recent balance sheet included in the Parent SEC Documents,
neither Parent nor any Parent Subsidiary has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) required by
GAAP to be set forth on a consolidated balance sheet of Parent or the notes
thereto which, individually or in the aggregate, would have a Parent Material
Adverse Effect. None of the Parent Subsidiaries is subject to the
informational reporting requirements of Section 13 of the Exchange Act.
(f) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub for inclusion or incorporation by reference in (i)
the Form S-4 will, at the time the Form S-4 is filed with the SEC, at any time
it is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact, or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) the Joint Proxy Statement will, at
the date the Joint Proxy Statement is first mailed to the Company's
shareholders and Parent's stockholders or at the time of the Company
Shareholders Meeting or the Parent Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The Form S-4
and the Joint Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation or warranty is made by
Parent or Sub with respect to statements made or incorporated by reference
therein based on information supplied by the Company for inclusion or
incorporation by reference in the Form S-4 or the Joint Proxy Statement, as
the case may be.
(g) Absence of Certain Changes or Events. From March 31, 2003, to
the date of this Agreement, Parent and the Parent Subsidiaries taken as a
whole have conducted their business only in the ordinary course, and:
(i) there has not been any event, change, effect or development
which, individually or in the aggregate, would have a Parent Material
Adverse Effect;
(ii) except for regular dividends not in excess of $0.60 per
share of Parent Common Stock per annum and $3.31875 per share of Parent
Series D Preferred Stock per annum, in each case with customary record and
payment dates, there has not been any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any shares of capital stock of Parent; and
<PAGE>
26
(iii) there has not been any split, combination or
reclassification of any capital stock of Parent or any issuance or the
authorization of any issuance of any other securities in exchange or in
substitution for shares of capital stock of Parent.
(h) Litigation. As of the date of this Agreement, there is no suit,
action or proceeding pending or, to the Knowledge of Parent, threatened
against Parent or any Parent Subsidiary that, individually or in the
aggregate, would have a Parent Material Adverse Effect, and there is not any
judgment, decree, injunction, rule or order of any Governmental Entity
outstanding against Parent or any Parent Subsidiary which, individually or in
the aggregate, would have a Parent Material Adverse Effect.
(i) Absence of Changes in Benefit Plans. Except for such matters
that would not have a Parent Material Adverse Effect, since December 31, 2002,
there has not been any adoption or amendment in any material respect by Parent
or any Parent Subsidiary of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding) providing
benefits to any current or former officer or director of Parent or any Parent
Subsidiary.
(j) Contracts.
(i) As of the date hereof, there are no Contracts to which Parent
or any Parent Subsidiary is a party, or by which any of them is bound,
which are or would be required to be filed or listed as an exhibit to the
Parent SEC Documents (any Contracts so filed or listed or required to be
so filed or listed collectively, the "Parent Material Contracts") which
have not been so filed or listed. There are no Contracts to which Parent
or any Parent Subsidiary is a party or by which they are bound which
contain provisions restricting or limiting Parent's or any Parent
Subsidiary's ability to compete or otherwise engage in specified lines of
business, except for any such restrictions or limitations that
individually or in the aggregate would not have a Parent Material Adverse
Effect.
(ii) Neither Parent nor any Parent Subsidiary is in default under
any Parent Material Contract, and there has not occurred any event that,
with the giving of notice or the lapse of time or both, would constitute
such a default by the Parent or any Parent Subsidiary or, to the
Knowledge of Parent, a default thereunder by any other party thereto,
except for any such defaults that individually or in the aggregate would
not have a Parent Material Adverse Effect.
(k) Real Property.
(i) Each of Parent and the Parent Subsidiaries has good and
marketable title to, or valid leasehold interests in, all of its
properties and assets except for such as are no longer used or useful in
the conduct of its business or as
<PAGE>
27
have been disposed of in the ordinary course of business and except for
defects in title, easements, restrictive covenants and similar
encumbrances that individually or in the aggregate would not have a
Parent Material Adverse Effect. All such properties and assets, other
than properties and assets in which Parent or any Parent Subsidiary has a
leasehold interest, are free and clear of all Liens, except for Liens
that individually or in the aggregate would not have a Parent Material
Adverse Effect.
(ii) Each of Parent and the Parent Subsidiaries has complied with
the terms of all leases to which it is a party and under which it is in
occupancy, and all such leases are in full force and effect, except for
such matters that individually or in the aggregate would not have a
Parent Material Adverse Effect. Parent and the Parent Subsidiaries enjoy
peaceful and undisturbed possession under all such leases, except for
failures to do so that individually or in the aggregate would not have a
Parent Material Adverse Effect.
(l) Intellectual Property.
(i) Parent or a Parent Subsidiary owns or has the valid right to
use all Intellectual Property used in the business of Parent or a Parent
Subsidiary as it currently is conducted, except as would not have a
Parent Material Adverse Effect.
(ii) All of the Intellectual Property owned by Parent or a Parent
Subsidiary is free and clear of all Liens, except for Liens that
individually or in the aggregate would not have a Parent Material Adverse
Effect. None of the Intellectual Property owned by Parent or a Parent
Subsidiary is owned by or registered in the name of any current or former
shareholder, director, executive, officer, employee, salesman, agent,
customer, representative or contractor of Parent or any Parent
Subsidiary, nor does any such person have any interest therein or rights
thereto, including the right to royalty payments, except for such matters
that individually or in the aggregate would not have a Parent Material
Adverse Effect.
(iii) Each material item of Software, which is used by Parent or
a Parent Subsidiary is either: (A) owned by Parent or a Parent Subsidiary,
(B) currently in the public domain or otherwise available to Parent or a
Parent Subsidiary, without the need of a license, lease or consent of any
third party, or (C) used under rights granted to Parent or a Parent
Subsidiary under a written agreement, license or lease from a third
party, except as would not have a Parent Material Adverse Effect.
(m) Voting Requirements. The approval and adoption of this Agreement
by the holders of a majority of a quorum of the outstanding shares of Parent
Common Stock and Parent Series D Preferred Stock, voting together as one class
(the "Parent Stockholder Approval"), is the only vote of the holders of any
class or series of stock of
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Parent necessary to approve or adopt this Agreement and the transactions
contemplated by this Agreement.
(n) Brokers. No broker, investment banker, financial advisor or
other person, other than Goldman, Sachs & Co., is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent. Complete and correct copies of Parent's
engagement letter with Goldman, Sachs & Co. regarding the transactions
contemplated by this Agreement have previously been furnished to the Company.
(o) Opinion of Financial Advisor. Parent has received the opinion of
Goldman, Sachs & Co., dated the date of this Agreement, to the effect that, as
of such date, the Consideration is fair to Parent from a financial point of
view.
(p) Taxes. (i) Parent and each Parent Subsidiary have timely filed
(or have had timely filed on their behalf) or will file or cause to be timely
filed, all Tax Returns required by applicable law to be filed by any of them
prior to or as of the Effective Time of the Merger, in each case other than
such failures to file that would not have a Parent Material Adverse Effect.
All such Tax Returns are, or will be at the time of filing, true, complete and
correct, other than such failures to be true, complete and correct that would
not have a Parent Material Adverse Effect.
(ii) Parent and each Parent Subsidiary have paid (or have had
paid on their behalf) or, where payment is not yet due, have established
(or have had established on their behalf and for their sole benefit and
recourse) or will establish or cause to be established on or before the
Effective Time of the Merger an adequate accrual for the payment of all
Taxes due with respect to any period ending prior to or as of the
Effective Time of the Merger, except where the failure to pay or
establish adequate reserves would not have a Parent Material Adverse
Effect.
(iii) No deficiencies for any Taxes have been proposed, asserted
or assessed against Parent or any Parent Subsidiary, and no requests for
waivers of the time to assess any such Taxes are pending, in each case
other than with respect to such deficiencies or Taxes that would not have
a Parent Material Adverse Effect. The Federal income Tax Returns of
Parent and each Parent Subsidiary consolidated in such Tax Returns have
been examined by and settled with the United States Internal Revenue
Service for all years through 1993.
(iv) Neither Parent nor any Parent Subsidiary has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code in the two years prior to the date of this Agreement.
(q) Compliance With Laws. Neither Parent nor any Parent Subsidiary
has violated or failed to comply with any statute, law, ordinance, regulation,
rule, judgment,
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decree or order of any Governmental Entity applicable to its business or
operations, except for violations and failures to comply that, individually or
in the aggregate, would not have a Parent Material Adverse Effect. Parent and
the Parent Subsidiaries possess all Permits necessary to conduct their
respective businesses as such businesses are currently conducted, except for
such Permits the lack of possession of which would not have a Parent Material
Adverse Effect. All such Permits are validly held by Parent or the Parent
Subsidiaries, and Parent and the Parent Subsidiaries have complied in all
respects with all terms and conditions thereof, except for such instances
where the failure to validly hold such Permits or the failure to have complied
with such Permits would not have a Parent Material Adverse Effect; and none of
such Permits will be subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of this Agreement or the
consummation of the Merger, other than such Permits the suspension,
modification or nonrenewal of which, individually or in the aggregate would
not have a Parent Material Adverse Effect. This Section 3.02(q) shall not
apply to Taxes or Environmental Law, which are the subject of Sections 3.02(p)
and 3.02(r), respectively.
(r) Environmental Matters. Except for such matters that individually
or in the aggregate would not have a Parent Material Adverse Effect:
(i) Parent and each of the Parent Subsidiaries are, and have
been, in compliance with all Environmental Laws, and neither Parent nor any
Parent Subsidiary has received any (A) communication that alleges that
Parent or any Parent Subsidiary is in violation of, or has liability
under, any Environmental Law, (B) written request for information
pursuant to any Environmental Law or (C) notice regarding any requirement
that is proposed for adoption or implementation under any Environmental
Law and that would be applicable to the operations of the Parent or any
Parent Subsidiary;
(ii) (A) Parent and each Parent Subsidiary have obtained and are
in compliance with all permits, licenses and governmental authorizations
pursuant to Environmental Law necessary for their operations as currently
conducted, (B) all such Environmental Permits are valid and in good
standing, and (C) neither Parent nor any Parent Subsidiary has been
advised by any Governmental Entity of any actual or potential change in
the status or terms and conditions of any Environmental Permit;
(iii) there are no Environmental Claims pending or, to the
Knowledge of Parent, threatened, against Parent or any Parent Subsidiary;
(iv) there have been no Releases of any Hazardous Material that
could reasonably be expected to form the basis of any Environmental Claim
against Parent or any Parent Subsidiary or against any person whose
liabilities for such Environmental Claims Parent or any Parent Subsidiary
has, or may have, retained or assumed, either contractually or by
operation of law; and
(v) (A) neither Parent nor any Parent Subsidiary has retained or
assumed, either contractually or by operation of law, any liabilities or
obligations
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that could reasonably be expected to form the basis of any Environmental
Claim against Parent or any Parent Subsidiary, and (B) to the Knowledge
of Parent, no Environmental Claims are pending against any person whose
liabilities for such Environmental Claims Parent or any Parent Subsidiary
has, or may have, retained or assumed, either contractually or by
operation of law.
(s) Rights Agreements. Parent has taken all necessary action, if
any, to render the Parent Rights inapplicable to the Merger and the other
transactions contemplated by this Agreement. As of the Effective Time of the
Merger, the Board of Directors of Parent shall have taken all necessary action
to cause one Parent Right to be issued with each share of Parent Common Stock
issuable to holders of Company Common Shares upon consummation of the Merger
pursuant to Article II.
(t) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated by this Agreement.
(u) Ownership of Company Securities. Neither Parent nor any Parent
Subsidiary beneficially owns or exercises control or direction over, nor do
they have any rights to acquire, any Company Common Shares or any other
securities of the Company.
(v) Capital Resources. Parent will have at the Effective Time of the
Merger, sufficient cash to pay the Per Share Cash Consideration.
ARTICLE IV
Covenants Relating to Conduct of Business
-----------------------------------------
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective
Time of the Merger, except as consented to in writing by Parent, the Company
shall, and shall cause the Company Subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and as it is currently proposed to be conducted
and in compliance in all material respects with all applicable laws and
regulations and, to the extent consistent therewith, use reasonable best
efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and preserve
their material relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them. Without limiting
the generality of the foregoing, during the period from the date of this
Agreement to the Effective Time of the Merger, except as expressly
contemplated by this Agreement or as set forth in Section 4.01(a) of the
Company Disclosure Letter, or otherwise approved in writing by Parent (such
approval not to be unreasonably withheld or delayed in the case of subsections
(iv) through (viii) and, to the extent applicable, subsection (ix)) the
Company shall not, and shall not permit any Company Subsidiary to:
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(i) (x) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its shares (or make any
announcement or other public statement of the intention to declare, set
aside or pay any such dividends or make any such other distributions),
other than dividends and distributions by a direct or indirect wholly
owned Company Subsidiary to its parent, (y) split, combine or reclassify
any of its shares or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for its shares or
(z) purchase, redeem or otherwise acquire any shares of the Company or
shares of any Company Subsidiary or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities (other than purchases in the ordinary course consistent with
past practice for distributions pursuant to the CSP, ESPP and the
Company's non-qualified deferred compensation plan);
(ii) issue, deliver, sell, grant, pledge or otherwise encumber
any of its shares, 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 make any
announcement of the intention to so issue, deliver, sell or grant any such
shares, other voting securities, convertible securities, rights, warrants
or options (other than (A) as required pursuant to existing agreements with
current or former employees, consultants and directors, and Company Benefit
Plans (including the Company Employee Share Plans) in effect on the date of
this Agreement, (B) contributions and distributions of shares of the
Company and rights related to shares of the Company by the Company and
the Company Subsidiaries pursuant to Company Benefit Plans (including the
Company Employee Share Plans) in the ordinary course of business
consistent with past practice, (C) the issuance of Company Common Shares
and related rights upon the exercise of Company Employee Share Options
outstanding on the date of this Agreement and in accordance with their
present terms, (D) the issuance of shares of th |
