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269390v6
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (the "Amendment")
is made and entered into effective the 9th day of May, 2000, by and among
Northstar Computer Forms, Inc. ("Northstar"), Ennis Business Forms, Inc.
("Ennis") and Polaris Acquisition Corp. ("Buyer Subsidiary').
RECITALS:
WHEREAS, Northstar, Ennis and Buyer Subsidiary are parties to that
certain Agreement and Plan of Merger dated as of February 21, 2000 (the
"Merger Agreement"); and
WHEREAS, Section 1.8 and other related provisions of the Merger
Agreement specify the applicable procedures for payment and disbursement
(the "Payment/Disbursement Procedures") of the Merger Consideration, the
consideration to be paid to the holders of the Stock Options, and the Bonus
Fund; and
WHEREAS, the parties now desire to make certain amendments to the
Payment/Disbursement Procedures as set forth herein; and
WHEREAS, unless otherwise expressly stated herein, all capitalized
words will have the meanings assigned to them in the Merger Agreement.
COVENANTS:
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties agree
as follows:
1. Section 1.6(d) of the Merger Agreement is hereby amended to read in
its entirety as follows:
(d) Immediately prior to the Effective Time, each Stock Option,
except for options to purchase an aggregate of 41,000 shares (the
"Overstreet Options") of Northstar Common Stock held by Kenneth
Overstreet (which shall be converted into options to purchase
common stock of Buyer), shall be exercised pursuant to the Stock
Option Exercise and Sale Agreements (as defined in Section 5.5)
and the Shares underlying each such Stock Option shall be
immediately resold to Northstar in a manner which would cause the
disposition of those Stock Options which qualify as incentive
stock options to be treated as a disqualifying disposition
pursuant to Section 424(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), and the payment for such Stock Options
shall be made as described in Section 5.5.
2. Section 1.8(a) of the Merger Agreement is hereby amended to read in
its entirety as follows:
(a) At or before the Effective Time, Buyer or Buyer Subsidiary
shall deposit in immediately available funds with Norwest Bank
Minnesota, N.A., Minneapolis, Minnesota ("Norwest"), or any other
disbursing agent that is selected by Buyer and reasonably
satisfactory to Northstar (the "Disbursing Agent"), an amount
equal to the sum of the following: (i) the product of the number
of Shares of Northstar Stock issued and outstanding immediately
prior to the Effective Time (other than Shares held of record, if
any, by Buyer or Buyer Subsidiary), prorated for fractional
shares, times the Merger Consideration; and (ii) for each
incentive Stock Option (meaning a stock option meeting the
requirements of Section 422 of the Code, hereinafter "Incentive
Stock Option") (other than the Overstreet Options), the product
of the number of Shares of Northstar Stock subject to such
Incentive Stock Option immediately prior to the Effective Time
times the per share Merger Consideration (the "Gross Incentive
Stock Option Consideration") (the aggregate of such amounts being
hereafter referred to as the "Fund"). Out of the Fund, the
Disbursing Agent shall, pursuant to irrevocable instructions from
the holders of Northstar Stock with respect to payment referred
to in Section 1.6(a), pursuant to irrevocable instructions from
the holders of Incentive Stock Options with respect to payment
referred to in Section 1.6(d), and pursuant to irrevocable
instructions from the Surviving Corporation with respect to
payments referred to in Section 1.7, make the payments referred
to in Sections 1.6(a), 1.6(d), and 1.7 hereof, subject to the
requirements of paragraphs (b), (d) and (e) of this Section 1.8.
The Disbursing Agent may invest portions of the Fund as the
Surviving Corporation directs, provided that substantially all
such investments shall be in obligations of or guaranteed by the
United States of America, in commercial paper obligations
receiving the highest rating from either Moody's Investors
Service, Inc. or Standard & Poor's Corporation, or in
certificates of deposit, bank repurchase agreements or bankers'
acceptances of commercial banks with capital exceeding
$100,000,000 (collectively, "Permitted Investments"), or in money
market funds which are invested solely in Permitted Investments.
Any net profit resulting from, or interest or income produced by,
such investments shall be payable to the Surviving Corporation.
Any amount remaining in the Fund one (1) year to the day after
the Effective Time may be refunded to the Surviving Corporation
at its option; provided, however, that the Surviving Corporation
shall be liable for any cash payments required to be made
thereafter pursuant to Sections 1.6(a) and 1.7 hereof, this
paragraph (a) of this Section 1.8 and paragraph (e) of this
Section 1.8.
3. Section 1.8(c) of the Merger Agreement is hereby amended to read in
its entirety as follows:
(c) The Disbursing Agent, after the Effective Time and as soon
as practicable following receipt of irrevocable instructions from
the holders of Incentive Stock Options (other than the Overstreet
Options), pursuant to the Stock Option Exercise and Sale
Agreements (as defined in Section 5.5), shall pay, in immediately
available funds to R. J. Steichen & Company, or any other third
party independent brokerage that is selected by Northstar and
reasonably satisfactory to Buyer (the "Third Party Independent
Brokerage") the Gross Incentive Stock Option Consideration.
Immediately following such payment to the Third Party Independent
Brokerage, the Third Party Independent Brokerage shall pay, by
check or draft to the holders of said Incentive Stock Options, an
amount determined by multiplying the number of Shares of
Northstar Stock subject to such Incentive Stock Option
immediately prior to the Effective Time times the difference
between the Merger Consideration and the Incentive Stock Option
exercise price (the "Net Incentive Stock Option Consideration")
of such Incentive Stock Option immediately prior to the Effective
Time (the "Incentive Stock Option Exercise Price").
Contemporaneously with the exercise of said Incentive Stock
Options, the Third Party Independent Brokerage shall pay, in
immediately available funds to Northstar, an amount determined by
aggregating the Incentive Stock Option Exercise Price of such
Incentive Stock Options.
4. Section 1.8(f) is hereby added to the Merger Agreement and shall read
in its entirety as follows:
(f) At or before the Effective Time, Northstar shall make
available in immediately available funds, an amount equal to the
sum of the following (i) for each nonqualified Stock Option
(meaning a stock option not meeting the requirements of Section
422 of the Code, hereinafter "Nonqualified Stock Option"), the
product of the number of shares of Northstar Stock subject to
such Nonqualified Stock Option immediately prior to the Effective
Time times the difference between the Merger Consideration and
the per share exercise price of such Nonqualified Stock Option
immediately prior to the Effective Time (the "Nonqualified Stock
Option Exercise Price") (the aggregate of such amounts being
hereafter referred to as the "Nonqualified Fund") and (ii) 33.33%
of the Bonus Fund contemplated by Section 5.9 hereof. Out of the
Nonqualified Fund and the Bonus Fund, Northstar shall, pursuant
to irrevocable instructions from the holders of the Nonqualified
Stock Options with respect to payment referred to in Section
1.6(d) and pursuant to the provisions of Section 5.9, make the
payments referred to in Sections 1.6(d) and 5.9 hereof, subject
to the applicable payroll taxes.
5. Section 2.2(c) of the Merger Agreement is hereby amended to read in
its entirety as follows:
(c) Subject to the right of the Surviving Corporation to receive
a refund of amounts remaining in the Fund one year after the
Closing Date as provided in Section 1.8 hereof, Buyer or Buyer
Subsidiary shall irrevocably deposit with the Disbursing Agent
the amount designated as the Fund as described in Section 1.8(a).
6. Section 5.5 of the Merger Agreement is hereby amended to read in its
entirety as follows:
5.5 Stock Options. Northstar shall obtain from all holders
of Stock Options (except the Overstreet Options) duly executed
Stock Option Exercise and Sale Agreements which will provide that
the holders thereof will exercise their Stock Options immediately
prior to the Effective Time of the Merger and sell the Shares
thereunder in accordance with Section 1.8, and such shares of
Northstar Stock underlying such Stock Options shall be deemed
cancelled upon the consummation thereof (the "Stock Option
Exercise and Sale Agreements"). The Stock Option Exercise and
Sale Agreements shall be in a form reasonably satisfactory to
Northstar and Buyer. Payment for each Stock Option other than
the Overstreet Options shall be made in cash and be equal to the
product of the number of Shares subject to such Stock Option
immediately prior to the Effective Time times the difference
between the Merger Consideration and the Incentive or
Nonqualified Stock Option Exercise Price (as the case may be)
immediately prior to the Effective Time (the "Net Stock Option
Consideration"). In no event shall any holder of an Incentive
Stock Option or Nonqualified Stock Option exercised pursuant to a
Stock Option Exercise and Sale Agreement be entitled to receive
any consideration for said Stock Option or the Shares thereunder,
other than the Net Stock Option Consideration.
7. Section 5.9 of the Merger Agreement is hereby amended to read in its
entirety as follows:
5.9 Bonus Fund. Northstar shall (a) establish a
transaction completion bonus fund equal to one percent (1%) of
the sum of the aggregated Merger Consideration and the aggregated
Net Stock Option Consideration (but aggregating not more than
$450,000, the "Bonus Fund"), and (b) as provided in Section
1.8(f), pay to Northstar's four executive officers other than
Roger Bredesen (the "Executive Officers"), at Closing an
aggregate of 33.33% of the Bonus Fund, and the Surviving
Corporation shall (c) pay to the Executive Officers (on a
proportionate basis as described below) 33.33% of the Bonus Fund
on the first anniversary of the Closing Date and the remaining
33.33% of the Bonus Fund on the second anniversary of the Closing
Date, provided in each case that such Executive Officer either
(i) is still employed with the Surviving Corporation or its
successor on such dates, or (ii) is not employed on such dates as
a result of death, total disability, retirement, termination
without cause or a change of control, all as provided in said
executives' employment agreements with Buyer. Each Executive
Officer's proportionate share of the Bonus Fund payable at the
Closing and on the anniversary dates of the Closing is calculated
as the percentage by which each person's 1999 base salary bears
to the collective 1999 base salaries of such executives. This
Section 5.9 and the obligations of Buyer hereunder shall survive
the closing of the transactions contemplated hereby, are intended
to benefit Executive Officers (each of whom shall be entitled to
enforce this Section against Buyer) and shall be binding on all
successors and assigns of Buyer.
8. The Merger Agreement is hereby deemed further amended to the extent
necessary (if at all) to effectuate the foregoing amendments, and in
the event that there is a conflict or inconsistency between this
Amendment and the Merger Agreement, this Amendment shall control.
9. Except as specifically amended hereby, the Merger Agreement remains in
full force and effect.
10. This Amendment may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
Northstar Computer Forms, Inc.,
a Minnesota corporation
By /s/Roger T. Bredesen
-----------------------------
Its Chairman
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Ennis Business Forms, Inc.,
a Texas corporation
By /s/Keith S. Walters
-----------------------------
Its Chairman, CEO & President
----------------------------
Polaris Acquisition Corp.,
a Minnesota corporation
By /s/Keith S. Walters
-----------------------------
Its Chairman, CEO & President
----------------------------
