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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 02549
----------------
FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 13, 1995
UNITED STATIONERS INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-10653 36-3141189
- ---------------------------------- -----------------------------------
(Commission File Number) (IRS Employer Identification No.)
2200 East Golf Road, Des Plaines, Illinois 60016
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(Address of principal executive offices) (Zip Code)
(708) 699-5000
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Registrant's Telephone Number
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Item 5. Changes in Control of Registrant
--------------------------------
On February 14, 1995, United Stationers Inc., a Delaware corporation
(the "Company") announced that it had entered into an Agreement and Plan of
Merger dated as of February 13, 1995 with Associated Holdings, Inc., a
Delaware corporation, (the "Purchaser"), (the "Merger Agreement"). Under the
Merger Agreement, the Purchaser will commence a tender offer no later than
February 21, 1995, for up to 92.5% of the outstanding common stock of the
Company at $15.50 per share, net to the seller in cash, or approximately
$266.6 million in the aggregate.
The tender offer will be followed by a merger of Purchaser into the
Company, with the Company as the surviving entity. In the merger, shares
representing a total of 7.5% of the currently outstanding shares of the
Company will remain outstanding as shares of the surviving company and will
represent, in the aggregate, a 20% interest, on a fully diluted basis, in the
surviving company which will remain public. Holders of shares not purchased in
the tender will receive cash equal to the portion, if any, of the $266.6
million not paid to shareholders in the tender offer as well as their
proportionate share of the 20% interest in the surviving company.
Concurrent with the execution of the Merger Agreement, each director
and certain other stockholders of the Company entered into an Agreement to
Tender with Associated pursuant to which the stockholders agreed, subject to
certain conditions, to tender pursuant to the tender offer, in the aggregate,
approximately 5,033,321 shares, constituting approximately 27.1% of the
outstanding shares of the Company.
On February 14, 1995, the Company issued a press release with
respect to the Merger Agreement and the transactions contemplated thereby.
The Merger Agreement, a composite Agreement to Tender, and press
release are attached as Exhibits 1, 2 and 3 hereto, respectively, and are
incorporated herein by reference.
Item 7. Exhibits
--------
1. Agreement and Plan of Merger dated as of February 13, 1995 between
United Stationers Inc. and Associated Holdings, Inc.
2. A composite Agreement to Tender dated as of February 13, 1995
between Associated Holdings, Inc. and certain stockholders of the
Company.
3. Press release issued by United Stationers Inc. and Associated
Holdings, Inc. on February 14, 1995.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED STATIONERS INC.
Dated: February 15, 1995 By: /s/ Joel D. Spungin
--------------------------------------
Name: Joel D. Spungin
Title: Chairman of the Board and Chief
Executive Officer
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EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
1. Agreement and Plan of Merger dated as
of February 13, 1995 between United
Stationers Inc. and Associated
Holdings, Inc.
2. A composite Agreement to Tender dated as of
February 13, 1995 between Associated
Holdings, Inc. and certain stockholders
of the Company.
3. Press release issued by United Stationers Inc.
and Associated Holdings, Inc. on February 14, 1995.
-4-
<PAGE>
[EXECUTION COPY]
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BETWEEN
ASSOCIATED HOLDINGS, INC.
AND
UNITED STATIONERS INC.
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TABLE OF CONTENTS
-----------------
<TABLE>
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Page
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<C> <S> <C>
ARTICLE 1 THE MERGER.......................................... 1
1.1 The Merger.......................................... 1
1.2 Effective Time of the Merger........................ 2
1.3 Closing............................................. 2
ARTICLE 2 THE OFFER........................................... 2
2.1 The Offer........................................... 2
2.2 Company Action...................................... 5
2.3 Company Board of Directors.......................... 6
ARTICLE 3 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.. 8
3.1 Effect on Capital Stock............................. 8
3.2 Adjustment of Merger Consideration.................. 10
3.3 Shares of Dissenting Stockholders................... 10
3.4 Exchange of Company Common Stock Certificates....... 11
3.5 Exchange of AHI Stock............................... 12
3.6 Company Stock Options............................... 13
3.7 AHI Stock Options................................... 13
3.8 Short-Form Merger................................... 13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES...................... 14
4.1 Representations and Warranties of the Company....... 14
4.2 Representations and Warranties of AHI............... 21
ARTICLE 5 COVENANTS RELATING TO CONDUCT OF BUSINESS........... 30
5.1 Covenants of the Company............................ 30
5.2 Covenants of AHI.................................... 34
ARTICLE 6 ADDITIONAL AGREEMENTS............................... 36
6.1 Information Statements; Offering Documents.......... 36
6.2 Access to Information............................... 37
6.3 Stockholder Approval................................ 37
6.4 Legal Conditions to Merger.......................... 38
6.5 Financing........................................... 38
6.6 Expenses............................................ 39
6.7 Brokers or Finders.................................. 39
6.8 Indemnification and Insurance....................... 40
6.9 Additional Agreements............................... 43
6.10 Employee Contracts and Employee Benefit Plans....... 43
6.11 Financial Condition................................. 45
6.12 Compliance Certificates............................. 45
6.13 Company Dividends................................... 45
6.14 AHI Stockholder Agreements.......................... 46
6.15 Agreements to be Assumed by the Company............. 46
6.16 Subsidiary Merger................................... 46
</TABLE>
(i)
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<TABLE>
<CAPTION>
Page
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ARTICLE 7 CONDITIONS PRECEDENT........................... 47
7.1 Conditions to Each Party's Obligations......... 47
7.2 Conditions to Obligations of AHI............... 48
7.3 Conditions to Obligations of the Company....... 48
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER.............. 49
8.1 Termination.................................... 49
8.2 Effect of Termination.......................... 51
8.3 Amendment...................................... 53
8.4 Extension; Waiver.............................. 54
ARTICLE 9 GENERAL PROVISIONS............................. 54
9.1 Nonsurvival of Representations and Warranties.. 54
9.2 Notices........................................ 54
9.3 Interpretation................................. 55
9.4 Counterparts................................... 55
9.5 Entire Agreement; Third Party Beneficiaries.... 55
9.6 Governing Law.................................. 56
9.7 Publicity...................................... 56
9.8 Assignment 56
</TABLE>
Annex A Offer Conditions
Exhibit A Amendment to Company
Certificate of Incorporation
Exhibit B Form of Tender Agreement
Exhibit C Form of Certificates of Designations, Preferences
and Rights for Company Preferred Stock
Exhibit D-1 Company Material Consents
Exhibit D-2 AHI Material Consents
Exhibit E Form of Benefits Trust Agreement
Exhibit F Form of Bonus Plan Trust
Exhibit G Form of Benefits Letter of Credit
Exhibit H Form of Bonus Trust Letter of Credit
Exhibit I Solvency Opinion
(ii)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 13, 1995, between
Associated Holdings, Inc., a Delaware corporation ("AHI"), and United Stationers
Inc., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of AHI and the Company
each has approved the merger of AHI into the Company (the "Merger"), pursuant to
which the Company will be the surviving corporation;
WHEREAS, the stockholders of AHI have adopted this Agreement and
approved the Merger in accordance with the General Corporation Law of the State
of Delaware (the "DGCL");
WHEREAS, AHI shall commence a tender offer to purchase up to 92.5% of
the issued and outstanding shares of common stock, par value $.10 per share, of
the Company (the "Company Shares" or "Company Common Stock") at a price of
$15.50 per share, net to the seller in cash, in accordance with the terms
hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, the
parties agree as follows:
ARTICLE 1
THE MERGER
----------
1.1 The Merger.
----------
(a) Effective Time. On the terms and subject to the conditions
of this Agreement, and in accordance with the DGCL at the Effective Time (as
defined in Section 1.2 hereof): (i) AHI will merge with and into the Company;
(ii) the separate existence of AHI shall cease and the Company shall continue as
the surviving corporation (the Company, in its capacity as the surviving
corporation in the Merger, is sometimes referred to herein as the "Surviving
Corporation"); (iii) the Restated Certificate of Incorporation of the Company as
amended as set forth on Exhibit A hereto shall as so amended, be the Certificate
of Incorporation of the Surviving Corporation; (iv) the By-laws of the Company
as in effect immediately prior to the Effective Time shall be the By-laws of the
Surviving Corporation; and (v) the directors of AHI immediately prior to the
Effective Time of the Merger shall be the directors of the Surviving
Corporation, to serve in accordance with the by-laws thereof, until their
successors are duly elected and qualified, or their earlier death, resignation
or removal.
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(b) Effects of Merger. At and after the Effective Time, the
Merger shall have all the effects provided in this Agreement and by applicable
law.
1.2 Effective Time of the Merger. Subject to the provisions of this
Agreement, a certificate of merger (the "Certificate of Merger") shall be duly
prepared and executed by AHI and the Company and thereafter delivered to the
Secretary of State of the State of Delaware for filing, as provided in the DGCL,
as soon as practicable on the Closing Date (as hereinafter defined). The Merger
shall become effective upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (the "Effective Time").
1.3 Closing. Unless this Agreement shall have been terminated
pursuant to Section 8.1 and subject to the satisfaction or waiver of all
conditions to the consummation of the transactions contemplated hereby, the
closing of the Merger (the "Closing") will take place at the offices of Weil,
Gotshal & Manges, 767 Fifth Avenue, New York, New York, at 10:00 a.m., Local
Time, on a date specified by AHI which is no more than five business days after
the first date on which each of the conditions to Closing set forth in Section
7.1 shall have been satisfied or waived or such other time and date, and such
other place as is agreed to in writing by the parties hereto. The date on which
the Closing is scheduled to occur is herein referred to as the "Closing Date."
ARTICLE 2
THE OFFER
---------
2.1 The Offer.
---------
(a) Making the Offer. Provided that none of the events set
forth in clauses (a) through (d) of Annex A shall have occurred and be
continuing, AHI shall, (i) not later than the first business day following the
date of this Agreement, publicly announce its intention to commence a tender
offer for up to 17,201,839 shares of Company Common Stock representing 92.5% of
the outstanding shares of Company Common Stock as of the date hereof at a price
of $15.50 per Share, net to the seller in cash and (ii) commence (within the
meaning of Rule 14d-2(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), the tender offer, as promptly as practicable following such
public announcement, but in any event not later than the end of the fifth
business day following such public announcement (such tender offer, as it may be
amended from time to time in accordance with this Agreement, being referred to
herein as the "Offer"). The Offer will be subject only to the conditions set
forth in Annex A (the "Offer Conditions"). Any Offer Condition
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(other than the Minimum Condition (as defined in Annex A) which may not be
waived or changed) may be waived by AHI in its sole discretion. The Offer shall
be made by means of an offer to purchase and related letter of transmittal (the
"Letter of Transmittal" and, together with the offer to purchase, the "Offer to
Purchase"). Subject only to the Offer Conditions, AHI shall accept for payment
all Company Shares which are validly tendered on or prior to the expiration of
the Offer and not withdrawn as soon as legally permissible and pay for all such
Company Shares as promptly as practicable thereafter; provided, however, that if
more than 17,201,839 Company Shares are so tendered, then AHI shall purchase
17,201,839 Company Shares pro rata from each tendering holder in proportion to
the Shares tendered by such holders. Notwithstanding the foregoing or anything
herein to the contrary, the tender of Company Shares by a stockholder of the
Company is expressly conditioned on, and the Letter of Transmittal will so
provide, that each tender of Company Shares is expressly subject to prompt
satisfaction by AHI of its obligations under Section 6.10(d) hereof (excluding
clause (i) thereof) and the receipt by the Company of the Financial Condition
Certificate and Solvency Opinion (each as defined in Section 6.11 of this
Agreement) unless waived by the Company on behalf of the stockholders of the
Company. The Offer shall expire at 5:00 p.m., New York City time, on the
twentieth business day following commencement thereof; provided, however, that
(i) AHI may, in its sole discretion, extend the expiration time of the Offer to
5:00 p.m., New York City time, on any business day (but not beyond the Deadline
Time (as defined in Section 8.1(b))) at any time and from time to time if, as of
any scheduled expiration time of the Offer (as originally scheduled or as
extended as permitted or required by this paragraph (a)), any Offer Condition
(other than the Minimum Condition) shall not have been satisfied; provided,
however, that in no event shall AHI be permitted to extend the expiration time
of the Offer if the failure of any Offer Condition to occur was caused by the
material action or material failure to act of AHI; and provided, further, AHI
shall not be permitted to extend the expiration time of the Offer beyond 5:00
p.m., New York City time, on the date which is ten business days after AHI has
publicly announced that it has entered into definitive documentation with
respect to the Financing (as herein defined) unless the Minimum Condition shall
have been satisfied on or before such tenth business day; and (ii) if as of any
scheduled expiration time of the Offer (as originally scheduled or as extended
as required or permitted by this paragraph (a)), all of the conditions thereto
have been satisfied or waived and at least 80% but less than 90% of the
outstanding Company Shares have been validly tendered and not properly withdrawn
pursuant to the Offer AHI may, in its sole discretion, extend the expiration
time of the Offer but not beyond the Deadline Time, for up to an additional
period of five business days. The date on which the Offer (as extended as
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<PAGE>
permitted hereunder) shall expire is herein referred to as the "Expiration
Date". Except as required by law and except for extensions permitted above in
this Section 2.1(a), AHI shall not (v) increase or decrease the number of
Company Shares being sought in the Offer, (w) change the form of consideration
payable in the Offer, (x) add additional conditions to the Offer, (y) extend the
time of original expiration of the Offer if all of the Offer Conditions are then
satisfied or waived or (z) otherwise amend the Offer without the prior written
or oral consent of the Company which consent shall not be unreasonably withheld
and, in any event, will be deemed given if the Company does not deliver to AHI
an objection in writing within 24 hours after receipt of AHI's written request
for consent describing the proposed amendment (other than amendments which
increase the amount of cash consideration payable for the purchase of Company
Shares pursuant to the Offer).
(b) Schedule 14D-1. As soon as practicable on the date the Offer is
commenced, AHI shall file with the Securities and Exchange Commission (the
"Commission") a tender offer statement on Schedule 14D-1 (together with all
amendments and supplements thereto, the "Schedule 14D-1") with respect to the
Offer. The Schedule 14D-1 shall include or shall incorporate by reference the
Offer to Purchase (or portions thereof) and forms of the related letter of
transmittal and summary advertisement, as well as all other information and
exhibits required by law (the Schedule 14D-1, Offer to Purchase and such other
documents, together with any supplements or amendments thereto, are herein
referred to as the "Offer Documents"). The Offer Documents shall comply with
the provisions of applicable law. AHI shall promptly correct any information in
the Offer Documents that shall be or have become false or misleading in any
material respect and shall take all steps necessary to cause the Schedule 14D-1
as so corrected to be filed with the Commission and the other Offer Documents as
so corrected to be disseminated to holders of shares of Company Common Stock, in
each case as and to the extent required by applicable federal securities law.
AHI shall conduct the Offer in accordance with all applicable requirements of
the Exchange Act and rules and regulations promulgated thereunder and all other
applicable laws. AHI shall give the Company and its counsel an opportunity to
review and comment on the Schedule 14D-1 prior to its being filed with the
Commission. AHI shall provide the Company and its counsel with any written
comments AHI may receive from the Commission with respect to the Offer Documents
promptly after the receipt of such comments.
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2.2 Company Action.
(a) Company Approvals. The Company hereby approves of and consents to
the Offer and represents and warrants that (i) its Board of Directors (the
"Company Board"), at a meeting duly called and held, has (A) determined that
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger, taken as a whole, are fair to and in the best interests of the
stockholders of the Company, and resolved to recommend that the holders of
Company Common Stock accept the Offer, tender their shares of Company Common
Stock thereunder to AHI, and, if required by applicable law, approve and adopt
the Merger and this Agreement, and (B) approved this Agreement and the
transactions contemplated hereby, including the Offer, the Tender Agreements (as
herein defined) and the Merger, for purposes of Section 203 of the DGCL, (ii) it
has received the opinion of William Blair & Co. ("Blair"), and the opinion of
Lazard Freres & Co. ("Lazard"), in each case that the consideration to be paid
in the Offer and the Merger, taken as a whole and taking into account the
interest retained by the holders of Company Common Stock is, in the opinion of
each of Blair and Lazard, fair to the holders of Company Common Stock (other
than AHI and its subsidiaries and affiliates) from a financial point of view
(the "Fairness Opinions") and (iii) a majority of the Disinterested Directors
(as defined in the Company's certificate of incorporation) have approved this
Agreement and the transactions contemplated hereby, including the Offer and
Merger, in satisfaction of the conditions specified in Section 2(a) of Article
VII of the Company's Restated Certificate of Incorporation. The Company Board
will not withdraw or modify its approval or recommendation of the Offer, the
Merger or this Agreement unless it shall determine in good faith after
consultation with legal counsel that to not do so would be inconsistent with its
fiduciary duties under applicable law. The Company hereby consents to the
inclusion in the Offer Documents of the recommendations referred to in this
Section 2.2(a), subject to the immediately preceding sentence.
(b) Tender Agreements. The Company has delivered, simultaneously with
the execution of this Agreement, a Tender Agreement, in substantially the form
attached hereto as Exhibit B, executed by each director of the Company and their
respective affiliates and certain other individuals and trusts identified on
Exhibit B.
(c) Schedule 14D-9. The Company hereby agrees to file with the
Commission contemporaneously with the commencement of the Offer, and promptly to
mail to its stockholders, a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto, the "Schedule 14D-
9") containing the recommendations contained in Section 2.2(a), subject to the
conditions stated therein. AHI and its counsel
5
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shall be given an opportunity to review and comment on the Schedule 14D-9 prior
to its being filed with the Commission. The Schedule 14D-9 will comply with the
provisions of applicable law.
(d) Labels, etc. In connection with the Offer, if requested by AHI,
the Company shall promptly furnish AHI with mailing labels, security position
listings, and any available listing or computer file containing the names and
addresses of the record and, to the extent available, beneficial, holders of
Shares as of a recent date (including without limitation updated lists of
stockholders, mailing labels, and lists of security positions) as AHI or its
agents may reasonably request in communicating the Offer to the record and
beneficial owners of Shares. Subject to the requirements of law, and except for
such steps as are necessary to disseminate the Offer Documents, AHI will hold in
confidence the information contained in any of such labels and lists and the
additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will upon request deliver to the Company all such information
(whether in written or computer tape or disk form) and any copies or extracts
therefrom in its possession or under its control. If any such information has
been electronically stored, such information shall be deleted from such storage
and AHI shall deliver a certificate to the Company to such effect.
2.3 Company Board of Directors.
(a) Designation by AHI. Promptly following the acceptance for payment
by AHI of a majority of the outstanding Company Shares pursuant to the Offer,
and from time to time thereafter, the Company shall take all actions necessary
to cause a number (but not more than six) of directors of the Company Board (and
a majority of the members of each committee of the Company Board and the members
of the Board of Directors of each Subsidiary (as defined in Section 4.1(a)) of
the Company) rounded up to the nearest whole number, equal to the percentage of
outstanding Company Shares held by AHI, to consist of persons designated by AHI
(whether, at the request of AHI, by means of increasing the size of the Company
Board or seeking resignation of directors and causing AHI's designees to be
elected). This Section 2.3(a) shall not constitute an implied waiver of the
Minimum Condition by the Company, or any commitment by the Company to agree to
such a waiver. Notwithstanding the foregoing, until the Effective Time at least
one member of the Company Board and the board of directors of each Subsidiary on
the date hereof who is not an employee of the Company and at least two members
of the Company Board who are also employees of the Company on the date hereof
shall remain members of the Company Board until death, disability or resignation
(such members, including replacements appointed or herein provided are referred
to herein as the "Continuing Directors"); provided that
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if the number of Continuing Directors shall be reduced below three because of
death, disability or resignation, such remaining Continuing Directors (or
Continuing Director, if there be only one remaining) shall be entitled to
designate persons to fill such vacancies. Simultaneous with the execution
hereof, the Company has (i) furnished to AHI copies of the written resignations
of six of the directors of the Company which resignation shall in each case be
subject to the acceptance for payment by AHI of at least a majority of the
outstanding Company Shares pursuant to the Offer and receipt by the Company of
written advice from The Chase Manhattan Bank (National Association) ("Chase")
that Chase is ready, willing and able to fund the payment of the purchase price
for the Company Shares accepted for payment by AHI in the Offer (the "Chase
Advice"); provided that if less than two-thirds of the outstanding Company
shares are purchased by AHI in the Offer, the Company will accept only five
resignations selected by it; and (ii) adopted a resolution appointing certain
designees of AHI as directors of the Company contingent upon the acceptance for
payment by AHI of a majority of the outstanding Company Shares and receipt by
the Company of the Chase Advice. AHI agrees not to seek any greater
representation on the Company Board, the board of directors of any Subsidiary of
the Company or any committee thereof prior to the Effective Time.
(b) Section 14(f). The Company's obligations to cause designees of
AHI to be elected or appointed to the Board of Directors of the Company shall be
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all actions required pursuant to
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 2.3(b), and shall include in the Schedule 14D-9 such information with
respect to AHI and its officers and directors as is required under Section 14(f)
and Rule 14f-1. AHI will supply to the Company and be solely responsible for
any information with respect to AHI and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
(c) Special Director Approval. Following the election or appointment
of AHI's designees pursuant to this Section 2.3 and prior to the Effective Time,
any amendment of the Certificate of Incorporation or By-laws of the Company, any
amendment or termination of this Agreement, extension of the time for the
performance of, waiver of the obligations or other acts of AHI or waiver of the
Company's rights or condition to the Company's obligation hereunder, or any
other action which would materially affect any rights of the Company or the
stockholders of the Company requires the concurrence of a majority of the
Continuing Directors.
7
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ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
--------------------------------------------------
3.1 Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holders thereof:
(a) Each share of Company Common Stock outstanding immediately prior
to the Effective Time (other than AHI-owned Shares (as herein defined) and
Company Treasury Shares (as herein defined)) shall be converted as follows:
(i) the Cash Portion (as herein defined) of each Share shall
be converted into and represent the right to receive cash in an
amount determined by subtracting (A) the product of $15.50 (or
such higher price per Company Share paid in the Offer) multiplied
by the number of AHI-owned Shares from (B) $266,628,495 (or, if
higher, the product of the highest price per Company Share paid
in the Offer multiplied by the product of 92.5% multiplied by the
lesser of the number of Company Shares outstanding immediately
prior to the Effective Time and 19,860,192 Company Shares) and
dividing the result so obtained by the number of Old Shares (as
herein defined);
(ii) the balance of each Company Share shall remain
outstanding and be unaffected by the Merger (the total number of
Shares to remain outstanding is referred to as the "Remaining
Shares");
The Cash Portion is a percentage equal to a fraction expressed as a percentage
(rounded to four decimal places), the numerator of which is the result of
subtracting (y) the product of 7.5% multiplied by the number of Company Shares
outstanding immediately prior to the Effective Time from (z) the number of
Shares outstanding (other than AHI-owned Shares and Treasury Shares) immediately
prior to the Effective Time (the "Old Shares") and the denominator of which is
the number of Old Shares (it being understood that if the numerator is zero, the
Cash Portion shall be zero);
(b) each share of Company Common Stock held by AHI or any of its
respective Subsidiaries or affiliates immediately prior to the Effective Time
("AHI-owned Shares") and each share of Company Common Stock then held in the
treasury of the Company or any of its subsidiaries ("Company Treasury Shares")
shall be cancelled and retired and cease to exist without any payment therefor;
8
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(c) each share of common stock Class A, par value $0.01 per share, of
AHI ("AHI Common") outstanding immediately prior to the Effective Time shall be
converted into a number of shares of Company Common Stock determined by [((x
divided by .20) minus x) divided by y] where "x" equals the number of Remaining
Shares (including for this purpose Dissenting Shares as herein defined) and "y"
equals the number of shares of AHI Common outstanding on a fully diluted basis
including treating for purposes of this calculation all outstanding options
(including AHI Options (as herein defined)), warrants and other rights
(including conversion rights and anti-dilution rights) to acquire AHI Common or
shares of Class B non voting common stock, $.01 par value of AHI ("AHI Class B
Common") and rights to receive options under the Executive Purchase Agreements
(as herein defined) as having been exercised and given effect; and
(d) each share (and fraction thereof) of Class A Preferred Stock, par
value $0.01 per share, of AHI (the "AHI Class A Preferred Stock") shall be
converted into one share (and corresponding fraction thereof) of Series A
Preferred Stock, par value $0.01 per share of the Company (the "Company Series A
Preferred Stock"); each share (and fraction thereof) of Class B Preferred Stock,
par value $0.01 per share, of AHI (the "AHI Class B Preferred Stock") shall be
converted into one share (and corresponding fraction thereof) of Series B
Preferred Stock, par value $0.01 per share, of the Company (the "Company Series
B Preferred Stock"); and each share (and fraction thereof) of Class C Preferred
Stock, par value $0.01 per share, of AHI (the "AHI Class C Preferred Stock" and,
together with the AHI Class A Preferred Stock and the AHI Class B Preferred
Stock, the "AHI Preferred Stock") shall be converted into one share (and
corresponding fraction thereof) of Series C Preferred Stock, par value $0.01 per
share, of the Company (the "Company Series C Preferred Stock" and, together with
the Company Series A Preferred Stock and the Company Series B Preferred Stock,
the "Company Preferred Stock"). The Company Series A Preferred Stock, the
Company Series B Preferred Stock and the Company Series C Preferred Stock shall
have the terms substantially as set forth in the form of the Certificate of
Designations, Preferences and Rights attached hereto as composite Exhibit C. At
the Effective Time all shares of AHI Preferred Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each certificate previously representing any such shares of AHI
Preferred Stock shall thereafter represent the right to receive the shares of
Company Series A Preferred Stock, Company Series B Preferred Stock or Company
Series C Preferred Stock, as the case may be, into which such AHI Preferred
Stock has been converted pursuant to Section 3.1(d). Certificates previously
representing shares of AHI Preferred Stock shall be exchanged for certificates
representing shares of Company Preferred Stock to be issued in consideration
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therefor upon the surrender of such certificates in accordance with Section 3.5.
3.2 Adjustment of Merger Consideration. If, between the date of this
Agreement and the Effective Time, the outstanding shares of Company Common Stock
shall have been changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or a stock dividend thereon shall be
declared with a record date within such period, the consideration to be received
in respect of each Share or Company Option (as herein defined) shall be
appropriately and equitably adjusted.
3.3 Shares of Dissenting Stockholders.
(a) Company Stockholders. Notwithstanding Section 3.1(a), each
outstanding Share as to which appraisal rights pursuant to Section 262 of the
DGCL are exercised, perfected and not withdrawn or lost ("Dissenting Shares")
shall not be converted pursuant to Section 3.1(a), but shall represent only the
right to receive such consideration as may be determined to be due to the holder
thereof (a "Company Dissenting Stockholder") pursuant to Section 262 of the
DGCL; provided, however, that shares of Company Common Stock outstanding at the
Effective Time and held by a Dissenting Stockholder who shall, after the
Effective Time, withdraw his or her demand for appraisal or lose his or her
right of appraisal as provided under Delaware law, shall be deemed to be
converted and outstanding, as of the Effective Time of the Merger, as provided
in Section 3.1(a). The Company shall give AHI (i) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
instruments served pursuant to the DGCL received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. The Company will not voluntarily make any payment
with respect to any demands for appraisal and will not, except with the prior
written consent of AHI, settle or offer to settle any such demands. Each
Company Dissenting Stockholder who becomes entitled, pursuant to the DGCL, to
payment for his, her or its Company Common Stock shall receive payment therefor
from the Surviving Corporation and such Shares shall be cancelled upon such
payment.
(b) AHI Stockholders. Notwithstanding Section 3.1(c) and (d), each
outstanding share of AHI Common and AHI Preferred Stock as to which appraisal
rights pursuant to Section 262 of the DGCL are available as a matter of law to
the holder of such shares and which are validly exercised, perfected and not
withdrawn or lost shall not be converted pursuant to Section 3.1(c) or (d), as
the case may be, but shall represent only the right to receive such
consideration as may be due to the holder
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("AHI Dissenting Stockholder") thereof pursuant to Section 262 of the DGCL.
Each AHI Dissenting Stockholder who becomes entitled, pursuant to the DGCL, to
payment for his, her or its shares of AHI Common or AHI Preferred Stock shall
receive payment therefor from the Surviving Corporation and such shares of AHI
Common or AHI Preferred Stock, shall be cancelled upon such payment.
3.4 Exchange of Company Common Stock Certificates.
(a) Paying Agent. Prior to the Closing Date, AHI and the Company
shall jointly select a bank or trust company with capital and surplus of at
least $500 million and offices in the Borough of Manhattan, New York, to act as
paying agent (the "Paying Agent") for the payment of the cash consideration
specified in Section 3.1(a)(i), and the exchange of certificates representing
Shares not converted in the Merger pursuant to Section 3.1(a)(ii) upon surrender
of certificates representing Company Common Stock to be converted into the right
to receive cash pursuant to the Merger.
(b) Surviving Corporation to Provide Funds. Unless the Cash Portion
shall be equal to zero, immediately prior to or simultaneously with the
Effective Time AHI will take all steps necessary to enable and cause the
Surviving Corporation to provide to the Paying Agent on a timely basis
immediately available funds necessary to pay the aggregate cash amount required
pursuant to Section 3.1(a).
(c) Exchange Procedures. Unless the Cash Portion shall be equal to
zero, as soon as practicable after the Effective Time, the Paying Agent shall
mail to each holder of record, other than the Company, AHI and their respective
affiliates and Subsidiaries, of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock (the "Old Certificates"), (i) a letter of transmittal in appropriate and
customary form and (ii) instructions for use in effecting the surrender of the
Old Certificates in exchange for the amount of cash and retained Company Common
Stock specified in Section 3.1(a). Upon surrender of an Old Certificate for
cancellation as provided herein to the Paying Agent, together with such letter
of transmittal, duly executed, and such other customary documents as may be
required by the Paying Agent, the holder of such Old Certificate shall be
entitled to receive in exchange therefor the amount of cash into which the
shares of Company Common Stock theretofore represented by the Old Certificate so
surrendered shall have been converted pursuant to the provisions of Section
3.1(a), less any amounts required to be withheld under applicable federal,
state, local or foreign income tax regulations, and a new stock certificate
evidencing the number of shares of Company Common Stock retained by such holder,
and the Company Shares to the extent so converted and represented by the Old
Certificate so
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surrendered shall forthwith be canceled. No interest will be paid or will
accrue on the cash payable upon the surrender of any Old Certificate. In the
event of a transfer of ownership of Company Common Stock which is not registered
in the transfer records of the Company, a check in payment of the proper amount
of cash and a new stock certificate evidencing the proper amount of retained
Company Common Stock may be issued to a transferee if the Old Certificate
representing such Company Common Stock is presented to the Paying Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 3.4, each Old Certificate shall be
deemed at any time after the Effective Time of the Merger to represent only the
right to receive upon such surrender the amount of cash and retained Company
Common Stock specified in Section 3.1(a) and the rights specified in this
Section 3.4. Any funds deposited with the Paying Agent that remain unclaimed by
the stockholders of the Company for one year after the Effective Time shall be
paid to the Surviving Corporation upon demand and any stockholders of the
Company who have not theretofore complied with the instructions for exchanging
their Old Certificates shall thereafter look only to the Surviving Corporation
for payment.
(d) Old Stock Certificates. If, after the Effective Time, Old
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as and to the extent provided in this Article
3, subject to applicable law in the case of shares of Company Common Stock held
by Company Dissenting Stockholders.
(e) Fractional Shares. Notwithstanding any other provision of this
Agreement, no certificates or scrip representing fractional shares of Company
Common Stock shall be issued upon the surrender for exchange of an Old
Certificate (taking into account all Old Certificates surrendered for exchange
by a particular stockholder) pursuant to Section 3.4(a). In the event a
fractional share would be retained pursuant to Section 3.1(a)(ii), each holder
of an Old Certificate (taking into account all Old Certificates surrendered for
exchange by a particular stockholder) who would otherwise have been entitled to
retain a fraction of a share of Company Common Stock upon surrender of such
Certificates for exchange pursuant to Section 3.2 will have such fractional
share rounded to the nearest whole Share and will receive the appropriate new
certificate therefor.
3.5 Exchange of AHI Stock. After the Effective Time, each holder of
a certificate formerly representing AHI Common or AHI Preferred Stock who
surrenders or has surrendered such certificate (or customary affidavits and
indemnification regarding the loss or destruction of such certificate), together
with duly executed transmittal materials, to the Paying Agent
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shall be entitled to a certificate representing shares of Company Common Stock
or Company Preferred Stock (including fractional shares) into which the shares
of AHI Common or AHI Preferred Stock, as the case may be, shall have been
converted pursuant hereto. Notwithstanding any other provision of this
Agreement, no certificates or scrip representing fractional shares of Company
Common Stock shall be issued upon the surrender for exchange of a certificate
("AHI Common Certificate") representing AHI Common (taking into account all AHI
Common Certificates surrendered by a particular holder of AHI Common). In lieu
thereof, each holder of an AHI Common Certificate (taking into account all AHI
Common Certificates held by a particular stockholder) who would otherwise have
been entitled to receive a fraction of a share of Company Common Stock upon
surrender of an AHI Common Certificate for exchange will have such fractional
share rounded to the nearest whole share and will receive the appropriate new
certificate therefor.
3.6 Company Stock Options. The Company shall (subject to the
approval of the holders thereof) make such adjustments to all the outstanding
options to purchase shares of Company Common Stock as may be necessary to
provide that at the Effective Time each such option whether or not then
exercisable (the "Company Options") shall, in settlement, be converted into the
right to receive a cash payment in an amount equal to the difference, if any,
between $15.50 or such higher price paid in the Offer or Merger and the per
share exercise price of such Company Option multiplied by the number of shares
of Company Common Stock subject to such Company Option. The Company shall adopt
such amendments to its plans under which such Company Options were granted, and
shall use its reasonable best efforts to obtain prior to the Closing Date such
consents of the holders of such Company Options, as shall be necessary to
effectuate the foregoing.
3.7 AHI Stock Options. At the Effective Time, each outstanding
option, warrant or other right to acquire AHI Common shall be assumed by the
Company as provided in Section 6.15 hereof.
3.8 Short-Form Merger. If AHI shall acquire at least 90% of the
outstanding shares of each class of capital stock of the Company, the parties
agree, at the request of AHI, to take all necessary and appropriate action to
cause the Merger to become effective without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
------------------------------
4.1 Representations and Warranties of the Company. Subject to the
qualifications and exceptions, if any, set forth in the disclosure letter of
even date herewith from the Company to AHI (the "Company Disclosure Schedule"),
the Company represents and warrants to AHI as follows as of the date hereof:
(a) Organization, Standing and Power. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary, other
than in such jurisdictions where the failure so to qualify would not have a
material adverse effect (as herein defined) on the Company. As used in this
Agreement, "material adverse effect" means, with respect to any entity, a
materially adverse effect on the condition (financial or otherwise), assets,
liabilities, business or results of operations of such entity and its
Subsidiaries taken as a whole; and "Subsidiary" of an entity means a corporation
more than 50% of whose voting securities ordinarily entitled to elect at least a
majority of its Board of Directors or other persons performing similar functions
is owned or controlled directly or indirectly by such entity.
(b) Capital Structure. The authorized capital stock of the Company
consists of 40,000,000 shares of Company Common Stock and 1,500,000 shares of
preferred stock, no par value ("Preferred Stock"). At the close of business on
February 10, 1995, 18,596,582 shares of Company Common Stock were outstanding,
1,263,610 shares of Company Common Stock were reserved for issuance upon the
exercise of outstanding stock options, no shares of Preferred Stock were
outstanding, and no bonds, debentures, notes or other indebtedness having the
right to vote on any matters on which stockholders may vote ("Voting Debt") were
issued or outstanding. Since February 10, 1995, no shares of Company Common
Stock have been issued except pursuant to the Company Option Plans. All
outstanding shares of the Company capital stock are validly issued, fully paid
and nonassessable and were not issued in violation of any preemptive rights.
Except for options to purchase 1,263,610 shares of Company Common Stock issued
pursuant to the Company's 1981 Stock Incentive Award Plan, 1985 Nonqualified
Stock Option Plan and Director's Stock Option Plan, each as amended (the "the
Company Option Plans"), there are no outstanding options, warrants, calls,
rights, commitments or agreements of any character to
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which the Company or any Subsidiary of the Company is a party or by which it is
bound obligating the Company or any Subsidiary of the Company to issue, deliver
or sell, or cause to be issued, delivered or sold shares of capital stock or any
Voting Debt of the Company or of any Subsidiary of the Company or obligating the
Company or any Subsidiary of the Company to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement.
(c) Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to approval of this
Agreement by the stockholders of the Company as required by law, to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to such approval by the stockholders of the
Company as may be required by law. This Agreement has been duly executed and
delivered by the Company and, subject to such approval by the stockholders of
the Company as may be required by law, constitutes a valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity). The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with, or result in any violation of, or
defaults (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any material
obligation or to loss of any material benefit under any provision of the
Certificate of Incorporation or By-laws of the Company or any Subsidiary of the
Company or any loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license or any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any Subsidiary of the Company or their respective properties
or assets, other than any such conflicts, violations, defaults or terminations,
cancellations or acceleration under any such loan or other agreement or
obligation which will be extinguished or satisfied on or before the Effective
Time or which individually or in the aggregate do not and would not have a
material adverse effect on the Company. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a
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"Governmental Entity"), is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated hereby, except for (i) the filing with the Commission of (A) a
proxy or information statement relating to the adoption by the Company's
stockholders of, or the required notice of the adoption of, this Agreement (the
"Information Statement") and (B) the Schedule 14D-9 and such reports under the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby, and (ii) the filing with the appropriate
authorities of the Certificate of Merger and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business. Notwithstanding anything to the contrary herein contained and except
for the representations and warranties of the Company in this Agreement, the
Company is not making and shall not be deemed to make any representation or
warranty with respect to the offer or issuance of shares of Company Common Stock
or Company Preferred Stock to AHI stockholders in the Merger.
(d) SEC Documents. Each report, schedule, registration statement and
definitive proxy statement filed by the Company with the Commission since
September 1, 1991 (the "SEC Documents"), as of its respective filing date, (i)
complied in all material respects with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), the Exchange Act and the respective
rules and regulations of the Commission thereunder applicable to such SEC
Documents and (ii) 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 not misleading. The Company has timely
filed all documents that it was required to file with the Commission since
September 1, 1991, except where the failure to file did not and would not
reasonably be expected to have a material adverse effect on the Company. The
Company has not filed any Reports on Form 8-K since November 30, 1994 and prior
to the date hereof. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
and fairly present in all material respects the consolidated financial position
of the Company and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and changes in financial position for
the periods then ended except as may be as otherwise stated therein and, in the
case of unaudited statements, as permitted by Form 10-Q or for normal,
recurring, year-end audit adjustments that would not be material in the
aggregate.
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(e) Information Supplied. The information supplied by the Company to
AHI in writing expressly for inclusion in the Offer Documents at the date the
Offer Documents are first mailed to the stockholders of the Company will not
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 were made, not
misleading.
(f) Compliance with Applicable Laws. Except as disclosed in the SEC
Documents filed prior to the date hereof, the businesses of the Company and its
Subsidiaries are not being conducted in violation of any law, ordinance,
regulation, judgment, decree, injunction, rule or order of any Governmental
Entity, except for violations which individually or in the aggregate do not and
would not reasonably be expected to have a material adverse effect on the
Company. No investigation or proceeding before any Governmental Entity with
respect to the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened, other than those which are disclosed in
the SEC Documents or those the outcome of which would not reasonably be expected
to have a material adverse effect on the Company.
(g) Litigation. Except as disclosed in the SEC Documents filed prior
to the date hereof, there is no suit, action or proceeding pending, or, to the
knowledge of the Company and its Subsidiaries, threatened against the Company or
any Subsidiary of the Company which has a reasonable probability of being
decided adversely to the Company or its Subsidiaries and which, if adversely
determined, would reasonably be expected to have a material adverse effect on
the Company, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any
Subsidiary of the Company having, or which would have, any such effect.
(h) Title to Properties. Except as disclosed in the SEC Documents
filed prior to the date hereof, the Company or one of its Subsidiaries has good
and indefeasible title to all properties purported to be owned by it or acquired
after the date thereof (except properties sold or otherwise disposed of since
the date thereof in the ordinary course of business), free and clear of all
claims, liens, charges, security interests or encumbrances of any nature
whatsoever except (i) statutory liens securing payments (including taxes) not
yet due, (ii) such imperfections or irregularities of title, claims, liens,
charges, security interests or encumbrances as do not materially affect the use
of the properties or assets subject thereto or affected thereby or otherwise
materially impair business operations at such properties and (iii) such
encumbrances as do not have a material adverse effect on the Company.
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(i) Leased Properties. Except as disclosed in the SEC Documents filed
prior to the date hereof, the Company or one of its Subsidiaries is the lessee
of all leasehold estates reflected in the latest audited financial statements
included in such SEC Documents or acquired after the date thereof (except for
leases that have expired by their terms since the date thereof) and is in
possession of the properties purported to be leased thereunder and each lease is
valid without material default thereunder by the lessee or, to the Company's
knowledge, the lessor, except for such leases the invalidity of which or the
material default under which in the future would not reasonably be expected to
have a material adverse effect on the Company.
(j) Taxes. Each of the Company and its Subsidiaries has filed, or has
timely applied for extensions to file, all tax returns, reports, statements and
other documents ("the Company Tax Returns") required to be filed, distributed,
or prepared by any of them relating to any material taxes. Each of the Company
and its Subsidiaries has paid (or the Company has paid on its behalf), or has
set up a reserve reasonably believed by the Company, after consultation with its
independent accountants, to be adequate for the payment of, all material taxes
required to be paid, withheld, or deducted in respect of the periods covered by
such the Company Tax Returns, and the most recent financial statements contained
in the SEC Documents filed prior to the date hereof reflect an adequate reserve
for all taxes payable, or required to be withheld and remitted, by the Company
and its Subsidiaries accrued through the date of such financial statements.
Neither the Company nor any Subsidiary of the Company is delinquent in the
payment of any material tax, assessment or governmental charge, except those
which are being contested in good faith and for which adequate reserves have
been established or which would not reasonably be expected to have a material
adverse effect on the Company. No deficiencies material to the Company and its
Subsidiaries taken as a whole for any taxes have been proposed, asserted or
assessed against the Company or any of its Subsidiaries, and no requests for
waivers of the time to assess any such tax, the granting of which would have a
material adverse effect on the Company and its Subsidiaries taken as a whole,
are pending. The federal income tax returns of the Company and each of its
Subsidiaries consolidated in such returns have been examined by and settled with
the United States Internal Revenue Service for all years through 1985. For the
purposes of this Agreement, the term "taxes" shall include all federal, state,
local and foreign income, property, sales, excise withholding, unemployment
compensation, social security, and other taxes.
(k) Certain Agreements. (i) The Company Disclosure Schedule contains
true and correct copies of all agreements between the Company and its executive
officers whose salary and bonus for the fiscal year ended August 31, 1994
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exceeded $150,000 (the "Executive Contracts"). Except as disclosed in the SEC
Documents filed prior to the date hereof, as set forth in the Executive
Contracts or as permitted pursuant to Section 5.1(j), neither the Company nor
any of its Subsidiaries is a party to any written or oral agreement, plan or
arrangement with any officer, director or employee of the Company or any
Subsidiary (other than the Company Option Plans) (A) the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving the Company or any Subsidiary of the Company of the
nature of any of the transactions contemplated by this Agreement, (B) providing
severance benefits or other benefits after the termination of employment
regardless of the reason for such termination of employment, or (C) any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement. The Company
Disclosure Schedule contains a true and correct copy of the United Stationers
Severance Plan dated February 10, 1995 as in effect on the date hereof.
(ii) Except as disclosed in the SEC Documents filed prior to the date
hereof, neither the Company nor any of its Subsidiaries is a party to any oral
or written (A) agreement, contract, indenture or other instrument relating to
the borrowing of money or the guarantee of any obligation for the borrowing of
money material to the Company and its Subsidiaries taken as a whole or (B) other
contract, agreement or commitment of the Company or its Subsidiaries material to
the Company and its Subsidiaries taken as a whole (except those entered into in
the ordinary course of business).
(l) ERISA Compliance. Except as disclosed in the SEC Documents filed
prior to the date hereof, the present value of all accrued benefits (vested and
unvested) under all the "employee pension benefit plans" as such term is defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which are subject to Title IV of ERISA and which the Company
or any Subsidiary of the Company maintains, or to which the Company or any
Subsidiary of the Company is obligated to contribute (the "Company Pension
Plans"), did not, as of the respective last annual valuation dates for such
Company Pension Plans, exceed the value of the assets of such Company Pension
Plans allocable to such benefits. Except as disclosed in the SEC Documents
filed prior to the date hereof, none of the Company Pension Plans subject to
Section 302 of ERISA has incurred any "accumulated funding deficiency", as such
term is defined in Section 302 of ERISA (whether or not waived), since the
effective date of such Section 302. None of the Company, any Subsidiary of the
Company, any officer of the Company or a
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Subsidiary of the Company or any of the employee benefit plans of the Company
and the Subsidiaries of the Company which are subject to ERISA, including the
Company Pension Plans, or any trusts created thereunder, or any trustee or
administrator thereof, has engaged in a "prohibited transaction", as such term
is defined in Section 4975 of the Code, which would subject the Company, any
Subsidiary of the Company, any officer of the Company or a Subsidiary of the
Company, any of such plans or any trust to any material tax or penalty on
prohibited transactions imposed by such Section 4975 and would reasonably be
expected to have a material adverse effect on the Company. Neither any of such
Company Pension Plans subject to Title IV of ERISA nor any of their related
trusts have been terminated, nor has there been any material "reportable event",
as that term is defined in Section 4043 of ERISA, for which the 30 day reported
request event have not been waived with respect thereto, which in any case would
have a material adverse effect on the Company. The Company is not a
contributing employer to any "multiemployer plan" as such term is defined in
Section 3(37) or Section 4001 (a)(3) of ERISA.
(m) Patents, Trademarks, Etc. The Company and its Subsidiaries own or
have the right to use all material patents, trademarks, trade names, service
marks, trade secrets, copyrights and other proprietary intellectual property
rights used in connection with the businesses of the Company and its
Subsidiaries, the lack of which would have a material adverse effect on the
Company. The Company does not have any knowledge of any conflict with the
rights of the Company and its Subsidiaries therein or any knowledge of any
conflict by them with the rights of others therein which in either case would
have a material adverse effect on the Company. Notwithstanding anything to the
contrary set forth in this Agreement, the representations and warranties
contained in this Section 4.1(m) that the Company does not have knowledge of a
fact shall not be breached by the existence of facts of which the Company could
have been informed by conducting searches of records contained in filing
offices, court records or other public or private records or databases.
(n) Absence of Certain Changes or Events. Except as disclosed in the
SEC Documents, since November 30, 1994, the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course, and there has
not been (i) any damage, destruction or loss to any property of the Company or
its Subsidiaries, whether covered by insurance or not, which has or in the
future would have a material adverse effect on the Company or the Surviving
Corporation; (ii) any declaration, setting aside or payment of any dividend
(whether in cash, stock or property) with respect to any of the Company's
capital stock (other than regular quarterly dividends of $.10 per share); (iii)
except for the Executive Contracts and the United Stationers Severance Plan
dated as of February 10, 1995, the
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execution of any agreement with any executive officer of the Company providing
for his employment, or any increase in compensation or in severance or
termination benefits payable or to become payable by the Company and its
Subsidiaries to their officers or key employees, or any material increase in
benefits under any collective bargaining agreement or in benefits under any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, insurance or
other plan or arrangement or understanding (whether or not legally binding)
providing benefits to any present or former employee of the Company
(collectively, "the Company Employee Benefit Plans"), except in any case in the
ordinary course of business consistent with prior practice; or (iv) any
transaction, commitment, dispute or other event or condition of any character
individually or in the aggregate having or which in the future would reasonably
be expected to have a material adverse effect on the Company or the Surviving
Corporation.
(o) Certain Information. With respect to agreements with customers or
suppliers which the Company has not disclosed to AHI prior to date hereof for
competitive reasons, (i) such agreements were entered into in the ordinary
course of the Company's business, (ii) the Company reasonably believes that such
agreements are in the aggregate not materially adverse to the Company and its
Subsidiaries taken as a whole and (iii) such agreements (A) do not contain terms
permitting cancellation or termination thereof upon the consummation of the
transactions contemplated hereby where such cancellation or termination would
reasonably be expected to have individually or in the aggregate a material
adverse effect on the Company and (B) if breached by the Company by reason of
the consummation of this Agreement would result in damages against the Company
which would reasonably be expected to have a material adverse effect on the
Company.
(p) Definition of Knowledge. For purposes of the Agreement, "to the
knowledge of the Company" and words of similar import shall be limited to the
actual knowledge of the executive officers of the Company and its Subsidiaries.
4.2 Representations and Warranties of AHI. Subject to the
qualifications and exceptions, if any, set forth in the disclosure letter from
AHI (the "AHI Disclosure Schedule") to the Company of even date herewith, AHI
represents and warrants to the Company as follows:
(a) Organization, Standing and Power. Each of AHI and Associated
Stationers Inc., a Delaware corporation ("Associated") and a wholly owned
Subsidiary of AHI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, has all requisite power
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and authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary, other
than in such jurisdictions where the failure so to qualify would not have a
material adverse effect on AHI.
(b) Capital Structure. The authorized capital stock of AHI consists
of 5,000,000 shares of Class A common stock, $.01 par value, of which 954,911
shares are outstanding (subject to increase as permitted under Section 6.5),
5,000,000 shares of Class B Nonvoting Common Stock, $.01 par value, none of
which are outstanding, 15,000 shares of Class A Preferred Stock, $.01 par value,
of which 5,000 shares are outstanding (subject to increase for dividends
accruing after the date hereof in accordance with the terms existing as of the
date hereof), 15,000 shares of Class B Preferred Stock, $.01 par value, of which
6,724.4436 shares are outstanding (subject to increase for dividends accruing
after the date hereof in accordance with the terms existing as of the date
hereof) and 15,000 shares of Class C Preferred Stock, $.01 par value, of which
10,086.6657 shares are outstanding (subject to increase for dividends accruing
after the date hereof in accordance with the terms existing as of the date
hereof). 31,528 shares of AHI Common are reserved for issuance under
outstanding stock options granted under the Associated Holdings, Inc. 1992
Management Stock Option Plan (the "AHI Option Plan"), and an additional 21,684
shares of AHI Common were reserved for issuance under stock options to be
granted to certain executive officers of AHI prior to January 31, 1996 pursuant
to Executive Stock Purchase Agreements dated January 31, 1992 (the "Executive
Purchase Agreements"). No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which stockholders may vote ("AHI Voting
Debt") were issued or outstanding. All outstanding shares of the capital stock
are validly issued, fully paid and nonassessable and were not issued in
violation of any preemptive rights. Except for options to purchase 31,528
shares of AHI Common issued pursuant to the AHI Option Plan, rights of certain
executive officers under the Executive Purchase Agreements to receive options
exercisable for an aggregate of 21,684 additional shares of AHI Common, a
warrant exercisable for 23,129 shares of AHI Common issued to Boise Cascade
Corporation and warrants exercisable for an aggregate of 201,275 shares of AHI
Common Stock issued to certain lenders to AHI (collectively, the "AHI Options")
there are no outstanding options, warrants, calls, rights, commitments or
agreements of any character to which AHI or any Subsidiary of AHI is a party or
by which it is bound obligating AHI or any Subsidiary of AHI to issue, deliver
or sell, or cause to be issued, delivered or sold shares of capital stock or any
Voting Debt of AHI or any Subsidiary of AHI or obligating AHI or any Subsidiary
of AHI to grant, extend or enter
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into any such option, warrant, call right, commitment or agreement, except as
and to the extent permitted pursuant to Section 6.5. AHI has no Subsidiaries
other than Associated, and Associated has no Subsidiaries. Neither AHI nor
Associated nor, to the knowledge of AHI, any affiliate of AHI owns any Company
Shares (other than as purchased pursuant to the Offer).
(c) Authority. AHI has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been approved by all necessary corporate action
including the approval of the holders of capital stock of AHI in accordance with
the DGCL. The execution and delivery of this Agreement by AHI and the
consummation by AHI of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of AHI including the
approval of the stockholders of AHI. This Agreement has been duly executed and
delivered by AHI and constitutes a valid and binding obligation of AHI
enforceable against AHI in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity). The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby 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, cancellation or acceleration of any obligation or to
loss of a material benefit under, any provision of the Certificate of
Incorporation or By-laws of AHI or any Subsidiary of AHI or any loan or credit
agreement, note, bond, mortgage, indenture, lease, or other agreement,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to AHI or any Subsidiary
of AHI or their respective properties or assets, other than any such conflicts,
violations or defaults which will be extinguished or satisfied on or before the
Effective Time or which individually or in the aggregate do not and would not
have a material adverse effect on AHI. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to AHI in connection with the execution
and delivery of this Agreement by AHI or the consummation by AHI of the
transactions contemplated hereby, except for (i) filings to be made and approval
to be obtained under applicable state securities laws and state takeover laws,
(ii) the filing with the appropriate authorities of the Certificate of Merger
and appropriate documents with the relevant authorities of other states and
municipalities in which AHI is qualified to do business, and (iii) the filing of
the Schedule
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14D-1 with the Commission and such other compliance with the Exchange Act as may
be required in connection with the transactions contemplated hereby.
(d) Information Supplied. The information supplied by AHI to the
Company in writing expressly for inclusion in the Information Statement and all
information (including the pro forma financial information) relating to the
Surviving Corporation, the proposed business and operation of the Company
following consummation of the Offer and the Financing included in the
Information Statement, at the date the Information Statement is first mailed to
the stockholders of the Company, at the date of the stockholders meeting
referred to in Section 6.3 (if held) and at the Effective Time, will not 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 were made, not
misleading. The information supplied by AHI to the Company in writing expressly
for inclusion in the Schedule 14D-9, and all information relating to the
Surviving Corporation, the business and operation of the Company following
consummation of the Offer and the Financing included in the Schedule 14D-9 at
the date the Schedule 14D-9 is first mailed to stockholders of the Company and
at the Expiration Date will not 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 were made, not misleading. For purposes of this representation and
warranty, AHI shall be entitled to assume the accuracy in all material respects
of the Company's representations and warranties in this Agreement.
(e) Solvency. At the Effective Time and after giving effect to any
changes in the Surviving Corporation's assets and liabilities as a result of the
Merger and the Financing (as herein defined) therefor and the use of proceeds
therefrom, the Surviving Corporation will not: (i) be insolvent either because
its financial condition is such that the sum of its debts is greater than the
fair value of its assets or because the present fair salable value of its assets
will be less than the amount required to pay its probable liability on its debts
(including any legal liability whether matured or unmatured, liquidated,
absolute, fixed, or contingent with any contingent liability evaluated in light
of all the facts and circumstances existing at the time of such valuation as the
amount that can reasonably be expected to become an actual or matured liability)
as they become absolute and matured; (ii) have unreasonably small capital with
which to continue as a going concern and will not lack sufficient capital for
its needs and anticipated needs; or (iii) have incurred or plan to incur debts
beyond its ability to pay as they become absolute and matured. For the purpose
of the representation and warranty contained in this Section 4.2(e), AHI
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shall be entitled to assume that the representations and warranties of the
Company regarding its liabilities and the liabilities of its Subsidiaries are
true and correct in all material respects and that there has been and will be no
material change in the aggregate of the assets or liabilities of the Company
after the date hereof except to the extent AHI has knowledge to the contrary.
(f) Financing. AHI has obtained and furnished the Company with a true
and correct copy of the commitment letter, dated February 13, 1995 from Chase.
Such commitment letter of Chase, as the same may be amended as permitted herein,
is herein referred to as the "Chase Commitment"; provided, however, that no such
amendment shall increase the aggregate amount of indebtedness, reduce the amount
of required equity contribution or materially increase the aggregate cost of
funds. Pursuant to the Chase Commitment, Chase has committed to provide senior
and subordinate debt financing in an aggregate amount sufficient (together with
the equity infusion contemplated thereby) to (i) pay all amounts required to be
paid to the stockholders of the Company upon consummation of the Offer and
Merger, (ii) pay all amounts required to be paid in respect of employee stock
options pursuant to Section 3.6 hereof, (iii) pay all expenses incurred in
connection with the transactions contemplated by this Agreement (it being
understood that, with respect to such expenses incurred or to be incurred by the
Company, AHI may assume that the Company will not breach Section 6.6 hereof),
(iv) provide working capital to the Company immediately following consummation
of the Offer, (v) provide for the Benefits Letter of Credit and Bonus Trust
Letter of Credit (each as defined in Section 6.10(d) hereof), and (vi) pay all
amounts owing (including penalties, prepayment fees and breakage fees identified
in the Company Disclosure Schedule) under the indebtedness of the Company and
its Subsidiaries to be refinanced under the Chase Commitment. The Chase
Commitment is in full force and effect. It is understood that, in lieu of
utilizing the subordinated debt financing provided in the Chase Commitment, AHI
may, at its option, obtain such portion of the financing for the Merger through
a public or private sale of subordinated debt and/or preferred stock issued by
the Surviving Corporation (which debt and preferred stock will become
obligations of the Company pursuant to the Merger) on terms satisfactory to AHI
(subject to the terms of this Agreement). AHI believes and has a reasonable and
informed basis for believing that the Financing will be available at the
expiration of the Offer and upon consummation of the Merger. The financing
contemplated by this Section 4.2(f) is herein called the "Financing." AHI has
reviewed the form of Solvency Opinion and has no reason to believe that the
Solvency Opinion will not be issued by the Appraiser (as defined in Section
6.11) without material change therein as required herein.
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(g) Offer Documents. The Offer Documents (other than information
supplied by the Company to AHI in writing expressly for inclusion therein, as to
which no representation or warranty is made), at the date the Offer Documents
are first mailed to the stockholders of the Company and at the Expiration Date
will not 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 were made,
not misleading.
(h) Financial Statements. AHI has furnished to the Company true and
correct copies of the audited balance sheets of AHI and its consolidated
Subsidiaries at December 31, 1992, 1993 and 1994, respectively, and the audited
statements of operations and cash flows of AHI and its consolidated Subsidiaries
for the fiscal years then ended (collectively, the "AHI Financial Statements").
The AHI Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved and fairly present in all material respects the consolidated financial
position of AHI and its consolidated Subsidiaries as at the dates thereof and
the consolidated results of their operations and changes in financial position
for the periods then ended except as otherwise stated therein.
(i) Compliance with Applicable Laws. The businesses of AHI and its
Subsidiaries are not being conducted in violation of any law, ordinance,
regulation, judgment, decree, injunction, rule or order of any Governmental
Entity, except for violations which individually or in the aggregate do not, and
would not reasonably be expected to have a material adverse effect on AHI. No
investigation or proceeding before any Governmental Entity with respect to AHI
or any of its Subsidiaries is pending or, to the knowledge and AHI, threatened,
other than those the outcome of which would not reasonably be expected to have a
material adverse effect on AHI.
(j) Litigation. There is no suit, action or proceeding pending, or,
to the knowledge of AHI or any of Subsidiary of AHI, threatened against AHI or
any Subsidiary of AHI which has a reasonable probability of being decided
adversely to AHI or such Subsidiary and which, if adversely determined, would
reasonably be expected to have a material adverse effect on AHI, nor is there
any judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against AHI or any Subsidiary of AHI having, or which in
the future would reasonably be expected to have any such effect.
(k) Liabilities. Neither AHI nor any of its Subsidiaries has any
material liabilities or obligations (absolute, accrued, contingent or otherwise)
of a nature required by generally accepted accounting principles to be
recognized or
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disclosed in consolidated financial statements of AHI and its Subsidiaries,
except those disclosed therein.
(l) Title to Properties. AHI or one of its Subsidiaries has good and
indefeasible title to all properties purported to be owned by it or acquired
after the date thereof (except properties sold or otherwise disposed of since
the date thereof in the ordinary course of business), free and clear of all
claims, liens, charges, security interests or encumbrances of any nature
whatsoever except (i) statutory liens securing payments (including taxes) not
yet due, (ii) such imperfections or irregularities of title, claims, liens,
charges, security interests or encumbrances as do not materially affect the use
of the properties or assets subject thereto or affected thereby or otherwise
materially impair business operations at such properties and (iii) such
encumbrances as do not have a material adverse effect on AHI.
(m) Leased Properties. AHI is the lessee of all leasehold estates
reflected in the AHI Financial Statements or acquired after the date thereof
(except for leases that have expired by their terms since the date thereof) and
is in possession of the properties purported to be leased thereunder and each
lease is valid without material default thereunder by the lessee or, to AHI's
knowledge, the lessor, except for such leases the invalidity of which or the
material default under which in the future would not reasonably be expected to
have a material adverse effect on AHI.
(n) Taxes. Each of AHI and its Subsidiaries has filed, or has timely
applied for extensions to file, all tax returns, reports, statements and other
documents ("AHI Tax Returns") required to be filed, distributed, or prepared by
any of them relating to any material taxes. Each of AHI and its Subsidiaries
has paid (or AHI has paid on its behalf), or has set up a reserve believed by
AHI, after consultation with its independent accountants, to be adequate for the
payment of, all material taxes required to be paid, withheld, or deducted in
respect of the periods covered by such AHI Tax Returns, and the most recent
financial statements contained in the AHI Financial Statements reflect an
adequate reserve for all taxes payable, or required to be withheld and remitted,
by AHI and its Subsidiaries accrued through the date of such financial
statements. Neither AHI nor any Subsidiary of AHI is delinquent in the payment
of any material tax, assessment or governmental charge, except those which are
not anticipated to be material to AHI and its Subsidiaries taken as a whole and
except those which are being contested in good faith and for which adequate
reserves have been established. No deficiencies material to AHI and its
Subsidiaries taken as a whole for any taxes have been proposed, asserted or
assessed against AHI or any of its Subsidiaries, and no requests for waivers of
the time to assess any such tax, the
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granting of which would have a material adverse effect on AHI are pending.
(o) Certain Agreements. Neither AHI nor any of its Subsidiaries is a
party to any oral or written agreement, plan or arrangement with any officer,
director or employee of AHI or any Subsidiary of AHI (i) the benefits of which
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving AHI or any Subsidiary of AHI of the nature
of any of the transactions contemplated by this Agreement, (ii) providing
severance benefits or other benefits after the termination of employment
regardless of the reason for such termination of employment, (iii) any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement. Neither AHI
nor any of its Subsidiaries is a party to any oral or written (i) agreement,
contract, indenture or other instrument relating to the borrowing of money or
the guarantee of any obligation for the borrowing of money material to AHI and
its Subsidiaries taken as a whole or (ii) other contract, agreement or
commitment of AHI or its Subsidiaries material to AHI and its Subsidiaries taken
as a whole (except those entered into in the ordinary course of business).
(p) ERISA Compliance. The present value of all accrued benefits
(vested and unvested) under all the "employee pension benefit plans" as such
term is defined in Section 3(2) of ERISA which are subject to Title IV of ERISA,
and which AHI or any Subsidiary of AHI maintains, or to which AHI or any
Subsidiary of AHI is obligated to contribute (the "AHI Pension Plans"), did not,
as of the respective last annual valuation dates for such AHI Pension Plans,
exceed the value of the assets of such AHI Pension Plans allocable to such
benefits. None of the AHI Pension Plans subject to Section 302 of ERISA has
incurred any "accumulated funding deficiency", as such term is defined in
Section 302 of ERISA (whether or not waived), since the effective date of such
Section 302. None of AHI, any Subsidiary of AHI, any officer of AHI or a
Subsidiary of AHI or any of the employee benefit plans of AHI and the
Subsidiaries of AHI which are subject to ERISA, including the AHI Pension Plans,
or any trusts created thereunder, or any trustee or administrator thereof, has
engaged in a "prohibited transaction", as such term is defined in Section 4975
of the Code, which could subject AHI, any Subsidiary of AHI, any officer of AHI
or a Subsidiary of AHI, any of such plans or any trust to any material tax or
penalty on prohibited transactions imposed by such Section 4975 and would
reasonably be expected to have a material adverse effect on AHI. Neither any of
such AHI Pension Plans subject to Title IV of ERISA nor any of their related
trusts have been terminated, nor has there been any material "reportable event",
as that term is defined in Section 4043 of ERISA, for which the 30 day reported
request event have not been waived with respect thereto, which in any case would
have a material adverse effect on AHI and its Subsidiaries taken as a whole. AHI
is not a contributing employer to any "multiemployer plan" as such term is
defined in Section 3(37) or Section 4001(a)(3) of ERISA.
(q) Certain Information. With respect to agreements with customers or
suppliers which AHI has not disclosed to the
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Company prior to date hereof for competitive reasons, (i) such agreements were
entered into in the ordinary cause of AHI's business, (ii) AHI reasonably
believes that such agreements are in the aggregate not materially adverse to AHI
and its Subsidiaries taken as a whole and (iii) such agreements (A) do not
contain terms permitting cancellation or termination thereof upon the
consummation of the transactions contemplated hereby where such cancellation or
termination would reasonably be expected to have individually or in the
aggregate a material adverse effect on AHI and (B) if breached by AHI by reason
of the consummation of this Agreement would result in damages against AHI which
would reasonably be expected to have a material adverse effect on AHI.
(r) Absence of Certain Changes or Events. Since December 31, 1994 AHI
and the Subsidiaries of AHI have conducted their respective businesses only in
the ordinary course, and there has not been (i) any damage, destruction or loss
to any property of AHI or its Subsidiaries, whether covered by insurance or not,
which has or, in the future would reasonably be expected to have a material
adverse effect on AHI or the Surviving Corporation; (ii) any declaration,
setting aside or payment of any dividend (whether in cash, stock or property)
with respect to any of AHI's capital stock other than the accrual or payment of
dividends on the AHI Preferred Stock in accordance with its terms; or (iii) any
transaction, commitment, dispute or other event or condition by or with respect
to AHI or its Subsidiary which, individually or in the aggregate, has had, or in
the future would reasonably be expected to have, a material adverse effect on
AHI or the Surviving Corporation.
(s) Definition of Knowledge. For purposes of the Agreement, "to the
knowledge of AHI" and words of similar import shall be limited to the actual
knowledge of the executive officers of AHI and its Subsidiaries.
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ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
5.1 Covenants of the Company. During the period from the date of
this Agreement and continuing until the Effective Time, the Company (except as
expressly permitted or contemplated by this Agreement or to the extent that AHI
shall otherwise consent in writing) shall conduct its business as follows:
(a) Ordinary Course. The Company and its Subsidiaries shall carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent with such businesses, use reasonable efforts to preserve their
present business organizations, keep available the services of their present
officers and employees and preserve their relationships with customers and
suppliers, except as any of the foregoing shall have been affected by the
announcement of the transactions contemplated by this Agreement.
(b) Dividends; Changes in Stock. The Company shall not and shall not
propose to (i) declare or pay any dividends on or make other distributions in
respect of any of its capital stock except as permitted by Section 6.13 hereof,
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of the Company or (iii) repurchase or
otherwise acquire, or permit any Subsidiary of the Company to purchase or
otherwise acquire, any shares of its capital stock (other than in accordance
with the terms of the Company Option Plans) or Company options (except as
contemplated by this Agreement).
(c) Issuance of Securities. The Company shall not, and shall not
permit any Subsidiary of the Company to, issue, deliver or sell, or authorize or
propose the issuance, or delivery or sale of, any shares of its capital stock of
any class, any Voting Debt or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, Voting Debt or convertible
securities (other than the issuance of no more than 10,000 shares of Company
Common Stock upon the exercise of stock options granted under the Company Option
Plans that are outstanding on the date of this Agreement in accordance with
their present terms).
(d) Governing Documents. The Company shall not, and shall not permit
any Subsidiary to, amend or propose to amend its Certificate of Incorporation or
bylaws except as contemplated by Section 1.1(a).
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(e) Takeover Proposals. From and after the date hereof and until the
Effective Time (or earlier termination of this Agreement), provided that AHI is
not in material breach of this Agreement, the Company shall not, nor shall it
permit any Subsidiary of the Company to, nor shall it authorize or permit any
officer, director or employee of or any investment banker, attorney, accountant
or other representative retained by the Company or any Subsidiary of the Company
to, solicit, initiate or encourage submission of any proposal or offer
(including by way of furnishing nonpublic information about the Company) from
any person which constitutes, or may reasonably be expected to lead to, any
Takeover Proposal (as defined below); provided, however, that the Company and
such other persons shall be entitled to furnish information to any third party
(and enter into agreements with respect to confidentiality and related matters
with such third party) in response to an unsolicited inquiry and to engage in
discussions to clarify and refine any details of any offers that may result from
any such unsolicited inquiry to the extent the Company Board determines in good
faith and after consultation with its legal counsel that the failure to do so
would be inconsistent with its fiduciary duties. The Company shall not waive
any rights, or release any such third party from any of its obligations, under
any such confidentiality agreement relating to the Confidentiality Provisions
and shall use reasonable efforts to fully enforce any rights it may have
relating to the Confidentiality Provisions under any such confidentiality
agreement. The Company shall promptly communicate to AHI the material terms of
any proposal (other than the identity of the party making such proposal if such
party requests that its identity remain confidential), which it may receive in
respect of any actual or potential Takeover Proposal. As used in this
Agreement, "Takeover Proposal" shall mean any proposal for a merger or other
business combination involving the Company or any Subsidiary of the Company or
any proposal or offer to acquire in any manner a substantial equity interest in
the Company or any Subsidiary of the Company or a substantial portion of the
assets of the Company or any Subsidiary of the Company. If the Company shall
enter into any agreement with a third party (a "TPC Agreement") with respect to
any of the matters set forth in that certain Confidentiality Agreement dated as
of November 16, 1994, among the Company, Associated Stationers, Inc., and
Wingate Partners, L.P., as supplemented by letter agreement dated as of November
16, 1994 (the "Confidentiality Agreement") and the material terms or condition
of any TPC Agreement are less restrictive on the third party than the
corresponding terms and conditions (excluding the no hire provisions) of the
Confidentiality Agreement, the Confidentiality Agreement shall automatically be
amended to such less restrictive terms and conditions.
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(f) No Acquisitions. The Company shall not, and shall not permit any
Subsidiary of the Company to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof which acquisition, if
consummated, would be, individually or in the aggregate, material to the
Company. The Company shall not purchase assets (other than inventory and
capital expenditures) with an aggregate purchase price of more than $5,000,000
in the aggregate.
(g) No Dispositions. The Company shall not, and shall not permit any
Subsidiary of the Company to, sell, lease or otherwise dispose of, or agree to
sell, lease or otherwise dispose of, assets with a fair market value in excess
of $5,000,000 (individually or in the aggregate), except for inventory, accounts
receivable, supplies obsolete or damaged assets and salvage items and excluding
dispositions of assets which are or will be replaced with a similar type of
asset.
(h) Indebtedness. The Company shall not, and shall not permit any
Subsidiary of the Company to, incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities of the
Company or any Subsidiary of the Company or guarantee any debt securities of
others other than in accordance with the Company Disclosure Schedule or for
working capital purposes in the ordinary course of business or capital
expenditures permitted hereunder and refinancings of existing bank indebtedness
with the consent of AHI, which consent shall not be unreasonably withheld or
delayed. To the extent available to the Company under agreements governing its
bank indebtedness, the Company shall select an interest rate option based on
LIBOR for an interest period not to exceed thirty (30) days.
(i) Benefit Plans, Etc. Other than as provided in the Company
Disclosure Schedule the Company shall not, and shall not permit any Subsidiary
of the Company to, adopt or amend in any material respect any collective
bargaining agreement or material employee benefit plan, stock option plan,
phantom stock plan or material vacation plan other than in the ordinary course
of business consistent with past practice or as contemplated by Section 3.6.
Notwithstanding the foregoing, the Company
(a) may (and after the Expiration Date, to the extent not already
paid, shall) pay to plan participants the following employee benefit
obligations on a date selected by it preceding the first date on which AHI
purchases Company Shares pursuant to the Offer (i) so-called "top-hat" or
supplemental retirement benefits for the benefit of present or past
employees and directors of the Company and (ii)
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deferred compensation owing to present or past employees and directors,
each as disclosed in the Company Disclosure Schedule assuming the Effective
Time is June 30, 1995. The amounts payable shall be computed by the
Company in accordance with its past practices and shall be in amounts which
shall not exceed the amounts accrued on the Company's books through the end
of the month preceding the date on which AHI first purchases Company Shares
pursuant to the Offer, plus amounts which the Company estimates would be
accrued through the Effective Time; and
(b) the Company may (and after the Expiration Date, to the extent not
already paid, shall) prior to the first date on which AHI purchases Shares
in the Offer, make contributions (calculated in accordance with past
practices) to its profit sharing plan for that portion of the fiscal year
ending August 31, 1995 which it estimates will have elapsed through the
Effective Time. The amount which the Company estimates would be
contributed for such fiscal year if the Effective Time occurred on June 30,
1995 is set forth in the Company Disclosure Schedule.
(j) Executive Compensation. The Company shall not, and shall not
permit any Subsidiary of the Company to, (i) increase the aggregate amounts
payable under or otherwise change in a manner materially (in reference to all
Executive Contracts) adverse to the Company any other material term of the
Executive Contracts or any other agreement with its executive officers except as
and to the extent disclosed in the Company Disclosure Schedule and except for
increases in the ordinary course of business consistent with past practice of
the Company, (ii) enter into any employment agreement with any executive officer
except with respect to prospective executive officers, except with the prior
written consent of AHI which shall not be unreasonably withheld or delayed,
(iii) materially increase the compensation payable to any other officer or
employee except for increases in the ordinary course of business consistent with
past practice of the Company. For purposes of this paragraph (j) the wage
freeze currently in effect for the Company shall not be considered part of the
past practice of the Company.
(k) No Capital Expenditures. The Company shall not, and shall not
permit any Subsidiary of the Company to, make any capital expenditures or any
commitments therefor which exceed 120% of the amount set forth in the Company
Disclosure Schedule.
(l) Company SEC Filings. The Company shall file all reports,
schedules and definitive proxy statements (the "Company Filings") required to be
filed by the Company with the SEC and shall provide copies thereof to AHI
promptly upon the filing thereof. As of its respective date, each Company
Filing will comply in all material respects with the requirements of the
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Exchange Act and the applicable rules and regulations of the Commission
thereunder and none of the Company Filings will contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading. As of their respective dates, the
financial statements of the Company included in the Company Filings will have
been prepared in accordance with generally accepted accounting principles
consistently applied (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q) and will fairly present
in all material respects the consolidated financial position of the Company as
at the dates thereof and the consolidated results of operations, cash flows or
changes in financial position for the periods indicated therein. Upon the
filing of a Company Filing, the Company Filing shall be considered as an SEC
Document for all purposes of this Agreement.
(m) Other Actions. The Company shall not, and shall not permit any
Subsidiary of the Company to, take any action that would or might result in any
of the representations and warranties of the Company set forth in this Agreement
becoming untrue or in any of the conditions to the Merger set forth in Article 7
not being satisfied.
(n) Advice of Changes. The Company shall promptly advise AHI orally
or in writing of any change or event having, or which would have, a material
adverse effect on the Company other than any changes or events arising from
general economic conditions or generally affecting the industry in which the
Company operates.
5.2 Covenants of AHI. During the period from the date of this
Agreement and continuing until the Effective Time, AHI shall (except as
expressly permitted by this Agreement or to the extent that the Company shall
otherwise consent in writing) conduct its business as follows:
(a) Ordinary Course. AHI and its Subsidiaries shall carry on their
respective businesses in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted and, to the extent consistent with such
businesses, use reasonable efforts to preserve their present business
organizations, keep available the services of their present officers and
employees and preserve their relationships with customers and suppliers, except
as any of the foregoing shall have been affected by the announcement of the
transactions contemplated by this Agreement.
(b) Dividends; Changes in Stock. AHI shall not and shall not propose
to (i) declare or pay any dividends on or make other distributions in respect of
any of its capital stock
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other than the accrual of dividends on the AHI Preferred Stock, (ii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of AHI or (iii) repurchase or otherwise
acquire, or permit any Subsidiary of AHI to purchase or otherwise acquire, any
shares of its capital stock.
(c) Issuance of Securities. Except as contemplated by the AHI
Options, Chase Commitment and Section 6.5 hereof, AHI shall not, and shall not
permit any Subsidiary of AHI to, issue, deliver or sell, or authorize or propose
the issuance, or delivery or sale of, any shares of its capital stock of any
class, any Voting Debt or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, Voting Debt or convertible
securities.
(d) Governing Documents. Except to the extent necessary to permit the
issuance of capital stock as provided in the Chase Commitment or as permitted
under Section 6.5, AHI shall not, and shall not permit any Subsidiary of AHI to,
amend or propose to amend their Certificate of Incorporation or By-laws.
(e) No Acquisitions. AHI shall not, and shall not permit any
Subsidiary of AHI to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof which acquisition, if consummated
would be material, individually or in the aggregate, to AHI.
(f) No Dispositions. AHI shall not, and shall not permit any
Subsidiary of AHI to, sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any of its assets, which are material,
individually or in the aggregate, to AHI, except in the ordinary course of
business consistent with prior practice.
(g) Indebtedness. Except as contemplated by the Chase Commitment, AHI
shall not, and shall not permit any Subsidiary of AHI to, incur any indebtedness
for borrowed money or guarantee any such indebtedness or issue or sell any debt
securities of AHI or any Subsidiary of AHI or guarantee any debt securities of
others other than for working capital purposes in the ordinary course of
business.
(h) Benefit Plans, Etc. AHI shall not, and shall not permit any
Subsidiary of AHI to, adopt or amend in any material respect any collective
bargaining agreement or employee benefit plan other than in the ordinary course
of business consistent with prior practice.
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(i) Executive Compensation. AHI shall not, and shall not permit any
Subsidiary of AHI to, grant to any executive officer any material increase in
compensation or in severance or termination pay, or enter into any employment
agreement with any executive officer, except as set forth in the AHI Disclosure
Schedule, as may be required under employment or termination agreements in
effect on the date of this Agreement and included in the AHI Disclosure Schedule
or in the ordinary course of business consistent with prior practice.
(j) No Capital Expenditures. AHI shall not, and shall not permit any
Subsidiary of AHI to, make any capital expenditures or any commitments therefor
other than in the ordinary course of business.
(k) Advice of Changes. AHI shall promptly advise the Company orally
or in writing of any change or event having, or which would have, a material
adverse effect on AHI, other than changes or events arising from economic
conditions or generally affecting the business in which AHI operates.
ARTICLE 6
ADDITIONAL AGREEMENTS
---------------------
6.1 Information Statements; Offering Documents.
(a) The Company will prepare and file, as promptly as practicable and
in no event later than ten days after the date hereof, a preliminary Information
Statement (with confidential treatment requested) with the Commission relating
to matters to be acted on by the stockholders of the Company after consummation
of the Offer. AHI agrees to provide to the Company as promptly practicable and
be solely responsible for all information (including all proforma financial
information) relating to AHI and its Subsidiaries and the description,
operations and conduct of the business of the Company following the purchase of
Company Shares in the Offer. The Company will use its reasonable best efforts
to respond to any comments of the Commission and to cause the Information
Statement to be mailed to the Company's stockholders at the earliest practicable
time following consummation of the Offer. The Company will provide to AHI and
its counsel a full opportunity to review and comment upon the preliminary and
definitive Information Statement prior to filing with the Commission. The
Company will notify AHI promptly of the receipt of any comments from the
Commission or its staff and of any request by the Commission or its staff for
amendments or supplements to the Information Statement or for additional
information and will supply AHI with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the Commission or
its staff, on the other hand, with
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respect to the Information Statement or the Merger. If at any time prior to the
Effective Time any event shall occur which should be set forth in an amendment
of, or a supplement to, the Information Statement, the Company will promptly
prepare and mail such an amendment or supplement. The Company will not mail the
Information Statement, or any amendment thereof or supplement thereto, to the
Company's stockholders unless it has first obtained the consent of AHI to such
mailing, which consent shall not be unreasonably withheld.
(b) AHI will prepare and submit to its stockholders, as promptly as
practicable after the date hereof and in a manner in conformance with all
applicable laws, all disclosures required by applicable law. Such action by AHI
will be exempt from the registration requirements of Federal and applicable
state securities laws.
6.2 Access to Information. Each of the Company and AHI shall (and
shall cause each of its Subsidiaries to) afford to the other party and to the
other party's accountants, counsel and other representatives, reasonable access
during normal business hours during the period prior to the Effective Time to
all their respective properties, financial statements, books, contracts,
commitments and records and, during such period, each of the Company and AHI
shall (and shall cause each of its Subsidiaries to) furnish promptly to the
other party (a) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of federal and state securities laws and (b) all other information
concerning its business, properties and personnel as the other party may
reasonably request; provided, however, that neither party shall be required to
furnish to the other or permit access to information relating to customers,
suppliers, marketing strategy or the like deemed by such party to be sensitive
from a competitive point of view. All information obtained pursuant to this
Agreement by or on behalf of AHI or any Subsidiary of AHI shall be subject to
the provisions of the Confidentiality Agreement.
6.3 Stockholder Approval.
(a) If required by applicable law in order to consummate the Merger,
the Company shall promptly following the date which the Offer is consummated
call a meeting of its stockholders for the purpose of adopting this Agreement
and approving the Merger and related matters. Subject to the fiduciary duties
of the Company Board under applicable law, the Company shall, through its Board
of Directors, otherwise use its reasonable best efforts (including the
engagement of a proxy solicitation firm acceptable to AHI) to obtain stockholder
approval of this Agreement. If a vote or consent of the stockholders is
required under the DGCL or requested, AHI shall
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vote all AHI-owned Shares to be voted in favor of adopting this Agreement and
approving the Merger.
(b) AHI shall as soon as practicable following the date hereof give to
its stockholders notice that this Agreement has been adopted and the
transactions contemplated hereby approved by action by written consent of AHI's
majority stockholder.
6.4 Legal Conditions to Merger. Each of AHI and the Company will
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it or any of its Subsidiaries with respect
to the Offer or Merger and will promptly cooperate with and furnish information
in connection with any such requirements imposed upon it or any of its
Subsidiaries in connection with the Offer or Merger. Each of AHI and the Company
will take, and will cause its Subsidiaries to take, all reasonable actions
necessary to obtain (and will cooperate with the other party and its
Subsidiaries in obtaining) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity, and will take all reasonable actions
necessary to obtain any consent of any other third party, required to be
obtained or made by the Company or any of its Subsidiaries (or by AHI or any of
its Subsidiaries) in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement. The Company shall use reasonable
best efforts to obtain the consent of the parties with respect to the matters
identified on Exhibit D-1 hereto (the "Company Material Consents"). AHI will
use reasonable best efforts to obtain the consents of the party with respect to
the matters identified in Exhibit D-2 hereto. Notwithstanding the foregoing, in
no event shall AHI or the Company be required to agree or consent to the
divestiture of any material amount of assets of AHI, the Company, the Surviving
Corporation or their respective Subsidiaries, or any restriction on the right of
AHI or Wingate Partners, L.P. to control the business of the Surviving
Corporation or any of its Subsidiaries following the Merger.
6.5 Financing. AHI will use its reasonable best efforts to obtain
the Financing in accordance with the Chase Commitment and enter into definitive
documentation with respect thereto, including without limitation the filing and
diligent prosecution of all filings with the Commission and state securities or
blue sky authorities, as may be necessary to effect the Financing, the Offer and
the Merger. AHI agrees that no shares of capital stock or rights to acquire
capital stock of the Company, the Surviving Corporation or any Subsidiary of
either given in connection with the Financing shall dilute the percentage
ownership in the Surviving Corporation of the holders of Company Shares which
are converted pursuant to Section 3.1(a) hereof. The Company acknowledges that
AHI intends to cause all
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or substantially all of the indebtedness of the Company to be refinanced
concurrently with the consummation of the Offer as and to the extent provided in
the Chase Commitment. In connection with the Financing, AHI will issue
additional shares of AHI Common for an aggregate consideration of not less than
$12,000,000 cash and an average equivalent price per share of Company Common
Stock of not less than $10 per share and warrants, options and other rights to
purchase common stock. AHI will promptly but in any event within one business
day issue a public announcement upon entering into definitive documentation with
respect to the Financing.
6.6 Expenses. Except as set forth in Section 8.2(c), all expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses and, for the purposes
of this Section 6.6, expenses to be paid by the Company shall include expenses
incurred in connection with the preparation and mailing of the Information
Statement; provided, however, that each party shall pay one-half of all fees and
expenses of any consultants retained by mutual agreement of the parties (other
than their respective attorneys, which shall be paid by their retaining party)
in connection with obtaining, or seeking to obtain necessary approvals under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and provided,
further, that the Company covenants and agrees that the aggregate third party
expenses (other than legal and accounting fees and expenses) incurred by it in
connection with this Agreement and the transactions contemplated hereby prior to
the Expiration Date shall not exceed $2.75 million (subject to an increase by
the amount by which certain fees payable by the Company disclosed to AHI prior
to the date hereof increase if the price paid in the Offer increases), and that
all such third party expenses will be paid or accrued in full prior to the
Closing Date.
6.7 Brokers or Finders. Each of AHI and the Company represents, as
to itself, its Subsidiaries and its affiliates, that no agent, broker,
investment banker or other firm or person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except Blair and Lazard, both
of whose fees and expenses will be paid by the Company in accordance with the
Company's agreement with such firm (copies of which have been delivered by the
Company to AHI prior to the date of this Agreement), and Chase Securities, Inc.
and Chase, whose fees and expenses will be paid by AHI in accordance with AHI's
agreement with such firms, and each of AHI and the Company shall indemnify and
hold the other harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such party or its affiliate.
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6.8 Indemnification and Insurance.
(a) AHI (from and after the purchase of Company Shares in the Offer),
the Surviving Corporation (and, prior to the Effective Time, the Company),
hereby jointly and severally agree that until June 30, 2000, the Company (prior
to the Effective Time) and the Surviving Corporation (at and after the Effective
Time) shall provide officers' and directors' liability insurance covering each
present and former director, officer, employee and agent of the Company and each
Subsidiary of the Company and each present and former director, officer,
employee, agent or trustee of any employee benefit plan for employees of the
Company (individually, an "Indemnified Person", and collectively, the
"Indemnified Persons"), who is currently covered by the Company's officers' and
directors' liability insurance or will be so covered on the Expiration Date or
the Closing Date with respect to actions and omissions occurring (or alleged to
have occurred) on or prior to the Effective Time (including, without limitation,
any which arise out of or relate to the transaction contemplated by this
Agreement), which liability insurance is no less favorable than such insurance
maintained in effect by the Company on the date hereof in terms of coverage and
amount; provided, however, that if the premiums for such insurance exceed in any
year 175% of the premiums for such insurance paid by the Company for the twelve
month period ended October 31, 1995, such insurance may be modified to provide
the maximum coverage available for 175% of the amount of such premiums for such
period. Proof of such insurance, including a certificate or certificates of
insurance (along with a copy of the underlying policy with respect to which the
certificate is issued) shall be furnished by AHI to the Company on or prior to
the Closing Date and thereafter shall be furnished by AHI to any Indemnified
Persons upon request during such period. On or before each June 30 of each year
the Company or the Surviving Corporation shall furnish a certificate executed by
its chief financial or accounting officer certifying and showing compliance with
the requirements of this Section 6.8 to Joel D. Spungin, in care of Altheimer &
Gray, Attn: Phillip Gordon, 10 South Wacker Drive, Suite 4000, Chicago, Illinois
60606.
(b) The Surviving Corporation (and, prior to the Effective Time, the
Company) shall indemnify and hold harmless to the fullest extent permissible
under the DGCL each of the Indemnified Persons against any losses, claims,
damages, liabilities, costs, expenses (including, without limitation, reasonable
attorneys fees), judgments, fines and amounts paid in settlement in connection
with any threatened, pending or completed claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative
("Indemnifiable Claim"), arising out of or related to any action or omission
occurring on or prior to the Closing Date (including, without limitation, any
which arise out of or relate to the
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transactions contemplated by this Agreement), whether asserted or commenced
prior to, on or after the Closing Date (excluding, however, actions brought by
the Company against persons who are Indemnified Persons for repayment amounts
alleged to have been improperly paid under the Benefits Trust Agreement.
(c) The Surviving Corporation (and, prior to the Effective Time, the
Company) hereby agrees that, until at least June 30, 2000, the provisions of the
Certificate of Incorporation and By-Laws of the Surviving Corporation shall
provide indemnification to the Indemnified Persons on terms, in a manner, and
with respect to matters, which are no less favorable (in favor of persons
indemnified) than the Certificate of Incorporation and By-Laws of the Company
and its Subsidiary, United Stationers Supply Co. ("USSC"), as in effect on the
date hereof, and further agree that such indemnification provisions shall not be
modified or amended except as required by law, unless such modification or
amendment clearly expands the rights of the Indemnified Persons to
indemnification. Without limiting the generality of the foregoing, the
Surviving Corporation shall advance, from time to time, as incurred, expenses
(including reasonable attorneys' fees) to each such Indemnified Person.
(d) In the event of any Indemnifiable Claim (whether asserted or
commenced before, on or after the Closing Date), (i) the Indemnified Person(s)
may retain counsel satisfactory to them, and the Company or the Surviving
Corporation after the Effective Time, shall pay all fees and expenses of such
counsel for the Indemnified Person(s) promptly as statements therefor are
received (whether or not such fees and expenses are incurred prior to the actual
disposition of such Indemnifiable Claim), and (ii) the Company and, after the
Effective Time, the Surviving Corporation shall use their respective best
efforts to assist the Indemnified Person(s) in the defense of any such matter;
provided that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its written consent, which consent, however,
shall not be unreasonably withheld or delayed. Any Indemnified Person wishing
to claim indemnification under this Section 6.8, upon learning of any
Indemnifiable Claim, shall notify the Surviving Corporation thereof, provided
their failure to provide any such notice shall not relieve the Surviving
Corporation of its obligations under this Section 6.8, except to the extent the
Surviving Corporation is actually and materially prejudiced by such lack of
notice. The Indemnified Persons as a group with respect to the same
Indemnifiable Claim may retain only one (1) law firm to represent them with
respect to any such matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two (2) or more Indemnified Persons, in which case such Indemnified
Persons may retain such number of additional counsel
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as are necessary to eliminate all conflicts of the type referred to above.
(e) AHI, the Company and the Surviving Corporation expressly
acknowledge the indemnification and like obligations of the Company and USSC
contained in their respective Certificates of Incorporation and By-Laws and
hereby agree, from and after the Expiration Date, to honor in accordance with
their terms all such obligations and further acknowledge that said obligations
(along with the indemnification and like obligations in the Certificate of
Incorporation and By-Laws of the Surviving Corporation) constitute a contract
between the Company and/or USSC (and/or the Surviving Corporation), as the case
may be, on the one hand, and the Indemnified Person(s), on the other hand,
creating binding obligations on the part of the indemnitors and binding rights
on the part of the Indemnified Persons. Without limiting the foregoing
obligations of AHI, the Company and the Surviving Corporation in this Section
6.8, upon consummation of the transactions contemplated by this Agreement, the
Company and USSC shall continue to honor, and the Surviving Corporation will be
bound by and honor such obligations of the Company and USSC referred to in the
next preceding sentence and will reimburse an Indemnified Person for its
expenses in enforcing its rights under this Section 6.8, including reasonable
attorneys fees.
(f) If the Company or the Surviving Corporation or its successors or
assigns shall transfer all or substantially all of its properties and assets to
any individual, corporation or other entity, then and in each such case, proper
provisions shall be made so that the successors and assigns thereof shall assume
the obligations set forth in this Section 6.8; provided, however, no such
assignment or assumption shall relieve the Surviving Corporation (or any
successor or assign) of its obligations set forth in (or imposed pursuant to)
this Section 6.8.
(g) Nothing contained in this Section 6.8, or elsewhere in this
Agreement, shall limit an Indemnified Person's right (or impose any obligation
upon an Indemnified Person) to pursue (whether separately, simultaneously or in
seriatim) recovery of the obligations of indemnification provided for in this
Section 6.8, or affect the obligations of the Company prior to the expiration of
the Offer, and the pursuit of one or more rights of indemnification by an
Indemnified Person shall not be deemed to be a waiver of the right to pursue any
other remedy. Nothing herein contained shall be deemed or construed as allowing
an Indemnified Person to recover an aggregate amount in excess of the amount for
which the Indemnified Person is entitled to indemnification. Nothing in this
Section 6.8 shall be deemed to require the Company (prior to the Effective Time)
or the Surviving Corporation to take any action in violation of applicable law.
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6.9 Additional Agreements. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
subject, if applicable, to the appropriate approval of stockholders of the
Company required so to approve, and, subject in the case of the Company to the
exercise by the Company Board prior to the Expiration Date of its fiduciary
duties under applicable law as advised by legal counsel. If at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of the Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
either the constituent corporations, the proper officers and directors of each
corporation that is a party to this Agreement shall take all such necessary
action.
6.10 Employee Contracts and Employee Benefit Plans.
(a) From and after the earlier to occur of the consummation of the
Offer and the Effective Time, the Company and the Surviving Corporation shall
cause to be maintained and honored the severance policy of the Company and USSC
for terminated employees as in effect on the date hereof, copies of which appear
in the Company Disclosure Schedule, or shall replace such policy with, and keep
in effect, a policy providing to the employees a severance policy which equals
or has more favorable terms, compensation and benefits than the severance policy
for the Company or USSC, for a period of not less than one (1) year after the
Effective Time.
(b) From and after the earlier to occur of the consummation of the
Offer and the Effective Time, the Company and the Surviving Corporation hereby
agree to duly and punctually perform (or cause to be performed) all obligations
of the Company and its Subsidiaries under all of their existing agreements with
directors, officers, employees and former employees, including, without
limitation, the Executive Contracts and the agreements set forth in the Company
Disclosure Schedule. To the extent not prohibited by applicable law the Company
and the Surviving Corporation shall cause service with the Company prior to the
Effective Time to be treated as service for benefit plan purposes at least to
the extent that service with AHI prior to the Effective Time is treated as
service for benefit plan purposes (including, without limitation, for purposes
of pre-existing conditions limitations, waiting period and vesting
requirements).
(c) The Company (and, following the Effective Time, the Surviving
Corporation) shall not amend the provisions of the United Stationers Pension
Plan ("US Pension Plan") which
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prescribe the interest rate assumption, mortality table assumption and any other
factors that determine the actuarial equivalent of different forms of payment
under the US Pension Plan if the amendment would result in lump sum options
smaller than the lump sum options calculated by using the interest rate
assumption, mortality table assumption, and other factors which would otherwise
be prescribed by the US Pension Plan as in effect on the date of this Agreement.
(d) Prior to the acceptance for payment of Company Shares pursuant to
the Offer, (i) the Company shall execute and deliver the Benefits Trust
Agreement substantially in the form of Exhibit E hereto (the "Benefits Trust
Agreement") and the Bonus Plan Trust Agreement substantially in the form of
Exhibit F hereto (the "Bonus Plan Trust") and (ii) AHI shall give its written
consent to the Benefits Trust Agreement and Bonus Plan Trust. Simultaneous with
the payment for Company Shares accepted for payment pursuant to the Offer, AHI
shall deposit with American National Bank and Trust Company, (A) as trustee
under the Benefits Trust Agreement ("Benefits Trustee") a Letter of Credit
issued by Chase in the face amount of $24,000,000 substantially in the form of
Exhibit G hereto (the "Benefits Letter of Credit") and (B) as trustee under the
Bonus Plan Trust a Letter of Credit issued by Chase substantially in the form of
Exhibit H hereto (the "Bonus Letter of Credit") in a face amount, as reasonably
estimated by the Company, equal to the sum of (x) in respect of the Executive
Bonus Plan, amounts accrued by the Company on its books through the first day on
which Shares are purchased in the Offer plus amounts which the Company estimates
will be accrued through the end of the month in which the Effective Time occurs;
provided, that if the Effective Date occurs on or before the tenth day of the
month, the estimate will be of amounts accrued to the Effective Date (less
amounts theretofore paid under such plan), plus (y) in respect of the Management
Incentive Plan, amounts accrued by the Company on its books through the first
date on which Shares are purchased in the Offer plus amounts which the Company
estimates will be accrued for the remainder of the fiscal year ending August 31,
1995. The accruals under such plans shall be made in accordance with the terms
of the plans. The amounts which the Company currently estimates will be accrued
if the Effective Time occurs on June 30, 1995 are (X) in respect of the
Executive Bonus Plan, $1,001,000, and (Y) in respect of the Management Incentive
Plan, $4,207,000. The Company shall give written notice to AHI of the amount of
the Bonus Letter of Credit not later than two days prior to the then scheduled
Expiration Date. The face amount of the Bonus Letter of Credit shall not exceed
$6,000,000.
(e) The Surviving Corporation shall make contributions to the
Company's 401(k) plan in amounts required by such plan for the portion of its
fiscal year elapsed through the Effective Time.
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6.11 Financial Condition. AHI shall use its reasonable best efforts
to cause to be executed and delivered to the Company prior to or simultaneous
with the acceptance for payment of the Company Shares pursuant to the Offer, (a)
financial condition certificate in the same form to be delivered to Chase which
certificates will address matters customarily addressed in such certificates
(the "Financial Condition Certificate") and (b) the opinion of Valuation
Research Corporation (the "Appraiser") addressed to the Company (among others)
substantially in the form attached hereto as Exhibit I (the "Solvency Opinion").
6.12 Compliance Certificates.
(a) Prior to the acceptance of Shares for payment pursuant to the
Offer Expiration Date (as then scheduled), AHI shall deliver to the Company a
certificate executed on behalf of AHI by the chief executive officer and chief
accounting officer of AHI, stating that the representations and warranties of
AHI set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the date of such certificate
as though made on and as of the date of such certificate, except as otherwise
permitted by this Agreement or if any such representation or warranty is untrue
in any material respect, specifying the respect in which the same is untrue.
(b) Prior to the acceptance of Shares for payment pursuant to the
Offer (as then scheduled), the Company shall, if requested by AHI, deliver to
AHI a certificate executed on behalf of the Company by the chief executive
officer and chief financial officer of the Company, stating that the
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all material respects as of the date of such certificate
as though made on and as of the date of such certificate, except as otherwise
permitted by this Agreement, or if any such representation or warranty is untrue
in any material respect, specifying the respect in which the same is untrue.
6.13 Company Dividends. Notwithstanding anything to the contrary
contained in this Agreement, (a) prior to the Expiration Date the Company shall
declare and thereafter promptly pay to stockholders a cash dividend of $.10 per
share in respect of the fiscal quarter ended February 28, 1995 and (b) if the
Merger shall not have occurred on or before June 15, 1995, the Company shall, if
approved by the Company Board (prior to the Expiration Date) or the Continuing
Directors (after the Expiration Date) and, if AHI, any of its Subsidiaries or
Affiliates owns any Company Shares, AHI shall cause the Company to, on or about
June 16, 1995 declare and thereafter promptly pay to stockholders of record as
of a date no later than one day prior to the Effective Time a cash dividend of
$.10 per share.
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6.14 AHI Stockholder Agreements. Prior to the Expiration Date, AHI
will use its reasonable best efforts to deliver to the Company within ten days
from the date of this Agreement a letter signed by each beneficial owner of 5%
or more of the outstanding Shares of AHI Common (including holders of rights to
acquire 5% or more of the AHI Common) agreeing not to sell their shares of
Company Common Stock received in the Merger for a period of one year after the
Effective Time, such letter to be in a form reasonably satisfactory to the
Company and AHI. The Surviving Corporation shall not waive the obligations of
rights such beneficial owners under such letters. The AHI Disclosure Schedule
contains a true and correct copy of certain Letter Agreements between AHI and
certain of its lenders dated February 10, 1995 (the "Bank Letters"). AHI, and
following the Effective Time, the Surviving Corporation, shall not amend,
release or relinquish its rights under such Bank Letters. AHI and the Surviving
Corporation shall not waive any obligation of any stockholder or warrantholder
to not sell its shares or warrants.
6.15 Agreements to be Assumed by the Company. At the Effective Time,
each outstanding option, warrant, or other right to acquire AHI Common or AHI
Class B Common (collectively, "AHI Options") shall be deemed to have been
assumed by the Company, without further action by the Company, and shall
thereafter be deemed an option to acquire, on the same terms and conditions as
were applicable under such AHI Option, a number of Company Shares equal to the
number of Company Shares that would have been received in respect of such AHI
Option if it had been exercised immediately prior to the Effective Time;
provided, however, that no fractional shares shall be issued on exercise of any
such assumed AHI Option and, in lieu thereof, the shares issuable on any such
exercise shall be rounded to the nearest whole share. Also at the Effective
Time the Company shall be deemed to have assumed, without further action by the
Company, the obligations of AHI under Stockholders Agreement, Executive Stock
Purchase Agreements, Voting Trust Agreement, Stockholders Registration Rights
Agreement, the Warrants, Warrant Agreements and Lenders Registration Rights
Agreement, each in substantially the form included in the AHI Disclosure
Schedule, with the effect that after the Effective Time all such agreements
shall be applicable to an appropriate number and class of Company Shares (based
on the exchange ratio of Company Shares for AHI Common Stock pursuant to Section
3.1(c)) in lieu of the shares of AHI Common or Class B Common Stock of AHI
subject thereof immediately prior to the Effective Time. Also after the
Effective Time, no additional options shall be granted under the AHI Stock
Option Plan.
6.16 Subsidiary Merger. Immediately following (and in no event prior
to) the Effective Time, the Company shall cause Associated (which as a result of
the Merger will become a wholly-owned Subsidiary of the Company) to be merged
with and into the
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Company's wholly-owned Subsidiary, United Stationers Supply Company. In
accordance with Treasury Regulation (S) 1.1502-76(b)(1)(ii)(B), each party to
this Agreement hereby acknowledges and agrees, on its own behalf and on behalf
of all persons related to such party under section 267(b) of the Internal
Revenue Code of 1986, as amended (a "Related Party"), to treat such subsidiary
merger as occurring for federal income tax purposes at the beginning of the day
following the Effective Time, and each party to this Agreement shall, and shall
cause all Related Parties with respect to such party to, file all relevant
federal, state, and local income tax returns in a manner consistent with such
treatment.
ARTICLE 7
CONDITIONS PRECEDENT
--------------------
7.1 Conditions to Each Party's Obligations. The respective
obligation of each party to effect the Merger is subject to the satisfaction
prior to the Closing Date of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the requisite vote or consent of the stockholders of the Company, if
such vote or consent is required by applicable law.
(b) Other Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity necessary for the consummation of the
transactions contemplated by this Agreement shall have been filed, occurred or
been obtained.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect.
(d) No Action. No action shall have been taken nor any statute, rule
or regulation shall have been enacted by any government (or any governmental
body or agency) of the United States or any state thereof or any foreign country
that makes the consummation of the Merger illegal.
(e) Financial Condition. The certificates and opinion referred to in
Section 6.11 shall have been executed and delivered to the Company as of the
Closing Date.
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7.2 Conditions to Obligations of AHI. Unless AHI shall have
purchased Company Shares pursuant to the Offer, the obligations of AHI to effect
the Merger are subject to the satisfaction of the following conditions unless
waived by AHI, it being understood that if AHI designates a majority of the
directors of the Company Board pursuant to Section 2.3(a) or otherwise, the
provisions of this Section 7.2 shall not apply:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, except as otherwise permitted
by this Agreement and except for changes in any representations and warranties
which do not have a material adverse effect on the Company, and AHI shall have
received a certificate signed on behalf of the Company by the chief executive
officer and by the chief accounting officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed all obligations required to be performed by it under this Agreement on
or prior to the Closing Date including, without limitation, all obligations
which the Company would be required to perform at the Closing if the transaction
contemplated hereby was consummated, and AHI shall have received a certificate
signed on behalf of the Company by the chief executive officer and by the chief
financial officer of the Company to such effect.
(c) Proceeds of the Financing. The proceeds of the Financing
shall have been received.
7.3 Conditions to Obligations of the Company. Unless AHI shall have
purchased Company Shares pursuant to the Offer, the obligation of the Company to
effect the Merger is subject to the satisfaction of the following conditions
unless waived by the Continuing Directors.
(a) Representations and Warranties. The representations and
warranties of AHI set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date, except as otherwise permitted by this
Agreement and except for changes in any representations and warranties which do
not have a material adverse effect on the Company, and the Company shall have
received a certificate signed on behalf of AHI by the chief executive officer
and by the chief financial officer of each of AHI, respectively, to such effect.
(b) Performance of Obligations of AHI. AHI shall have performed all
obligations required to be performed by it
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under this Agreement prior to the Closing Date including, without limitation,
all obligations which AHI would be required to perform at the Closing if the
transaction contemplated hereby was consummated, and the Company shall have
received a certificate signed on behalf of AHI by the chief executive officer
and by the chief financial officer of AHI to such effect.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
8.1 Termination. This Agreement may be terminated prior to the
Effective Time, and the transactions contemplated hereby abandoned:
(a) by mutual written consent of the Boards of Directors of AHI and
the Company provided that following the purchase of Company Shares pursuant to
the Offer such consent by the Company must be approved by a majority of the
Continuing Directors;
(b) by either AHI or the Company (i) if the Merger shall not have been
consummated on or before 5:00 p.m. New York City Time May 15, 1995 (or such
later date, but not beyond June 30, 1995, to which the Chase Commitment may be
extended (the "Deadline Time")); provided, however, that the right to terminate
this Agreement under this Section 8.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on or before such
date; and provided further that the right to terminate this Agreement pursuant
to this Section 8.1(b) shall not be available to AHI if AHI acquires any Company
Shares pursuant to the Offer; or (ii) if any court or governmental authority of
competent jurisdiction shall have issued an order, decree or ruling or taken
other action, permanently restraining, enjoining or otherwise prohibiting the
making and consummation of the Offer or consummation of the Merger, and such
order shall be final and nonappealable;
(c) by AHI, if the Offer is not commenced, or terminates or expires
without AHI having purchased any shares of Company Common Stock thereunder, in
any case because of the occurrence and remaining in effect of the events or
conditions set forth in paragraphs (a) through (h) on Annex A hereto;
(d) by the Company, if the Offer is not commenced in accordance with
Section 2.1(a) hereof; provided, however, that the Company shall have no right
to terminate under this Section 8.1(d) if the Offer is not commenced due to a
failure of the Company to fulfill any of its obligations under this Agreement;
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<PAGE>
(e) by the Company, if the Offer shall expire or terminate without any
Shares being purchased thereunder prior to the Deadline Time;
(f) by AHI, if no Shares have been purchased pursuant to the Offer and
there has been (i) a material breach of any material agreement on the part of
the Company which, if curable, has not been cured or adequate (in the reasonable
judgement of AHI) assurance of cure given, in either case within five (5)
business days following notice of such breach from AHI or, if less, the time
remaining to the then scheduled Expiration Date or (ii) a breach of a
representation or warranty of the Company (assuming that such representation or
warranty were remade as of the date of such notice) herein which (individually
or, together with other such breaches, in the aggregate) has or would reasonably
be expected to have a material adverse effect on the Company and which has not
been cured within five (5) business days (or, if less, the time remaining to the
then scheduled Expiration Date) following notice of such breach from AHI; or
(g) by the Company, so long as AHI has not purchased Company Shares
pursuant to the Offer:
(i) if there has been (A) a material breach of any material
agreement herein on the part of AHI which, if curable, has not been
cured or adequate (in the Company's reasonable judgment) assurance of
cure given, in either case within five (5) business days following
notice of such breach from the Company or, if less, the time remaining
to the then scheduled Expiration Date (it being agreed that any breach
by AHI of its obligations under Section 6.10(d) or 6.11 is a material
breach of a material agreement herein) or (B) a breach of a
representation or warranty of AHI herein (assuming that such
representation or warranty were remade as of the date of notice of
breach given by the Company) which (individually or, together with
other such breaches, in the aggregate) has or would reasonably be
expected to have a material adverse effect on AHI or the Surviving
Corporation and which has not been cured within five (5) business days
(or, if less, the time remaining to the then scheduled Expiration
Date) after notice from the Company; or
(ii) if the Company determines to accept a Superior Takeover
Proposal (as defined below), provided, however, that the Company shall
not be permitted to terminate this Agreement pursuant to this clause
(ii) unless the Company has provided AHI with twenty-four hours' (or
if less, the
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period then remaining to 4:59 p.m., New York City time, on the
then scheduled Expiration Date) prior written notice of its
intent to so terminate this Agreement (together with a summary of
the material terms of such Superior Takeover Proposal). As used
in this Agreement, "Superior Takeover Proposal" means a Takeover
Proposal which the Company Board determines in good faith (A) is
on terms more favorable to the stockholders of the Company than
the Offer and Merger taken as a whole and (B) has a reasonable
prospect of being consummated in accordance with its terms.
(h) by AHI if (i) the Company shall enter into a definitive
agreement or agreements related to or providing for any Takeover Proposal, or
(ii) any person shall announce its intention to commence a tender offer for all
or any portion of the outstanding shares of Company Common Stock or make a
Takeover Proposal and the Offer has remained open for at least twenty business
days and at least a majority of the outstanding shares of Company Common Stock
shall not have been properly tendered and unwithdrawn prior to the expiration of
the Offer, (iii) the Company Board shall withdraw, modify, or change in a manner
adverse to AHI its recommendation of the Offer or this Agreement as set forth in
Section 2.2(a) (i) (A) hereof (an "Adverse Change in Recommendation"), unless
simultaneously with such Adverse Change in Recommendation the Company shall
deliver to AHI notice of termination of this Agreement pursuant to Section
8.1(g) (ii) and shall publicly announce that it has done so or (iv) any person
(within the meaning of Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) acquires beneficial ownership of 40% of the
outstanding Company Common Stock. Notwithstanding the immediately preceding
sentence, AHI may not terminate this Agreement pursuant to Section 8.1(h) (iii)
if at the time of such Adverse Change in Recommendation and at all times
thereafter the Minimum Condition (as defined in Annex A) is and remains
satisfied; provided, however, that even if the Minimum Condition is and remains
satisfied, AHI may terminate this Agreement pursuant to the first sentence of
this Section 8.1(h) (iii), (x) at any time after an Adverse Change in
Recommendation if AHI has been advised in writing by Chase that the Financing
will not be made available, or (y) at the opening of business on the scheduled
Expiration Date (as it may be extended by AHI in accordance with this Agreement)
if any of the events or circumstances described in clauses (a) through (i),
inclusive of Annex A shall have occurred and be continuing. It is understood
that a termination of this Agreement by the Company under this Section 8.1 shall
not, in and of itself, be deemed to be an Adverse Change in Recommendation.
8.2 Effect of Termination.
---------------------
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(a) Effect on Agreement. In the event of termination of this
Agreement by either the Company or AHI as provided in Section 8.1, this
Agreement shall forthwith become void, the transactions contemplated hereby
shall be abandoned and there shall be no liability or obligation on the part of
AHI or the Company or their respective officers or directors except with respect
to Section 6.2 (last sentence), Section 6.7, and this Section 8.2 and except for
liability for material breach of this Agreement. Termination of this Agreement
shall have no effect on the rights and obligations of the parties under the
Confidentiality Letter.
(b) Return of Documents. Each party, if so requested by the other
party, will return promptly every document furnished to it by or on behalf of
the other party in connection with the transaction contemplated hereby, whether
so obtained before or after the execution of this Agreement, and any copies
thereof (except for copies of documents publicly available) which may have been
made, and will use reasonable efforts to cause its representatives and any
representatives of financial institutions and others to whom such documents were
furnished promptly to return such documents and any copies thereof any of them
may have made.
(c) Expense Reimbursement.
---------------------
(i) If this Agreement is terminated by the Company pursuant to
Section 8.1(g)(ii) or by AHI pursuant to Section 8.1(h)(i), the
Company shall pay to AHI or its designee the sum of $5,000,000 plus
the amount of AHI's Expenses (as herein defined) up to $2,500,000 in
cash by wire transfer of immediately available funds to an account
designated by AHI immediately following such termination.
(ii) If this Agreement is terminated by AHI pursuant to Section
8.1(h)(ii) or 8.1(h)(iv) and the Company within 135 days after such
termination enters into a letter of intent, memorandum of
understanding or similar agreement or definitive transaction agreement
with the person or group acquiring such 40% beneficial ownership or
any affiliate of such person or group (or member of such group or
affiliate of such member) (in the case of Section 8.1(h)(iv)) or the
person or group or any affiliate of such person or group (or member of
such group or affiliate of such member) making the Takeover Proposal
(in the case of Section 8.1(h)(ii)) then the Company shall pay to AHI
immediately upon consummation of the transaction contemplated by such
letter of intent,
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memorandum, similar agreement or definitive transaction agreement
the sum of $5,000,000 plus an amount equal to AHI's Expenses up
to $2,500,000 in cash by wire transfer of immediately available
funds.
(iii) If this Agreement is terminated by AHI pursuant to
Section 8.1(h)(iii), then the Company shall pay to AHI the sum of
$7,500,000 plus the amount of its Expenses up to $2,500,000 in
cash by wire transfer of immediately available funds to an
account designated by AHI immediately following such termination.
(iv) The Company shall reimburse AHI for all costs incurred
by AHI in connection with the collection of any amounts due AHI
under clauses (i) through (iii), including reasonable attorneys'
fees.
For purposes of this paragraph (c), "Expenses" includes all out-of-
pocket costs and expenses incurred by AHI or the Company, as the case may be,
including fees and disbursements of counsel, accountants, financial advisors and
other third parties, commitment fees, printing mailing and filing fees and
similar fees incurred in connection with the transactions contemplated by this
Agreement. Each party acknowledges and agrees that the other party's Expenses
exceed $2,500,000 and releases the other party fully and finally from any
obligation to furnish any evidence of such expenses. In the event AHI has
received in full the amounts payable under Section 8.1(c)(i), (ii) or (iii), AHI
shall not assert or pursue in any manner, directly or indirectly, any claim or
cause of action against the Company or the party making a Takeover Proposal or
engaging in a transaction with the Company based in whole or in part upon the
events giving rise to the termination of this Agreement which triggered the
payment of such amounts; provided, however, that this sentence shall not apply
to and shall in no way restrict the right of AHI to assert a counterclaim in (or
any claim asserted in response to) any action brought by the Company or such
party with respect to such events.
8.3 Amendment. Subject to Section 2.3(c), this Agreement may be
amended by the parties hereto, by action taken by their respective boards of
directors, at any time before or after any required approval of matters
presented in connection with the Merger by the stockholders of the Company but,
after any such approval, no amendment shall be made which by law requires
further approval by such stockholders without such further stockholder approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
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8.4 Extension; Waiver. Subject to Section 2.3(c), at any time prior
to the Effective Time, the parties hereto, by action taken by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE 9
GENERAL PROVISIONS
------------------
9.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the earlier to
occur of (i) the Effective Time and (ii) the termination of this Agreement and
the agreements made herein shall terminate at the Effective Time or earlier
termination of this Agreement except for the agreements as set forth in Section
6.2 (last sentence) and Sections 6.5, 6.6, 6.7 and 8.2.
9.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally upon request of
telecopy confirmation when telecopied, upon receipt if sent by recognized
overnight courier service or two business days after being mailed by registered
or certified mail (postage prepaid, return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to AHI, to
1075 Hawthorn Drive
Itasca, Illinois 60143
Attention: Daniel H. Bushell
Telecopy: (708) 775-7509
With a copy to:
Weil, Gotshal & Manges
100 Crescent Court
Suite 1300
Dallas, Texas 75201-6950
Attention: Lawrence D. Stuart, Jr.
Telecopy: (214) 746-7777
Wingate Partners, L.P.
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750 North St. Paul Street
Suite 1200
Dallas, Texas 75201
Attention: Thomas W. Sturgess
Telecopy: (214) 871-8799
(b) if to the Company, to
2200 East Golf Road
Des Plaines, Illinois 60016-1267
Attention: Joel D. Spungin
Telecopy: (708) 699-0891
with a copy to:
Altheimer & Gray
Suite 4000
10 South Wacker
Chicago, Illinois 60606
Attention: Phillip Gordon
Mark Kindelin
Telecopy: (312) 715-4800
9.3 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes", or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.5 Entire Agreement; Third Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof;
and (b) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder (except for Sections 6.5, 6.8 and 6.14). Any
breach by the Company of Section 6.13 may be enforced for the benefit of the
stockholders of the Company entitled to dividends under Section 6.13 by any one
or more of the persons named as Continuing Directors on behalf of such
stockholders. This Agreement is not intended to supersede the
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Confidentiality Agreement which shall continue in full force and effect. Each
Exhibit, schedule and the Company Disclosure Schedule and AHI Disclosure
Schedule shall be considered incorporated into this Agreement. Any matter which
is disclosed in any portion of a Disclosure Schedule is deemed to have been
disclosed for the purposes of all relevant provisions of this Agreement. The
inclusion of any item in a Disclosure Schedule is not evidence of the
materiality of such item for the purposes of this Agreement. The parties make
no representations or warranties to each other, except as contained in this
Agreement, and any and all prior representations and warranties made by any
party or its representatives, whether verbally or in writing, are deemed to have
been merged into this Agreement, it being intended that no such prior
representations or warranties shall survive the execution and delivery of this
Agreement. The Company and AHI each acknowledge that they have conducted an
independent investigation satisfactory to them in all respects (including,
without limitation, with respect to the financial condition, assets,
liabilities, properties and projected operations of the Company) in making its
determination as to the propriety of the transaction contemplated by this
Agreement, and in entering into this Agreement, has relied solely on the results
of said investigation and on the representations and warranties of the Company
expressly contained in this Agreement.
9.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to its
conflict of laws rules.
9.7 Publicity. Except as otherwise required by law, so long as this
Agreement is in effect, neither the Company or AHI shall, or shall permit any of
their Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to the transactions contemplated by this
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
9.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
AHI may collaterally assign its rights under this Agreement in connection with
the Financing or replacement thereof.
IN WITNESS WHEREOF, AHI and the Company have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
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ASSOCIATED HOLDINGS, INC.
By: /s/ Thomas W. Sturgis
-------------------------------
Its: Chairman
-------------------------------
UNITED STATIONERS INC.
By: /s/ Joel D. Spungin
-------------------------------
Its: Chairman
-------------------------------
<PAGE>
ANNEX A
-------
Notwithstanding any other provision of the Offer, AHI will not be
required to accept for payment, purchase or pay for any Company Shares tendered,
and may postpone the acceptance for payment, the purchase of, or payment for,
Company Shares, and, subject to the terms of the Agreement, may amend, extend or
terminate the Offer if (i) a number of Company Shares, when added to the Company
Shares then beneficially owned by AHI, which is not less than a majority of the
Company Shares outstanding on a fully diluted basis (or, if a lesser number, at
the option of AHI, on an issued and outstanding basis) shall have not been
validly tendered pursuant to the Offer and not withdrawn prior to the Expiration
Date (the "Minimum Condition"), or (ii) at any time on or after February 13,
1995 and prior to acceptance for payment of any Company Shares tendered pursuant
to the Offer, any of the following events shall occur or circumstances exist:
(a) there shall be in effect any temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the Offer or the Merger, which shall remain in effect as of the Expiration
Date;
(b) there shall be any action taken or any statute, rule or regulation
enacted, applicable to the Offer or the Merger by any government (or any
governmental body or agency) of the United States or any state thereof or
any foreign country that makes illegal the consummation of the Offer or the
Merger;
(c) any authorization, consent, order or approval of, or declaration
or filing with, or expiration of waiting period imposed by, any
Governmental Entity necessary for the consummation of the Offer shall not
have been filed, occurred or been obtained;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange or National Association of Securities Dealers Automated Quotations
System, (ii) a declaration of a banking moratorium or any limitation or
suspension of payments by any U.S. governmental authority on the extension
of credit by lending institutions, (iii) a commencement of war or armed
hostilities directly involving the United States, (iv) any limitation
(whether or not mandated) by any governmental authority which will
materially adversely affect the extension of credit by banks or other
lending institutions in the United States, or (v) in the case of any of the
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foregoing existing on or before February 13, 1995, a material acceleration
or worsening thereof;
(e) the Agreement shall have been terminated by the Company, on the
one hand, or AHI, on the other hand, in accordance with its terms or AHI
and the Company shall have reached an agreement providing for the
termination of the Offer;
(f) AHI shall have failed to obtain the proceeds of Financing;
(g) The representations and warranties of the Company set forth in
the Agreement shall be untrue in any material respect and the facts or
events causing the representation or warranty to be untrue shall have or
would reasonably be expected to have a material adverse effect on the
Company;
(h) The Company shall have failed to perform in all material respects
its material obligations under the Merger Agreement to be performed by it
on or prior to the Expiration Date; or
(i) The Company shall not have obtained the Material Consents on or
prior to the Expiration Date.
The foregoing conditions (i) may be asserted by AHI regardless of the
circumstances (including any action or inaction by AHI or any of its affiliates)
giving rise to such condition and are for the sole benefit of AHI and its
affiliates. The foregoing conditions, other than the Minimum Condition, may be
waived by AHI in whole or in part at any time and from time to time in its sole
discretion. The failure by AHI at any time to exercise any of the foregoing
rights will not be deemed a waiver of any other rights and each such right will
be deemed an ongoing right which may be asserted at any time and from time to
time.
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EXHIBIT 2
AGREEMENT TO TENDER
-------------------
This Agreement to Tender (the "Agreement") dated as of February 13, 1995
among Associated Holdings, Inc., a Delaware corporation ("AHI"), and the persons
whose names are set forth on Schedule A hereto (individually a "Shareholder" and
collectively the "Shareholders").
Recitals:
--------
A. AHI and United Stationers Inc., a Delaware corporation (the "Company")
are simultaneously herewith entering into an Agreement and Plan of Merger dated
as of the date hereof (the "Merger Agreement"), which provides, among other
things, that AHI, upon the terms and subject to the conditions thereof, will
make a cash tender offer for up to 92.5% of the outstanding shares of common
stock, par value $.10 per share, of the Company (the "Shares") at a price of
$15.50 per Share, pursuant to an Offer to Purchase and related Letter of
Transmittal which together constitute the "Offer" included in a Tender Offer
Statement on Schedule 14D-1 filed by AHI with the Securities and Exchange
Commission (the "Offer Statement"), or such higher price per share pursuant to
the Offer. Upon completion of the Offer, AHI will merge with the Company (the
"Merger") and each then outstanding Share (other than certain Shares identified
in Section 3.1(b) of the Merger Agreement) would be converted as provided in
Section 3.1(a) of the Merger Agreement (the Offer and Merger being collectively
referred to as the "Transaction").
B. As a condition to entering into the Merger Agreement, AHI has
requested, and each of the Shareholders has agreed, to make certain agreements
and covenants with AHI, upon the terms and subject to the conditions hereinafter
set forth with respect to the respective number of Shares set forth on Schedule
A hereto opposite the name of each of the Shareholders.
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained herein, the parties hereto agree as
follows:
ARTICLE I
Agreement to Tender Shares
--------------------------
Section 1.1 Tender. Subject to the terms and conditions of this
Agreement and of the Offer, each Shareholder agrees severally for itself only to
tender to AHI pursuant to the Offer in accordance with the terms thereof
("Tender") and not withdraw except as permitted hereby all Shares held by such
Shareholder.
<PAGE>
The approximate number of Shares owned by the Shareholder are set forth on
Schedule A hereto opposite the name of such Shareholder and AHI shall accept for
payment and pay for all of such Shares Tendered by such Shareholder at the price
of $15.50 per Share or such higher price to be paid under the terms of the Offer
by means of a wire transfer to an account as specified by the Shareholder at the
following time: one business following the Expiration Date (as defined in the
Offer Statement) if the aggregate number of shares Tendered are less than the
Maximum Number (as defined in the Offer Statement) or one business day following
the announcement of the final proration factor should more than the Maximum
Number be Tendered. In the event that any Shareholder acquires any additional
Shares prior to the Tender of its Shares hereunder, all such additional Shares
shall be subject to the terms of this Agreement. Notwithstanding the foregoing,
no Shareholder shall be required to Tender Shares and, if such Shareholder has
Tendered Shares, shall be permitted to withdraw its Shares, if this Agreement is
terminated as set forth in Section 6.1 hereof.
Section 1.2 Adjustment Upon Changes in Capitalization. In the event of
any change in the Shares by reason of any stock dividends, split-ups, mergers,
recapitalizations or other changes in the corporate or capital structure of the
Company, the number and kind of Shares subject to this Agreement shall be
appropriately adjusted.
ARTICLE II
Related Matters
---------------
Section 2.1 Acquisition Transaction. The parties acknowledge that AHI
would not have entered into the Merger Agreement without the concurrent
execution of this Agreement and that each Shareholder and AHI would not have
entered into this Agreement without the concurrent execution of the Merger
Agreement.
Section 2.2 Agreement to Vote. Subject to Section 6.1 hereof, each
Shareholder agrees to vote all their shares set forth on Schedule A, at any
meeting of shareholders, in favor of the Merger Agreement, the Merger and all
transactions arising out of the Merger Agreement which require shareholder
approval. The Shareholder's agreement to vote their shares shall include an
agreement to execute written consents in lieu of a meeting.
-2-
<PAGE>
ARTICLE III
Representations
and Warranties of the Shareholders
----------------------------------
Each of the Shareholders, severally, and not jointly, hereby represents and
warrants to AHI as follows:
Section 3.1 Ownership of the Shares. Such Shareholder is the record or
beneficial owner with full or shared voting power of the number of Shares set
forth opposite such Shareholder's name on Schedule A hereto (which are all the
Shares which such Shareholder so owns of record or beneficially), and at the
time of Tender will have good title, and (subject to the provisions of Section
2.2 hereof) full voting power, with respect to all such Shares, free and clear
of all liens, charges, encumbrances, equities, claims and options or other
defects in title which may restrict such Shareholder's ability or authority to
tender, sell, and deliver such Shares hereunder.
Section 3.2 Authorization; Valid and Binding Agreement. This Agreement
has been duly and validly executed and delivered by such Shareholder and
constitutes a valid and binding agreement of such Shareholder enforceable
against such Shareholder in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity, including
principles of good faith and fair dealing (regardless of whether enforcement is
sought in a proceeding at law or equity). Except as set forth in the Merger
Agreement, no consent or approval or any court, federal or state governmental
agency, or any other person or entity is required in connection with the
execution and consummation of the transactions contemplated by this Agreement to
permit each to carry out its obligations hereunder.
Section 3.3 No Conflicts. Neither the execution and delivery of this
Agreement nor the consummation by such Shareholder of the transactions
contemplated hereby will constitute a violation of, or conflict with, or
constitute a default under, any contract, commitment, agreement, understanding,
arrangement or restriction of any kind to which such Shareholder is a party or
by which such Shareholder is bound or any judgment, decree or order applicable
to such Shareholder.
-3-
<PAGE>
ARTICLE IV
Representations and
Warranties of AHI
-----------------
AHI hereby represents and warrants to the Shareholders as follows:
Section 4.1 Authorization; Valid and Binding Agreement. AHI has all
requisite corporate power and authority to enter into this Agreement, and this
Agreement has been duly authorized by all necessary corporate action on the part
of AHI. This Agreement has been duly and validly executed and delivered by AHI,
and constitutes a valid and binding obligation of AHI, enforceable against AHI
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principle of equity including principles of good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or equity).
Section 4.2 Securities Matters. AHI is acquiring the Shares for its
own account and not with a view to the public distribution thereof and will not
offer to sell or otherwise dispose of the Shares acquired in violation of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
ARTICLE V
Covenants
---------
Section 5.1 Other Transactions. Each Shareholder agrees severally,
and for itself only, that, prior to the termination of this Agreement, such
Shareholder shall not engage in any action or omission that would have the
effect of preventing or disabling such Shareholder from Tendering its Shares to
AHI. Without limiting the foregoing and except as provided in this Agreement,
until the termination of this agreement such Shareholder agrees not to sell or
transfer, or agree to sell or transfer, any of the Shares provided, however,
that a Shareholder may transfer his or her Shares to a person, partnership,
trust, or other entity so long as such person or entity agrees in writing to be
bound by the terms, provisions and conditions of this Agreement. Upon such
transfer, the transferor shall be released from the terms of this Agreement with
regard to such transferred Shares.
-4-
<PAGE>
ARTICLE VI
Termination
-----------
Section 6.1 Termination. This Agreement shall terminate
automatically upon the occurrence of any of the following: (i) the Effective
Time (as defined in the Merger Agreement), (ii) the termination of the Merger
Agreement for any reason, (iii) any time following the public announcement by
any person of an offer to acquire at least a majority of the outstanding Shares
which the Shareholder reasonably believes is likely to be consummated and offers
a higher economic value to the Shareholder than the Offer and where the
Shareholder gives notice to AHI of such termination, or (iv) the Company Board
(as defined in the Merger Agreement) shall withdraw, modify or change in a
manner adverse to Purchaser, its recommendation set forth in Section
2.2(a)(i)(A) of the Merger Agreement, provided that the Company Board shall have
received an opinion of counsel that the Company Board is required to so
withdraw, modify or change such recommendation in the exercise of its fiduciary
duties.
Section 6.2 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 6.1, this Agreement (including, without
limitation, the voting agreement set forth herein) shall forthwith become void
and have no effect, without liability on the part of any party or its trustees,
partners, beneficiaries, directors, officers, and shareholders or affiliates.
Nothing contained in this Article VI shall relieve any party from liability for
any material breach of this Agreement or the Offer.
ARTICLE VII
Miscellaneous
-------------
Section 7.1 Expenses. Each of the parties hereto will pay all fees
and expenses it incurs in connection with this Agreement, including without
limitation the fees and expenses of its financial and legal advisors. Each
Shareholder represents and warrants to AHI that such Shareholder has not
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated
herein.
Section 7.2 Survival of Representations, Warranties and Agreements.
The representations, warranties and agreements of AHI and the Shareholders in
this Agreement or in any instrument delivered by AHI and the Shareholders
pursuant to this Agreement shall not survive the consummation of the Merger.
-5-
<PAGE>
Section 7.3 Assignment; Parties in Interest. Except as permitted by
Section 5.2 hereof or as required by operation of law, this Agreement shall not
be assignable by the parties hereto without the prior written consent of the
other parties. This Agreement will be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors and permitted
assigns.
Section 7.4 Entire Agreement; Amendments. This Agreement and the
documents referred to herein or delivered pursuant hereto which form a part
hereof, contain the entire understanding of the parties with respect to its
subject matter. There are no representations, warranties, agreements, promises,
covenants or undertakings other than those expressly set forth herein or
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to its subject matter. This Agreement may be
amended only by a written instrument duly executed by all the parties. Any
condition to a party's obligations hereunder may be waived in writing by such
party.
Section 7.5 Notices. All notices, claims, certificates, requests,
demands and other communications ("Notices") required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given when
delivered in person, upon receipt of the telecopy confirmation when telecopied,
upon receipt if sent by a nationally recognized overnight courier service or two
(2) business days after being mailed (registered or certified mail, postage
prepaid, return receipt requested), addressed as follows:
(a) If to AHI, to:
1075 Hawthorn Drive
Itasca, Illinois 60143
Telecopy: (708) 775-7509
Attention: Daniel H. Bushell
With copies to:
Weil, Gotshal & Manges
100 Crescent Court
Dallas Texas 75201-6950
Telecopy: (214) 746-4777
Attention: Lawrence D. Stuart, Jr.
and:
Wingate Partners, L.P.
750 North St. Paul Street
Suite 1200
Dallas, Texas 75201
Attention: Thomas W. Sturgess
-6-
<PAGE>
(b) If to the Shareholders, to each Shareholder at the address set
forth on their respective signature page to this Agreement:
With copies to:
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Telecopy (312) 715-4800
Attention: Phillip Gordon
or to such other address as the person to whom Notice is to be given may have
previously furnished to the other in writing in the manner set forth above.
Section 7.6 Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 7.7 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
Section 7.8 Counterparts; Headings. This Agreement may be executed
simultaneously in several counterparts, each of which will be deemed to be an
original, but all of which together will constitute one and the same instrument.
The article and section headings contained herein are for reference purposes
only and will not affect in any way the meaning or interpretation of this
Agreement.
Section 7.9 Remedies. The parties hereto agree that if for any reason
any party hereto shall have failed to perform its obligations under this
Agreement, then any other party hereto seeking to enforce this Agreement against
such non-performing party shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief. This provision
is without prejudice to any other rights that any party hereto may have against
any other party hereto for any failure to perform its obligations under this
Agreement.
Section 7.10 Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use reasonable efforts to
take, or cause to be taken, all action,
-7-
<PAGE>
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective agreement to
tender and vote contemplated by this Agreement.
Section 7.11 Exculpation. Notwithstanding anything to the contrary
contained herein, with respect to Shareholders which are partnerships or trusts,
there shall be no personal liability hereunder on any partners or trustees with
respect to the terms, conditions, representations, warranties or covenants
contained in this Agreement. AHI shall look solely to such Shareholder and not
to any partners or trustees of those Shareholders for the satisfaction of all
remedies which AHI may have hereunder.
[*****]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ASSOCIATED HOLDINGS, INC.
By: _______________________________________
Title: ______________________________
[Signatures continued on next pages]
-9-
<PAGE>
FISHMAN FAMILY
INVESTMENT PARTNERSHIP
By: /s/ Joan Fishman
--------------------------------
Joan Fishman, General Partner
Address:
/s/ Phillip Gordon
- -----------------------------------
Phillip Gordon, not personally,
but as Trustee of the Joan
Fishman Charitable Remainder
Trust u/a/d 2/1/95
Address:
<PAGE>
JEROLD A. HECKTMAN
FAMILY INVESTMENT
PARTNERSHIP
By: /s/ Jerold A. Hecktman /s/ Jerold A. Hecktman
-------------------------------- --------------------------------
Jerold A. Hecktman, Jerold A. Hecktman
General Partner
Address: Address:
/s/ Phillip Gordon
- -----------------------------------
Phillip Gordon, not personally,
but as Trustee of the Jerold
and Ruth Hecktman Charitable
Remainder Trust u/a/d 2/1/95
Address:
<PAGE>
MELVIN L. HECKTMAN
FAMILY INVESTMENT
PARTNERSHIP
By: /s/ Melvin L. Hecktman /s/ Melvin L. Hecktman
-------------------------------- --------------------------------
Melvin L. Hecktman, Melvin L. Hecktman
General Partner
Address: Address:
MLH INVESTMENT PARTNERSHIP /s/ Phillip Gordon
--------------------------------
Phillip Gordon, not
personally, but as
Trustee of the Julie B.
Hecktman Charitable
By: /s/ Melvin L. Hecktman
--------------------------------
Melvin L. Hecktman, Address:
Managing General Partner
Address:
/s/ Melvin L. Hecktman
- -----------------------------------
Charitable Remainder Trust
u/a/d 2/1/95
Address:
/s/ Phillip Gordon
- -----------------------------------
Phillip Gordon, not personally,
but as Trustee of the Sherri A.
Sheftel Charitable Remainder Trust
u/a/d 2/1/95
Address:
<PAGE>
MILLS FAMILY
INVESTMENT PARTNERSHIP
By: /s/
------------------------------
Barbara Wolf,
General Partner
Address:
/s/
- ---------------------------------
Phillip Gordon, not personally,
but as Trustee of the Barbara
Mills Charitable Remainder Trust
u/a/d 2/1/95
Address:
<PAGE>
WOLF FAMILY
INVESTMENT PARTNERSHIP
By: /s/ Barbara Wolf
-------------------------------
Barbara Wolf Savage,
General Partner
Address:
/s/ Phillip Gordon
- ----------------------------------
Phillip Gordon, not personally,
but as Trustee of the Barbara
Wolf Savage Charitable Remainder
Trust u/a/d 2/1/95
Address:
<PAGE>
/s/ Joel D. Spungin JOEL D. SPUNGIN
- ---------------------------------- INVESTMENT PARTNERSHIP
Joel D. Spungin
/s/ Marilyn G. Spungin By: /s/ Joel D. Spungin
- ---------------------------------- ---------------------------
Marilyn G. Spungin Joel D. Spungin,
Partner
/s/ Debra A. Spungin /s/ Marc A. Spungin
- ---------------------------------- ------------------------------
Debra A. Spungin Marc A. Spungin
/s/ Phillip Gordon /s/ Marilyn G. Spungin
- ---------------------------------- ------------------------------
Phillip Gordon, not personally, Marilyn G. Spungin, not
but as Trustee of the Joel and personally, but as Co-
Marilyn Spungin Charitable Trustee of the Joel J.
Remainder Trust u/a/d 2/1/95 Spungin Family Trust
u/a/d 11/15/90
/s/ Robert B. Scadron
------------------------------
Robert B. Scadron, not
personally, but as Co-
Trustee of the Joel D.
Spungin Family Trust
u/a/d 11/15/90
/s/ Phillip Gordon
------------------------------
Phillip Gordon, not
personally, but as
Trustee of the Joel and
Marilyn Spungin
Charitable
Remainder Trust u/a/d
2/1/95
<PAGE>
SCHEDULE A
----------
Number of Shares
----------------
/s/ Douglas K. Chapman 28,000
- ---------------------------------
Douglas K. Chapman
United Stationers Inc.
2200 East Golf Road
Des Plaines, Illinois 60016
/s/ Doreen Chapman 7,000
- ---------------------------------
Doreen Chapman
United Stationers Inc.
2200 East Golf Road
Des Plaines, Illinois 60016
<PAGE>
SCHEDULE A
----------
Number of Shares
----------------
/s/ E. David Coolidge III 20,000
- ---------------------------------
E. David Coolidge III
United Stationers Inc.
2200 East Golf Road
Des Plaines, Illinois 60016
<PAGE>
SCHEDULE A
----------
Number of Shares
----------------
/s/ Ira A. Eichner 9,175
- ---------------------------------
Ira A. Eichner
United Stationers Inc.
2200 East Golf Road
Des Plaines, Illinois 60016
/s/ Barbara Eichner 1,000
- ---------------------------------
Barbara Eichner
United Stationers Inc.
2200 East Golf Road
Des Plaines, Illinois 60016
<PAGE>
SCHEDULE A
----------
Number of Shares
----------------
/s/ Jeffrey K. Hewson 32,750
- ---------------------------------
Jeffrey K. Hewson
United Stationers Inc.
2200 East Golf Road
Des Plaines, Illinois 60016
<PAGE>
SCHEDULE A
----------
Number of Shares
----------------
/s/ David R. Smith 107,644
- ----------------------------------
David R. Smith
United Stationers Inc.
2200 East Golf Road
Des Plaines, Illinois 60016
/s/ David R. Smith 10,000
- ----------------------------------
David R. Smith as Trustee of the
Trust u/a/d/ December 21, 1993 for
the benefit of Kareen Kanaga.
/s/ George L. Smith same
- ----------------------------------
George L. Smith as Trustee of the
Trust u/a/d/ December 21, 1993 for
the benefit of Kareen Kanaga.
/s/ George L. Smith 56,347
- ----------------------------------
George L. Smith as Trustee of the
Trust under Article Fourth of the
Will of Joan O. Smith.
/s/ George L. Smith 1,000
- ----------------------------------
George L. Smith as Custodian under
the Uniform Gift to Minors Act for
the Benefit of Colleen M. Smith.
/s/ George L. Smith 1,000
- ----------------------------------
George L. Smith as Custodian under
the Uniform Gift to Minors Act for
the Benefit of Maureen E. Smith.
<PAGE>
SCHEDULE A
----------
Number of Shares
----------------
/s/ Jack Twyman 1,000
- ---------------------------------
Jack Twyman
United Stationers Inc.
2200 East Golf Road
Des Plaines, Illinois 60016
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Shareholder Number of
----------- Shares
---------
<S> <C>
Fishman Family Investment Partnership 586,134
Joan Fishman Charitable Remainder Trust u/a/d 50,000
2/1/95
Jerold A. Hecktman Family Investment Partnership 902,795
Jerold A. Hecktman 4,385
Jerold and Ruth Hecktman Charitable Remainder 200,000
Trust u/a/d 2/1/95
Melvin Hecktman 6,667
Melvin L. Hecktman Family Investment Partnership 203,835
Melvin and Judith Hecktman Charitable Remainder 80,000
Trust u/a/d 2/1/95
MLH Investment Partnership 863,670
Mills Family Investment Partnership 533,197
Barbara Mills Charitable Remainder Trust u/a/d 50,000
2/1/95
Wolf Family Investment Partnership 921,057
Barbra Wolf Savage Charitable Remainder Trust 133,333
u/a/d 2/1/95
Joel D. Spungin 101,468
Joel and Marilyn Spungin Charitable Remainder 33,333
Trust u/a/d 2/1/95
Joel D. Spungin Investment Partnership 1,000
Joel D. Spungin Family Trust 57,682
Marilyn G. Spungin 7,648
Debra A. Spungin 4,856
Marc A. Spungin 4,868
Steven M. Spungin 4,856
---------
Total 4,750,784
</TABLE>
<PAGE>
Joel D. Spungin Thomas W. Sturgess
Chairman of the Board and Chairman of the Board
Chief Executive Officer Associated Holdings, Inc.
or (214) 720-1313
Kathleen S. Dvorak
Director, Investor Relations
United Stationers Inc.
(708) 699-5000
EXHIBIT 3
---------
FOR IMMEDIATE RELEASE
UNITED STATIONERS INC. AND ASSOCIATED HOLDINGS, INC.
----------------------------------------------------
ANNOUNCE MERGER AGREEMENT
-------------------------
Des Plaines, Ill. Feb. 14, 1995 -- United Stationers Inc. (NASDAQ: USTR)
and Associated Holdings, Inc., parent company of Associated Stationers Inc.,
announced the signing of a definitive Merger Agreement under which Associated
Holdings would acquire United Stationers Inc. Associated Holdings will commence
a tender offer no later than Feb. 21, 1995 for up to 92.5% of the outstanding
shares of United Stationers at a price of $15.50 per share in cash, or
approximately $266.6 million in the aggregate for such interest.
The tender offer will be followed by a merger of Associated Holdings into
United Stationers, with United Stationers Inc. being the surviving legal entity.
In the Merger, shares representing a total of 7.5% of the currently outstanding
stock will remain outstanding as shares of the surviving company and will
represent, in the aggregate, a 20% common stock interest, on a fully diluted
basis, in the surviving company which will remain public. Holders of shares not
purchased in the tender offer will receive in the aggregate cash equal to the
portion, if any, of the $266.6 million not paid to shareholders in the tender
offer as well as their proportionate interest in the combined company.
As a result of the merger, the owners of Associated Holdings will control
80% of the combined company on a fully diluted basis. The proposed tender offer
is subject to various
<PAGE>
United Stationers Inc. and Associated Holdings, Inc.
Announce Merger Agreement
Page 2
conditions, including the closing by Associated of its financing and the tender
of a majority of the fully-diluted United Stationers shares in the tender offer.
Associated Holdings has informed United Stationers that Associated has obtained
a financing commitment from The Chase Manhattan Bank, N.A. for amounts
sufficient to complete the transaction.
The directors and certain stockholders of United Stationers have agreed,
subject to certain conditions, to tender all of their shares, representing in
total 27.1% of United Stationers outstanding shares.
The execution of the Merger Agreement was jointly announced by Joel D.
Spungin, Chairman of the Board and Chief Executive Officer of United Stationers
Inc., and Thomas W. Sturgess, Chairman and Chief Executive Officer of
Associated: "We are delighted to announce the agreement for the combination of
United Stationers and Associated Stationers. The combined company will be
capable of achieving greater efficiencies in meeting the needs of our customers
and suppliers and will be well positioned to respond to the opportunities and
challenges facing our industry. This transaction brings together two
outstanding management teams with complementary operating philosophies."
As previously announced, Mr. Sturgess will be Chairman of the combined
company and Jeffrey K. Hewson, currently President of United Stationers, will
serve as Chief Executive Officer of the combined entity, with Michael Rowsey of
Associated Stationers and Steven Schwarz of United Stationers reporting to him.
Mr. Spungin and Mr. Hewson are expected to continue as directors of the combined
company.
- more -
<PAGE>
United Stationers Inc. and Associated Holdings, Inc.
Announce Merger Agreement
Page 3
William Blair & Company and Lazard Freres & Co. acted as financial advisors
to United Stationers in connection with this transaction. Chase Securities,
Inc. has been retained to act as financial advisor to Associated.
United Stationers Inc. is North America's largest wholesaler of business
products to resellers. Through its computer-based physical distribution system,
more than 25,000 items are available substantially within 24 hours through
distribution points in 58 major hub cities. Associated Stationers,
headquartered in Itasca, Ill., has 17 facilities located throughout the
continental United States and is the third largest wholesaler of business
products to resellers in the United States. Associated is controlled by Wingate
Partners, a Dallas-based private investment firm.
The common stock of United Stationers is traded on the NASDAQ Stock Market
(SYMBOL: USTR) and is quoted in its national market system listings.
